Sunday, November 14, 2010 11:07 PM Remedial Law Review University of the Philippines College of Law Second Semester Yr 2010-2011 Prof. TJ Herbosa Jurisdiction Subject matter jurisdiction Allegations of complaint determine jurisdiction – Hasegawa et al v. Kitamura GR 149177 Nov 23, 2007 Jurisdiction by estoppel – Figueroa v. People, GR 147407, Jul 14, 2008; Payment of filing fees - Ruby Shelter v. Hon. Formaran GR 174914 Feb 10, 2009 Distinguished from venue – Chavez v. CA GR 125813 Feb 6, 2007 Doctrine of non-interference – Springfield v. RTC Judge GR 142626 Feb 6, 2007 Primary jurisdiction – Sta. Ana v. Carpo GR 164340 Nov 28, 2008 Supreme Court Philippine Constitution, Article VIII Power of judicial review – Garcillano v. House GR 170338 Dec 23, 2008 Doctrine of stare decisis – Lazatin v. Desierto GR 147097 June 5, 2009 Hierarchy of courts – Ferdinand Cruz v. Priscilla Mijares et al GR 154404 Sep 11, 2008; First United v. Poro Point GR 178799 Jan 19, 2009 Appellate jurisdiction – First Lepanto Ceramics, Inc. v. CA, GR 110571, Mar 10, 1994 SC Power of administrative supervision – Sarah Ampong v. CSC GR 167916 Aug 26, 2008 Court of Appeals BP 129, as amended by RA 7902, Sec. 9 and RA 8246 Question of law , fact or both – CGP Transport v. PU Leasing GR 164547 Mar 28, 2007
Court of Tax Appeals RA 9282 Sandiganbayan RA 8249 Regional Trial Courts BP 129, as amended by RA 7691, Sec. 5 Incapable of pecuniary estimation - Bokingco v. CA, GR No. 161739, May 4, 2006; RCP v. CA GR 136109 Aug 1, 2002; Recovery of possession – Honorio Bernardo v. Heirs of Eusebio Villegas GR 183357 Mar 15, 2010; Encarnacion v. Amigo, GR No. 169793 Sep 15, 2006 Issue of constitutionality – Planters Products v. Fertiphil GR 166006 Mar 14, 2008 Quasi judicial agency – Badillo v. CA GR 131903 June 26, 2008 CIAC – Fort Bonifacio v Domingo GR 180768 Feb 27, 2009 RTC acting as Special Agrarian Court – Land Bank v. Ralla Balista GR 164631 Jun 26, 2009 Default jurisdiction – Mun of Pateros v. CA GR 157714 Jun 16, 2009 HLURB – Tricorp v. CA GR 165742 Jun 30, 2009;Ma. Luisa Dazon v. Kenneth Yap and People Jan 15, 2010 Family Courts Sec 5, RA 8369 Family Courts Act of 1997 A.M. No. 02-11-10-SC Rules on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages A.M. No. 02-11-11 Rule on Legal Separation A.M. No. 02-11-12 Rule on Provisional Orders A.M. No. 03-04-04-SC Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors A.M. No. 03-02-05-SC Rule on Guardianship of Minors A.M. No. 02-6-02-SC Rule on Adoption
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A.M. No. 02-6-02-SC Rule on Adoption Summary Proceedings under the Family Code, Title XI, Chapters 1 to 3 on separation in fact between husband and wife or abandonment by one of the other and incidents involving parental authority; Chapter 4 on Art. 41 (declaration of a spouse as presumptively dead), Art. 51(action of a child for presumptive legitime), Art. 69 (judicial declaration of family domicile in case of disagreement of the spouses), Art. 73 (spouse’s objection to the profession of the other spouse), Arts. 96 and 124 (annulment of husband’s decision in the administration and enjoyment of community or conjugal property; appointment of spouse as sole administrator except cases of “incompetent” other spouse which shall be under Rules 93 and 95) and Art. 217 (entrusting children to homes and orphanages). Madrinan v. Madrinan GR 159374 Jul 12, 2007 Yu v Yu GR 164915 Mar 10, 2006 Commercial Courts Sec. 5.2, RA 8799 A.M. No. 01-2-04-SC Interim Rules of Procedure Governing Intra-corporate Controversies A.M. 00-8-10-SC Interim Rules of Procedure on Corporate Rehabilitation (note FRIA) Oscar Reyes v. RTC Makati GR 165744 Aug 11, 2008
Metropolitan Trial Courts, Municipal Trial Courts/Circuit Trial Courts BP 129, as amended by RA 7691, Secs. 2 to 4 Unlawful detainer v. agrarian dispute – Sps Fajardo v. Anita Flores GR 167891 Jan 15, 2010 Recovery of possession – Vda De Barrera et al v. Heirs of Vicente Legaspi GR 174346 Sept 12, 2008; Ouano v. PGTT Gr No. 134230 July 7, 2002; Barangay Lupon RA 7160 (Local Government Code of 1991) Secs 399-422 Substantial compliance – Leo Wee v. George de Castro et al GR 1764095 Aug 20, 2008; Aquino v. Aure, GR 153567 Feb 18, 2008 CIVIL PROCEDURE Ordinary Civil Actions Rules 1 to 39 Rule 1 General Provisions of the Rules of Court Liberal application – Makati Ins. V. Reyes et al GR 167403 Aug 6, 2008; Rural Bank of Seven Lakes v. Dan GR 174109 Dec 24, 2008;
Rule 2 Cause of Action Elements of a cause of action - Ceroferr v. CA 376 SCRA 144; Camarines Sur Electric v. Aquino GR 167691 Sep 23, 2008 Sufficiency of allegations –Vinzons-Chato v. Fortune GR 141309 Dec 23, 2008 Splitting a cause of action – BPI Family v. De Coscuella, GR No. 167724, Jun 27, 2006 Joinder of causes of action – UCPB v. Sps. Beluso GR 159912 Aug 17, 2007 Rule 3 Parties to Civil Actions Real party in interest – Carlos v. Sandoval GR 179922 Dec 16, 2008; Estreller v. Ysmael GR 170264 Mar 13, 2009 Indispensable parties – Robert De Galicia v. Mercado, GR No. 146744, Mar 6, 2006; Lagunilla v. Velasco GR 169276 Jun 16, 2009; Josephine Marmo v Moises Anacay GR 182585 Nov 27 2009; Leonis Navigation v Catalina Villamater GR 179169 Mar 3, 2010 Necessary parties – Relucio v. Lopez 373 SCRA 578; AutoCorp v. Intra Strata GR 166662 Jun 27, 2008 Capacity to sue and be sued - Van ZuiDen v. GTVL Manufacturing 523 SCRA 233; Deutsche v CA GR 152318 Apr 16, 2009 Misjoinder/non-joinder of parties – Chua v. Torres GR 151900 Aug 30, 2005; Anicia Valdez Tallorin v Heirs of Juanito Tarona GR 177429 Nov 24, 2009; Littie Sarah Agdeppa v Heirs of Ignacio Bonete GR 164436 Jan 15 2010 Successors in interest – Sui Man Hui Chan v. CA, GR 147999, Feb 27, 2004 Substitute parties – Carandang vs. Heirs of De Guzman GR 160347 Nov. 29, 2006; Judge Sumaljag v. Literato GR 149787 Jun 18, 2008; Domingo v Landicho GR 170015 Aug 29, 2007; Napere v. Barbarona GR 160426 Jan 31, 2008 Indigent parties – Sps Algura v. LGU GR 150135 Oct 30, 2006
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Indigent parties – Sps Algura v. LGU GR 150135 Oct 30, 2006 Rule 4 Venue of Actions Personal action – Uniwide v. Cruz GR 171456 Aug 9, 2007 Real Action – Infante v. Aran Builders, GR 156594 Aug 24, 2007; HiYield v. CA GR 168863 Jun 23, 2009 Principal party ; when to object – Irene Marcos-Araneta v. CA GR 154096 Aug 22, 2008 Stipulated venue not exclusive - Philbanking v. Tensuan, 230 SCRA 413; Spouses Lantin v. Judge Lantion, GR No. 160053, Aug 28, 2006 Rule 5 Uniform Procedure in Trial Courts Revised Rules on Summary Procedure Summary procedure – Estate of Macadangdang v Gaviola GR 156809 Mar 4, 2009; Angelina Soriente v Estate pf Arsenio Concepcion GR 160239 Nov 25 2009; Sps Edillo v Sps Dulpina GR 188360 Jan 21 2010
Rule 6 Kinds of Pleadings Answer – Rosete v. Lim, GR No. 136051, Jun 8, 2006 Compulsory counterclaim – Financial Builders. V. FPA 338 SCRA 346; Reillo v. San Jose GR 166393 Jun 18, 2009 Permissive counterclaim – Banco de Oro v. CA GR 160354 Aug 25, 2005; Dec 19, 2007 Third party complaint – Asian Construction v. CA 458 SCRA 750; Sy Tiong Shion v Sy Chin GR 174168/179438 Mar 30, 2009 Cross-claim – Torres v. CA 49 SCRA 67 Rule 7 Parts of a Pleading Sufficient in form/substance – Sps Munsalado v. NHA GR 167181 Dec 23, 2008 Signature of counsel – Republic v. Kenrich Dev. Do., GR No. 149576, August 8, 2006 Verification/Certification – Madara v. Porillo GR 172449 Aug 20, 2008; Kaunlaran v. Uy GR 154974, Feb 4, 2008; Sps Valmonte v. Alcala GR 168667 Jul 23, 2008 Who can sign w/o sec cert – Mid-Pasig Land v Mario Tablante GR 162924 Feb 4, 2010 Rule 8 Manner of Making Allegations in Pleadings Ultimate facts – Far East Marble v. CA GR 94093 Aug 10, 1993 Specific denial under oath – Filipinas Textile v. CA 415 SCRA 635 No knowledge – Warner Barnes v. Reyes 103 Phil 602 Modes of specific denial – Gaza et al v. Lim GR 126863 Jan 16, 2003; Actionable document – Casent Realty v. Philbanking GR 150731 Sep 14, 2007; Malayan v. Regis Brokerage GR 172156 Nov 23, 2007 Rule 9 Effect of Failure to Plead No default motu proprio – Santos v PNOC GR 170943 Sep 23, 2008 Failure to appear – Monzon v. Sps Relova GR 171827 Sep 17, 2008 Remedies of party declared in default – Gomez v. Montalban GR 174414 Mar 14, 2008 Default judgment – Gajudo v. Traders Royal GR 151098, Mar 21, 2006
Rule 10 Amended and Supplemental Pleadings Substantial amendment - PPA v. Gothong and Aboitiz GR 158401 Jan 28, 2008 When amendments allowed - Quirao v. Quirao 414 SCRA 430; Bautista v. Maya-Maya Cottages, GR 148361, Nov 29, 2005; Marcos -Araneta et al v. CA GR 154096 Aug 22, 2008 Conform to evidence – Cagungun v. Planters Dev Bank GR 158674 Oct 17, 2005 Rule 11 When to File Responsive Pleading Saturday, Sunday or legal holiday - Alarilla v. Ocampo 417 SCRA 601 Rule 12 Bill of Particulars When a complaint is vague – Bantillo v. IAC, GR No 75311, Oct. 18, 1988; Republic v. SB and Marcos, GR 148154, Dec 17, 2007 Rule 13 Filing and Service of Pleadings, Judgments and Other Paper Personal filing and service – Maceda, et al. v. Macatangay, GR 164947, Jan 31, 2006 Service by registered mail - Andy Quelnan v. VHF Phil GR 138500, Sep16, 2005; Marcelino Domingo v CA GR 169122 Feb 2 2010; Sps Belen v. Hon. Chavez, GR 175334, Mar 26, 2008 Service upon counsel – GCP Many Transport v. Principe GR 141484, Nov 11, 2005 Notice of lis pendens – Sps Vicente v. Avera GR 169970 Jun 20, 2009
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Rule 14 Summons Kinds of actions - Gomez v. CA GR 127692 March 10, 2004; San Pedro v. Ong GR 17758 Oct 17, 2008; Personal vs. substituted service of summons - Guiguinto Credit Coop v. Torres, GR No. 170926, Sep 15, 2006; Guanzon v Arrandoza Dec 6, 2006 GR 155392; Potenciano v. Barnes GR 159421 Aug 20, 2008 Substituted service – Clarita Garcia v SB and Republic GR 170122 Oct 12, 2009 Extraterritorial service – Montefalcon et al v. Vasquez GR 165016 Jun 17, 2008; Elmer v. Dakila Trading GR 172242 Aug 14, 2007; Temporarily out – PCIB v Alejando GR 175587 Sep 21, 2007; Sps Torres v. Amparo Medina GR166730 Maar 10 2010 Domestic juridical entity – BPI v. Spouses Santiago Mar 28, 2007; Paramount v. Ordonez GR 175109, Aug 6, 2008 Substantial compliance - Mason v. CA 413 SCRA 303; Millenium v. Tan GR 131724 Feb 28, 2000 Rule 15 Motions Notice of hearing - KKK Foundation Inc. v. Hon. Bargas, et al GR 163785 Dec 27, 2007; Camarines Corp v. Aquino GR 167691 Sept 23, 2008; Motion for extension – Sarmiento v. Zaratan Feb 5, 2007 Proof of service – Romulo et al v. Peralta, GR 165665 Jan 31, 2007
Rule 16 Motion to Dismiss Jurisdiction over subject matter – DAR v. Hon. Abdulwahid GR 163285 Feb 27, 2008 Jurisdiction over person – Republic v. Glasgow GR 170281, Jan 18, 2008 Failure to state a cause of action - Equitable PCIB v. CA GR 143556 Mar 16, 2004; Goodyear Phil v. Sy GR 154554 Nov 9, 2005; Aldemita v. Heirs of Silva Nov 2, 2006; PDI v. Alameda GR 160604 Mar 28, 2008; Heirs of Maramag v. Maramag GR 181132 Jun 5, 2009 Lack of cause of action - Rural Bank of Calinog v. CA GR 146519, Jul 8, 2005; Bayot v. CA GR 155635 Nov 7, 2008 Litis pendentia - Mid Pasig Land Dev v. CA 413 SCRA 204; Intramuros Administration v. Contacto 402 SCRA 581 Res judicata – Francisco v. Roque GR 151339 Jan 31, 2006; Cruz v. CA GR 164797 Feb 13, 2006 Prescription – Heirs of Dolleton v. Fil-estate GR 170750 Apr 7, 2009; Lasquite v Victory Hills GR 175375 Jun 23, 2009; Paid, waived, etc. – Doña Rosana Realty v. Molave Dev Corp GR 180523 Mar 26, 2010 Forum Non Conveniens – Raytheon Int‘l v. Rouzie GR 162894 Feb 26, 2008 Denial of, unappealable – Malicdem v. Flores Sep 8, 2006; PNB v Estate of De Guzman et al GR 182507 Jun 16, 2010 Rule 17 Dismissal of Actions Grounds – Pinga v. Santiago, GR No. 170354, Jun 30, 2006 Failure to prosecute – Filinvest v. CA GR 142439 Dec 6, 2006; RN Dev v. A.I.I GR 166104 Jun 26, 2008; Dismissal without prejudice – Heirs of Gaudiane v. CA, GR 119879, March 11, 2004; Cruz v. CA GR 164797 Feb 13, 2006 Notice of dismissal prevails over motion to dismiss – Dael v. Sps Beltran GR 156470 Apr 30, 2008 Counterclaim – Mendoza v. Paule GR 175885 Feb 31, 2009 Effect – Benedicto v. Lacson GR 141508 May 5, 2010 Rule 18 Pre-Trial AM No. 03-1-09-SC Rule on Guidelines to be Observed by Trial Court Judges and Clerks of Court in the Conduct of Pre-Trial and Use of Deposition-Discovery Measures Effect of failure to appear - Saguid v. CA 403 SCRA 678; Jazmin Espiritu v. Vladimir Lazaro, GR 181020, Nov 25, 2009 Admissions at pre-trial - Biesterbos v. CA 411 SCRA 396 Other pre-trial requirements - Advance Textile Mills v. Tan GR 154040 Jul 28, 2005; Anatalia Ramos v. Dominga Dizon, GR No. 137247, Aug. 7, 2006 Rule 19 Intervention Requirements - Nordic Asia v. CA 403 SCRA 390 When to intervene - Salandanan v Sps Mendoza GR 160280 (2009) Who may intervene – GSIS v Nocom GR 175989 Feb 4, 2008; Asia‘s Emerging Dragon v DOTC GR 169914; Rep v CA GR 174166 Mar 24, 2008; Office of Ombudsman v. Maximo D. Sison GR 185954 Feb 16, 2010
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Rule 20 Calendar of Cases Rule 21 Subpoena Macaspac v. Flores AM No. P-05-2072 Aug 13, 2008; Re Subpoena of Dir Amante AM No. 10-1-13-SC Mar 2, 2010 Rule 22 Computati on of Time Filing on the last day - De Las Alas v. CA 83 SCRA 200 Rule 23 Depositions Pending Action DFA Guidelines in Taking Depositions before Philippine Consular Officers Abroad Purpose of rules of discovery – Republic v. Sandiganbayan, 204 SCRA 212. Manner of taking – Pfeger Dulay v Dulay, GR 158857 Nov 11, 2005 Admissibility – Jowel Sales v. Sabino GR 133154 Dec 9, 2005 Sec 4- San Luis v. Rojas GR 159127 Mar 3, 2008; Dasmarinas v. Reyes, 225 SCRA 622 Deposition (oral examination) in criminal cases – Rosete v. Lim GR 136051 June 8, 2006
Rule 24 Depositions Before Action or Pending Appeal Availability of deponent as a witness - Hyatt Industrial v. Ley Construction, GR No. 147143, Mar 10, 2006 Rule 25 Interrogatories to Parties Rule 26 Admissions by Adverse Party Purpose – DBP v. CA GR 153034 Sep 20, 2005 Period to answer a request for admission- Po v. CA 164 SCRA 668 To whom served - Briboneria v. CA 216 SCRA 616 Effect of non-compliance – Limos et al v Sps Odones GR 186979 Aug 11, 2010 Rule 27 Production or Inspection of Documents or Things Solidbank v. Gateway GR 164805 Apr 30, 2008 Rule 28 Physical and Mental Exami nation of Persons See RA 8054 Sec 17 [a] Rule 29 Refusal to Comply with Modes of Discovery Rule 30 Trial When trial can be dispensed with - Republic v. Vda De Neri GR 139588 Mar 4, 2004 Absence of a party – Spouses Calo v. Spouses Tan, GR 151266 Nov 29, 2005 Rule 31 Consolidation or Severance Requisites of consolidation - Republic v. CA 403 SCRA 403 What actions can be consolidated - Teston v. DBP GR 144374 Nov 11, 2005; Gregorio Espinoza v. UOB, GR 175380, Mar 22, 2010 Rule 32 Trial by Commissioner When proper – Manotok Realty v. CLT Realty GR 123346 Nov 29, 2005
Rule 33 Demurrer to Evi dence Effects of filing a demurrer - Radiowealth Finance Co v. Sps Del Rosario GR 138739 Jul 6, 2000; Heirs of Santiago v. Heirs of Palma GR 160832 Oct 27, 2006 What evidence – Casent Realty v. Philbanking GR 150731 Sep 14, 2007 Rule 34 Judgment on the Pleadings Sham or specific denials - Manufacturer‘s Bank v. Diversified 173 SCRA 357; Tan v. De La Vega, GR No. 168809, Mar 10, 2006 Fails to tender an issue – Pesane Animas Monzao v. Pryce Properties GR 156474 Aug 16, 2005; Sps Ong v. Roban Lending GR 172592 Jul 9, 2008; Reillo v San Jose GR 166393 Jun 18, 2009 Who files – Doris Sunbanun v. Aurora Go GR 163280 Feb 2, 2010 Rule 35 Summary Judgments Distinguish from Rule 34 – Nocom v. Camerino GR 182984 Feb 10, 2009 Genuine issues of fact – Evangelista v. Mercator Finance 409 SCRA 410; Bitanga v. Pyramid GR 173526 Aug 28, 2008; Phil Countryside v Toring GR 157862 Apr 16, 2009; BPI v. Sps. Yu GR 184122 Jan 20, 201; Eland Phil v Garcia GR 173289 Feb 17, 2010 Partial summary judgment - Monterey Foods Corp v. Eserjose 410 SCRA 627; Asian Construction v. PCI Bank, GR No. 153827, Aug 25, 2006; Jose Feliciano Loy v. SMC GR REMLAW Page 5
Construction v. PCI Bank, GR No. 153827, Aug 25, 2006; Jose Feliciano Loy v. SMC GR 164886 Nov 24, 2009 Not applicable – Carlos v. Sandoval GR 179922 Dec 16, 2008 Rule 36 Judgments, Final Orders and Entry Thereof Form of judgment – Velarde v. SJS GR 159357 Apr 28, 2004 Several and separate judgments - Miranda v. CA 71 SCRA 295; De Leon v. CA GR 138884 June 6, 2002; Republic v. Nolasco 457 SCRA 400 Dispositive portion – Obra v. Badua et al GR 149125 Aug 9, 2007
Rule 37 New Trial or Reconsideration Second MR not allowed – Sps Balanoba v. Madriaga GR 160109 Nov 22, 2005 Requisities of MNT – Bernaldez v. Francia, 398 SCRA 488; Capuz v. CA 233 SCRA 471 Intrinsic fraud v. extrinsic fraud – Libudan v. Gil 45 SCRA 17 Period to file – Delos Santos v. Elizalde Feb 2, 2007 Rule 38 Relief from Judgments, Orders, or Other Proceedings Propriety of relief from judgment – Spouses Que v. CA GR 150739 Aug 18, 2005; Monzon v. Sps Relova GR 171827 Sep 17, 2008 Petition for relief before the MTC - Sps Mesina v. Meer GR 146845 Jul 2, 2002 Excusable negligence - Land Bank v. Natividad 458 SCRA 441; Gomez v. Montalban GR 174414 Mar 14, 2008 CA – Redena v. CA Feb 6, 2007 Who may file – De La Cruz v. Quiazon GR 171961 Nov 28, 2008
Rule 39 Execution, Satisfaction and Effect of Judgments Immutability of final judgment – Roman Catholic Archbishop v. Heir of Manuel Abella GR 143510 Nov 23, 2005; Session Delights Ice Cream v. CA, GR 172149, Feb 8, 2010 Res Judicata – Heirs of Igmedio Maglaque v. CA 524 SCRA 234; PCGG et al v. SB and Officers GR 124772 Aug 14, 2007; DBP v La Campana GR 137694 Jan 17, 2005 Conclusiveness of judgment - Cayana v. CA GR 125607 18 Mar 2004; Republic of the Phil v. Ramon Yu GR 157557 March 10, 2006 Execution pending appeal - Stronghold Ins. V. Felix GR 148090 Nov 28, 2006; JP Latex v. Hon. De Leon GR 177121 Mar 16, 2009; Archinet Intl v Becco GR 183753 Jun 19, 2009; Rosario T. Florendo vs. Paramount Ins. Co. GR 167976 Jan. 20, 2010 By motion/independent action – Yau v. Silverio Feb 4, 2008 GR 158848/171994 Money judgment– Jerome Solco v. Provido Feb 11, 2008 GR 176533 Redemption period - Hi Yield Realty Inc v. CA GR 138978 Sept 12, 2002 Exempt from execution – Honrado v. CA GR 166333 Nov 25, 2005 Garnishment – Cardinal v. Asset GR 149696 Sheriff‘s duties-Benjamin Sanga vs. Florencio Alcantara AMO-09-2657 Jan. 25, 2010; Domingo Peña vs. Achilles Regalado AM P-10-2772 Feb. 16, 2010 Third party claimant – Fermin v. Hon Estevez GR 147977 Mar 26, 2008 Foreign judgment – Republic v. Gingoyon GR 166429 Feb 1, 2006; Mijares, et al V. Hon. Judge GR 139325 , 455 SCRA; 2008 Quasha vs. CA GR 182013 Dec. 4, 2009 Supervening event – Republic v. Antonio et al GR 166866 Mar 27, 2008 Appeals In General Payment of docket fee – Camposagrado v. Camposagrado GR 143195 Sept 13, 2005 No appeal period - Republic v. Bermudez-Lorino, GR No. 160258, Jan 19, 2005 Mode of appeal from special courts - Land Bank of the Philippines v. De Leon 399 SCRA 376 Appeal from ―amended‖ judgment – De Grano v. Lacaba GR 158877 Jun 16, 2009 Rule 40 Appeal from Municipal Trial Courts to the Regional Trial Courts Non-payment of appeal fee - Badillo v. Tayag GR 143976 Apr 3, 2003 AM No. 07-7-12-SC Amendments to Rules 41, 45, 58 and 65 Dec 27, 2007 Filing of appeal memo – Estate of Macadangdang v. Gaviola GR 156809 Mar 4, 2009 Sec 7 (b) – Mejillano v. Lucillo GR 154717 Jun 19, 2009 Rule 41 Appeal from RTC Sec 1 – Simeon Valdez v. Financiera Manila, GR 183387, Sept 29, 2009; Palma v Galvez GR 165273 Mar 10, 2010 Period of time to appeal - Neypes v. CA GR 141524 Sep 14, 2005; First Aqua Sugar v. BPI
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Period of time to appeal - Neypes v. CA GR 141524 Sep 14, 2005; First Aqua Sugar v. BPI Feb 5, 2007 Appeal from dismissal - Philexport v. Phil Infrastructures GR 120384 Jan 13, 2004; Lullete S Ko v. PNB GR 169131-32 Jan 20, 2006 Period to appeal - Eda v. CA, GR No. 155251, Dec 8, 2004 Presence of grave abuse – Benedicta Samson v. Hon. Judge Macaraig, GR 166356, Feb 2, 2010 Record on appeal – Rovia v Heirs of Deleste, et al GR 160825 Mar 26, 2010 Rule 42 Petition for Review from RTC to CA Form & contents – Sps Lanaria v. Planta GR 172891 Nov 22, 2007; Perez v. Falcatan, GR 139536 Sept 26, 2005; Elsie Ang v. Dr. Grageda GR 166239 Jun 8, 2006 Period to appeal - Balgami v. CA, GR 131287, Dec 9, 2004
Rule 43 Appeals from the Court of Tax Appeals and Quasi-Judicial Agencies to the Court of Appeals Formal requirements - Dalton-Reyes v. CA, et al, GR 149580, Mar 16, 2005 Quasi judicial bodies - Jose Luis Angelo Orosa v. Alberto Roa, GR No. 140423, July 14, 2006; Villorente et al v. Aplaya Laiya GR 145013 Mar 13, 2005; Ruvivar v. Ombudsman GR 165012 Sept 16, 2008; Phillips Seafood v BOI GR 175787 Feb 4, 2009 Impleading the lower court or agency - Basmayor v. Atencio GR 160573 Oct 19, 2005 Attaching copy of judgment – CocaCola v. Cabalo, GR 144180 Jan 30, 2006 Supporting papers – BE San Diego Inc. v. Alzul 524 SCRA 402 Appeal from CSC – DECS v Cuanan GR 169013 Dec 16, 2008 Rule 44 Ordinary Appealed Cases Revised Internal Rules of the Court of Appeals (RIRCA) Grounds for dismissal of appeal - De Leon v. CA 383 SCRA 217 Contents of appellant‘s brief - De Liano v. CA 370 SCRA 349 Change of theory – Mon v CA GR 118292 Apr 14, 2004 Rule 45 Appeal by Certiorari to the Supreme Court Question of law - Agote v. Lorenzo, 464 SCRA 60, Jul 22, 2005; BPI v. CA, GR 160890, Nov. 10, 2004; CGP Transportation v. PCI Leasing Mar 28, 2007 Limited review – Local Superior of the Servants of Charity v. Jody King Construction GR 141715 Oct 12, 2005; Perez – Rosario, et al. v. CA, GR No. 140796, June 30, 2006; Republic v. Sta Ana- Burgos, 523 SCRA 309, GR 163254 , 1 June 2007 CA not impleaded – Selegna v. UCPB GR 165662 May 3, 2006 Distinguished from Rule 65 – Tagle v. Equitable PCI GR 172299 Apr 22, 2008; International Corporate Bank v. CA & PNB, Sept 5, 2006; San Miguel Bukid Homeowner v. City of Mandaluyong, GR 153653, Oct 2, 2009 Assignment of errors – Phil Hawk Corp v. Vivian Tan Lee, GR 166869, Feb 16, 2010
Rule 46 Original Cases Rule 65 supplements Rule 46 - Republic v. Carmel Dev 377 SCRA 459 Sec. 3 – China Banking Corp v. Padilla Feb 2, 2007 Rule 47 Annulment of Judgments or Final Orders and Resolutions Extrinsic fraud - Alma Jose v. Intra Strata 464 SCRA 496, Jul 28, 2005; De La Cruz v. Sison, GR 142464, Sept 26, 2005; Ramos v. Combong, Jr. GR 144273 Oct 20, 2005; Alaban v. CA GR 156021 Sept 23, 2005 Lack of jurisdiction – Ancheta v. Ancheta GR 145370, Mar 4, 2004; Republic thru APT v. ―G‖ Holdings GR 141241, Nov. 22, 2005; Sps Benatiro et al v. Heirs of Evaristo Cuyo GR 161220 Jul 30, 2008; GAUF v. RTC GR 139672 Mar 14, 2009; DENR v. Technological Advocates, GR 165333, Feb 9, 2010 SC resolution – Grande v. UP, GR No. 148456, Sep 15, 2006 Rule 48 Preliminary Conference Rule 49 Oral Argument Rule 50 Dismissal of Appeal Discretionary - PNB v. Philippine Milling 26 SCRA 712 Direct appeal to SC- Atlas Consolidated Mining 201 SCRA 51 Non-payment of fee – Cu-Unjieng v. CA, GR No. 139596, Jan 24, 2006 Non-filing of brief – Gov‘t v. CA et al GR 164150 Apr 14, 2008; Bachrach v. PPA GR
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Non-filing of brief – Gov‘t v. CA et al GR 164150 Apr 14, 2008; Bachrach v. PPA GR 159915 Mar12, 2009 Rule 51 Judgment Multiple proceedings - Crystal vs. CA, 160 SCRA 79 Rule 52 Motion for Reconsideration Badiola v. Ca GR 170691 Apr 23, 2008 Rule 53 New Trial Rule 54 Internal Business Rule 55 Publication of Judgments and Final Resolutions Rule 56 Procedure in the Supreme Court Sec 5 – Ericsson v. City of Pasig GR 176667 Nov 22, 2007; Law of the case/conflicting decisions – Collantes v. CA 517 SCRA 561 (2007) Prospective effect – Land Bank v. De Leon GR 143275 Mar 20, 2003 A.M. No. 99-8-09 SC Amended Rules on Who Shall Resolve MRs
Provisional Remedies Rule 57 Preliminary Attachment Grounds – PCL Industries v. CA GR 147970 March 31, 2006; Magaling v. Peter Ong GR 173333 Aug 13, 2008; Professional Video V Tesda GR 155504 Jun 26, 2009; Metro Inc. et al v. Lara‘s Gifts, GR 171741, Nov 27, 2009 Ex Parte issuance - Davao Light and Power Co., Inc. vs. CA, 204 SCRA 343; Onate v. Abrogar, 241 SCRA 659 Provisional/ancillary – Silangan Textile v. Judge Mar 12, 2007 Discharge of an attachment – Security Pacific Assurance v. Hon. Judge Tria-Infante GR 144740 Aug 31, 2005; Insular Savings v. CA 460 SCRA 122; Sofia Torres v. Nicanor Satsatin, GR 166759, Nov 25, 2009 Rule 58 Preliminary InjunctionClear legal right – Filipino Metals v. Secretary of Trade and Industry GR 157498 Jul 15, 2005; Levi Strauss v. Clinton Apparelle, GR No 138900 Sept 20, 2005; Duvaz Corp v. Export & Industry Bank 523 SCRA 405, Jun 7, 2007; Equitable PCIB v. Hon. Apurillo, GR 168746; Nov 5, 2009 Injunction should maintain status quo - Rualo v. Pitargue GR 140284 Jan 21, 2005; University v Ang Wong GR 150280 Apr 26, 2006 Injunction not proper - Tayag v. Lacson GR 134971 25 Mar 2004 Irreparable injury – G.G. Sportswear v. BDO, GR 184434, Feb 8, 2010 Summary hearing necessary/Procedure - Borja v. Salcedo 412 SCRA 110; National Electrification Adm v Val Villanueva GR 168203 Mar 9, 2010 RA 8975 act to ensure the expeditious implementation and completion of government infrastructure projects - Phil Ports Authority v. Pier 8 Arrastre GR No. 147861, Nov. 18, 2005; DFA v Falcon GR 176657 Sep 1, 2010 Grave abuse of discretion in grant – Overseas Workers v. Chavez 524 SCRA 451; Power Sites v United Neon GR 163406 Nov 24, 2009 Rule 59 Receivership No receivership of property in custodia legis - Dolar v. Sundiam 38 SCRA 616 Vivares v. Jose Reyes GR 155408 Feb 13, 2008
Rule 60 Replevin- Applicant must be owner of property - Servicewide Specialists v. CA 318 SCRA 493 No replevin of property in custodia legis - Vda de Danao v. Ginete 395 SCRA 542 Distinguished from labor case – Smart v. Astorga GR 148132 Jan 28 2008 542 SCRA 434 Improperly served – Rivera v. Vargas GR 165895 Jun 5, 2009 Rule 61 Support “Pendente Lite”- Judgment for support never final - Lam v. Chua GR 131286 18 Mar 2004 Future support cannot be subject of compromise - De Asis vs. CA, 303 SCRA 176 (1999)
Special Civil Actions Rule 62 Interpleader- Lessee‘s recourse to interpleader - Ocampo v. Tirona GR 147812 Apr 6, 2005 Rule 63 Declaratory Relief and Similar Remedies Nature; Requisites for declaratory relief - Jumamil v. Café et al, GR 144570, Sep 21, 2005; Republic v Mangotara, GR 170375 July 7, 2010 REMLAW Page 8
Republic v Mangotara, GR 170375 July 7, 2010 Who may file – SJS v. Lina GR 160031 Dec 18, 2008 When to file – Tambunting v. Spouses Sumabat GR 144101 Sept 16, 2005; Hon. Exec Secretary v. Southwing Heavy Industries, etc. GR 164171-72, 168741 Feb 20, 2006; Martelino et al v. NHMFC GR 160208 Jun 30, 2008 Rule 64 Review of Judgments and Final Orders and Resolutions of the Commission on Elections and the Commission on Audit – Benguet State University v. COA, 524 SCRA 437 Rule 65 Certiorari Grave abuse of discretion – Phil Rabbit Bus Lines v. Goimco GR 135507 Nov 29, 2005 ; Preferred Home Specialties, Inc. v. CA, GR No. 163593, Dec 16, 2005, 478 SCRA 387 Plain speedy adequate remedy – Cervantes v. CA GR 166755 Nov 18, 2005 ; Davao Merchant Marine v. CA GR 144075 April 19, 2006 Service of petition – New Ever Marketing v. CA GR 140555. July 14, 2005 Who are the parties - Flores v. Joven 394 SCRA 339 Where to file – Sps Colmenares v. Vda de Gonzales GR 155454 Dec 10, 2008 Other requirements - Eagle Ridge Golf v. CA, GR 178989, Mar 18, 2010 Constitutional commission – Comoporo v. COMELEC GR 178624 Jun 30, 2009 Distinguished from Rule 45 – Ang Biat Huan Sons v. CA Mar 22, 2007 ; DOLE v. Ruben Maceda, GR 185112, Jan 18, 2010 Sec 6 – Jimmy Areno v. Skycable, GR 180302, Feb 5, 2010 Prohibition Holy Spirit Homeowners v. Defensor, GR No. 163980, Aug. 3, 2006 ; Tan v. CA 524 SCRA 306 ; Estandarte v. PP GR 156851 Feb 18, 2008 Mandamus Calim v. Guerrero Mar 5, 2007 Sec 7 – AM 07-7-12 SC Uy Kiao Eng v. Nixon Lee, GR 176831, Jan 15, 2010 (mandamus will not lie if no public interest) Rule 66 Quo Warranto- Against public officers – Calleja v. Panday GR 168696 Feb 28, 2006 Clear legal right - Garces vs. CA, 253 SCRA 99 (1996); Feliciano v. Villasin GR 174929 Jun 27, 2008 Damages – Titus B. Villanueva v. Emma Rosquetta, GR 180764, Jan 19, 2010
Rule 67 Expropriati on Multiple appeals allowed - NPC v. Aguirre-Paderanga, 464 SCRA 481, Jul 28, 2005 Two stages in action for expropriation - National Housing v. Heirs Guivelondo 404 SCRA 389; Sps Curata v PPA GR 154251 Jun 22, 2009 Public Use – Masikip v. City of Pasig GR 136349 Jan 23, 2006 Reckoning date – City of Iloilo v Contreras-Besama GR 168967 Feb 12, 2010 Commissioners – Napocor v. Purefoods GR 160725 Sep 12, 2008 Rule 68 Foreclosure of Real Estate Mortgage- BPI Family v. Coscuella GR 167724 Jun 27, 2006; Teresita Monzon v. Sps Relova GR 171827 Sep 17, 2008 Rule 69 Partition Object of partition - Sepulveda v. Pelaez GR 152195 Jan 31, 2005; Balo v. CA GR 129704 Sep 30, 2005; Panganiban et al v. Oamil GR 149313 Jan 22, 2008 Two stages – Marasigan v. Marasigan GR 156078 Mar 14, 2008; Figuracion-Gerilla v. Vda de Figuracion GR 154322 Aug 22, 2006 Publication – Reillo v. San Jose GR 166393 Jun 18, 2009 Rule 70 Forcible Entry and Unlawful Detainer- Distinction between ―forcible entry‖ and ―unlawful detainer‖ - Acaylar v Naraya GR 176995 Jul 30, 2008; Sales v. Barro GR 171678 Dec 10, 2008 Question of ownership – Go Ke Cheng v Chan GR 153791 Aug 24, 2007; Sps. Samonte v. Century Savings Bank, GR 176413, Nov 25, 2009 Jurisdictional requirements for unlawful detainer - Ross-Rica v. Sps Ong GR 132197 Aug 16, 2005; Abaya v. Merit GR 176324 Apr 16, 2008 Jurisdictional requirements for forcible entry – Leonardo David v. Cordova GR 152992 July
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Jurisdictional requirements for forcible entry – Leonardo David v. Cordova GR 152992 July 27, 2005; Domalsin v. Spouses Valenciano GR 158687 Jan 25, 2006; Bunyi v Factor GR 172547 Jun 30, 2009 Stay of judgment – Bugarin v. Palisoc GR 157985 Dec 2, 2005; PNB v. DKS International GR 179161, Jan 22, 2010 Rule 71 Contempt Distinction ―direct‖ and ―indirect‖ contempt - Heirs of Vda De Roxas v. CA GR 138660 5 Feb 2004 ; Nunez v Ibay AM RTJ 06-1984 Jun 30, 2009 Modes of filing (re indirect contempt) Regalado v. Go GR 167988 Feb 6, 2007 Contempt against quasi-judicial entities - LBP v. Listana 408 SCRA 328 Penalty – Canada v. Judge Suerte AM No. RTJ-04-1875 SPECIAL PROCEEDINGS Rule 72 Subject Matter and Applicability of General Rules Distinction between ―civil action‖ and ―special proceeding‖ - Natcher v. CA 366 SCRA 385 Determination of heirship – Portugal v. Portugal-Beltran GR 155555 Aug 16, 2005 Termination of proceeding – Tabuada v. Ruiz GR 168799 Jun 27, 2008 Sec 2 – Hilado v. CA GR 164108 May 8, 2009
Settlement of Estate of Deceased Persons Rule 73 Venue and Process- Limited jurisdiction of probate court - Camaya v. Patulandon, GR 144915 23 Feb 2004; Pacioles v. Chuatoco-Ching GR 127920 Aug 9, 2005; Heirs of Doromio v. Heirs of Doromio GR 169454; 541 SCRA 479; Reyes v. Sotero, et al., GR No. 167405, Feb 16, 2006 Termination of the special proceeding - Munsayac-De Villa, v. CA 414 SCRA 436 Meaning of residence – San Luis v. San Luis Feb 6, 2007 Rule 74 Summary Settlement of Estates - Two year prescriptive period - Pedrosa v. CA, 353 SCRA 620 Extrajudicial partition - Pada-Kilario, et al. vs. CA et al., GR 134329, 19 Jan 2000
Rule 75 Production of Will. Allowance of Will Necessary- Probate mandatory - Pascual v. CA, 409 SCRA 105 Probate proceeding in rem – Alaban v. CA GR 156021 Sept 23, 2005 False will – Obando v People GR 138696 July 7, 2010 Rule 76 Allowance or Disallowance of Will - Grounds – Azuela v. CA, GR No. 122880, April 12, 2006 Rule 77 Allowance of Will Proved Outside of Philippines and Administration of Estate – Ancheta v. Guersay-Dalaygon; GR No. 139868, June 8, 2006 Rule 78 Letters Testamentary and of Administrati on, When and to Whom Issued Failure to attend hearings of applicant - Silverio v. CA, 304 SCRA 541 Intestate estate of Cristina suntay v Isabel Cojuangco GR 183053 June 16, 2010
