JURISDICTION

EDUARDO M. COJUANGCO, JR., Petitioner,

-versus -

REPUBLIC OF THE PHILIPPINES, Respondent.

G.R. No. 180705 | 2012-11-27

FACTS: Of the several coconut levy appealed cases that stemmed from certain issuances of the Sandiganbayan in its Civil Case No. 0033, the present . recourse proves to be one of the most difficult.

In particular, the instant petition for review under Rule 45 of the Rules of Court assails and seeks to annul a portion of the Partial Summary Judgment dated July 11, 2003, as affirmed in a Resolution of December 28, 2004, both rendered by the Sandiganbayan in its Civil Case ("CC") No. 0033-A (the judgment shall hereinafter be referred to as "PSJ-A"), entitled"Republic of the Philippines, Plaintiff, v. Eduardo M. Cojuangco, Jr., et al., Defendants, COCOFED, et al., BALLARES, et al., Class Action Movants." CC No. 0033-A is the result of the splitting into eight (8) amended complaints of CC No. 0033 entitled, "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al.," a suit for recovery of ill-gotten wealth commenced by the Presidential Commission on Good Government ("PCGG"), for the Republic of the Philippines ("Republic"), against Eduardo M. Cojuangco, Jr. ("Cojuangco") and several individuals, among them, Ferdinand E. Marcos, Maria Clara Lobregat ("Lobregat"), and Danilo S. Ursua ("Ursua"). Each of the eight (8) subdivided complaints, CC No. 0033-A to CC No. 0033-H, correspondingly impleaded as defendants only the alleged participants in the transaction/s subject of the suit, or who are averred as owner/s of the assets involved.

Apart from this recourse, We clarify right off that PSJ-A was challenged in two other separate but consolidated petitions for review, one commenced by COCOFED et al., docketed as G.R. Nos. 177857-58, and the other, interposed by Danilo S. Ursua, and docketed as G.R. No. 178193.

By Decision dated January 24, 2012, in the aforesaid G.R. Nos. 177857-58 (COCOFED et al. v. Republic) and G.R. No. 178193 (Ursua v. Republic) consolidated cases1 (hereinafter collectively referred to as "COCOFED v. Republic"), the Court addressed and resolved all key matters elevated to it in relation to PSJ-A, except for the issues raised in the instant petition which have not yet been resolved therein. In the same decision, We made clear that: (1) PSJ-A is subject of another petition for review interposed by Eduardo Cojuangco, Jr., in G.R. No. 180705, entitled Eduardo M. Cojuangco, Jr. v. Republic

of the Philippines, which shall be decided separately by the Court,2 and (2) the issues raised in the instant petition should not be affected by the earlier decision "save for determinatively legal issues directly addressed [t]herein."3

For a better perspective, the instant recourse seeks to reverse the Partial Summary Judgment4 of the anti-graft court dated July 11, 2003, as reiterated in a Resolution5 of December 28, 2004, denying COCOFED's motion for reconsideration, and the May 11, 2007 Resolution6 denying COCOFED's motion to set case for trial and declaring the partial summary judgment final and appealable, all issued in PSJ-A. In our adverted January 24, 2012 Decision in COCOFED v. Republic, we affirmed with modification PSJ-A of the Sandiganbayan, and its Partial Summary Judgment in Civil Case No. 0033-F, dated May 7, 2004 (hereinafter referred to as "PSJ-F').7

More specifically, We upheld the Sandiganbayan's ruling that the coconut levy funds are special public funds of the Government. Consequently, We affirmed the Sandiganbayan's declaration that Sections 1 and 2 of Presidential Decree ("P.D.") 755, Section 3, Article III of P.D. 961 and Section 3, Article III of P.D. 1468, as well as the pertinent implementing regulations of the Philippine Coconut Authority ("PCA"), are unconstitutional for allowing the use and/or the distribution of properties acquired through the coconut levy funds to private individuals for their own direct benefit and absolute ownership. The Decision also affirmed the Government's ownership of the six CIIF companies, the fourteen holding companies, and the CIIF block of San Miguel Corporation shares of stock, for having likewise been acquired using the coconut levy funds. Accordingly, the properties subject of the January 24, 2012 Decision were declared owned by and ordered reconveyed to the Government, to be used only for the benefit of all coconut farmers and for the development of the coconut industry.

By Resolution of September 4, 2012,8 the Court affirmed the abovestated Decision promulgated on January 24, 2012.

It bears to stress at this juncture that the only portion of the appealed Partial Summary Judgment dated July 11, 2003 ("PSJ-A") which remains at issue revolves around the following decretal holdings of that court relating to the "compensation" paid to petitioner for exercising his personal and exclusive option to acquire the FUB/UCPB shares.9 It will be recalled that the Sandiganbayan declared the Agreement between the PCA and Cojuangco containing the assailed "compensation" null and void for not having the required valuable consideration. Consequently, the UCPB

shares of stocks that are subject of the Agreement were declared conclusively owned by the Government. It also held that the Agreement did not have the effect of law as it was not published as part of P.D. 755, even if Section 1 thereof made reference to the same.

ISSUE: Did the Sandiganbayan have jurisdiction, in Civil Case No. 0033-A, an “ill-gotten wealth” case brought under [EO] Nos. 1 and 2, to declare the [Cojuangco UCPB shares] acquired by virtue of the Pedro Cojuangco, et al. Agreement and/or the PCA Agreement null and void because “not supported by valuable consideration”

HELD: THE SANDIGANBAYAN HAS JURISDICTION OVER THE SUBJECT MATTER OF THE SUBDIVIDED AMENDED COMPLAINTS, INCLUDING THE SHARES ALLEGEDLY ACQUIRED BY COJUANGCOBY VIRTUE OF THE PCA AGREEMENTS.

The issue of jurisdiction over the subject matter of the subdivided amended complaints has peremptorily been put to rest by the Court in its January 24, 2012 Decision in COCOFED v. Republic. There, the Court, citing Regalado27 and settled jurisprudence, stressed the following interlocking precepts: Subject matter jurisdiction is conferred by law, not by the consent or acquiescence of any or all of the parties. In turn, the issue on whether a suit comes within the penumbra of a statutory conferment is determined by the allegations in the complaint,

regardless of whether or not the suitor will be entitled to recover upon all or part of the claims asserted.

The Republic's material averments in its complaint subdivided in CC No. 0033-A included the following:

CC No. 0033-A

12. Defendant Eduardo M. Cojuangco, Jr. served as a public officer during the Marcos administration. During the period of his incumbency as a public officer, he acquired assets, funds and other property grossly and manifestly disproportionate to his salaries, lawful income and income from legitimately acquired property.

13. Defendant Eduardo M. Cojuangco, Jr., taking undue advantage of his association, influence, connection, and acting in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, AND THE INDIVIDUAL DEFENDANTS, embarked upon devices, schemes and stratagems, to unjustly enrich themselves at the expense of Plaintiff and the Filipino people, such as when he -

JURISDICTION

a) manipulated, beginning the year 1975 with the active collaboration of Defendants x x x Maria Clara Lobregat, Danilo Ursua [etc.], the purchase by . . . (PCA) of 72.2% of the outstanding capital stock of the x x x (FUB) which was subsequently converted into a universal bank named x x x (UCPB) through the use of the Coconut Consumers Stabilization Fund (CCSF) being initially in the amount of P85,773,100.00 in a manner contrary to law and to the specific purposes for which said coconut levy funds were imposed and collected under P.D. 276, and with sinister designs and under anomalous circumstances, to wit:

(i) Defendant Eduardo Cojuangco, Jr. coveted the coconut levy funds as a cheap, lucrative and risk-free source of funds with which to exercise his private option to buy the controlling interest in FUB; thus, claiming that the 72.2% of the outstanding capital stock of FUB could only be purchased and transferred through the exercise of his "personal and exclusive action [option] to acquire the 144,000 shares" of the bank, Defendant Eduardo M. Cojuangco, Jr. and PCA, x x x executed on May 26, 1975 a purchase agreement which provides, among others, for the payment to him in fully paid shares as compensation thereof 95,384 shares worth P1,444,000.00 with the further condition that he shall manage and control the bank as Director and President for a term of five (5) years renewable for another five (5) years and to designate three (3) persons of his choice who shall be elected as members of the Board of Directors of the Bank;

(ii) to legitimize a posteriori his highly anomalous and irregular use and diversion of government funds to

advance his own private and commercial interests, Defendant Eduardo Cojuangco, Jr. caused the issuance by Defendant Ferdinand E. Marcos of PD 755 (a) declaring that the coconut levy funds shall not be considered special and fiduciary and trust funds and do not form part of the general funds of the National Government, conveniently repealing for that purpose a series of previous decrees, PDs 276 and 414, establishing the character of the coconut levy funds as special, fiduciary, trust and governmental funds; (b) confirming the agreement between Defendant Eduardo Cojuangco, Jr. and PCA on the purchase of FUB by incorporating by reference said private commercial agreement in PD 755;

(iii)To further consolidate his hold on UCPB, Defendant Eduardo Cojuangco, Jr. imposed as consideration and conditions for the purchase that (a) he gets one out of every nine shares given to PCA, and (b) he gets to manage and control UCPB as president for a term of five (5) years renewable for another five (5) years;

(iv)To perpetuate his opportunity to deal with and make use of the coconut levy funds x x x Cojuangco, Jr. caused the issuance by Defendant Ferdinand E. Marcos of an unconstitutional decree (PD 1468) requiring the deposit of all coconut levy funds with UCPB, interest free to the prejudice of the government.

(v) In gross violation of their fiduciary positions and in contravention of the goal to create a bank for the coconut farmers of the country, the capital stock of UCPB as of February 25, 1986 was actually held by the defendants, their lawyers, factotum and business associates, thereby finally gaining control of the UCPB by misusing the names and identities of the so-called "more than one million coconut farmers."

14. The acts of Defendants, singly or collectively, and/or in unlawful concert with one another, constitute gross abuse of official position and authority, flagrant breach of public trust and fiduciary obligations, brazen abuse of right and power, and unjust enrichment, violation of the constitution and laws of the Republic of the Philippines, to the grave and irreparable damage of Plaintiff and the Filipino people.28

In no uncertain terms, the Court has upheld the Sandiganbayan's assumption of jurisdiction over the subject matter of Civil Case Nos. 0033-A and 0033-F.29 The Court wrote:

Judging from the allegations of the defendants' illegal acts thereat made, it is fairly obvious that both CC Nos. 0033-A and CC 0033-F partake, in the context of EO Nos. 1, 2 and 14, series of 1986, the nature of ill-gotten wealth suits. Both deal with the recovery of sequestered shares, property or business enterprises claimed, as alleged in the corresponding basic complaints, to be ill-gotten assets of President Marcos, his cronies

and nominees and acquired by taking undue advantage of relationships or influence and/or through or as a result of improper use, conversion or diversion of government funds or property. Recovery of these

assets--determined as shall hereinafter be discussed as prima facie ill-gotten--falls within the unquestionable jurisdiction of the Sandiganbayan.30

P.D. No. 1606, as amended by R.A. 7975 and E.O. No. 14, Series of 1986, vests the Sandiganbayan with, among others, original jurisdiction over civil and criminal cases instituted pursuant to and in connection with E.O. Nos. 1, 2, 14 and 14-A. Correlatively, the PCGG Rules and Regulations defines the term "Ill-Gotten Wealth" as "any asset,

property, business enterprise or material possession of persons within the purview of [E.O.] Nos. 1 and 2, acquired by them directly, or indirectly thru dummies, nominees, agents, subordinates and/or business associates by any of the following means or similar schemes":

(1) Through misappropriation, conversion, misuse or malversation of public funds or raids on the public treasury;

(2) x x x x

(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the government or any of its subdivisions, agencies or instrumentalities or government-owned or controlled corporations;

(4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or participation in any business enterprise or undertaking;

(5) Through the establishment of agricultural, industrial or commercial monopolies or other combination and/or by the issuance, promulgation and/or implementation of decrees and orders intended to benefit particular persons or special interests; and

(6) By taking undue advantage of official position, authority, relationship or influence for personal gain or benefit. (Emphasis supplied)

Section 2(a) of E.O. No. 1 charged the PCGG with the task of assisting the President in "[T]he recovery of all ill-gotten wealth accumulated by former ... [President] Marcos, his immediate family, relatives, subordinates and close associates ... including the takeover or sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship." Complementing the aforesaid Section 2(a) is Section 1 of E.O. No. 2 decreeing the freezing of all assets "in which the [Marcoses] their close relatives, subordinates, business associates, dummies, agents or nominees have any interest or participation."

The Republic's averments in the amended complaints, particularly those detailing the alleged wrongful acts of the defendants, sufficiently reveal that the subject matter thereof comprises the recovery by the Government of ill-gotten wealth acquired by then President Marcos, his cronies or their associates and dummies through the unlawful, improper utilization or diversion of coconut

JURISDICTION

levy funds aided by P.D. No. 755 and other sister decrees. President Marcos himself issued these decrees in a brazen bid to legalize what amounts to private taking of the said public funds.

There was no actual need for Republic, as plaintiff a quo, to adduce

evidence to show that the Sandiganbayan has jurisdiction over the subject

matter of the complaints as it leaned on the averments in the initiatory

pleadings to make visible the jurisdiction of the Sandiganbayan over the

ill-gotten wealth complaints. As previously discussed, a perusal of the

allegations easily reveals the sufficiency of the statement of matters

disclosing the claim of the government against the coco levy funds and the

assets acquired directly or indirectly through said funds as ill-gotten

wealth. Moreover, the Court finds no rule that directs the plaintiff to first

prove the subject matter jurisdiction of the court before which the

complaint is filed. Rather, such burden falls on the shoulders of defendant

in the hearing of a motion to dismiss anchored on said ground or a

preliminary hearing thereon when such ground is alleged in the answer.

Lest it be overlooked, this Court has already decided that the sequestered shares are prima facie ill-gotten wealth rendering the issue of the validity of their sequestration and of the jurisdiction of the Sandiganbayan over the case beyond doubt. In the case of COCOFED v. PCGG, We stated that:

It is of course not for this Court to pass upon the factual issues thus raised. That function pertains to the Sandiganbayan in the first instance. For purposes of this proceeding, all that the Court needs to determine is whether or not there is prima facie justification for the sequestration ordered by the PCGG. The Court is satisfied that there is. The cited incidents, given the public character of the

coconut levy funds, place petitioners COCOFED and its leaders and officials, at least prima facie, squarely within the purview of Executive Orders Nos. 1, 2 and 14, as construed and applied in BASECO, to wit:

"1. that ill-gotten properties (were) amassed by the leaders and supporters of the previous regime;

"a. more particularly, that '(i) Ill-gotten wealth was accumulated by x x x Marcos, his immediate family, relatives, subordinates and close associates, x x x (and) business enterprises and entities (came to be) owned or controlled by them, during x x x (the Marcos) administration, directly or through nominees, by taking undue advantage of their public office and using their powers, authority, influence, connections or relationships';

"b. otherwise stated, that 'there are assets and properties purportedly pertaining to [the Marcoses], their close relatives, subordinates, business associates, dummies, agents or nominees which had been or were acquired by them directly or indirectly, through or as a result of the improper or illegal use of funds or properties owned by the Government x x x or any of its branches, instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of their office, authority, influence, connections or relationship, resulting in their unjust enrichment

2. The petitioners' claim that the assets acquired with the coconut levy funds are privately owned by the coconut farmers is founded on certain provisions of law, to wit [Sec. 7, RA 6260 and Sec. 5, Art. III, PD 1468]... (Words in bracket added; italics in the original).

E.O. 1, 2, 14 and 14-A, it bears to stress, were issued precisely to effect the recovery of ill-gotten assets amassed by the Marcoses, their associates, subordinates and cronies, or through their nominees. Be that as it may, it stands to reason that persons listed as associated with the Marcoses refer to those in possession of such ill-gotten wealth but holding the same in behalf of the actual, albeit undisclosed owner, to prevent discovery and consequently recovery. Certainly, it is well-nigh inconceivable that ill-gotten assets would be distributed to and left in the hands of individuals or entities with obvious traceable connections to Mr. Marcos and his cronies. The Court can take, as it has in fact taken, judicial notice of schemes and machinations that have been put in place to keep illgotten assets under wraps. These would include the setting up of layers after layers of shell or dummy, but controlled, corporations31 or manipulated instruments calculated to confuse if not altogether mislead would-be investigators from recovering

wealth deceitfully amassed at the expense of the people or simply the fruits thereof. Transferring the illegal assets to third parties not readily perceived as Marcos cronies would be another. So it was that in PCGG v. Pena, the Court, describing the rule of Marcos as a "well entrenched plundering regime of twenty years," noted the magnitude of the past regime's organized pillage and the ingenuity of the plunderers and pillagers with the assistance of experts and the best legal minds in the market.32

Prescinding from the foregoing premises, there can no longer be any serious challenge as to the Sandiganbayan's subject matter jurisdiction. And in connection therewith, the Court wrote in COCOFED v. Republic, that the instant petition shall be decided separately and should not be affected by the January 24, 2012 Decision, "save for determinatively legal issues directly addressed" therein.33 Thus:

We clarify that PSJ-A is subject of another petition for review interposed by Eduardo Cojuangco, Jr., in G.R. No. 180705 entitled, Eduardo M. Cojuangco, Jr. v. Republic of the Philippines, which shall be decided separately by this Court. Said petition should accordingly not be affected by this Decision save for determinatively legal issues directly addressed herein.34 (Emphasis Ours.)

We, therefore, reiterate our holding in COCOFED v. Republic respecting the Sandiganbayan's jurisdiction over the subject matter of Civil Case No. 0033-A, including those matters whose adjudication We shall resolve in the present case.

G.R. No. 194247, June 19, 2013

BASES CONVERSION DEVELOPMENT AUTHORITY, Petitioner, v. ROSA REYES,

CENANDO, REYES AND CARLOS REYES, Respondents.

D E C I S I O N

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the May 7, 20102 and October 15, 20103 Resolutions of the Court of Appeals (CA) in CA-G.R. CV No. 92181, dismissing petitioner Bases Conversion Development Authority’s appeal from the November 27, 2007 Order4 issued by the Regional Trial Court of Dinalupihan, Bataan, Branch 5 (RTC) in Civil Case Nos. DH-1136-07, DH-1137-07 and DH-1138-07 for lack of jurisdiction, as only questions of law were raised on the aforesaid appeal.

The Facts

JURISDICTION

On February 13, 2007, petitioner filed a complaint5 before the RTC, docketed as Civil Case No. DH-1136-07, seeking to expropriate 308 square meters of a parcel of land located in Barangay San Ramon, Dinalupihan, Bataan, registered in the name of respondent Rosa Reyes (Rosa) under Transfer Certificate of Title (TCT) No. CLOA-10265, in view of the construction of the Subic-Clark-Tarlac Expressway (SCTEx). It claimed that the said property is an irrigated riceland with a zonal value of P20.00 per square meter, based on the relevant zonal valuation of the Bureau of Internal Revenue (BIR). Consequently, pursuant to Section 4(a)6 of Republic Act No. 89747 (RA 8974), petitioner deposited the amount of P6,120.00,8 representing 100% of the zonal value of the same.

Similar complaints for expropriation, docketed as Civil Case Nos. DH-1137-07 and DH-1138-07, were also filed over the 156 and 384 square meter portions of certain parcels of land owned by respondents Cenando Reyes9 (Cenando) and Carlos Reyes10 (Carlos), respectively, for which petitioner deposited the sums of P3,120.0011 and P7,680.0012 also in accordance with Section 4(a) of RA 8974.

In their separate Answers,13 respondents uniformly alleged that while they had no objection to petitioner’s right to expropriate, they claimed that the amount of just compensation which petitioner offered was ridiculously low considering that the subject properties were already re-classified into residential lots as early as October 6, 2003 and as such, their zonal value ranged from P3,000.00 to P6,000.00 per square meter, as determined by the BIR. Nevertheless, to expedite the proceedings, respondents expressed that they were amenable to be paid the rate of P3,000.00 per square meter, at the lowest, translating to P924,000.00 for Rosa,14 P468,000.00 for Cenando15 and P1,152,000.00 for Carlos.16

The three (3) cases were subsequently consolidated as per the RTC’s Order dated May 23, 200717 and a writ of possession was granted in petitioner’s favor on December 12, 2007.18

Meanwhile, on April 27, 2007, respondents filed a Motion for Summary Judgment19 (motion for summary judgment), contending that there were no genuine issues left for resolution, except for the amount of damages to be paid as just compensation.

In opposition,20 petitioner argued that Rule 35 of the Rules of Court on summary judgment applies only to ordinary civil actions for recovery of money claims and not to expropriation cases. Moreover, it claimed that the mandatory constitution of a panel of commissioners for the purpose of ascertaining the amount of just compensation due under Section 5, Rule 67 of the Rules of Court

precludes a summary judgment.

In turn, respondents filed a Reply,21 asserting that Rule 35 of the Rules of Court applies to both ordinary and special civil actions.

The RTC Ruling

On November 27, 2007, the RTC issued an Order,22 granting the motion for summary judgment and thereby ordered petitioner to pay respondents just compensation at the rate of P3,000.00 per square meter, for a total of P924,000.00 for Rosa, P1,152,000.00 for Carlos and P468,000.00 for Cenando.

In ruling for respondents, the RTC observed that the subject properties were already re-classified from agricultural to residential in 2004, or long before the corresponding expropriation complaints were filed in February 2007. In this regard, it held that the amount of just compensation should be pegged anywhere between the range of P3,000.00 to P6,000.00 per square meter, pursuant to the relevant zonal valuation of the BIR as published in the December 9, 2002 issue of the Official Gazette.23 Thus, considering that respondents had already signified their willingness to accept the rate of P3,000.00 per square meter as just compensation, it ruled that there was nothing left for it to do but to terminate the proceedings through summary judgment. In view of the foregoing, the RTC brushed aside petitioner’s insistence for the constitution of a panel of commissioners under Section 5, Rule 67 of the Rules of Court, dismissing the same as a futile exercise which would only delay the proceedings.24

Dissatisfied, petitioner filed a motion for reconsideration25 based on the following grounds: (a) respondents failed to prove that the properties sought to be expropriated were properly re-classified; (b) the RTC erred in fixing the value thereof at the rate of P3,000.00 per square meter given that they are not located along a national highway or road but are inner lots which should be classified as “all other streets” and hence, accorded a lower zonal valuation; (c) the non-appointment of the panel of commissioners was fatal; and (d) the issues surrounding the overlap of Rosa’s and Cenando’s properties with that of the Philippine National Bank26 must first be resolved so as not to prejudice the rights of the parties. In line with these factual issues, petitioner maintained that a full-blown trial should have been conducted by the RTC.

Petitioner’s motion for reconsideration was, however, denied in an Order27 dated May 12, 2008, prompting it to file a notice of appeal.28

For their part, respondents filed a Motion to Dismiss Appeal, 29 averring that an appeal from a summary judgment raises only questions of

law; hence, the proper recourse to assail its propriety should be a petition for review on certiorari under Rule 45 of the Rules of Court and not an ordinary appeal under Rule 41 as adopted by petitioner.

In response, petitioner filed a Comment,30 asserting that its appeal raised both questions of fact and law and thus, was properly lodged before the CA.

The CA Ruling

On May 7, 2010, the CA rendered a Resolution,31 dismissing petitioner’s appeal for being the wrong mode to assail the RTC’s summary judgment.

It found that the errors raised in petitioner’s appeal essentially pertained to the propriety of the RTC’s grant of respondents’ motion for summary judgment and thus, involved only questions of law of which the CA had no jurisdiction. Hence, considering its dismissal of petitioner’s appeal, it held that the assailed RTC Orders fixing the amount of just compensation had already become final and executory.

Petitioner moved for reconsideration which was, however, denied in a Resolution dated October 15, 2010,32prompting it to file the instant petition.

Issue Before The Court

The sole issue in this case is whether or not the CA erred in dismissing petitioner’s appeal.

The Court’s Ruling

The petition is meritorious.

A. Propriety of the CA’s dismissalof petitioner’s appeal.

Under Section 2, Rule 4133 of the Rules of Court, there are two (2) modes of appealing a judgment or final order of the RTC in the exercise of its original jurisdiction:cralavvonlinelawlibrary

(a) If the issues raised involve questions of fact or mixed questions of fact and law, the proper recourse is an ordinary appeal to the CA in accordance with Rule 41 in relation to Rule 44 of the Rules of Court; and

(b) If the issues raised involve only questions of law, the appeal shall be to the Court by petition for review on certiorari in accordance with Rule 45 of the Rules of Court.

JURISDICTION

Corollary thereto, should a party raise only questions of law through an ordinary appeal taken under Rule 41, Section 2, Rule 50 of the Rules of Court provides that the said appeal shall be dismissed.34

Jurisprudence dictates that there is a “question of law” when the doubt or difference arises as to what the law is on a certain set of facts or circumstances; on the other hand, there is a “question of fact” when the issue raised on appeal pertains to the truth or falsity of the alleged facts. The test for determining whether the supposed error was one of “law” or “fact” is not the appellation given by the parties raising the same; rather, it is whether the reviewing court can resolve the issues raised without evaluating the evidence, in which case, it is a question of law; otherwise, it is one of fact.35 In other words, where there is no dispute as to the facts, the question of whether or not the conclusions drawn from these facts are correct is a question of law.36 However, if the question posed requires a re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relationship to each other, the issue is factual.37

Applying these principles, the Court finds that the CA did not err in dismissing petitioner’s appeal.

Records show that petitioner raised four (4) issues 38 in its appeal before the CA:cralavvonlinelawlibrary

First, whether or not summary judgment was properly rendered by the RTC;chanroblesvirtualawlibrary

Second, whether or not there is any evidence on record to support the conclusion that the subject lots had already been re- classified from agricultural to residential; and if in the affirmative, whether or not the same may be considered as “interior lots” which would necessarily affect its zonal valuation;chanroblesvirtualawlibrary

Third, whether or not the appointment of commissioners is indispensable in an expropriation case; and

Fourth, whether or not the properties of Cenando and Rosa Reyes overlap that of the Philippine National Bank.

At the outset, it bears to note that the second and fourth issues were not raised by petitioner in its opposition to respondents’ motion for summary judgment39 but only in its motion for reconsideration from the RTC’s Order dated November 27, 2007.40 It has been consistently held that appellate courts are precluded from entertaining matters neither alleged nor raised during the proceedings below, but ventilated

for the first time only in a motion for reconsideration or on appeal.41 Thus, while these issues may be classified as questions of fact since their resolution would require an evaluation of the evidence on record, the CA was precluded from considering the same. Consequently, only the first and third issues were left for its determination.

Unlike the second and fourth issues, the first and third issues can be properly classified as questions of law since their resolution would not involve an examination of the evidence but only an application of the law on a particular set of facts.

To elucidate, the first issue regarding the propriety of the RTC’s summary judgment involves only a question of law since one need not evaluate the evidence on record to assess if the unresolved issues in this case, i.e., the classification of the properties expropriated, its location and valuation, constitute genuine issues.42 This is in line with the rule that a summary judgment is not warranted when there are genuine issues which call for a full blown trial.43 Similarly, the third issue concerning the propriety of the appointment of a panel of commissioners only requires an application of Section 5, Rule 67 of the Rules of Court,44 without the need of examining the evidence on record. Thus, given that the issues to be resolved on appeal only involve questions of law, no reversible error was committed by the CA in dismissing petitioner’s appeal. The proper recourse should have been to file a petition for review on certiorari under Rule 45 of the Rules of Court.

B. Relaxation of procedural rules.

While the RTC’s November 27, 2007 Order should – as a matter of course – already be regarded as final and executory due to petitioner’s erroneous appeal, the Court, nonetheless, deems it proper to relax the rules of procedure and remand the case to the RTC in order to re-evaluate, on trial, the proper amount of just compensation. Two (2) reasons impel this course of action:cralavvonlinelawlibrary

First, petitioner’s appeal – at least as to the first issue – would have been granted due to its merit were it not for the foregoing procedural lapse.

As earlier discussed, genuine issues remain to be threshed out in this case which thereby negate the propriety of a summary judgment. In this respect, the RTC improperly issued the November 27, 2007 Order which granted respondents’ motion for summary judgment.

Second, expropriation cases involve the expenditure of public funds and thus, are matters of public interest. In this light, trial courts are required to be more circumspect in

their evaluation of the just compensation to be awarded to the owner of the expropriated property,45 as in this case.

Records, however, show that the adjudged amount of just compensation was not arrived at judiciously since the RTC based the same solely on respondents’ intimation that they were willing to settle for the rate of P3,000.00 per square meter.46 It is settled that the final conclusions on the proper amount of just compensation can only be made after due ascertainment of the requirements set forth under RA 8974 and not merely based on the declarations of the parties.47

Further, it is observed that the RTC simply glossed over the issue regarding the proper classification of the subject properties as either residential or agricultural lands when the said matter should have been circumspectly resolved considering that land classification accounts for a significant discrepancy in the valuation of the property. Based on the evidence on record, the residential lots in Barangay San Ramon, Dinalupihan, Bataan have a zonal valuation ranging from P2,000.00 (for all other streets) to P6,000.00 per square meter (for those situated within the vicinity of the national highway and San Juan to Payumo Streets).48 On the other hand, petitioner claims . that agricultural lands command a zonal valuation of only P20.00.49 Moreover, a property's zonal valuation cannot, by and of itself, be considered as the sole basis for "just compensation"; hence, the RTC was duty bound to look at other indices of fair market value.50 Unfortunately, records show that it did not.

In fine, given the special and compelling reasons as above-discussed, the Court finds it appropriate to relax the rules of procedure in the interest of substantial justice. In Twin Towers Condominium Corp. v. CA,51 the Court held that the merits of the case may be regarded as a special or compelling reason to relax procedural rules. Likewise, in Apo Fruits Corporation v. Land Bank of the Philippines,52 special and compelling reasons constitute recognized exceptions to the rule on immutability of judgment, viz:cralavvonlinelawlibrary

As a rule, a final judgment may no longer be altered, amended or modified, even if the alteration, amendment or modification is meant to correct what is perceived to be an erroneous conclusion of fact or law and regardless of what court, be it the highest Court of the land, rendered it. In the past, however, we have recognized exceptions to this rule by reversing judgments and recalling their entries in the interest of substantial justice and where special and compelling reasons for such actions. (Emphasis supplied)

Accordingly the case is hereby remanded to the

JURISDICTION

RTC for further proceedings in order to determine the proper amount of just compensation due to respondents.

WHEREFORE, the petition is GRANTED. The May 7, 2010 and October 15, 2010 Resolutions of the Court of Appeals in CA-G.R. CV No. 92181 and the November 27,2007 and May 12,2008 Orders of the Regional Trial Court of Dinalupihan, Bataan, Branch 5 are hereby SET ASIDE. Let the records of this case be REMANDEDto the trial court for further proceedings to determine the proper amount of just compensation.

SO ORDERED.

Republic vs, Roman Catholic Archbishop of Manila

G.R. No. 192975

FACTS: Republic filed a complaint before the RTC of Malolos City, Bulacan, for cancellation of titles and reversion against respondent RCAM and several others. The complaint alleged, inter alia, that RCAM appears as the registered owner of 8 parcels of land covered by OCT No. 588 allegedly issued pursuant to a decision by the Land Registration Court in favor of RCAM. RCAM sold the said eight (8) parcels of land to the other named defendants. These parcels of land, however, were certified by the BFD as falling within the unclassified lands of the public domain and it was only later that they were declared alienable and disposable. RCAM filed a motion to dismiss assailing the jurisdiction of the RTC over the complaint. It alleged that the action for reversion of title was essentially one for annulment of judgment of the then Court of First Instance acting as a Land Registration Court, hence, beyond the competence of the RTC to act upon.RTC denied RCAM's motion to dismiss for being premature. The CA reversed.

ISSUE: Whether the RTC has jurisdiction over the case filed by the Republic

HELD: Yes. It is axiomatic that the nature of an action and whether the tribunal has jurisdiction over such action are to be determined from the material allegations of the complaint, the law in force at the time the complaint is filed, and the character of the relief sought irrespective of whether the plaintiff is entitled to all or some of the claims averred. In the present case, the material averments, as well as the character of the relief prayed for by petitioners in the complaint show that their action is one for cancellation of titles and reversion, not for annulment of judgment of the RTC. The

complaint alleged the parcels of land subject matter of the action were not the subject of the CFI’s judgment in the relevant prior land registration case. Hence, petitioners pray that the certificates of title of RCAM be cancelled which will not necessitate the annulment of said judgment. Clearly, Rule 47 of the Rules of Court on annulment of judgment finds no application in the instant case. The RTC may properly take cognizance of reversion suits which do not call for an annulment of judgment of the RTC acting as a Land Registration Court. Actions for cancellation of title and reversion, like the present case, belong to the class of cases that "involve the title to, or possession of, real property, or any interest therein" and where the assessed value of the property exceeds P20,000.00 fall under the jurisdiction of the RTC.