Rule 79 Opposing Issuance of Letters Testamentary. Petition and Contest for Letters of Administration Justification for appointment of an administrator - Avelino v CA, GR 115181, 31 Mar 2000 Rule 80 Special Administrator Qualifications - Valarao v. Pascual 392 SCRA 695; Vilma Tan et al v. Hon Gedonio GR 166520 Mar 14, 2008 Justification for special administrator - De Guzman vs. Guadiz Jr., et al., L-48585, 31 Mar 1980 Appointment of special administrator discretionary - Jamero v. Melicos, GR 140929, 26 May 2005; Heirs of Castillo v. Gabriel GR 162934 Nov 11, 2005 474 SCRA Removal – Co v. Rosario et al GR No. 160671 Apr 30, 2008
Rule 81 Bonds of Executors and Administrators Rule 82- Revocation of Administration, Death, Resignation, and Removal of Executors and Administrators Ocampo v Ocampo GR 187879 Jul 2 , 2010 Rule 83 Inventory and Appraisal. Provision for Support of Family Provisional inclusion in inventory - Heirs of Miguel Franco v. CA, 418 SCRA 60; Chua v. REMLAW Page 10
Provisional inclusion in inventory - Heirs of Miguel Franco v. CA, 418 SCRA 60; Chua v. Absolute Management Corp. 413 SCRA 547 Rule 84 General Powers and Duties of Executors and Administrators Conflict of interest - Mananquil v. Villegas, GR 2430, 30 Aug 1990 Rule 85 Accountability and Compensation of Executors and Administrators Duty to account - Tumang v. Laguio GR 50277 14 Feb 1980; Charges and expenses of the administrator – Quasha Pena v. LCN Const GR 174873 Aug 26, 2008 Rule 86 Claims Against Estate Substitution of heirs - Heirs of Lorilla, et al. v. CA, GR 118655 12 Apr 2000; Liability of heirs for debts of decedent - Union Bank v. Santibañez, GR 149926, 23 Feb 2005 Atty‘s fees - Salonga Hernandez v. Pascual, GR No. 127165, May 2, 2006 Money claims – Stronghold v. Republic GR 174561 Jun 22, 2006 ; Gutierrez v. Barreto-Datu GR L-17175 Jul 31, 1962 Rule 87 Actions by and Against Executors and Administrators Recovery of estate property - Valera v. Inserto GR 56504, 7 May 1987; Damages arising from crime – ABS CBN v Office of Ombudsman GR 133347 Apr 23, 2010
Rule 88 Payment of the Debts of the Estate Rule 89 Sales, Mortgages, and other Encumbrances of Property of Decedent Mortgage of estate property - Pahamatong v. PNB, GR 156403, 31 Mar 2005; Orola v. Rural Bank of Pontevedra, GR 158566 Sept 20, 2005 Can heir sell estate property - Aggabao v. RTC, GR No. 146006 Feb 23, 2004 Rule 90 Distribution and Partition of the Estate Distribution, when – Quasha Pena v LCN Const GR 174873 Aug 26, 2008 Joinder – Guy v. CA GR 163707 Sep 15, 2006
Rule 91 Escheats - Republic v. CA & Solano GR 143483, 375 SCRA Guardians and Guardianshi p Guardianship over Incompetents Rule 92 Venue Parco v. CA, L-33152 30 Jan 1982 Vanal v. Balmes, GR 132223, 19 June 2001 Rule 93 Appointment of Guardians Rule 94 Bonds of Guardians Rule 95 Selling and Encumbering Property of Ward De Pua v. San Agustin, GR L-17402, 25 July 1981 Rule 96 General Powers and Duties of Guardi ans Rule 97 Termination of Guardianship Guardianship of Minors AM 03-02-05 SC Rule on Guardianship of Minors Rule 98 Trustees Express trust vs. implied trust – Richard Lopez Trustee v. CA GR 157784 Dec 16, 2008; Heirs of Lorenzo Yap v. CA 312 SCRA 603; Saltiga de Romero v. CA 319 SCRA 180 ; Richard Lopez v CA GR 157784 Dec 16, 2008 Other Special Proceedings Rule 99 Adopti on and Custody of Minors RA 8551 An act establishing rules and policies on the domestic adoption of Filipino children and for other purposes AM No. 02-6-02-SC Rules on Adoption AM No. 03-04-04 –SC Rules on Custody of Minors and Writ of Habeas Corpus in relation to Custody of Minors In the matter of adoption of Stephanie Garcia, GR 148311, 31 Mar 2005; Republic v. Miller, 306 SCRA 183; Republic v. Hernandez, GR 117209, 9 Feb 1996 In re petition for adoption of Michelle Lim GR 168992 May 21, 2009
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Special Proceedings Invol vi ng Family Code Provisions AM 02-11-10-SC Rules on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages AM 02-11-11 SC Rule on Legal Separation AM 02-11-12 SC Rule on Provisional Orders
Other (Summary) Proceedings under the Family Code: Title XI, Chapters 1 to 3 on separation in fact between husband and wife or abandonment by one of the other and incidents involving parental authority Chapter 4 on Art. 41 (declaration of a spouse as presumpti vely dead) Art. 51(action of a child for presumpti ve legitime) Art. 69 (judicial declaration of family domicile in case of disagreement of the spouses) Art. 73 (spouse’s objection to the profession of the other spouse) Arts. 96 and 124 (annulment of husband’s decision in the administration and enjoyment of community or conjugal property appointment of spouse as sole administrator except cases of “incompetent” other spouse which shall be under Rules 93 and 95) Art. 217 (entrusting children to homes and orphanages). Rule 101 Proceedings for Hospitalization of Insane Persons Chin Ah Foo v. Concepcion, 54 Phil 775
Rule 102 Habeas Corpus AM No. 03-04-04 SC Rules on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors SC Rules on Writs of Amparo and Habeas Data /Writ of Kalikasan Sec of Defense v Manalo GR 180906 Oct 7, 2009 In Re Writ of Habeas Corpus for Reynaldo De Villa, GR 158802, Nov. 17, 2004 Glenn Caballes v. CA, GR 163108, 23 Feb 2005; Ilusorio v. Bildner, 332 SCRA 169 Pp v. Andal, 307 SCRA 650; Feria v. CA, 325 SCRA 525; Canlas v. Napico GR 182795 Jun 5, 2008; Tapuz v. Del Rosario GR 182484 Jun 19, 2008 P/Supt. Felixberto Castillo v. Dr. Amanda T. Cruz, GR 182165, Nov 25, 2009; Gen Avelino Razon, Jr. et al. v Mary Jean Tagitis, et al, GR 182498, Feb 16, 2010; Yano et al v Sanchez et al GR 186640 Feb 11, 2010 Rule 103 Change of Name RA 9048 Clerical Error Law RA 9255 An act allowing illegitimate children to use the surname of their father Republic v. Lim, GR No. 153883 13 Jan 2004 In Re: Petition of Julian Wang, GR 159966, 30 March 2005 Republic v. Capote GR 157043 Feb 2, 2007 Rule 108 Cancellation or Correction of Entries in the Civil Registry Tan Co v. Civil Register, GR 138496; 23 Feb 2004 Lee v. CA, 367 SCRA 110 Barco v CA 420 SCRA 162 Gerbert Corpuz v Sto Tomas GR 186571 Aug 11, 2010 Rule 109 Appeals in Special Proceedings Testate of Maria Biascan v. Biascan, 347 SCRA 621; Briones v. Lilia Henson -Cruz GR 159130 Aug 22, 2008; Heirs of Siapian et al v Estate of Mackay GR 184799 Sept 1, 2010
Special Proceedings under Other Laws or SC rules Sec. 5/2 RA 8799 AM 01-2-04 – SC Interim Rules of Procedure governing Intra-corporate Controversies 2008 Rules on Corporate Rehabilitation (see rules 2 and 4 re: pre-trial) Pryce Corp v. CA GR 172302 Feb 4, 2008 NB v Equitable PCIBank GR 165571 Jan 20, 2009 Jerry Ong v PDUC GR 175117 aug 18, 2010; China Banking v Cebu Printing GR 172880 Aug 11, 2010 CRIMINAL PROCEDURE Rule 110 Prosecution of Offenses - Venue of libel cases - Macasaet v. People, 452 SCRA 255 Venue of BP 22 cases - Rigor v. People, GR No. 144887, Nov. 17, 2004 AM No. 02-2-07, Sec 5
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AM No. 02-2-07, Sec 5 Filing - Del Rosario v. Vda De Mercado 29 SCRA 116; SEC v Interport GR 135808 Oct 6, 2008 Reinvestigation - Crespo v. Mogul 151 SCRA 462; ; Harold Tamargo v. Romulo Awingan GR 177727, Jan 19, 2010 Amendment – Pp v. Casey 103 SCRA 21; Fronda –Baggao v. Pp GR 151785 Dec 10, 2007; PP v. Hon Cajigal GR 157472 Sep 20, 2007 Sec 5 (affidavit of desistance) – People v. De la Cerna GR 136899 – 904 Oct 9, 2002 Sec 6 – Lasoy et al v. Zenarosa GR 129472; People v. Puig GR 173654 – 765 Aug 28, 2009 Sec 15 – Isip v. People GR 170298 Jun 26, 2007; Sony Corp v. Supergreen GR 161823 Mar 22, 2007 Relationship – People v. Ceredon GR 167179 Jan 28, 2008 Date/time of commission – People v. Almendral GR 126025 Jul 6, 2004 Qualifying circumstances – Pp v. Buayaban GR No. 112459 Mar 28, 2003 ; Pp v. Masapol 417 SCRA 371; PP v. Coredon GR 167179 Jan 28, 2008 Sec 13 (duplicity of offenses) – People v. Soriano GR 178325 Feb 22, 2008 Complaint-affidavit – Hilario P. Soriano v. People, GR 162336, Feb 1, 2010 Rule 111 Prosecution of Civil Action- Sec 1 – Cancio v. Isip GR 133978 Nov 12, 2002; Cheng v. Sy GR 174238 Jul 7, 2009 Sec 3 – Samson v. Daway GR 1600554 Jul 21, 2004 Sec 5 – Ferrer v. SB GR 161067 Mar 14, 2008 Sec 7 – Dreamwork Construction v. Janiola GR 184861 Jun 30, 2009 Implied reservation - Sarmiento v. CA 394 SCRA 315 Express reservation - Hambon v. CA 399 SCRA 255 Civil liability - Salazar v. Pp 411 SCRA 598 ; First Producers Holdings Corp v. Luis Co., GR 139655 July 27, 2000; Corpus v. Siapno AM MTJ-96-1106 Jun 17, 2002; Cruz v. Ca 388 SCRA 72 BP22 – Sps Benito Lo Ban Tiong v. Balboa GR 158177 Jan 28, 2008; Cheng v. Sps Sy GR 174238 Jun 7, 2009 Sec 4 (death of accused) - People v. Abungan GR 136843 Sept 28, 2000; ABS-CBN v. Ombudsman GR 133347 Oct 15, 2008 Prejudicial question – People v. Consing GR 148193 Jan 16, 2003; Reyes v. Pearlbank GR 171435 Jul 30, 2008; Dreamwork v. Janiola GR 184861 Jun 30, 2009
Rule 112 Preliminary InvestigationAM No. 05-8-26-SC Amendment of Rules 112 and 114 of the Revised Rules on Criminal Procedure by Removing the Conduct of Preliminary Investigation from Judges of the First Level Courts Probable cause discretion of investigating prosecutor - Hegerty v. CA 409 SCRA 285 Cause of accusation – Miranda v. SB GR 154098 Jul 27, 2005 Contents of the information – People v. Ibanez 523 SCRA 136 Authority of prosecutor – Tolentino v. Paqueo 523 SCRA 377 Sec 3 – Santos-Concio et al v. DOJ Sec GR 175057 Jan 29, 2008; Racho v. Miro GR 168578 Sep 30, 2008; Sps Balaguan v Ca GR 174350 Aug 13, 2008 Non-interference by court – Aguirre v. DOJ GR 170723 Mar 23, 2008; Juanito Chan v. DOJ Sec GR 147065 Mar 14, 2008 When to question irregularities – Lolita Eugenio v. PP GR 168163 Mar 26, 2008; Failure to comply with Sec 4 - Cruz v CA 388 SCRA 72 Villaflor v. Vivar 349 SCRA 194; Uy v. SB 354 SCRA 651 Sec 6 – Baltazar v. People GR 174016 Jul 28, 2008; Tabujara III v. People GR 175162 Oct 29, 2008 Sec 7 – GR 158211 Aug 31, 2004 San Agustin v. People; Ladlad v. Velasco 523 SCRA 318 Secs. 8 and 9 – Victorias Milling v. Padilla GR 156962 Oct 6, 2008 Issuance of warrant discretionary on judge - Sesbreno v. Aglugub 452 SCRA 365 Second information – Saludaga v SB GR 184537 Apr 23, 2010 Rule 113 ArrestPeople v. Escordial GR 138934 January 16, 2002 Requirements for issuance of warrant of arrest - Gutierrez v. Hernandez 524 SCRA 1 Probable cause to issue warrant - AAA v. Carbonell GR 171465 Jan 8, 2007; People v. Laguio GR 128587 March 1, 2007 Inquest – Ladlad v. Velasco 523 SCRA 318 PP v. Molina 352 SCRA 174; PP v. Salanguit 356 SCRA 683 In flagrante delicto – People v. Alunday GR 181548 Sep 3, 2008; People v. Carlos de la Cruz GR 182348 Nov 20, 2008; REMLAW Page 13
GR 182348 Nov 20, 2008; Hot pursuit – People v. Recepcion et al GR 141943-45 Nov 13, 2002 Rule 114 Bail- Right to bail – San Miguel v. Hon. Maceda AM RTJ-03-1749 Apr 3, 2007 Esteban v. Alhambra GR No. 135012 Sep 7, 2004 Procedure re grant - Taborite v. Sollesta 408 SCRA 602; Serapio v. SB GR 148468, 148769, 149116 Jan 28, 2003; Yap v. CA 358 SCRA 564; Pp v. Fitzerald GR 140288 Oct 23, 2006 Where to appeal from denial of bail – Chua v. CA GR 140842 Apr 12, 2007 Discretionary bail (Sec 20) – Andres v. Beltran 415 SCRA 598 (2001) Sec. 26 – Okabe v. Gutierrez GR 150185 May 27, 2004 Meaning of ―reclusion perpetua‖ – Cenzon v. Hon. Abad Santos GR 164337 Jun 27, 2006 Sec 5 – Jose Antonio Leviste v CA GR 189122 Mar 17, 2010 OSG – Heirs of Sarah Burgos v CA GR 169711 Feb 8, 2010
Rule 115 Rights of Accused Phil. Constitution Art. III RA 8493 (Speedy Trial Act of 1998) and SC Circular No. 38-98 RA 7438 An act defining certain rights of person arrested, detained or under custodial investigation as well as the duties of arresting, detaining and investigating officers and providing penalties for violations thereof – Lumanog v People GR 182555 Sep 7, 2010 Speedy disposition – Cabarles v. Maceda GR 161330 Feb 20, 2007 Speedy trial – Perez v. People GR 164763 Feb 12, 2008; Benares v. Lim GR 173421 Dec 14, 2006; People v. Jose R. Hernandez, GR No. 154218 and 154372, August 28, 2006; Pp v Baloloy 381 SCRA 31; Miranda rights – Pp v. Teves 356 SCRA 14 Out of Court Identification – People v. Jojo Musa GR 170472, July 3, 2009 Right to counsel – Aquino v. Paiste GR 147782 Jun 25, 2008; People v. Serzo Jr GR 118435 Jun 20, 1997; PP v Domingo Reyes GR 178300 Mar 17, 2009 Rule 116 Arraignment and PleaChange of plea - Pp v Bernas 377 SCRA 391; Pp v. Ulit GR 131799-901 23 Feb 2004; Sec. 2 - Daan v SB GR 163972-77 Mar 28, 2008 Rule 117 Motion to QuashNot a MOD- Antonio Abador v. People GR 186001, Oct 2, 2009 Double jeopardy - Alonto v. People GR No. 140078, Dec 9, 2004; Pp v. Velasco 340 SCRA 207; Castro v. People GR 180832 Jul 23, 2008 Provisional dismissal - Pp v. Lacson GR 149453 Apr 1, 2003 ; Torres v. Sps Aguinaldo GR 164268 Jun 28, 2005 No authority to file - People v. Hon Garfin GR 153176, 29 Mar 2004 Denial not correctible by certiorari – Serana v. SB & PP GR 162059 Jan 22, 2008; Pp v. Romualdez GR 166510 Jul7 23, 2008 Res judicata – Pacifico Cruz v. SB GR 174599-609 Feb 12, 2010
Rule 118 Pre-TrialStipulation of facts - Bayas v. SB 391 SCRA 415 People v. Sitao, 387 SCRA 701 Rule 119 Trial RA No. 6981 The Witness Protection Act Affidavit v. testimony - Angcaco v Pp 378 SCRA 297 Right to counsel - People v. Sunga 399 SCRA 624 Demurrer to evidence - People v. Sandiganbayan GR 137707-11, Dec 17, 2004; Pp v. Sayaboc GR 147201, 15 Jan 2004 ; Cabarles v. Maceda & Pp GR 161330 Feb 20, 2007; Pp v. Tolentino et al GR 176385 Feb 26, 2008 Phil Const Art II Secs 12, 14, 16 and 17 Sec 4 – People v. Webb GR 132577 Aug 17, 1999 Sec. 15 – Vda de Manguerra v. Risos GR 152643 Aug 28, 2008 Subpoena – Roco v. Contreras GR 158275 Jun 28, 2005 Role of private prosecutor – Carino v. De Castro GR 176084 Apr 30, 2008
Rule 120 JudgmentDelay in promulgation - Cea v. Paguio 397 SCRA 494 Failure to appear at promulgation - Tolentino v. People, GR No. 170396, August 31, 2006 Sec 5 – Suero v People GR 156408 Jan 31, 2005 REMLAW Page 14
Sec 5 – Suero v People GR 156408 Jan 31, 2005 Determination of penalty – People v. Temporada GR 173473 Dec 17, 2008 Sec 2 – Lumanog v. People GR 182555 Sep 7, 2010 Rule 121 New Trial or Reconsideration- Requisites of MNT - Pp v Judavar 380 SCRA 548 Sec 2, Saludaga v SB GR 184537 Apr 23, 2010 Rule 122 Appeal- AM No. 00-5-03-SC – Re: Amendments to the Revised Rules of Criminal Procedure to Govern Death Penalty Cases – Pp v. Mateo GR 147678-87, Jul 7, 2004 Certiorari from grant of bail - Pobre v. CA, 463 SCRA 50, Jul 8, 2005 Failure to file brief - Tamayo v CA GR 147070 Feb 17, 2004 Escape pending appeal - Pp v. Latayada GR 146865 Feb 18, 2004; Vitto v. CA 404 SCRA 307 Hierarchy of courts - Quesada v. DOJ, GR No. 150325, Aug 31, 2006 Pp v. Bayotas 236 SCRA 239 Rule 123 Procedure in the Municipal Trial Courts - Rule 124 Procedure in the Court of Appeals - Dismissal of appeal - Pp v De La Concha 388 SCRA 280 Sec 8 - Nino Masas v. PP GR 177313 Dec 19, 2007 Rule 125 Procedure in the Supreme Court- Post-conviction review – Pp v. Labriaga 250 SCRA 163 Rule 126 Search and Seizure- Plain view – People v. Que Ming Kha GR 133265 May 29, 2002 Unannounced entry- People v. Huang Zhen Hua, GR 139301, Sep 29, 2004 Control of property - People v. Del Castillo GR 153254, Sep 30, 2004 Exceptions to warrant requirement - Caballes v. CA 373 SCRA 221 Time of arrest - PP v. Che Cun ting 328 SCRA 592; People v. Zenaida Quebral, GR 185379, Nov 27, 2009 Determination of probable cause - Sony Music v. Espanol GR 156804 March 14, 2005 People v. Judge Laguio & Wang Mar 16, 2007 Things to be seized – PP v Raul Nunez GR 177168 Jun 30, 2009 Things to be seized – Pp v. Raul Nunez GR 177168 Jun 30, 2009 Sec 13 – Sr. Inspc. Jerry C. Valeroso v. CA & Pp GR 164815, Sept 3, 2009 Rule 127 Provisional Remedies in Criminal Cases - EVIDENCE Rule 128 General Provisions - Competence – Ramirez v. CA 248 SCRA 590
Rule 129 What Need Not be Proved- Judicial admission - Republic v. Sandiganbayan 406 SCRA 190; BPI Savings v. CTA 330 SCRA 507 Judicial notice – Experttravel v. CA GR 152392 Rule 130 Rules of Admissibility- Real Evidence – People v. Bardaje 99 SCRA 388 DNA – read AM No. 06-11-5-SC Oct 15, 2007; Estate of Rogelio Ong v. Minor Diaz GR 171713 Dec 17, 2007; PP v Umamito GR 172607 Oct 26, 2007; Herrera v Alba GR 148220 Jun 15, 2005 Documentary Evi dence: Best/Secondary/Parol Evi dence Best evidence rule (Rule 130 Secs 2-8 ; Rule 132 Secs. 25 and 27) - Lee v. People Gr 159288 Oct 19, 2004 ; Mallari v. People, GR 153911 Dec 10, 2004; DECS v. Del Rosario GR 146586 Jan 26, 2005; Citibank Mastercard v. Teodoro 411 SCRA 577; Seaoil v Autocorp GR 164326 Oct 17, 2008 Parol evidence – Duvaz Corp v. Export and Industry Bank 523 SCRA 405 Parol evidence rule – Rule 130 Sec. 9 Ortanez v. CA 266 SCRA 561 Falsified document –Pacasum v PP GR 180314 Apr 16, 2009
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Electronic Evidence RA 8792 Electronic Commerce Act Secs. 5, 6-15 AM 01-7-01-SC New Rules on Electronic Evidence, Rule 2, Sec 1; Rule 3, Rule 4 MCC v Ssangyong GR 170633 Oct 17, 2007 Aznar v. Citibank Mar 28, 2007; NPC v. Codilla GR 170491 Apr 3, 2007 Ang v CA et al GR 182835 Apr 20, 2010 Interpretation of Documents Testimonial Evidence: Qualification of Witnesses/Testimonial Privilege/Admissions and Confessions/Previous Conduct as Evi dence Qualification of witnesses Mental incapacity Rule 130 Sec 20, 21 - Pp v. Mendoza GR 113791 Feb 2, 1996 Marital disqualification Rule 130 Sec 22 – Pp v. Castaneda 88 SCRA 562 Deadman‘s Statute Rule 130 Sec 23 – Razon v. IAC 207 SCRA 234 Privileged Communications Marital communications Rule 130 Sec 24 (a) – Pp v. Carlos Mar 1975 Attorney-client Rule 130 Sec. 24 (b) – Pp v. Sandiganbayan 275 SCRA 505; Regala v. Sandiganbayan 262 SCRA 124 Physician-patient Rule 130 Sec. 24 - Lim v. CA 214 SCRA 273 (1992); Krohn v. CA 233 SCRA 146 State secrets Rule 130 Sec 24 (e) – BF v. Monetary Board 142 SCRA 523 (1986) Parental and filial privilege Rule 130 Sec 25 Newsman‘s privilege RA 53, as amended by RA 1477 Admissions and Confessions Admissions against interest Rule 130 Sec 26 & 32 – Keller & Co. v. COB 141 SCRA 86 Compromises Rule 130 Sec 27 – Pp v. Yparriguirre 268 SCRA 35; Pp v. Godoy 250 SCRA 676 Res Inter Alios Acta Rule 130 Sec 28 - Pp v. Racquel 265 SCRA 248 Exceptions to res inter alios acta rule Partner‘s agent‘s admissions Rule 130 Sec 28 Coconspirator‘s statements Rule 130 Sec 30 Pp v. Cabrera 57 SCRA 715 Admission by privies Rule 130 Sec 31 Sec 32 - Villanueva v. Balaguer GR 180197 Jun 23, 2009 Confessions Rule 130 Sec 33 – Pp v. Yip Wai Ming 264 SCRA 224; Pp v. Wong Chuen Ming 256 SCRA 135 Corpus delicti – Pp v. Romulo Tuniaco, GR 185710, Jan 19, 2010 The Hearsay Rule Testimonial knowledge Rule 130 Sec 36 – Pp v. Gaddi 170 SCRA 649 Hearsay, what is – Phil Free Press v. CA 473 SCRA GR 132864 Dying Declaration Rule 130 Sec 37 - Pp v. Macandog June 6, 2001 GR 129534; Pp v. Latayada GR 146865 Feb 18, 2004; Pp v Cerilla GR 177147 Nov 28, 2007 Declaration against interest Rule 130 Sec 38 - Estrada v. Disierto GR 146710-15 Apr 3, 2001; HKO Ah Pao v. Ting GR 153476; Heirs of Franco v. CA 418 SCRA 60 Act or declaration about pedigree / Family reputation or tradition regarding pedigree Rule 130 Secs 39, 40, 41 - Rosendo Herrera v. Alba GR 148220 June 15, 2005; Tison v. CA 276 SCRA 582 Res gestae Rule 130 Sec 42 – Pepito Capila v. Pp GR 146161 Jul 17, 2006; PP v. Cudal Oct 31, 2006; DPB Pool v. RMN GR 147039 Jan 27, 2006; Pp v. Tolentino 218 SCRA 337; Arthur Zarate v. RTC GR 152263, July 3, 2009 Entries in the course of business Rule 130 Sec 42 - Nestle Phil v. FY Sons GR 150780; Security Bank v. Gan GR 150464 Jun 27, 2006 Entries in official records Rule 130 Sec 44 – Pp v. Aureo Rojo GR 82737 July 5, 1989; Pp v. Cabuang 217 SCRA 675; Franco Cruz v. CA GR 172238 Sep 17, 2008 Commercial lists and the like Rule 130 Sec 45 – PNOC Shipping v. Ca 299 SCRA 402 Learned Treatises Rule 130 Sec 46 Prior testimony Rule 130 Sec 47 – Tan v. CA 20 SCRA 54
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Opinion Rule Rule 130 Secs 48 -50 Expert witnesses – Milagors Ilao Quianay v. Mapile GR 154087 Oct 25, 2005; Pp v. Adoviso 309 SCRA 1; Bacalso v. Padigos GR 173192 Apr 18, 2008
Character Evidence Rule 130 Secs 34-35; Rule 132 Sec 14 – PP v. Soliman 53 OG 8083 Rule 131 Burden of Proof and Presumptions - Republic v. Vda De Neri GR 139588 4 Mar 2004 Barcelon Roxas Sec v. CIR GR 157064 GR 157064 Aug 7, 2006 Substantial evidence in adm proc - Republic v. Canastillo 524 SCRA 546; Salvador Pleto v. PNP GR 169982 Nov 23, 2007 Authenticity of signature – Sanchez v. Mapalad GR 148516 Dec 27 2007 541 SCRA 397
Rule 132 Presentation of Evidence (Examination of Witnesses) Examination in open court – Galman v. Pamaran 138 SCRA 294 Cross-examination – Dela Paz v. IAS 154 SCRA 65 Impeachment by prior inconsistent statement – Villalon v. IAC 144 SCRA 443 Recalling witnesses – Pp v. Rivera 200 SCRA 786 Pp v. Cadley GR 150735 15 Mar 2004 Zalamea v CA 228 SCRA 23 Heirs of Sabanpan v. Comorposa 408 SCRA 692 Adverse party witness - Gaw v. Suy Ben Chua GR 160855; People v Obnuranis GR 181492 Dec 16, 2008 SC Administrative Memo No. 00-4-07 Rule on Examination of a Child Witness Authentication and Proof of Documents Rule 132 Secs 19-33; E-Commerce Act, Secs. 5, 6-15; REE Rules 5, 6, 9 & 11 Heirs of Gubaton v CA GR 150206 Mar 13, 2009 Llemos et al v. Llemos et al GR 150162 Jan 26, 2007; IBM Phil v. NLRC 305 SCRA 592; Pp v. Lazaro 317 SCRA 435\ Sps De La Rama v Sps Pape GR 142309 Jan 30, 2009 Offer and Objection Rule 132 Secs 34-40 Vda de Onate v. CA 250 SCRA 283; Heirs of Doromio v. Heirs of Doromio 541 SCRA 479; Deutsche Bank v SEC 481 SCRA 672 Rule 133 Weight and Sufficiency of Evidence- Habagat Grill v. DMC-Urban GR 155110 March 31, 2005; Pp v. Hijada GR 123696 11 Mar 2004; Heirs of Conti v. CA 300 SCRA 345
DNA Evi dence Estate of Ong v Diaz GR 171713 Dec 17, 2007 People v. Umanito GR 172607 Oct 26, 2007 Herrera v Alba GR 148220 Jan 15, 2005 In re Writ of Habeas Corpus for Reynaldo De Villa GR 158802 Nov 17, 2004 Rule 134 Sec. 6 – Go v. Looyuko GR 147923 537 SCRA 445 26 Oct 2007 Chain of custody in drugs cases – Bonifacio Tejada v. Pp GR 180693, Sep 4, 2009
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Hasegawa et al v. Kitamura GR 149177 Nov 23, 2007 Sunday, November 14, 2010 11:16 PM
KAZUHIRO HASEGAWA AND NIPPON ENGINEERING CONSULTANTS CO., LTD. VS. MINORU KITAMURA [G.R. No. 149177, November 23, 2007] NACHURA Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the April 18, 2001 Decision [1] of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution [2] denying the motion for reconsideration thereof. On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese consultancy firm providing technical and management support in the infrastructure projects of foreign governments, [3] entered into an Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national permanently residing in the Philippines. [4] The agreement provides that respondent was to extend professional services to Nippon for a year starting on April 1, 1999. [5] Nippon then assigned respondent to work as the project manager of the Southern Tagalog Access Road (STAR) Project in the Philippines, following the company's consultancy contract with the Philippine Government. [6]
When the STAR Project was near completion, the Department of Public Works and Highways (DPWH) engaged the consultancy services of Nippon, on January 28, 2000, this time for the detailed engineering and construction supervision of the BongabonBaler Road Improvement (BBRI) Project. [7] Respondent was named as the project manager in the contract's Appendix 3.1. [8] On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its International Division, informed respondent that the company had no more intention of automatically renewing his ICA. His services would be engaged by the company only up to the substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's expiry. [9] Threatened with impending unemployment, respondent, through his lawyer, requested a negotiation conference and demanded that he be assigned to the BBRI project. Nippon insisted that respondent’s contract was for a fixed term that had already expired, and refused to negotiate for the renewal of the ICA. [10] As he was not able to generate a positive response from the petitioners, respondent consequently initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and damages with the Regional Trial Court of Lipa City. [11] For their part, petitioners, contending that the ICA had been perfected in Japan and executed by and between Japanese nationals, moved to dismiss the complaint for lack of jurisdiction. They asserted that the claim for improper pre -termination of respondent's ICA could only be heard and ventilated in the proper courts of Japan following the principles of lex loci celebrationis and lex contractus.[12]
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of Kitamura by a certain Y. Kotake as project manager of the BBRI Project.[13] REMLAW Page 18
Project.[13] On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank [14] that matters connected with the performance of contracts are regulated by the law prevailing at the place of performance, [15] denied the motion to dismiss. [16] The trial court subsequently denied petitioners' motion for reconsideration, [17] prompting them to file with the appellate court, on August 14, 2000, their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No. 60205].[18] On August 23, 2000, the CA resolved to dismiss the petition on procedural grounds—for lack of statement of material dates and for insufficient verification and certification against forum shopping. [19] An Entry of Judgment was later issued by the appellate court on September 20, 2000.[20] Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the reglementary period, a second Petition for Certiorari under Rule 65 already stating therein the material dates and attaching thereto the proper verification and certification. This second petition, which substantially raised the same issues as those in the first, was docketed as CA-G.R. SP No. 60827.[21]
Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001 Decision [22] finding no grave abuse of discretion in the trial court's denial of the motion to dismiss. The CA ruled, among others, that the principle of lex loci celebrationis was not applicable to the case, because nowhere in the pleadings was the validity of the written agreement put in issue. The CA thus declared that the trial court was correct in applying instead the principle of lex loci solutionis.[23] Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25, 2001 Resolution. [24] Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant Petition for Review on Certiorari [25] imputing the following errors to the appellate court: A. The honorable court of appeals gravely erred in finding that the trial court validly exercised jurisdiction over the instant controversy, despite the fact that the contract subject matter of the proceedings a quo was entered into by and between two japanese nationals, written wholly in the japanese language and executed in tokyo, japan. B. The honorable court of appeals gravely erred in overlooking the need to review our adherence to the principle of lex loci solutionis in the light of recent development[s] in private international laws. [26] The pivotal question that this Court is called upon to resolve is whether the subject matter jurisdiction of Philippine courts in civil cases for specific performance and damages involving contracts executed outside the country by foreign nationals may be assailed on the principles of lex loci celebrationis, lex contractus, the “state of the most significant relationship rule,― or forum non conveniens. However, before ruling on this issue, we must first dispose of the procedural matters raised by the respondent. Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has already barred the filing of the second petition docketed as CA -G.R. SP No. 60827 (fundamentally raising the same issues as those in the first one) and
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the instant petition for review thereof. We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's defective certification of non-forum shopping, it was a dismissal without prejudice.[27] The same holds true in the CA's dismissal of the said case due to defects in the formal requirement of verification [28] and in the other requirement in Rule 46 of the Rules of Court on the statement of the material dates. [29] The dismissal being without prejudice, petitioners can re-file the petition, or file a second petition attaching thereto the appropriate verification and certification—as they, in fact did—and stating therein the material dates, within the prescribed period[30] in Section 4, Rule 65 of the said Rules. [31] The dismissal of a case without prejudice signifies the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced. In other words, the termination of a case not on the merits does not bar another action involving the same parties, on the same subject matter and theory. [32] Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and even if petitioners still indicated in the verification and certification of the second certiorari petition that the first had already been dismissed on procedural grounds, [33] petitioners are no longer required by the Rules to indicate in their certification of non-forum shopping in the instant petition for review of the second certiorari petition, the status of the aforesaid first petition before the CA. In any case, an omission in the certificate of non-forum shopping about any event that will not constitute res judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant the dismissal and nullification of the entire proceedings, considering that the evils sought to be prevented by the said certificate are no longer present. [34]
The Court also finds no merit in respondent's contention that petitioner Hasegawa is only authorized to verify and certify, on behalf of Nippon, the certiorari petition filed with the CA and not the instant petition. True, the Authorization [35] dated September 4, 2000, which is attached to the second certiorari petition and which is also attached to the instant petition for review, is limited in scope—its wordings indicate that Hasegawa is given the authority to sign for and act on behalf of the company only in the petition filed with the appellate court, and that authority cannot extend to the instant petition for review. [36] In a plethora of cases, however, this Court has liberally applied the Rules or even suspended its application whenever a satisfactory explanation and a subsequent fulfillment of the requirements have been made.[37] Given that petitioners herein sufficiently explained their misgivings on this point and appended to their Reply [38] an updated Authorization [39] for Hasegawa to act on behalf of the company in the instant petition, the Court finds the same as sufficient compliance with the Rules. However, the Court cannot extend the same liberal treatment to the defect in the verification and certification. As respondent pointed out, and to which we agree, Hasegawa is truly not authorized to act on behalf of Nippon in this case. The aforesaid September 4, 2000 Authorization and even the subsequent August 17, 2001 Authorization were issued only by Nippon's president and chief executive officer, not by the company's board of directors. In not a few cases, we have ruled that corporate powers are exercised by the board of directors; thus, no person, not even its officers, can bind the corporation, in the absence of authority from the board.[40] Considering that Hasegawa verified and certified the petition only on his REMLAW Page 20