BPI VS. HONG

FACTS:

This petition for review on certiorari under Rule 45 assails the Decision[1] dated September 27, 2002 and Resolution[2] dated January 12, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 64166.

the EYCO Group of Companies (“EYCO”) filed a petition for suspension of payments and rehabilitation before the Securities and Exchange Commission (SEC), docketed as SEC Case No. 09-97-5764. A stay order was issued on September 19, 1997 enjoining the disposition in any manner except in the ordinary course of business and payment outside of legitimate business expenses during the pendency of the proceedings, and suspending all actions, claims and proceedings against EYCO until further orders from the SEC.[3] On December 18, 1998, the hearing panel approved the proposed rehabilitation plan prepared by EYCO despite the recommendation of the management committee for the adoption of the rehabilitation plan prepared and submitted by the steering committee of the Consortium of Creditor Banks which appealed the order to the Commission.[4] On September 14, 1999, the SEC rendered its decision disapproving the petition for suspension of payments, terminating EYCO’s proposed rehabilitation plan and ordering the dissolution and liquidation of the petitioning corporation. The case was remanded to the hearing panel for liquidation proceedings.[5] On appeal by EYCO, (CA-G.R. SP No. 55208) the CA upheld the SEC ruling. EYCO then filed a petition for certiorari before this Court, docketed as G.R. No. 145977,which case was eventually dismissed under Resolution dated May 3, 2005 upon joint manifestation and motion to dismiss filed by the parties.[6] Said

resolution had become final and executory on June 16, 2005.[7]

Petitioner Bank of the Philippine Islands (BPI), filed with the Office of the Clerk of Court, Regional Trial Court of Valenzuela City, a petition for extra-judicial foreclosure of real properties mortgaged to it by Eyco Properties, Inc. and Blue Star Mahogany, Inc. Public auction of the mortgaged properties was scheduled on December 19, 2000.[8]

Claiming that the foreclosure proceedings initiated by petitioner was illegal, respondent Eduardo Hong, an unsecured creditor of Nikon Industrial Corporation, one of the companies of EYCO, filed an action for injunction and damages against the petitioner in the same court (RTC of Valenzuela City).

After hearing, the trial court issued a temporary restraining order (TRO). Petitioner filed a motion to dismiss[10] arguing that by plaintiff’s own allegations in the complaint, jurisdiction over the reliefs prayed for belongs to the SEC, and that plaintiff is actually resorting to forum shopping since he has filed a claim with the SEC and the designated Liquidator in the ongoing liquidation of the EYCO Group of Companies. In his Opposition,[11] plaintiff (respondent) asserted that the RTC has jurisdiction on the issue of propriety and validity of the foreclosure by petitioner, in accordance with Section 1, Rule 4 of the 1997 Rules of Civil Procedure, as amended, the suit being in the nature of a real action.

On January 17, 2001, the trial court denied the motion to dismiss.[12] Petitioner’s motion for reconsideration was likewise denied.[13] Petitioner challenged the validity of the trial court’s ruling before the CA via a petition for certiorari under Rule 65.

The CA affirmed the trial court’s denial of petitioner’s motion to dismiss. It held that questions relating to the validity or legality of the foreclosure proceedings, including an action to enjoin the same, must necessarily be cognizable by the RTC, notwithstanding that the SEC likewise possesses the power to issue injunction in all cases in which it has jurisdiction as provided in Sec. 6 (a) of Presidential Decree (P.D.) No. 902-A. Further, the CA stated that an action for foreclosure of mortgage and all incidents relative thereto including its validity or invalidity is within the jurisdiction of the RTC and is not among those cases over which the SEC exercises exclusive and original jurisdiction under Sec. 5 of P.D. No. 902-A. Consequently, no grave abuse of discretion was committed by the trial court in issuing the assailed orders.

ISSUE:

JURISDICTION

WON the RTC can take cognizance of the injunction suit despite the pendency of SEC Case No. 09-97-5764

HELD: The petition has no merit.

Jurisdiction is defined as the power and authority of a court to hear and decide a case.[14] A court’s jurisdiction over the subject matter of the action is conferred only by the Constitution or by statute.[15] The nature of an action and the subject matter thereof, as well as which court or agency of the government has jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved and the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs.[16] And jurisdiction being a matter of substantive law, the established rule is that the statute in force at the time of the commencement of the action determines the jurisdiction of the court.[17]

Perusal of the complaint reveals that respondent does not ask the trial court to rule on its interest or claim -- as an unsecured creditor of two companies under EYCO -- against the latter’s properties mortgaged to petitioner. The complaint principally seeks to enjoin the foreclosure proceedings initiated by petitioner over those properties on the ground that such properties are held in trust and placed under the jurisdiction of the appointed Liquidator in SEC Case No. 09-97-5764. Thus, Civil Case No. 349-V-00 is one for injunction with prayer for damages.

An action for injunction is a suit which has for its purpose the enjoinment of the defendant, perpetually or for a particular time, from the commission or continuance of a specific act, or his compulsion to continue performance of a particular act. It has an independent existence, and is distinct from the ancillary remedy of preliminary injunction which cannot exist except only as a part or an incident of an independent action or proceeding. In an action for injunction, the auxiliary remedy of preliminary injunction, prohibitory or mandatory, may issue.[18]

As a rule, actions for injunction and damages lie within the jurisdiction of the RTC pursuant to Section 19 of Batas PambansaBlg. 129, otherwise known as the “Judiciary Reorganization Act of 1980,” as amended by Republic Act (R.A.) No. 7691.

Sec. 19. Jurisdiction   in   civil cases. — Regional Trial Courts shall exercise exclusive original jurisdiction:

(1) In all civil actions in which the subject of the litigations is incapable of pecuniary estimation;

(6) In all cases not   within   the   exclusive jurisdiction  of  any   court, tribunal,   person   or   body exercising x xx judicial or quasi-judicial functions;

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs or the value of the property in controversy exceeds Three hundred thousand pesos (P300,000.00) or, in such other cases in Metro Manila, where the demand exclusive of the above-mentioned items exceeds Four hundred thousand pesos (P400,000.00). (Italics supplied.)

On the other hand, Sec. 6 (a) of P.D. No. 902-A empowered the SEC to “issue preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in which it has jurisdiction.” Such cases in which the SEC exercises original and exclusive jurisdiction are the following:

(a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partnership, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder, partners, members of associations or organizations registered with the Commission;

(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership

or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity; and

(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.[19]

Previously, under the Rules of Procedure on Corporate Recovery, the SEC upon termination of cases involving petitions for suspension of payments or rehabilitation may, motuproprio, or on motion by any interested party, or on the basis of the findings and recommendation of the Management Committee that the continuance in business of the debtor is no longer feasible or profitable, or no longer works to the best interest of the stockholders, parties-litigants, creditors, or the general public, order the dissolution of the debtor and the liquidation of its remaining assets appointing a Liquidator for the purpose.[20] The debtor’s properties are then deemed to have been conveyed to the Liquidator in trust for the benefit of creditors, stockholders and other persons in interest. This notwithstanding, any lien or preference to any property shall be recognized by the Liquidator in favor of the security or lienholder, to the extent allowed by law, in the implementation of the liquidation plan.[21]

The SEC finally disposed of said case when it rendered on September 14, 1999 the decision disapproving the petition for suspension of payments, terminating the proposed rehabilitation plan, and ordering the dissolution and liquidation of the petitioning corporation. With the enactment of the new law, jurisdiction over the liquidation proceedings ordered in SEC Case No. 09-97-5764 was transferred to the RTC branch designated by the Supreme Court to exercise jurisdiction over cases formerly cognizable by the SEC.

There is no showing in the records that SEC Case No. 09-97-5764 had been transferred to the appropriate RTC designated as Special Commercial Court at the time of the commencement of the injunction suit on December 18, 2000. Given the urgency of the situation and the proximity of the scheduled public auction of the mortgaged properties as per the Notice of Sheriff’s Sale, respondent was

JURISDICTION

constrained to seek relief from the same court having jurisdiction over the foreclosure proceedings – RTC of Valenzuela City. Respondent thus filed Civil Case No. 349-V-00 in the RTC of Valenzuela City on December 18, 2000 questioning the validity of and enjoining the extrajudicial foreclosure initiated by petitioner. Pursuant to its original jurisdiction over suits for injunction and damages, the RTC of Valenzuela City, Branch 75 properly took cognizance of the injunction case filed by the respondent. No reversible error was therefore committed by the CA when it ruled that the RTC of Valenzuela City, Branch 75 had jurisdiction to hear and decide respondent’s complaint for injunction and damages.

Lastly, it may be mentioned that while the Consortium of Creditor Banks had agreed to end their opposition to the liquidation proceedings upon the execution of the Agreement[24] dated February 10, 2003, on the basis of which the parties moved for the dismissal of G.R. No. 145977, it is to be noted that petitioner is not a party to the said agreement. Thus, even assuming that the SEC retained jurisdiction over SEC Case No. 09-97-5764, petitioner was not bound by the terms and conditions of the Agreement relative to the foreclosure of those mortgaged properties belonging to EYCO and/or other accommodation mortgagors.

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated September 27, 2002 and Resolution dated January 12, 2004 of the Court of Appeals in CA-G.R. SP No. 64166 are AFFIRMED.

HEIRS OF CANDIDO DEL ROSARIO VS DEL ROSARIO

FACTS:

This involves a parcel of land with an area of 9,536 square meters situated in Barangay Caingin, Bocaue, Bulacan. The subject land was formerly owned by Pedro G. Lazaro and tenanted by the spouses Jose Del Rosario and Florentina De Guzman (Spouses Del Rosario).

Spouses Del Rosario had three children: Monica Del Rosario (Monica), Candido Del Rosario (Candido) and Gil Del Rosario (Gil). The petitioners claimed that when Spouses Del Rosario died, only they continued to tenant and actually till the subject land.

Monica and Gil agreed that the latter would facilitate the application for an Emancipation Patent over the subject land in the name of the former. In exchange, Monica agreed to cede to Gil one-third of the said land

after the Emancipation Patent had been issued to her.

Department of Agrarian Reform (DAR) issued to Monica Emancipation Patent No. 00733146 over the land. Subsequently, on October 22, 1998, the Registry of Deeds for the Province of Bulacan issued Transfer Certificate of Title (TCT) No. EP-257-M in the name of Monica.

The petitioners claimed that Monica, despite repeated demands, refused to cede to Gil the one-third portion of the subject land pursuant to their agreement. Thus, on April 17, 2000, the petitioners filed with the Office of the Provincial Agrarian Reform Adjudicator (PARAD) in Malolos, Bulacan a complaint against Monica for amendment of TCT No. EP-257-M and partition of the subject land.

For her part, Monica claimed that their father entrusted to her the cultivation of the subject land after the latter became ill and incapacitated sometime in 1950. Gil and Candido, in turn, were entrusted with the cultivation of other parcels of land tenanted by Spouses Del Rosario. Further, after Presidential Decree No. 27 (P.D. No. 27) took effect, Monica claimed that she was the one listed in the files of the DAR as the tenant-beneficiary of the subject land and that she was the one who was paying the amortizations over the same.

The PARAD’s Decision

PARAD Provincial Adjudicator Toribio E. Ilao, Jr. (PA Ilao) rendered a Decision.

PA Ilao found that Monica was not the bona fide tenant-farmer of the subject land and that she had continuously failed to cultivate or develop the same.

Unperturbed, Monica appealed from the foregoing disposition of PA Ilao to the Department of Agrarian Reform Adjudication Board (DARAB).

The DARAB’s Decision

On January 8, 2004, the DARAB rendered a Decision,[4] which reversed and set aside the Decision dated May 22, 2002 of PA Ilao.

Further, the DARAB ruled that the agreement between Monica and Gil that one-third of the subject land would be ceded to the latter after the same had been registered under Monica’s name is contrary to law as P.D. No. 27

prohibits the transfer of parcels of land given to qualified farmer-beneficiaries other than by hereditary succession or to the government.

The petitioners sought a reconsideration of the Decision dated January 8, 2004, but it was denied by the DARAB in its Resolution[6] dated July 8, 2004.

Subsequently, the petitioners filed a petition for review[7] with the CA alleging that the DARAB erred in ruling that they and Monica are not co-owners of the subject land.

The CA’s Decision

On January 21, 2008, the CA rendered the herein assailed decision denying the petition for review filed by the petitioners. The CA held that the PARAD and the DARAB had no jurisdiction to take cognizance of the petitioners’ complaint for amendment of the Emancipation Patent and partition of the subject land, there being no agrarian dispute or tenancy relations between the parties.

Nevertheless, the CA also held that the petitioners are bound by the decision of the DARAB declaring Monica as the bona fide holder of TCT No. EP-257-M since they participated in the proceedings before the PARAD and the DARAB without raising any objection thereto.

ISUE: whether the PARAD and the DARAB have jurisdiction to take cognizance of the petitioners’ complaint for amendment and partition; and second, if the PARAD and the DARAB have no jurisdiction over the complaint for amendment and partition, whether the petitioners are bound by their respective dispositions.

HELD: The petition is partly meritorious.

First Issue: Jurisdiction of the PARAD and the DARAB

Contrary to the CA’s disposition, the petitioners insist that the PARAD and the DARAB have the jurisdiction to take cognizance of their complaint for amendment of the Emancipation Patent and partition of the subject land notwithstanding the absence of tenancy relationship between them and Monica. They assert that the complaint below essentially involves a determination of the actual tenant and eventual rightful beneficiary of the subject land.

JURISDICTION

On the other hand, Monica asserts that the CA did not err in declaring that the PARAD and the DARAB have no jurisdiction over the said complaint for amendment and partition since there was simply no “tenancy relationship” alleged therein.

The jurisdiction of the PARAD and the DARAB is limited only to all agrarian disputes and matters or incidents involving the implementation of the CARP.

In the process of reorganizing the DAR, Executive Order (E.O.) No. 129-A created the DARAB to assume the powers and functions with respect to the adjudication of agrarian reform matter

At the time the complaint for amendment and partition was filed by the petitioners, the proceedings before the PARAD and the DARAB were governed by the DARAB New Rules of Procedures, which were adopted and promulgated on May 30, 1994, and came into effect on June 21, 1994 after publication (1994 DARAB Rules). The 1994 DARAB Rules identified the cases over which the DARAB shall have jurisdiction, to wit:

Specifically, the PARAD and the DARAB have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act (R.A.) No. 6657, as amended by R.A. No. 9700, E.O. Nos. 228, 229, and 129-A, R.A. No. 3844 as amended by R.A. No. 6389, P.D. No. 27 and other agrarian laws and their Implementing Rules and Regulations.[11]

Thus, the jurisdiction of the PARAD and the DARAB is only limited to cases involving agrarian disputes, including incidents arising from the implementation of agrarian laws

The petitioners’ complaint for amendment and partition is beyond the jurisdiction of the PARAD and the DARAB.

Where a question of jurisdiction between the DARAB and the RTC is at the core of a dispute, basic jurisprudential tenets come into play. It is the rule that the jurisdiction of a tribunal, including a quasi-judicial office or government agency, over the nature and subject matter of a petition or complaint is determined by the material allegations therein and the character of the relief prayed for irrespective of whether the petitioner or complainant is entitled to any or all such reliefs.[12]

7. The respondent, after receiving the EP over the subject agricultural land, refused to give the shares of her brothers (predecessors-in-interest of herein petitioners) and subdivide equally the subject land among them, they being surviving heirs of their late parents who first tilled the subject agricultural land despite persistent demand;

10. An agreement was likewise entered into by the respondent and the other tenant farmers of the adjoining lots, with the late Gil del Rosario dated February 1991, committing themselves that after the issuance of their EPs by the DAR, the ONE THIRD (1/3) portion of their tillage will be segregated and given to her brother Gil del Rosario in consideration of the assistance of the latter, x x

12. The petitioners are seeking the assistance of this Honorable Board to amend and partition the EP issued to the respondent and the subject agricultural land be divided equally among the respondent and the predecessors-in-interest of herein petitioners;[13] (Emphasis supplied)

A perusal of the foregoing will readily show that the complaint essentially sought the following: first, the enforcement of the agreement entered into by and between Gil and Monica wherein the latter promised to cede to the former one-third portion of the subject land upon the issuance of the emancipation patent over the same; and second, the recovery of petitioners’ purported hereditary share over the subject land, in representation of Gil and Candido.

Indubitably, the said complaint for amendment and partition does not involve any “agrarian dispute,” nor does it involve any incident arising from the implementation of

agrarian laws. The petitioners and Monica have no tenurial, leasehold, or any agrarian relations whatsoever that will bring this controversy within the jurisdiction of the PARAD and the DARAB. Since the PARAD and the DARAB have no jurisdiction over the present controversy, they should not have taken cognizance of the petitioners’ complaint for amendment of the Emancipation Patent and partition.

Further, the instant case does not involve an “incident arising from the implementation of agrarian laws” as would place it within the jurisdiction of the PARAD and the DARAB. Admittedly, the petitioners alleged that it was Gil and Candido who continued the tillage of the subject land after the death of Spouses Del Rosario. While the foregoing allegation seems to raise a challenge to Monica’s qualification as a farmer-beneficiary of the subject land, we nevertheless find the same insufficient to clothe the PARAD and the DARAB with jurisdiction over the complaint.

While ostensibly assailing Monica’s qualification as a farmer-beneficiary, the petitioners did not seek the nullification of the emancipation patent issued to Monica and the issuance of a new one in their names. Instead, the petitioners merely sought that the subject land be equally partitioned among the surviving heirs of Spouses Del Rosario, including Monica. Verily, by merely asking for the recovery of their alleged hereditary share in the subject land, the petitioners implicitly recognized the validity of the issuance of the emancipation patent over the subject land in favor of Monica.

Second Issue: Effect of the DARAB’s Decision

Despite its finding that the PARAD and the DARAB lacked jurisdiction to take cognizance of the petitioners’ complaint for amendment and partition, the CA nevertheless ruled that the petitioners were bound by the DARAB’s Decision dated January 8, 2004

We do not agree with the foregoing ratiocination of the CA. The Decision dated January 8, 2004 of the DARAB is null and void and, thus, produced no effect whatsoever, the DARAB having no jurisdiction to take cognizance of the petitioners’ complaint for amendment and partition.

WHEREFORE, in consideration of the foregoing disquisitions, the Decision dated January 21, 2008 of the Court of Appeals in CA-G.R. SP No. 85483 is hereby REVERSED and SET ASIDE. The Provincial Agrarian Reform Adjudicator’s Decision dated May 22, 2002, and the Department of Agrarian Reform Adjudication Board’s Decision dated January 8,

JURISDICTION

2004 and Resolution dated July 8, 2004, are declared NULL and VOID for lack of jurisdiction.

BANK OF COMMERCE VS PLANTERS DEVELOPMENT BANK

FACTS:

Before the Court are two consolidated petitions for review on certiorari under Rule 45,1 on pure questions of law, filed by the petitioners Bank of Commerce (BOC) and the BangkoSentralngPilipinas (BSP). They assail the January 10, 2002 and July 23, 2002 Orders (assailed orders) of the Regional Trial Court (RTC) of Makati City, Branch 143, in Civil Case Nos. 94-3233 and 94-3254. These orders dismissed (i) the petition filed by the Planters Development Bank (PDB), (ii) the "counterclaim" filed by the BOC, and (iii) the counter-complaint/cross-claim for interpleader filed bythe BSP; and denied the BOC’s and the BSP’s motions for reconsideration.

The Rizal Commercial Banking Corporation (RCBC) was the registered owner of seven Central Bank (CB) bills with a total face value of P 70 million, issued on January 2, 1994 and would mature on January 2, 1995.2 As evidenced by a "Detached Assignment" dated April 8, 1994,3 the RCBC sold these CB bills to the BOC.4 As evidenced by another "Detached Assignment"5 of even date, the BOC, in turn, sold these CB bills to the PDB.6The BOC delivered the Detached Assignments to the PDB.7

On April 15, 1994 (April 15 transaction), the PDB, in turn, sold to the BOC Treasury Bills worth P 70 million, with maturity date of June 29, 1994, as evidenced by a Trading Order8 and a Confirmation of Sale.9 However, instead of delivering the Treasury Bills, the PDB delivered the seven CB bills to the BOC, as evidenced by a PDB Security Delivery Receipt, bearing a "note: ** substitution in lieu of 06-29-94" – referring to the Treasury Bills.10Nevertheless, the PDB retained possession of the Detached Assignments. It is basically the nature of this April 15 transaction that the PDB and the BOC cannot agree on.

As the registered owner of the remaining three CB bills, the RCBC sold them to IVI Capital and Insular Savings Bank. Again, when the BSP refused to release the amount of this CB bill on maturity, the RCBC paid back its transferees, reacquired these three CB bills and sold them to the BOC – ultimately, the BOC acquired these three CB bills.

On June 30, 1994, upon learning of the transfers involving the CB bills, the PDB

informed20 the Officer-in-Charge of the BSP’s Government Securities Department,21 LagrimasNuqui, of the PDB’s claim over these CB bills, based on the Detached Assignments in its possession. The PDB requested the BSP22 to record its claim in the BSP’s books, explaining that its non-possession of the CB bills is "on account of imperfect negotiations thereof and/or subsequent setoff or transfer."23

Nuqui denied the request, invoking Section 8 of CB Circular No. 28 (Regulations Governing Open Market Operations, Stabilization of the Securities Market, Issue, Servicing and Redemption of the Public Debt)24 which requires the presentation of the bond before a registered bond may be transferred on the books of the BSP.25

In a July 25, 1994 letter, the PDB clarified to Nuqui that it was not "asking for the transfer of the CB Bills…. rather it intends to put the BSP on formal notice that whoever is in possession of said bills is not a holder in due course," and, therefore the BSP should not make payment upon the presentation of the CB bills on maturity.26 Nuqui responded that the BSP was "not in a position at that point in time to determine who is and who is not the holder in due course since it is not privy to all acts and time involving the transfers or negotiation" of the CB bills. Nuqui added that the BSP’s action shall be governed by CB Circular No. 28, as amended.27

On November 17, 1994, the PDB also asked BSP Deputy Governor Edgardo Zialcita that (i) a notation in the BSP’s books be made against the transfer, exchange, or payment of the bonds and the payment of interest thereon; and (ii) the presenter of the bonds upon maturity be required to submit proof as a holder in due course (of the first set of CB bills). The PDB relied on Section 10 (d) 4 of CB Circular No. 28.28 This provision reads:

(4) Assignments effected by fraud – Where the assignment of a registered bond is secured by fraudulent representations, the Central Bank can grant no relief if the assignment has been honored without notice of fraud. Otherwise, the Central Bank, upon receipt of notice that the assignment is claimed to have been secured by fraudulent representations, or payment of the bond the payment of interest thereon, and when the bond is presented, will call upon the owner and the person presenting the bond to substantiate their respective claims.If it then appears that the person presenting the bond stands in the position of bonafide holder for value, the Central Bank, after giving the owner an opportunity to assert his claim, will pass the bond for transfer, exchange or payments, as the case may be, without further question.

In a December 29, 1994 letter, Nuqui again denied the request, reiterating the BSP’s previous stand.

In light of these BSP responses and the impending maturity of the CB bills, the PDB filed29 with the RTC two separate petitions for Mandamus, Prohibition and Injunction with prayer for Preliminary Injunction and Temporary Restraining Order, docketed as Civil Case No. 94-3233 (covering the first set of CB bills) and Civil Case 94-3254 (covering the second set of CB bills) against Nuqui, the BSP and the RCBC.30

The PDB essentially claims that in both the April 15 transaction (involving the first set of CB bills) and the April 19 transaction (involving the second set of CB bills), there was no intent on its part to transfer title of the CB bills, as shown by its non-issuance of a detached assignment in favor of the BOC and Bancap, respectively. The PDB particularly alleges that it merely "warehoused"31 the first set of CB bills with the BOC, as security collateral.

On December 28, 1994, the RTC temporarily enjoined Nuqui and the BSP from paying the face value of the CB bills on maturity.32 On January 10, 1995, the PDB filed an Amended Petition, additionally impleading the BOC and All Asia.33 In a January 13, 1995 Order, the cases were consolidated.34 On January 17, 1995, the RTC granted the PDB’s application for a writ of preliminary prohibitory injunction.35 In both petitions, the PDB identically prayed:

WHEREFORE, it is respectfully prayed x xx that, after due notice and hearing, the Writs of Mandamus, Prohibition and Injunction, be issued; (i) commanding the BSP and Nuqui, or whoever may take her place -

(a) to record forthwith in the books of BSP the claim of x xx PDB on the [two sets of] CB Bills in accordance with Section 10 (d) (4) of revised C.B. Circular No. 28; and

(b) also pursuant thereto, when the bills are presented on maturity date for payment, to call (i) x xx PDB, (ii) x xx RCBC x xx, (iii) x xx BOC x xx, and (iv) x xx ALL-ASIA x xx; or whoever will present the [first and second sets of] CB Bills for payment, to submit proof as to who stands as the holder in due course of said bills, and, thereafter, act accordingly;

and (ii) ordering the BSP and Nuqui to pay jointly and severally to x xx PDB the following:

(a) the sum of P 100,000.00, as and for exemplary damages;

JURISDICTION

(b) the sum of at least P 500,000.00, or such amount as shall be proved at the trial, as and for attorney’s fees;

(c) the legal rate of interest from the filing of this Petition until full payment of the sums mentioned in this Petition; and

(d) the costs of suit.36

After the petitions were filed, the BOC acquired/reacquired all the nine CB bills – the first and second sets of CB bills (collectively, subject CB bills).

Defenses of the BSP and of the BOC37

The BOC filed its Answer, praying for the dismissal of the petition. It argued that the PDB has no cause of action against it since the PDB is no longer the owner of the CB bills. Contrary to the PDB’s "warehousing theory,"38 the BOC asserted that the (i) April 15 transaction and the (ii) April 19 transaction – covering both sets of CB bills - were valid contracts of sale, followed by a transfer of title (i) to the BOC (in the April 15 transaction) upon the PDB’s delivery of the 1st set of CB bills in substitution of the Treasury Bills the PDB originally intended to sell, and (ii) to Bancap (in the April 19 transaction) upon the PDB’s delivery of the 2nd set of CB bills to Bancap, likewise by way of substitution.

The BOC adds that Section 10 (d) 4 of CB Circular No. 28 cannot apply to the PDB’s case because (i) the PDB is not in possession of the CB bills and (ii) the BOC acquired these bills from the PDB, as to the 1st set of CB bills, and from Bancap, as to the 2nd set of CB bills, in good faith and for value. The BOC also asserted a compulsory counterclaim for damages and attorney’s fees.

On the other hand, the BSP countered that the PDB cannot invoke Section 10 (d) 4 of CB Circular No. 28 because this section applies only to an "owner" and a "person presenting the bond," of which the PDB is neither. The PDB has not presented to the BSP any assignment of the subject CB bills, duly recorded in the BSP’s books, in its favor to clothe it with the status of an "owner."39 According to the BSP –

Section 10 d. (4) applies only to a registered bond which is assigned. And the issuance of CB Bills x xx are required to be recorded/registered in BSP’s books. In this regard, Section 4 a. (1) of CB Circular 28 provides that registered bonds "may be transferred only by an assignment thereon duly executed by the registered owner or his duly authorized representative x xx and duly recorded on the books of the Central Bank."

x xxx

The alleged assignment of subject CB Bills in PDB’s favor is not recorded/registered in BSP’s books.40(underscoring supplied)

Consequently, when Nuqui and the BSP refused the PDB’s request (to record its claim), they were merely performing their duties in accordance with CB Circular No. 28.

Alternatively, the BSP asked that an interpleader suit be allowed between and among the claimants to the subject CB bills on the position that while it is able and willing to pay the subject CB bills’ face value, it is duty bound to ensure that payment is made to the rightful owner. The BSP prayed that judgment be rendered:

a. Ordering the dismissal of the PDB’s petition for lack of merit;

b. Determining which between/among [PDB] and the other claimants is/are lawfully entitled to the ownership of the subject CB bills and the proceeds thereof;

c. x xx;

d. Ordering PDB to pay BSP and Nuqui such actual/compensatory and exemplary damages… as the RTC may deem warranted; and

e. Ordering PDB to pay Nuqui moral damages… and to pay the costs of the suit.41

Subsequent events

The PDB agreed with the BSP’s alternative response for an interpleader –

4. PDB agrees that the various claimants should now interplead and substantiate their respective claims on the subject CB bills. However, the total face value of the subject CB bills should be deposited in escrow with a private bank to be disposed of only upon order of the RTC.42

Accordingly, on June 9, 199543 and August 4, 1995,44 the BOC and the PDB entered into two separate Escrow Agreements.45 The first agreement covered the first set of CB bills, while the second agreement covered the second set of CB bills. The parties agreed to jointly collect from the BSP the maturity proceeds of these CB bills and to deposit said amount in escrow, "pending final determination by Court judgment, or amicable

settlement as to who shall be eventually entitled thereto."46 The BOC and the PDB filed a Joint Motion,47 submitting these Escrow Agreements for court approval. The RTC gave its approval to the parties’ Joint Motion.48 Accordingly, the BSP released the maturity proceeds of the CB bills by crediting the Demand Deposit Account of the PDB and of the BOC with 50% each of the maturity proceeds of the amount in escrow.49

In view of the BOC’s acquisition of all the CB bills, All Asia50 moved to be dropped as a respondent (with the PDB’s conformity51), which the RTC granted.52 The RCBC subsequently followed suit.53

In light of the developments, on May 4, 1998, the RTC required the parties to manifest their intention regarding the case and to inform the court of any amicable settlement; "otherwise, th[e] case shall be dismissed for lack of interest."54 Complying with the RTC’s order, the BOC moved (i) that the case be set for pre-trial and (ii) for further proceeding to resolve the remaining issues between the BOC and the PDB, particularly on "who has a better right over the subject CB bills."55 The PDB joined the BOC in its motion.56

On September 28, 2000, the RTC granted the BSP’s motion to interplead and, accordingly, required the BOC to amend its Answer and for the conflicting claimants to comment thereon.57 In October 2000, the BOC filed its Amended Consolidated Answer with Compulsory Counterclaim, reiterating its earlier arguments asserting ownership over the subject CB bills.58

In the alternative, the BOC added that even assuming that there was no effective transfer of the nine CB bills ultimately to the BOC, the PDB remains obligated to deliver to the BOC, as buyer in the April 15 transaction and ultimate successor-in-interest of the buyer (Bancap) in the April 19 transaction, either the original subjects of the sales or the value thereof, plus whatever income that may have been earned during the pendency of the case.59

That BOC prayed:

1. To declare BOC as the rightful owner of the nine (9) CB bills and as the party entitled to the proceeds thereof as well as all income earned pursuant to the two (2) Escrow Agreements entered into by BOC and PDB.

2. In the alternative, ordering PDB to deliver the original subject of the sales transactions or the value thereof and whatever income

JURISDICTION

earned by way of interest at prevailing rate.

Without any opposition or objection from the PDB, on February 23, 2001, the RTC admitted60 the BOC’s Amended Consolidated Answer with Compulsory Counterclaims.

In May 2001, the PDB filed an Omnibus Motion,61 questioning the RTC’s jurisdiction over the BOC’s "additional counterclaims." The PDB argues that its petitions pray for the BSP (not the RTC) to determine who among the conflicting claimants to the CB bills stands in the position of the bona fide holder for value. The RTC cannot entertain the BOC’s counterclaim, regardless of its nature, because it is the BSP which has jurisdiction to determine who is entitled to receive the proceeds of the CB bills.

The BOC opposed62 the PDB’s Omnibus Motion. The PDB filed its Reply.63

In a January 10, 2002 Order, the RTC dismissed the PDB’s petition, the BOC’s counterclaim and the BSP’s counter-complaint/cross-claim for interpleader, holding that under CB Circular No. 28, it has no jurisdiction (i) over the BOC’s "counterclaims" and (ii) to resolve the issue of ownership of the CB bills.64 With the denial of their separate motions for Reconsideration,65 the BOC and the BSP separately filed the present petitions for review on certiorari.66

THE BOC’S and THE BSP’S PETITIONS

The BOC argues that the present cases do not fall within the limited provision of Section 10 (d) 4 of CB Circular No. 28, which contemplates only of three situations: first, where the fraudulent assignment is not coupled with a notice to the BSP, it can grant no relief; second, where the fraudulent assignment is coupled with a notice of fraud to the BSP, it will make a notation against the assignment and require the owner and the holder to substantiate their claims; and third, where the case does not fall on either of the first two situations, the BSP will have to await action on the assignment pending settlement of the case, whether by agreement or by court order.

The PDB’s case cannot fall under the first two situations. With particular regard to the second situation, CB Circular No. 28 requires that the conflict must be between an "owner" and a "holder," for the BSP to exercise its limited jurisdiction to resolve conflicting claims; and the word "owner" here refers to the registered owner giving notice of the fraud to the BSP. The PDB, however, is not the registered owner nor is it in possession (holder) of the CB bills.67 Consequently, the PDB’s case can only falls under the third situation which leaves the

RTC, as a court of general jurisdiction, with the authority to resolve the issue of ownership of a registered bond (the CB bills) not falling in either of the first two situations.

The BOC asserts that the policy consideration supportive of its interpretation of CB Circular No. 28 is to have a reliable system to protect the registered owner; should he file a notice with the BSP about a fraudulent assignment of certain CB bills, the BSP simply has to look at its books to determine who is the owner of the CB bills fraudulently assigned. Since it is only the registered owner who complied with the BSP’s requirement of recording an assignment in the BSP’s books, then "the protective mantle of administrative proceedings" should necessarily benefit him only, without extending the same benefit to those who chose to ignore the Circular’s requirement, like the PDB.68

Assuming arguendo that the PDB’s case falls under the second situation – i.e., the BSP has jurisdiction to resolve the issue of ownership of the CB bills – the more recent CB Circular No. 769-80 (Rules and Regulations Governing Central Bank Certificates of Indebtedness) already superseded CB Circular No. 28, and, in particular, effectively amended Section 10 (d) 4 of CB Circular No. 28. The pertinent provisions of CB Circular No. 769-80 read:

Assignment Affected by Fraud. – Any assignment for transfer of ownership of registered certificate obtained through fraudulent representation if honored by the Central Bank or any of its authorized service agencies shall not make the Central Bank or agency liable therefore unless it has previous formal notice of the fraud. The Central Bank, upon notice under oath that the assignment was secured through fraudulent means, shall immediately issue and circularize a "stop order" against the transfer, exchange, redemption of the Certificate including the payment of interest coupons. The Central Bank or service agency concerned shall continue to withhold action on the certificate until such time that the conflicting claims have been finally settled either by amicable settlement between the parties or by order of the Court.