board.[40] Considering that Hasegawa verified and certified the petition only on his behalf and not on behalf of the other petitioner, the petition has to be denied pursuant to Loquias v. Office of the Ombudsman. [41] Substantial compliance will not suffice in a matter that demands strict observance of the Rules. [42] While technical rules of procedure are designed not to frustrate the ends of justice, nonetheless, they are intended to effect the proper and orderly disposition of cases and effectively prevent the clogging of court dockets. [43] Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question the trial court's denial of their motion to dismiss. It is a well -established rule that an order denying a motion to dismiss is interlocutory, and cannot be the subject of the extraordinary petition for certiorari or mandamus. The appropriate recourse is to file an answer and to interpose as defenses the objections raised in the motion, to proceed to trial, and, in case of an adverse decision, to elevate the entire case by appeal in due course. [44] While there are recognized exceptions to this rule,[45] petitioners' case does not fall among them. This brings us to the discussion of the substantive issue of the case. Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction to hear and resolve the civil case for specific performance and damages filed by the respondent. The ICA subject of the litigation was entered into and perfected in Tokyo, Japan, by Japanese nationals, and written wholly in the Japanese language. Thus, petitioners posit that local courts have no substantial relationship to the parties [46] following the [state of the] most significant relationship rule in Private International Law. [47] The Court notes that petitioners adopted an additional but different theory when they elevated the case to the appellate court. In the Motion to Dismiss[48] filed with the trial court, petitioners never contended that the RTC is an inconvenient forum. They merely argued that the applicable law which will determine the validity or invalidity of respondent's claim is that of Japan, following the principles of lex loci celebrationis and lex contractus. [49] While not abandoning this stance in their petition before the appellate court, petitioners on certiorari significantly invoked the defense of forum non conveniens. [50] On petition for review before this Court, petitioners dropped their other arguments, maintained the forum non conveniens defense, and introduced their new argument that the applicable principle is the [state of the] most significant relationship rule. [51] Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change in theory, as explained in Philippine Ports Authority v. City of Iloilo. [52] We only pointed out petitioners' inconstancy in their arguments to emphasize their incorrect assertion of conflict of laws principles. To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved: jurisdiction, choice of law, and recognition and enforcement of judgments. Corresponding to these phases are the following questions: (1) Where can or should litigation be initiated? (2) Which law will the court apply? and (3) Where can the resulting judgment be enforced?[53]
Analytically, jurisdiction and choice of law are two distinct concepts. [54] Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a substantive law which will determine the merits of the case is fair to both parties. The power to exercise jurisdiction does not automatically give a state constitutional authority to apply forum law. While jurisdiction and the choice of the lex fori will often coincide, the “minimum contacts― for one REMLAW Page 21
and the choice of the lex fori will often coincide, the “minimum contacts― for one do not always provide the necessary “significant contacts― for the other. [55] The question of whether the law of a state can be applied to a transaction is different from the question of whether the courts of that state have jurisdiction to enter a judgment. [56] In this case, only the first phase is at issue—jurisdiction. Jurisdiction, however, has various aspects. For a court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent, over the subject matter, over the issues of the case and, in cases involving property, over the res or the thing which is the subject of the litigation. [57] In assailing the trial court's jurisdiction herein, petitioners are actually referring to subject matter jurisdiction. Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which establishes and organizes the court. It is given only by law and in the manner prescribed by law. [58] It is further determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. [59] To succeed in its motion for the dismissal of an action for lack of jurisdiction over the subject matter of the claim, [60] the movant must show that the court or tribunal cannot act on the matter submitted to it because no law grants it the power to adjudicate the claims. [61] In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not properly vested by law with jurisdiction to hear the subject controversy for, indeed, Civil Case No. 00-0264 for specific performance and damages is one not capable of pecuniary estimation and is properly cognizable by the RTC of Lipa City. [62] What they rather raise as grounds to question subject matter jurisdiction are the principles of lex loci celebrationis and lex contractus, and the “state of the most significant relationship rule.― The Court finds the invocation of these grounds unsound. Lex loci celebrationis relates to the “law of the place of the ceremony―[63] or the law of the place where a contract is made. [64] The doctrine of lex contractus or lex loci contractus means the “law of the place where a contract is executed or to be performed.―[65] It controls the nature, construction, and validity of the contract [66] and it may pertain to the law voluntarily agreed upon by the parties or the law intended by them either expressly or implicitly. [67] Under the “state of the most significant relationship rule,― to ascertain what state law to apply to a dispute, the court should determine which state has the most substantial connection to the occurrence and the parties. In a case involving a contract, the court should consider where the contract was made, was negotiated, was to be performed, and the domicile, place of business, or place of incorporation of the parties. [68] This rule takes into account several contacts and evaluates them according to their relative importance with respect to the particular issue to be resolved. [69] Since these three principles in conflict of laws make reference to the law applicable to a dispute, they are rules proper for the second phase, the choice of law. [70] They determine which state's law is to be applied in resolving the substantive issues of a conflicts problem. [71] Necessarily, as the only issue in this case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet called for. Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have not yet pointed out any conflict between the laws of Japan and ours. Before determining which law should apply, first there should exist a conflict of laws situation requiring the application of the conflict of laws rules. [72] Also, when the law of a REMLAW Page 22
situation requiring the application of the conflict of laws rules. [72] Also, when the law of a foreign country is invoked to provide the proper rules for the solution of a case, the existence of such law must be pleaded and proved. [73] It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or administrative agency, there are three alternatives open to the latter in disposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction over the case and apply the internal law of the forum; or (3) assume jurisdiction over the case and take into account or apply the law of some other State or States. [74] The court’s power to hear cases and controversies is derived from the Constitution and the laws. While it may choose to recognize laws of foreign nations, the court is not limited by foreign sovereign law short of treaties or other formal agreements, even in matters regarding rights provided by foreign sovereigns. [75]
Neither can the other ground raised, forum non conveniens, [76] be used to deprive the trial court of its jurisdiction herein. First, it is not a proper basis for a motion to dismiss because Section 1, Rule 16 of the Rules of Court does not include it as a ground. [77] Second, whether a suit should be entertained or dismissed on the basis of the said doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court. [78] In this case, the RTC decided to assume jurisdiction. Third, the propriety of dismissing a case based on this principle requires a factual determination; hence, this conflicts principle is more properly considered a matter of defense. [79] Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed by respondent and the grounds raised by petitioners to assail that jurisdiction are inappropriate, the trial and appellate courts correctly denied the petitioners’ motion to dismiss. WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
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Figueroa v. People, GR 147407, Jul 14, 2008 Sunday, November 14, 2010 11:18 PM
FIGUEROA vs. PEOPLE OF THE PHILIPPINES JULY 14, 2008 NACHURA, J. SUBJECT AREA: Estoppel by laches NATURE: Petition for review on certiorari FACTS: Petitioner was charged with the crime of reckless imprudence resulting in homicide. The RTC found him guilty. In his appeal before the CA, the petitioner, for the first time, questioned RTCs jurisdiction on the case. The CA in affirming the decision of the RTC, ruled that the principle of estoppel by laches has already precluded the petitioner from questioning the jurisdiction of the RTC—the trial went on for 4 years with the petitioner actively participating therein and without him ever raising the jurisdictional infirmity. The petitioner, for his part, counters that the lack of jurisdiction of a court over the subject matter may be raised at any time even for the first time on appeal. As undue delay is further absent herein, the principle of laches will not be applicable. Hence, this petition. ISSUE: WON petitioner’s failure to raise the issue of jurisdiction during the trial of this case, constitute laches in relation to the doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the fact that said issue was immediately raised in petitioner’s appeal to the CA HELD:No . RATIO: Citing the ruling in Calimlim vs. Ramirez, the Court held that as a general rule, 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. 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 of Tijam v. Sibonghanoy. Laches should be clearly present for the Sibonghanoy doctrine to be applicable, that is, lack of jurisdiction must have been raised so belatedly as to warrant the presumption that the party entitled to assert it had abandoned or declined to assert it. In Sibonghanoy, the party invoking lack of jurisdiction did so only after fifteen years and at a stage when the proceedings had already been elevated to the CA. Sibonghanoy is an exceptional case because of the presence of laches. In the case at bar, the factual settings attendant in Sibonghanoy are not present. Petitioner Atty. Regalado, after the receipt of the Court of Appeals resolution finding her guilty of contempt, promptly filed a Motion for Reconsideration assailing the said court’s jurisdiction based on procedural infirmity in initiating the action. Her compliance with the appellate court’s directive to show cause why she should not be cited for contempt and filing a single piece of pleading to that effect could not be considered as an active participation in the judicial proceedings so as to take the case within the milieu of Sibonghanoy. Rather, it is the natural fear to disobey the mandate of the court that could lead to dire consequences that impelled her to comply. The petitioner is in no way estopped by laches in assailing the jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate court. At that time, no considerable period had yet elapsed for laches to attach.
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yet elapsed for laches to attach. DISPOSITIVE: Petition for review on certiorari is granted. Criminal case is dismissed Pasted from
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Ruby Shelter v. Hon. Formaran GR 174914 Feb 10, 2009 Sunday, November 14, 2010 11:19 PM
G.R. No. 175914 : February 10, 2009 RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT CORPORATION, Petitioner, vs. HON. PABLO C. FORMARAN III, Presiding Judge of Regional Trial Court Branch 21, Naga City, as Pairing Judge for Regional Trial Court Branch 22, Formerly Presided By HON. NOVELITA VILLEGAS-LLAGUNO (Retired 01 May 2006), ROMEO Y. TAN, ROBERTO L. OBIEDO and ATTY. TOMAS A. REYES, Respondents.
DE C I SI O N
CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision[1 ] dated 22 November 2006 of the Court of Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its assailed Decision, affirmed the Order[2 ] dated 24 March 2006 of the Regional Trial Court (RTC), Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter Builders and Realty Development Corporation to pay additional docket/filing fees, computed based on Section 7(a) of Rule 141 of the Rules of Court, as amended. chanroblesvirtuallawlibrary
The present Petition arose from the following facts: chanroblesvirtuallawlibrary Petitioner obtained a loan[3 ] in the total amount of P95,700,620.00 from respondents Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured by real estate mortgages over five parcels of land, all located in Triangulo, Naga City, covered by Transfer Certificates of Title (TCTs) No. 38376,[4 ] No. 29918,[5 ] No. 38374,[6 ] No. 39232,[7 ] and No. 39225,[8 ] issued by the Registry of Deeds for Naga City, in the name of petitioner. When petitioner was unable to pay the loan when it became due and demandable, respondents Tan and Obiedo agreed to an extension of the same. chanroblesvirtuallawlibrary
In a Memorandum of Agreement[9 ] dated 17 March 2005, respondents Tan and Obiedo granted petitioner until 31 December 2005 to settle its indebtedness, and condoned the interests, penalties and surcharges accruing thereon from 1 October 2004 to 31 December 2005 which amounted to P74,678,647.00. The Memorandum of Agreement required, in turn, that petitioner execute simultaneously with the said Memorandum, by way of dacion en pago, Deeds of Absolute Sale in favor of respondents Tan and Obiedo, covering the same parcels of land subject of the mortgages. The Deeds of Absolute Sale would be uniformly dated 2 January 2006, and state that petitioner sold to respondents Tan and Obiedo the parcels of land for REMLAW Page 26
that petitioner sold to respondents Tan and Obiedo the parcels of land for the following purchase prices: chanroblesvirtuallawlibrary TCT No.
Purchase Price
38376
P 9,340,000.00
29918
P 28,000,000.00
38374
P 12,000,000.00
39232
P 1,600,000.00
39225
P 1,600,000.00
chanroblesvirtuallawlibrary
Petitioner could choose to pay off its indebtedness with individual or all five parcels of land; or it could redeem said properties by paying respondents Tan and Obiedo the following prices for the same, inclusive of interest and penalties: chanroblesvirtuallawlibrary TCT No.
Redemption Price
38376
P 25,328,939.00
29918
P 35,660,800.00
38374
P 28,477,600.00
39232
P 6,233,381.00
39225
P 6,233,381.00
In the event that petitioner is able to redeem any of the afore-mentioned parcels of land, the Deed of Absolute Sale covering the said property shall be nullified and have no force and effect; and respondents Tan and Obiedo shall then return the owners duplicate of the corresponding TCT to petitioner and also execute a Deed of Discharge of Mortgage. However, if petitioner is unable to redeem the parcels of land within the period agreed upon, respondents Tan and Obiedo could already present the Deeds of Absolute Sale covering the same to the Office of the Register of Deeds for Naga City so respondents Tan and Obiedo could acquire TCTs to the said properties in their names. chanroblesvirtuallawlibrary The Memorandum of Agreement further provided that should petitioner contest, judicially or otherwise, any act, transaction, or event related to or necessarily connected with the said Memorandum and the Deeds of Absolute Sale involving the five parcels of land, it would pay respondents Tan and Obiedo P10,000,000.00 as liquidated damages inclusive of costs and attorneys fees. Petitioner would likewise pay respondents Tan and Obiedo the condoned interests, surcharges and penalties.[10] Finally, should a contest arise from the Memorandum of Agreement, Mr. Ruben Sia (Sia), President of petitioner corporation, personally assumes, jointly and severally with petitioner, the latters monetary obligation to respondent Tan and Obiedo. REMLAW Page 27
petitioner, the latters monetary obligation to respondent Tan and Obiedo. chanroblesvirtuallawlibrary
Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized the Memorandum of Agreement dated 17 March 2005 between respondent Tan and Obiedo, on one hand, and petitioner, on the other. chanroblesvirtuallawlibrary
Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia, executed separate Deeds of Absolute Sale,[1 1 ] over the five parcels of land, in favor of respondents Tan and Obiedo. On the blank spaces provided for in the said Deeds, somebody wrote the 3rd of January 2006 as the date of their execution. The Deeds were again notarized by respondent Atty. Reyes also on 3 January 2006. chanroblesvirtuallawlibrary Without payment having been made by petitioner on 31 December 2005, respondents Tan and Obiedo presented the Deeds of Absolute Sale dated 3 January 2006 before the Register of Deeds of Naga City on 8 March 2006, as a result of which, they were able to secure TCTs over the five parcels of land in their names. chanroblesvirtuallawlibrary On 16 March 2006, petitioner filed before the RTC a Complaint[1 2 ] against respondents Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds of sales and damages, with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO). The Complaint was docketed as Civil Case No. 2006-0030. chanroblesvirtuallawlibrary On the basis of the facts already recounted above, petitioner raised two causes of action in its Complaint. chanroblesvirtuallawlibrary As for the first cause of action, petitioner alleged that as early as 27 December 2005, its President already wrote a letter informing respondents Tan and Obiedo of the intention of petitioner to pay its loan and requesting a meeting to compute the final amount due. The parties held meetings on 3 and 4 January 2006 but they failed to arrive at a mutually acceptable computation of the final amount of loan payable. Respondents Tan and Obiedo then refused the request of petitioner for further dialogues. Unbeknownst to petitioner, despite the ongoing meetings, respondents Tan and Obiedo, in evident bad faith, already had the pre-executed Deeds of Absolute Sale notarized on 3 January 2006 by respondent Atty. Reyes. Atty. Reyes, in connivance with respondents Tan and Obiedo, falsely made it appear in the Deeds of Absolute Sale that Mr. Sia had personally acknowledged/ratified the said Deeds before Atty. Reyes. chanroblesvirtuallawlibrary Asserting that the Deeds of Absolute Sale over the five parcels of land were executed merely as security for the payment of its loan to respondents Tan REMLAW Page 28
executed merely as security for the payment of its loan to respondents Tan and Obiedo; that the Deeds of Absolute Sale, executed in accordance with the Memorandum of Agreement, constituted pactum commisorium and as such, were null and void; and that the acknowledgment in the Deeds of Absolute Sale were falsified, petitioner averred: chanroblesvirtuallawlibrary 13.That by reason of the fraudulent actions by the [herein respondents], [herein petitioner] is prejudiced and is now in danger of being deprived, physically and legally, of the mortgaged properties without benefit of legal processes such as the remedy of foreclosure and its attendant procedures, solemnities and remedies available to a mortgagor, while [petitioner] is desirous and willing to pay its obligation and have the mortgaged properties released. [1 3] chanroblesvirtuallawlibrary
In support of its second cause of action, petitioner narrated in its Complaint that on 18 January 2006, respondents Tan and Obiedo forcibly took over, with the use of armed men, possession of the five parcels of land subject of the falsified Deeds of Absolute Sale and fenced the said properties with barbed wire. Beginning 3 March 2006, respondents Tan and Obiedo started demolishing some of the commercial spaces standing on the parcels of land in question which were being rented out by petitioner. Respondents Tan and Obiedo were also about to tear down a principal improvement on the properties consisting of a steel-and-concrete structure housing a motor vehicle terminal operated by petitioner. The actions of respondents Tan and Obiedo were to the damage and prejudice of petitioner and its tenants/lessees. Petitioner, alone, claimed to have suffered at least P300,000.00 in actual damages by reason of the physical invasion by respondents Tan and Obiedo and their armed goons of the five parcels of land. chanroblesvirtuallawlibrary Ultimately, petitioners prayer in its Complaint reads: chanroblesvirtuallawlibrary WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that upon the filing of this complaint, a 72-hour temporary restraining order be forthwith issued ex parte: chanroblesvirtuallawlibrary
(a)Restraining [herein respondents] Tan and Obiedo, their agents, privies or representatives, from committing act/s tending to alienate the mortgaged properties from the [herein petitioner] pending the resolution of the case, including but not limited to the acts complained of in paragraph 14, above; chanroblesvirtuallawlibrary (b)Restraining the Register of Deeds of Naga City from entertaining moves by the [respondents] to have [petitioners] certificates of title to the mortgaged properties cancelled and changed/registered in REMLAW Page 29
the mortgaged properties cancelled and changed/registered in [respondents] Tans and Obiedos names, and/or released to them; chanroblesvirtuallawlibrary
(c)After notice and hearing, that a writ of preliminary injunction be issued imposing the same restraints indicated in the next preceding two paragraphs of this prayer; and chanroblesvirtuallawlibrary (d)After trial, judgment be rendered:
chanroblesvirtuallawlibrary
1. Making the injunction permanent; chanroblesvirtuallawlibrary 2. Declaring the provision in the Memorandum of Agreement requiring the [petitioner] to execute deed of sales (sic) in favor of the [respondents Tan and Obiedo] as dacion en pago in the event of nonpayment of the debt as pactum commissorium; chanroblesvirtuallawlibrary 3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374, 38376, 39225 and 39232, all dated January 3, 2006, the same being in contravention of law; chanroblesvirtuallawlibrary 4. Ordering the [respondents] jointly and solidarily to pay the [petitioner] actual damages of at least P300,000.00; attorneys fees in the amount of P100,000.00 plus P1,000.00 per court attendance of counsel as appearance fee; litigation expenses in the amount of at least P10,000.00 and exemplary damages in the amount of P300,000.00, plus the costs. chanroblesvirtuallawlibrary [Petitioner] further prays for such other reliefs as may be proper, just and equitable under the premises. [14] chanroblesvirtuallawlibrary
Upon filing its C omplaint with the RTC on 16 March 2006, petitioner paid the sum of P13,644.25 for docket and other legal fees, as assessed by the Office of the Clerk of Court. The Clerk of Court initially considered Civil Case No. 2006-0030 as an action incapable of pecuniary estimation and computed the docket and other legal fees due thereon according to Section 7(b)(1), Rule 141 of the Rules of Court. chanroblesvirtuallawlibrary
Only respondent Tan filed an Answer[15] to the C omplaint of petitioner. Respondent Tan did admit that meetings were held with Mr. Sia, as the representative of petitioner, to thresh out Mr. Sias charge that the computation by respondents Tan and Obiedo of the interests, surcharges and penalties accruing on the loan of petitioner was replete with errors and uncertainties. However, Mr. Sia failed to back up his accusation of errors and uncertainties and to present his own final computation of the amount due. Disappointed and exasperated, respondents Tan and Obiedo informed Mr. Sia that they had already asked respondent Atty. Reyes to come over to notarize the Deeds of Absolute Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature appearing above his printed
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Absolute Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature appearing above his printed name on the Deeds of Absolute Sale, to which Mr. Sia replied yes. On 4 January 2006, Mr. Sia still failed to establish his claim of errors and uncertainties in the computation of the total amount which petitioner must pay respondent Tan and Obiedo. Mr. Sia, instead, sought a nine-month extension for paying the loan obligation of petitioner and the reduction of the interest rate thereon to only one percent (1%) per month. Respondents Tan and Obiedo rejected both demands. chanroblesvirtuallawlibrary
Respondent Tan maintained that the Deeds of Absolute Sale were not executed merely as securities for the loan of petitioner. The Deeds of Absolute Sale over the five parcels of land were the consideration for the payment of the total indebtedness of petitioner to respondents Tan and Obiedo, and the condonation of the 15-month interest which already accrued on the loan, while providing petitioner with the golden opportunity to still redeem all or even portions of the properties covered by said Deeds. Unfortunately, petitioner failed to exercise its right to redeem any of the said properties. chanroblesvirtuallawlibrary
Belying that they forcibly took possession of the five parcels of land, respondent Tan alleged that it was Mr. Sia who, with the aid of armed men, on board a Sports Utility Vehicle and a truck, rammed into the personnel of respondents Tan and Obiedo causing melee and disturbance. Moreover, by the execution of the Deeds of Absolute Sale, the properties subject thereof were, ipso jure, delivered to respondents Tan and Obiedo. The demolition of the existing structures on the properties was nothing but an exercise of dominion by respondents Tan and Obiedo. chanroblesvirtuallawlibrary
Respondent Tan, thus, sought not just the dismissal of the C omplaint of petitioner, but also the grant of his counterclaim. The prayer in his Answer is faithfully reproduced below: chanroblesvirtuallawlibrary
Wherefore, premises considered, it is most respectfully prayed that, after due hearing, judgment be rendered dismissing the complaint, and on the counterclaim, [herein petitioner] and Ruben Sia, be ordered to indemnify, jointly and severally [herein respondents Tan and Obiedo] the amounts of not less than P10,000,000.00 as liquidated damages and the further sum of not less than P500,000.00 as attorneys fees. In the alternative, and should it become necessary, it is hereby prayed that [petitioner] be ordered to pay herein [respondents Tan and Obiedo] the entire principal loan of P95,700,620.00, plus interests, surcharges and penalties computed from March 17, 2005 until the entire sum is fully paid, including the amount of P74,678,647.00 foregone interest covering the period from October 1, 2004 to December 31, 2005 or for a total of fifteen (15) months, plus incidental expenses as may be proved in court, in the event that Annexes G to L be nullified. Other relief and remedies as are just and equitable under the premises are hereby prayed for.[1 6] chanroblesvirtuallawlibrary
Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he contended that Civil Case No. 2006-0030 involved real properties, the docket fees for which should be computed in accordance with Section 7(a), not Section 7(b)(1), of Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC which took effect on 16 August 2004. Since petitioner did not pay the appropriate docket fees for Civil Case No. 2006-0030, the RTC did not acquire jurisdiction over the said case. Hence, respondent Tan asked the RTC to issue an order requiring petitioner to pay the correct and accurate docket fees pursuant to Section 7(a), Rule 141 of the Rules of Court, as amended; and should petitioner fail to do so, to deny and dismiss the prayer of petitioner for the annulment of the Deeds of Absolute Sale for having been executed in contravention of the law or of the Memorandum of Agreement as pactum commisorium. chanroblesvirtuallawlibrary
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As required by the RTC, the parties submitted their Position Papers on the matter. On 24 March 2006, the RTC issued an Order[17] granting respondent Tans Omnibus Motion. In holding that both petitioner and respondent Tan must pay docket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as amended, the RTC reasoned: chanroblesvirtuallawlibrary
It must be noted that under paragraph (b) 2. of the said Section 7, it is provided that QUIETING OF TITLE which is an action classified as beyond pecuniary estimation shall be governed by paragraph (a). Hence, the filing fee in an action for Declaration of Nullity of Deed which is also classified as beyond pecuniary estimation, must be computed based on the provision of Section 7(A) herein-above, in part, quoted. chanroblesvirtuallawlibrary
Since [herein respondent], Romeo Tan in his Answer has a counterclaim against the plaintiff, the former must likewise pay the necessary filling (sic) fees as provided for under Section 7 (A) of Amended Administrative Circular No. 35-2004 issued by the Supreme Court.[18] chanroblesvirtuallawlibrary
C onsequently, the RTC decreed on the matter of docket/filing fees: chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the [herein petitioner] is hereby ordered to pay additional filing fee and the [herein respondent], Romeo Tan is also ordered to pay docket and filing fees on his counterclaim, both computed based on Section 7(a) of the Supreme C ourt Amended Administrative Circular No. 35-2004 within fifteen (15) days from receipt of this Order to the C lerk of Court, Regional Trial Court, Naga C ity and for the latter to compute and to collect the said fees accordingly.[19] chanroblesvirtuallawlibrary
Petitioner moved[20] for the partial reconsideration of the 24 March 2006 Order of the RTC, arguing that C ivil Case No. 2006-0030 was principally for the annulment of the Deeds of Absolute Sale and, as such, incapable of pecuniary estimation. Petitioner submitted that the RTC erred in applying Section 7(a), Rule 141 of the Rules of C ourt, as amended, to petitioners first cause of action in its C omplaint in C ivil Case No. 2006-0030. chanroblesvirtuallawlibrary
In its Order[21] dated 29 March 2006, the RTC refused to reconsider its 24 March 2006 Order, based on the following ratiocination: chanroblesvirtuallawlibrary
Analyzing, the action herein pertains to real property, for as admitted by the [herein petitioner], the deeds of sale in question pertain to real property x x x. The Deeds of Sale subject of the instant case have already been transferred in the name of the [herein respondents Tan and Obiedo].
chanroblesvirtuallawlibrary
C ompared with Quieting of Title, the latter action is brought when there is cloud on the title to real property or any interest therein or to prevent a cloud from being cast upon title to the real property (Art. 476, Civil Code of the Philippines) and the plaintiff must have legal or equitable title to or interest in the real property which is the subject matter of the action (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE is required to pay the fees in accordance with paragraph (a) of Section 7 of the said Amended Administrative
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is required to pay the fees in accordance with paragraph (a) of Section 7 of the said Amended Administrative C ircular No. 35-2004, hence, with more reason that the [petitioner] who no longer has title to the real properties subject of the instant case must be required to pay the required fees in accordance with Section 7(a) of the Amended Administrative Circular No. 35-2004 afore-mentioned. chanroblesvirtuallawlibrary
Furthermore, while [petitioner] claims that the action for declaration of nullity of deed of sale and memorandum of agreement is one incapable of pecuniary estimation, however, as argued by the [respondent Tan], the issue as to how much filing and docket fees should be paid was never raised as an issue in the case of Russell vs. Vestil, 304 SCRA 738. chanroblesvirtuallawlibrary
xxxx
chanroblesvirtuallawlibrary
WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED. [22] chanroblesvirtuallawlibrary
In a letter dated 19 April 2006, the RTC Clerk of C ourt computed, upon the request of counsel for the petitioner, the additional docket fees petitioner must pay for in Civil Case No. 2006-0030 as directed in the afore-mentioned RTC Orders. Per the computation of the RTC Clerk of C ourt, after excluding the amount petitioner previously paid on 16 March 2006, petitioner must still pay the amount of P720,392.60 as docket fees.[23] chanroblesvirtuallawlibrary
Petitioner, however, had not yet conceded, and it filed a Petition for Certiorari with the C ourt of Appeals; the petition was docketed as CA-G.R. SP No. 94800. According to petitioner, the RTC[24] acted with grave abuse of discretion, amounting to lack or excess of jurisdiction, when it issued its Orders dated 24 March 2006 and 29 March 2006 mandating that the docket/filing fees for Civil Case No. 2006-0030, an action for annulment of deeds of sale, be assessed under Section 7(a), Rule 141 of the Rules of C ourt, as amended. If the Orders would not be revoked, corrected, or rectified, petitioner would suffer grave injustice and irreparable damage. chanroblesvirtuallawlibrary
On 22 November 2006, the Court of Appeals promulgated its Decision wherein it held that: chanroblesvirtuallawlibrary
C learly, the petitioners complaint involves not only the annulment of the deeds of sale, but also the recovery of the real properties identified in the said documents. In other words, the objectives of the petitioner in filing the complaint were to cancel the deeds of sale and ultimately, to recover possession of the same. It is therefore a real action. chanroblesvirtuallawlibrary
C onsequently, the additional docket fees that must be paid cannot be assessed in accordance with Section 7(b). As a real action, Section 7(a) must be applied in the assessment and payment of the proper docket fee. chanroblesvirtuallawlibrary
Resultantly, there is no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the court a quo. By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and mere abuse of discretion is not enough it must be grave. The abuse must be grave and patent, and it must be shown that the discretion was exercised arbitrarily and
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despotically. chanroblesvirtuallawlibrary
Such a situation does not exist in this particular case. The evidence is insufficient to prove that the court a quo acted despotically in rendering the assailed orders. It acted properly and in accordance with law. Hence, error cannot be attributed to it. [25] chanroblesvirtuallawlibrary
Hence, the fallo of the Decision of the appellate court reads: chanroblesvirtuallawlibrary
WHEREFORE, the petition for certiorari is DENIED. The assailed Orders of the court a quo are AFFIRMED.[2 6 ] chanroblesvirtuallawlibrary
Without seeking reconsideration of the foregoing Decision with the Court of Appeals, petitioner filed its Petition for Review on Certiorari before this Court, with a lone assignment of error, to wit: chanroblesvirtuallawlibrary
18.The herein petitioner most respectfully submits that the C ourt of Appeals committed a grave and serious reversible error in affirming the assailed Orders of the Regional Trial Court which are clearly contrary to the pronouncement of this Honorable Court in the case of Spouses De Leon v. Court of Appeals, G.R. No. 104796, March 6, 1998, not to mention the fact that if the said judgment is allowed to stand and not rectified, the same would result in grave injustice and irreparable damage to herein petitioner in view of the prohibitive amount assessed as a consequence of said Orders. [27] chanroblesvirtuallawlibrary
In Manchester Development Corporation v. Court of Appeals,[28] the Court explicitly pronounced that [t]he court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. Hence, the payment of docket fees is not only mandatory, but also jurisdictional. chanroblesvirtuallawlibrary
In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,[29] the Court laid down guidelines for the implementation of its previous pronouncement in Manchester under particular circumstances, to wit: chanroblesvirtuallawlibrary
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action. 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. chanroblesvirtuallawlibrary
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. chanroblesvirtuallawlibrary
3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the
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payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of C ourt or his duly authorized deputy to enforce said lien and assess and collect the additional fee.
chanroblesvirtuallawlibrary
In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that petitioner did not pay the correct amount of docket fees for C ivil Case No. 2006-0030. According to both the trial and appellate courts, petitioner should pay docket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as amended. Consistent with the liberal tenor of Sun Insurance, the RTC, instead of dismissing outright petitioners Complaint in Civil C ase No. 2006-0030, granted petitioner time to pay the additional docket fees. Despite the seeming munificence of the RTC , petitioner refused to pay the additional docket fees assessed against it, believing that it had already paid the correct amount before, pursuant to Section 7(b)(1), Rule 141 of the Rules of Court, as amended. chanroblesvirtuallawlibrary
Relevant to the present controversy are the following provisions under Rule 141 of the Rules of C ourt, as amended by A.M. No. 04-2-04-SC [30] and Supreme Court Amended Administrative Circular No. 35-2004[31]: chanroblesvirtuallawlibrary
SEC . 7. C lerks of Regional Trial Courts. chanroblesvirtuallawlibrary
(a)For filing an action or a permissive OR COMPULSORY counterclaim, CROSS-CLAIM, or money claim against an estate not based on judgment, or for filing a third-party, fourth-party, etc. complaint, or a complaint-in-intervention, if the total sum claimed, INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF WHATEVER KIND, AND ATTORNEYS FEES, LITIGATIO NEXPENSES AND COSTS and/or in cases involving property, the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX DEC LARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICHEVER IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY THE CLAIMANT, is: chanroblesvirtuallawlibrary
[Table of fees omitted.] chanroblesvirtuallawlibrary
If the action involves both a money claim and relief pertaining to property, then THE fees will be charged on both the amounts claimed and value of property based on the formula prescribed in this paragraph a. chanroblesvirtuallawlibrary
(b)For filing: chanroblesvirtuallawlibrary
1.Actions where the value of the subject matter cannot be estimated chanroblesvirtuallawlibrary
2.Special civil actions, except judicial foreclosure of mortgage, EXPROPRIATION PROCEEDINGS, PARTITION AND QUIETING OF TITLE which will chanroblesvirtuallawlibrary
3.
All other actions not involving property
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chanroblesvirtuallawlibrary
3.
All other actions not involving property
chanroblesvirtuallawlibrary
[Table of fees omitted.] chanroblesvirtuallawlibrary
The docket fees under Section 7(a), Rule 141, in cases involving real property depend on the fair market value of the same: the higher the value of the real property, the higher the docket fees due. In contrast, Section 7(b)(1), Rule 141 imposes a fixed or flat rate of docket fees on actions incapable of pecuniary estimation. chanroblesvirtuallawlibrary
In order to resolve the issue of whether petitioner paid the correct amount of docket fees, it is necessary to determine the true nature of its Complaint. The dictum adhered to in this jurisdiction is that the nature of an action is determined by the allegations in the body of the pleading or Complaint itself, rather than by its title or heading.[32] However, the Court finds it necessary, in ascertaining the true nature of Civil Case No. 2006-0030, to take into account significant facts and circumstances beyond the Complaint of petitioner, facts and circumstances which petitioner failed to state in its C omplaint but were disclosed in the preliminary proceedings before the court a quo. chanroblesvirtuallawlibrary
Petitioner persistently avers that its C omplaint in Civil Case No. 2006-0030 is primarily for the annulment of the Deeds of Absolute Sale. Based on the allegations and reliefs in the Complaint alone, one would get the impression that the titles to the subject real properties still rest with petitioner; and that the interest of respondents Tan and Obiedo in the same lies only in the Deeds of Absolute Sale sought to be annulled. chanroblesvirtuallawlibrary
What petitioner failed to mention in its C omplaint was that respondents Tan and Obiedo already had the Memorandum of Agreement, which clearly provided for the execution of the Deeds of Absolute Sale, registered on the TC Ts over the five parcels of land, then still in the name of petitioner. After respondents Tan and Obiedo had the Deeds of Absolute Sale notarized on 3 January 2006 and presented the same to Register of Deeds for Naga C ity on 8 March 2006, they were already issued TCTs over the real properties in question, in their own names. Respondents Tan and Obiedo have also acquired possession of the said properties, enabling them, by petitioners own admission, to demolish the improvements thereon. chanroblesvirtuallawlibrary
It is, thus, suspect that petitioner kept mum about the afore-mentioned facts and circumstances when they had already taken place before it filed its C omplaint before the RTC on 16 March 2006. Petitioner never expressed surprise when such facts and circumstances were established before the RTC, nor moved to amend its C omplaint accordingly. Even though the Memorandum of Agreement was supposed to have long been registered on its TCTs over the five parcels of land, petitioner did not pray for the removal of the same as a cloud on its title. In the same vein, although petitioner alleged that respondents Tan and Obiedo forcibly took physical possession of the subject real properties, petitioner did not seek the restoration of such possession to itself. And despite learning that respondents Tan and Obiedo already secured TCTs over the subject properties in their names, petitioner did not ask for the cancellation of said titles. The only logical and reasonable explanation is that petitioner is reluctant to bring to the attention of the C ourt certain facts and circumstances, keeping its C omplaint safely worded, so as to institute only an action for annulment of Deeds of Absolute Sale. Petitioner deliberately avoided raising issues on the title and possession of the real properties that may lead the Court to classify its case as a real action. chanroblesvirtuallawlibrary
No matter how fastidiously petitioner attempts to conceal them, the allegations and reliefs it sought in its
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No matter how fastidiously petitioner attempts to conceal them, the allegations and reliefs it sought in its C omplaint in C ivil Case No. 2006-0030 appears to be ultimately a real action, involving as they do the recovery by petitioner of its title to and possession of the five parcels of land from respondents Tan and Obiedo. chanroblesvirtuallawlibrary
A real action is one in which the plaintiff seeks the recovery of real property; or, as indicated in what is now Section 1, Rule 4 of the Rules of C ourt, a real action is an action affecting title to or recovery of possession of real property.[33] chanroblesvirtuallawlibrary
Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04-2-04-SC, had a specific paragraph governing the assessment of the docket fees for real action, to wit: chanroblesvirtuallawlibrary
In a real action, the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees.
chanroblesvirtuallawlibrary
It was in accordance with the afore-quoted provision that the Court, in Gochan v. Gochan,[34] held that although the caption of the complaint filed by therein respondents Mercedes Gochan, et al. with the RTC was denominated as one for specific performance and damages, the relief sought was the conveyance or transfer of real property, or ultimately, the execution of deeds of conveyance in their favor of the real properties enumerated in the provisional memorandum of agreement. Under these circumstances, the case before the RTC was actually a real action, affecting as it did title to or possession of real property. C onsequently, the basis for determining the correct docket fees shall be the assessed value of the property, or the estimated value thereof as alleged in the complaint. But since Mercedes Gochan failed to allege in their complaint the value of the real properties, the Court found that the RTC did not acquire jurisdiction over the same for non-payment of the correct docket fees. chanroblesvirtuallawlibrary
Likewise, in Siapno v. Manalo,[35] the C ourt disregarded the title/denomination of therein plaintiff Manalos amended petition as one for Mandamus with Revocation of Title and Damages; and adjudged the same to be a real action, the filing fees for which should have been computed based on the assessed value of the subject property or, if there was none, the estimated value thereof. The Court expounded in Siapno that: chanroblesvirtuallawlibrary
In his amended petition, respondent Manalo prayed that NTAs sale of the property in dispute to Standford East Realty Corporation and the title issued to the latter on the basis thereof, be declared null and void. In a very real sense, albeit the amended petition is styled as one for Mandamus with Revocation of Title and Damages, it is, at bottom, a suit to recover from Standford the realty in question and to vest in respondent the ownership and possession thereof. In short, the amended petition is in reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There, we said: chanroblesvirtuallawlibrary chanroblesvirtuallawlibrary
A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948) chanroblesvirtuallawlibrary
An action for the annulment or rescission of a sale of real property is a real action. Its prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760, 1954)
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prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760, 1954) chanroblesvirtuallawlibrary
An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property. (Muoz v. Llamas, 87 Phil. 737, 1950). chanroblesvirtuallawlibrary
While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. chanroblesvirtuallawlibrary
Unfortunately, and evidently to evade payment of the correct amount of filing fee, respondent Manalo never alleged in the body of his amended petition, much less in the prayer portion thereof, the assessed value of the subject res, or, if there is none, the estimated value thereof, to serve as basis for the receiving clerk in computing and arriving at the proper amount of filing fee due thereon, as required under Section 7 of this C ourts en banc resolution of 04 September 1990 (Re: Proposed Amendments to Rule 141 on Legal Fees). chanroblesvirtuallawlibrary
Even the amended petition, therefore, should have been expunged from the records.
chanroblesvirtuallawlibrary
In fine, we rule and so hold that the trial court never acquired jurisdiction over its C ivil Case No. Q-95-24791.[36] chanroblesvirtuallawlibrary
It was in Serrano v. Delica,[37] however, that the C ourt dealt with a complaint that bore the most similarity to the one at bar. Therein respondent Delica averred that undue influence, coercion, and intimidation were exerted upon him by therein petitioners Serrano, et al. to effect transfer of his properties. Thus, Delica filed a complaint before the RTC against Serrano, et al., praying that the special power of attorney, the affidavit, the new titles issued in the names of Serrano, et al., and the contracts of sale of the disputed properties be cancelled; that Serrano, et al. be ordered to pay Delica, jointly and severally, actual, moral and exemplary damages in the amount of P200,000.00, as well as attorneys fee of P200,000.00 and costs of litigation; that a TRO and a writ of preliminary injunction be issued ordering Serrano, et al. to immediately restore him to his possession of the parcels of land in question; and that after trial, the writ of injunction be made permanent. The Court dismissed Delicas complaint for the following reasons: chanroblesvirtuallawlibrary chanroblesvirtuallawlibrary
A careful examination of respondents complaint is that it is a real action.
In Paderanga vs. Buissan, we
held that in a real action, the plaintiff seeks the recovery of real property, or, as stated in Section 2(a), Rule 4 of the Revised Rules of Court, a real action is one affecting title to real property or for the recovery of possession of, or for partition or condemnation of, or foreclosure of a mortgage on a real property. chanroblesvirtuallawlibrary
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Obviously, respondents complaint is a real action involving not only the recovery of real properties, but likewise the cancellation of the titles thereto.
chanroblesvirtuallawlibrary
C onsidering that respondents complaint is a real action, the Rule requires that the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees. chanroblesvirtuallawlibrary
We note, however, that neither the assessed value nor the estimated value of the questioned parcels of land were alleged by respondent in both his original and amended complaint. What he stated in his amended complaint is that the disputed realties have a BIR zonal valuation of P1,200.00 per square meter. However, the alleged BIR zonal valuation is not the kind of valuation required by the Rule. It is the assessed value of the realty. Having utterly failed to comply with the requirement of the Rule that he shall allege in his complaint the assessed value of his real properties in controversy, the correct docket fee cannot be computed. As such, his complaint should not have been accepted by the trial court. We thus rule that it has not acquired jurisdiction over the present case for failure of herein respondent to pay the required docket fee. On this ground alone, respondents complaint is vulnerable to dismissal. [38] chanroblesvirtuallawlibrary
Brushing aside the significance of Serrano, petitioner argues that said decision, rendered by the Third Division of the C ourt, and not by the Court en banc, cannot modify or reverse the doctrine laid down in Spouses De Leon v. Court of Appeals.[39] Petitioner relies heavily on the declaration of this C ourt in Spouses De Leon that an action for annulment or rescission of a contract of sale of real property is incapable of pecuniary estimation. chanroblesvirtuallawlibrary
The C ourt, however, does not perceive a contradiction between Serrano and the Spouses De Leon. The Court calls attention to the following statement in Spouses De Leon: A review of the jurisprudence of this C ourt indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this C ourt has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. Necessarily, the determination must be done on a case-to-case basis, depending on the facts and circumstances of each. What petitioner conveniently ignores is that in Spouses De Leon, the action therein that private respondents instituted before the RTC was solely for annulment or rescission of the contract of sale over a real property.[40] There appeared to be no transfer of title or possession to the adverse party. Their complaint simply prayed for: chanroblesvirtuallawlibrary
1. Ordering the nullification or rescission of the Contract of C onditional Sale (Supplementary Agreement) for having violated the rights of plaintiffs (private respondents) guaranteed to them under Article 886 of the C ivil C ode and/or violation of the terms and conditions of the said contract.
chanroblesvirtuallawlibrary
2. Declaring void ab initio the Deed of Absolute Sale for being absolutely simulated; and
chanroblesvirtuallawlibrary
3. Ordering defendants (petitioners) to pay plaintiffs (private respondents) attorney's fees in the amount of P100,000.00.[41] chanroblesvirtuallawlibrary
As this C ourt has previously discussed herein, the nature of Civil Case No. 2006-0030 instituted by petitioner
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As this C ourt has previously discussed herein, the nature of Civil Case No. 2006-0030 instituted by petitioner before the RTC is closer to that of Serrano, rather than of Spouses De Leon, hence, calling for the application of the ruling of the C ourt in the former, rather than in the latter. chanroblesvirtuallawlibrary chanroblesvirtuallawlibrary
It is also important to note that, with the amendments introduced by A.M. No. 04-2-04-SC, which became effective on 16 August 2004, the paragraph in Section 7, Rule 141 of the Rules of Court, pertaining specifically to the basis for computation of docket fees for real actions was deleted. Instead, Section 7(1) of Rule 141, as amended, provides that in cases involving real property, the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION x x x shall be the basis for the computation of the docket fees. Would such an amendment have an impact on Gochan, Siapno, and Serrano? The Court rules in the negative. chanroblesvirtuallawlibrary
A real action indisputably involves real property. The docket fees for a real action would still be determined in accordance with the value of the real property involved therein; the only difference is in what constitutes the acceptable value. In computing the docket fees for cases involving real properties, the courts, instead of relying on the assessed or estimated value, would now be using the fair market value of the real properties (as stated in the Tax Declaration or the Zonal Valuation of the Bureau of Internal Revenue, whichever is higher) or, in the absence thereof, the stated value of the same. chanroblesvirtuallawlibrary
In sum, the C ourt finds that the true nature of the action instituted by petitioner against respondents is the recovery of title to and possession of real property. It is a real action necessarily involving real property, the docket fees for which must be computed in accordance with Section 7(1), Rule 141 of the Rules of Court, as amended. The C ourt of Appeals, therefore, did not commit any error in affirming the RTC Orders requiring petitioner to pay additional docket fees for its Complaint in C ivil Case No. 2006-0030. chanroblesvirtuallawlibrary chanroblesvirtuallawlibrary
The C ourt does not give much credence to the allegation of petitioner that if the judgment of the Court of Appeals is allowed to stand and not rectified, it would result in grave injustice and irreparable injury to petitioner in view of the prohibitive amount assessed against it. It is a sweeping assertion which lacks evidentiary support. Undeniably, before the Court can conclude that the amount of docket fees is indeed prohibitive for a party, it would have to look into the financial capacity of said party. It baffles this Court that herein petitioner, having the capacity to enter into multi-million transactions, now stalls at paying P720,392.60 additional docket fees so it could champion before the courts its rights over the disputed real properties. Moreover, even though the C ourt exempts individuals, as indigent or pauper litigants, from paying docket fees, it has never extended such an exemption to a corporate entity. chanroblesvirtuallawlibrary WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The Decision, dated 22 November 2006, of the Court of Appeals in CA-G.R. SP No. 94800, which affirmed the Orders dated 24 March 2006 and 29 March 2006 of the R TC, Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter Builders and Realty De ve lopment Corporation to pay additional docket/filing fees, computed based on Section 7(a), Rule 141 of the Rules of Court, as amended, is hereby AFFIRMED. Costs against the petitioner.