Unlike CB Circular No. 28, CB Circular No. 769-80 limited the BSP’s authority to the mere issuance and circularization of a "stop order" against the transfer, exchange and redemption upon sworn notice of a fraudulent assignment. Under this Circular, the BSP shall only continue to withhold action until the dispute is ended by an amicable settlement or by judicial determination. Given the more passive stance of the BSP – the very agency tasked to enforce the circulars involved - under CB Circular No. 769-80, the RTC’s dismissal of the BOC’s counterclaims is palpably erroneous.

Lastly, since Nuqui’s office (Government Securities Department) had already been abolished,69 it can no longer adjudicate the dispute under the second situation covered by CB Circular No. 28. The abolition of Nuqui’s office is not only consistent with the BSP’s Charter but, more importantly, with CB Circular No. 769-80, which removed the BSP’s adjudicative authority over fraudulent assignments.

THE PDB’S COMMENT

The PDB claims that jurisdiction is determined by the allegations in the complaint/petition and not by the defenses set up in the answer.70 In filing the petition with the RTC, the PDB merely seeks to compel the BSP to determine, pursuant to CB Circular No. 28, the party legally entitled to the proceeds of the subject CB bills, which, as the PDB alleged, have been transferred through fraudulent representations – an allegation which properly recognized the BSP’s jurisdiction to resolve conflicting claims of ownership over the CB bills.

The PDB adds that under the doctrine of primary jurisdiction, courts should refrain from determining a controversy involving a question whose resolution demands the exercise of sound administrative discretion. In the present case, the BSP’s special knowledge and experience in resolving disputes on securities, whose assignment and trading are governed by the BSP’s rules, should be upheld.

The PDB counters that the BOC’s tri-fold interpretation of Section 10 (d) 4 of CB Circular No. 28 sanctions split jurisdiction which is not favored;but even this tri-fold interpretation which, in the second situation, limits the meaning of the "owner" to the registered owner is flawed. Section 10 (d) 4 aims to protect not just the registered owner but anyone who has been deprived of his bond by fraudulent representation in order to deter fraud in the secondary trading of government securities.

The PDB asserts that the existence of CB Circular No. 769-80 or the abolition of Nuqui’s office does not result in depriving the BSP of its jurisdiction: first, CB Circular No. 769-80 expressly provides that CB Circular No. 28 shall have suppletory application to CB Circular No. 769-80; and second, the BSP can always designate an office to resolve the PDB’s claim over the CB bills.

Lastly, the PDB argues that even assuming that the RTC has jurisdiction to resolve the issue of ownership of the CB bills, the RTC has not acquired jurisdiction over the BOC’s so-called "compulsory" counterclaims (which in truth is merely "permissive") because of the BOC’s failure to pay the appropriate docket fees.

JURISDICTION

These counterclaims should, therefore, be dismissed and expunged from the record.

THE COURT’S RULING

We grant the petitions.

At the outset, we note that the parties have not raised the validity of either CB Circular No. 28 or CB Circular No. 769-80 as an issue. What the parties largely contest is the applicable circular in case of an allegedly fraudulently assigned CB bill. The applicable circular, in turn, is determinative of the proper remedy available to the PDB and/or the BOC as claimants to the proceeds of the subject CB bills.

Indisputably, at the time the PDB supposedly invoked the jurisdiction of the BSP in 1994 (by requesting for the annotation of its claim over the subject CB bills in the BSP’s books), CB Circular No. 769-80 has long been in effect. Therefore, the parties’ respective interpretations of the provision of Section 10 (d) 4 of CB Circular No. 28 do not have any significance unless it is first established that that Circular governs the resolution of their conflicting claims of ownership. This conclusion is important, given the supposed repeal or modification of Section 10 (d) 4 of CB Circular No. 28 by the following provisions of CB Circular No. 769-80:

ARTICLE XISUPPLEMENTAL RULES

Section 1. Central Bank Circular No. 28 – The provisions of Central Bank Circular No. 28 shall have suppletory application to matters not specially covered by these Rules.

ARTICLE XIIEFFECTIVITY

Effectivity – The rules and regulations herein prescribed shall take effect upon approval by the Monetary Board, Central Bank of the Philippines, and all circulars, memoranda, or office orders inconsistent herewith are revoked or modified accordingly. (Emphases added)

We agree with the PDB that in view of CB Circular No. 28’s suppletory application, an attempt to harmonize the apparently conflicting provisions is a prerequisite before one may possibly conclude that an amendment or a repeal exists.71 Interestingly, however, even the PDB itself failed to submit an interpretation based on its own position of harmonization.

The repealing clause of CB Circular No. 769-80 obviously did not expressly repeal CB Circular No. 28; in fact, it even provided for the suppletory application of CB Circular No. 28 on

"matters not specially covered by" CB Circular No. 769-80. While no express repeal exists, the intent of CB Circular No. 769-80 to operate as an implied repeal,72 or at least to amend earlier CB circulars, is supported by its text "revoking" or "modif[ying" "all circulars" which are inconsistent with its terms.

At the outset, we stress that none of the parties disputes that the subject CB bills fall within the category of a certificate or evidence of indebtedness and that these were issued by the Central Bank, now the BSP. Thus, even without resorting to statutory construction aids, matters involving the subject CB bills should necessarily be governed by CB Circular No. 769-80. Even granting, however, that reliance on CB Circular No. 769-80 alone is not enough, we find that CB Circular No. 769-80 impliedly repeals CB Circular No. 28.

An implied repeal transpires when a substantial conflict exists between the new and the prior laws. In the absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and the old laws.73 Repeal by implication is not favored, unless manifestly intended by the legislature, or unless it is convincingly and unambiguously demonstrated, that the laws or orders are clearly repugnant and patently inconsistent with one another so that they cannot co-exist; the legislature is presumed to know the existing law and would express a repeal if one is intended.74

There are two instances of implied repeal. One takes place when the provisions in the two acts on the same subject matter are irreconcilably contradictory, in which case, the later act, to the extent of the conflict, constitutes an implied repeal of the earlier one. The other occurs when the later act covers the whole subject of the earlier one and is clearly intended as a substitute; thus, it will operate to repeal the earlier law.75

A general reading of the two circulars shows that the second instance of implied repeal is present in this case. CB Circular No. 28, entitled "Regulations Governing Open Market Operations, Stabilization of Securities Market, Issue, Servicing and Redemption of Public Debt," is a regulation governing the servicing and redemption of public debt, including the issue, inscription, registration, transfer, payment and replacement of bonds and securities representing the public debt.76 On the other hand, CB Circular No. 769-80, entitled "Rules and Regulations Governing Central Bank Certificate of Indebtedness," is the governing regulation on matters77 (i) involving certificate of indebtedness78 issued by the Central Bank itself and (ii) which are similarly covered by CB Circular No. 28.

The CB Monetary Board issued CB Circular No. 28 to regulate the servicing and redemption of public debt, pursuant to Section 124 (now Section 119 of Republic Act R.A. No. 7653) of the old Central Bank law79 which provides that "the servicing and redemption of the public debt shall also be effected through the BangkoSentral." However, even as R.A. No. 7653 continued to recognize this role by the BSP, the law required a phase-out of all fiscal agency functions by the BSP, including Section 119 of R.A. No. 7653.

In other words, even if CB Circular No. 28 applies broadly to both government-issued bonds and securities and Central Bank-issued evidence of indebtedness, given the present state of law, CB Circular No. 28 and CB Circular No. 769-80 now operate on the same subject – Central Bank-issued evidence of indebtedness. Under Section 1, Article XI of CB Circular No. 769-80, the continued relevance and application of CB Circular No. 28 would depend on the need to supplement any deficiency or silence in CB Circular No. 769-80 on a particular matter.

In the present case, both CB Circular No. 28 and CB Circular No. 769-80 provide the BSP with a course of action in case of an allegedly fraudulently assigned certificate of indebtedness. Under CB Circular No. 28, in case of fraudulent assignments, the BSP would have to "call upon the owner and the person presenting the bond to substantiate their respective claims" and, from there, determine who has a better right over the registered bond. On the other hand, under CB Circular No. 769-80, the BSP shall merely "issue and circularize a ‘stop order’ against the transfer, exchange, redemption of the [registered] certificate" without any adjudicative function (which is the precise root of the present controversy). As the two circulars stand, the patent irreconcilability of these two provisions does not require elaboration. Section 5, Article V of CB Circular No. 769-80 inescapably repealed Section 10 (d) 4 of CB Circular No. 28.

The issue of BSP’s jurisdiction, lay hidden

On that note, the Court could have written finis to the present controversy by simply sustaining the BSP’s hands-off approach to the PDB’s problem under CB Circular No. 769-80. However, the jurisdictional provision of CB Circular No. 769-80 itself, in relation to CB Circular No. 28, on the matter of fraudulent assignment, has given rise to a question of jurisdiction - the core question of law involved in these petitions - which the Court cannot just treat sub-silencio.

Broadly speaking, jurisdiction is the legal power or authority to hear and determine a cause.80 In the exercise of judicial or quasi-judicial power, it refers to the authority of a court to hear and

JURISDICTION

decide a case.81 In the context of these petitions, we hark back to the basic principles governing the question of jurisdiction over the subject matter.

First, jurisdiction over the subject matter is determined only by the Constitution and by law.82 As a matter of substantive law, procedural rules alone can confer no jurisdiction to courts or administrative agencies.83 In fact, an administrative agency, acting in its quasi-judicial capacity, is a tribunal of limited jurisdiction and, as such, could wield only such powers that are specifically granted to it by the enabling statutes. In contrast, an RTC is a court of general jurisdiction, i.e., it has jurisdiction over cases whose subject matter does not fall within the exclusive original jurisdiction of any court, tribunal or body exercising judicial or quasi-judicial functions.84

Second, jurisdiction over the subject matter is determined not by the pleas set up by the defendant in his answer85 but by the allegations in the complaint,86 irrespective of whether the plaintiff is entitled to favorable judgment on the basis of his assertions.87 The reason is that the complaint is supposed to contain a concise statement of the ultimate facts constituting the plaintiff's causes of action.88

Third, jurisdiction is determined by the law in force at the time of the filing of the complaint.89

Parenthetically, the Court observes that none of the parties ever raised the issue of whether the BSP can simply disown its jurisdiction, assuming it has, by the simple expedient of promulgating a new circular (specially applicable to a certificate of indebtedness issued by the BSP itself), inconsistent with an old circular, assertive of its limited jurisdiction over ownership issues arising from fraudulent assignments of a certificate of indebtedness. The PDB, in particular, relied solely and heavily on CB Circular No. 28.

In light of the above principles pointing to jurisdiction as a matter of substantive law, the provisions of the law itself that gave CB Circular 769-80 its life and jurisdiction must be examined.

The Philippine Central Bank

On January 3, 1949, Congress created the Central Bank of the Philippines (Central Bank) as a corporate body with the primary objective of (i) maintaining the internal and external monetary stability in the Philippines; and (ii) preserving the international value and the convertibility of the peso.90 In line with these broad objectives, the Central Bank was empowered to issue rules and regulations "necessary for the effective discharge of the responsibilities and exercise of the powers

assigned to the Monetary Board and to the Central Bank."91Specifically, the Central Bank is authorized to organize (other) departments for the efficient conduct of its business and whose powers and duties "shall be determined by the Monetary Board, within the authority granted to the Board and the Central Bank"92 under its original charter.

With the 1973 Constitution, the then Central Bank was constitutionally made as the country’s central monetary authority until such time that Congress93 shall have established a central bank. The 1987 Constitution continued to recognize this function of the then Central Bank until Congress, pursuant to the Constitution, created a new central monetary authority which later came to be known as the BangkoSentralngPilipinas.

Under the New Central Bank Act (R.A. No. 7653),94 the BSP is given the responsibility of providing policy directions in the areas of money, banking and credit; it is given, too, the primary objective of maintaining price stability, conducive to a balanced and sustainable growth of the economy, and of promoting and maintaining monetary stability and convertibility of the peso.95

The Constitution expressly grants the BSP, as the country’s central monetary authority, the power of supervision over the operation of banks, while leaving with Congress the authority to define the BSP’s regulatory powers over the operations of finance companies and other institutions performing similar functions. Under R.A. No. 7653, the BSP’s powers and functions include (i) supervision over the operation of banks; (ii) regulation of operations of finance companies and non-bank financial institutions performing quasi banking functions; (iii) sole power and authority to issue currency within the Philippine territory; (iv) engaging in foreign exchange transactions; (v) making rediscounts, discounts, loans and advances to banking and other financial institutions to influence the volume of credit consistent with the objective of achieving price stability; (vi) engaging in open market operations; and (vii) acting as banker and financial advisor of the government.1âwphi1

On the BSP’s power of supervision over the operation of banks, Section 4 of R.A. No. 8791 (The General Banking Law of 2000) elaborates as follows:

CHAPTER IIAUTHORITY OF THE BANGKO SENTRAL

SECTION 4.Supervisory Powers. — The operations and activities of banks shall be subject to supervision of the BangkoSentral. "Supervision" shall include the following:

4.1. The issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions or functions covered, taking into consideration the distinctive character of the operations of institutions and the substantive similarities of specific functions to which such rules, modes or standards are to be applied;

4.2. The conduct of examination to determine compliance with laws and regulations if the circumstances so warrant as determined by the Monetary Board;

4.3. Overseeing to ascertain that laws and regulations are complied with;

4.4. Regular investigation which shall not be oftener than once a year from the last date of examination to determine whether an institution is conducting its business on a safe or sound basis: Provided, That the deficiencies/irregularities found by or discovered by an audit shall be immediately addressed;

4.5. Inquiring into the solvency and liquidity of the institution (2-D); or

4.6. Enforcing prompt corrective action. (n)

The BangkoSentral shall also have supervision over the operations of and exercise regulatory powers over quasi-banks, trust entities and other financial institutions which under special laws are subject to BangkoSentral supervision. (2-Ca)

For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the borrowing of funds through the issuance, endorsement or assignment with recourse or acceptance of deposit substitutes as defined in Section 95 of Republic Act No. 7653 (hereafter the "New Central Bank Act") for purposes of relending or purchasing of receivables and other obligations. [emphasis ours]

While this provision empowers the BSP to oversee the operations and activities of banks to "ascertain that laws and regulations are complied with," the existence of the BSP’s jurisdiction in the present dispute cannot rely on this provision. The fact remains that the BSP already made known to the PDB its unfavorable position on the latter’s claim of fraudulent assignment due to the latter’s own failure to comply96 with existing regulations:

JURISDICTION

In this connection, Section 10 (b) 2 also requires that a "Detached assignment will be recognized or accepted only upon previous notice to the Central Bank x xx." In fact, in a memo dated September 23, 1991 xxx then CB Governor Jose L. Cuisia advised all banks (including PDB) xxx as follows:

In view recurring incidents ostensibly disregarding certain provisions of CB circular No. 28 (as amended) covering assignments of registered bonds, all banks and all concerned are enjoined to observe strictly the pertinent provisions of said CB Circular as hereunder quoted:

x xxx

Under Section 10.b. (2)

x xx Detached assignment will be recognized or accepted only upon previous notice to the Central Bank and its use is authorized only under the following circumstances:

(a) xxx

(b) xxx

(c) assignments of treasury notes and certificates of indebtedness in registered form which are not provided at the back thereof with assignment form.

(d) Assignment of securities which have changed ownership several times.

(e) xxx

Non-compliance herewith will constitute a basis for non-action or withholding of action on redemption/payment of interest coupons/transfer transactions or denominational exchange that may be directly affected thereby. [Boldfacing supplied]

Again, the books of the BSP do not show that the supposed assignment of subject CB Bills was ever recorded in the BSP’s books. [Boldfacing supplied]

However, the PDB faults the BSP for not recording the assignment of the CB bills in the PDB’s favor despite the fact that the PDB already requested the BSP to record its assignment in the BSP’s books as early as June 30, 1994.97

The PDB’s claim is not accurate. What the PDB requested the BSP on that date was not the recording of the assignment of the CB bills in its

favor but the annotation of its claim over the CB bills at the time when (i) it was no longer in possession of the CB bills, having been transferred from one entity to another and (ii) all it has are the detached assignments, which the PDB has not shown to be compliant with Section 10 (b) 2 above-quoted. Obviously, the PDB cannot insist that the BSP take cognizance of its plaint when the basis of the BSP’s refusal under existing regulation, which the PDB is bound to observe, is the PDB’s own failure to comply therewith.

True, the BSP exercises supervisory powers (and regulatory powers) over banks (and quasi banks). The issue presented before the Court, however, does not concern the BSP’s supervisory power over banks as this power is understood under the General Banking Law. In fact, there is nothing in the PDB’s petition (even including the letters it sent to the BSP) that would support the BSP’s jurisdiction outside of CB Circular No. 28, under its power of supervision, over conflicting claims to the proceeds of the CB bills.

BSP has quasi-judicial powers over aclass of cases which does not includethe adjudication of ownership of theCB bills in question

In United Coconut Planters Bank v. E. Ganzon, Inc.,98 the Court considered the BSP as an administrative agency,99 exercising quasi-judicial functions through its Monetary Board. It held:

A quasi-judicial agency or body is an organ of government other than a court and other than a legislature, which affects the rights of private parties through either adjudication or rule-making. The very definition of an administrative agency includes its being vested with quasi-judicial powers. The ever increasing variety of powers and functions given to administrative agencies recognizes the need for the active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies which cannot possibly be handled by regular courts. A "quasi-judicial function" is a term which applies to the action, discretion, etc., of public administrative officers or bodies, who are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature.

Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-judicial powers or functions. As aptly observed by the Court of Appeals, the BSP Monetary Board is an independent central monetary authority and a body corporate with fiscal and administrative autonomy, mandated to provide policy directions in the areas of money, banking and credit. It has power to issue subpoena, to sue

for contempt those refusing to obey the subpoena without justifiable reason, to administer oaths and compel presentation of books, records and others, needed in its examination, to impose fines and other sanctions and to issue cease and desist order. Section 37 of Republic Act No. 7653, in particular, explicitly provides that the BSP Monetary Board shall exercise its discretion in determining whether administrative sanctions should be imposed on banks and quasi-banks, which necessarily implies that the BSP Monetary Board must conduct some form of investigation or hearing regarding the same. [citations omitted]

The BSP is not simply a corporate entity but qualifies as an administrative agency created, pursuant to constitutional mandate,100 to carry out a particular governmental function.101 To be able to perform its role as central monetary authority, the Constitution granted it fiscal and administrative autonomy. In general, administrative agencies exercise powers and/or functions which may be characterized as administrative, investigatory, regulatory, quasi-legislative, or quasi-judicial, or a mix of these five, as may be conferred by the Constitution or by statute.102

While the very nature of an administrative agency and the raison d'être for its creation103 and proliferation dictate a grant of quasi-judicial power to it, the matters over which it may exercise this power must find sufficient anchorage on its enabling law, either by express provision or by necessary implication. Once found, the quasi-judicial power partakes of the nature of a limited and special jurisdiction, that is, to hear and determine a class of cases within its peculiar competence and expertise. In other words, the provisions of the enabling statute are the yardsticks by which the Court would measure the quantum of quasi-judicial powers an administrative agency may exercise, as defined in the enabling act of such agency.104

Scattered provisions in R.A. No. 7653 and R.A. No. 8791, inter alia, exist, conferring jurisdiction on the BSP on certain matters.105 For instance, under the situations contemplated under Section 36, par. 2106 (where a bank or quasi bank persists in carrying on its business in an unlawful or unsafe manner) and Section 37107 (where the bank or its officers willfully violate the bank’s charter or by-laws, or the rules and regulations issued by the Monetary Board) of R.A. No. 7653, the BSP may place an entity under receivership and/or liquidation or impose administrative sanctions upon the entity or its officers or directors.

Among its several functions under R.A. No. 7653, the BSP is authorized to engage in open market operations and thereby "issue, place, buy and sell freely negotiable evidences of

JURISDICTION

indebtedness of the BangkoSentral" in the following manner.

SEC. 90.Principles of Open Market Operations. – The open market purchases and sales of securities by the BangkoSentral shall be made exclusively in accordance with its primary objective of achieving price stability.

x xxx

SEC. 92.Issue and Negotiation of BangkoSentral Obligations. – In order to provide the BangkoSentral with effective instruments for open market operations, the BangkoSentral may, subject to such rules and regulations as the Monetary Board may prescribe and in accordance with the principles stated in Section 90 of this Act, issue, place, buy and sell freely negotiable evidences of indebtedness of the BangkoSentral: Provided, That issuance of such certificates of indebtedness shall be made only in cases of extraordinary movement in price levels. Said evidences of indebtedness may be issued directly against the international reserve of the BangkoSentral or against the securities which it has acquired under the provisions of Section 91 of this Act, or may be issued without relation to specific types of assets of the BangkoSentral.

The Monetary Board shall determine the interest rates, maturities and other characteristics of said obligations of the BangkoSentral, and may, if it deems it advisable, denominate the obligations in gold or foreign currencies.

Subject to the principles stated in Section 90 of this Act, the evidences of indebtedness of the BangkoSentral to which this section refers may be acquired by the BangkoSentral before their maturity, either through purchases in the open market or through redemptions at par and by lot if the BangkoSentral has reserved the right to make such redemptions. The evidences of indebtedness acquired or redeemed by the BangkoSentral shall not be included among its assets, and shall be immediately retired and cancelled.108 (italics supplied; emphases ours)

The primary objective of the BSP is to maintain price stability.109 The BSP has a number of monetary policy instruments at its disposal to promote price stability. To increase or reduce liquidity in the financial system, the BSP uses open market operations, among others.110 Open market operation is a monetary tool where the BSP publicly buys or sells government securities111 from (or to) banks and financial institutions in order to expand or contract the supply of money. By controlling the money supply, the BSP is able to exert some influence on the prices of goods and services and achieve its inflation objectives.112

Once the issue and/or sale of a security is made, the BSP would necessarily make a determination, in accordance with its own rules, of the entity entitled to receive the proceeds of the security upon its maturity. This determination by the BSP is an exercise of its administrative powers113 under the law as an incident to its power to prescribe rules and regulations governing open market operations to achieve the "primary objective of achieving price stability."114 As a matter of necessity, too, the same rules and regulations facilitate transaction with the BSP by providing for an orderly manner of, among others, issuing, transferring, exchanging and paying securities representing public debt.

Significantly, when competing claims of ownership over the proceeds of the securities it has issued are brought before it, the law has not given the BSP the quasi-judicial power to resolve these competing claims as part of its power to engage in open market operations. Nothing in the BSP’s charter confers on the BSP the jurisdiction or authority to determine this kind of claims, arising out of a subsequent transfer or assignment of evidence of indebtedness – a matter that appropriately falls within the competence of courts of general jurisdiction. That the statute withholds this power from the BSP is only consistent with the fundamental reasons for the creation of a Philippine central bank, that is, to lay down stable monetary policy and exercise bank supervisory functions. Thus, the BSP’s assumption of jurisdiction over competing claims cannot find even a stretched-out justification under its corporate powers "to do and perform any and all things that may be necessary or proper to carry out the purposes" of R.A. No. 7653. 115

To reiterate, open market operation is a monetary policy instrument that the BSP employs, among others, to regulate the supply of money in the economy to influence the timing, cost and availability of money and credit, as well as other financial factors, for the purpose of stabilizing the price level.116 What the law grants the BSP is a continuing role to shape and carry out the country’s monetary policy – not the authority to adjudicate competing claims of ownership over the securities it has issued – since this authority would not fall under the BSP’s purposes under its charter.

While R.A. No. 7653117 empowers the BSP to conduct administrative hearings and render judgment for or against an entity under its supervisory and regulatory powers and even authorizes the BSP Governor to "render decisions, or rulings x xx on matters regarding application or enforcement of laws pertaining to institutions supervised by the BSP and laws pertaining to quasi-banks, as well as regulations, policies or instructions issued by the Monetary Board," it is precisely the text of

the BSP’s own regulation (whose validity is not here raised as an issue) that points to the BSP’s limited role in case of an allegedly fraudulent assignment to simply (i) issuing and circularizing a ‘"stop order" against the transfer, exchange, redemption of the certificate of indebtedness, including the payment of interest coupons, and (ii) withholding action on the certificate.

A similar conclusion can be drawn from the BSP’s administrative adjudicatory power in cases of "willful failure or refusal to comply with, or violation of, any banking law or any order, instruction or regulation issued by the Monetary Board, or any order, instruction or ruling by the Governor."118 The non-compliance with the pertinent requirements under CB Circular No. 28, as amended, deprives a party from any right to demand payment from the BSP.

In other words, the grant of quasi-judicial authority to the BSP cannot possibly extend to situations which do not call for the exercise by the BSP of its supervisory or regulatory functions over entities within its jurisdiction.119

The fact alone that the parties involved are banking institutions does not necessarily call for the exercise by the BSP of its quasi-judicial powers under the law.120

The doctrine of primary jurisdictionargues against BSP’s purportedauthority to adjudicate ownershipissues over the disputed CB bills

Given the preceding discussions, even the PDB’s invocation of the doctrine of primary jurisdiction is misplaced.

In the exercise of its plenary legislative power, Congress may create administrative agencies endowed with quasi-legislative and quasi-judicial powers. Necessarily, Congress likewise defines the limits of an agency’s jurisdiction in the same manner as it defines the jurisdiction of courts.121 As a result, it may happen that either a court or an administrative agency has exclusive jurisdiction over a specific matter or both have concurrent jurisdiction on the same. It may happen, too, that courts and agencies may willingly relinquish adjudicatory power that is rightfully theirs in favor of the other. One of the instances when a court may properly defer to the adjudicatory authority of an agency is the applicability of the doctrine of primary jurisdiction.122

As early as 1954, the Court applied the doctrine of primary jurisdiction under the following terms:

6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative

JURISDICTION

commissions and boards the power to resolve specialized disputes xxx ruled that Congress in requiring the Industrial Court's intervention in the resolution of labor-management controversies xxx meant such jurisdiction to be exclusive, although it did not so expressly state in the law. The Court held that under the "sense-making and expeditious doctrine of primary jurisdiction ... the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an 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 purposes of the regulatory statute administered."123 (emphasis ours)

In Industrial Enterprises, Inc. v. Court of Appeals,124 the Court ruled that while an action for rescission of a contract between coal developers appears to be an action cognizable by regular courts, the trial court remains to be without jurisdiction to entertain the suit since the contract sought to be rescinded is "inextricably tied up with the right to develop coal-bearing lands and the determination of whether or not the reversion of the coal operating contract over the subject coal blocks to [the plaintiff] would be in line with the country’s national program and objective on coal-development and over-all coal-supply-demand balance." It then applied the doctrine of primary jurisdiction –

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."

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 Bureau of Energy Development 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. [emphases ours]

The absence of any express or implied statutory power to adjudicate conflicting claims of ownership or entitlement to the proceeds of its certificates of indebtedness finds complement in the similar absence of any technical matter that would call for the BSP’s special expertise or competence.125 In fact, what the PDB’s petitions bear out is essentially the nature of the transaction it had with the subsequent transferees of the subject CB bills (BOC and Bancap) and not any matter more appropriate for special determination by the BSP or any administrative agency.

In a similar vein, it is well-settled that the interpretation given to a rule or regulation by those charged with its execution is entitled to the greatest weight by the courts construing such rule or regulation.126 While there are exceptions127 to this rule, the PDB has not convinced us that a departure is warranted in this case. Given the non-applicability of the doctrine of primary jurisdiction, the BSP’s own position, in light of Circular No. 769-80, deserves respect from the Court.

Ordinarily, cases involving the application of doctrine of primary jurisdiction are initiated by an action invoking the jurisdiction of a court or administrative agency to resolve the substantive legal conflict between the parties. In this sense, the present case is quite unique since the court’s jurisdiction was, originally, invoked to compel an administrative agency (the BSP) to resolve the legal conflict of ownership over the CB bills - instead of obtaining a judicial determination of the same dispute.

The remedy of interpleader

Based on the unique factual premise of the present case, the RTC acted correctly in initially assuming jurisdiction over the PDB’s petition for mandamus, prohibition and injunction.128 While the RTC agreed (albeit erroneously) with the PDB’s view (that the BSP has jurisdiction), it, however, dismissed not only the BOC’s/the BSP’s counterclaims but the PDB’s petition itself as well, on the ground that it lacks jurisdiction.

This is plain error.

Not only the parties themselves, but more so the courts, are bound by the rule on non-waiver of jurisdiction.129believes that jurisdiction over the BOC’s counterclaims and the BSP’s counterclaim/crossclaim for interpleader calls for the application of the doctrine of primary jurisdiction, the allowance of the PDB’s petition even becomes imperative because courts may raise the issue of primary jurisdiction sua sponte.130

Of the three possible options available to the RTC, the adoption of either of these two would lead the trial court into serious legal error: first, if it granted the PDB’s petition, its decision would have to be set aside on appeal because the BSP has no jurisdiction as previously discussed; and second when it dismissed the PDB’s petitions and the BOC’s counterclaims on the ground that it lacks jurisdiction, the trial court seriously erred because precisely, the resolution of the conflicting claims over the CB bills falls within its general jurisdiction.

Without emasculating its jurisdiction, the RTC could have properly dismissed the PDB’s petition but on the ground that mandamus does not lie against the BSP; but even this correct alternative is no longer plausible since the BSP, as a respondent below, already properly brought before the RTC the remaining conflicting claims over the subject CB bills by way of a counterclaim/crossclaim for interpleader. Section 1, Rule 62 of the Rules of Court provides when an interpleader is proper:

SECTION 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or may be made against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves.

The remedy of an action of interpleader131 is designed to protect a person against double vexation in respect of a single liability.7 It requires, as an indispensable requisite, that conflicting claims upon the same subject matter are or may be made against the stakeholder (the possessor of the subject matter) who claims no interest whatever in the subject matter or an interest which in whole or in part is not disputed by the claimants.132

Through this remedy, the stakeholder can join all competing claimants in a single proceeding to determine conflicting claims without exposing the stakeholder to the possibility of having to pay more than once on a single liability.133

When the court orders that the claimants litigate among themselves, in reality a new

JURISDICTION

action arises,134 where the claims of the interpleaders themselves are brought to the fore, the stakeholder as plaintiff is relegated merely to the role of initiating the suit. In short, the remedy of interpleader, when proper, merely provides an avenue for the conflicting claims on the same subject matter to be threshed out in an action. Section 2 of Rule 62 provides:

SEC. 2.Order. – Upon the filing of the complaint, the court shall issue an order requiring the conflicting claimants to interplead with one another. If the interests of justice so require, the court may direct in such order that the subject matter be paid or delivered to the court.

This is precisely what the RTC did by granting the BSP’s motion to interplead. The PDB itself "agreed that the various claimants should now interplead." Thus, the PDB and the BOC subsequently entered into two separate escrow agreements, covering the CB bills, and submitted them to the RTC for approval.

In granting the BSP’s motion, the RTC acted on the correct premise that it has jurisdiction to resolve the parties’ conflicting claims over the CB bills - consistent with the rules and the parties’ conduct - and accordingly required the BOC to amend its answer and for the PDB to comment thereon. Suddenly, however, the PDB made an about-face and questioned the jurisdiction of the RTC. Swayed by the PDB’s argument, the RTC dismissed even the PDB’s petition - which means that it did not actually compel the BSP to resolve the BOC’s and the PDB’s claims.

Without the motion to interplead and the order granting it, the RTC could only dismiss the PDB’s petition since it is the RTC which has jurisdiction to resolve the parties’ conflicting claims – not the BSP. Given that the motion to interplead has been actually filed, the RTC could not have really granted the relief originally sought in the PDB’s petition since the RTC’s order granting the BSP’s motion to interplead - to which the PDB in fact acquiesced into - effectively resulted in the dismissal of the PDB’s petition. This is not altered by the fact that the PDB additionally prayed in its petition for damages, attorney’s fees and costs of suit "against the public respondents" because the grant of the order to interplead effectively sustained the propriety of the BSP’s resort to this procedural device.

Interpleader

1. as a special civil action

What is quite unique in this case is that the BSP did not initiate the interpleader suit through an original complaint but through its Answer. This

circumstance becomes understandable if it is considered that insofar as the BSP is concerned, the PDB does not possess any right to have its claim recorded in the BSP’s books; consequently, the PDB cannot properly be considered even as a potential claimant to the proceeds of the CB bills upon maturity. Thus, the interpleader was only an alternative position, made only in the BSP’s Answer.135

The remedy of interpleader, as a special civil action, is primarily governed by the specific provisions in Rule 62 of the Rules of Court and secondarily by the provisions applicable to ordinary civil actions.136 Indeed, Rule 62 does not expressly authorize the filing of a complaint-in-interpleader as part of, although separate and independent from, the answer. Similarly, Section 5, Rule 6, in relation to Section 1, Rule 9 of the Rules of Court137 does not include a complaint-in-interpleader as a claim,138 a form of defense,139 or as an objection that a defendant may be allowed to put up in his answer or in a motion to dismiss. This does not mean, however, that the BSP’s "counter-complaint/cross-claim for interpleader" runs counter to general procedures.

Apart from a pleading,140 the rules141 allow a party to seek an affirmative relief from the court through the procedural device of a motion. While captioned "Answer with counter complaint/cross-claim for interpleader," the RTC understood this as in the nature of a motion,142 seeking relief which essentially consists in an order for the conflicting claimants to litigate with each other so that "payment is made to the rightful or legitimate owner"143 of the subject CB bills.

The rules define a "civil action" as "one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong." Interpleader may be considered as a stakeholder’s remedy to prevent a wrong, that is, from making payment to one not entitled to it, thereby rendering itself vulnerable to lawsuit/s from those legally entitled to payment.

Interpleader is a civil action made special by the existence of particular rules to govern the uniqueness of its application and operation. Under Section 2, Rule 6 of the Rules of Court, governing ordinary civil actions, a party’s claim is asserted "in a complaint, counterclaim, cross-claim, third (fourth, etc.)-party complaint, or complaint-in-intervention." In an interpleader suit, however, a claim is not required to be contained in any of these pleadings but in the answer-(of the conflicting claimants)-in-interpleader. This claim is different from the counter-claim (or cross-claim, third party-complaint) which is separately allowed under Section 5, par. 2 of Rule 62.

2. the payment of docket fees covering BOC’s counterclaim

The PDB argues that, even assuming that the RTC has jurisdiction over the issue of ownership of the CB bills, the BOC’s failure to pay the appropriate docket fees prevents the RTC from acquiring jurisdiction over the BOC’s "counterclaims."

We disagree with the PDB.

To reiterate and recall, the order granting the "PDB’s motion to interplead," already resulted in the dismissal of the PDB’s petition. The same order required the BOC to amend its answer and for the conflicting claimants to comment, presumably to conform to the nature of an answer-in interpleader. Perhaps, by reason of the BOC’s denomination of its claim as a "compulsory counterclaim" and the PDB’s failure to fully appreciate the RTC’s order granting the "BSP’s motion for interpleader" (with the PDB’s conformity), the PDB mistakenly treated the BOC’s claim as a "permissive counterclaim" which necessitates the payment of docket fees.

As the preceding discussions would show, however, the BOC’s "claim" - i.e., its assertion of ownership over the CB bills – is in reality just that, a "claim" against the stakeholder and not as a "counterclaim,"144 whether compulsory145 or permissive. It is only the BOC’s alternative prayer (for the PDB to deliver to the BOC, as the buyer in the April 15 transaction and the ultimate successor-in-interest of the buyer in the April 19 transaction, either the original subjects of the sales or the value thereof plus whatever income that may have been earned pendente lite) and its prayer for damages that are obviously compulsory counterclaims against the PDB and, therefore, does not require payment of docket fees.146

The PDB takes a contrary position through its insistence that a compulsory counterclaim should be one where the presence of third parties, of whom the court cannot acquire jurisdiction, is not required. It reasons out that since the RCBC and All Asia (the intervening holders of the CB bills) have already been dropped from the case, then the BOC’s counterclaim must only be permissive in nature and the BOC should have paid the correct docket fees.

We see no reason to belabor this claim. Even if we gloss over the PDB’s own conformity to the dropping of these entities as parties, the BOC correctly argues that a remedy is provided under the Rules. Section 12, Rule 6 of the Rules of Court reads:

SEC. 12.Bringing new parties. – When the presence of parties other than those to the

JURISDICTION

original action is required for the granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order them to be brought in as defendants, if jurisdiction over them can be obtained.

Even then, the strict characterization of the BOC’s counterclaim is no longer material in disposing of the PDB’s argument based on non-payment of docket fees.

When an action is filed in court, the complaint must be accompanied by the payment of the requisite docket and filing fees by the party seeking affirmative relief from the court. It is the filing of the complaint or appropriate initiatory pleading, accompanied by the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the claim or the nature of the action.147 However, the non-payment of the docket fee at the time of filing does not automatically cause the dismissal of the case, so long as the fee is paid within the applicable prescriptive or reglementary period, especially when the claimant demonstrates a willingness to abide by the rules prescribing such payment.148

In the present case, considering the lack of a clear guideline on the payment of docket fee by the claimants in an interpleader suit, compounded by the unusual manner in which the interpleader suit was initiated and the circumstances surrounding it, we surely cannot deduce from the BOC’s mere failure to specify in its prayer the total amount of the CB bills it lays claim to (or the value of the subjects of the sales in the April 15 and April 19 transactions, in its alternative prayer) an intention to defraud the government that would warrant the dismissal of its claim.149

At any rate, regardless of the nature of the BOC’s "counterclaims," for purposes of payment of filing fees, both the BOC and the PDB, properly as defendants-in-interpleader, must be assessed the payment of the correct docket fee arising from their respective claims. The seminal case of Sun Insurance Office, Ltd. v. Judge Asuncion150provides us guidance in the payment of docket fees, to wit:

1. x xx Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee

prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period. [underscoring ours]

This must be the rule considering that Section 7, Rule 62 of which reads:

SEC. 7.Docket and other lawful fees, costs and litigation expenses as liens. – The docket and other lawful fees paid by the party who filed a complaint under this Rule, as well as the costs and litigation expenses, shall constitute a lien or charge upon the subject matter of the action, unless the court shall order otherwise.

only pertain to the docket and lawful fees to be paid by the one who initiated the interpleader suit, and who, under the Rules, actually "claims no interest whatever in the subject matter." By constituting a lien on the subject matter of the action, Section 7 in effect only aims to actually compensate the complainant-in-interpleader, who happens to be the stakeholder unfortunate enough to get caught in a legal crossfire between two or more conflicting claimants, for the faultless trouble it found itself into. Since the defendants-in-interpleader are actually the ones who make a claim - only that it was extraordinarily done through the procedural device of interpleader - then to them devolves the duty to pay the docket fees prescribed under Rule 141 of the Rules of Court, as amended.151

The importance of paying the correct amount of docket fee cannot be overemphasized:

The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court expenses in the handling of cases. Consequently, in order to avoid tremendous losses to the judiciary, and to the government as well, the payment of docket fees cannot be made dependent on the outcome of the case, except when the claimant is a pauper-litigant.152

WHEREFORE, premises considered the consolidated PETITIONS are GRANTED. The Planters Development Bank is hereby REQUIRED to file with the Regional Trial Court its comment or answer-in-interpleader to Bank of Commerce’s Amended Consolidated Answer with Compulsory Counterclaim, as previously ordered by the Regional Trial Court. The Regional Trial Court of Makati City, Branch 143, is hereby ORDERED to assess the docket fees due from Planters Development Bank and Bank of Commerce and order their payment, and to resolve with DELIBERATE DISPATCH the parties’ conflicting claims of ownership over the proceeds of the Central Bank bills.

The Clerk of Court of the Regional Trial Court of Makati City, Branch 143, or his duly authorized representative is hereby ORDERED to assess and collect the appropriate amount of docket fees separately due the Bank of Commerce and Planters Development Bank as conflicting claimants in BangkoSentralngPilipinas’ interpleader suit, in accordance with this decision.

SO ORDERED.

FACTS:

Before the Court are two consolidated petitions for review on certiorari under Rule 45,1 on pure questions of law, filed by the petitioners Bank of Commerce (BOC) and the BangkoSentralngPilipinas (BSP). They assail the January 10, 2002 and July 23, 2002 Orders (assailed orders) of the Regional Trial Court (RTC) of Makati City, Branch 143, in Civil Case Nos. 94-3233 and 94-3254. These orders dismissed (i) the petition filed by the Planters Development Bank (PDB), (ii) the "counterclaim" filed by the BOC, and (iii) the counter-complaint/cross-claim for interpleader filed bythe BSP; and denied the BOC’s and the BSP’s motions for reconsideration.

The Rizal Commercial Banking Corporation (RCBC) was the registered owner of seven Central Bank (CB) bills with a total face value of P 70 million, issued on January 2, 1994 and would mature on January 2, 1995.2 As evidenced by a "Detached Assignment" dated April 8, 1994,3 the RCBC sold these CB bills to the BOC.4 As evidenced by another "Detached Assignment"5 of even date, the BOC, in turn, sold these CB bills to the PDB.6The BOC delivered the Detached Assignments to the PDB.7

On April 15, 1994 (April 15 transaction), the PDB, in turn, sold to the BOC Treasury Bills worth P 70 million, with maturity date of June 29, 1994, as evidenced by a Trading Order8 and a Confirmation of Sale.9 However, instead of delivering the Treasury Bills, the PDB delivered the seven CB bills to the BOC, as evidenced by a PDB Security Delivery Receipt, bearing a "note: ** substitution in lieu of 06-29-94" – referring to the Treasury Bills.10Nevertheless, the PDB retained possession of the Detached Assignments. It is basically the nature of this April 15 transaction that the PDB and the BOC cannot agree on.

As the registered owner of the remaining three CB bills, the RCBC sold them to IVI Capital and Insular Savings Bank. Again, when the BSP refused to release the amount of this CB bill on maturity, the RCBC paid back its transferees, reacquired these three CB bills and sold them to the BOC – ultimately, the BOC acquired these three CB bills.

JURISDICTION

On June 30, 1994, upon learning of the transfers involving the CB bills, the PDB informed20 the Officer-in-Charge of the BSP’s Government Securities Department,21 LagrimasNuqui, of the PDB’s claim over these CB bills, based on the Detached Assignments in its possession. The PDB requested the BSP22 to record its claim in the BSP’s books, explaining that its non-possession of the CB bills is "on account of imperfect negotiations thereof and/or subsequent setoff or transfer."23

Nuqui denied the request, invoking Section 8 of CB Circular No. 28 (Regulations Governing Open Market Operations, Stabilization of the Securities Market, Issue, Servicing and Redemption of the Public Debt)24 which requires the presentation of the bond before a registered bond may be transferred on the books of the BSP.25

In a July 25, 1994 letter, the PDB clarified to Nuqui that it was not "asking for the transfer of the CB Bills…. rather it intends to put the BSP on formal notice that whoever is in possession of said bills is not a holder in due course," and, therefore the BSP should not make payment upon the presentation of the CB bills on maturity.26 Nuqui responded that the BSP was "not in a position at that point in time to determine who is and who is not the holder in due course since it is not privy to all acts and time involving the transfers or negotiation" of the CB bills. Nuqui added that the BSP’s action shall be governed by CB Circular No. 28, as amended.27

On November 17, 1994, the PDB also asked BSP Deputy Governor Edgardo Zialcita that (i) a notation in the BSP’s books be made against the transfer, exchange, or payment of the bonds and the payment of interest thereon; and (ii) the presenter of the bonds upon maturity be required to submit proof as a holder in due course (of the first set of CB bills). The PDB relied on Section 10 (d) 4 of CB Circular No. 28.28

In a December 29, 1994 letter, Nuqui again denied the request, reiterating the BSP’s previous stand.

In light of these BSP responses and the impending maturity of the CB bills, the PDB filed29 with the RTC two separate petitions for Mandamus, Prohibition and Injunction with prayer for Preliminary Injunction and Temporary Restraining Order, docketed as Civil Case No. 94-3233 (covering the first set of CB bills) and Civil Case 94-3254 (covering the second set of CB bills) against Nuqui, the BSP and the RCBC.30

On December 28, 1994, the RTC temporarily enjoined Nuqui and the BSP from paying the

face value of the CB bills on maturity.32 On January 10, 1995, the PDB filed an Amended Petition, additionally impleading the BOC and All Asia.33 In a January 13, 1995 Order, the cases were consolidated.34 On January 17, 1995, the RTC granted the PDB’s application for a writ of preliminary prohibitory injunction.35

After the petitions were filed, the BOC acquired/reacquired all the nine CB bills – the first and second sets of CB bills (collectively, subject CB bills).

The BOC filed its Answer, praying for the dismissal of the petition. It argued that the PDB has no cause of action against it since the PDB is no longer the owner of the CB bills. Contrary to the PDB’s "warehousing theory,"38 the BOC asserted that the (i) April 15 transaction and the (ii) April 19 transaction – covering both sets of CB bills - were valid contracts of sale, followed by a transfer of title (i) to the BOC (in the April 15 transaction) upon the PDB’s delivery of the 1st set of CB bills in substitution of the Treasury Bills the PDB originally intended to sell, and (ii) to Bancap (in the April 19 transaction) upon the PDB’s delivery of the 2nd set of CB bills to Bancap, likewise by way of substitution.

The BOC adds that Section 10 (d) 4 of CB Circular No. 28 cannot apply to the PDB’s case because (i) the PDB is not in possession of the CB bills and (ii) the BOC acquired these bills from the PDB, as to the 1st set of CB bills, and from Bancap, as to the 2nd set of CB bills, in good faith and for value. The BOC also asserted a compulsory counterclaim for damages and attorney’s fees.

RTC admitted60 the BOC’s Amended Consolidated Answer with Compulsory Counterclaims.

In May 2001, the PDB filed an Omnibus Motion,61 questioning the RTC’s jurisdiction over the BOC’s "additional counterclaims." The PDB argues that its petitions pray for the BSP (not the RTC) to determine who among the conflicting claimants to the CB bills stands in the position of the bona fide holder for value. The RTC cannot entertain the BOC’s counterclaim, regardless of its nature, because it is the BSP which has jurisdiction to determine who is entitled to receive the proceeds of the CB bills.

The BOC opposed62 the PDB’s Omnibus Motion. The PDB filed its Reply.63

In a January 10, 2002 Order, the RTC dismissed the PDB’s petition, the BOC’s counterclaim and the BSP’s counter-complaint/cross-claim for interpleader, holding that under CB Circular No. 28, it has no jurisdiction (i) over the BOC’s "counterclaims" and (ii) to resolve the issue of

ownership of the CB bills.64 With the denial of their separate motions for Reconsideration,65 the BOC and the BSP separately filed the present petitions for review on certiorari.66

THE BOC’S and THE BSP’S PETITIONS

The BOC argues that the present cases do not fall within the limited provision of Section 10 (d) 4 of CB Circular No. 28, which contemplates only of three situations: first, where the fraudulent assignment is not coupled with a notice to the BSP, it can grant no relief; second, where the fraudulent assignment is coupled with a notice of fraud to the BSP, it will make a notation against the assignment and require the owner and the holder to substantiate their claims; and third, where the case does not fall on either of the first two situations, the BSP will have to await action on the assignment pending settlement of the case, whether by agreement or by court order.

The PDB’s case cannot fall under the first two situations. With particular regard to the second situation, CB Circular No. 28 requires that the conflict must be between an "owner" and a "holder," for the BSP to exercise its limited jurisdiction to resolve conflicting claims; and the word "owner" here refers to the registered owner giving notice of the fraud to the BSP. The PDB, however, is not the registered owner nor is it in possession (holder) of the CB bills.67 Consequently, the PDB’s case can only falls under the third situation which leaves the RTC, as a court of general jurisdiction, with the authority to resolve the issue of ownership of a registered bond (the CB bills) not falling in either of the first two situations.

The BOC asserts that the policy consideration supportive of its interpretation of CB Circular No. 28 is to have a reliable system to protect the registered owner; should he file a notice with the BSP about a fraudulent assignment of certain CB bills, the BSP simply has to look at its books to determine who is the owner of the CB bills fraudulently assigned. Since it is only the registered owner who complied with the BSP’s requirement of recording an assignment in the BSP’s books, then "the protective mantle of administrative proceedings" should necessarily benefit him only, without extending the same benefit to those who chose to ignore the Circular’s requirement, like the PDB.68

Assuming arguendo that the PDB’s case falls under the second situation – i.e., the BSP has jurisdiction to resolve the issue of ownership of the CB bills – the more recent CB Circular No. 769-80 (Rules and Regulations Governing Central Bank Certificates of Indebtedness) already superseded CB Circular No. 28, and, in particular, effectively amended Section 10 (d) 4 of CB Circular No. 28.

JURISDICTION

THE PDB’S COMMENT

The PDB claims that jurisdiction is determined by the allegations in the complaint/petition and not by the defenses set up in the answer.70 In filing the petition with the RTC, the PDB merely seeks to compel the BSP to determine, pursuant to CB Circular No. 28, the party legally entitled to the proceeds of the subject CB bills, which, as the PDB alleged, have been transferred through fraudulent representations – an allegation which properly recognized the BSP’s jurisdiction to resolve conflicting claims of ownership over the CB bills.

The PDB adds that under the doctrine of primary jurisdiction, courts should refrain from determining a controversy involving a question whose resolution demands the exercise of sound administrative discretion. In the present case, the BSP’s special knowledge and experience in resolving disputes on securities, whose assignment and trading are governed by the BSP’s rules, should be upheld.

The PDB asserts that the existence of CB Circular No. 769-80 or the abolition of Nuqui’s office does not result in depriving the BSP of its jurisdiction: first, CB Circular No. 769-80 expressly provides that CB Circular No. 28 shall have suppletory application to CB Circular No. 769-80; and second, the BSP can always designate an office to resolve the PDB’s claim over the CB bills.

Lastly, the PDB argues that even assuming that the RTC has jurisdiction to resolve the issue of ownership of the CB bills, the RTC has not acquired jurisdiction over the BOC’s so-called "compulsory" counterclaims (which in truth is merely "permissive") because of the BOC’s failure to pay the appropriate docket fees. These counterclaims should, therefore, be dismissed and expunged from the record.

HELD: We grant the petitions.

The issue of BSP’s jurisdiction, lay hidden

On that note, the Court could have written finis to the present controversy by simply sustaining the BSP’s hands-off approach to the PDB’s problem under CB Circular No. 769-80. However, the jurisdictional provision of CB Circular No. 769-80 itself, in relation to CB Circular No. 28, on the matter of fraudulent assignment, has given rise to a question of jurisdiction - the core question of law involved in these petitions - which the Court cannot just treat sub-silencio.

Broadly speaking, jurisdiction is the legal power or authority to hear and determine a cause.80 In the exercise of judicial or quasi-judicial power, it refers to the authority of a court to hear and

decide a case.81 In the context of these petitions, we hark back to the basic principles governing the question of jurisdiction over the subject matter.

First, jurisdiction over the subject matter is determined only by the Constitution and by law.82 As a matter of substantive law, procedural rules alone can confer no jurisdiction to courts or administrative agencies.83 In fact, an administrative agency, acting in its quasi-judicial capacity, is a tribunal of limited jurisdiction and, as such, could wield only such powers that are specifically granted to it by the enabling statutes. In contrast, an RTC is a court of general jurisdiction, i.e., it has jurisdiction over cases whose subject matter does not fall within the exclusive original jurisdiction of any court, tribunal or body exercising judicial or quasi-judicial functions.84

Second, jurisdiction over the subject matter is determined not by the pleas set up by the defendant in his answer85 but by the allegations in the complaint,86 irrespective of whether the plaintiff is entitled to favorable judgment on the basis of his assertions.87 The reason is that the complaint is supposed to contain a concise statement of the ultimate facts constituting the plaintiff's causes of action.88

Third, jurisdiction is determined by the law in force at the time of the filing of the complaint.89

Parenthetically, the Court observes that none of the parties ever raised the issue of whether the BSP can simply disown its jurisdiction, assuming it has, by the simple expedient of promulgating a new circular (specially applicable to a certificate of indebtedness issued by the BSP itself), inconsistent with an old circular, assertive of its limited jurisdiction over ownership issues arising from fraudulent assignments of a certificate of indebtedness. The PDB, in particular, relied solely and heavily on CB Circular No. 28.

In light of the above principles pointing to jurisdiction as a matter of substantive law, the provisions of the law itself that gave CB Circular 769-80 its life and jurisdiction must be examined.

In the exercise of its plenary legislative power, Congress may create administrative agencies endowed with quasi-legislative and quasi-judicial powers. Necessarily, Congress likewise defines the limits of an agency’s jurisdiction in the same manner as it defines the jurisdiction of courts.121 As a result, it may happen that either a court or an administrative agency has exclusive jurisdiction over a specific matter or both have concurrent jurisdiction on the same. It may happen, too, that courts and agencies may willingly relinquish adjudicatory power that is rightfully theirs in favor of the other.

One of the instances when a court may properly defer to the adjudicatory authority of an agency is the applicability of the doctrine of primary jurisdiction.122

As early as 1954, the Court applied the doctrine of primary jurisdiction under the following terms:

6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions and boards the power to resolve specialized disputes xxx ruled that Congress in requiring the Industrial Court's intervention in the resolution of labor-management controversies xxx meant such jurisdiction to be exclusive, although it did not so expressly state in the law. The Court held that under the "sense-making and expeditious doctrine of primary jurisdiction ... the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an 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 purposes of the regulatory statute administered."123 (emphasis ours)

In Industrial Enterprises, Inc. v. Court of Appeals,124 the Court ruled that while an action for rescission of a contract between coal developers appears to be an action cognizable by regular courts, the trial court remains to be without jurisdiction to entertain the suit since the contract sought to be rescinded is "inextricably tied up with the right to develop coal-bearing lands and the determination of whether or not the reversion of the coal operating contract over the subject coal blocks to [the plaintiff] would be in line with the country’s national program and objective on coal-development and over-all coal-supply-demand balance." It then applied the doctrine of primary jurisdiction –

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

JURISDICTION

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."

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 Bureau of Energy Development 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. [emphases ours]

WHEREFORE, premises considered the consolidated PETITIONS are GRANTED. The Planters Development Bank is hereby REQUIRED to file with the Regional Trial Court its comment or answer-in-interpleader to Bank of Commerce’s Amended Consolidated Answer with Compulsory Counterclaim, as previously ordered by the Regional Trial Court. The Regional Trial Court of Makati City, Branch 143, is hereby ORDERED to assess the docket fees due from Planters Development Bank and Bank of Commerce and order their payment, and to resolve with DELIBERATE DISPATCH the parties’ conflicting claims of ownership over the proceeds of the Central Bank bills.

The Clerk of Court of the Regional Trial Court of Makati City, Branch 143, or his duly authorized representative is hereby ORDERED to assess and collect the appropriate amount of docket fees separately due the Bank of Commerce and Planters Development Bank as conflicting claimants in BangkoSentralngPilipinas’ interpleader suit, in accordance with this decision

EN BANCTHE COMMISSION ON ELECTIONS,Petitioner,

-versus-HON. THELMA CANLAS TRINIDAD-PE AGUIRRE, Presiding Judge, Regional Trial Court, Br. 129, Caloocan City, and MA. LEONISA GENOVIA,Respondents.

G.R. No. 171208

Promulgated: September 7, 2007x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CARPIO MORALES, J.:

FACTS: The present petition for Certiorari

under Rule 64 of the Rules of Court involves

jurisdiction over an election offense punishable

under the Omnibus Election Code by

“imprisonment of not less than one year but

not more than six years.”

On the directive of the Commission on Elections

(COMELEC) En Banc,[1] its Law Department filed

an Information against respondent Ma.

LeonisaGenovia, for violation of Section 261 (z)

(3) of the Omnibus Election Code which

penalizes

“Any person who votes in substitution for another whether with or without the latter’s knowledge and/or consent.” (Underscoring supplied)

The accusatory portion of the Information,

dated July 26, 2005, which was filed before the

Regional Trial Court (RTC)

of Caloocan City where it was docketed as

Criminal Case No. C-73774, reads:

That on or about July 15, 2002 Synchronized Barangay and SangguniangKabataan (SK) Elections, in the City of Caloocan, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, did, then and there, willfully and unlawfully, cast her vote in substitution of another person by misrepresenting herself to be EmelyGenovia and voted in substitution of said EmelyGenovia, a registered voter in Precinct No. 779-A, Barangay 60, Caloocan City.[2]

Under Section 264 of the Omnibus

Election Code, violation of any

election offense is punishable as

follows:

SECTION 264. Penalties. – Any person found guilty of any election offense under this Code shall be punished with imprisonment of not less than one year but not more than six years and shall not be subject to probation. In addition, the guilty party shall be sentenced to suffer disqualification to hold public office and deprivation of the right of suffrage. If he is a foreigner, he shall be sentenced to deportation which shall be enforced after the prison term has been served. Any political party found guilty shall be sentenced to pay a fine of not less than ten thousand pesos, which shall be imposed upon such party after criminal action has been instituted in which their corresponding officials have been found guilty. x xx (Italics in the original; emphasis and underscoring supplied)

RTC Ruling: By Order of September 21, 2005,[3] Branch 129 of the Caloocan RTC dismissed the case for lack of jurisdiction, it citing Section 32(2) of Batas Pambansa (B.P.) Blg. 129 (The Judiciary Reorganization Act of 1980) reading:

Sec. 32. Jurisdiction of Metropolitan   Trial   Courts, Municipal   Trial   Courts   and Municipal   Circuit   Trial   Courts   in Criminal   Cases. – Except in cases falling within the exclusive jurisdiction of Regional Trial Courts and of the Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:

x xxx

(2) Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the amount of fine regardless of other imposable accessory penalties, including the civil liability arising from such offenses or predicated thereon, irrespective of kind, nature, or

JURISDICTION

value amount thereof: Provided, however, That in offenses involving damage to property through criminal negligence, they shall have exclusive original jurisdiction thereof. (Italics in the original; emphasis and underscoring supplied)

The COMELEC moved to reconsider the trial

court’s dismissal order,[4] inviting attention to

Section 268 of the Omnibus Election Code

which reads:

SECTION 268. Jurisdiction of courts. – The regional trial court shall have the exclusive original jurisdiction to try and decide any criminal action or proceedings for violation of this Code, except those relating to the offense of failure to register or failure to vote which shall be under the jurisdiction of the metropolitan or municipal trial courts. From the decision of the courts, appeal will lie as in other criminal cases. (Underscoring supplied)

By a one sentence Order of November 15,

2005,[5] the trial court denied the COMELEC’s

motion for “lack of merit.”

Hence, the present petition for certiorari

under Rule 64,[6] the COMELEC contending that

the dismissal order is contrary to Section 268

of the Omnibus Election Code.

The COMELEC argues that under the above-

quoted provision of Section 268 of the

Omnibus Election Code, all criminal cases for

violation of the Code, except those relating to 

failure to register or failure to vote which shall 

be  under   the  exclusive   jurisdiction of   inferior 

courts, fall under the exclusive jurisdiction of

regional trial courts.[7]

ISSUE: Whether or not RTC erred in denying

the case for lack of jurisdiction?

Ruling of SC: The petition is meritorious. From

the above-quoted provision of Section 32 of BP

Blg. 129, jurisdiction of first-level courts – the

metropolitan trial courts, municipal trial courts

and municipal circuit trial courts – does not

cover criminal cases which, by specific provision

of law, fall within the exclusive jurisdiction of

regional trial courts (and of the Sandiganbayan).

[8]

As correctly argued by the COMELEC, Section

268 of the Omnibus Election Code specifically

provides, regional trial courts have exclusive

jurisdiction to try and decide any criminal action

or proceedings for violation of the Code “except

those relating to the offense of failure to register

or failure to vote.”

It bears emphasis that Congress has the plenary

power to define, prescribe and apportion the

jurisdictions of various courts. Hence, it may, by

law, provide that a certain class of cases should

be exclusively heard and determined by a

specific court. Section 268 of Omnibus Election

Code is one such and must thus be construed as

an exception to BP Blg. 129, the general law on

jurisdiction of courts.[9]

In fine, while BP Blg. 129 lodges in

municipal trial courts, metropolitan trial courts

and municipal circuit trial courts jurisdiction over

criminal cases carrying a penalty of

imprisonment of less than one year but not

exceeding six years, following Section 268 of the

Omnibus Election Code, any criminal action or

proceeding which bears the same penalty, with

the exception of the therein mentioned two

cases, falls within the exclusive original

jurisdiction of regional trial courts.

WHEREFORE, the petition

is GRANTED. The challenged orders of

respondent Judge Thelma CanlasTrinided-Pe

Aguirre, in Criminal Case No. C-73774 are SET

ASIDE. Respondent judge is DIRECTED to

reinstate the case to the court docket and to

conduct appropriate proceedings thereon with

reasonable dispatch.

FIRST DIVISION

[G.R. NO. 146454 : September 14, 2007]

PAMELA S. SEVILLENO and PURITA S. SEVILLENO, Petitioners, v. PACITA CARILO and

CAMELO CARILO, Respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

FACTS: On October 28, 1998, Pamela and Purita, both surnamed Sevilleno, petitioners, filed with the Regional Trial Court (RTC), Branch 82, Quezon City, a complaint for damages against spouses Camelo and PacitaCarilo, respondents, docketed as Civil Case No. Q-35895. Petitioners prayed for an award ofP5,000.00 as actual damages, P400,000.00 as moral damages, P10,000.00 as exemplary damages, and P50,000.00 for attorney's fees.

Respondents seasonably filed their answer with compulsory counterclaim. They prayed that the trial court dismiss the complaint for lack of cause of action.

RTC ruling: motuprioprio issued an Order dismissing the case for lack of jurisdiction over the subject matter of the case.

Petitioners filed a motion for reconsideration but it was denied by the RTC in an Order dated May 18, 1999.

Ruling of CA:Petitioners interposed an appeal to the Court of Appeals but it was dismissed for being the wrong mode of appeal. The appellate court held that since the issue being raised is whether the RTC has jurisdiction over the subject matter of the case, which is a question of law, the appeal should have been elevated to the Supreme Court under Rule 45 of the 1997 Rules of Civil Procedure, as amended.

Section 2, Rule 41 of the same Rules which governs appeals from judgments and final orders of the RTC to the Court of Appeals, provides:

SEC. 2. Modes of appeal. '

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the Regional

JURISDICTION

Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by Petition for Review in accordance with Rule 42.

(c) Appeal by certiorari . - In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by Petition for Review on Certiorariin accordance with Rule 45.

In Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals,2 we summarized the rule on appeals as follows:

(1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be made to the Court of Appeals by mere notice of appeal where the appellant raises questions of fact or mixed questions of fact and law;

(2) In all cases decided by the RTC in the exercise of its original jurisdiction where the appellant raises only questions of law, the appeal must be taken to the Supreme Court on a Petition for Review on Certiorari under Rule 45.

(3) All appeals from judgments rendered by the RTC in the exercise of its appellate jurisdiction, regardless of whether the appellant raises questions of fact, questions of law, or mixed questions of fact and law, shall be brought to the Court of Appeals by filing a Petition for Review under Rule 42.

ISSUE:Whether or not CA erred in dismissing petitioners appeal.

HELD:It is not disputed that the issue brought by petitioners to the Court of Appeals involves the jurisdiction of the RTC over the subject matter of the case. We have a long standing rule that a court's jurisdiction over the subject matter of an action is conferred only by the Constitution or by statute.3Otherwise put, jurisdiction of a court over the subject matter of the action is a matter of law.4Consequently, issues which deal with the jurisdiction of a court over the subject matter of a case are pure questions of law. As petitioners' appeal solely involves a question of law, they should have

directly taken their appeal to this Court by filing a Petition for Review on Certiorari under Rule 45, not an ordinary appeal with the Court of Appeals under Rule 41. Clearly, the appellate court did not err in holding that petitioners pursued the wrong mode of appeal.

Indeed, the Court of Appeals did not err in dismissing petitioners' appeal. Section 2, Rule 50 of the same Rules provides that an appeal from the RTC to the Court of Appeals raising only questions of law shall be dismissed; and that an appeal erroneously taken to the Court of Appeals shall be dismissed outright, thus:

Sec. 2. Dismissal of improper appeal to the Court of Appeals. - An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues of pure law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by Petition for Review from the appellate judgment of a Regional Trial Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.

WHEREFORE, we DENY the petition. The questioned Resolution of the Court of Appeals (Third Division) in CA-G.R. CV No. 63608 is AFFIRMED. Costs against petitioners.

Republic of the PhilippinesSupreme Court

Baguio CityTHIRD DIVISION

COSCO PHILIPPINES SHIPPING, INC.,Petitioner,- versus -KEMPER INSURANCE COMPANY,Respondent.

G.R. No. 179488April 23, 2012x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - xPERALTA, J.:

FACTS:Respondent Kemper Insurance Company is a foreign insurance company based in Illinois, United States of America (USA) with no license to engage in business in the Philippines, as it is not doing business in the Philippines, except in isolated transactions; while petitioner is a domestic shipping company organized in accordance with Philippine laws.In 1998, respondent insured the shipment of imported frozen boneless beef (owned by

Genosi, Inc.), which was loaded at a port in Brisbane, Australia, for shipment to Genosi, Inc. (the importer-consignee) in the Philippines. However, upon arrival at the Manila port, a portion of the shipment was rejected by Genosi, Inc. by reason of spoilage arising from the alleged temperature fluctuations of petitioner's reefer containers.

Thus, Genosi, Inc. filed a claim against both petitioner shipping company and respondent Kemper Insurance Company. The claim was referred to McLarens Chartered for investigation, evaluation, and adjustment of the claim. After processing the claim documents, McLarens Chartered recommended a settlement of the claim in the amount of $64,492.58, which Genosi, Inc. (the consignee-insured) accepted. Thereafter, respondent paid the claim of Genosi, Inc. (the insured) in the amount of $64,492.58. Consequently, Genosi, Inc., through its General Manager, Avelino S. Mangahas, Jr., executed a Loss and Subrogation Receipt[3] dated September 22, 1999, stating that Genosi, Inc. received from respondent the amount of $64,492.58 as the full and final satisfaction compromise, and discharges respondent of all claims for losses and expenses sustained by the property insured, under various policy numbers, due to spoilage brought about by machinery breakdown which occurred on October 25, November 7 and 10, and December 5, 14, and 18, 1998; and, in consideration thereof, subrogates respondent to the claims of Genosi, Inc. to the extent of the said amount. Respondent then made demands upon petitioner, but the latter failed and refused to pay the said amount.Hence, on October 28, 1999, respondent filed a Complaint for Insurance Loss and Damages[4] against petitioner before the trial court, docketed as Civil Case No. 99-95561, entitled Kemper Insurance Company v. Cosco Philippines Shipping, Inc. Respondent alleged that despite repeated demands to pay and settle the total amount of US$64,492.58, representing the value of the loss, petitioner failed and refused to pay the same, thereby causing damage and prejudice to respondent in the amount of US$64,492.58; that the loss and damage it sustained was due to the fault and negligence of petitioner, specifically, the fluctuations in the temperature of the reefer container beyond the required setting which was caused by the breakdown in the electronics

JURISDICTION

controller assembly; that due to the unjustified failure and refusal to pay its just and valid claims, petitioner should be held liable to pay interest thereon at the legal rate from the date of demand; and that due to the unjustified refusal of the petitioner to pay the said amount, it was compelled to engage the services of a counsel whom it agreed to pay 25% of the whole amount due as attorney's fees. Respondent prayed that after due hearing, judgment be rendered in its favor and that petitioner be ordered to pay the amount of US$64,492.58, or its equivalent in Philippine currency at the prevailing foreign exchange rate, or a total of P2,594,513.00, with interest thereon at the legal rate from date of demand, 25% of the whole amount due as attorney's fees, and costs.