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Chavez v. CA GR 125813 Feb 6, 2007 Sunday, November 14, 2010 11:20 PM
G.R. No. 125813 February 6, 2007 FRANCISCO I. CHAVEZ and PEOPLE OF THE PHILIPPINES, Petitioners, vs. COURT OF APPEALS, RAFAEL BASKIÑAS and RICARDO MANAPAT, Respondents. DEC ISIO N TINGA, J.: An Information for Libel dated 26 June 1995 was filed before the Regional Trial Court (RTC) of Manila against private respondents Rafael Baskinas and Ricardo Manapat, with petitioner Francisco Chavez as the complainant. The Information reads in part: "That on or about March 1995, in the City of Manila, Philippines, the said accused [Baskinas and Manapat] conspiring and confederating with others whose true names, real identities and present whereabouts are still unknown and helping one another, with malicious intent of impeaching the honesty, virtue, character and reputation of one FRANCISCO I. CHAVEZ, former Solicitor General of the Philippines, and with the evident purpose of injuring and exposing him to public ridicule, hatred and contempt, did then and there willfully, unlawfully and maliciously cause to be published in "Smart File," a magazine of general circulation in Manila, and in their respective capacity as Editor-in-Chief and Author-Reporter, the following, to wit: xx x x with which published articles, the said accused meant and intended to convey, as in fact they did mean and convey false and malicious imputations of a defect, vice and crime, which insinuations and imputations as the accused well knew are entirely false and untrue and without the foundation in fact whatsoever, and tend to impeach, besmirch and destroy the good name, character and reputation of said FRANCISCO I. CHAVEZ, as in fact, he was exposed to dishonor, discredit, public hatred, contempt and ridicule. CONTRARY TO LAW.1 Private respondents moved to quash the Information, as well as the corresponding warrants of arrest subsequently issued. However, these motions were denied by the RTC of Manila, Branch 16, in an Order dated 31 August 1995.2 Private respondents then filed a Petition for Certiorari with the Court of Appeals, assailing the 31 August 1995 Order. The petition was granted in a Decision dated 21 December 1995, hence the present petition. The crux of the matter revolves around whether the above-quoted Information is sufficient to sustain a charge for libel, considering the following requirement imposed by Article 360 of the Revised Penal Code, as amended by Rep. Act No. 4363: Article 360. Persons responsible.—Any person who shall publish, exhibit or cause the publication or exhibition of any defamation in writing or by similar means, shall be responsible for the same. The author or editor of a book or pamphlet, or the editor or business manager of a daily newspaper, magazine or serial publication, shall be responsible for the defamations contained therein to the same extent as if he were the author thereof. The criminal action and civil action for damages in cases of written defamations, as provided for in this chapter shall be filed simultaneously or separately with the court of first instance of the province or city where the libelous article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense: Provided, however, That where one of the offended parties is a public officer whose office is in the City of Manila at the time of the commission of the offense, the action shall be filed in the Court of First Instance of the City of Manila or of the city or province where the libelous article is printed and first published, and in case such public officer does not hold office in the City of Manila, the action shall be filed in the Court of First Instance of the province or city where he held office at the time of the commission of the offense or where the libelous article is printed and first published and in case one of the offended parties is a private individual, the action shall be filed REMLAW Page 41
published and in case one of the offended parties is a private individual, the action shall be filed in the Court of First Instance of the province or city where he actually resides at the time of the commission of the offense or where the libelous matter is printed and first published x x x. (Emphasis supplied.) Referring to the fact that the Information against private respondents states that the libelous matter was "caused to be published in Smart File, a magazine of general circulation in Manila," the Court of Appeals deemed the cases of Agbayani v. Sayo3 and Soriano v. IAC4 as controlling. Based on the doctrines pronounced in said cases, the appellate court held that the Information failed to allege where the written defamation was "printed and first published," an allegation sine qua non "if the circumstances as to where the libel was printed and first published is used as the basis of the venue of the publication."5 It was observed that "venue of libel cases where the complainant is a private person is either in any of only two places, namely: (1) where the subject article was printed and first published; and (2) where complainant of the commission actually resides at the time of the commission of the offense." The Information, it was noted, did not indicate that the libelous articles were printed or first published in Manila, or that petitioner resided in Manila at the time of the publication of the articles. The Court of Appeals further observed that even during the preliminary investigation, private respondents had already interposed that Smart File was actually printed and first published in the City of Makati, and that the address of the publisher Animal Farms Publication as indicated in the editorial page of the publication itself was a post office box with the Makati Central Post Office. Even as this observation was disputed by petitioner, who insisted the place of private respondent‘s printing and publishing business was actually in Manila, the Court of Appeals noted that he should have been alerted enough by private respondents' adverse insistence and that a due investigation would have inevitably revealed that private respondents had transferred from their previous Manila address to Makati by the time the subject articles were published.6 Before this Court, petitioner attacks the reliance placed on Agbayani and Soriano, primarily by pointing out that in both cases, the complainants were public officers, and not private officials. Petitioner submits that the 1965 amendments to Article 360 of the Revised Penal Code which imposed the present venue requisites were introduced in order to preclude the harassment of members of the press through libel suits filed in remote and distant places by public officers. Petitioner also assails the conclusion of the Court of Appeals that the place of printing and first publication of Smart File was in Makati, saying that this was derived out of hearsay evidence. Does the subject information sufficiently vest jurisdiction in the Manila trial courts to hear the libel charge, in consonance with Article 360 of the Revised Penal Code? Jurisprudence applying the provision has established that it does not. Agbayani supplies a comprehensive restatement of the rules of venue in actions for criminal libel, following the amendment by Rep. Act No. 4363 of the Revised Penal Code: Article 360 in its original form provided that the venue of the criminal and civil actions for written defamations is the province wherein the libel was published, displayed or exhibited, regardless of the place where the same was written, printed or composed. Article 360 originally did not specify the public officers and the courts that may conduct the preliminary investigation of complaints for libel. Before article 360 was amended, the rule was that a criminal action for libel may be instituted in any jurisdiction where the libelous article was published or circulated, irrespective of where it was written or printed (People v. Borja, 43 Phil. 618). Under that rule, the criminal action is transitory and the injured party has a choice of venue. Experience had shown that under that old rule the offended party could harass the accused in a libel case by laying the venue of the criminal action in a remote or distant place. Thus, in connection with an article published in the Daily Mirror and the Philippine Free Press, Pio Pedrosa, Manuel V. Villareal and Joaquin Roces were charged with libel in the justice of the peace court of San Fabian, Pangasinan (Amansec v. De Guzman, 93 Phil. 933). To forestall such harassment, Republic Act No. 4363 was enacted. It lays down specific rules as to the venue of the criminal action so as to prevent the offended party in written defamation cases from inconveniencing the accused by means of out-of-town libel suits, meaning complaints filed in remote municipal courts (Explanatory Note for the bill which became Republic Act No. REMLAW Page 42
filed in remote municipal courts (Explanatory Note for the bill which became Republic Act No. 4363, Congressional Record of May 20, 1965, pp. 424-5; Time, Inc. v. Reyes, L-28882, May 31, 1971, 39 SCRA 303, 311). The rules on venue in article 360 may be restated thus: 1. Whether the offended party is a public official or a private person, the criminal action may be filed in the Court of First Instance of the province or city where the libelous article is printed and first published. 2. If the offended party is a private individual, the criminal action may also be filed in the Court of First Instance of the province where he actually resided at the time of the commission of the offense. 3. If the offended party is a public officer whose office is in Manila at the time of the commission of the offense, the action may be filed in the Court of First Instance of Manila. 4. If the offended party is a public officer holding office outside of Manila, the action may be filed in the Court of First Instance of the province or city where he held office at the time of the commission of the offense.7 (Emphasis supplied.) The rules, as restated in Agbayani, do not lay a distinction that only those actions for criminal libel lodged by public officers need be filed in the place of printing and first publication. In fact, the rule is quite clear that such place of printing and first publication stands as one of only two venues where a private person may file the complaint for libel, the other venue being the place of residence of the offended party at the time the offense was committed. The very language itself of Article 360, as amended, does not support petitioner's thesis that where the complainant is a private person, a more liberal interpretation of the phrase "printed and first published" is warranted than when a public officer is the offended party. To wit: Article 360. Persons responsible.―x x x The criminal and civil action for damages in cases of written defamations as provided for in this chapter, shall be filed simultaneously or separately with the Court of First Instance of the province or city where the libelous article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense. x x x Where the law does not distinguish, we should not distinguish.8 Petitioner faults the Court of Appeals for relying on Agbayani and Soriano, two cases wherein the complainant was a public officer. Yet the Court has since had the opportunity to reiterate the Agbayani doctrine even in cases where the complainants were private persons. Most telling of the recent precedents is Agustin v. Pamintuan,9 which involved a criminal action for libel filed by a private person, the acting general manager of the Baguio Country Club, with the RTC of Baguio City. The relevant portion of the Information is quoted below: That on or about the 17th day of March 2000, in the City of Baguio, Philippines, and within the jurisdiction of this Honorable Court, the said accused, with deliberate intent and malicious intent and evil motive of attacking, injuring and impeaching the character, honesty, integrity, virtue and reputation of one Anthony De Leon the acting general manager of the Baguio Country Club, and as a private citizen of good standing and reputation in the community and with malicious intent of exposing the (sic) Anthony De Leon to public hatred, contempt, ridicule, discredit and dishonor, without any justifiable motive, did then and there willfully, maliciously and criminally prepare or cause to prepare, write in his column "Cocktails" and publish in the Philippine Daily Inquirer, a newspaper of general circulation in the City of Baguio and in the entire Philippines x x x.10 (Emphasis supplied.) The phrase "the Philippine Daily Inquirer, a newspaper of general circulation in the City of Baguio and in the entire Philippines" bears obvious similarity to the reference in the Information in this case to the publication involved as "‗Smart File,‘ a magazine of general circulation in Manila," and both private complainants in Agustin and the case at bar were private citizens at the time of the filing of the complaint. Yet the Court in Agustin ruled that the failure to allege that Baguio was the venue of printing and first publication, or that the complainant therein was a resident of Baguio, constituted a substantial defect that could not even be cured by mere amendment. The rules on venue as laid down in Agbayani were restated in Agustin,11 retaining no distinction as to venue whether the offended party is a public official or a private person. In fact, the Court considered the phrase "a newspaper of general circulation in the city of Baguio" REMLAW Page 43
fact, the Court considered the phrase "a newspaper of general circulation in the city of Baguio" as so utterly incapable of establishing Baguio as venue that the bulk of the discussion instead centered on whether the allegation that the complainant was the acting general manager of the Baguio Country Club sufficiently established that he was a resident of Baguio City. On that point, the Court ruled that it did not. In Macasaet v. People,12 the complainant was again a private person.13 The Information for libel against a gossip columnist and the editors of the tabloid which published the column was filed with the RTC of Quezon City, but it failed to state at all where the tabloid was printed and first published, or where the complainant resided. Even as evidence was presented during trial that complainant was a resident of Quezon City, the Court ultimately held that the allegations contained in the Information "[were] utterly insufficient to vest jurisdiction on the RTC of Quezon City."14 Again, the rules laid down in Agbayani were cited as controlling.15 The Court further held that the evidence establishing the complainant's place of residence as Quezon City could not cure the defect of the Information, noting that "it is settled that jurisdiction of a court over a criminal case is determined by the allegations of the complaint or information."16 Macasaet resolutely stated that since the place of printing and first publication or the place of residence at the time are "matters deal[ing] with the fundamental issue of the court's jurisdiction, Article 360 of the Revised Penal Code, as amended, mandates that either one of these statements must be alleged in the information itself and the absence of both from the very face of the information renders the latter fatally defective."17 We affirm that proposition, which is fatal to this petition. There is no question that the Information fails to allege that the City of Manila was the place where the offending articles were printed and first published, or that petitioner was a resident of Manila at the time the articles were published. Petitioner does submit that there is no need to employ the clause "printed and first published" in indicating where the crime of libel was committed, as the term "publish" is "generic and within the general context of the term 'print' in so far as the latter term is utilized to refer to the physical act of producing the publication."18 Certainly, that argument flies in the face of our holding in Agustin, which involved a similarly worded Information, and which stands as a precedent we have no inclination to disturb. Still, a perusal of the Information in this case reveals that the word "published" is utilized in the precise context of noting that the defendants "cause[d] to be published in 'Smart File', a magazine of general circulation in Manila." The Information states that the libelous articles were published in Smart File, and not that they were published in Manila. The place "Manila" is in turn employed to situate where Smart File was in general circulation, and not where the libel was published or first printed. The fact that Smart File was in general circulation in Manila does not necessarily establish that it was published and first printed in Manila, in the same way that while leading national dailies such as the Philippine Daily Inquirer or the Philippine Star are in general circulation in Cebu, it does not mean that these newspapers are published and first printed in Cebu. Indeed, if we hold that the Information at hand sufficiently vests jurisdiction in Manila courts since the publication is in general circulation in Manila, there would be no impediment to the filing of the libel action in other locations where Smart File is in general circulation. Using the example of the Inquirer or the Star, the granting of this petition would allow a resident of Aparri to file a criminal case for libel against a reporter or editor in Jolo, simply because these newspapers are in general circulation in Jolo. Such a consequence is precisely what Rep. Act No. 4363 sought to avoid. Our ruling in Banal III v. Panganiban19 might tend to support petitioner's argument that the phrase "printed and first published" need not be necessarily employed in the Information. The Information in that case filed by private persons before the Makati City RTC read that the libelous matter was found in a newspaper column "of the Philippine Daily Inquirer which is published in English in the City of Makati, Metro Manila, Philippines and of general circulation in the Philippines and abroad x x x x."20 The Court did observe that this information was "sufficient in form"21 as it clearly stated "that the newspaper is published in Makati City but circulated throughout the country, which allegation accordingly vests jurisdiction over the offense charged in the RTC of Makati City."22 Yet even notwithstanding the fact that the information in Banal III did not use the phrase "printed and first published," it still categorically REMLAW Page 44
information in Banal III did not use the phrase "printed and first published," it still categorically stated, at the very least, that the libelous matter was "published in English in the City of Makati." In contrast, what the Information at bar categorically states is that the libelous matter was "published in Smart File," not "published in Manila."23 The fact that the present Information further alleges that Smart File was "of general circulation in Manila" does not necessarily mean that the magazine was printed and first published in Manila. In any event, as the language in the present information hews closer to that in Agustin rather than Banal III, we find the former as the appropriate precedent to apply in this case. For us to grant the present petition, it would be necessary to abandon the Agbayani rule providing that a private person must file the complaint for libel either in the place of printing and first publication, or at the complainant's place of residence. We would also have to abandon the subsequent cases that reiterate this rule in Agbayani, such as Soriano, Agustin, and Macasaet. There is no convincing reason to resort to such a radical action. These limitations imposed on libel actions filed by private persons are hardly onerous, especially as they still allow such persons to file the civil or criminal complaint in their respective places of residence, in which situation there is no need to embark on a quest to determine with precision where the libelous matter was printed and first published.1awphi1.net If this disquisition impresses an unduly formalistic reading of the Information at hand, it should be reiterated that the flaws in the Information strike at the very heart of the jurisdiction of the Manila RTC. It is settled that jurisdiction of a court over a criminal case is determined by the allegations of the complaint or information,24 and the offense must have been committed or any one of its essential ingredients took place within the territorial jurisdiction of the court.25 Article 360 states, in as unequivocal a manner as possible, that the criminal and civil action for libel shall be filed with the court of the province or city "where the libelous article is printed and first published, or where any of the offended parties actually resides at the time of the commission of the offense." If the Information for libel does not establish with particularity any of these two venue requirements, the trial court would have no jurisdiction to hear the criminal case. Another point bears to be added. We are unable to share petitioner's insistence that since the protection of members of the mass media from frivolous libel suits filed by public officers in farflung places appears to have been a motivating force behind the amendments to Article 360, a more liberal interpretation of the provision should obtain if the complainant is a private person. Without the venue requirements under Article 360, a private person induced by a motive to harass could, similarly as a public officer, coerce a journalist to defend against a libel suit filed in the most remote of places. While Rep. Act No. 4363 does attribute value to the right to comment on the performance of public officials of their duties, it actually extends its protection to the right of any person to free expression, by assuring a reasonable venue requirement even if the subject of comment is not a public officer. Libel stands as an exception to one of the most cherished constitutional rights, that of free expression. While libel laws ensure a modicum of responsibility in one's own speech or expression, a prescribed legal standard that conveniences the easy proliferation of libel suits fosters an atmosphere that inhibits the right to speak freely. When such a prescribed standard is submitted for affirmation before this Court, as is done in this petition, it must receive the highest possible scrutiny, as it may interfere with the most basic of democratic rights. Finally, we decline to resolve the other issues raised in the petition, as the Information by itself is defective on its face, for the reasons we have stated, that there is no need to evaluate whether Smart File was actually printed and first published in Manila or Makati City. The plain fact is that the Information failed to make the sufficient allegation in that regard, and even any ascertainment that the articles were printed and first published in Manila does not cure the jurisdictional defect of the Information. WHEREFORE, the petition is DENIED. Pasted from
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Springfield v. RTC Judge GR 142626 Feb 6, 2007 Sunday, November 14, 2010 11:20 PM
G.R. NO. 142628 February 6, 2007 SPRINGFIELD DEVELOPMENT CORPORATION, INC. and HEIRS OF PETRA CAPISTRANO PIIT, Petitioners, vs. HONORABLE PRESIDING JUDGE OF REGIONAL TRIAL COURT OF MISAMIS ORIENTAL, BRANCH 40, CAGAYAN DE ORO CITY, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD (DARAB), DAR REGION X DIRECTOR, ROSALIO GAMULO, FORTUNATO TELEN, EMERITA OLANGO, THERESA MONTUERTO, DOMINGO H. CLAPERO, JOEL U. LIM, JENEMAIR U. POLLEY, FIDELA U. POLLEY, JESUS BATUTAY, NICANOR UCAB, EMERIA U. LIM, EMILITO CLAPERO, ANTONINA RIAS, AURILLIO ROMULO, ERWIN P. CLAPERO, EVELITO CULANGO, VILMA/CRUISINE ALONG, EFREN EMATA, GREGORIO CABARIBAN, and SABINA CANTORANA, Respondents. DEC ISIO N AUSTRIA-MARTINEZ, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court. The principal issue presented for resolution is whether the Regional Trial Court (RTC) has jurisdiction to annul final judgment of the Department of Agrarian Reform Adjudication Board (DARAB). The antecedent facts: Petra Capistrano Piit previously owned Lot No. 2291 located in Cagayan de Oro City which measured 123,408 square meters under Transfer Certificate of Title No. T-62623. Springfield Development Corporation, Inc. (Springfield) bought Lot No. 2291-C with an area of 68,732 square meters, and Lot No. 2291-D with an area of 49,778 square meters.1 Springfield developed these properties into a subdivision project called Mega Heights Subdivision.2 On May 4, 1990, the Department of Agrarian Reform (DAR), through its Municipal Agrarian Reform Officer, issued a Notice of Coverage,3 placing the property under the coverage of Republic Act (R.A.) No. 6657 or the Comprehensive Agrarian Reform Law of 1988. There being an opposition from the heirs of Petra Piit, the case was docketed as DARAB Case No. X-305. On August 27, 1991, DARAB Provincial Adjudicator Abeto A. Salcedo, Jr. rendered a decision declaring the nature of the property as residential and not suitable for agriculture.4 The Regional Director filed a notice of appeal, which the Provincial Adjudicator disallowed for being pro forma and frivolous.5 The decision became final and executory6 and Springfield proceeded to develop the property.7 The DAR Regional Director then filed a petition for relief from judgment of the DARAB Decision, docketed as DARAB Case No. 0555. In its Decision dated October 5, 1995, the DARAB granted the petition and gave due course to the Notice of Coverage. It also directed the Municipal Agrarian Reform Office to proceed with the documentation, acquisition, and distribution of the property to the true and lawful beneficiaries.8 The DARAB also issued an Order dated May 22, 1997, ordering the heirs of Piit and Springfield to pay the farmer-beneficiaries the amount of Twelve Million, Three Hundred Forty Thousand, Eight Hundred Pesos (P12,340,800.00), corresponding to the value of the property since the property has already been developed into a subdivision. On June 13, 1997, Springfield and the heirs of Piit (petitioners) filed with the RTC of Cagayan de Oro City, Branch 40, a petition for annulment of the DARAB Decision dated October 5, 1995 and all its subsequent proceedings. Petitioners contend that the DARAB decision was rendered without affording petitioners any notice and hearing.9 On motion filed by the farmer-beneficiaries, the RTC issued an Order dated June 25, 1997, dismissing the case for lack of jurisdiction.10 On July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil action for REMLAW Page 47
On July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil action for certiorari, mandamus, and prohibition with prayer for the issuance of writ of preliminary injunction and/or temporary restraining order, docketed as CA-G.R. SP No. 44563.11 Petitioners alleged that the RTC committed grave abuse of discretion when it ruled that the annulment of judgment filed before it is actually an action for certiorari in a different color. According to petitioners, what it sought before the RTC is an annulment of the DARAB Decision and not certiorari, as the DARAB Decision is void ab initio for having been rendered without due process of law.12 In the assailed Decision13 dated July 16, 1998, the CA dismissed the petition for lack of merit, ruling that the RTC does not have jurisdiction to annul the DARAB Decision because it is a coequal body.14 However, on January 12, 1999, the CA ordered the elevation of the DARAB records before it, declaring that it "overlooked the fact that petitioners likewise applied for a writ of prohibition against the enforcement of the DARAB decision which they claim to be patently void."15 Forwarded to the CA were the records of the original case filed with the DARAB-Region X, and it appearing that the petition for relief from judgment and its pertinent records were forwarded to the DARAB Central Office, the CA issued another Resolution on December 20, 1999,16 requiring the DARAB Central Office to forward the records of the case. But after receipt of the records, the CA simply denied petitioners' motion for reconsideration per Resolution17 dated February 23, 2000 without specifically resolving the issues raised concerning the prayer for a writ of prohibition. Hence, the present petition on the following grounds: I THE COURT OF APPEALS COMMITTED A CLEAR ERROR OF LAW IN APPLYING THE PRINCIPLE OF JUDICIAL STABILITY TO JUSTIFY ITS CONCLUSION DIVESTING THE REGIONAL TRIAL COURT OF ITS JURISDICTION VESTED BY LAW OVER CASES WHERE THE EXCLUSIVE JURISDICTION WAS NOT EXPRESSLY GRANTED TO ANY OTHER COURTS [SIC] OR TRIBUNAL, IN EFFECT, MODIFYING THE APPLICABLE LAW ON THE MATTER. II THE COURT OF APPEALS IRREGULARLY DISMISSED PETITIONERS' MOTION FOR RECONSIDERATION AFTER IT HAD RESOLVED TO ENTERTAIN PETITIONERS' PETITION FOR PROHIBITION AND TO REVIEW THE DARAB PROCEEDINGS, THEREBY DEPARTING FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS. III THE HONORABLE SUPREME COURT, BEING THE HIGHEST TEMPLE OF RIGHTS, AND TO AVOID SERIOUS MISCARRIAGE OF JUSTICE AND NEEDLESS DELAYS, IS MOST RESPECTFULLY URGED TO TAKE COGNIZANCE OF THE PETITION FILED IN CA-G.R. SP No. 44563 IN THE EXERCISE OF ITS CONCURRENT JURISDICTION, AS IF THE PETITION WAS ORIGINALLY LODGED BEFORE IT.18 Petitioners argue that under Batas Pambansa (B.P.) Blg. 129, there is no provision that vests with the CA jurisdiction over actions for annulment of DARAB judgments. Petitioners, however, contend that the RTC may take cognizance of the annulment case since Section 19 of B.P. Blg. 129 vests the RTC with general jurisdiction and an action for annulment is covered under such general jurisdiction. According to petitioners, "this is but a logical consequence of the fact that no other courts were expressly given the jurisdiction over such actions."19 Petitioners further argue that the CA was in error when it summarily ignored their application for a writ of prohibition, as it was necessary to restrain the DARAB from enforcing its void decision; and even if the DARAB decision was valid, the writ of prohibition could have enjoined the execution of the DARAB decision since there have been changes which will make the execution unjust and inequitable. In their Joint-Comments, the farmer-beneficiaries and the DARAB (respondents) refute
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petitioners' allegation that they were not afforded due process in the DARAB proceedings, stating that petitioners were impleaded as a party thereto, and in fact, they attended some of the hearings although their counsel was absent. Respondents also adopt the CA's ruling that the RTC is not vested with any jurisdiction to annul the DARAB decision. As stated at the outset, the main issue in this case is whether the RTC has jurisdiction to annul a final judgment of the DARAB. Note must be made that the petition for annulment of the DARAB decision was filed with the RTC on June 13, 1997, before the advent of the 1997 Rules of Civil Procedure, which took effect on July 1, 1997. Thus, the applicable law is B.P. Blg. 129 or the Judiciary Reorganization Act of 1980, enacted on August 10, 1981. It is also worthy of note that before the effectivity of B.P. Blg. 129, a court of first instance has the authority to annul a final and executory judgment rendered by another court of first instance or by another branch of the same court. This was the Court's ruling in Dulap v. Court of Appeals.20 Yet, in subsequent cases,21 the Court held that the better policy, as a matter of comity or courteous interaction between courts of first instance and the branches thereof, is for the annulment cases to be tried by the same court or branch which heard the main action. The foregoing doctrines were modified in Ngo Bun Tiong v. Sayo,22 where the Court expressed that pursuant to the policy of judicial stability, the doctrine of non-interference between concurrent and coordinate courts should be regarded as highly important in the administration of justice whereby the judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction. With the introduction of B.P. Blg. 129,23 the rule on annulment of judgments was specifically provided in Section 9(2), which vested in the then Intermediate Appellate Court (now the CA) the exclusive original jurisdiction over actions for annulment of judgments of RTCs. Sec. 9(3) of B.P. Blg. 129 also vested the CA with "exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." As provided in paragraph 16 of the Interim Rules and Guidelines implementing B.P. Blg. 129, the quasi-judicial bodies whose decisions are exclusively appealable to the CA are those, which under the law, R.A. No. 5434,24 or its enabling acts, are specifically appealable to the CA. Significantly, B.P. Blg. 129 does not specifically provide for any power of the RTC to annul judgments of quasi-judicial bodies. However, in BF Northwest Homeowners Association, Inc. v. Intermediate Appellate Court,25 the Court ruled that the RTCs have jurisdiction over actions for annulment of the decisions of the National Water Resources Council, which is a quasi-judicial body ranked with inferior courts, pursuant to its original jurisdiction to issue writs of certiorari, prohibition, and mandamus, under Sec. 21(1) of B.P. Blg. 129, in relation to acts or omissions of an inferior court. This led to the conclusion that despite the absence of any provision in B.P. Blg. 129, the RTC had the power to entertain petitions for annulment of judgments of inferior courts and administrative or quasi-judicial bodies of equal ranking. This is also in harmony with the "pre-B.P. Blg. 129" rulings of the Court recognizing the power of a trial court (court of first instance) to annul final judgments.26 Hence, while it is true, as petitioners contend, that the RTC had the authority to annul final judgments, such authority pertained only to final judgments rendered by inferior courts and quasi-judicial bodies of equal ranking with such inferior courts. The foregoing statements beg the next question, i.e., whether the DARAB is a quasi-judicial body with the rank of an inferior court such that the RTC may take cognizance of an action for the annulments of its judgments. The answer is no. The DARAB is a quasi-judicial body created by Executive Order Nos. 229 and 129-A. R.A. No. 6657 delineated its adjudicatory powers and functions. The DARAB Revised Rules of Procedure adopted on December 26, 198827 specifically provides for the manner of judicial review of its decisions, orders, rulings, or awards. Rule XIV, Section 1 states: SECTION 1. Certiorari to the Court of Appeals. Any decision, order, award or ruling by the REMLAW Page 49
SECTION 1. Certiorari to the Court of Appeals. Any decision, order, award or ruling by the Board or its Adjudicators on any agrarian dispute or on any matter pertaining to the application, implementation, enforcement or interpretation of agrarian reform laws or rules and regulations promulgated thereunder, may be brought within fifteen (15) days from receipt of a copy thereof, to the Court of Appeals by certiorari, except as provided in the next succeeding section. Notwithstanding an appeal to the Court of Appeals the decision of the Board or Adjudicator appealed from, shall be immediately executory. Further, the prevailing 1997 Rules of Civil Procedure, as amended, expressly provides for an appeal from the DARAB decisions to the CA.28 The rule is that where legislation provides for an appeal from decisions of certain administrative bodies to the CA, it means that such bodies are co-equal with the RTC, in terms of rank and stature, and logically, beyond the control of the latter.29 Given that DARAB decisions are appealable to the CA, the inevitable conclusion is that the DARAB is a co-equal body with the RTC and its decisions are beyond the RTC's control. The CA was therefore correct in sustaining the RTC's dismissal of the petition for annulment of the DARAB Decision dated October 5, 1995, as the RTC does not have any jurisdiction to entertain the same. This brings to fore the issue of whether the petition for annulment of the DARAB judgment could be brought to the CA. As previously noted, Section 9(2) of B.P. Blg. 129 vested in the CA the exclusive original jurisdiction over actions for annulment of judgments, but only those rendered by the RTCs. It does not expressly give the CA the power to annul judgments of quasijudicial bodies. Thus, in Elcee Farms, Inc. v. Semillano,30 the Court affirmed the ruling of the CA that it has no jurisdiction to entertain a petition for annulment of a final and executory judgment of the NLRC, citing Section 9 of B.P. Blg. 129, as amended, which only vests in the CA "exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts." This was reiterated in Galang v. Court of Appeals,31 where the Court ruled that that the CA is without jurisdiction to entertain a petition for annulment of judgment of a final decision of the Securities and Exchange Commission. Recent rulings on similar cases involving annulments of judgments of quasi-judicial bodies are also quite instructive on this matter. In Cole v. Court of Appeals,32 involving an annulment of the judgment of the HLURB Arbiter and the Office of the President (OP), filed with the CA, the Court stated that, "(U)nder Rule 47 of the Rules of Court, the remedy of annulment of judgment is confined to decisions of the Regional Trial Court on the ground of extrinsic fraud and lack of jurisdiction x x x." The Court further ruled, viz.: Although the grounds set forth in the petition for annulment of judgment are fraud and lack of jurisdiction, said petition cannot prosper for the simple reason that the decision sought to be annulled was not rendered by the Regional Trial Court but by an administrative agency (HLU Arbiter and Office of the President), hence, not within the jurisdiction of the Court of Appeals. There is no such remedy as annulment of judgment of the HLURB or the Office of the President. Assuming arguendo that the annulment petition can be treated as a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, the same should have been dismissed by the Court of Appeals, because no error of judgment was imputed to the HLURB and the Office of the President. Fraud and lack of jurisdiction are beyond the province of petitions under Rule 43 of the Rules of Court, as it covers only errors of judgment. A petition for annulment of judgment is an initiatory remedy, hence no error of judgment can be the subject thereof. Besides, the Arbiter and the Office of the President indisputably have jurisdiction over the cases brought before them in line with our ruling in Francisco Sycip, Jr. vs. Court of Appeals, promulgated on March 17, 2000, where the aggrieved townhouse buyers may seek protection from the HLURB under Presidential Decree No. 957, otherwise known as "Subdivision and Condominium Buyers' Protective Decree."33 (Emphasis supplied) In Macalalag v. Ombudsman,34 the Court ruled that Rule 47 of the 1997 Rules of Civil Procedure on annulment of judgments or final orders and resolutions covers "annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies REMLAW Page 50
which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies could no longer be availed of through no fault of the petitioner." Thus, the Court concluded that judgments or final orders and resolutions of the Ombudsman in administrative cases cannot be annulled by the CA, more so, since The Ombudsman Act specifically deals with the remedy of an aggrieved party from orders, directives and decisions of the Ombudsman in administrative disciplinary cases only, and the right to appeal is not to be considered granted to parties aggrieved by orders and decisions of the Ombudsman in criminal or non-administrative cases. While these cases involve annulments of judgments under the 1997 Rules of Civil Procedure, as amended, still, they still find application in the present case, as the provisions of B.P. Blg. 129 and the 1997 Rules of Civil Procedure, as amended, on annulment of judgments are identical. Consequently, the silence of B.P. Blg. 129 on the jurisdiction of the CA to annul judgments or final orders and resolutions of quasi-judicial bodies like the DARAB indicates its lack of such authority. Further, petitioners are also asking the Court to take cognizance of their prayer for the issuance of a writ of prohibition, which they claim was not acted upon by the CA, citing the Court's action in Fortich v. Corona35 where the Court took cognizance of the petition previously filed with the CA due to compelling reasons. The Court is not persuaded to do so. Fortich involved a 144-hectare land located at San Vicente, Sumilao, Bukidnon, owned by the Norberto Quisumbing, Sr. Management and Development Corporation (NQSRMDC), which was leased as a pineapple plantation to Del Monte Philippines, Inc. for a period of 10 years. During the existence of the lease, the DAR placed the entire 144-hectare property under compulsory acquisition and assessed the land value at P2.38 million. When the NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development Association) filed an application for conversion due to the passage of Resolution No. 6 by the Provincial Development Council of Bukidnon and Ordinance No. 24 by the Sangguniang Bayan of Sumilao, Bukidnon, reclassifying the area from agricultural to industrial/institutional, the same was disapproved by the DAR Secretary and instead, the property was placed under the compulsory coverage of Comprehensive Agrarian Reform Program for distribution to all qualified beneficiaries. This prompted Governor Carlos O. Fortich of Bukidnon to file an appeal with the OP, while NQSRMDC filed with the CA a petition for certiorari, and prohibition with preliminary injunction. The OP then issued a Decision dated March 29, 1996 reversing the DAR Secretary's decision and approving the application for conversion. Executive Secretary Ruben D. Torres denied the DAR's motion for reconsideration for having been filed beyond the reglementary period of 15 days, and it was also declared that the OP Decision dated March 29, 1996 had already become final and executory. Because of this, the farmer-beneficiaries staged a hunger strike on October 9, 1997, protesting the OP's decision. In order to resolve the strike, the OP issued a so-called "Win/Win" resolution on November 7, 1997, modifying the decision in that NQSRMDC's application for conversion is approved only with respect to the approximately 44-hectare portion of the land adjacent to the highway, as recommended by the Department of Agriculture, while the remaining approximately 100 hectares traversed by an irrigation canal and found to be suitable for agriculture shall be distributed to qualified farmer-beneficiaries.1awphi1.net A petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court36 was then filed with the Court, which was contested by the Office of the Solicitor General on the ground that the proper remedy should have been to file a petition for review directly with the CA in accordance with Rule 43 of the Revised Rules of Court. In resolving the issue, the Court recognized the rule that the Supreme Court, CA and RTC have original concurrent jurisdiction to issue a writ of certiorari, prohibition, and mandamus. However, due to compelling reasons and in the interest of speedy justice, the Court resolved to take primary jurisdiction over the petition in the interest of speedy justice, after which the Court nullified the act of the OP in re-opening the case and substantially modifying its March 29, 1996 Decision which had already become final and executory, as it was in gross disregard of the rules and basic legal precept that accord finality to administrative determinations. It must be stressed at this point that the Court, as a rule, will not entertain direct resort to it unless
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the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, prohibition, or mandamus calling for the exercise of its primary jurisdiction.37 The Court finds no compelling circumstances in this case to warrant a relaxation of the foregoing rule. The Fortich case is not analogous with the present case such that the Court is not bound to abandon all rules, take primary jurisdiction, and resolve the merits of petitioners' application for a writ of prohibition. In the present case, the assailed DARAB Decision dated October 5, 1995 granting the petition for relief from judgment and giving due course to the Notice of Coverage was made pursuant to a petition for relief from judgment filed by the DAR, albeit petitioners are contesting the validity of the proceedings held thereon. On the other hand, in Fortich, the OP's "Win/Win" resolution dated November 7, 1997 was made motu proprio, as a result of the hunger strike staged by the farmer-beneficiaries. Further, the OP's "Win/Win" Resolution dated November 7, 1997 in the Fortich case is a patently void judgment since it was evident that there was already an existing final and executory OP Decision dated March 29, 1996. In this case, the assailed DARAB Decision dated October 5, 1995 appears to be regular on its face, and for its alleged nullity to be resolved, the Court must delve into the records of the case in order to determine the validity of petitioners' argument of lack of due process, absent notice and hearing. Moreover, the principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues.38 The question of whether the DARAB Decision dated October 5, 1995 is null and void and enforceable against petitioners for having been rendered without affording petitioners due process is a factual question which requires a review of the records of this case for it to be judiciously resolved. The Court notes that the CA, indeed, failed to resolve petitioners' prayer for the issuance of the writ of prohibition, which, significantly, focuses on the alleged nullity of the DARAB Decision dated October 5, 1995. On this score, the CA found that the application for the issuance of the writ of prohibition was actually a collateral attack on the validity of the DARAB decision. But, a final and executory judgment may be set aside in three ways;39 and a collateral attack, whereby in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof,40 is one of these. This tenet is based upon a court's inherent authority to expunge void acts from its records.41 Despite recognizing the need to resolve petitioners' application for the writ of prohibition in its Resolution dated January 12, 1999, the CA nonetheless summarily denied petitioners' motion for reconsideration in its Resolution dated February 23, 2000,42 leaving the matter hanging and unresolved. At first, the Court considered resolving the merits of petitioners' motion for reconsideration concerning their application for a writ of prohibition against enforcing the DARAB Decision dated October 5, 1995. Thus, in a Resolution dated June 5, 2006, the Court directed the CA to transmit the records of DARAB Case No. 0555, which was previously required by the CA to be forwarded to it per Resolution dated December 20, 1999.43 However, as of even date, the CA has not complied with the Court's Resolution. Withal, upon re-examination of the issues involved in this case, the Court deems it more judicious to remand this case to the CA for immediate resolution of petitioners' motion for reconsideration, re: their application for the writ of prohibition. Moreover, the radical conflict in the findings of the Provincial Adjudicator and the DARAB as regards the nature of the subject property necessitates a review of the present case. In this regard, the CA is in a better position to fully adjudicate the case for it can delve into the records to determine the probative value of the evidence supporting the findings of the Provincial Adjudicator and of the DARAB. In addition, the CA is empowered by its internal rules to require parties to submit additional documents, as it may find necessary to promote the ends of substantial justice, and further order the transmittal of the proper records for it to fully adjudicate the case. After all, it is an avowed policy of the courts that cases should be determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or some procedural imperfections. In that way, the ends of justice would be REMLAW Page 52
on technicality or some procedural imperfections. In that way, the ends of justice would be served better.44 WHEREFORE, the petition is PARTLY GRANTED. This case is REMANDED to the Court of Appeals which is DIRECTED to resolve petitioners' prayer for the issuance of the writ of prohibition in their Motion for Reconsideration. Upon finality of this Decision, let the records be remanded forthwith to the Court of Appeals. Pasted from
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Sta. Ana v. Carpo GR 164340 Nov 28, 2008 Sunday, November 14, 2010 11:20 PM
OTILIA STA. ANA vs. SPOUSES LEON G. CARPO and AURORA CARPO G.R. No. 164340 November 28, 2008 NACHURA, J.: Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2 dated March 5, 2004 which reversed and set aside the Decision3 of the Department of Agrarian Reform Adjudication Board (DARAB) dated June 24, 1998 and reinstated the Decision4 of the Provincial Agrarian Reform Adjudicator (PARAD) of Laguna dated October 12, 1993. The Facts Respondent Leon Carpo5 (Leon) and his brother Francisco G. Carpo are the registered co-owners of a parcel of land designated as Lot No. 2175 of the Santa Rosa Estate Subdivision, situated at Sta. Rosa, Laguna, covered by Transfer Certificate of Title (TCT) No. T-172726 of the Register of Deeds of Laguna, with an area of 91,337 square meters, more or less. A portion thereof, consisting of 3.5 hectares, pertained to Leon and his wife, respondent Aurora Carpo. It was devoted to rice and corn production (subject land) and was tenanted by one Domingo Pastolero (Domingo), husband of Adoracion Pastolero (Adoracion).7 When Domingo passed away, Adoracion together with her son Elpidio Pastolero, assumed the tenancy rights of Domingo over the subject land. However, on December 29, 1983, Adoracion, by executing a notarized Pinanumpaang Salaysay8 with the conformity of Leon, and for a consideration of P72,500.00, transferred her rights in favor of petitioner Otilia Sta. Ana9 (petitioner) who, together with her husband, Marciano de la Cruz (Marciano), became the new tenants of the subject land. At the outset, the parties had a harmonious tenancy relationship.10 Unfortunately, circumstances transpired which abraded the relationship. The Department of Agrarian Reform (DAR) mediated in order to amicably settle the controversy, but no settlement was reached by the parties. Thus, the instant case. In their Complaint for Ejectment due to Non-Payment of Lease Rentals11 dated December 1, 1989, respondents alleged that it was their agreement with petitioner and Marciano to increase the existing rentals from 36 cavans to 45 cavans, and that, if respondents wanted to repossess the property, they only had to pay the petitioner the amount of P72,500.00, the same amount paid by the latter to Adoracion. Respondents further averred that despite repeated demands, petitioner refused to pay the actual rentals from July 1985 to September 1989, in violation of Presidential Decree (P.D.) No. 817; and that the subject land had been declared, upon the recommendation of the Human Settlements Committee, suitable for commercial and industrial purposes, per Zoning Ordinance of 1981 of the Municipality of Sta. Rosa, Laguna. Respondents prayed that petitioner be ejected from the subject land and be directed to pay P75,016.00 as unpaid rentals. In their Answer12 dated January 26, 1990, petitioner and Marciano denied that there was an agreement to increase the existing rental which was already fixed at 36 cavans of palay, once or twice a year depending on the availability of irrigation water; that neither was there an agreement as to the future surrender of the land in favor of the respondents; that they did not refuse to pay the rentals because they even sent verbal and written notices to the respondents, advising them to accept the same; and that in view of the latter’s failure to respond, petitioner and Marciano were compelled to sell the harvest and to deposit the proceeds thereof in Savings Account No. 9166 with the Universal Savings Bank at Sta. Rosa, Laguna under the names of Leon and Marciano. As their special affirmative defense, petitioner and Marciano claimed that Marciano is a farmer-beneficiary of the subject land pursuant to P.D. 27. Petitioner and Marciano prayed for the outright dismissal of the complaint and for the declaration of Marciano as full owner of the subject land. Thereafter, trial on the merits ensued. The PARAD’s Ruling On October 12, 1993, the PARAD ruled that petitioner and Marciano deliberately defaulted in the payment of the rentals due the respondents. The PARAD found that the deposit made with Republic Planters Bank was actually in the names of petitioner and Marciano, hence, personal to them. The PARAD also found that it was only during the hearing that petitioner and Marciano deposited the REMLAW Page 54
PARAD also found that it was only during the hearing that petitioner and Marciano deposited the amount of P40,000.00 with the Universal Savings Bank for the unpaid rentals. As such the PARAD considered the deposits as late payments and as implied admission that indeed petitioner and Marciano did not pay the past rentals when they fell due. The PARAD further held and disposed thus: The intent of the defendant to subject the said area under PD 27 should pass the criteria set. Foremost is the determination of the aggregate riceland of plaintiff. He must have more than seven (7) hectares of land principally devoted to the planting of palay. Area over seven (7) hectares shall be the one to be covered by PD 27 on Operation Land Transfer (OLT). In the case at bar, defendants failed to prove that plaintiff has more than the required riceland. In fact the subject 3.5 hectares are jointly owned by two. Hence, coverage for OLT is remote. Defendant claimed that plaintiff is covered by LOI 474, and therefore, he is zero retention of area. In reference to said law, wherein it provides landowner with other agricultural land of more than 7 hectares, or have other industrial lands from where he and his family derived resources, then, the owner cannot retain any riceland. However, this is not applicable in the instant case, as the defendant failed to prove that plaintiff has other source of income from where they will derive their sustenance. WHEREFORE, in view of the foregoing, Judgment is hereby rendered: a) Ordering the ejectment of defendant from the subject landholding for non-payment of lease rentals; b) Ordering the defendant Marciano de la Cruz to surrender the possession and cultivation of the subject land to herein plaintiffs; c) Ordering the defendant to pay as actual damage the amount of P75,016.00 corresponding to the unpaid rentals from July 18, 1985 up to September 16, 1989[; and] d) [D]eclaring the subject land not covered by Presidential Decree No. 27, Republic Act [No.] 6657, and Executive Order No. 228. SO ORDERED. Petitioner and Marciano sought relief from the DARAB.13 The DARAB’s Ruling On June 24, 1998, the DARAB held: It is a fundamental rule in this jurisdiction that for non-payment of lease rentals to warrant the dispossession and ejectment of a tenant, the same must be made in a willful and deliberate manner (Cabero v. Caturna, et al., CA-G.R. 05886-R, March 10, 1977). For a valid ouster or ejectment of a farmertenant, the willful and deliberate intent not to pay lease rentals and/or share can be ascertained when there is a determination of will not to do a certain act. Considering the circumstances obtaining in this case, it cannot be concluded that the defendantsappellants deliberately failed or refused to pay their lease rentals. It was not the fault of defendantsappellants herein that the rentals did not reach the plaintiffs-appellees because the latter choose to lend a deaf ear to the notices sent to them. Clearly, therefore plaintiffs-appellees failed to show by substantial evidence that the defendants-appellants deliberately failed or refused to pay their lease rentals. It has been held that the mere failure of a tenant to pay the landowner’s share does not necessarily give the latter the right to eject the former when there is lack of deliberate intent on the part of the tenant to pay (Roxas y Cia v. Cabatuando, 1 SCRA 1106). Thus: WHEREFORE, finding the appeal interposed by the defendants-appellants to be meritorious, the Decision appealed from is hereby SET ASIDE and another judgment issued as follows: 1. Enjoining plaintiffs-appellees to respect the peaceful possession and cultivation of the land in suit by the defendants-appellants; and 2. Directing the MARO of Sta. Rosa, Laguna to assist the parties in the proper accounting of lease rentals to be paid by the defendants-appellants to the plaintiffs-appellees. No costs. SO ORDERED. Aggrieved, respondents appealed to the CA. On April 16, 2003, Marciano passed away.14 The CA’s Ruling On March 5, 2004, the CA affirmed the factual findings of the PARAD that petitioner and Marciano failed to pay the rentals and that there was no valid tender of payment. The CA added that this failure to pay was tainted with bad faith and deliberate intent. Thus, petitioner and Marciano did not legally comply with their duties as tenants. Moreover, the CA held that the subject land was not covered by P.D. 27, REMLAW Page 55
with their duties as tenants. Moreover, the CA held that the subject land was not covered by P.D. 27, Republic Act (R.A.) No. 6657 and Executive Order (E.O.) No. 228, since the same had become a residential, commercial and industrial land, to wit: In the case at bar, We opted to give more weight to the petitioners contention that the "subject landholding is for residential, commercial, and industrial purposes as declared by zoning ordinance of 1981 of the town of Sta. Rosa, Laguna upon recommendation of the Human Settlement Committee xxx." The vicinity map of the subject landholding shows that it is almost beside Nissan Motors Technopa[r]k and surrounded by the South Expressway and several companies such as the Coca-Cola Bottlers Philippines, Inc. and Toyota Motors Philippines along the Pulong Santa Cruz, National Road. The vicinity map shows therefore that the subject landholding is a residential, commercial, and industrial area exempted from the coverage of P.D. No. 27, Republic Act. No. 6657 and Executive Order No. 228. The CA ruled in favor of the respondents in this wise: WHEREFORE, premises considered and pursuant to applicable law and jurisprudence on the matter, the present Petition is hereby GRANTED. Accordingly, the decision of the Department of Agrarian Reform Adjudication Board-Central Office, Elliptical Road, Diliman, Quezon City (promulgated on June 24, 1998) is hereby REVERSED and SET ASIDE and a new one entered- REINSTATING the decision of the Department of Agrarian Reform Adjudication Board-Region IV, Office of the Provincial Adjudicator, Sta. Cruz, Laguna (dated October 12, 1993). No pronouncement as to costs. SO ORDERED. Petitioner filed a Motion for Reconsideration15 assailing the aforementioned Decision which the CA, however, denied in its Resolution16 dated June 28, 2004. Hence, this Petition based on the following grounds: THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ARROGATING UPON ITSELF WHAT IS OTHERWISE DAR’S POWER TO DETERMINE WHETHER THE SUBJECT AGRICULTURAL LAND HAS BECOME RESIDENTIAL/INDUSTRIAL/COMMERCIAL. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT EQUATED "LAND RECLASSIFICATION" WITH "LAND CONVERSION" FOR PURPOSES OF DETERMINING THE PROPRIETY OF EJECTMENT OF AN AGRICULTURAL LESSEE. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT FAILED TO NOTE THAT AN EJECTMENT SUIT BASED ON A CLAIM OF NON-PAYMENT OF LEASE RENTAL IS DIAMETRICALLY ANTITHETICAL TO THE CLAIM THAT THE SUBJECT LAND IS NO LONGER AGRICULTURAL BUT "A RESIDENTIAL, COMMERCIAL AND INDUSTRIAL AREA EXEMPTED FROM THE COVERAGE OF P.D. NO. 27, REPUBLIC ACT NO. 6657 AND EXECUTIVE ORDER NO. 228. THE DECISION DATED MARCH 5, 2004--INSOFAR AS IT ADOPTED THE FINDING OF DARAB-REGION IV, OFFICE OF THE PROVINCIAL ADJUDICATOR, STA. CRUZ, LAGUNA INSTEAD OF THAT OF THE DARABCENTRAL--IS VIOLATIVE OF SEC. 14, ART. VIII OF THE 1987 CONSTITUTION FOR HAVING DECIDED WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON WHICH SAID DECISION IS BASED. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RESORTING TO SURMISES AND CONJECTURES WHEN IT RULED THAT THE FAILURE OF THE HEREIN PETITIONER AND HER DECEASED HUSBAND TO DELIVER THE LEASE RENTALS TO HEREIN RESPONDENTS, WAS DONE SO IN BAD FAITH AND WITH DELIBERATE INTENT TO DEPRIVE THE LAND OWNERS THEREOF. Petitioner asseverates that there is no evidence to support respondents' claim that the failure to pay the lease rentals was tainted with malevolence, as the records are replete with acts indicative of good faith on the part of the petitioner and Marciano and bad faith on the part of respondents. Moreover, petitioner claimed that the power to determine whether or not the subject land is nonagricultural, hence, exempt from the coverage of the Comprehensive Agrarian Reform Law (CARL), lies with the DAR, and not with the courts; that mere reclassification by way of a zoning ordinance does not warrant the dispossession of a tenant but conversion does, and entitles the tenant to payment of disturbance compensation; the legal concepts of reclassification and conversion are separate and distinct from each other; that respondents' complaint before the PARAD alleged and established the fact that the subject land is a riceland, therefore, agricultural; that the CA failed to explain why it upheld the findings of the PARAD on the issue of non-payment of lease rentals; and that though the issue of nonpayment of lease rentals is a question of fact, due to the conflict of the factual findings of the PARAD and CA with those of the DARAB, petitioner asks that this Court review the evidence on record, and REMLAW Page 56
and CA with those of the DARAB, petitioner asks that this Court review the evidence on record, and pursuant to the CA decision in Cabero v. Caturna, et al.,17 rule on whether petitioner willfully and deliberately refused to pay lease rentals as to warrant her dispossession from the subject land.18 On the other hand, respondents aver that petitioner and her family are wealthy, as they own numerous properties in Sta. Rosa, Laguna including a luxurious house;19 that, as such, petitioner cannot be considered as a landless tenant deserving the protection of agrarian reform laws; that the DARAB negated the highest degree of respect the factual findings of the PARAD deserved; that petitioner's claims that Marciano repeatedly made verbal and written notices20 for Leon to accept their lease rentals were fraudulent designs to disguise the deliberate intent of petitioner not to pay the lease rentals; that when Leon went to petitioner's residence, petitioner did not pay the P10,000.00 due as lease rentals; that during the hearing before the PARAD, when respondents' counsel requested that they be furnished a bank certificate as to the existence of said bank deposits in Republic Planters Bank as of April 20, 1987 and October 1, 1987, petitioner herself commented, "Nagdeposito ho talaga kami sa pangalan namin";21 that the statement of petitioner is an admission that bank deposits, if any, were made, not in the name of Leon as contained in the written notices, but rather in the names of petitioner and Marciano; that such certificate was not introduced in evidence and that upon inquiry, said deposits do not actually exist; that per recent inquiry, the bank deposit in Universal Savings Bank only contains P1,020.19 due to previous withdrawals made by Marciano; that the foregoing circumstances indicate a pattern of fraudulent misrepresentations by the petitioner to mislead the DARAB into believing that petitioner and Marciano did not deliberately refuse to pay the lease rentals; that from July 18, 1985 up to the present, petitioner failed to pay the lease rentals showing again, the deliberate refusal to pay; that this default on the part of the petitioner has been recurring for several years already, thus depriving the respondents as landowners of their share of the subject land in violation of the principle of social justice; that as raised in respondents Omnibus Supplemental Motion for Reconsideration22 before the DARAB and as found by the CA based on its vicinity map,23 the subject land is of a residential, commercial and industrial character, exempted from agrarian reform coverage; and that the DARAB erred in not finding the sale of the tenancy rights of Adoracion to petitioner and Marciano for P72,500.00 violative of P.D. 27 even if the same was with Leon's consent. The sale, respondents contend was therefore, null and void ab initio, not susceptible of any ratification.24 Our Ruling Before we resolve this case on the merits, a procedural issue must be disposed of. Respondents strongly argue that the instant Petition was filed out of time because, while petitioner originally claimed to have received her copy of the CA Resolution25 dated June 28, 2004, denying her Motion for Reconsideration,26 on July 12, 2004, petitioner eventually admitted, after respondents showed proof to the contrary, that she actually received the said Resolution on July 7, 2004.27 Thus, petitioner had only up to July 22, 2004 to appeal the CA's ruling to this Court. In this case, petitioner filed her Motion28 for Extension of Time to File Petition for Review on Certiorari (Motion) on July 23, 2004. As such, there was no more period to extend. Further, the instant Petition was filed on August 27, 2004, or three (3) days beyond the thirty-day extended period. Hence, respondents submit that the CA decision had already become final and executory.29 Petitioner alleges that on July 15, 2004, she met with her counsel to engage the latter's legal services. During said meeting, counsel asked petitioner about the date of receipt of the assailed CA Resolution. Petitioner replied that she received her copy on July 12, 2004. On July 20, 2004, counsel filed an Entry of Appearance with the CA.30 On July 23, 2004, petitioner through counsel filed the Motion for Extension of Time to File Petition for Review. On August 11, 2004, petitioner received a copy of respondents' Opposition to the Motion. Thereafter, upon verification, petitioner admitted that she received the copy of the CA Resolution on July 7, 2004. Thus, her Motion was admittedly filed one day late. Petitioner begs the indulgence of this Court for her oversight and mistake, attributing the same to her lack of education and old age. Rules of procedure are merely tools designed to facilitate the attainment of justice. If the application of the Rules would tend to frustrate rather than to promote justice, it is always within our power to suspend the rules or except a particular case from their operation. Law and jurisprudence grant to courts the prerogative to relax compliance with the procedural rules, even the most mandatory in character, mindful of the duty to reconcile the need to put an end to litigation speedily and the parties'
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right to an opportunity to be heard.31 Our recent ruling in Tanenglian v. Lorenzo32 is instructive: We have not been oblivious to or unmindful of the extraordinary situations that merit liberal application of the Rules, allowing us, depending on the circumstances, to set aside technical infirmities and give due course to the appeal. In cases where we dispense with the technicalities, we do not mean to undermine the force and effectivity of the periods set by law. In those rare cases where we did not stringently apply the procedural rules, there always existed a clear need to prevent the commission of a grave injustice. Our judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement of procedural laws and the guarantee that every litigant be given the full opportunity for the just and proper disposition of his cause. In this case, petitioner was one day late in filing her Motion for Extension. To deny the Petition on this ground alone is too harsh a penalty for a day’s delay, taking into consideration the time, resources and effort spent by petitioner and even by the respondents, in order to pursue this case all the way to this Court. Thus, we dispense with the apparent procedural defect and resolve this case on the merits. The ends of justice are better served when cases are determined on the merits – with all parties given full opportunity to ventilate their causes and defenses – rather than on technicality or some procedural imperfections.33 The Petition is impressed with merit. In sum, there are two (2) ultimate issues that require resolution in this case: 1) Whether the CA erred in ruling that the subject land had already become residential, commercial and/or industrial, thus, excluded from the coverage of our laws on agrarian reform; and 2) Whether the petitioner, as an agricultural tenant, failed to pay her lease rentals when the same fell due as to warrant her dispossession of the subject land. On the first issue, we rule in the affirmative. To recapitulate, the instant case sprang from a Complaint for Ejectment based on Non-Payment of lease rentals. Though an allegation was made by the respondents that the land had been declared, upon the recommendation of the Human Settlements Committee, suitable for commercial and industrial purposes, per Zoning Ordinance of 1981 of the Municipality of Sta. Rosa, no argument was advanced by respondents to support such allegation, in the same way that no prayer for the ejectment of the tenants was raised based on that allegation. The PARAD held that petitioner should be ejected for non-payment of lease rentals. It also ruled that the subject land is not covered by P.D. No. 27, R.A. No. 6657, and E.O. No. 228, not on the basis of the allegation in the complaint, but on the respondents' right of retention. On appeal, the DARAB concentrated on the issue of petitioner’s failure to pay lease rentals. When the DARAB ruled that petitioner and Marciano did not deliberately fail to pay said rentals, respondents raised a new issue in their Omnibus Motion that the transaction between Adoracion and petitioner was void in violation of P.D. No. 27, despite the conformity of Leon. This issue was not resolved by the DARAB. Finally, when the case reached the CA, the appellate court affirmed the findings of the PARAD that petitioner and Marciano deliberately and in bad faith did not pay the lease rentals. The CA, however, also held that the subject land had already become a residential, commercial and industrial area based on the vicinity map showing that the land was surrounded by commercial and industrial establishments. Without doubt, the PARAD acted without jurisdiction when it held that the subject land was no longer covered by our agrarian laws because of the retention rights of the respondents. The CA likewise acted without jurisdiction when it ruled that the land had become non-agricultural based on a zoning ordinance of 1981– on the strength of a mere vicinity map. These rulings violated the doctrine of primary jurisdiction. The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which jurisdiction has initially been lodged in an administrative body of special competence. For agrarian reform cases, jurisdiction is vested in the Department of Agrarian Reform (DAR); more specifically, in the Department of Agrarian Reform Adjudication Board (DARAB). Executive Order 229 vested the DAR with (1) quasi-judicial powers to determine and adjudicate agrarian reform matters; and (2) jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive original jurisdiction of the Department of Agriculture and the Department of Environment and Natural Resources.34 In Department of Agrarian Reform v. Abdulwahid,35 we held: REMLAW Page 58
In Department of Agrarian Reform v. Abdulwahid,35 we held: As held by this Court in Centeno v. Centeno [343 SCRA 153], "the DAR is vested with the primary jurisdiction to determine and adjudicate agrarian reform matters and shall have the exclusive jurisdiction over all matters involving the implementation of the agrarian reform program." The DARAB has primary, original and appellate jurisdiction "to determine and adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian Reform Program under R.A. No. 6657, E.O. Nos. 229, 228 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." Under Section 3 (d) of R.A. No. 6657 (CARP Law), "agrarian dispute" is defined to include "(d) . . . any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise over lands devoted to agriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements. It includes any controversy relating to compensation of lands acquired under this Act and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee." Simply put, agrarian disputes, as defined by law and settled in jurisprudence, are within the primary and exclusive original jurisdiction of the PARAD and the DARAB, while issues of retention and non-coverage of a land under agrarian reform, among others, are within the domain of the DAR Secretary. Thus, Section 3, Rule II of the 2003 DARAB Rules of Procedure provides: SECTION 3. Agrarian Law Implementation Cases. – The Adjudicator or the Board shall have no jurisdiction over matters involving the administrative implementation of RA No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988 and other agrarian laws as enunciated by pertinent rules and administrative orders, which shall be under the exclusive prerogative of and cognizable by the Office of the Secretary of the DAR in accordance with his issuances, to wit: 3.1 Classification and identification of landholdings for coverage under the agrarian reform program and the initial issuance of CLOAs and EPs, including protests or oppositions thereto and petitions for lifting of such coverage; 3.2 Classification, identification, inclusion, exclusion, qualification, or disqualification of potential/actual farmer-beneficiaries; 3.3 Subdivision surveys of land under CARP; 3.4 Recall, or cancellation of provisional lease rentals, Certificates of Land Transfers (CLTs) and CARP Beneficiary Certificates (CBCs) in cases outside the purview of Presidential Decree (PD) No. 816, including the issuance, recall, or cancellation of EPs or CLOAs not yet registered with the Register of Deeds; 3.5 Exercise of the right of retention by the landowner; 3.6 Application for exemption from coverage under Section 10 of RA 6657; 3.7 Application for exemption pursuant to Department of Justice (DOJ) Opinion No. 44 (1990); 3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry raising; 3.9 Cases of exemption/exclusion of fish pond and prawn farms from the coverage of CARP pursuant to RA 7881; 3.10 Issuance of Certificate of Exemption for land subject of Voluntary Offer to Sell (VOS) and Compulsory Acquisition (CA) found unsuitable for agricultural purposes; 3.11 Application for conversion of agricultural land to residential, commercial, industrial, or other nonagricultural uses and purposes including protests or oppositions thereto; 3.12 Determination of the rights of agrarian reform beneficiaries to homelots; 3.13 Disposition of excess area of the tenants/farmer-beneficiary's landholdings; 3.14 Increase in area of tillage of a tenant/farmer-beneficiary; 3.15 Conflict of claims in landed estates administered by DAR and its predecessors; or 3.16 Such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR. Verily, there is an established tenancy relationship between petitioner and respondents in this case. An action for Ejectment for Non-Payment of lease rentals is clearly an agrarian dispute, cognizable at the initial stage by the PARAD and thereafter by the DARAB.36 But issues with respect to the retention rights of the respondents as landowners and the exclusion/exemption of the subject land from the coverage of REMLAW Page 59
respondents as landowners and the exclusion/exemption of the subject land from the coverage of agrarian reform are issues not cognizable by the PARAD and the DARAB, but by the DAR Secretary because, as aforementioned, the same are Agrarian Law Implementation (ALI) Cases. It has not escaped our notice that, as this case progressed and reached a higher level in the hierarchy of tribunals, the respondents would, invariably, proffer an additional theory or defense, in order to effect petitioner’s eviction from the land. As a consequence, the simple issue of ejectment based on nonpayment of rentals has been muddled. Proof necessary for the resolution of the issue of the land being covered by, or excluded/exempted from, P.D. No. 27, R.A. No. 6657, and other pertinent agrarian laws, as well as of the issue of the right of retention of the respondents, was not offered in evidence. Worse, the PARAD resolved the issue of retention even if it was not raised by the respondents at that level, and even if the PARAD had no jurisdiction over the same. Likewise, the CA ruled that the land had ceased being agricultural on the basis of a mere vicinity map, in open disregard of the Doctrine of Primary Jurisdiction, since the issue was within the province of the Secretary of DAR. We take this opportunity to remind the PARAD and the CA that "courts of justice have no power to decide a question not in issue." A judgment that goes beyond the issues, and purports to adjudicate something on which the parties were not heard, is extra-judicial, irregular and invalid. This norm applies not only to courts of justice, but also to quasi-judicial bodies such as the PARAD. Accordingly, premature and irregular were the PARAD ruling on the retention rights of the respondents, and the CA decision on the non-agricultural character of the land subject of this controversy -- these issues not having passed the scrutiny of the DAR Secretary -- are premature and irregular.37 Thus, we cannot allow ourselves to fall into the same error as that committed by the PARAD and the CA, and resolve the issue of the non-agricultural nature of the subject land by receiving, at this stage, pieces of evidence and evaluating the same, without the respondents having first introduced them in the proper forum. The Office of the DAR Secretary is in a better position to resolve the issues on retention and exclusion/exemption from agrarian reform coverage, being the agency lodged with such authority inasmuch it possesses the necessary expertise on the matter.38 Likewise, we refrain from entertaining the issue raised by respondents that petitioner and her family are not landless tenants and are therefore not deserving of any protection under our laws on agrarian reform, because fairness and due process dictate that issues not raised in the proceedings below should not be raised for the first time on appeal.39 On the second issue, we rule in the negative. Under Section 37 of Republic Act No. 3844,40 as amended, coupled with the fact that the respondents are the complainants themselves, the burden of proof to show the existence of a lawful cause for the ejectment of the petitioner as an agricultural lessee rests upon the respondents as agricultural lessors.41 This proceeds from the principle that a tenancy relationship, once established, entitles the tenant to security of tenure. Petitioner can only be ejected from the agricultural landholding on grounds provided by law.42 Section 36 of the same law pertinently provides: Sec. 36. Possession of Landholding; Exceptions. – Notwithstanding any agreement as to the period or future surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing it is shown that: xxx x (6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if the nonpayment of the rental shall be due to crop failure to the extent of seventy-five per centum as a result of a fortuitous event, the non-payment shall not be a ground for dispossession, although the obligation to pay the rental due that particular crop is not thereby extinguished; xxx x Respondents failed to discharge such burden. The agricultural tenant's failure to pay the lease rentals must be willful and deliberate in order to warrant his dispossession of the land that he tills. Petitioner's counsel opines that there appears to be no decision by this Court on the matter; he thus submits that we should use the CA decision in Cabero v. Caturna. This is not correct. In an En Banc Decision by this Court in Roxas y Cia v. Cabatuando, et al.,43 we held that under our law and REMLAW Page 60
Decision by this Court in Roxas y Cia v. Cabatuando, et al.,43 we held that under our law and jurisprudence, mere failure of a tenant to pay the landholder's share does not necessarily give the latter the right to eject the former when there is lack of deliberate intent on the part of the tenant to pay. This ruling has not been overturned. The term "deliberate" is characterized by or results from slow, careful, thorough calculation and consideration of effects and consequences.44 The term "willful," on the other hand, is defined as one governed by will without yielding to reason or without regard to reason.45 We agree with the findings of the DARAB that it was not the fault of petitioner that the lease rentals did not reach the respondents because the latter chose to ignore the notices sent to them. To note, as early as November 10, 1986, Marciano executed an Affidavit46 stating that Leon refused to receive the respective lease rentals consisting of 37 cavans for November 1985 and July 1986. For 1987, Marciano wrote Leon two letters47 informing him of the availability of the lease rentals for April and October of the same year. On April 27, 1988, Marciano sought DAR intervention and mediation with respect to the execution of a leasehold contract and the fixing of the leasehold rentals.48 Meetings were set but respondents failed to attend.49 The dispute was referred to the barangay but the parties failed to amicably settle.50 These factual circumstances negate the PARAD findings of Marciano’s and petitioner's deliberate and willful intent not to pay lease rentals. Good faith was clearly demonstrated by Marciano and petitioner when, because respondents refused to accept the proffered payment, they even went to the point of seeking government intervention in order to address their problems with respondents. Absent such deliberate and willful refusal to pay lease rentals, petitioner's ejectment from the subject land is not justified. WHEREFORE, the instant Petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 60640 is hereby REVERSED and SET ASIDE. The Decision of the Department of Agrarian Reform Adjudication Board (DARAB) dated June 24, 1998 in DARAB Case No. 2203 is REINSTATED without prejudice to the rights of respondent-spouses Leon and Aurora Carpo to seek recourse from the Office of the Department of Agrarian Reform (DAR) Secretary on the other issues they raised. No costs. Pasted from
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Garcillano v. House GR 170338 Dec 23, 2008 Sunday, November 14, 2010 11:20 PM
G.R. No. 170338 December 23, 2008 Virgilio O. Garcillano vs. The House Of Representatives Committees On Public Information, Public Order And Safety, National Defense And Security, Information And Communications Technology, And Suffrage And Electoral Reforms G.R. No. 179275 December 23, 2008 Santiago Javier Ranada And Oswaldo D. Agcaoili, Petitioners, Vs. The Senate Of The Republic Of The Philippines, Represented By The Senate President The Honorable Manuel Villar, Respondents. Maj. Lindsay Rex Sagge, Petitioner-In-Intervention Aquilino Q. Pimentel, Jr., Benigno Noynoy C. Aquino, Rodolfo G. Biazon, Panfilo M. Lacson, Loren B. Legarda, M.A. Jamby A.S. Madrigal, And Antonio F. Trillanes, Respondents-Intervenors
NACHURA, J.: More than three years ago, tapes ostensibly containing a wiretapped conversation purportedly between the President of the Philippines and a high-ranking official of the Commission on Elections (COMELEC) surfaced. They captured unprecedented public attention and thrust the country into a controversy that placed the legitimacy of the present administration on the line, and resulted in the near-collapse of the Arroyo government. The tapes, notoriously referred to as the "Hello Garci" tapes, allegedly contained the President’s instructions to COMELEC Commissioner Virgilio Garcillano to manipulate in her favor results of the 2004 presidential elections. These recordings were to become the subject of heated legislative hearings conducted separately by committees of both Houses of Congress.1 In the House of Representatives (House), on June 8, 2005, then Minority Floor Leader Francis G. Escudero delivered a privilege speech, "Tale of Two Tapes," and set in motion a congressional investigation jointly conducted by the Committees on Public Information, Public Order and Safety, National Defense and Security, Information and Communications Technology, and Suffrage and Electoral Reforms (respondent House Committees). During the inquiry, several versions of the wiretapped conversation emerged. But on July 5, 2005, National Bureau of Investigation (NBI) Director Reynaldo Wycoco, Atty. Alan Paguia and the lawyer of former NBI Deputy Director Samuel Ong submitted to the respondent House Committees seven alleged "original" tape recordings of the supposed three-hour taped conversation. After prolonged and impassioned debate by the committee members on the admissibility and authenticity of the recordings, the tapes were eventually played in the chambers of the House.2 On August 3, 2005, the respondent House Committees decided to suspend the hearings indefinitely. Nevertheless, they decided to prepare committee reports based on the said recordings and the testimonies of the resource persons.3 Alarmed by these developments, petitioner Virgilio O. Garcillano (Garcillano) filed with this Court a Petition for Prohibition and Injunction, with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction4 docketed as G.R. No. 170338. He prayed that the respondent House Committees be restrained from using these tape recordings of the "illegally obtained" wiretapped conversations in their committee reports and for any other purpose. He further implored that the said recordings and any reference thereto be ordered stricken off the records of the inquiry, and the respondent House Committees directed to desist from further using the recordings in any of the House proceedings.5 Without reaching its denouement, the House discussion and debates on the "Garci tapes" abruptly stopped. After more than two years of quiescence, Senator Panfilo Lacson roused the slumbering issue with a privilege speech, "The Lighthouse That Brought Darkness." In his discourse, Senator Lacson promised to provide the public "the whole unvarnished truth – the what’s, when’s, where’s, who’s and why’s" of the alleged wiretap, and sought an inquiry into the perceived willingness of telecommunications providers to participate in nefarious wiretapping activities. On motion of Senator Francis Pangilinan, Senator Lacson’s speech was referred to the Senate Committee on National Defense and Security, chaired by Senator Rodolfo Biazon, who had previously REMLAW Page 62