In its Answer[5] dated November 29, 1999, petitioner insisted, among others, that respondent had no capacity to sue since it was doing business in the Philippines without the required license; that the complaint has prescribed and/or is barred by laches; that no timely claim was filed; that the loss or damage sustained by the shipments, if any, was due to causes beyond the carrier's control and was due to the inherent nature or insufficient packing of the shipments and/or fault of the consignee or the hired stevedores or arrastre operator or the fault of persons whose acts or omissions cannot be the basis of liability of the carrier; and that the subject shipment was discharged under required temperature and was complete, sealed, and in good order condition.

During the pre-trial proceedings, respondent's counsel proffered and marked its exhibits, while petitioner's counsel manifested that he would mark his client's exhibits on the next scheduled pre-trial. However, on November 8, 2001, petitioner filed a Motion to Dismiss,[6] contending that the same was filed by one Atty. Rodolfo A. Lat, who failed to show his authority to sue and sign the corresponding certification against forum shopping. It argued that Atty. Lat's act of signing the certification against forum shopping was a clear violation of Section 5, Rule 7 of the 1997 Rules of Court.

RTC Ruling: the trial court granted petitioner's Motion to Dismiss and dismissed the case without prejudice, ruling that it is mandatory that the certification must be executed by the

petitioner himself, and not by counsel. Since respondent's counsel did not have a Special Power of Attorney (SPA) to act on its behalf, hence, the certification against forum shopping executed by said counsel was fatally defective and constituted a valid cause for dismissal of the complaint.

Respondent's Motion for Reconsideration[8] was denied by the trial court in an Order[9] dated July 9, 2002.

CA Ruling:On appeal by respondent, the CA, in its Decision[10] dated March 23, 2007, reversed and set aside the trial court's order. The CA ruled that the required certificate of non-forum shopping is mandatory and that the same must be signed by the plaintiff or principal party concerned and not by counsel; and in case of corporations, the physical act of signing may be performed in behalf of the corporate entity by specifically authorized individuals. However, the CA pointed out that the factual circumstances of the case warranted the liberal application of the rules and, as such, ordered the remand of the case to the trial court for further proceedings.

Petitioner's Motion for Reconsideration[11] was later denied by the CA in the Resolution[12] dated September 3, 2007.

Hence, petitioner elevated the case to this Court via Petition for Review on Certiorari under Rule 45 of the Rules of Court, with the following issues:

ISSUE: Whether or not THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT ATTY. RODOLFO LAT WAS PROPERLY AUTHORIZED BY THE RESPONDENT TO SIGN THE CERTIFICATE AGAINST FORUM SHOPPING DESPITE THE UNDISPUTED FACTS THAT:A) THE PERSON WHO EXECUTED THE SPECIAL POWER OF ATTORNEY (SPA) APPOINTING ATTY. LAT AS RESPONDENT'S ATTORNEY-IN-FACT WAS MERELY AN UNDERWRITER OF THE RESPONDENT WHO HAS NOT SHOWN PROOF THAT HE WAS AUTHORIZED BY THE BOARD OF DIRECTORS OF RESPONDENT TO DO SO.B) THE POWERS GRANTED TO ATTY. LAT REFER TO [THE AUTHORITY TO REPRESENT DURING THE] PRE-TRIAL [STAGE] AND DO NOT COVER THE SPECIFIC POWER TO SIGN THE CERTIFICATE.[13]

Petitioner alleged that respondent failed to submit any board resolution or secretary's certificate authorizing Atty. Lat to institute the complaint and sign the certificate of non-forum shopping on its behalf. Petitioner submits that since respondent is a juridical entity, the signatory in the complaint must show proof of his or her authority to sign on behalf of the corporation. Further, the SPA[14] dated May 11, 2000, submitted by Atty. Lat, which was notarized before the Consulate General of Chicago, Illinois, USA, allegedly authorizing him to represent respondent in the pre-trial and other stages of the proceedings was signed by one Brent Healy (respondent's underwriter), who lacks authorization from its board of directors.

In its Comment, respondent admitted that it failed to attach in the complaint a concrete proof of Atty. Lat's authority to execute the certificate of non-forum shopping on its behalf. However, there was subsequent compliance as respondent submitted an authenticated SPA empowering Atty. Lat to represent it in the pre-trial and all stages of the proceedings. Further, it averred that petitioner is barred by laches from questioning the purported defect in respondent's certificate of non-forum shopping.The main issue in this case is whether Atty. Lat was properly authorized by respondent to sign the certification against forum shopping on its behalf.

The petition is meritorious.

HELD:We have consistently held that the certification against forum shopping must be signed by the principal parties.[15] If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly authorized.[16] With respect to a corporation, the certification against forum shopping may be signed for and on its behalf, by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed in such document.[17] A corporation has no power, except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence. In turn, a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents. Thus, it has been observed that the power of a corporation to sue and be sued in any court is lodged with the board of directors that exercises its

JURISDICTION

corporate powers. In turn, physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors.[18]

In Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP),[19] we ruled that only individuals vested with authority by a valid board resolution may sign the certificate of non-forum shopping on behalf of a corporation. We also required proof of such authority to be presented. The petition is subject to dismissal if a certification was submitted unaccompanied by proof of the signatory's authority.In the present case, since respondent is a corporation, the certification must be executed by an officer or member of the board of directors or by one who is duly authorized by a resolution of the board of directors; otherwise, the complaint will have to be dismissed.[20] The lack of certification against forum shopping is generally not curable by mere amendment of the complaint, but shall be a cause for the dismissal of the case without prejudice.[21] The same rule applies to certifications against forum shopping signed by a person on behalf of a corporation which are unaccompanied by proof that said signatory is authorized to file the complaint on behalf of the corporation.[22]

There is no proof that respondent, a private corporation, authorized Atty. Lat, through a board resolution, to sign the verification and certification against forum shopping on its behalf. Accordingly, the certification against forum shopping appended to the complaint is fatally defective, and warrants the dismissal of respondent's complaint for Insurance Loss and Damages (Civil Case No. 99-95561) against petitioner.

In Republic v. Coalbrine International Philippines, Inc.,[23] the Court cited instances wherein the lack of authority of the person making the certification of non-forum shopping was remedied through subsequent compliance by the parties therein. Thus,[w]hile there were instances where we have allowed the filing of a certification against non-forum shopping by someone on behalf of a corporation without the accompanying proof of authority at the time of its filing, we did so on the basis of a special circumstance or

compelling reason. Moreover, there was a subsequent compliance by the submission of the proof of authority attesting to the fact that the person who signed the certification was duly authorized.

Contrary to the CA's finding, the Court finds that the circumstances of this case do not necessitate the relaxation of the rules. There was no proof of authority submitted, even belatedly, to show subsequent compliance with the requirement of the law. Neither was there a copy of the board resolution or secretary's certificate subsequently submitted to the trial court that would attest to the fact that Atty. Lat was indeed authorized to file said complaint and sign the verification and certification against forum shopping, nor did respondent satisfactorily explain why it failed to comply with the rules. Thus, there exists no cogent reason for the relaxation of the rule on this matter. Obedience to the requirements of procedural rules is needed if we are to expect fair results therefrom, and utter disregard of the rules cannot justly be rationalized by harking on the policy of liberal construction.[25]Moreover, the SPA dated May 11, 2000, submitted by respondent allegedly authorizing Atty. Lat to appear on behalf of the corporation, in the pre-trial and all stages of the proceedings, signed by Brent Healy, was fatally defective and had no evidentiary value. It failed to establish Healy's authority to act in behalf of respondent, in view of the absence of a resolution from respondent's board of directors or secretary's certificate proving the same. Like any other corporate act, the power of Healy to name, constitute, and appoint Atty. Lat as respondent's attorney-in-fact, with full powers to represent respondent in the proceedings, should have been evidenced by a board resolution or secretary's certificate.

Respondent's allegation that petitioner is estopped by laches from raising the defect in respondent's certificate of non-forum shopping does not hold water.

In Tamondong v. Court of Appeals,[26] we held that if a complaint is filed for and in behalf of the plaintiff who is not authorized to do so, the complaint is not deemed filed. An unauthorized complaint does not produce any legal effect. Hence, the court should dismiss the complaint on the ground that it has no jurisdiction over

the complaint and the plaintiff.[27] Accordingly, since Atty. Lat was not duly authorized by respondent to file the complaint and sign the verification and certification against forum shopping, the complaint is considered not filed and ineffectual, and, as a necessary consequence, is dismissable due to lack of jurisdiction.

Jurisdiction is the power with which courts are invested for administering justice; that is, for hearing and deciding cases. In order for the court to have authority to dispose of the case on the merits, it must acquire jurisdiction over the subject matter and the parties. Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a party should first be subjected to the court's jurisdiction.[28] Clearly, since no valid complaint was ever filed with the RTC, Branch 8, Manila, the same did not acquire jurisdiction over the person of respondent.

Since the court has no jurisdiction over the complaint and respondent, petitioner is not estopped from challenging the trial court's jurisdiction, even at the pre-trial stage of the proceedings. This is so because the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.[29]

In Regalado v. Go,[30] the Court held that laches should be clearly present for the Sibonghanoy[31] doctrine to apply, thus:Laches is defined as the "failure or neglect for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier, it is negligence or omission to assert a right within a reasonable length of time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.”

The ruling in People v. Regalario that was based on the landmark doctrine enunciated in Tijam v. Sibonghanoy on the matter of jurisdiction by estoppel is the exception rather than the rule. Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in cases in which the factual milieu is analogous to that in the cited case. In such controversies, laches should have been clearly present; that is, lack of jurisdiction must have been raised so belatedly as to warrant the presumption that

JURISDICTION

the party entitled to assert it had abandoned or declined to assert it.

In Sibonghanoy, the defense of lack of jurisdiction was raised for the first time in a motion to dismiss filed by the Surety almost 15 years after the questioned ruling had been rendered. At several stages of the proceedings, in the court a quo as well as in the Court of Appeals, the Surety invoked the jurisdiction of the said courts to obtain affirmative relief and submitted its case for final adjudication on the merits. It was only when the adverse decision was rendered by the Court of Appeals that it finally woke up to raise the question of jurisdiction.[32] The factual setting attendant in Sibonghanoy is not similar to that of the present case so as to make it fall under the doctrine of estoppel by laches. Here, the trial court's jurisdiction was questioned by the petitioner during the pre-trial stage of the proceedings, and it cannot be said that considerable length of time had elapsed for laches to attach.

WHEREFORE, the petition is GRANTED. The Decision and the Resolution of the Court of Appeals, dated March 23, 2007 and September 3, 2007, respectively, in CA-G.R. CV No. 75895 are REVERSED and SET ASIDE. The Orders of the Regional Trial Court, dated March 22, 2002 and July 9, 2002, respectively, in Civil Case No. 99-95561, are REINSTATED.Go vs Distinct Corporation

FACTS: Lim (petitioners) are registered individual owners of condominium units in Phoenix Heights Condominium developed by the respondent. In August 2008, petitioners, as condominium unit-owners, filed a complaint before the HLURB against DPDCI for unsound business practices and violation of the MDDR, alleging that DPDCI committed misrepresentation in their circulated flyers and brochures as to the facilities or amenities that would be available in the condominium and failed to perform its obligation to comply with the MDDR. In defense, DPDCI alleged that the brochure attached to the complaint was “a mere preparatory draft”. HLURB rendered its decision in favor of petitioners. DPDCI filed with the CA its Petition for Certiorari and Prohibition on the ground that HLURB acted without or beyond its jurisdiction. The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners as the controversy did not fall within the scope of the administrative agency’s authority.

ISSUE: 1. Whether the HLURB has jurisdiction over the complaint filed by the petitioners

2. Whether PHCC is an indispensable party

RULING: 1. Jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. Thus, it was ruled that the jurisdiction of the HLURB to hear and decide cases is determined by the nature of the cause of action, the subject matter or property involved and the parties. In this case, the complaint filed by petitioners alleged causes of action that apparently are not cognizable by the HLURB considering the nature of the action and the reliefs sought. 2. An indispensable party is defined as one who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest. It is "precisely ‘when an indispensable party is not before the court (that) an action should be dismissed.’ The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even to those present. The purpose of the rules on joinder of

the cause of action rightfully pertains to PHCC.indispensable parties is a complete determination of all issues not only between the parties themselves. Evidently. . but also as regards other persons who may be affected by the judgment. as it would be directly and adversely affected by any determination therein. PHCC is an indispensable party and should have been impleaded.

POWERS OF HLURB:PD 957 WHICH GRANTED HLURB EXCLUSIVE JURISDICTION TO REGULATE THE REAL ESTATE TRADE AND BUSINESS.

THIS POWER WAS EXPANDED BY PD 1344 TO THE FOLLOWING CASES:

(A) UNSOUND REAL ESTATE BUSINESS PRACTICES;

(B) CLAIMS INVOLVING REFUND AND ANY OTHER CLAIMS FILED BY SUBDIVISION LOT OR CONDOMINIUM UNIT BUYER AGAINST THE PROJECT OWNER, DEVELOPER, DEALER, BROKER OR SALESMAN; AND

(C) CASES INVOLVING SPECIFIC PERFORMANCE OF CONTRACTUAL AND STATUTORY OBLIGATIONS FILED BY BUYERS OF SUBDIVISION LOT OR CONDOMINIUM UNIT AGAINST THE OWNER, DEVELOPER, DEALER, BROKER OR SALESMAN.

Generally, the extent to which an administrative agency may exercise its powers depends largely, if not wholly, on the provisions of the statute creating or empowering such agency.[3][19] With respect to the HLURB, to determine if said agency has jurisdiction over petitioners’ cause of action, an examination of the laws defining the HLURB’s jurisdiction and authority becomes imperative. P.D. No. 957,[4][20] specifically Section 3, granted the National Housing Authority (NHA) the “exclusive jurisdiction to regulate the real estate trade and business.” Then came P.D. No. 1344[5][21] expanding the jurisdiction of the NHA (now HLURB), as follows:

SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

(a) Unsound real estate business practices;

(b) Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and

(c) Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.

This provision must be read in light of the law’s preamble, which explains the reasons for enactment of the law or the contextual basis for its interpretation.[6][22] A statute derives its vitality from the purpose for which it is

JURISDICTION

enacted, and to construe it in a manner that disregards or defeats such purpose is to nullify or destroy the law.[7][23] P.D. No. 957, as amended, aims to protect innocent subdivision lot and condominium unit buyers against fraudulent real estate practices.[8][24]

The HLURB is given a wide latitude in characterizing or categorizing acts which may constitute unsound business practice or breach of contractual obligations in the real estate trade. This grant of expansive jurisdiction to the HLURB does not mean, however, that all cases involving subdivision lots or condominium units automatically fall under its jurisdiction. The CA aptly quoted the case ofChristian General Assembly, Inc. v. Ignacio,[9][25] wherein the Court held that:

The mere relationship between the parties, i.e., that of being subdivision owner/developer and subdivision lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to fall within the exclusive jurisdiction of the HLURB, the decisive element is the nature of the action as enumerated in Section 1 of P.D. 1344. On this matter, we have consistently held that the concerned administrative agency, the National Housing Authority (NHA) before and now the HLURB, has jurisdiction over complaints aimed at compelling the subdivision developer to comply with its contractual and statutory obligations.

FASAP VS PAL

June 15, 1998 - Philippine Airlines (PAL) retrenches 5,000 employees, including 1,400 cabin crew personnel as a cost-cutting measure. PAL said it incurred P90-B in liabilities during the 1997 Asian financial crisis. The retrenchment takes effect on July 15.

June 22, 1998 - The Flight Attendants and Stewards Association of the Philippines (FASAP) files a complaint against PAL and Patria Chiong, the Assistant Vice President for Cabin Services of PAL, for illegal retrenchment at the National Labor Relations Commission.

July 23, 1998 - The labor arbiter rules in favor of FASAP and issues a preliminary injunction stopping PAL from implementing retrenchment program. He also orders the parties to issue a position paper.

Sept. 4, 1998 - PAL chairman Lucio Tan dangles shares of stock to employees and 3 seats in its

board of directors, but, in exchange, the collective bargaining agreement would be suspended for 10 years. The employees dismiss the offer.

Sept. 23, 1998 - PAL stops operations and terminates employees.

November 1998 - March 1999 - PAL starts to recall the cabin crew personnel it retrenched. PAL says it recalled 820 personnel already. FASAP says it only recalled 80.

Sept. 28, 1999- FASAP files position paper with the National Labor Relations Commission (NLRC).

Nov. 8, 1999- PAL files position paper

July 21, 2000 - Labor arbiter Jovencio Mayor rules in favor of FASAP and orders PAL to reinstate retrenched employees. PAL appeals the decision.

May 31, 2004 - NLRC reverses decision due to lack of merit. FASAP elevates case to the Court of Appeals.

Aug, 23, 2006 - The Court of Appeals affirms NLRC's decision, saying PAL doesn't have to consult FASAP for its criteria on retrenchment program. FASAP files motion for reconsideration.

May 29, 2007 - CA stands by its earlier ruling. FASAP goes to the Supreme Court.

July 22, 2008 - The SC special third division, in a decision penned by Justice Consuelo Ynares-Santiago, rules in favor of FASAP and orders PAL to reinstate retrenched employees. Justices who concurred with this decision are Justices Alicia Austria-Martinez, Minita Chico-Nazario, Antonio Eduardo Nachura and Ruben Reyes.

Aug. 20, 2008 - PAL files motion for reconsideration.

(NOTE)Oct. 2, 2009 - SC special third division affirms 2008 decision with finality. Decision is penned by Ynares-Santiago. Concurring are Justices Nachura, Diosdado Peralta, Nazario and Lucas Bersamin.

Nov. 3. 2009 - PAL files motion for leave to file, and to admit motion for reconsideration for 2009 decision and second motion for reconsideration for 2008 decision.

Jan. 20, 2010 - The SC third division, then chaired by Associate Justice Renato Corona,

grants PAL's motion. Corona inhibits from the case.

June 3, 2010 - Chief Justice Renato Corona (he was named Chief Justice in May 2010) orders a revamp of SC divisions. Justice ConchitaCarpio-Morales is new chair of third division, with members including Associate Justices Arturo Brion, Bersamin and Villarama.

The FASAP case is raffled off to SC second division because members of the Special third division have retired.

Sept. 7, 2011 - The SC second division dismisses PAL's second motion for reconsideration

Sept. 13, 2011 - PAL lawyer Estelito Mendoza writes the Clerk of Court and asks for an update on the Court's action regarding the case and asks who is the ponente assigned to it.

Sept. 16, 2011 - Mendoza writes a second letter, reiterating request for update.

Sept. 20, 2011 - Mendoza writes another letter, saying they received copy of the Sept. 7 resolution on Sept. 19. He asks for voting pn the details on the resolution. The Sept. 7 resolution dismissses PAL's second motion for reconsideration.

Sept. 22, 2011 - Mendoza writes a fourth letter, asking the Clerk of Court to direct queries to Justices Carpio, Arturo Brion, Jose Perez, Diosdado Peralta, Jose Mendoza, Bersamin, if necessary.

Oct. 4, 2011 - The SC en banc orders the recall of Sept. 7 resolution.

Oct. 16, 2011 - In an interview with Move.ph on this day, Mendoza said the SC erred because their motion for reconsideration was decided by the second division, when what the SC should have done was to form a special third division in light of the retirement of certain members of the the third division, which originally handled the FASAP case.

Oct. 17, 2011 - FASAP files a motion for reconsideration asking the Court to set aside its Oct. 4, 2011 resolution.

(NOTE)March 13 2012- In sum, the recall of the September 7, 2011 Resolution of the ruling Division was a proper and legal move to make under the applicable laws and rules, and the indisputably unusual developments and circumstances of the case.

JURISDICTION

Between Section 3, Article 8 and Section 7, Rule 2, both of the IRSC, the former is the general provision on a Member-in-Charge’s inhibition, but it should yield to the more specific Section 7, Rule 2 in a situation where the review of an issued decision or signed resolution is called for and the ponente or writer of these rulings is no longer available to act. Section 7, Rule 2 exactly contemplates this situation.

WHEREFORE, premises considered, we hereby confirm that the Court en banc has assumed jurisdiction over the resolution of the merits of the motions for reconsideration of Philippine Airlines, Inc., addressing our July 22, 2008 Decision and October 2, 2009 Resolution; and that the September 7, 2011 ruling of the Second Division has been effectively recalled. This case should now be raffled either to Justice Lucas P. Bersamin or Justice Diosdado M. Peralta (the remaining Members of the Special Third Division that originally ruled on the merits of the case) as Member-in-Charge in resolving the merits of these motions.

The Philippine Airlines, Inc.’s Motion to Vacate dated October 3, 2011, but received by this Court after a recall had been made, has thereby been rendered moot and academic.

The Flight Attendants and Stewards Association of the Philippines’ Motion for Reconsideration of October 17, 2011 is hereby denied; the recall of the September 7, 2011 Resolution was made by the Court on its own before the ruling’s finality pursuant to the Court’s power of control over its orders and resolutions. Thus, no due process issue ever arose.

NOTE:

(ung October 2 2009 at March 13 2012, yung case naididiscuss, nilagyankolng ng timeline ungfasap vs pal na case para di kayo maguluhansamganangyari, yannaung key events ng kwento ng FASAP AT PAL, added trivia- yang case ding yanangginamitsaisasamga grounds for impeachment ni CJ Corona sapagiging partial nung justice pa siya, kasisiyaung justice na nag grant ng MR ng PAL bagosiyanaginhibitsakaso,.. tapossiya din ung chief justice nung nag decide sa case ulet ng fasap at pal ng March 2012, for 14yrs puro FASAP halos nanalosa hierarchy ng courts, peronung 2012 na reversed ung favor for PAL, RE RAFFLED ulitungkaso and pending ulet.

Angpagkakaintindikosa case na to in connection ng subject kung san nakaunder tong case na to (Allocation of Power/jurisdiction) ay ungmga nagging ponente ng 14yrsold na case natoh, meronkasingnagretire, naginhibit, my napunta ng ibang division Yun unglaman ng mga letters niattyestelito Mendoza, na binding baungmga nagging decision ng mgaponentenanagretire, napunta ng ibang division, bagong head ng division, reshuffle ng members ng division…. Yan ungmgatanongni Mendoza kaya pinapaupdatenya kung sinona may hawak ng kaso at kung gumulongbayung M.R nila? Ilangtanong din sa case natoh eh pwd bang baliktarinnungpumalitnaponente or division ungnaunanang decision ng mga older ponente? Kung anung proper jurisdiction dapatiaaplysa case nila at kung sinobadapathumawak, kasi my issue ng flippflopping tong case na to, dahil for 14yrs, majority ng M.R ng PAL binura ng FASAP, peronung nag reshuffle na, nagkaroon ng special division, bagong assigned na justices at my naginhibitulet.. napuntaungpaborsa PAL…( Yanungpagkakaintindikosa case peroim not limiting sa possibility nakulang or mali ako, depende pa din sapagkakabasaniyo)

October 2 2009- FASAP VS PAL (CHIEFJUSTICE PUNO) (SPECIAL DIVISION JUSTICE YNARES SANTIAGO).

FACTS:

For resolution is respondent Philippine Airlines, Inc.’s (PAL) Motion for Reconsideration[1] of our Decision of July 22, 2008, the dispositive portion of which provides:

WHEREFORE, the instant petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 87956 dated August 23, 2006, which affirmed the Decision of the NLRC setting aside the Labor Arbiter’s findings of illegal retrenchment and its Resolution of May 29, 2007 denying the motion for reconsideration, are REVERSED and SET ASIDE and a new one is rendered:

1. FINDING respondent Philippine Airlines, Inc. GUILTY of illegal dismissal;

2. ORDERING Philippine Airlines, Inc. to reinstate the cabin crew personnel who were covered by the retrenchment and demotion scheme of June 15, 1998 made effective on July 15, 1998, without loss of seniority rights and other privileges, and to pay them full backwages, inclusive of allowances and other

monetary benefits computed from the time of their separation up to the time of their actual reinstatement, provided that with respect to those who had received their respective separation pay, the amounts of payments shall be deducted from their backwages. Where reinstatement is no longer feasible because the positions previously held no longer exist, respondent Corporation shall pay backwages plus, in lieu of reinstatement, separation pay equal to one (1) month pay for every year of service;

3. ORDERING Philippine Airlines, Inc. to pay attorney’s fees equivalent to ten percent (10%) of the total monetary award.

Costs against respondent PAL.

SO ORDERED.

In its Motion for Reconsideration, PAL maintains that it was suffering from financial distress which justified the retrenchment of more than 1,400 of its flight attendants. This, it argued, was an established fact. Furthermore, FASAP never assailed the economic basis for the retrenchment, but only the allegedly discriminatory and baseless manner by which it was carried out.

PAL asserts that it has presented proof of its claimed losses by attaching its petition for suspension of payments, as well as the June 23, 1998 Order of the Securities and Exchange Commission (SEC) approving the said petition for suspension of payments, in its Motion to Dismiss and/or Consolidation of Case filed with the Labor Arbiter in NLRC-NCR Case No. 06-05100-98, or the labor case subject of the herein petition. Also attached to the petition for suspension of payments were its audited financial statements for its fiscal year ending March 1998, and interim financial statements as of the end of the month prior to the filing of its petition for suspension of payments,

ISSUE: Whether or not the PAL TERMINATION of its thousands employees is reasonable,

HELD:

NO. the retrenchment made is invalid

WHEREFORE, for lack of merit, the Motion for Reconsideration is hereby DENIED with FINALITY. The assailed Decision dated July 22, 2008 is AFFIRMED with MODIFICATIONin that the award of attorney’s fees and expenses of

JURISDICTION

litigation is reduced to P2,000,000.00. The case is hereby REMANDED to the Labor Arbiter solely for the purpose of computing the exact amount of the award pursuant to the guidelines herein stated.

No further pleadings will be entertained.

MARCH 13 2012 –FASAP VS PAL ( CHIEF JUSTICERENATO CORONA)

FACTS:

before the Court is the administrative matter that originated from the letters dated September 13, 16, 20, and 22, 2011 of Atty. Estelito P. Mendoza regarding G.R. No. 178083 – Flight Attendants and Stewards Association of the Philippines v. Philippine Airlines, Inc., et al.

1. The July 22, 2008 Decision

On July 22, 2008, the Court’s Third Division ruled to grant[1] the petition for review on certiorari filed by the Flight Attendants and Stewards Association of the Philippines (FASAP), finding Philippine Airlines, Inc. (PAL) guilty of illegal dismissal. The July 22, 2008 Decision was penned by Justice Consuelo Ynares-Santiago who was joined by the other four Members of the Third Division. The Third Division was then composed of:

1. Justice Ynares-Santiago,

2. Justice Alicia Austria-Martinez,

3. Justice Minita Chico-Nazario,

4. Justice Antonio Eduardo Nachura, and

5. Justice Teresita Leonardo-De Castro (replacing Justice Ruben Reyes who inhibited himself from the case).

Justice Leonardo-De Castro was included to replace Justice Ruben Reyes who had inhibited himself from the case because he concurred in the Court of Appeals (CA) decision assailed by FASAP before the Court.[2] Then Associate Justice Renato Corona was originally designated to replace Justice Ruben Reyes, but he likewise inhibited himself from participation on June July 14, 2008 due to his previous efforts in settling the controversy when he was still in Malacañan. Under Administrative Circular (AC) No. 84-2007, one additional Member needed be drawn from the rest of the Court to replace

the inhibiting Member.[3] In this manner, Justice Leonardo-De Castro came to participate in the July 22, 2008 Decision.

PAL subsequently filed its motion for reconsideration (MR) of the July 22, 2008 Decision. The motion was handled by the Special Third Division composed of:

1. Justice Ynares-Santiago,

2. Justice Chico-Nazario,

3. Justice Nachura,

4. Justice Diosdado Peralta (replacing Justice Austria-Martinez who retired on April 30, 2009), and

5. Justice Lucas Bersamin (replacing Justice Leonardo-De Castro who inhibited at the MR stage for personal reasons on July 28, 2009).

2. The October 2, 2009 Resolution

Justice Ynares-Santiago, as the ponente of the July 22, 2008 Decision, continued to act as the ponente of the case.[4]

The Special Third Division[5] denied the MR with finality on October 2, 2009.[6] The Court further declared that “[n]o further pleadings will be entertained.”[7] The other Members of the Special Third Division unanimously concurred with the denial of the motion.

To fully explain the movements in the membership of the division, the Special Third Division missed Justice Austria-Martinez (who was among those who signed the July 22, 2008 Decision) due to her intervening retirement on April 30, 2009. Justice Leonardo-De Castro also did not participate in resolving the 1st MR, despite having voted on the July 22, 2008 Decision, because of her own subsequent inhibition on July 28, 2009.[8]

3. PAL’s 2 nd MR

On November 3, 2009, PAL asked for leave of court to file (a) an MR of the October 2, 2009 Resolution, and (b) a 2nd MR of the July 22, 2008 Decision. Both rulings were anchored on the validity of PAL’s retrenchment program.

In view of the retirement of the ponente, Justice Ynares-Santiago (who retired on October 5, 2009), the Court’s Raffle Committee[9] had to resolve the question of who would be the newponente of the case.

Under A.M. No. 99-8-09-SC (Rules on Who Shall Resolve Motions for Reconsideration in Cases Assigned to the Divisions of the Court, effective April 1, 2000), if the ponente has retired, he/she shall be replaced by another Justice who shall be chosen by raffle from among the remaining Members of the Division:

2. If the ponente is no longer a member of the Court or is disqualified or has inhibited himself from acting on the motion, he shall be replaced by another Justice who shall be chosen by raffle from among the remaining members of the Division who participated and concurred in the rendition of the decision or resolution and who concurred therein. If only one member of the Court who participated and concurred in the rendition of the decision or resolution remains, he shall be designated as the ponente.

However, on November 11, 2009, the case was raffled, not to a Member of the Third Division that issued the July 22, 2008 Decision or to a Member of the Special Third Division that rendered the October 2, 2009 Resolution, but to Justice Presbitero Velasco, Jr. who was then a Member of the newly-constituted regular Third Division.[10]

In raffling the case to Justice Velasco, the Raffle Committee considered the above-quoted rule inapplicable because of the express excepting qualification provided under A.M. No. 99-8-09-SC that states:

[t]hese rules shall not apply to motions for reconsideration of decisions or resolutions already denied with finality. [underscoring ours]

Stated otherwise, when the original ponente of a case retires, motions filed after the case has been denied with finality may be resolved by any Member of the Court to whom the case shall be raffled, not necessarily by a Member of the same Division that decided or resolved the case. Presumably, the logic behind the rule is that no further change can be made involving the merits of the case, as judgment has reached finality and is thus irreversible, based on the Rules of Court provision that “[n]o second MR of a judgment or final resolution by the same party shall be entertained.”[11] (The October 2, 2009 Resolution denying PAL’s 1st MR further stated that “[n]o further pleadings will be entertained.”) Thus, the resolution of post-decisional matters in a case already declared final may be resolved by other Members of the Court to whom the case may be raffled after the retirement of the original ponente.

JURISDICTION

Given the denial of PAL’s 1st MR and the declaration of finality of the Court’s July 22, 2008 Decision through the October 2, 2009 Resolution, the Raffle Committee found it unnecessary to create a special Third Division. Thus, it found nothing irregular in raffling the case to Justice Velasco (who did not take part in the deliberation of the Decision and the Resolution) of thereorganized Third Division for handling by a new regular division.

4. The acceptance of PAL’s 2 nd MR

On January 20, 2010 (or while A.M. No. 99-8-09-SC was still in effect), the new regular Third Division, through Justice Velasco, granted PAL’s Motion for Leave to File and Admit Motion for Reconsideration of the Resolution dated 2 October 2009 and 2nd Motion for Reconsideration of Decision dated 22 July 2008. The Court’s Third Division further required the respective parties to comment on PAL’s motion and FASAP’s Urgent Appeal dated November 23, 2009. This grant, which opened both the Decision and the Resolution penned by Justice Ynares-Santiago for review, effectively opened the whole case for review on the merits.

The following were the Members of the Third Division that issued the January 20, 2010 Resolution:

1. Justice Antonio Carpio (vice Justice Corona who inhibited himself as of July 14, 2008),

2. Justice Velasco (ponente),

3. Justice Nachura,

4. Justice Peralta, and

5. Justice Bersamin.

Significantly, at the time leave of court was granted (which was effectively an acceptance for review of PAL’s 2nd MR), the prohibition against entertaining a 2nd MR under Section 2, Rule 52[12] (in relation with Section 4, Rule 56[13]) of the Rules of Court applied. This prohibition, however, had been subject to various existing Court decisions that entertained 2nd MRs in the higher interest of justice.[14] This liberalized policy was not formalized by the Court until the effectivity of the Internal Rules of the Supreme Court (IRSC) on May 4, 2010.[15]

With the acceptance of PAL’s 2nd MR, the question that could have arisen (but was not asked then) was whether the general rule under A.M. No. 99-8-09-SC (which was then still

in effect) should have applied so that the case should have been transferred to the remaining Members of the Division that ruled on the merits of the case. In other words, with the re-opening of the case for review on the merits, the application of the excepting qualification under A.M. No. 99-8-09-SC that the Raffle Committee cited lost its efficacy, as the rulings of the Court were no longer final for having been opened for further review.