Committee on National Defense and Security, chaired by Senator Rodolfo Biazon, who had previously filed two bills6 seeking to regulate the sale, purchase and use of wiretapping equipment and to prohibit the Armed Forces of the Philippines (AFP) from performing electoral duties. 7 In the Senate’s plenary session the following day, a lengthy debate ensued when Senator Richard Gordon aired his concern on the possible transgression of Republic Act (R.A.) No. 42008 if the body were to conduct a legislative inquiry on the matter. On August 28, 2007, Senator Miriam Defensor-Santiago delivered a privilege speech, articulating her considered view that the Constitution absolutely bans the use, possession, replay or communication of the contents of the "Hello Garci" tapes. However, she recommended a legislative investigation into the role of the Intelligence Service of the AFP (ISAFP), the Philippine National Police or other government entities in the alleged illegal wiretapping of public officials.9 On September 6, 2007, petitioners Santiago Ranada and Oswaldo Agcaoili, retired justices of the Court of Appeals, filed before this Court a Petition for Prohibition with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction,10 docketed as G.R. No. 179275, seeking to bar the Senate from conducting its scheduled legislative inquiry. They argued in the main that the intended legislative inquiry violates R.A. No. 4200 and Section 3, Article III of the Constitution.11 As the Court did not issue an injunctive writ, the Senate proceeded with its public hearings on the "Hello Garci" tapes on September 7,12 1713 and October 1,14 2007. Intervening as respondents,15 Senators Aquilino Q. Pimentel, Jr., Benigno Noynoy C. Aquino, Rodolfo G. Biazon, Panfilo M. Lacson, Loren B. Legarda, M.A. Jamby A.S. Madrigal and Antonio F. Trillanes filed their Comment16 on the petition on September 25, 2007. The Court subsequently heard the case on oral argument.17 On October 26, 2007, Maj. Lindsay Rex Sagge, a member of the ISAFP and one of the resource persons summoned by the Senate to appear and testify at its hearings, moved to intervene as petitioner in G.R. No. 179275.18 On November 20, 2007, the Court resolved to consolidate G.R. Nos. 170338 and 179275.19 It may be noted that while both petitions involve the "Hello Garci" recordings, they have different objectives–the first is poised at preventing the playing of the tapes in the House and their subsequent inclusion in the committee reports, and the second seeks to prohibit and stop the conduct of the Senate inquiry on the wiretapped conversation. The Court dismisses the first petition, G.R. No. 170338, and grants the second, G.R. No. 179275. -I Before delving into the merits of the case, the Court shall first resolve the issue on the parties’ standing, argued at length in their pleadings. In Tolentino v. COMELEC,20 we explained that "‘*l+egal standing’ or locus standi refers to a personal and substantial interest in a case such that the party has sustained or will sustain direct injury because of the challenged governmental act x x x," thus, generally, a party will be allowed to litigate only when (1) he can show that he has personally suffered some actual or threatened injury because of the allegedly illegal conduct of the government; (2) the injury is fairly traceable to the challenged action; and (3) the injury is likely to be redressed by a favorable action.21 The gist of the question of standing is whether a party has "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions."22 However, considering that locus standi is a mere procedural technicality, the Court, in recent cases, has relaxed the stringent direct injury test. David v. Macapagal-Arroyo23 articulates that a "liberal policy has been observed, allowing ordinary citizens, members of Congress, and civic organizations to prosecute actions involving the constitutionality or validity of laws, regulations and rulings."24 The fairly recent Chavez v. Gonzales25 even permitted a non-member of the broadcast media, who failed to allege a personal stake in the outcome of the controversy, to challenge the acts of the Secretary of Justice and the National Telecommunications Commission. The majority, in the said case, echoed the current policy that "this Court has repeatedly and consistently refused to wield procedural barriers as impediments to its addressing and resolving serious legal questions that greatly impact on public interest, in keeping with the Court’s duty under the 1987 Constitution to determine whether or not other branches of government have kept themselves within the limits of the Constitution and the laws, and that they have REMLAW Page 63
government have kept themselves within the limits of the Constitution and the laws, and that they have not abused the discretion given to them."26 In G.R. No. 170338, petitioner Garcillano justifies his standing to initiate the petition by alleging that he is the person alluded to in the "Hello Garci" tapes. Further, his was publicly identified by the members of the respondent committees as one of the voices in the recordings.27 Obviously, therefore, petitioner Garcillano stands to be directly injured by the House committees’ actions and charges of electoral fraud. The Court recognizes his standing to institute the petition for prohibition. In G.R. No. 179275, petitioners Ranada and Agcaoili justify their standing by alleging that they are concerned citizens, taxpayers, and members of the IBP. They are of the firm conviction that any attempt to use the "Hello Garci" tapes will further divide the country. They wish to see the legal and proper use of public funds that will necessarily be defrayed in the ensuing public hearings. They are worried by the continuous violation of the laws and individual rights, and the blatant attempt to abuse constitutional processes through the conduct of legislative inquiries purportedly in aid of legislation.28 Intervenor Sagge alleges violation of his right to due process considering that he is summoned to attend the Senate hearings without being apprised not only of his rights therein through the publication of the Senate Rules of Procedure Governing Inquiries in Aid of Legislation, but also of the intended legislation which underpins the investigation. He further intervenes as a taxpayer bewailing the useless and wasteful expenditure of public funds involved in the conduct of the questioned hearings.29 Given that petitioners Ranada and Agcaoili allege an interest in the execution of the laws and that intervenor Sagge asserts his constitutional right to due process,30 they satisfy the requisite personal stake in the outcome of the controversy by merely being citizens of the Republic. Following the Court’s ruling in Francisco, Jr. v. The House of Representatives,31 we find sufficient petitioners Ranada’s and Agcaoili’s and intervenor Sagge’s allegation that the continuous conduct by the Senate of the questioned legislative inquiry will necessarily involve the expenditure of public funds.32 It should be noted that in Francisco, rights personal to then Chief Justice Hilario G. Davide, Jr. had been injured by the alleged unconstitutional acts of the House of Representatives, yet the Court granted standing to the petitioners therein for, as in this case, they invariably invoked the vindication of their own rights–as taxpayers, members of Congress, citizens, individually or in a class suit, and members of the bar and of the legal profession–which were also supposedly violated by the therein assailed unconstitutional acts.33 Likewise, a reading of the petition in G.R. No. 179275 shows that the petitioners and intervenor Sagge advance constitutional issues which deserve the attention of this Court in view of their seriousness, novelty and weight as precedents. The issues are of transcendental and paramount importance not only to the public but also to the Bench and the Bar, and should be resolved for the guidance of all.34 Thus, in the exercise of its sound discretion and given the liberal attitude it has shown in prior cases climaxing in the more recent case of Chavez, the Court recognizes the legal standing of petitioners Ranada and Agcaoili and intervenor Sagge. - II The Court, however, dismisses G.R. No. 170338 for being moot and academic. Repeatedly stressed in our prior decisions is the principle that the exercise by this Court of judicial power is limited to the determination and resolution of actual cases and controversies.35 By actual cases, we mean existing conflicts appropriate or ripe for judicial determination, not conjectural or anticipatory, for otherwise the decision of the Court will amount to an advisory opinion. The power of judicial inquiry does not extend to hypothetical questions because any attempt at abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.36 Neither will the Court determine a moot question in a case in which no practical relief can be granted. A case becomes moot when its purpose has become stale.37 It is unnecessary to indulge in academic discussion of a case presenting a moot question as a judgment thereon cannot have any practical legal effect or, in the nature of things, cannot be enforced.38 In G.R. No. 170338, petitioner Garcillano implores from the Court, as aforementioned, the issuance of an injunctive writ to prohibit the respondent House Committees from playing the tape recordings and from including the same in their committee report. He likewise prays that the said tapes be stricken off the records of the House proceedings. But the Court notes that the recordings were already played in the House and heard by its members.39 There is also the widely publicized fact that the committee reports
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on the "Hello Garci" inquiry were completed and submitted to the House in plenary by the respondent committees.40 Having been overtaken by these events, the Garcillano petition has to be dismissed for being moot and academic. After all, prohibition is a preventive remedy to restrain the doing of an act about to be done, and not intended to provide a remedy for an act already accomplished.41 - III As to the petition in G.R. No. 179275, the Court grants the same. The Senate cannot be allowed to continue with the conduct of the questioned legislative inquiry without duly published rules of procedure, in clear derogation of the constitutional requirement. Section 21, Article VI of the 1987 Constitution explicitly provides that "[t]he Senate or the House of Representatives, or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure." The requisite of publication of the rules is intended to satisfy the basic requirements of due process.42 Publication is indeed imperative, for it will be the height of injustice to punish or otherwise burden a citizen for the transgression of a law or rule of which he had no notice whatsoever, not even a constructive one.43 What constitutes publication is set forth in Article 2 of the Civil Code, which provides that "[l]aws shall take effect after 15 days following the completion of their publication either in the Official Gazette, or in a newspaper of general circulation in the Philippines."44 The respondents in G.R. No. 179275 admit in their pleadings and even on oral argument that the Senate Rules of Procedure Governing Inquiries in Aid of Legislation had been published in newspapers of general circulation only in 1995 and in 2006.45 With respect to the present Senate of the 14th Congress, however, of which the term of half of its members commenced on June 30, 2007, no effort was undertaken for the publication of these rules when they first opened their session. Recently, the Court had occasion to rule on this very same question. In Neri v. Senate Committee on Accountability of Public Officers and Investigations,46 we said: Fourth, we find merit in the argument of the OSG that respondent Committees likewise violated Section 21 of Article VI of the Constitution, requiring that the inquiry be in accordance with the "duly published rules of procedure." We quote the OSG’s explanation: The phrase "duly published rules of procedure" requires the Senate of every Congress to publish its rules of procedure governing inquiries in aid of legislation because every Senate is distinct from the one before it or after it. Since Senatorial elections are held every three (3) years for one-half of the Senate’s membership, the composition of the Senate also changes by the end of each term. Each Senate may thus enact a different set of rules as it may deem fit. Not having published its Rules of Procedure, the subject hearings in aid of legislation conducted by the 14th Senate, are therefore, procedurally infirm. Justice Antonio T. Carpio, in his Dissenting and Concurring Opinion, reinforces this ruling with the following rationalization: The present Senate under the 1987 Constitution is no longer a continuing legislative body. The present Senate has twenty-four members, twelve of whom are elected every three years for a term of six years each. Thus, the term of twelve Senators expires every three years, leaving less than a majority of Senators to continue into the next Congress. The 1987 Constitution, like the 1935 Constitution, requires a majority of Senators to "constitute a quorum to do business." Applying the same reasoning in Arnault v. Nazareno, the Senate under the 1987 Constitution is not a continuing body because less than majority of the Senators continue into the next Congress. The consequence is that the Rules of Procedure must be republished by the Senate after every expiry of the term of twelve Senators.47 The subject was explained with greater lucidity in our Resolution48 (On the Motion for Reconsideration) in the same case, viz.: On the nature of the Senate as a "continuing body," this Court sees fit to issue a clarification. Certainly, there is no debate that the Senate as an institution is "continuing," as it is not dissolved as an entity with each national election or change in the composition of its members. However, in the conduct of its day-to-day business the Senate of each Congress acts separately and independently of the Senate of the Congress before it. The Rules of the Senate itself confirms this when it states: RULE XLIV UNFINISHED BUSINESS SEC. 123. Unfinished business at the end of the session shall be taken up at the next session in the same status. All pending matters and proceedings shall terminate upon the expiration of one (1) Congress, but may be taken by the succeeding Congress as if present for the first time. REMLAW Page 65
be taken by the succeeding Congress as if present for the first time. Undeniably from the foregoing, all pending matters and proceedings, i.e., unpassed bills and even legislative investigations, of the Senate of a particular Congress are considered terminated upon the expiration of that Congress and it is merely optional on the Senate of the succeeding Congress to take up such unfinished matters, not in the same status, but as if presented for the first time. The logic and practicality of such a rule is readily apparent considering that the Senate of the succeeding Congress (which will typically have a different composition as that of the previous Congress) should not be bound by the acts and deliberations of the Senate of which they had no part. If the Senate is a continuing body even with respect to the conduct of its business, then pending matters will not be deemed terminated with the expiration of one Congress but will, as a matter of course, continue into the next Congress with the same status. This dichotomy of the continuity of the Senate as an institution and of the opposite nature of the conduct of its business is reflected in its Rules. The Rules of the Senate (i.e. the Senate’s main rules of procedure) states: RULE LI AMENDMENTS TO, OR REVISIONS OF, THE RULES SEC. 136. At the start of each session in which the Senators elected in the preceding elections shall begin their term of office, the President may endorse the Rules to the appropriate committee for amendment or revision. The Rules may also be amended by means of a motion which should be presented at least one day before its consideration, and the vote of the majority of the Senators present in the session shall be required for its approval. RULE LII DATE OF TAKING EFFECT SEC. 137. These Rules shall take effect on the date of their adoption and shall remain in force until they are amended or repealed. Section 136 of the Senate Rules quoted above takes into account the new composition of the Senate after an election and the possibility of the amendment or revision of the Rules at the start of each session in which the newly elected Senators shall begin their term. However, it is evident that the Senate has determined that its main rules are intended to be valid from the date of their adoption until they are amended or repealed. Such language is conspicuously absent from the Rules. The Rules simply state "(t)hese Rules shall take effect seven (7) days after publication in two (2) newspapers of general circulation." The latter does not explicitly provide for the continued effectivity of such rules until they are amended or repealed. In view of the difference in the language of the two sets of Senate rules, it cannot be presumed that the Rules (on legislative inquiries) would continue into the next Congress. The Senate of the next Congress may easily adopt different rules for its legislative inquiries which come within the rule on unfinished business. The language of Section 21, Article VI of the Constitution requiring that the inquiry be conducted in accordance with the duly published rules of procedure is categorical. It is incumbent upon the Senate to publish the rules for its legislative inquiries in each Congress or otherwise make the published rules clearly state that the same shall be effective in subsequent Congresses or until they are amended or repealed to sufficiently put public on notice. If it was the intention of the Senate for its present rules on legislative inquiries to be effective even in the next Congress, it could have easily adopted the same language it had used in its main rules regarding effectivity. Respondents justify their non-observance of the constitutionally mandated publication by arguing that the rules have never been amended since 1995 and, despite that, they are published in booklet form available to anyone for free, and accessible to the public at the Senate’s internet web page.49 The Court does not agree. The absence of any amendment to the rules cannot justify the Senate’s defiance of the clear and unambiguous language of Section 21, Article VI of the Constitution. The organic law instructs, without more, that the Senate or its committees may conduct inquiries in aid of legislation only in accordance with duly published rules of procedure, and does not make any distinction whether or not these rules have undergone amendments or revision. The constitutional mandate to publish the said rules prevails over any custom, practice or tradition followed by the Senate. Justice Carpio’s response to the same argument raised by the respondents is illuminating: The publication of the Rules of Procedure in the website of the Senate, or in pamphlet form available at the Senate, is not sufficient under the Tañada v. Tuvera ruling which requires publication either in the REMLAW Page 66
the Senate, is not sufficient under the Tañada v. Tuvera ruling which requires publication either in the Official Gazette or in a newspaper of general circulation. The Rules of Procedure even provide that the rules "shall take effect seven (7) days after publication in two (2) newspapers of general circulation," precluding any other form of publication. Publication in accordance with Tañada is mandatory to comply with the due process requirement because the Rules of Procedure put a person’s liberty at risk. A person who violates the Rules of Procedure could be arrested and detained by the Senate. The invocation by the respondents of the provisions of R.A. No. 8792,50 otherwise known as the Electronic Commerce Act of 2000, to support their claim of valid publication through the internet is all the more incorrect. R.A. 8792 considers an electronic data message or an electronic document as the functional equivalent of a written document only for evidentiary purposes.51 In other words, the law merely recognizes the admissibility in evidence (for their being the original) of electronic data messages and/or electronic documents.52 It does not make the internet a medium for publishing laws, rules and regulations. Given this discussion, the respondent Senate Committees, therefore, could not, in violation of the Constitution, use its unpublished rules in the legislative inquiry subject of these consolidated cases. The conduct of inquiries in aid of legislation by the Senate has to be deferred until it shall have caused the publication of the rules, because it can do so only "in accordance with its duly published rules of procedure." Very recently, the Senate caused the publication of the Senate Rules of Procedure Governing Inquiries in Aid of Legislation in the October 31, 2008 issues of Manila Bulletin and Malaya. While we take judicial notice of this fact, the recent publication does not cure the infirmity of the inquiry sought to be prohibited by the instant petitions. Insofar as the consolidated cases are concerned, the legislative investigation subject thereof still could not be undertaken by the respondent Senate Committees, because no published rules governed it, in clear contravention of the Constitution. With the foregoing disquisition, the Court finds it unnecessary to discuss the other issues raised in the consolidated petitions. WHEREFORE, the petition in G.R. No. 170338 is DISMISSED, and the petition in G.R. No. 179275 is GRANTED. Let a writ of prohibition be issued enjoining the Senate of the Republic of the Philippines and/or any of its committees from conducting any inquiry in aid of legislation centered on the "Hello Garci" tapes. Pasted from
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Lazatin v. Desierto GR 147097 June 5, 2009 Sunday, November 14, 2010 11:20 PM
G.R. No. 147097 June 5, 2009 CARMELO F. LAZATIN, MARINO A. MORALES, TEODORO L. DAVID and ANGELITO A. PELAYO, Petitioner, vs. HON. ANIANO A. DESIERTO as OMBUDSMAN, and SANDIGANBAYAN, THIRD DIVISION, Respondents. DEC I SI O N PERALTA, J.: This resolves the petition for certiorari under Rule 65 of the Rules of Court, praying that the Ombudsman's disapproval of the Office of the Special Prosecutor's (OSP) Resolution 1 dated September 18, 2000, recommending dismissal of the criminal cases filed against herein petitioners, be reversed and set aside. The antecedent facts are as follows. On July 22, 1998, the Fact-Finding and Intelligence Bureau of the Office of the Ombudsman filed a Complaint-Affidavit docketed as OMB-0-98-1500, charging herein petitioners with Illegal Use of Public Funds as defined and penalized under Article 220 of the Revised Penal Code and violation of Section 3, paragraphs (a) and (e) of Republic Act (R.A.) No. 3019, as amended. The complaint alleged that there were irregularities in the use by then Congressman Carmello F. Lazatin of his Countrywide Development Fund (CDF) for the calendar year 1996, i.e., he was both proponent and implementer of the projects funded from his CDF; he signed vouchers and supporting papers pertinent to the disbursement as Disbursing Officer; and he received, as claimant, eighteen (18) checks amounting to P4,868,277.08. Thus, petitioner Lazatin, with the help of petitioners Marino A. Morales, Angelito A. Pelayo and Teodoro L. David, was allegedly able to convert his CDF into cash. A preliminary investigation was conducted and, thereafter, the Evaluation and Preliminary Investigation Bureau (EPIB) issued a Resolution 2 dated May 29, 2000 recommending the filing against herein petitioners of fourteen (14) counts each of Malversation of Public Funds and violation of Section 3 (e) of R.A. No. 3019. Said Resolution was approved by the Ombudsman; hence, twenty-eight (28) Informations docketed as Criminal Case Nos. 26087 to 26114 were filed against herein petitioners before the Sandiganbayan. Petitioner Lazatin and his co-petitioners then filed their respective Motions for Reconsideration/Reinvestigation, which motions were granted by the Sandiganbayan (Third Division). The Sandiganbayan also ordered the prosecution to re-evaluate the cases against petitioners. Subsequently, the OSP submitted to the Ombudsman its Resolution 3 dated September 18, 2000. It recommended the dismissal of the cases against petitioners for lack or insufficiency of evidence. The Ombudsman, however, ordered the Office of the Legal Affairs (OLA) to review the OSP Resolution. In a Memorandum4 dated October 24, 2000, the OLA recommended that the OSP Resolution be disapproved and the OSP be directed to proceed with the trial of the cases against petitioners. On October 27, 2000, the Ombudsman adopted the OLA Memorandum, thereby disapproving the OSP Resolution dated September 18, 2000 and ordering the aggressive prosecution of the subject cases. The cases were then returned to the Sandiganbayan for continuation of criminal proceedings. Thus, petitioners filed the instant petition. Petitioners allege that: I. THE OMBUDSMAN ACTED WITH GRAVE ABUSE OF DISCRETION OR ACTED WITHOUT OR IN EXCESS OF HIS JURISDICTION. II. THE QUESTIONED RESOLUTION WAS BASED ON MISAPPREHENSION OF FACTS, SPECULATIONS, SURMISES AND CONJECTURES. 5 Amplifying their arguments, petitioners asseverate that the Ombudsman had no authority to overturn the OSP's Resolution dismissing the cases against petitioners because, under Section 13, Article XI of the 1987 Constitution, the Ombudsman is clothed only with the power to watch, investigate and recommend the filing of proper cases against erring officials, but it was not granted the power to prosecute. They point out that under the Constitution, the power to prosecute belongs to the OSP (formerly the Tanodbayan), which was intended by the framers to be a separate and distinct entity REMLAW Page 68
(formerly the Tanodbayan), which was intended by the framers to be a separate and distinct entity from the Office of the Ombudsman. Petitioners conclude that, as provided by the Constitution, the OSP being a separate and distinct entity, the Ombudsman should have no power and authority over the OSP. Thus, petitioners maintain that R.A. No. 6770 (The Ombudsman Act of 1989), which made the OSP an organic component of the Office of the Ombudsman, should be struck down for being unconstitutional. Next, petitioners insist that they should be absolved from any liability because the checks were issued to petitioner Lazatin allegedly as reimbursement for the advances he made from his personal funds for expenses incurred to ensure the immediate implementation of projects that are badly needed by the Pinatubo victims. The Court finds the petition unmeritorious. Petitioners' attack against the constitutionality of R.A. No. 6770 is stale. It has long been settled that the provisions of R.A. No. 6770 granting the Office of the Ombudsman prosecutorial powers and placing the OSP under said office have no constitutional infirmity. The issue of whether said provisions of R.A. No. 6770 violated the Constitution had been fully dissected as far back as 1995 in Acop v. Office of the Ombudsman.6 Therein, the Court held that giving prosecutorial powers to the Ombudsman is in accordance with the Constitution as paragraph 8, Section 13, Article XI provides that the Ombudsman shall "exercise such other functions or duties as may be provided by law." Elucidating on this matter, the Court stated: x x x While the intention to withhold prosecutorial powers from the Ombudsman was indeed present, the Commission [referring to the Constitutional Commission of 1986] did not hesitate to recommend that the Legislature could, through statute, prescribe such other powers, functions, and duties to the Ombudsman. x x x As finally approved by the Commission after several amendments, this is now embodied in paragraph 8, Section 13, Article XI (Accountability of Public Officers) of the Constitution, which provides: Sec.13. The Office of the Ombudsman shall have the following powers, functions, and duties: xx x x Promulgate its rules and procedure and exercise such other functions or duties as may be provided by law. Expounding on this power of Congress to prescribe other powers, functions, and duties to the Ombudsman, we quote Commissioners Colayco and Monsod during interpellation by Commissioner Rodrigo: xx x x MR. RODRIGO: Precisely, I am coming to that. The last of the enumerated functions of the Ombudsman is: "to exercise such powers or perform such functions or duties as may be provided by law." So, the legislature may vest him with powers taken away from the Tanodbayan, may it not? MR. COLAYCO: Yes. MR. MONSOD: Yes. xx x x MR. RODRIGO: Madam President. Section 5 reads: "The Tanodbayan shall continue to function and exercise its powers as provided by law." MR. COLAYCO: That is correct, because it is under P.D. No. 1630. MR. RODRIGO: So, if it is provided by law, it can be taken away by law, I suppose. MR. COLAYCO: That is correct. MR. RODRIGO: And precisely, Section 12(6) says that among the functions that can be performed by the Ombudsman are "such functions or duties as may be provided by law." The sponsors admitted that the legislature later on might remove some powers from the Tanodbayan and transfer these to the Ombudsman. MR. COLAYCO: Madam President, that is correct. xx x x MR. RODRIGO: Madam President, what I am worried about is, if we create a constitutional body which has neither punitive nor prosecutory powers but only persuasive powers, we might be raising the REMLAW Page 69
neither punitive nor prosecutory powers but only persuasive powers, we might be raising the hopes of our people too much and then disappoint them. MR. MONSOD: I agree with the Commissioner. MR. RODRIGO: Anyway, since we state that the powers of the Ombudsman can later on be implemented by the legislature, why not leave this to the legislature? xx x x MR. MONSOD: (reacting to statements of Commissioner Blas Ople): xx x x With respect to the argument that he is a toothless animal, we would like to say that we are promoting the concept in its form at the present, but we are also saying that he can exercise such powers and functions as may be provided by law in accordance with the direction of the thinking of Commissioner Rodrigo. We do not think that at this time we should prescribe this, but we leave it up to Congress at some future time if it feels that it may need to designate what powers the Ombudsman need in order that he be more effective. This is not foreclosed. So, this is a reversible disability, unlike that of a eunuch; it is not an irreversible disability. 7 The constitutionality of Section 3 of R.A. No. 6770, which subsumed the OSP under the Office of the Ombudsman, was likewise upheld by the Court in Acop. It was explained, thus: x x x the petitioners conclude that the inclusion of the Office of the Special Prosecutor as among the offices under the Office of the Ombudsman in Section 3 of R.A. No. 6770 ("An Act Providing for the Functional and Structural Organization of the Office of the Ombudsman and for Other Purposes") is unconstitutional and void. The contention is not impressed with merit. x x x xx x x x x x Section 7 of Article XI expressly provides that the then existing Tanodbayan, to be henceforth known as the Office of the Special Prosecutor, "shall continue to function and exercise its powers as now or hereafter may be provided by law, except those conferred on the Office of the Ombudsman created under this Constitution." The underscored phrase evidently refers to the Tanodbayan's powers under P.D. No. 1630 or subsequent amendatory legislation. It follows then that Congress may remove any of the Tanodbayan's/Special Prosecutor's powers under P.D. No. 1630 or grant it other powers, except those powers conferred by the Constitution on the Office of the Ombudsman. Pursuing the present line of reasoning, when one considers that by express mandate of paragraph 8, Section 13, Article XI of the Constitution, the Ombudsman may "exercise such other powers or perform functions or duties as may be provided by law," it is indubitable then that Congress has the power to place the Office of the Special Prosecutor under the Office of the Ombudsman. In the same vein, Congress may remove some of the powers granted to the Tanodbayan by P.D. No. 1630 and transfer them to the Ombudsman; or grant the Office of the Special Prosecutor such other powers and functions and duties as Congress may deem fit and wise. This Congress did through the passage of R.A. No. 6770.8 The foregoing ruling of the Court has been reiterated in Camanag v. Guerrero.9 More recently, in Office of the Ombudsman v. Valera,10 the Court, basing its ratio decidendi on its ruling in Acop and Camanag, declared that the OSP is "merely a component of the Office of the Ombudsman and may only act under the supervision and control, and upon authority of the Ombudsman" and ruled that under R.A. No. 6770, the power to preventively suspend is lodged only with the Ombudsman and Deputy Ombudsman.11 The Court's ruling in Acop that the authority of the Ombudsman to prosecute based on R.A. No. 6770 was authorized by the Constitution was also made the foundation for the decision in Perez v. Sandiganbayan,12 where it was held that the power to prosecute carries with it the power to authorize the filing of informations, which power had not been delegated to the OSP. It is, therefore, beyond cavil that under the Constitution, Congress was not proscribed from legislating the grant of additional powers to the Ombudsman or placing the OSP under the Office of the Ombudsman. Petitioners now assert that the Court's ruling on the constitutionality of the provisions of R.A. No. 6770 should be revisited and the principle of stare decisis set aside. Again, this contention deserves scant consideration. The doctrine of stare decisis et non quieta movere (to adhere to precedents and not to unsettle things which are established) is embodied in Article 8 of the Civil Code of the Philippines which provides, thus: ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. It was further explained in Fermin v. People13 as follows: The doctrine of stare decisis enjoins adherence to judicial precedents. It requires courts in a country to follow the rule established in a decision of the Supreme Court thereof. That 1awphi 1
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country to follow the rule established in a decision of the Supreme Court thereof. That decision becomes a judicial precedent to be followed in subsequent cases by all courts in the land. The doctrine of stare decisis is based on the principle that once a question of law has been examined and decided, it should be deemed settled and closed to further argument. 14 In Chinese Young Men's Christian Association of the Philippine Islands v. Remington Steel Corporation,15 the Court expounded on the importance of the foregoing doctrine, stating that: The doctrine of stare decisis is one of policy grounded on the necessity for securing certainty and stability of judicial decisions, thus: Time and again, the court has held that it is a very desirable and necessary judicial practice that when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same. Stare decisis et non quieta movere. Stand by the decisions and disturb not what is settled. Stare decisis simply means that for the sake of certainty, a conclusion reached in one case should be applied to those that follow if the facts are substantially the same , even though the parties may be different. It proceeds from the first principle of justice that, absent any powerful countervailing considerations, like cases ought to be decided alike. Thus, where the same questions relating to the same event have been put forward by the parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.16 The doctrine has assumed such value in our judicial system that the Court has ruled that "[a] bandonment thereof must be based only on strong and compelling reasons, otherwise, the becoming virtue of predictability which is expected from this Court would be immeasurably affected and the public's confidence in the stability of the solemn pronouncements diminished." 17 Verily, only upon showing that circumstances attendant in a particular case override the great benefits derived by our judicial system from the doctrine of stare decisis, can the courts be justified in setting aside the same. In this case, petitioners have not shown any strong, compelling reason to convince the Court that the doctrine of stare decisis should not be applied to this case. They have not successfully demonstrated how or why it would be grave abuse of discretion for the Ombudsman, who has been validly conferred by law with the power of control and supervision over the OSP, to disapprove or overturn any resolution issued by the latter. The second issue advanced by petitioners is that the Ombudsman's disapproval of the OSP Resolution recommending dismissal of the cases is based on misapprehension of facts, speculations, surmises and conjectures. The question is really whether the Ombudsman correctly ruled that there was enough evidence to support a finding of probable cause. That issue, however, pertains to a mere error of judgment. It must be stressed that certiorari is a remedy meant to correct only errors of jurisdiction, not errors of judgment. This has been emphasized in First Corporation v. Former Sixth Division of the Court of Appeals, 18 to wit: It is a fundamental aphorism in law that a review of facts and evidence is not the province of the extraordinary remedy of certiorari, which is extra ordinem - beyond the ambit of appeal. In certiorari proceedings, judicial review does not go as far as to examine and assess the evidence of the parties and to weigh the probative value thereof. It does not include an inquiry as to the correctness of the evaluation of evidence. Any error committed in the evaluation of evidence is merely an error of judgment that cannot be remedied by certiorari. An error of judgment is one which the court may commit in the exercise of its jurisdiction. An error of jurisdiction is one where the act complained of was issued by the court without or in excess of jurisdiction, or with grave abuse of discretion, which is tantamount to lack or in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari. Certiorari will not be issued to cure errors of the trial court in its appreciation of the evidence of the parties, or its conclusions anchored on the said findings and its conclusions of law. It is not for this Court to re -examine conflicting evidence, re-evaluate the credibility of the witnesses or substitute the findings of fact of the court a quo.19 Evidently, the issue of whether the evidence indeed supports a finding of probable cause would necessitate an examination and re-evaluation of the evidence upon which the Ombudsman based its disapproval of the OSP Resolution. Hence, the Petition for Certiorari should not be given due course. Likewise noteworthy is the holding of the Court in Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto,20 imparting the value of the Ombudsman's independence, stating thus: Under Sections 12 and 13, Article XI of the 1987 Constitution and RA 6770 (The Ombudsman Act of 1989), the Ombudsman has the power to investigate and prosecute any act or omission of a public officer or employee when such act or omission appears to be illegal, unjust, improper or inefficient. It has been the consistent ruling of the Court not to interfere with the Ombudsman's exercise of his investigatory and prosecutory powers as long as his rulings are supported by substantial 1avvphi 1
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his investigatory and prosecutory powers as long as his rulings are supported by substantial evidence. Envisioned as the champion of the people and preserver of the integrity of public service, he has wide latitude in exercising his powers and is free from intervention from the three branches of government. This is to ensure that his Office is insulated from any outside pressure and improper influence.21 Indeed, for the Court to overturn the Ombudsman's finding of probable cause, it is imperative for petitioners to clearly prove that said public official acted with grave abuse of discretion. In Presidential Commission on Good Government v. Desierto,22 the Court elaborated on what constitutes such abuse, to wit: Grave abuse of discretion implies a capricious and whimsical exercise of judgment tantamount to lack of jurisdiction. The Ombudsman's exercise of power must have been done in an arbitrary or despotic manner which must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. x x x23 In this case, petitioners failed to demonstrate that the Ombudsman acted in a manner described above. Clearly, the Ombudsman was acting in accordance with R.A. No. 6770 and properly exercised its power of control and supervision over the OSP when it disapproved the Resolution dated September 18, 2000. It should also be noted that the petition does not question any order or action of the Sandiganbayan Third Division; hence, it should not have been included as a respondent in this petition. IN VIEW OF THE FOREGOING, the petition is DISMISSED for lack of merit.