A necessary implication is that either the Clerk of Court or the Raffle Committee should have advised Justice Velasco that his Division should refer the case back to raffle for referral of the case to the original Justices who participated in the assailed Decision and Resolution under the terms of the general rule under A.M. No. 99-8-09-SC; the Justices who participated in the assailed Decision and Resolution were the best ones to consider the motion and to review their own rulings. This was the first major error that transpired in the case and one that the Clerk of Court failed to see.

Parenthetically, when PAL’s 2nd MR was filed and when it was subsequently accepted, Justices Nachura, Peralta, and Bersamin were the only remaining Members of the Special Third Division that rendered the October 2, 2009 Resolution. Of these three Justices, only Justice Nachura was a Member of the original Third Division that issued the main decision on July 22, 2008. The case should have gone to Justice Nachura or, at the very least, to the two other remaining Justices. The re-raffle of the FASAP case to Justice Nachura (or to Justices Peralta and Bersamin) would have been consistent with the constitutional rule that “[c]ases or matters heard by a division shall be decided or resolved with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon[.]”[16]

5. The Reorganization of the Court

In May 2010, three developments critical to the FASAP case transpired.

The first was the approval of the IRSC by the Court on May 4, 2010. The IRSC codified the procedural rules of the Court, heretofore existing under various separate and scattered resolutions. Its relevant terms took the place of A.M. No. 99-8-09-SC.

The second was the retirement of then Chief Justice Reynato Puno and the appointment as Chief Justice of then Associate Justice Corona.

The third was the reorganization of the divisions of the Court under Special Order No. 838 dated May 17, 2010. Justice Velasco was transferred from the Third Division to the First Division. Pursuant to the new IRSC, Justice Velasco brought with him the FASAP case so that the case went from the Third Division to the First Division:

RULE 2. THE OPERATING STRUCTURES

Section 9. Effect of reorganization of Divisions on assigned cases. – In the reorganization of the membership of Divisions, cases already assigned to a Member-in-Charge shall be transferred to the Division to which the Member-in-Charge moves, subject to the rule on the resolution of motions for reconsideration under Section 7 of this Rule. The Member-in-Charge is the Member given the responsibility of overseeing the progress and disposition of a case assigned by raffle.

Another significant development in the case came on January 17, 2011 (or under the new regime of the IRSC) when Justice Velasco, after acting on the FASAP case for almost one whole year, inhibited himself from participation “due to a close relationship to a party,” despite his previous action on the case. The pertinent provisions of the IRSC on the matter of inhibition state:

RULE 2.

THE OPERATING STRUCTURES

Section 7. Resolutions of motions for reconsideration or clarification of decisions or signed resolutions and all other motions and incidents subsequently filed; creation of a Special Division. – Motions for reconsideration or clarification of a decision or of a signed resolution and all other motions and incidents subsequently filed in the case shall be acted upon by the ponente and the other Members of the Division who participated in the rendition of the decision or signed resolution.

If the ponente has retired, is no longer a Member of the Court, is disqualified, or has inhibited himself or herself from acting on the motion for reconsideration or clarification, he or she shall be replaced through raffle by a new ponente who shall be chosen [from] among the new Members of the Division who participated in the rendition of the decision or

JURISDICTION

signed resolution remains, he or she shall be designated as the new ponente.

If a Member (not the ponente) of the Division which rendered the decision or signed resolution has retired, is no longer a Member of the Court, is disqualified, or has inhibited himself or herself from acting on the motion for reconsideration or clarification, he or she shall be replaced through raffle by a replacement Member who shall be chosen from the other Divisions until a new Justice is appointed as replacement for the retired Justice. Upon the appointment of a new Justice, he or she shall replace the designated Justice as replacement Member of the Special Division.

Any vacancy or vacancies in the Special Division shall be filled by raffle from among the other Members of the Court to constitute a Special Division of five (5) Members.

If the ponente and all the Members of the Division that rendered the Decision or signed Resolution are no longer members of the Court, the case shall be raffled to any Member of the Court and the motion shall be acted upon by him or her with the participation of the other Members of the Division to which he or she belongs.

If there are pleadings, motions or incidents subsequent to the denial of the motion for reconsideration [or] clarification, the case shall be acted upon by the ponente on record with the participation of the other Members of the Division to which he or she belongs at the time said pleading, motion or incident is to be taken up by the Court.

RULE 8.

INHIBITION AND SUBSTITUTION OF MEMBERS OF THE COURT

SEC. 3. Effects of Inhibition. – The consequences of an inhibition of a Member of the Court shall be governed by these rules:

(a) Whenever a Member-in-Charge of a case in a Division inhibits himself for a just and valid reason, the case shall be returned to the Raffle Committee for re-raffling among the Members of the other two Divisions of the Court. (IRSC, as amended by A.M. No. 10-4-20-SC dated August 3, 2010) [All emphasis supplied.]

The case was then referred to the Raffle Committee pursuant to Administrative Circular (AC) No. 84-2007, as stated in the Division

Raffle Sheet. The pertinent provision of AC No. 84-2007 states:

2. Whenever the ponente, in the exercise of sound discretion, inhibits herself or himself from the case for just and valid reasons other than those mentioned in paragraph 1, a to f above, the case shall be returned to the Raffle Committee for re-raffling among the other Members of the same Division with one additional Member from the other two Divisions. [underscoring and italics ours]

Reference to AC No. 84-2007, however, was erroneous. For one, the IRSC was already in effect when Justice Velasco inhibited himself from participation, and the IRSC had already superseded AC No. 84-2007. The prevailing IRSC, though, has an almost similar rule, with the difference that the IRSC speaks of the inhibition of a Member-in-Charge or of a Member of the Division other than the Member-in-Charge in its rule on inhibition, and did not use the ponente as its reference point. This seemingly trivial point carries a lot of significance, particularly in the context of the FASAP case.

Under the rule on inhibition found in Section 3, Rule 8 of the governing IRSC (as Justice Ma. Lourdes Sereno found in her dissenting opinion), the inhibition called for the raffle to a Member of the two other divisions of the Court. Thus, Justice Sereno found the subsequent January 26, 2011 raffle of the case to Justice Brion to be legally correct. As discussed by the Division that issued the September 7, 2011 Resolution (the ruling Division), however, the application of the IRSC is not as simple as Justice Sereno views it to be. This matter is discussed at length below

On June 21, 2011 (after the retirement of Justice Nachura on June 13, 2011), Chief Justice Corona issued Special Order No. 1025, again reorganizing the divisions of the Court. Justice Brion was transferred from the Third Division to the Second Division. Accordingly, the Third Division – composed of Justice Velasco, Justice Peralta, Justice Bersamin, Justice Jose Mendoza, and Justice Sereno (who was included as additional Member) – referred the FASAP case to the Second Division where Justice Brion belonged, pursuant to Section 9, Rule 2 of the IRSC.[17]

Justice Carpio (the Chair of the Second Division), after voting for the January 20, 2010 Resolution granting leave to PAL to file its 2nd MR, inhibited himself from the case on August 15, 2011. As stated in the Division

Raffle Sheet of August 15, 2011, Justice Carpio “recused himself from the case per advice of the office of the Member-in-Charge.” Justice Peralta became the replacement for Justice Carpio, pursuant to Rule 8, Section 3 of the IRSC.

6. The September 7, 2011 Resolution and Atty. Estelito Mendoza’s letters

On September 7, 2011, the Court – through its Second Division as then constituted – resolved to deny with finality PAL’s 2nd MR through an unsigned resolution. The Second Division, as then constituted, was composed of:

1. Justice Brion (as Member-in-Charge and as Acting Chair, being the most senior Member),

2. Justice Peralta (replacing Justice Carpio who inhibited),

3. Justice Jose Perez,

4. Justice Bersamin (replacing Justice Sereno who was on leave[18]), and

5. Justice Mendoza (replacing Justice Bienvenido Reyes who was on leave[19]).

On September 13, 2011, the counsel for PAL, Atty. Mendoza, sent the first of a series of letters[20] addressed to the Clerk of Court of the Supreme Court. This letter noted that, of the Members of the Court who acted on the MR dated August 20, 2008 and who issued the Resolution of October 2, 2009, Justices Ynares-Santiago (ponente), Chico-Nazario, and Nachura had already retired from the Court, and the Third Division had issued a Resolution on the case dated January 20, 2010, acted upon by Justices Carpio, Velasco, Nachura, Peralta, and Bersamin. The letter then asked whether the Court had acted on the 2nd MR and, if so, which division – whether regular or special – acted and who were the chairperson and members. It asked, too, for the identity of the current ponente or justice-in-charge, and when and for what reason he or she was designated as ponente. It further asked for a copy of the Resolution rendered on the 2nd MR, if an action had already been taken thereon.

On September 16, 2011, Atty. Mendoza sent his second letter, again addressed to the Clerk of Court requesting that “copies of any Special Orders or similar issuances transferring the case to another division, and/or designating Members of the division which resolved” its 2nd MR, in case a resolution had already been rendered by the Court and in the event that

JURISDICTION

“such resolution was issued by a different division.”

The Court received Atty. Mendoza’s third letter, again addressed to the Clerk of Court, on September 20, 2011.[21] Atty. Mendoza stated that he received a copy of the September 7, 2011 Resolution issued by the Second Division, notwithstanding that all prior Court Resolutions he received regarding the case had been issued by the Third Division.[22] He reiterated his request in his two earlier letters to the Court, asking for the date and time when the Resolution was deliberated upon and a vote taken thereon, as well as the names of the Members of the Court who had participated in the deliberation and voted on the September 7, 2011 Resolution.

Atty. Mendoza sent his fourth and last letter dated September 22, 2011, also addressed to the Clerk of Court, suggesting that “if some facts subject of my inquiries are not evident from the records of the case or are not within your knowledge, that you refer the inquiries to the Members of the Court who appear to have participated in the issuance of the Resolution of September 7, 2011, namely: Hon. Arturo D. Brion, Hon. Jose P. Perez, Hon. Diosdado M. Peralta, Hon. Lucas P. Bersamin, and Hon. Jose C. Mendoza.”

On September 26, 2011, the Clerk of Court issued the Vidal-Anama[23] Memorandum to the Members of the Second Division in relation to the inquiries contained in the first and second letters of Atty. Mendoza dated September 13 and 20, 2011. Justice Brion also furnished the Members of the ruling Division a copy of the Vidal-Anama Memorandum.

The Vidal-Anama Memorandum explained the events that transpired and the actions taken, which resulted in the transfer of the case from its original ponente, Justice Ynares-Santiago, to Justice Velasco, and eventually to Justice Brion. Attached to the Memorandum were the legal and documentary bases for all the actions of the various raffle committees.[24] These included the decisions of the two raffle committees on the transfer of the ponencia from Justice Ynares-Santiago to Justice Velasco and finally to Justice Brion as a regular Second Division case.

On September 28, 2011, the Letters dated September 13 and 20, 2011 of Atty. Mendoza to Atty. Vidal (asking that his inquiry be referred to the relevant Division Members who took part on the September 7, 2011 Resolution) were “NOTED” by the regular Second

Division. The Members of the ruling Division also met to consider the queries posed by Atty. Mendoza. Justice Brion met with the Members of the ruling Division (composed of Justices Brion, Peralta, Perez, Bersamin, and Mendoza), rather than with the regular Second Division (composed of Justices Carpio, Brion, Perez, and Sereno[25]), as the former were the active participants in the September 7, 2011 Resolution.

In these meetings, some of the Members of the ruling Division saw the problems pointed out above, some of which indicated that the ruling Division might have had no authority to rule on the case. Specifically, their discussions centered on the application of A.M. No. 99-8-09-SC for the incidents that transpired prior to the effectivity of the IRSC, and on the conflicting rules under the IRSC – Section 3, Rule 8 on the effects of inhibition and Section 7, Rule 2 on the resolution of MRs.

A.M. No. 99-8-09-SC indicated the general rule that the re-raffle shall be made among the other Members of the same Division who participated in rendering the decision or resolution and who concurred therein, which should now apply because the ruling on the case is no longer final after the case had been opened for review on the merits. In other words, after acceptance by the Third Division, through Justice Velasco, of the 2nd MR, there should have been a referral to raffle because the excepting qualification that the Clerk of Court cited no longer applied; what was being reviewed were the merits of the case and the review should be by the same Justices who had originally issued the original Decision and the subsequent Resolution, or by whoever of these Justices are still left in the Court, pursuant to the same A.M. No. 99-8-09-SC.

On the other hand, the raffle to Justice Brion was made by applying AC No. 84-2007 that had been superseded by Section 3, Rule 8 of the IRSC. Even the use of this IRSC provision, however, would not solve the problem, as its use still raised the question of the provision that should really apply in the resolution of the MR: should it be Section 3, Rule 8 on the inhibition of a Member-in-Charge, or Section 7, Rule 2 of the IRSC on the inhibition of the ponente when an MR of a decision and a signed resolution was filed. These two provisions are placed side-by-side in the table below for easier and clearer comparison, with emphasis on the more important words:

RULE 2 RULE 8

THE OPERATING STRUCTURES

INHIBITION AND SUBSTITUTION OF MEMBERS OF THE COURT

SEC. 7. Resolutions of motions for reconsideration or clarification of decisions or signed resolutions and all other motions and incidents subsequently filed; creation of a Special Division. - Motions for reconsideration or clarification of a decision or of a signed resolution and all other motions and incidents subsequently filed in the case shall be acted upon by the ponente and the other Members of the Division who participated in the rendition of the decision or signed resolution.

If the ponente has retired, is no longer a Member of the Court, is disqualified, or has inhibited himself or herself from acting on the motion for reconsideration or clarification, he or she shall be replaced through raffle by a new ponente who shall be chosen among the new Members of the Division who participated in the rendition of the decision or signed resolution and who concurred therein. If only one Member of the Court who

SEC. 3. Effects of inhibition. - The consequences of an inhibition of a Member of the Court shall be governed by these rules:

(a) Whenever a Member-in-Charge of a case in a Division inhibits himself for a just and valid reason, the case shall be returned to the Raffle Committee for re-raffling among the Members of the other two (2) Divisions of the Court.

JURISDICTION

participated and concurred in the rendition of the decision or signed resolution remains, he or she shall be designated as the new ponente.

A comparison of these two provisions shows the semantic sources of the seeming conflict: Section 7, Rule 2 refers to a situation where the ponente has retired, is no longer a Member of the Court, is disqualified, or has inhibited himself from acting on the case; while Section 3, Rule 8 generally refers to the inhibition of a Member-in-Charge who does not need to be the writer of the decision or resolution under review.

Significantly, Section 7, Rule 2 expressly uses the word ponente (not Member-in-Charge) and refers to a specific situation where the ponente (or the writer of the Decision or the Resolution) is no longer with the Court or is otherwise unavailable to review the decision or resolution he or she wrote. Section 3, Rule 8, on the other hand, expressly uses the term Member-in-Charge and generally refers to his or her inhibition, without reference to the stage of the proceeding when the inhibition is made.

Under Section 7, Rule 2, the case should have been re-raffled and assigned to anyone of Justices Nachura (who did not retire until June 13, 2011), Peralta, or Bersamin, either (1) after the acceptance of the 2nd MR (because the original rulings were no longer final); or (2) after Justice Velasco’s inhibition because the same condition existed, i.e., the need for a review by the same Justices who rendered the decision or resolution. As previously mentioned, Justice Nachura participated in both the original Decision and the subsequent Resolution, and all three Justices were the remaining Members who voted on the October 2, 2009 Resolution. On the other hand, if Section 3, Rule 8 were to be solely applied after Justice Velasco’s inhibition, the Clerk of Court would be correct in her assessment and the raffle to Justice Brion, as a Member outside of Justice Velasco’s Division, was correct.

These were the legal considerations that largely confronted the ruling Division in late September 2011 when it deliberated on what to do with Atty. Mendoza’s letters.

The propriety of and grounds for the recall of the September 7, 2011 Resolution

Most unfortunately, the above unresolved questions were even further compounded in the course of the deliberations of the Members of the ruling Division when they were informed that the parties received the ruling on September 19, 2011, and this ruling would lapse to finality after the 15th day, or after October 4, 2011.

Thus, on September 30, 2011 (a Friday), the Members went to Chief Justice Corona and recommended, as a prudent move, that the September 7, 2011 Resolution be recalled at the very latest on October 4, 2011, and that the case be referred to the Court en banc for a ruling on the questions Atty. Mendoza asked. The consequence, of course, of a failure to recall their ruling was for that Resolution to lapse to finality. After finality, any recall for lack of jurisdiction of the ruling Division might not be understood by the parties and could lead to a charge of flip-flopping against the Court. The basis for the referral is Section 3(n), Rule 2 of the IRSC, which provides:

RULE 2.

OPERATING STRUCTURES

Section 3. Court en banc matters and cases. – The Court en banc shall act on the following matters and cases:

(n) cases that the Court en banc deems of sufficient importance to merit its attention[.]

Ruling positively, the Court en banc duly issued its disputed October 4, 2011 Resolution recalling the September 7, 2011 Resolution and ordering the re-raffle of the case to a new Member-in-Charge. Later in the day, the Court received PAL’s Motion to Vacate (the September 7, 2011 ruling) dated October 3, 2011. This was followed by FASAP’s MR dated October 17, 2011 addressing the Court Resolution of October 4, 2011. The FASAP MR mainly invoked the violation of its right to due process as the recall arose from the Court’s ex 

parte consideration of mere letters from one of the counsels of the parties.

As the narration in this Resolution shows, the Court acted on its own pursuant to its power to recall its own orders and resolutions before their finality. The October 4, 2011 Resolution was issued to determine the propriety of the September 7, 2011 Resolution given the facts that came to light after the ruling Division’s examination of the records. To point out the obvious, the recall was not a ruling on the merits and did not constitute the reversal of the substantive issues already decided upon by the Court in the FASAP case in its previously issued Decision (of July 22, 2008) and Resolution (of October 2, 2009). In short, the October 4, 2011 Resolution was not meant and was never intended to favor either party, but to simply remove any doubt about the validity of the ruling Division’s action on the case. The case, in the ruling Division’s view, could be brought to the Court en banc since it is one of “sufficient importance”; at the very least, it involves the interpretation of conflicting provisions of the IRSC with potential jurisdictional implications.

At the time the Members of the ruling Division went to the Chief Justice to recommend a recall, there was no clear indication of how they would definitively settle the unresolved legal questions among themselves. The only matter legally certain was the looming finality of the September 7, 2011 Resolution if it would not be immediately recalled by the Court en banc by October 4, 2011. No unanimity among the Members of the ruling Division could be gathered on the unresolved legal questions; thus, they concluded that the matter is best determined by the Court en banc as it potentially involved questions of jurisdiction and interpretation of conflicting provisions of the IRSC. To the extent of the recommended recall, the ruling Division was unanimous and the Members communicated this intent to the Chief Justice in clear and unequivocal terms.

Given this background, the Clerk of Court cannot and should not be faulted for her recommended position, as indeed there was a ruling in the 1st MR that declared the original ruling on the case final. Perhaps, she did not fully realize that the ruling on the 1st MR varied the terms of the original Decision of July 22, 2008; she could not have considered, too, that a subsequent 2nd MR would be accepted for the Court’s further consideration of the case on the merits.

JURISDICTION

Upon acceptance of the 2nd MR by the Third Division through Justice Velasco, the Clerk of Court and the Raffle Committee, however, should have realized that Justice Velasco was not the proper Member-in-Charge of the case and another raffle should have been held to assign the case to a Justice who participated in the original Decision of July 22, 2008 or in the Resolution of October 2, 2009. This realization, unfortunately, did not dawn on the Clerk of Court.

For practically the same reasons, the Third (or Velasco) Division, with Justice Velasco as Member-in-Charge, cannot and should not be faulted for accepting the 2nd MR; the variance introduced by the ruling on the 1st MR and the higher interest of justice (in light alone of the gigantic amount involved) appeared to justify further consideration of the case. Recall that at that time, the IRSC was not yet in existence and a specific rule under the IRSC on the handling of 2nd MRs was yet to be formulated, separately from the existing jurisprudential rulings. Justice Velasco, though, could not have held on to the case after its merits were opened for new consideration, as he was not the writer of the assailed Decision and Resolution, nor was he a Member of the Division that acted on the case. Under A.M. No. 99-8-09-SC, the rightful ponente should be a remaining Member of the Division that rendered the decision or resolution.

With Justice Velasco’s subsequent inhibition, a legal reason that the involved officials and Justices should have again recognized is the rationale of the rule on replacements when an inhibition or retirement intervenes. Since the inhibiting Justice was only the Member-in-Charge and was technically merely a nominal ponente[26] in so far as the case is concerned (because he was not the writer of the Decision and Resolution under consideration), the raffle should have been confined among the Members who actually participated in ruling on the merits of the original Decision or of the subsequent Resolution. At that point, only Justices Peralta and Bersamin were left because all the other Members of the original ruling groups had retired. Since under the IRSC[27] and Section 4(3), Article VIII of the Constitution, the case should have been decided by the Members who actually took part in the deliberations, the ruling on the merits made by the ruling Division on September 7, 2011 was effectively void and should appropriately be recalled.

To summarize all the developments that brought about the present dispute – expressed in a format that can more readily be appreciated in terms of the Court en banc’s ruling to recall the September 7, 2011 ruling – the FASAP case, as it developed, was attended by special and unusual circumstances that saw:

(a) the confluence of the successive retirement of three Justices (in a Division of five Justices) who actually participated in the assailed Decision and Resolution;

(b) the change in the governing rules – from the A.M.s to the IRSC regime – which transpired during the pendency of the case;

(c) the occurrence of a series of inhibitions in the course of the case (Justices Ruben Reyes, Leonardo-De Castro, Corona, Velasco, and Carpio), and the absences of Justices Sereno and Reyes at the critical time, requiring their replacement; notably, Justices Corona, Carpio, Velasco and Leonardo-De Castro are the four most senior Members of the Court;

(d) the three re-organizations of the divisions, which all took place during the pendency of the case, necessitating the transfer of the case from the Third Division, to the First, then to the Second Division;

(e) the unusual timing of Atty. Mendoza’s letters, made after the ruling Division had issued its Resolution of September 7, 2011, but before the parties received their copies of the said Resolution; and

(f) finally, the time constraint that intervened, brought about by the parties’ receipt on September 19, 2011 of the Special Division’s Resolution of September 7, 2011, and the consequent running of the period for finality computed from this latter date; and the Resolution would have lapsed to finality after October 4, 2011, had it not been recalled by that date.

All these developments, in no small measure, contributed in their own peculiar way to the confusing situations that attended the September 7, 2011 Resolution, resulting in the recall of this Resolution by the Court en banc.

On deeper consideration, the majority now firmly holds the view that Section 7, Rule 2 of the IRSC should have prevailed in considering the raffle and assignment of cases after the 2nd MR was accepted, as advocated by some Members within the ruling Division, as against the general rule on inhibition under Section 3, Rule 8. The underlying constitutional reason, of course, is the requirement of Section 4(3), Article VIII of the Constitution already referred to above.[28]

The general rule on statutory interpretation is that apparently conflicting provisions should be reconciled and harmonized,[29] as a statute must be so construed as to harmonize and give effect to all its provisions whenever possible.[30] Only after the failure at this attempt at reconciliation should one provision be considered the applicable provision as against the other.[31]

Applying these rules by reconciling the two provisions under consideration, Section 3, Rule 8 of the IRSC should be read as the general rule applicable to the inhibition of a Member-in-Charge. This general rule should, however, yield where the inhibition occurs at the late stage of the case when a decision or signed resolution is assailed through an MR. At that point, when the situation calls for the review of the merits of the decision or the signed resolution made by a ponente (or writer of the assailed ruling), Section 3, Rule 8 no longer applies and must yield toSection 7, Rule 2 of the IRSC which contemplates a situation when the ponente is no longer available, and calls for the referral of the case for raffle among the remaining Members of the Division who acted on the decision or on the signed resolution. This latter provision should rightly apply as it gives those who intimately know the facts and merits of the case, through their previous participation and deliberations, the chance to take a look at the decision or resolution produced with their participation.

To reiterate, Section 3, Rule 8 of the IRSC is the general rule on inhibition, but it must yield to the more specific Section 7, Rule 2 of the IRSC where the obtaining situation is for the reviewon the merits of an already issued decision or resolution and the ponente or writer is no longer available to act on the matter. On this basis, the ponente, on the

JURISDICTION

merits of the case on review, should be chosen from the remaining participating Justices, namely, Justices Peralta and Bersamin.

A final point that needs to be fully clarified at this juncture, in light of the allegations of the Dissent is the role of the Chief Justice in the recall of the September 7, 2011 Resolution. As can be seen from the above narration, the Chief Justice acted only on the recommendation of the ruling Division, since he had inhibited himself from participation in the case long before. The confusion on this matter could have been brought about by the Chief Justice’s role as the Presiding Officer of the Court en banc (particularly in its meeting of October 4, 2011), and the fact that the four most senior Justices of the Court (namely, Justices Corona, Carpio, Velasco and Leonardo-De Castro) inhibited from participating in the case. In the absence of any clear personal malicious participation, it is neither correct nor proper to hold the Chief Justice personally accountable for the collegial ruling of the Court en banc.

Another disturbing allegation in the Dissent is the implication of the alleged silence of, or lack of objection from, the Members of the ruling Division during the October 4, 2011 deliberations, citing for this purpose the internal en banc deliberations. The lack of a very active role in the arguments can only be attributable to the Members of the ruling Division’s unanimous agreement to recall their ruling immediately; to their desire to have the intricate issues ventilated before the Court en banc; to the looming finality of their Division’s ruling if this ruling would not be recalled; and to their firm resolve to avoid any occasion for future flip-flopping by the Court. To be sure, it was not due to any conspiracy to reverse their ruling to affirm the previous Court rulings already made in favor of FASAP; the Division’s response was simply dictated by the legal uncertainties that existed and the deep division among them on the proper reaction to Atty. Mendoza’s letters.

Of the above-cited reasons, a major influencing factor, of course, was the time constraint – the Members of the ruling Division met with the Chief Justice on September 30, 2011, the Friday before October 4, 2011 (the date of the closest Court en banc meeting, as well as the deadline for the finality of the September 7, 2011 Resolution). They impressed upon the Chief Justice the urgent need to recall their September 7, 2011 Resolution under the risk of

being accused of a flip-flop if the Court en banc would later decide to override its ruling.

As a final word, if no detailed reference to internal Court deliberations is made in this Resolution, the omission is intentional in view of the prohibition against the public disclosure of the internal proceedings of the Court during its deliberations. The present administrative matter, despite its pendency, is being ventilated in the impeachment of Chief Justice Corona before the Senate acting as an Impeachment Court, and any disclosure in this Resolution could mean the disclosure of the Court’s internal deliberations to outside parties, contrary to the clear terms of the Court en banc Resolution of February 14, 2012 on the attendance of witnesses from this Court and the production of Court records.

CONCLUSION

In sum, the recall of the September 7, 2011 Resolution of the ruling Division was a proper and legal move to make under the applicable laws and rules, and the indisputably unusual developments and circumstances of the case.

Between Section 3, Article 8 and Section 7, Rule 2, both of the IRSC, the former is the general provision on a Member-in-Charge’s inhibition, but it should yield to the more specific Section 7, Rule 2 in a situation where the review of an issued decision or signed resolution is called for and the ponente or writer of these rulings is no longer available to act. Section 7, Rule 2 exactly contemplates this situation.

WHEREFORE, premises considered, we hereby confirm that the Court en banc has assumed jurisdiction over the resolution of the merits of the motions for reconsideration of Philippine Airlines, Inc., addressing our July 22, 2008 Decision and October 2, 2009 Resolution; and that the September 7, 2011 ruling of the Second Division has been effectively recalled. This case should now be raffled either to Justice Lucas P. Bersamin or Justice Diosdado M. Peralta (the remaining Members of the Special Third Division that originally ruled on the merits of the case) as Member-in-Charge in resolving the merits of these motions.

The Philippine Airlines, Inc.’s Motion to Vacate dated October 3, 2011, but received by this Court after a recall had been made, has thereby been rendered moot and academic.

The Flight Attendants and Stewards Association of the Philippines’ Motion for Reconsideration of October 17, 2011 is hereby denied; the recall of the September 7, 2011 Resolution was made by the Court on its own before the ruling’s finality pursuant to the Court’s power of control over its orders and resolutions. Thus, no due process issue ever arose.

SO ORDERED.

PEOPLE VS SANDIGANBAYAN

FACTS: Before us is a petition for certiorari filed by the People of the Philippines (petitioner) assailing the decision dated March 22, 2002 of the Sandiganbayan[1] in Criminal Case Nos. 20345 and 20346 which granted the demurrers to evidence filed by Imelda R. Marcos, Jose Conrado Benitez (respondents) and Rafael Zagala.

The petition stemmed from two criminal informations filed before the Sandiganbayan, charging the respondents with the crime of malversation of public funds, defined and penalized under Article 217, paragraph 4 of the Revised Penal Code, as amended. The charges arose from the transactions that the respondents participated in, in their official capacities as Minister and Deputy Minister of the Ministry of Human Settlements (MHS) under the MHS’ Kabisig Program.

In Criminal Case No. 20345, respondents, together with Gilbert C. Dulay, were charged with malversation of public funds, committed as follows:

That on or about April 6, 1984 or sometime and/or [subsequent] thereto, in Pasig, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, all public officers charged with the administration of public funds and as such, accountable officers, Imelda R. Marcos being then the Minister of Human Settlements, Jose Conrado Benitez being then the Deputy Minister of Human Settlements and Gilbert C. Dulay being then [the] Assistant Manager for Finance, Ministry of Human Settlements, while in the performance of their official functions, taking advantage of their positions, acting in concert and mutually helping one another thru manifest partiality and evident bad faith did then and there, willfully, unlawfully and criminally, in a series of anomalous

JURISDICTION

transactions, abstract the total amount of P57.954 Million Pesos (sic), Philippine Currency from the funds of the Ministry of Human Settlements in the following manner: accused Conrado Benitez approved the series of cash advances made and received by Gilbert C. Dulay, and made it appear that the funds were transferred to the University of Life, a private foundation represented likewise by Gilbert C. Dulay when in truth and in fact no such funds were transferred while Imelda R. Marcos concurred in the series of such cash advances approved by Jose Conrado Benitez and received by Gilbert C. Dulay and in furtherance of the conspiracy, in order to camouflage the aforesaid anomalous and irregular cash advances and withdrawals, Imelda R. Marcos requested that the funds of the KSS Program be treated as “Confidential Funds”; and as such be considered as “Classified Information”; and that the above-named accused, once in possession of the said aggregate amount of P57.954 Million Pesos (sic), misappropriated and converted the same to their own use and benefit to the damage and prejudice of the government in the said amount.

CONTRARY TO LAW. [Emphasis ours][2

          In Criminal Case No. 20346, respondents together with Zagala were charged with malversation of public funds under these allegations:

          That on or about April 6 to April 16, 1984[3] and/or sometime or subsequent thereto, in Pasig, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, all public officers charged with the administration of public funds and as such, accountable officers, Imelda R. Marcos being then the Minister of Human Settlements, Jose Conrado Benitez being then the Deputy Minister of Human Settlements[,] and Rafael Zagala being then [the] Assistant Manager for Regional Operations and at the same time Presidential Action Officer, while in the performance of their official functions, taking advantage of their positions, acting in concert and mutually helping one another thru manifest partiality and evident bad faith[,] did then and there, willfully, unlawfully and criminally, in a series of anomalous transactions, abstract from the funds of the Ministry of Human Settlements the total amount of P40 Million Pesos (sic), Philippine Currency, in the following manner: Jose Conrado Benitez approved the cash advances made by Rafael Zagala and Imelda R.

Marcos concurred in the series of cash advances approved by Jose Conrado Benitez in favor of Rafael G. Zagala; and in furtherance of the conspiracy, Imelda R. Marcos in order to camouflage the aforesaid anomalous and irregular cash advances, requested that funds of the KSS Program be treated as “Confidential Funds”; and as such be considered as “Classified Information”; and the above-named accused, once in possession of the total amount of P40 Million Pesos (sic), misappropriated and converted the same to their own use and benefit to the damage and prejudice of the government in the said amount

ISSUE: Whether or not Sandiganbayan gravely abused their discretion?

RULING: III. Grave abuse of discretion

Under the Rules on Criminal Procedure, the Sandiganbayan is under no obligation to require the parties to present additional evidence when a demurrer to evidence is filed. In a criminal proceeding, the burden lies with the prosecution to prove that the accused committed the crime charged beyond reasonable doubt, as the constitutional presumption of innocence ordinarily stands in favor of the accused. Whether the Sandiganbayan will intervene in the course of the prosecution of the case is within its exclusive jurisdiction, competence and discretion, provided that its actions do not result in the impairment of the substantial rights of the accused, or of the right of the State and of the offended party to due process of law.[72]

A discussion of the violation of the State’s right to due process in the present case, however, is intimately linked with the gross negligence or the fraudulent action of the State’s agent. The absence of this circumstance in the present case cannot but have a negative impact on how the petitioner would want the Court to view the Sandiganbayan’s actuation and exercise of discretion.

The court, in the exercise of its sound discretion, may require or allow the prosecution to present additional evidence (at its own initiative or upon a motion) after a demurrer to evidence is filed. This exercise, however, must be for good reasons and in the paramount interest of justice.[73] As mentioned, the court may require the presentation of further evidence if its action on the demurrer to evidence would patently result in the denial

of due process; it may also allow the presentation of additional evidence if it is newly discovered, if it was omitted through inadvertence or mistake, or if it is intended to correct the evidence previously offered.[74]

In this case, we cannot attribute grave abuse of discretion to the Sandiganbayan when it exercised restraint and did not require the presentation of additional evidence, given the clear weakness of the case at that point. We note that under the obtaining circumstances, the petitioner failed to show what and how additional available evidence could have helped and the paramount interest of justice sought to be achieved. It does not appear that pieces of evidence had been omitted through inadvertence or mistake, or that these pieces of evidence are intended to correct evidencepreviously offered. More importantly, it does not appear that these contemplated additional pieces of evidence (which the special prosecutor allegedly should have presented) were ever present and available. For instance, at no point in the records did the petitioner unequivocally state that it could present the three UL officers, Cueto, Jiao and Sison. The petitioner also failed to demonstrate its possession of or access to these documents (such as the final audit report) to support the prosecution’s charges – the proof that the State had been deprived of due process due to the special prosecutor’s alleged inaction

IIIa. Grave abuse of discretion and the demurrers to evidence

In Criminal Case No. 20345 that charged conspiracy for abstracting P57.59 Million out of the P100 Million KSS fund, the prosecution’s evidence showed that P60 Million of this fund was disbursed by respondent Benitez, as approving officer, in the nature of cash advances to Zagala (who received a total amount of P40 Million) and Dulay (who received P20 Million).

To prove the misappropriation, the prosecution tried to establish that there was an irregularity in the procedure of liquidating these amounts on the basis of COA Auditor Cortez’ testimony that the liquidation should have been made before the COA Chairman (not to the resident auditor of the MHS) because these funds were confidential.[75]

Quite evident from the prosecution’s position is that it did not dispute whether a liquidation had been made of the whole amount of P60 Million; rather, what it disputed was the

JURISDICTION

identity of the person before whom the liquidation should have been made. Before the directive of former President Marcos was made which declared the KSS funds (of which the P60 Million formed part) to be confidential, the liquidation of this amount must be made before the resident auditor of the MHS. With the issuance of the directive, liquidation should have been made to the COA Chairman who should have then issued a credit memo to prove proper liquidation.[76]

To justify conviction for malversation of public funds, the prosecution has to prove that the accused received public funds or property that they could not account for, or was not in their possession and which they could not give a reasonable excuse for the disappearance of such public funds or property.[77] The prosecution failed in this task as the subject funds were liquidated and were not shown to have been converted for personal use by the respondents.

The records reveal that the amounts of P50 Million and P10 Million were liquidated by Zagala and Dulay, respectively.[78] On Zagala’s part, the liquidation of P50 Million (P10 Million of which was the cash advance given to Dulay) was made to resident auditor Flerida V. Creencia on September 25, 1984 or before the directive of former President Marcos (declaring the said funds confidential) was issued on November 7, 1984.[79] Hence, at the time the liquidation of the amount was made, the liquidation report submitted to the resident auditor was the proper procedure of liquidation. Respondent Benitez, for his part, submitted Journal Voucher No. 4350208 dated November 27, 1984 stating, among others, that as early as June 22, 1984, the supporting papers for the liquidation of the P50 Million had already been submitted to the COA.[80]

Moreover, even if the liquidation should have been made in compliance with the former President’s directive, the prosecution’s evidence did not sufficiently establish the non-existence of a credit memo. As admitted by COA Auditor Cortez, certain documents they were looking for during the audit examination (including the credit memo) could no longer be located after the (EDSA) revolution.[81] She further declared that she did not know if COA Chairman Alfredo Tantingco complied with the required audit examination of the liquidated P60 Million.[82]

In Criminal Case No. 20346, respondents are sought to be held liable under the criminal information for converting P40 Million (subdivided to P21.6 Million, P3.8 Million and P17 Million or a total of P42.4 Million) to their own use given that these funds were never allegedly transferred to UL, the intended beneficiary.

Records show that the disputed amount allegedly malversed was actually P37,757,364.57 Million because of evidence that an amount of P4.5 Million was returned by respondent Benitez.[83] As previously mentioned, the documentary evidence adduced reveals the existence of treasury warrants and disbursement vouchers issued in the name of UL bearing the amounts of P21.6 Million, P3.8 Million and P17 Million.[84] Documentary evidence also exists showing that these amounts were deposited in the UCPB and drawn afterwards by means of checks issued for purchases intended for the Kabisig Program of the MHS.

Except for the appropriated P17 Million, the petitioner’s evidence does not sufficiently show how the amounts of P21.6 Million and P3.8 Million were converted to the personal use by the respondents. The testimony of COA Auditor Cortez revealed that documents showing the disbursements of the subject funds were in possession of one Flordeliz Gomez as the Records Custodian and Secretary of UL. For undisclosed reasons, however, COA Auditor Cortez failed to communicate with Gomez but merely relied on the documents and checks, which the audit team already had in its possession.[85]

This omission, in our view, raises doubts on the completeness and accuracy of the audit examination pertaining to the P21.6 Million and P3.8 Million funds. Such doubt was further strengthened by COA Auditor Cortez’ testimony showing that P3.8 Million was listed in the books of the MHS as a direct expense account to which UL is not required to render an accounting or liquidation.[86] Also, she admitted that the amount of P21.6 Million was contained in a liquidation voucher submitted by Dulay, which was included in the transmittal letter signed by the respondents to the COA and accompanied by a performance report on the Kabisig Program. This performance report showed that the total amount of P21.6 Million was exhausted in the KabisigProgram.[87]

With respect to the P17 Million, evidence adduced showed that 270 units of the motorcycles have already been transferred in the name of MHS by UL.[88] There is also evidence that the audit team initially found nothing irregular in the documentation of the 500 motorcycles during the audit examination conducted in April 1986; the same goes for the eight cars purchased.

Under the circumstances, we agree with the Sandiganbayan that registration of these vehicles in UL’s name alone did not constitute malversation in the absence of proof, based on the available evidence, to establish that the respondents benefited from the registration of these motor vehicles in UL’s name, or that these motor vehicles were converted by the respondents to their own personal use.[89] In the end, the prosecution’s evidence tended to prove that the subject funds were actually used for their intended purpose.

IV. Conclusion

In dismissing this petition, we observe that the criminal cases might have been prompted by reasons other than injury to government interest as the primary concern.[90] These other reasons might have triggered the hastiness that attended the conduct of audit examinations which resulted in evidentiary gaps in the prosecution’s case to hold the respondents liable for the crime of malversation.[91] As matters now stand, no sufficient evidence exists to support the charges of malversation against the respondents. Hence, the Sandiganbayan did not commit any grave abuse of discretion amounting to lack or excess of jurisdiction when it granted the demurrers to evidence and, consequently, dismissed the criminal cases against the respondents.

We take this opportunity to remind the prosecution that this Court is as much a judge in behalf of an accused-defendant whose liberty is in jeopardy, as it is the judge in behalf of the State, for the purpose of safeguarding the interests of society.[92] Therefore, unless the petitioner demonstrates, through evidence and records, that its case falls within the narrow exceptions from the criminal protection of double jeopardy, the Court has no recourse but to apply the finality-of-acquittal rule.

ESTRELLA TAGLAY, PETITIONER, VS. JUDGE MARIVIC TRABAJO DARAY AND LOVERIE PALACAY, RESPONDENTS.

JURISDICTION

G.R. No. 164258, August 22, 2012

Facts:

Before the Court is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to reverse and set aside the Orders of the Regional Trial Court (RTC) of Digos City wherein petitioner’s motion to dismiss and motion for reconsideration were denied. The instant petition arose from a Criminal Complaint for Qualified Trespass to Dwelling filed by private respondent against herein petitioner.

That on June 2, 2001 at about 2:30 o'clock in the afternoon at Tibangao, Malita, Davao del Sur, Philippines, and within the jurisdiction of this Honorable Court, the aforesaid accused, a private person and without any justifiable reason and by means of violence, did then and there willfully, unlawfully and feloniously enter into the dwelling of LoveriePalacay without her consent and against her will and once inside maltreated, boxed and choked her, to her damage and prejudice.

Petitioner pleaded not guilty.

Subsequently, the case was transferred to the RTC of Digos City where petitioner was brought to trial. Witnesses were then presented by the prosecution. Petitioner filed a Motion to Dismiss on the ground of lack of jurisdiction. Petitioner contended that the RTC did not acquire jurisdiction over the case, because the MCTC erroneously transferred the case to the RTC instead of dismissing it. Petitioner also argued that the RTC's lack of jurisdiction was further aggravated when she was not arraigned before the RTC. On March 9, 2004, the RTC issued its assailed Order ruling that it acquired jurisdiction over the case when it received the records of the case as a consequence of the transfer effected by the MCTC; that the transfer of the case from the MCTC is authorized under Administrative Matter No. 99- 1-13-SC and Circular No. 11-99; that there is no doubt that the offended party is a minor and, thus, the case falls within the original jurisdiction of Family Courts pursuant to Republic Act (R.A.) No. 8369. The RTC also held that even granting that there was defect or irregularity in the procedure because petitioner was not arraigned before the RTC, such defect was fully cured when petitioner's counsel entered into trial without objecting that his client had not yet been arraigned. Furthermore, the RTC noted that petitioner's counsel has cross-

examined the witnesses for the prosecution. Consequently, the RTC denied petitioner's Motion to Dismiss. Petitioner filed a Motion for Reconsideration, but the same was denied by the RTC via its Order. Hence, the instant petition for certiorari.

Petitioner raises two main grounds. First, petitioner contends that the RTC did not acquire jurisdiction over the case because Circular No. 11-99, which authorizes the transfer of Family Courts cases filed with first-level courts to the RTCs, is applicable only to cases which were filed prior to the effectivity of the said Circular on March 1, 1999. Petitioner argues that all Family Courts cases filed with first-level courts after the effectivity of the said Circular can no longer be transferred to Page 3 of 11 the RTC; instead they should be dismissed. Considering that the Information in the instant case was filed with the MCTC on November 19, 2001, petitioner avers that the MCTC should have dismissed the case instead of ordering its transfer to the RTC. Second, petitioner insists that she should have been arraigned anew before the RTC and that her arraignment before the MCTC does not count because the proceedings conducted therein were void.

Issue:

Whether or not MCTC has jurisdiction over the petitioner.

Held:

The petition is meritorious.

It is true that petitioner was arraigned by the MCTC. However, the MCTC Page 6 of 11 has no jurisdiction over the subject matter of the present case. It is settled that the proceedings before a court or tribunal without jurisdiction, including its decision, are null and void.[24] Considering that the MCTC has no jurisdiction, all the proceedings conducted therein, including petitioner's arraignment, are null and void. Thus, the need for petitioner's arraignment on the basis of a valid Information filed with the RTC.

MCTC has no jurisdiction over this case but this case falls under the original and exclusive jurisdiction of Family Courts because R.A. 8369 clearly provides that Family Courts have exclusive original jurisdiction over criminal cases where one or more of the accused is below eighteen (18) years of age but not less than nine (9) years of age, or where one or more of the victims is a minor at the time of the

commission of the offense. In the present case, there is no dispute that at the time of the commission of the alleged offense on June 2, 2001, private respondent, who is also the private complainant, was a minor.

ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY REYES, JANET BAY, JESUS R. GALANG, AND RANDY HAGOS, Petitioners vs.RANCISCO R. CO, JR., Respondent.

G.R. No. 156759, June 5, 2013

Facts:

On July 3, 2000, respondent, a retired police officer assigned at the Western Police District in Manila, sued AbanteTonite, a daily tabloid of general circulation; its Publisher Allen A. Macasaet; its Managing Director Nicolas V. Quijano; its Circulation Manager Isaias Albano; its Editors Janet Bay, Jesus R. Galang and Randy Hagos; and its Columnist/Reporter Lily Reyes (petitioners), claiming damages because of an allegedly libelous article petitioners published in the June 6, 2000 issue of AbanteTonite.

In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the stated address to effect the personal service of the summons on the defendants. But his efforts to personally serve each defendant in the address were futile because the defendants were then out of the office and unavailable. He returned in the afternoon of that day to make a second attempt at serving the summons, but he was informed that petitioners were still out of the office. He decided to resort to substituted service of the summons.

On October 3, 2000, petitioners moved for the dismissal of the complaint through counsel’s special appearance in their behalf, alleging lack of jurisdiction over their persons because of the invalid and ineffectual substituted service of summons. They contended that the sheriff had made no prior attempt to serve the summons personally on each of them in accordance with Section 6 and Section 7, Rule 14 of the Rules of Court. They further moved to drop AbanteTonite as a defendant by virtue of its being neither a natural nor a juridical person that could be impleaded as a party in a civil action.

RTC denied petitioners’ motion to dismiss and motion for reconsideration. Hence this petition

JURISDICTION

contending that the trial court has not acquired jurisdiction over the petitioners.

Issue:

Whether or not the court of appeals committed an error of law in holding that the trial court acquired jurisdiction over herein petitioners.

Held:

The petition for review lacks merit.

Jurisdiction over the person, or jurisdiction in personam –the power of the court to render a personal judgment or to subject the parties in a particular action to the judgment and other rulings rendered in the action – is an element of due process that is essential in all actions, civil as well as criminal, except in actions in rem or quasi in rem. Jurisdiction over the defendantin an action in rem or quasi in rem is not required, and the court acquires jurisdiction over an actionas long as it acquires jurisdiction over the resthat is thesubject matter of the action. The purpose of summons in such action is not the acquisition of jurisdiction over the defendant but mainly to satisfy the constitutional requirement of due process.

The distinctions that need to be perceived between an action in personam, on the one hand, and an action inrem or quasi in rem, on the other hand, are aptly delineated in Domagas v. Jensen,13 thusly:

The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An action in personam is said to be one which has for its

object a judgment against the person, as distinguished from a judgment against the property to determine its state. It has been held that an action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that proceedings to enforce personal rights and obligations and in which personal judgments are rendered adjusting the rights and obligations between the affected parties is in personam. Actions for recovery of real property are in personam.

On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the property of such persons to the discharge of the claims assailed. In an action quasi in rem, an individual is named as defendant and the purpose of the proceeding is to subject his interests therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status, ownership or liability of a particular property but which are intended to operate on these questions only as between the particular parties to the proceedings and not to ascertain or cut off the rights or interests of all possible claimants. The judgments therein are binding only upon the parties who joined in the action.

As the initiating party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court by the act of filing the initiatory pleading. As to the defendant, the court acquires jurisdiction over his person either by the proper service of the summons, or by a voluntary appearance in the action.

The significance of the proper service of the summons on the defendant in an action in personam cannot be overemphasized. The service of the summons fulfills two fundamental objectives, namely: (a) to vest in the court jurisdiction over the person of the defendant; and (b) to afford to the defendant the opportunity to be heard on the claim brought against him.19 As to the former, when jurisdiction in personam is not acquired in a civil action through the proper service of the summons or upon a valid waiver of such proper service, the ensuing trial and judgment are void.20 If the defendant knowingly does an act inconsistent with the right to object to the lack of personal jurisdiction as to him, like voluntarily appearing in the action, he is deemed to have submitted himself to the jurisdiction of the court.21 As to the latter, the

essence of due process lies in the reasonable opportunity to be heard and to submit any evidence the defendant may have in support of his defense. With the proper service of the summons being intended to afford to him the opportunity to be heard on the claim against him, he may also waive the process.21 In other words, compliance with the rules regarding the service of the summons is as much an issue of due process as it is of jurisdiction.23

Under the Rules of Court, the service of the summons should firstly be effected on the defendant himself whenever practicable. Such personal service consists either in handing a copy of the summons to the defendant in person, or, if the defendant refuses to receive and sign for it, in tendering it to him.24 The rule on personal service is to be rigidly enforced in order to ensure the realization of the two fundamental objectives earlier mentioned. If, for justifiable reasons, the defendant cannot be served in person within a reasonable time, the service of the summons may then be effected either (a) by leaving a copy of the summons at his residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copy at his office or regular place of business with some competent person in charge thereof.25 The latter mode of service is known as substituted service because the service of the summons on the defendant is made through his substitute.

It is no longer debatable that the statutory requirements of substituted service must be followed strictly, faithfully and fully, and any substituted service other than that authorized by statute is considered ineffective.26 This is because substituted service, being in derogation of the usual method of service, is extraordinary in character and may be used only as prescribed and in the circumstances authorized by statute.27 Only when the defendant cannot be served personally within a reasonable time may substituted service be resorted to. Hence, the impossibility of prompt personal service should be shown by stating the efforts made to find the defendant himself and the fact that such efforts failed, which statement should be found in the proof of service or sheriff’s return.28Nonetheless, the requisite showing of the impossibility of prompt personal service as basis for resorting to substituted service may be waived by the defendant either expressly or impliedly.29

JURISDICTION

ATTY. FE SALVADOR PALMIANO- Petitioner, vs. CONSTANTINO ANGELES, substituted by LUZ G. ANGELES, Respondent.

G.R. No. 171219, September 3, 2012

Facts:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision1 of the Court of Appeals (CA) promulgated on September 16, 2005 dismissing the petition before it, and its Resolution2 dated January 13, 2006, denying petitioner's Motion for Reconsideration, be reversed and set aside. Hence this petition.

Respondent-appellee ANGELES is one of the registered owners of a parcel of land located at 1287 Castanos Street, Sampaloc, Manila, evidenced by Transfer Certificate of Title No. 150872. The subject parcel of land was occupied by one Jelly Galiga (GALIGA) from 1979 up to 1993, as a lessee with a lease contract. Subsequently, Fe Salvador (SALVADOR) alleged that she bought on September 7, 1993 the subject parcel of land from GALIGA who represented that he was the owner, being one in possession. Petitioner-appellant SALVADOR remained in possession of said subject property from November 1993 up to the present. On November 18, 1993, the registered owner, the respondentappellee ANGELES, sent a letter to petitioner-appellant SALVADOR demanding that the latter vacate the subject property, which was not heeded by petitioner-appellant SALVADOR. Respondent-appellee ANGELES, thru one Rosauro Diaz, Jr. (DIAZ), filed a complaint for ejectment on October 12, 1994 with the Metropolitan Trial Court [MeTC] of Manila, Branch 16, docketed as Civil Case No. 146190-CV. The court ruled in favor of the herein respondent.

Petitioner then filed an appeal contending that DIAZ, who filed the complaint for ejectment, had no authority whatsoever from respondent-appellee ANGELES at the time of filing of the suit. But her appeal was denied.

Petitioner elevated the case to the CA via a petition for review, but in a Decision dated September 16, 2005, said petition was dismissed for lack of merit. The CA affirmed the factual findings of the lower courts that Galiga, the person who supposedly sold the subject premises to petitioner, was a mere lessee of respondent, the registered owner of the land in question. Such being the case, the lower court

ruled that Galiga could not have validly transferred ownership of subject property to herein petitioner. It was ruled by the CA that there were no significant facts or circumstances that the trial court overlooked or misinterpreted, thus, it found no reason to overturn the factual findings of the MeTC and the RTC. A motion for reconsideration of said Decision was denied in a Resolution dated January 13, 2006.

Issue:

Whether or not the respondent’s representative has authority to file the complaint.

Held:

No, respondent representative has no authority to file the case due to his failure to present proof which the MeTC, RTC and CA failed to address despite petitioner's insistence on it from the very beginning.

The complaint before the MeTC was filed in the name of respondent, but it was one Rosauro Diaz who executed the verification and certification dated October 12, 1994, alleging therein that he was respondent's attorney-in-fact. There was, however, no copy of any document attached to the complaint to prove Diaz's allegation regarding the authority supposedly granted to him. A Special Power of Attorney executed by respondent in favor of Rosauro Diaz but the said SPA was executed only on November 16, 1994, or more than a month after the complaint was filed, appearing to have been notarized by one Robert F. McGuire of Santa Clara County. Thus, there is nothing on record to show that Diaz had been authorized by respondent to initiate the action against petitioner.

What then, is the effect of a complaint filed by one who has not proven his authority to represent a plaintiff in filing an action? In Tamondong v. Court of Appeals, 6 the Court categorically stated that “if a complaint is filed for and in behalf of the plaintiff [by one] who is not authorized to do so, the complaint is not deemed filed. An unauthorized complaint does not produce any legal effect. Hence, the court should dismiss the complaint on the ground that it has no jurisdiction over the complaint and the plaintiff.”7 This ruling was reiterated in Cosco Philippines Shipping, Inc. v. Kemper Insurance Company, 8 where the Court went on to say that “[i]n order for the court to have authority to dispose of the case on the merits, it must acquire jurisdiction over the subject

matter and the parties. Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a party should first be subjected to the court's jurisdiction. Clearly, since no valid complaint was ever filed with the MeTC, the same did not acquire jurisdiction over the person of respondent [plaintiff before the lower court]."9 Pursuant to the foregoing rulings, therefore, the MeTC never acquired jurisdiction over this case and all proceedings before it were null and void. The courts could not have delved into the very merits of the case, because legally, there was no complaint to speak of. The court's jurisdiction cannot be deemed to have been invoked at all.

Optima Realty Corporation vs Hertz Phil. Exclusive Cars Inc GR No. 183035 Jan 9, 2013

Facts: Optima Corporation, a company engaged in leasing commercial spaces and buildings to its tenants, entered into a Contract of Lease with Hertz Phil Exclusive Cars Inc. over an office unit and a parking slot in the Optima Building for two years and five months, starting from October 1 2003 up to February 28 2006.During the lease period, Hertz alleged that it experienced a 50% drop in monthly sales and a significant decrease in its personnel’s productivity due to the renovations made in the building. It then requested a 50% discount on its rent for four months in 2005. Optima granted the request; however, respondent still failed to pay for 7 months and utility bills for 4 months. Petitioner then wrote another letter to Hertz on December 8 2005, reminding the latter that the contract could be renewed subject to a new negotiation and upon written notice by the lessee to the lessor at least 90 days prior to the termination of the lease period. Since no letter was received from Hertz within the 90-day period, Optima informed it that the lease would expire on February 28 2006 and would not be renewed. In its answer, Hertz wrote a letter on December 21 2005 advising Optima of the former’s desire to negotiate and extend the lease.

However, petitioner no longer entertained the notice. Optima thereby ordered Hertz to surrender and vacate the leased premises. Respondent, however, refused to vacate the leased premises which resulted to Optima filing a Complaint for Unlawful Detainer and Damages with Prayer for the Issuance of a TRO and/or Preliminary Mandatory Injunction in the MeTC against Hertz.

MeTC rendered a Decision, ruling that petitioner Optima had established its right to evict Hertz from the subject premises due to nonpayment of rentals and the expiration of the period of lease.

JURISDICTION

Hertz appealed the MeTC’s Decision to the RTC. The RTC affirmed its decision by dismissing the appeal.

Hertz thereafter filed a verified Rule 42 Petition for Review on Certiorari with the CA

CA reversed RTC’s decision because of the MeTC’s failure to acquire jurisdiction due to improper service of summons, hence, this appeal. Petitioner’s MFR was denied.

Petitioner then filed the instant Rule 45 Petition for Review on Certiorari with the SC.

Issue: Whether the MeTC properly acquired jurisdiction over the person of respondent Hertz

Held: The MeTC acquired jurisdiction over the person of respondent Hertz.

In civil cases, jurisdiction over the person of the defendant may be acquired either by service of summons or by the defendant’s voluntary appearance in court and submission to its authority.35

In this case, the MeTC acquired jurisdiction over the person of respondent Hertz by reason of the latter’s voluntary appearance in court. In Philippine Commercial International Bank v. Spouses Dy, we had occasion to state:

Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power of legal processes exerted over his person, or his voluntary appearance in court. As a general proposition, one who seeks an affirmative relief is deemed to have submitted to the jurisdiction of the court. It is by reason of this rule that we have had occasion to declare that the filing of motions to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, is considered voluntary submission to the court's jurisdiction. This, however, is tempered by the concept of conditional appearance, such that a party who makes a special appearance to challenge, among others, the court's jurisdiction over his person cannot be considered to have submitted to its authority.

Ellice Agro-Industrial Corp represented by Raul Gala. vs RODEL T. YOUNG, GUIA G. DOMINGO

Facts:

On July 24, 1995, Rodel T. Young, Delfin Chan and Jim Wee (respondents) and Ellice Agro-

Industrial Corporation (EAIC), represented by its alleged corporate secretary and attorney-in-fact, Guia G. Domingo, entered into a Contract to Sell, under certain terms and conditions, wherein EAIC agreed to sell to the respondents a 30,000 square-meter portion of a parcel of land located in Lutucan, Sariaya, Quezon and registered under EAIC’s name in consideration of P1,050,000.00.

Pursuant to the Contract to Sell, respondents paid EAIC, through Domingo, the aggregate amount of P545,000.00 as partial payment for the acquisition of the subject property. Despite such payment, EAIC failed to deliver to respondents the owner’s duplicate certificate of title of the subject property and the corresponding deed of sale as required under the Contract to Sell.

Respondents filed a Complaint for specific performance against EAIC and Domingo before the RTC.

Respondents caused the annotation of a Notice of Lis Pendens (formal notice)

The initial attempt to serve the summons on EAIC, through Domingo, on Rizal Street, Sariaya, Quezon, was unsuccessful.

Another attempt was made to serve summons on EAIC at 996 Maligaya Street, Singalong, Manila, the residence of Domingo. This time, summons was served successfuly.

EAIC, represented by Domingo, filed its Answer with Counterclaim.

In response, the Robles Ricafrente Aguirre Sanvicente & Cacho Law Firm, introducing itself to be the counsel of EAIC, sent Wee a letter informing him of Domingo’s lack of authority to represent EAIC.

As a result of EAIC’s failure to appear in the pre-trial conference, respondents were allowed to present their evidence.

Following the presentation of evidence, the RTC rendered its Decision ordering EAIC to deliver the owner’s duplicate copy of TCT and to execute a final deed of sale in favor of respondents.

No MFR or notice of appeal was filed by EAIC, hence, the said RTC decision became final and executory.

EAIC, represented by Gala, initiated the Petition for Annulment of Judgment under Rule 47 of the Rules of Court of the RTC Decision before the CA. The petition was grounded on the RTC’s lack of jurisdiction over EAIC and the extrinsic

fraud committed by Domingo. EAIC discarded any knowledge of the said sale and the suit filed by respondents against it. According to EAIC, it could not be bound by the assailed RTC Decision saying Domingo was not its President, Manager, Secretary, Cashier, Agent or Director, thus, she did not possess the requisite authorization to represent EAIC in the subject transaction. Furthermore, her misrepresentation that she was EAIC’s corporate secretary who was properly authorized to sell and receive payment for the subject property, defrauded EAIC of the potential gains it should have realized from the proceeds of the sale.

In their Answer with Counterclaim filed before the CA, respondents countered that considering EAIC’s petition for relief from judgment under Rule 38 grounded on extrinsic fraud, had already been rejected with finality, EAIC could not be permitted to invoke the same ground in a petition for annulment of judgment under Rule 47.

In its Reply filed before the CA, EAIC explained that the RTC did not touch upon the issue of fraud in the petition for relief from judgment as it was dismissed for being filed out of time. In addition, EAIC claimed that the exchange of letters between Wee and EAIC never stated anything whatsoever of any pending suit between them.

CA dismissed the petition for annulment of judgment. EAIC’s motion for reconsideration was denied by the CA

ISSUE: WON RTC validly acquired jurisdiction over the person of EAIC

HELD: It is a settled rule that jurisdiction over the defendant is acquired either upon a valid service of summons or the defendant’s voluntary appearance in court. When the defendant does not voluntarily submit to the court’s jurisdiction or when there is no valid service of summons, any judgment of the court which has no jurisdiction over the person of the defendant is null and void. The purpose of summons is not only to acquire jurisdiction over the person of the defendant, but also to give notice to the defendant that an action has been commenced against it and to afford it an opportunity to be heard on the claim made against it. The requirements of the rule on summons must be strictly followed, otherwise, the trial court will not acquire jurisdiction over the defendant.

Section 13, Rule 14 of the 1964 Rules of Civil Procedure, the applicable rule on service of summons upon a private domestic corporation then, provides:

JURISDICTION

Sec. 13. Service upon private domestic corporation or partnership.— If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors. [Underscoring supplied]

Based on the above-quoted provision, for service of summons upon a private domestic corporation, to be effective and valid, should be made on the persons enumerated in the rule. Conversely, service of summons on anyone other than the president, manager, secretary, cashier, agent, or director, is not valid. The purpose is to render it reasonably certain that the corporation will receive prompt and proper notice in an action against it or to insure that the summons be served on a representative so integrated with the corporation that such person will know what to do with the legal papers served on him.

In the present case, the pertinent document showing EAIC’s composition at the time the summons was served upon it, through Domingo, will readily reveal that she was not its president, manager, secretary, cashier, agent or director. Due to this fact, the Court is of the view that her honest belief that she was the authorized corporate secretary was clearly mistaken because she was evidently not the corporate secretary she claimed to be. In view of Domingo’s lack of authority to properly represent EAIC, the Court is constrained to rule that there was no valid service of summons binding on it.

Granting arguendo that EAIC had actual knowledge of the existence of Civil Case No. 96-177 lodged against it, the RTC still failed to validly acquire jurisdiction over EAIC. In Cesar v. Ricafort-Bautista, it was held that "xjurisdiction of the court over the person of the defendant or respondent cannot be acquired notwithstanding his knowledge of the pendency of a case against him unless he was validly served with summons. Such is the important role a valid service of summons plays in court actions."

In this case, at the time she filed the Answer with Counterclaim, Domingo was clearly not an officer of EAIC, much less duly authorized by any board resolution or secretary’s certificate from EAIC to file the said Answer with Counterclaim in behalf of EAIC. Undoubtedly, Domingo lacked the necessary authority to bind EAIC to Civil Case No. 96-177 before the RTC despite the filing of an Answer with Counterclaim. EAIC cannot be bound or deemed to have voluntarily appeared before the RTC by the act of an unauthorized stranger.

In view of the fact that EAIC was not validly served with summons and did not voluntarily appear in Civil Case No. 96-177, the RTC did not

validly acquire jurisdiction over the person of EAIC. Consequently, the proceedings had before the RTC and ultimately its Decision were null and void.

Afdal vs Carlos

Facts:

Respondent Romeo Carlos filed a complaint for unlawful detainer and damages against petitioners Zenaida Guijabar, et al.

Respondent alleged that petitioners were occupying, by mere tolerance. Respondent claimed that petitioner Abubakar Afdal sold the property to him but that he allowed petitioners to stay in the property. Respondent claimed that he demanded return of the property because he needed its use but that they refused to heed the demand.

According to the records, there were three attempts to serve the summons and complaint on petitioners which were returned with the following annotations:

Given address cannot be located; Duly served as evidenced by a signature of one Gary Acob (relative); duly served but refused to sign without specifying to whom it was served.

Petitioner failed to file an answer. the MTC ruled in favor of respondent. Petitioner filed a motion for relief in the MTC which they withdrew. They filed the same motion in the RTC.

The RTC dismissed the petition holding that it didn’t have jurisdiction because the petition should have been filed before the MTC in accordance with Section 1 of Rule 38 of the Rules of Court which provides that a petition for relief should be filed "in such court and in the same case praying that the judgment, order or proceeding be set aside.

Issue: Whether or not the RTC had jurisdiction over the petition for relief from judgement.

No jurisdiction.

In the present case, petitioners cannot file the petition for relief with the MTC because it is a prohibited pleading in an unlawful detainer case. Petitioners cannot also file the petition for relief with the RTC because the RTC has no jurisdiction to entertain petitions for relief from judgments of the MTC. Therefore, the RTC did not err in dismissing the petition for relief from judgment of the MTC. The remedy is to file a petition for certiorari under Rule 01 on the

ground of lack of jurisdiction of the MTC over the person of petitioners in view of the absence of summons to petitioners. An action for unlawful detainer or forcible entry is a real action and in personam. In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. Any judgment of the court which has no jurisdiction over the person of the defendant is null and void. Service of summons upon the defendant shall be by personal service first and only when the defendant cannot be promptly served in person will substituted service be availed of. In this case, the indorsements failed to state that prompt and personal service on petitioners was rendered impossible. These requirements are indispensable because substituted service is in derogation of the usual method of service. Likewise, nowhere in the return of summons or in the records of the case was it shown that Gary Acob, the person on whom substituted service of summons was effected, was a person of suitable age and discretion residing in petitioners- residence. The process server failed to specify Gary Acob’s age, his relationship to petitioners and to ascertain whether he comprehends the significance of the receipt of the summons and his duty to deliver it to petitioners or at least notify them of said receipt of summons. In sum, petitioners were not validly served with summons by substituted service. Hence, the MTC failed to acquire jurisdiction over the person of the petitioners and, thus, the MTC’s decision is void

Sharuf vs bubia

FACTS:

ssThis is a verified petition for certiorari, with a prayer for a preliminary injunction filed by Samuel S. Sharruf against Frank Bubla and the Hon. Arsenio Solidum, Judge of the Court of First Instance of Manila, Branch XVII, to set aside the latter's orders of March 14 and April 11, 1960 in Civil Case No. 33461 denying petitioner's motion for new trial, for lack of merit, and his motion for reconsideration thereof, respectively, and his order of June 3, 1960 disallowing petitioner's appeal from the order of denial of March 14, 1960 on the ground that the order aforesaid was already final and executory, and ordering its execution.

On August 15, 1957 respondent Bubla, a non-resident alien, through his counsel and legal representative, William Quasha& Associates, filed a complaint with the respondent court to compel petitioner to render an accounting in connection with a written contract entered into between them (Civil Case No. 33461). Petitioner filed an answer denying the material allegations of the complaint and setting forth therein a counterclaim for damages, but on

JURISDICTION

September 17, 1958 his counsel filed a motion to withdraw his appearance for the reason that he had been unable to get in touch with him. The court granted the motion.

When the case called for pre-trial on September 27, 1958, petitioner failed to appear, and the court set the case for trial on the judgments an December 1, 1958. Notice thereof was sent to petitioner at his address of record. After several postponements, the hearing of the case was reset for March 6, 1959, but petitioner again failed to appear either personally or thru counsel, despite notice sent to him at his address of record. Instead of proceeding with the trial of the case — as His Honor could have done — he directed respondent Bubla's counsel to exert efforts to notify petitioner of the trial of the case on April 23, 1959. Upon petitioner's failure to appear when the case was finally called for trial on that date, the court received Bubla's evidence which consisted of Bubla's deposition taken before the Philippine Consul, Philippine Embassy at Sydney, Australia, and documentary evidence relative to their contract, management and operation of the theatrical venture and stipulation as to accounting. On the basis thereof, the respondent court found that the following facts had been established:

From the evidence in the record, it appears that the plaintiff, Frank Bubla, is a resident of 11 Shipley Street, South Yarra Melbourne, State of Victoria, Commonwealth of Australia, and was an entrepreneur managing a theatrical troupe under the name of "Bubla Continental Revue" in 1954, while the defendant, Samuel S. Sharruf was then the operator and manager of the "Riviera Night Club" at Dewey Boulevard, Manila. Exhibits "A" to "K" of plaintiff's deposition show that plaintiff and defendant entered into a series of agreement by correspondence whereby the former undertook to provide the latter with the so-called "Bubla Continental Revue" for the purpose of presenting two nightly floor shows in said night club for a consideration of P2,500.00 monthly, "net and free income tax", as well as three daily stage shows at the Manila Grand Opera House (Exhibits "E", "A-3", and "A-46"), for another P2,500.00 a month. Subsequently, plaintiff and defendant reduced the terms of their agreement to a formal contract (Exhibit "P").

The "Bubla Continental Revue", comprising of six members excluding the plaintiff, who was unable to enter this country because his visa was not approved, arrived in Manila sometime in September, 1954, and from September 29,

1954 to January 15, 1955, it performed floor shows at the "Riviera Night Club" twice nightly, and three or four stage shows daily at the Manila Grand Opera House under the management and sponsorship of herein defendant (Exhibits "A-28", "A-36", "A-42", "A-43" and "A-46"). In the meantime plaintiff authorized defendant to pay the salaries of the members of said theatrical troupe and requested an accounting of the expenditures incurred as well as payment of whatever amount was due plaintiff by virtue of their contract (Exhibit "P"). However, despite such demands (Annex "A", Exhibits "II", "III", "IV" and "V"), defendant failed to render any accounting and to pay to plaintiff such amount as was due him, thereby compelling the latter to engage the services of his lawyers for P5,000.00 for the purpose of instituting this action.

ISSUE: Whether or not the petition for certiorari should be granted

RULING:The granting or denial of a motion for new trial is a matter addressed to the sound discretion of the trial court. In this case where petitioner's motion was based on mistake and/or excusable negligence, the lower court found that the same was not supported by any affidavit of merit. Even if we were to agree with petitioner that, in this connection, his answer to the complaint may be taken into account, the allegations made therein do not appear to satisfy the rule as to proof of mistake or excusable negligence. Consequently, the respondent court committed no error in denying said motion.

Petitioner insists that the respondent court acquired no jurisdiction over the person of respondent Bubla. We find this to be without merit. It is settled law in this jurisdiction that a court may acquire jurisdiction over the person of a party either by his voluntary appearance in court demanding affirmative relief or by having him served. With summons within the territorial jurisdiction of the Philippines.Bubla was the plaintiff in Civil Case No. 33461 filed against the herein petitioner. By filing his complaint, therefore, Bubla submitted voluntarily to the jurisdiction of the respondent court and the latter acquired such jurisdiction even if, as a matter of fact, Bubla had never been able to enter the Philippines.

Petitioner's claim that the decision of the respondent court in Civil Case No. 33461 is void because of lack of notice of trial served on him is likewise untenable. The record shows that petitioner had a registered address in the

record of said case at which repeated notices of trial were addressed to him. Aside from this, it also appears that the respondent court, instead of proceeding to receive the evidence of the plaintiff on March 6, went out of its way and deemed it wise to reset the trial for April 23 of the same year, directing Bubla's counsel to exert efforts to notify petitioner. But this notwithstanding, the latter failed to appear on the aforesaid date, for which reason the respondent court received Bubla's evidence and subsequently rendered judgment in his favor.

WHEREFORE, the petition for certiorari under consideration is dismissed, with costs.

ABAN VS ENAGE

FACTS:

This is a petition for certiorari and prohibition with preliminary injunction filed by petitioners against private respondents and Honorable Judge Manuel L. Enage, District Judge of the Court of First Instance of Agusan, to declare null and void the order of the court dated July 29, 1968, issued in Civil Case No. 1005, ordering the cancellation of TCT No. RT 1693 in the names of herein petitioners covering Lot No. 427 C-I (Subdivision Plan LRC-Psd-40107), on the ground that the same was issued without or in excess of jurisdiction.

The antecedent facts are as follows:

On August 21, 1964, a complaint was filed in the Court of First Instance of Agusan, Branch 11, then presided by the late Judge Montano Ortiz, docketed as Civil Case No. 1005, entitled "Maria BalagaSeveroMalvar, Ariston Blanco, Domingo Macuno plaintiffs, versus Pedro Cuenca, Moises Burdeos, Nestor Burdeos, DeodoroBurdeos, LeonilaBurdeos, RemediosBurdeos, Leonardo Campana, AproditoCampana, CleofeCampana, Lilia Campana, Alberto Banjao, for himself and on behalf of the Minors- Luzminda, Clemencia, and Isabel, all surnamed Banjao, Felix Arriola Sr., Leonardo Villafuerte, Lope C. Jonco, Butuan City Rural Bank, Register of Deeds of Butuan City, Land Registration Commissioner, Sixto Martinez, Aurora C. Martinez, CelestinoUdarbe and Andres Aban, defendants," for Nullification and Cancellation of Subdivision Plan LRC- Psd 37270 on Lot No. 427 Cad. 84, Butuan City, TCT-RT 1584, TCT-RT 1585 and Various Documents and for Damages with Injunction (pp. 12- 17, rec.).

JURISDICTION

The complaint states that CelestinoUdarbe and Andres Aban are sued as parties-defendants "since their consent to have them joined as parties- plaintiffs could not be secured. "

Andres Aban, as a defendant in the above-entitled case, through counsel, filed a motion dated September 1, 1964 to drop him from the complaint as a misjoined party and, at the same time, moved for the dismissal of the complaint (pp. 57-58, rec.).

On September 17, 1964, the CFI of Butuan City issued an order (p. 59, rec.) dropping Andres Aban as party- defendant and dismissing the complaint against him.

On May 26, 1965, an amended complaint was filed wherein the names of SeveroMalvar as plaintiff and petitioner herein Andres Aban and CelestinoUdarbe as defendants in Civil Case No. 1005 were dropped as parties therein.

Meanwhile, the heirs of Eleuterio Cuenca filed a petition for correction, etc. dated November 1, 1965 and docketed as Civil Case No. 1126, this time before the CFI of Agusan, Branch 1, presided by Judge Simeon Ferrer, praying, inter alia, for the cancellation of TCT No. RT- 1693 issued to herein petitioner Andre Aban. This case, however, was dismissed at the instance of the heirs in an order of the court dated June 4, 1968 (pp. 68-69, rec.).

On April 15, 1968, defendants-heirs of Eleuterio Cuenca in Civil Case No. 1005, through Atty. Timoteo D. Naldoza, counsel and attorney-in-fact of the Cuenca heirs, filed a motion in the aforesaid case for the cancellation of TCT No. RT-1693 issued in the name of Andres Aban, as well as all the annotations at the back thereof, alleging that herein petitioner Aban's claim over a portion of Lot No. 427, particularly Lot No. 427-C-1 is "now abandoned, waived or relinquished" (pp. 12-17, rec.).

Subsequently, herein petitioner Andres Aban filed an opposition to the motion to cancel TCT No. RT-1693 filed by the heirs of Eleuterio Cuenca.

On August 20, 1968, herein petitioner Andres Aban filed a motion for reconsideration, but the same was denied in an order (p. 26, rec.) of the court dated January 11, 1969.

A second motion for reconsideration dated January 22, 1969 was filed but was denied in an order (pp. 27-30, rec.) dated May 10,1969.

A third motion for reconsideration dated May 15, 1969 was filed but was again denied in an order (p. 31, rec.) dated June 6, 1969.

Hence, the instant appeal.

Acting on the petition for certiorari, this Court, on July 9, 1969, issued a resolution requiring the respondents herein to file an answer to the petition for certiorari and, at the same time, issued a temporary restraining order restraining the enforcement of the Order "cancelling Title TCT-RT-1693 of petitioners herein, and from taking further proceedings or action in Civil Case No. 1005 of the Court of First Instance of Agusan, entitled 'Maria Balaga et al. vs. Pedro Cuenca, et al.

While the instant case was pending before this Court, a certain Antonio K. Cañon came into the picture by entering his appearance (p. 327, rec.) on May 29, 1973 as counsel for the respondents and, at the same time, filing a motion for resolution (pp. 328-329, rec.).

In his motion for resolution, counsel Antonio K. Cañon stated that he is appearing in collaboration with 'the original counsel of record, Atty. Timoteo D. Naldoza. "

In a resolution dated June 5, 1973 (p. 333, rec.), this Court "resolved to require the respondents themselves to COMMENT on the said appearance, and in conformity therewith, to INFORM this Court, who between Attys. Timoteo D. Naldoza and Antonio K. Cañon shall be exclusively served with copies of all pleadings and court processes in this case, both within ten (10) days from notice hereof. This Court resolved further to NOTE the motion of respondents heirs of the late Eleuterio Cuenca praying that this case be resolved and dismissed,"

On June 19, 1973, the petitioners, thru counsel, filed a manifestation to motion for resolution (pp. 334-335, rec.) filed by Atty. Antonio K. Cañon in behalf of herein respondents, joining said Atty. Cañon in his prayer for the resolution of the instant case.

On July 6, 1973, the respondent heirs of Eleuterio Cuenca filed their comment in compliance with the resolution of this Court dated June 5, 1973.

ISSUE: Whether or not there is excess of jurisdiction

RULING:

Going back to the main case, herein petitioners alleged that the order of the court a quo dated July 29, 1968, issued in Civil Case No. 1005, ordering the cancellation of TCT No. RT-1693 issued in the name of herein petitioner Andres Aban over lot No. 127-C-1 (Subdivision Plan LRC-Psd-40107' ), was issued with grave abuse of discretion amounting to lack of jurisdiction and/or without jurisdiction because:

(a) The motion [Annex 'A'] filed in the lower Court is improperly filed because the Court below had no jurisdiction over the subject matter, the same being a separate, distinct, and independent action by itself;

(b) Your petitioners are not parties in Civil Case No. 1005 [Annex 'F'] and therefore, the Court below was without jurisdiction over them;

(c) There is patently no basis for respondent Judge Enage to give due course to a mere motion to cancel the title of petitioners there being no proper proceedings conducted, petitioners not being parties in Civil Case No. 1005 as amended, and therefore respondent judge had no power, jurisdiction or authority to order the cancellation of said title No. RT 1693 of petitioners herein;

(d) According to records of Civil Case No. 1005 the respondent heirs of Eleuterio Cuenca are represented by their counsel, Atty. Tranquilino O. Calo, Jr., and not respondent Atty. TimoteoNaldoza; said case is still pending before respondent Judge Enage; consequently, respondent, Atty. Naldoza had no authority or power to file the motion to cancel Title No. RT-1693; such act of respondent Atty. Naldoza constitutes malpractice and a ground for disbarment before this Court;

(e) Respondent Judge Enage acted without jurisdiction and/or with grave abuse of discretion amounting to lack of jurisdiction in issuing the order of cancellation of TCT-R,T-1693 of Andres Aban by an unlawful and improper motion of respondent Atty. Naldoza, Attorney-in-fact for heirs of Eleuterio Cuenca, filed in Civil Case No. 1005 as amended, wherein, petitioners herein are not parties [attached Annex 'F', amended complaint 1005];

(f) Petitioners are without any remedy of appeal nor is there any plain, speedy and adequate remedy under the ordinary course of law against the patently unlawful order of the lower court to cancel Title No. RT 1693 of herein petitioners;

JURISDICTION

(g) Respondent Judge Enage has set the execution of his order after the lapse of the reglementaryperiod, which order are clearly illegal and unwarranted and will result in irreparable damage and injury to the petitioners herein;

(h) There is therefore an imperative need for the issuance of an ex parte Writ of Preliminary Injunction restraining and prohibiting the respondents, their agents, attorneys, representatives, deputies, servants, or any other persons acting in their behalf from enforcing the Order of which purposes petitioners are ready and willing to put up the necessary bond in the minimum amount which the Honorable Court will require" (pp. 8-10, rec.).

In fine, herein petitioners assert that the court a quo could not have acquired jurisdiction over the subject matter of the motion to cancel TCT-RT-1693 filed by the heirs of Eleuterio Cuenca, private respondents herein, because the aforesaid motion to cancel partakes of a separate, distinct, and independent action by itself; that since herein petitioners are not parties in Civil Case No. 1005, the Court a quo was without jurisdiction over their persons.

It may be well to state at this point that jurisdiction of the court over the subject or nature of an action, is conferred by law. Jurisdiction over the persons of the parties may be acquired by the voluntary appearance of the plaintiff, and, with respect to the defendant, by the service of summons upon him or by his voluntary appearance in court.

It may be recalled that when the motion to cancel dated April 15, 1968 was filed by the heirs of Eleuterio Cuenca in the Court of First Instance of Agusan in Civil Case No. 1005, the court served summons to the petitioners herein who subsequently filed their opposition thereto (pp. 18- 19, rec.). When the motion to cancel was set for hearing (pp. 149-167, rec.) on June 17, 1968, Atty. Jose L. Lachica, counsel of herein petitioners, appeared in court. During said hearing, the parties were given ample opportunity to argue their respective stand, present evidence and exhibits, after which the court a quo required the parties to submit their respective memoranda, which the parties did.

Against the foregoing backdrop, this Court is not inclined to sustain herein petitioners' contention that the lower court was without jurisdiction or gravely abused its discretion when it ,acted on the motion to cancel filed by private respondents herein by issuing an order

dated July 29,1968 cancelling TCT-RT-1693 in the name of Andres Aban, petitioner herein.

For even assuming that the motion to cancel filed by private respondents in the court below is a separate, distinct, and independent action by itself, as argued by the petitioners, nevertheless, by the service of summons upon herein petitioners, and by their act of filing an opposition to the motion as well as their voluntary appearance in court when the motion was set for hearing, together with the submission of their memorandum (pp. 168-177, rec.), the petitioners are deemed to have submitted themselves to the jurisdiction of the court, and, consequently, they are bound by the legal implications of the order of the court a quo.

Moreover, the filing of petitioners' three motions for reconsideration is a further submission on their part to the jurisdiction of the court, and the denial of such motions was binding on petitioners herein (Soriano vs. Palacio, et al., 12 SCRA 447, 449).

It cannot be said that the petitioners were denied their day in court. Neither can it be said that the petitioners' substantial rights were prejudiced thereby. The petitioners have had the fullest opportunity to lay before the court the merits of their claim when they, as stated heretofore, voluntarily submitted themselves to the jurisdiction of the court a quo.

To assert that the court had no jurisdiction because petitioner Andres Aban was not a party in Civil Case No. 1005 would appear therefore to be a mere technicality that would not serve the interest of the administration of justice (Torres vs. Caluag, et al., 17 SCRA 808, 811). Besides, petitioner Andres Aban's not being a party in Civil Case No. 1005 was of his own making. By not joining as party-plaintiff in Civil Case No. 1005, and, at the same time, asking the court to drop him as party-defendant (he was sued as one of the parties-defendants when his consent to have him joined as one of the parties-plaintiffs could not be secured) in the same case' which the court a quogranted in an order dated September 17, 1964, petitioner Andres Aban virtually toyed with his right to enforce and protect his claim over a portion of Lot No. 427 of ButuanCadastre. There is no plausible reason for petitioner Andres Aban to assume that the lot he claims (Lot No. 427-C-1) is not involved in Civil Case No. 1005 because what is precisely under litigation in said case is ' Lot No. 427 as a

whole, of which Lot No. 427-C-1 is part and parcel.

Under the circumstances, petitioner spouses Andres Aban and Dolores Galope are deemed impleaded as party respondents in Civil Case No. 1005.

II

With respect to the petition filed by Atty. Timoteo D. Naldoza to record his attorney's lien and to consider him as the principal counsel of record of herein private respondents, suffice it to state that this Court finds the petition meritorious.

While concededly, private respondents herein have the right to dismiss their attorney with or without cause, however, any change or substitution of attorney must have to follow the procedure prescribed by Rule 138, Section 26 of the Revised Rules of Court.

Unless the formalities required by the Rules of -Court on valid substitution of attorneys are complied with, no substitution will be permitted and the attorney who appeared last in the cause before such application for substitution will be regarded as the attorney of record and entitled to be notified of all notices and pleadings and responsible for the conduct of the case (Olivares vs. Leola 97 Phil. 352). Specifically, We have ruled in several cases that "no substitution of attorneys will be allowed unless the following requisites concur: (1) there must be filed a written application for substitution; (2) there must be filed the written consent of the client to the substitution; (3) there must be filed the written consent of the attorney to be substituted, if such consent can be obtained; (4) in case such written consent cannot be procured, there must be filed with the application for substitution, proof of the service of notice of such motion in the manner required by the rules, on the attorney to be substituted".

In the case at bar, it is clear that there was no valid substitution of counsel. The records show that from the time this case was filed in the CFI of Agusan until the same reaches this Court, it was Atty. Timoteo D. Naldoza who appeared and filed all the necessary pleadings and motions in court as counsel of record for private respondents herein. The subsequent appearance of Attys. Antonio K. Cañon Cesar T. Palana, and Francisco T. Concon bears no significance because there was practically nothing to be done in the case any more as the

JURISDICTION

same was already submitted to this Court for decision.

MACASAET VS CO

FACTS:

To warrant the substituted service of the summons and copy of the complaint, the serving officer must first attempt to effect the same upon the defendant in person. Only after the attempt at personal service has become futile or impossible within a reasonable time may the officer resort to substituted service.

The Case

Petitioners – defendants in a suit for libel brought by respondent – appeal the decision promulgated on March 8, 20021 and the resolution promulgated on January 13, 2003,2 whereby the Court of Appeals (CA) respectively dismissed their petition for certiorari, prohibition and mandamus and denied their motion for reconsideration. Thereby, the CA upheld the order the Regional Trial Court (RTC), Branch 51, in Manila had issued on March 12, 2001 denying their motion to dismiss because the substituted service of the summons and copies of the complaint on each of them had been valid and effective.3

Antecedents

On July 3, 2000, respondent, a retired police officer assigned at the Western Police District in Manila, sued AbanteTonite, a daily tabloid of general circulation; its Publisher Allen A. Macasaet; its Managing Director Nicolas V. Quijano; its Circulation Manager Isaias Albano; its Editors Janet Bay, Jesus R. Galang and Randy Hagos; and its Columnist/Reporter Lily Reyes (petitioners), claiming damages because of an allegedly libelous article petitioners published in the June 6, 2000 issue of AbanteTonite. The suit, docketed as Civil Case No. 00-97907, was raffled to Branch 51 of the RTC, which in due course issued summons to be served on each defendant, including AbanteTonite, at their business address at Monica Publishing Corporation, 301-305 3rd Floor, BF Condominium Building, Solana Street corner A. Soriano Street, Intramuros, Manila.4

In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the stated address to effect the personal service of the summons on the defendants. But his efforts to personally serve each defendant in the address were futile because the defendants were then out of the office and unavailable. He returned

in the afternoon of that day to make a second attempt at serving the summons, but he was informed that petitioners were still out of the office. He decided to resort to substituted service of the summons, and explained why in his sheriff’s return dated September 22, 2005

On October 3, 2000, petitioners moved for the dismissal of the complaint through counsel’s special appearance in their behalf, alleging lack of jurisdiction over their persons because of the invalid and ineffectual substituted service of summons. They contended that the sheriff had made no prior attempt to serve the summons personally on each of them in accordance with Section 6 and Section 7, Rule 14 of the Rules of Court. They further moved to drop AbanteTonite as a defendant by virtue of its being neither a natural nor a juridical person that could be impleaded as a party in a civil action.

At the hearing of petitioners’ motion to dismiss, Medina testified that he had gone to the office address of petitioners in the morning of September 18, 2000 to personally serve the summons on each defendant; that petitioners were out of the office at the time; that he had returned in the afternoon of the same day to again attempt to serve on each defendant personally but his attempt had still proved futile because all of petitioners were still out of the office; that some competent persons working in petitioners’ office had informed him that Macasaet and Quijano were always out and unavailable, and that Albano, Bay, Galang, Hagos and Reyes were always out roving to gather news; and that he had then resorted to substituted service upon realizing the impossibility of his finding petitioners in person within a reasonable time.

On March 12, 2001, the RTC denied the motion to dismiss, and directed petitioners to file their answers to the complaint within the remaining period allowed by the Rules of Court,6 relevantly stating:

Records show that the summonses were served upon Allen A. Macasaet, President/Publisher of defendant AbanteTonite, through LuAnn Quijano; upon defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, through Rene Esleta, Editorial Assistant of defendant AbanteTonite (p. 12, records). It is apparent in the Sheriff’s Return that on several occasions, efforts to served (sic) the summons personally upon all the defendants were ineffectual as they were always out and

unavailable, so the Sheriff served the summons by substituted service.

Considering that summonses cannot be served within a reasonable time to the persons of all the defendants, hence substituted service of summonses was validly applied. Secretary of the President who is duly authorized to receive such document, the wife of the defendant and the Editorial Assistant of the defendant, were considered competent persons with sufficient discretion to realize the importance of the legal papers served upon them and to relay the same to the defendants named therein (Sec. 7, Rule 14, 1997 Rules of Civil Procedure).

WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby DENIED for lack of merit..

Accordingly, defendants are directed to file their Answers to the complaint within the period still open to them, pursuant to the rules.

SO ORDERED.

Petitioners filed a motion for reconsideration, asserting that the sheriff had immediately resorted to substituted service of the summons upon being informed that they were not around to personally receive the summons, and that AbanteTonite, being neither a natural nor a juridical person, could not be made a party in the action.

On June 29, 2001, the RTC denied petitioners’ motion for reconsideration.7 It stated in respect of the service of summons, as follows:

The allegations of the defendants that the Sheriff immediately resorted to substituted service of summons upon them when he was informed that they were not around to personally receive the same is untenable. During the hearing of the herein motion, Sheriff Raul Medina of this Branch of the Court testified that on September 18, 2000 in the morning, he went to the office address of the defendants to personally serve summons upon them but they were out. So he went back to serve said summons upon the defendants in the afternoon of the same day, but then again he was informed that the defendants were out and unavailable, and that they were always out because they were roving around to gather news. Because of that information and because of the nature of the work of the defendants that they are always on field, so the sheriff resorted to substituted service of summons. There was substantial compliance with the rules, considering the difficulty to serve the

JURISDICTION

summons personally to them because of the nature of their job which compels them to be always out and unavailable. Additional matters regarding the service of summons upon defendants were sufficiently discussed in the Order of this Court dated March 12, 2001.

Regarding the impleading of AbanteTonite as defendant, the RTC held, viz:

"AbanteTonite" is a daily tabloid of general circulation. People all over the country could buy a copy of "AbanteTonite" and read it, hence, it is for public consumption. The persons who organized said publication obviously derived profit from it. The information written on the said newspaper will affect the person, natural as well as juridical, who was stated or implicated in the news. All of these facts imply that "AbanteTonite" falls within the provision of Art. 44 (2 or 3), New Civil Code. Assuming arguendo that "AbanteTonite" is not registered with the Securities and Exchange Commission, it is deemed a corporation by estoppels considering that it possesses attributes of a juridical person, otherwise it cannot be held liable for damages and injuries it may inflict to other persons.

Undaunted, petitioners brought a petition for certiorari, prohibition, mandamusin the CA to nullify the orders of the RTC dated March 12, 2001 and June 29, 2001.

ISSUE: Whether or not jurisdiction is acquired over the defendant through summons

RULING: Ruling of the CA

On March 8, 2002, the CA promulgated its questioned decision,8 dismissing the petition for certiorari, prohibition, mandamus, to wit:

We find petitioners’ argument without merit. The rule is that certiorari will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction committed by the respondent Judge. A judicious reading of the questioned orders of respondent Judge would show that the same were not issued in a capricious or whimsical exercise of judgment. There are factual bases and legal justification for the assailed orders. From the Return, the sheriff certified that "effort to serve the summons personally xxx were made, but the same were ineffectual and unavailing xxx.

and upholding the trial court’s finding that there was a substantial compliance with the rules that allowed the substituted service.

Furthermore, the CA ruled:

Anent the issue raised by petitioners that "AbanteTonite is neither a natural or juridical person who may be a party in a civil case," and therefore the case against it must be dismissed and/or dropped, is untenable.

The respondent Judge, in denying petitioners’ motion for reconsideration, held that:

xxxx

AbanteTonite’s newspapers are circulated nationwide, showing ostensibly its being a corporate entity, thus the doctrine of corporation by estoppel may appropriately apply.

An unincorporated association, which represents itself to be a corporation, will be estopped from denying its corporate capacity in a suit against it by a third person who relies in good faith on such representation.

There being no grave abuse of discretion committed by the respondent Judge in the exercise of his jurisdiction, the relief of prohibition is also unavailable.

WHEREFORE, the instant petition is DENIED. The assailed Orders of respondent Judge are AFFIRMED.

SO ORDERED.9

On January 13, 2003, the CA denied petitioners’ motion for reconsideration.10

Issues

Petitioners hereby submit that:

1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT THE TRIAL COURT ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.

2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY SUSTAINING THE INCLUSION OF ABANTE TONITE AS PARTY IN THE INSTANT CASE.11

Ruling

The petition for review lacks merit.

Jurisdiction over the person, or jurisdiction in personam –the power of the court to render a personal judgment or to subject the parties in a particular action to the judgment and other rulings rendered in the action – is an element of

due process that is essential in all actions, civil as well as criminal, except in actions in rem or quasi in rem. Jurisdiction over the defendantin an action in rem or quasi in rem is not required, and the court acquires jurisdiction over an actionas long as it acquires jurisdiction over the resthat is thesubject matter of the action. The purpose of summons in such action is not the acquisition of jurisdiction over the defendant but mainly to satisfy the constitutional requirement of due process.12

The distinctions that need to be perceived between an action in personam, on the one hand, and an action inrem or quasi in rem, on the other hand, are aptly delineated in Domagas v. Jensen,13 thusly:

The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An action in personam is said to be one which has for its object a judgment against the person, as distinguished from a judgment against the property to determine its state. It has been held that an action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that proceedings to enforce personal rights and obligations and in which personal judgments are rendered adjusting the rights and obligations between the affected parties is in personam. Actions for recovery of real property are in personam.

On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the property of such persons to the discharge of the claims assailed. In an action quasi in rem, an individual is named as defendant and the

JURISDICTION

purpose of the proceeding is to subject his interests therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status, ownership or liability of a particular property but which are intended to operate on these questions only as between the particular parties to the proceedings and not to ascertain or cut off the rights or interests of all possible claimants. The judgments therein are binding only upon the parties who joined in the action.

As a rule, Philippine courts cannot try any case against a defendant who does not reside and is not found in the Philippines because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court; but when the case is an action in rem or quasi in rem enumerated in Section 15, Rule 14 of the Rules of Court, Philippine courts have jurisdiction to hear and decide the case because they have jurisdiction over the res, and jurisdiction over the person of the non-resident defendant is not essential. In the latter instance, extraterritorial service of summons can be made upon the defendant, and such extraterritorial service of summons is not for the purpose of vesting the court with jurisdiction, but for the purpose of complying with the requirements of fair play or due process, so that the defendant will be informed of the pendency of the action against him and the possibility that property in the Philippines belonging to him or in which he has an interest may be subjected to a judgment in favor of the plaintiff, and he can thereby take steps to protect his interest if he is so minded. On the other hand, when the defendant in an action in personam does not reside and is not found in the Philippines, our courts cannot try the case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court.14

As the initiating party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court by the act of filing the initiatory pleading. As to the defendant, the court acquires jurisdiction over his person either by the proper service of the summons, or by a voluntary appearance in the action.15

Upon the filing of the complaint and the payment of the requisite legal fees, the clerk of court forthwith issues the corresponding summons to the defendant.16 The summons is directed to the defendant and signed by the clerk of court under seal. It contains the name of the court and the names of the parties to the action; a direction that the defendant answers

within the time fixed by the Rules of Court; and a notice that unless the defendant so answers, the plaintiff will take judgment by default and may be granted the relief applied for.17 To be attached to the original copy of the summons and all copies thereof is a copy of the complaint (and its attachments, if any) and the order, if any, for the appointment of a guardian ad litem.18

The significance of the proper service of the summons on the defendant in an action in personam cannot be overemphasized. The service of the summons fulfills two fundamental objectives, namely: (a) to vest in the court jurisdiction over the person of the defendant; and (b) to afford to the defendant the opportunity to be heard on the claim brought against him.19 As to the former, when jurisdiction in personam is not acquired in a civil action through the proper service of the summons or upon a valid waiver of such proper service, the ensuing trial and judgment are void.20 If the defendant knowingly does an act inconsistent with the right to object to the lack of personal jurisdiction as to him, like voluntarily appearing in the action, he is deemed to have submitted himself to the jurisdiction of the court.21 As to the latter, the essence of due process lies in the reasonable opportunity to be heard and to submit any evidence the defendant may have in support of his defense. With the proper service of the summons being intended to afford to him the opportunity to be heard on the claim against him, he may also waive the process.21 In other words, compliance with the rules regarding the service of the summons is as much an issue of due process as it is of jurisdiction.23

Under the Rules of Court, the service of the summons should firstly be effected on the defendant himself whenever practicable. Such personal service consists either in handing a copy of the summons to the defendant in person, or, if the defendant refuses to receive and sign for it, in tendering it to him.24 The rule on personal service is to be rigidly enforced in order to ensure the realization of the two fundamental objectives earlier mentioned. If, for justifiable reasons, the defendant cannot be served in person within a reasonable time, the service of the summons may then be effected either (a) by leaving a copy of the summons at his residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copy at his office or regular place of business with some competent person in charge thereof.25 The latter mode of service is known as substituted service because the

service of the summons on the defendant is made through his substitute.

It is no longer debatable that the statutory requirements of substituted service must be followed strictly, faithfully and fully, and any substituted service other than that authorized by statute is considered ineffective.26 This is because substituted service, being in derogation of the usual method of service, is extraordinary in character and may be used only as prescribed and in the circumstances authorized by statute.27 Only when the defendant cannot be served personally within a reasonable time may substituted service be resorted to. Hence, the impossibility of prompt personal service should be shown by stating the efforts made to find the defendant himself and the fact that such efforts failed, which statement should be found in the proof of service or sheriff’s return.28Nonetheless, the requisite showing of the impossibility of prompt personal service as basis for resorting to substituted service may be waived by the defendant either expressly or impliedly.29

There is no question that Sheriff Medina twice attempted to serve the summons upon each of petitioners in person at their office address, the first in the morning of September 18, 2000 and the second in the afternoon of the same date. Each attempt failed because Macasaet and Quijano were "always out and not available" and the other petitioners were "always roving outside and gathering news." After Medina learned from those present in the office address on his second attempt that there was no likelihood of any of petitioners going to the office during the business hours of that or any other day, he concluded that further attempts to serve them in person within a reasonable time would be futile. The circumstances fully warranted his conclusion. He was not expected or required as the serving officer to effect personal service by all means and at all times, considering that he was expressly authorized to resort to substituted service should he be unable to effect the personal service within a reasonable time. In that regard, what was a reasonable time was dependent on the circumstances obtaining. While we are strict in insisting on personal service on the defendant, we do not cling to such strictness should the circumstances already justify substituted service instead. It is the spirit of the procedural rules, not their letter, that governs.30

In reality, petitioners’ insistence on personal service by the serving officer was demonstrably superfluous. They had actually received the

JURISDICTION

summonses served through their substitutes, as borne out by their filing of several pleadings in the RTC, including an answer with compulsory counterclaim ad cautelam and a pre-trial brief ad cautelam. They had also availed themselves of the modes of discovery available under the Rules of Court. Such acts evinced their voluntary appearance in the action.

Nor can we sustain petitioners’ contention that AbanteTonite could not be sued as a defendant due to its not being either a natural or a juridical person. In rejecting their contention, the CA categorized AbanteTonite as a corporation by estoppel as the result of its having represented itself to the reading public as a corporation despite its not being incorporated. Thereby, the CA concluded that the RTC did not gravely abuse its discretion in holding that the non-incorporation of AbanteTonite with the Securities and Exchange Commission was of no consequence, for, otherwise, whoever of the public who would suffer any damage from the publication of articles in the pages of its tabloids would be left without recourse. We cannot disagree with the CA, considering that the editorial box of the daily tabloid disclosed that basis, nothing in the box indicated that Monica Publishing Corporation had owned AbanteTonite.