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Ferdinand Cruz v. Priscilla Mijares et al GR 154404 Sep 11, 2008 Sunday, November 14, 2010 11:20 PM
[G.R. NO. 154464, September 11, 2008] FERDINAND A. CRUZ, VS. JUDGE PRISCILLA MIJARES, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 108, PASAY CITY, METRO MANILA, PUBLIC RESPONDENT BENJAMIN MINA, PRIVATE RESPONDENT.
NACHURA, J.:
This is a Petition for Certiorari, Prohibition and Mandamus, with prayer for the issuance of a writ of preliminary injunction under Rule 65 of the Rules of Court. It was directly filed with this Court assailing the Resolutions dated May 10, 2002[1] and July 31, 2002[2] of the Regional Trial Court (RTC), Branch 108, Pasay City, which denied the appearance of the plaintiff Ferdinand A. Cruz, herein petitioner, as party litigant, and the refusal of the public respondent, Judge Priscilla Mijares, to voluntarily inhibit herself from trying the case. No writ of preliminary injunction was issued by this Court. The antecedents: On March 5, 2002, Ferdinand A. Cruz (petitioner) sought permission to enter his appearance for and on his behalf, before the RTC, Branch 108, Pasay City, as the plaintiff in Civil Case No. 01-0410, for Abatement of Nuisance. Petitioner, a fourth year law student, anchors his claim on Section 34 of Rule 138 of the Rules of Court[3] that a non-lawyer may appear before any court and conduct his litigation personally. During the pre-trial, Judge Priscilla Mijares required the petitioner to secure a written permission from the Court Administrator before he could be allowed to appear as counsel for himself, a party-litigant. Atty. Stanley Cabrera, counsel for Benjamin Mina, Jr., filed a Motion to Dismiss instead of a pre-trial brief to which petitioner Cruz vehemently objected alleging that a Motion to Dismiss is not allowed after the Answer had been filed. Judge Mijares then remarked, "Hay naku, masama `yung marunong pa sa Huwes. Ok?" and proceeded to hear the pending Motion to Dismiss and calendared the next hearing on May 2, 2002. On March 6, 2002, petitioner Cruz filed a Manifestation and Motion to Inhibit,[4] praying for the voluntary inhibition of Judge Mijares. The Motion alleged that expected partiality on the part of the respondent judge in the conduct of the trial could be inferred from the contumacious remarks of Judge Mijares during the pre-trial. It asserts that the judge, in uttering an uncalled for remark, reflects a negative frame of mind, which engenders the belief that justice will not be served.[5]
In an Order[6] dated April 19, 2002, Judge Mijares denied the motion for inhibition stating that throwing tenuous allegations of partiality based on the said remark is not enough to warrant her voluntary inhibition, considering that it was said even prior to the start of pre-trial. Petitioner filed a motion for reconsideration[7] of the said order. On May 10, 2002, Judge Mijares denied the motion with finality.[8] In the same Order, the trial court held that for the failure of petitioner Cruz to submit the promised document and jurisprudence, and for his failure to satisfy the requirements or conditions under Rule 138-A of the Rules of Court, his appearance was denied.
In a motion for reconsideration,[9] petitioner reiterated that the basis of his appearance was not Rule 138-A, but Section 34 of Rule 138. He contended that the two Rules were distinct and are applicable to different circumstances, but the respondent judge denied the same, still invoking Rule 138-A, in an REMLAW Page 73
different circumstances, but the respondent judge denied the same, still invoking Rule 138-A, in an Order[10] dated July 31, 2002. On August 16, 2002, the petitioner directly filed with this Court, the instant petition and assigns the following errors: I. The respondent regional trial court gravely erred and abused its discretion when it denied the appearance of the petitioner, for and in the latter's behalf, in civil case no. 01-0401 [sic] contrary to rule 138, section 34 of the rules of court, providing for the appearance of non-lawyers as a party litigant; II. the respondent court gravely erred and abused its discretion when it did not voluntarily inhibit despite the advent of jurisprudence [sic] that such an inhibition is proper to preserve the people's faith and confidence to the courts.
The core issues raised before the Court are: (1) whether the extraordinary writs of certiorari, prohibition and mandamus under Rule 65 of the 1997 Rules of Court may issue; and (2) whether the respondent court acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it denied the appearance of the petitioner as party litigant and when the judge refused to inhibit herself from trying the case. This Court's jurisdiction to issue writs of certiorari, prohibition, mandamus and injunction is not exclusive; it has concurrent jurisdiction with the RTCs and the Court of Appeals. This concurrence of jurisdiction is not, however, to be taken as an absolute, unrestrained freedom to choose the court where the application therefor will be directed.[11] A becoming regard of the judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against the RTCs should be filed with the Court of Appeals.[12] The hierarchy of courts is determinative of the appropriate forum for petitions for the extraordinary writs; and only in exceptional cases and for compelling reasons, or if warranted by the nature of the issues reviewed, may this Court take cognizance of petitions filed directly before it.[13] Considering, however, that this case involves the interpretation of Section 34, Rule 138 and Rule 138-A of the Rules of Court, the Court takes cognizance of herein petition. Nonetheless, the petitioner is cautioned not to continue his practice of filing directly before this Court petitions under Rule 65 when the issue raised can be resolved with dispatch by the Court of Appeals. We will not tolerate litigants who make a mockery of the judicial hierarchy as it necessarily delays more important concerns before us. In resolving the second issue, a comparative reading of Rule 138, Section 34 and Rule 138-A is necessary. Rule 138-A, or the Law Student Practice Rule, provides: RULE 138-A LAW STUDENT PRACTICE RULE Section 1. Conditions for Student Practice. - A law student who has successfully completed his 3rd year of the regular four-year prescribed law curriculum and is enrolled in a recognized law school's clinical legal education program approved by the Supreme Court, may appear without compensation in any civil, criminal or administrative case before any trial court, tribunal, board or officer, to represent indigent clients accepted by the legal clinic of the law school.
Sec. 2. Appearance. - The appearance of the law student authorized by this rule, shall be under the direct supervision and control of a member of the Integrated Bar of the Philippines duly accredited by the law school. Any and all pleadings, motions, briefs, memoranda or other papers to be filed, must be signed by the supervising attorney for and in behalf of the legal clinic. REMLAW Page 74
signed by the supervising attorney for and in behalf of the legal clinic. The respondent court held that the petitioner could not appear for himself and on his behalf because of his failure to comply with Rule 138-A. In denying petitioner's appearance, the court a quo tersely finds refuge in the fact that, on December 18, 1986, this Court issued Circular No. 19, which eventually became Rule 138-A, and the failure of Cruz to prove on record that he is enrolled in a recognized school's clinical legal education program and is under supervision of an attorney duly accredited by the law school. However, the petitioner insisted that the basis of his appearance was Section 34 of Rule 138, which provides: Sec. 34. By whom litigation is conducted. - In the court of a justice of the peace, a party may conduct his litigation in person, with the aid of an agent or friend appointed by him for that purpose, or with the aid of an attorney. In any other court, a party may conduct his litigation personally or by aid of an attorney, and his appearance must be either personal or by a duly authorized member of the bar. and is a rule distinct from Rule 138-A.
From the clear language of this provision of the Rules, it will have to be conceded that the contention of the petitioner has merit. It recognizes the right of an individual to represent himself in any case to which he is a party. The Rules state that a party may conduct his litigation personally or with the aid of an attorney, and that his appearance must either be personal or by a duly authorized member of the Bar. The individual litigant may personally do everything in the course of proceedings from commencement to the termination of the litigation.[14] Considering that a party personally conducting his litigation is restricted to the same rules of evidence and procedure as those qualified to practice law,[15] petitioner, not being a lawyer himself, runs the risk of falling into the snares and hazards of his own ignorance. Therefore, Cruz as plaintiff, at his own instance, can personally conduct the litigation of Civil Case No. 01-0410. He would then be acting not as a counsel or lawyer, but as a party exercising his right to represent himself. The trial court must have been misled by the fact that the petitioner is a law student and must, therefore, be subject to the conditions of the Law Student Practice Rule. It erred in applying Rule 138-A, when the basis of the petitioner's claim is Section 34 of Rule 138. The former rule provides for conditions when a law student may appear in courts, while the latter rule allows the appearance of a non-lawyer as a party representing himself.
The conclusion of the trial court that Rule 138-A superseded Rule 138 by virtue of Circular No. 19 is misplaced. The Court never intended to repeal Rule 138 when it released the guidelines for limited law student practice. In fact, it was intended as an addendum to the instances when a non-lawyer may appear in courts and was incorporated to the Rules of Court through Rule 138-A. It may be relevant to recall that, in respect to the constitutional right of an accused to be heard by himself and counsel,[16] this Court has held that during the trial, the right to counsel cannot be waived.[17] The rationale for this ruling was articulated in People v. Holgado,[18] where we declared that "even the most intelligent or educated man may have no skill in the science of law, particularly in the rules of procedure, and without counsel, he may be convicted not because he is guilty but because he does not know how to establish his innocence." The case at bar involves a civil case, with the petitioner as plaintiff therein. The solicitous concern that the Constitution accords the accused in a criminal prosecution obviously does not obtain in a civil case. Thus, a party litigant in a civil case, who insists that he can, without a lawyer's assistance, effectively undertake the successful pursuit of his claim, may be given the chance to do so. In this case, petitioner alleges that he is a law student and impliedly asserts that he has the competence to litigate the case himself. Evidently, he is aware of the perils incident to this decision. In addition, it was subsequently clarified in Bar Matter 730, that by virtue of Section 34, Rule 138, a law student may appear as an agent or a friend of a party litigant, without need of the supervision of a REMLAW Page 75
student may appear as an agent or a friend of a party litigant, without need of the supervision of a lawyer, before inferior courts. Here, we have a law student who, as party litigant, wishes to represent himself in court. We should grant his wish. Additionally, however, petitioner contends that the respondent judge committed manifest bias and partiality by ruling that there is no valid ground for her voluntary inhibition despite her alleged negative demeanor during the pre-trial when she said: "Hay naku, masama `yung marunong pa sa Huwes. Ok?" Petitioner avers that by denying his motion, the respondent judge already manifested conduct indicative of arbitrariness and prejudice, causing petitioner's and his co-plaintiff's loss of faith and confidence in the respondent's impartiality. We do not agree. It must be noted that because of this incident, the petitioner filed an administrative case [19] against the respondent for violation of the Canons of Judicial Ethics, which we dismissed for lack of merit on September 15, 2002. We now adopt the Court's findings of fact in the administrative case and rule that there was no grave abuse of discretion on the part of Judge Mijares when she did not inhibit herself from the trial of the case. In a Motion for Inhibition, the movant must prove the ground for bias and prejudice by clear and convincing evidence to disqualify a judge from participating in a particular trial,[20] as voluntary inhibition is primarily a matter of conscience and addressed to the sound discretion of the judge. The decision on whether she should inhibit herself must be based on her rational and logical assessment of the circumstances prevailing in the case before her.[21] Absent clear and convincing proof of grave abuse of discretion on the part of the judge, this Court will rule in favor of the presumption that official duty has been regularly performed.
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Resolution and Order of the Regional Trial Court, Branch 108, Pasay City are MODIFIED. Regional Trial Court, Branch 108, Pasay City is DIRECTED to ADMIT the Entry of Appearance of petitioner in Civil Case No. 01-0410 as a party litigant. No pronouncement as to costs. Pasted from
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First United v. Poro Point GR 178799 Jan 19, 2009 Sunday, November 14, 2010 11:20 PM
G.R. No. 178799 January 19, 2009 FIRST UNITED CONSTRUCTORS CORPORATION, vs. PORO POINT MANAGEMENT CORPORATION (PPMC), THE SPECIAL BIDS & AWARDS COMMITTEE (SBAC) of PPMC, ATTY. FELIX S. RACADIO, and SATRAP CONSTRUCTION COMPANY, INC., NACHURA, J.: First United Constructors Corporation (FUCC) filed this special civil action for certiorari and prohibition with prayer for the issuance of a temporary restraining order, seeking to annul (i) the re-bidding of the contract for the Upgrading of the San Fernando Airport Project, Phase I, held on May 8, 2007; (ii) the Notice of Award1 dated May 23, 2007 to Satrap Construction Company, Inc. (SCCI); and (iii) Notice to Proceed2 dated May 29, 2007 also to SCCI. FUCC also seeks to permanently enjoin the Special Bids and Awards Committee (SBAC) and Poro Point Management Corporation (PPMC) from implementing the Contract3 in favor of SCCI. The factual antecedents are as follows: On January 26, 2007, PPMC approved the Contract for the Upgrading of the San Fernando Airport Phase I. The SBAC then issued invitations to reputable contractors to pre-qualify for the project. FUCC and two (2) other contractors - C.M. Pancho Construction, Inc. (C.M. Pancho) and EEI-New Kanlaon Construction, Inc. Joint Venture (EEI-New Kanlaon JV) responded to the invitation and were pre-qualified to bid for the project. However, upon evaluation, none of the pre-qualified bidders was chosen. C.M. Pancho was disqualified because it did not possess the required minimum years of experience in airport projects, while EEI New Kanlaon JV was disqualified because it did not submit a special license to bid as joint venture. FUCC’s technical proposal, on the other hand, obtained a failing mark because it failed to submit the automated weather observation system (AWOS) and its authorized representative did not sign some pages of the narrative construction method and the tax returns. FUCC sought reconsideration of the SBAC decision, but it was denied.4 FUCC then filed a protest5 with the PPMC. On March 26, 2007, Atty. Felix S. Racadio, PPMC Head, resolved FUCC’s protest, viz.: In sum, based on the issues raised and [the] arguments presented by FUCC, this OFFICE finds NO REVERSIBLE ERROR committed by SBAC, both on its findings of 06 March 2007 (giving FUCC the FAILED rating) and 12 March 2007 (denial of FUCC’s Motion for Reconsideration). In addition to the "NO REVERSIBLE ERROR FINDING," there exists a PRESUMPTION OF REGULARITY OF OFFICIAL ACTION OF A PUBLIC OFFICER. In the case at bar, such presumption applies. The burden of proof lies with the FUCC. On this score, FUCC failed to even just scratch the surface of the same. The proceedings and findings of SBAC, in the Pre-Qualification stage not having been put into issue by the PROTEST, then, FUCC had opted to leave them as they were, thus, let them remain UNDISTURBED. WHEREFORE, in view of the foregoing, the PROTEST filed by FUCC which is under consideration is hereby DISMISSEDfor lack of merit. The FILING FEE paid by FUCC, the protestant, via Metro Bank Cashier’s Check No. 0600018513, dated March 19, 2007, in the amount of Four Million Seven Hundred Twenty-One Thousand Pesos (P4,721,000.00), Philippine Currency, which is equivalent to one [percent] (%) of the ABC being NONREFUNDABLE (Sec. 55.1, IRR-A, RA 1984), the same is hereby ordered FORFEITED in favor of PPMC. SO ORDERED.6 SBAC then scheduled a re-bidding and issued new invitations to bid for the project. To enjoin the rebidding set on May 8, 2007, FUCC filed a petition for injunction with prayer for the issuance of a preliminary injunction or temporary restraining order (TRO) with the Regional Trial Court (RTC) of La Union, docketed as Civil Case No. 7274. On May 2, 2007, the RTC issued a TRO which, however, was lifted on May 4, 2007 because under Section 3 of Republic Act No. 8975,7 no court, except the Supreme Court, shall issue a TRO or injunction or prohibit the bidding or award of a government infrastructure project. SBAC thus proceeded with the rebidding of the project on May 8, 2007 and awarded the project to SCCI as the lowest qualified bidder.8 REMLAW Page 77
bidding of the project on May 8, 2007 and awarded the project to SCCI as the lowest qualified bidder.8 The Contract9 for the project was signed, and a notice to proceed10 was served on SCCI on May 29, 2007. FUCC filed an amended petition with the RTC to enjoin the implementation of the project. The Office of the Government Corporate Counsel (OGCC) moved to dismiss the petition for lack of jurisdiction. Pending resolution of OGCC’s motion to dismiss, FUCC moved for the dismissal of its amended petition, which was granted by the RTC on July 4, 2007, to wit: Acting on the above-stated notice of dismissal, this Court hereby confirms the dismissal of the amended petition, in effect the dismissal of the whole action, without prejudice, pursuant to Sec. 1, Rule 17 of the Rules of Court. WHEREFORE, this case is hereby DISMISSED. SO ORDERED.11 Claiming that there is no appeal, or any speedy and adequate remedy in the ordinary course of law, FUCC comes to us via this petition. It also asks for the issuance of a TRO to enjoin the implementation of the project, asserting that SCCI is not qualified to undertake the project and the award clearly poses a real threat to the public welfare and safety. In its November 12, 2007 Resolution, this Court denied FUCC’s application for the issuance of a TRO for lack of merit. FUCC filed this petition praying for the following relief, viz.: (a) That upon receipt of this Petition, a Temporary Restraining Order (TRO) be issued enjoining the implementation of the contract for the Upgrading of the San Fernando Airport Project, Phase I with respondent [SCCI] as the contractor; (b) That after proper proceeding, judgment be rendered: (1) permanently enjoining the implementation of the contract for the Upgrading of the San Fernando Airport Project, Phase I with respondent [SCCI] as the contractor; (2) declaring the re-bidding of the contract for the Upgrading of the San Fernando Airport Project, Phase I on 08 May 2007 illegal and nullifying the results thereof; (3) annulling the Notice of Award dated 23 May 2007, the Contract for the Upgrading of the San Fernando Airport, Phase I entered into, by and between respondent PPMC and respondent [SCCI] on 29 May 2007, and the Notice to Proceed dated 29 May 2007; and (4) directing respondent SBAC and/or respondent PPMC and/or respondent Atty. Recadio to reconsider the "Failed" rating of the bid of FUCC, open the Financial Proposal Envelope submitted by FUCC during the original bidding, declare FUCC as the winning bidder, and forthwith award the contract to FUCC, as the winning bidder and being the only qualified contractor for the project. 12 It asserts that SBAC and PPMC committed grave abuse of discretion in disqualifying its bid, in denying its protest, in conducting a re-bidding and in awarding the project to SCCI. It insists that it is the only qualified contractor for the project and prays that it be declared the winning bidder. We dismiss the petition. Republic Act (RA) No. 9184, or the Government Procurement Reform Act, outlines the procedure to assail decisions of the SBAC in this wise: SEC. 55. Protests on Decisions of the BAC. – Decisions of BAC in all stages of procurement may be protested to the head of the procuring entity and shall be in writing. Decisions of the BAC may be protested by filing a verified position paper and paying a nonrefundable protest fee. The amount of protest fee and the periods during which the protests may be filed and resolved shall be specified in the IRR. SEC. 56. Resolution of Protests. - The protests shall be resolved strictly on the basis of records of the BAC. Up to a certain amount specified in the IRR, the decisions of the Head of the Procuring Entity shall be final. SEC. 57. Non-interruption of the Bidding Process. – In no case shall any protest taken from any decision treated in this Article stay or delay the bidding process. Protests must first be resolved before any award is made. SEC. 58. Resort to Regular Courts; Certiorari. – Court action may be resorted only after the protest contemplated in this Article shall have been completed. Cases that are filed in violation of the process specified in this Article shall be dismissed for lack of jurisdiction. The regional trial court shall have jurisdiction over final decisions of the head of the procuring entity. Court actions shall be governed by Rule 65 of the 1997 Rules of Civil Procedure. This provision is without prejudice to any law conferring on the Supreme Court the sole jurisdiction to issue temporary restraining orders and injunctions relating to Infrastructure Projects of Government. FUCC challenged the decision of SBAC in a protest filed with Atty. Racadio of the PPMC who affirmed the REMLAW Page 78
issue temporary restraining orders and injunctions relating to Infrastructure Projects of Government. FUCC challenged the decision of SBAC in a protest filed with Atty. Racadio of the PPMC who affirmed the SBAC decision. Instead of filing a petition for certiorari, as provided in Section 58, FUCC filed a petition for injunction with prayer for the issuance of a temporary restraining order and/or preliminary injunction with the RTC. FUCC, however, later moved for its dismissal theorizing that the RTC had no jurisdiction over petitions for injunction. Thereafter, it filed this petition for certiorari with this Court. Section 4, Rule 65 of the 1997 Rules of Civil Procedure provides that a special civil action for certiorari shall be filed not later than sixty (60) days from the notice of the judgment, order or resolution.13 FUCC admitted that it received the PPMC decision on March 27, 2007.14 However, it filed this petition assailing the said decision only on July 30, 2007. It is, therefore, too late in the day for FUCC, via this petition, to assail the PPMC decision which rated its bid as failed. Besides, FUCC violated the doctrine of judicial hierarchy in filing this petition for certiorari directly with this Court. Section 58 is clear that petitions for the issuance of a writ of certiorari against the decision of the head of the procuring agency, like PPMC, should be filed with the Regional Trial Court. Indeed, the jurisdiction of the RTC over petitions for certiorari is concurrent with this Court. However, such concurrence does not allow unrestricted freedom of choice of the court forum. A direct invocation of the Supreme Court’s original jurisdiction to issue this writ should be allowed only when there are special and important reasons, clearly and specifically set out in the petition.15 In the present case, FUCC adduced no special and important reason why direct recourse to this Court should be allowed. Thus, we reaffirm the judicial policy that this Court will not entertain a direct invocation of its jurisdiction unless the redress desired cannot be obtained in the appropriate lower courts, and exceptional and compelling circumstances justify the resort to the extraordinary remedy of a writ of certiorari. Similarly, the RTC is the proper venue to hear FUCC’s prayer for permanent injunction. Unquestionably, RA No. 897516 enjoins all courts, except the Supreme Court, from issuing any temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity to restrain, prohibit or compel the bidding or awarding of a contract or project of the national government. The proscription, however, covers only temporary restraining orders or writs but not decisions on the merits granting permanent injunction. Therefore, while courts below are prohibited by RA No. 8795 from issuing TROs or preliminary restraining orders pending the adjudication of the case, said statute, however, does not explicitly proscribe the issuance of a permanent injunction granted by a court of law arising from an adjudication of a case on the merits.17 As we explained in Alvarez v. PICOP Resources, Inc.:18 x x x Republic Act No. 8975 merely proscribes the issuance of temporary restraining orders and writs of preliminary injunction and preliminary mandatory injunction. [It] cannot, under pain of violating the Constitution, deprive the courts of authority to take cognizance of the issues raised in the principal action, as long as such action and the relief sought are within their jurisdiction. Clearly, except for the prayer for the issuance of a TRO or preliminary injunction, the issues raised by FUCC and the relief it sought are within the jurisdiction of the RTC. It is a procedural faux pas for FUCC to invoke the original jurisdiction of this Court over the issuance of a writ of certiorari and permanent injunction. In any event, the invitation to bid contains a reservation for PPMC to reject any bid. It has been held that where the right to reject is so reserved, the lowest bid, or any bid for that matter, may be rejected on a mere technicality.19 The discretion to accept or reject bid and award contracts is vested in the government agencies entrusted with that function. This discretion is of such wide latitude that the Courts will not interfere therewith or direct the committee on bids to do a particular act or to enjoin such act within its prerogatives unless it is apparent that it is used as a shield to a fraudulent award;20 or an unfairness or injustice is shown;21 or when in the exercise of its authority, it gravely abuses or exceeds its jurisdiction. Thus, where PPMC as advertiser, availing itself of that right, opts to reject any or all bids, the losing bidder has no cause to complain or right to dispute that choice, unless fraudulent acts, injustice, unfairness or grave abuse of discretion is shown. FUCC alleges that SBAC and PPMC, along with the SCCI and five (5) other bidders, colluded to rig the results of the re-bidding so that SCCI would emerge as the so-called lowest bidder. The record, however, is bereft of any proof to substantiate the allegation. Neither is there any evidence offered to establish unfairness, injustice, caprice or arbitrariness on the part of the SBAC or the PPMC in awarding the contract to SCCI, the lowest bidder. The presumption of regularity of the bidding must thus be upheld. REMLAW Page 79
contract to SCCI, the lowest bidder. The presumption of regularity of the bidding must thus be upheld. As we explained in JG Summit Holdings, Inc. v. Court of Appeals:22 The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgressed its constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making. It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489). Accordingly, there being no showing of grave abuse of discretion, FUCC has no valid ground to demand annulment of the contract between PPMC and SCCI. WHEREFORE, the petition is DISMISSED. The assailed Decision of the PPMC is AFFIRMED. SO ORDERED. Pasted from
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First Lepanto Ceramics, Inc. v. CA, GR 110571, Mar 10, 1994 Sunday, November 14, 2010 11:21 PM
G.R. No. 110571 March 10, 1994 FIRST LEPANTO CERAMICS, INC vs. CA and MARIWASA MANUFACTURING, INC., NOCON, J.: Brought to fore in this petition for certiorari and prohibition with application for preliminary injunction is the novel question of where and in what manner appeals from decisions of the Board of Investments (BOI) should be filed. A thorough scrutiny of the conflicting provisions of Batas Pambansa Bilang 129, otherwise known as the "Judiciary Reorganization Act of 1980," Executive Order No. 226, also known as the Omnibus Investments Code of 1987 and Supreme Court Circular No. 1-91 is, thus, called for. Briefly, this question of law arose when BOI, in its decision dated December 10, 1992 in BOI Case No. 92-005 granted petitioner First Lepanto Ceramics, Inc.'s application to amend its BOI certificate of registration by changing the scope of its registered product from "glazed floor tiles" to "ceramic tiles." Eventually, oppositor Mariwasa filed a motion for reconsideration of the said BOI decision while oppositor Fil-Hispano Ceramics, Inc. did not move to reconsider the same nor appeal therefrom. Soon rebuffed in its bid for reconsideration, Mariwasa filed a petition for review with respondent Court of Appeals pursuant to Circular 1-91. Acting on the petition, respondent court required the BOI and petitioner to comment on Mariwasa's petition and to show cause why no injunction should issue. On February 17, 1993, respondent court temporarily restrained the BOI from implementing its decision. This temporary restraining order lapsed by its own terms on March 9, 1993, twenty (20) days after its issuance, without respondent court issuing any preliminary injunction. On February 24, 1993, petitioner filed a "Motion to Dismiss Petition and to Lift Restraining Order" on the ground that respondent court has no appellate jurisdiction over BOI Case No. 92-005, the same being exclusively vested with the Supreme Court pursuant to Article 82 of the Omnibus Investments Code of 1987. On May 25, 1993, respondent court denied petitioner's motion to dismiss, the dispositive portion of which reads as follows: WHEREFORE, private respondent's motion to dismiss the petition is hereby DENIED, for lack of merit. Private respondent is hereby given an inextendible period of ten (10) days from receipt hereof within which to file its comment to the petition. 1 Upon receipt of a copy of the above resolution on June 4, 1993, petitioner decided not to file any motion for reconsideration as the question involved is essentially legal in nature and immediately filed a petition for certiorari and prohibition before this Court. Petitioner posits the view that respondent court acted without or in excess of its jurisdiction in issuing the questioned resolution of May 25, 1993, for the following reasons: I. Respondent court has no jurisdiction to entertain Mariwasa's appeal from the BOI's decision in BOI Case No. 92-005, which has become final. II. The appellate jurisdiction conferred by statute upon this Honorable Court cannot be amended or superseded by Circular No. 1-91. 2 Petitioner then concludes that: III. Mariwasa has lost it right to appeal . . . in this case. 3 Petitioner argues that the Judiciary Reorganization Act of 1980 or Batas Pambansa Bilang 129 and Circular 1-91, "Prescribing the Rules Governing Appeals to the Court of Appeals from a Final Order or Decision of the Court of Tax Appeals and Quasi-Judicial Agencies" cannot be the basis of Mariwasa's appeal to respondent court because the procedure for appeal laid down therein runs contrary to Article 82 of E.O. 226, which provides that appeals from decisions or orders of the BOI shall be filed directly with this Court, to wit: Judicial relief. — All orders or decisions of the Board (of Investments) in cases involving the provisions of this Code shall immediately be executory. No appeal from the order or decision of the Board by the party adversely affected shall stay such an order or decision; Provided, that all appeals shall be filed directly with the Supreme Court within thirty (30) days REMLAW Page 81
decision; Provided, that all appeals shall be filed directly with the Supreme Court within thirty (30) days from receipt of the order or decision. On the other hand, Mariwasa maintains that whatever "obvious inconsistency" or "irreconcilable repugnancy" there may have been between B.P. 129 and Article 82 of E.O. 226 on the question of venue for appeal has already been resolved by Circular 1-91 of the Supreme Court, which was promulgated on February 27, 1991 or four (4) years after E.O. 226 was enacted. Sections 1, 2 and 3 of Circular 1-91, is herein quoted below: 1. Scope. — These rules shall apply to appeals from final orders or decisions of the Court of Tax Appeals. They shall also apply to appeals from final orders or decisions of any quasi-judicial agency from which an appeal is now allowed by statute to the Court of Appeals or the Supreme Court. Among these agencies are the Securities and Exchange Commission, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Secretary of Agrarian Reform and Special Agrarian Courts under RA 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission and Philippine Atomic Energy Commission. 2. Cases not covered. — These rules shall not apply to decisions and interlocutory orders of the National Labor Relations Commission or the Secretary of Labor and Employment under the Labor Code of the Philippines, the Central Board of Assessment Appeals, and other quasi-judicial agencies from which no appeal to the courts is prescribed or allowed by statute. 3. Who may appeal and where to appeal. — The appeal of a party affected by a final order, decision, or judgment of the Court of Tax Appeals or of a quasi-judicial agency shall be taken to the Court of Appeals within the period and in the manner herein provided, whether the appeal involves questions of fact or of law or mixed questions of fact and law. From final judgments or decisions of the Court of Appeals, the aggrieved party may appeal by certiorari to the Supreme Court as provided in Rule 45 of the Rules of Court. It may be called that Section 9(3) of B.P. 129 vests appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of quasi-judicial agencies on the Court of Appeals, to wit: (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals. Clearly evident in the aforequoted provision of B.P. 129 is the laudable objective of providing a uniform procedure of appeal from decisions of all quasi-judicial agencies for the benefit of the bench and the bar. Equally laudable is the twin objective of B.P. 129 of unclogging the docket of this Court to enable it to attend to more important tasks, which in the words of Dean Vicente G. Sinco, as quoted in our decision in Conde v. Intermediate Appellate Court 4 is "less concerned with the decisions of cases that begin and end with the transient rights and obligations of particular individuals but is more intertwined with the direction of national policies, momentous economic and social problems, the delimitation of governmental authority and its impact upon fundamental rights. In Development Bank of the Philippines vs. Court of Appeals, 5 this Court noted that B.P. 129 did not deal only with "changes in the rules on procedures" and that not only was the Court of Appeals reorganized, but its jurisdiction and powers were also broadened by Section 9 thereof. Explaining the changes, this Court said: . . . Its original jurisdiction to issue writs of mandamus, prohibition, certiorari and habeas corpus, which theretofore could be exercised only in aid of its appellate jurisdiction, was expanded by (1) extending it so as to include the writ of quo warranto, and also (2) empowering it to issue all said extraordinary writs REMLAW Page 82
so as to include the writ of quo warranto, and also (2) empowering it to issue all said extraordinary writs "whether or not in aid of its appellate jurisdiction." Its appellate jurisdiction was also extended to cover not only final judgments of Regional Trial Courts, but also "all final judgments, decisions, resolutions, orders or awards of . . . quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of sub-paragraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948," it being noteworthy in this connection that the text of the law is broad and comprehensive, and the explicitly stated exceptions have no reference whatever to the Court of Tax Appeals. Indeed, the intention to expand the original and appellate jurisdiction of the Court of Appeals over quasi-judicial agencies, instrumentalities, boards, or commissions, is further stressed by the last paragraph of Section 9 which excludes from its provisions, only the "decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals." 6 However, it cannot be denied that the lawmaking system of the country is far from perfect. During the transitional period after the country emerged from the Marcos regime, the lawmaking power was lodged on the Executive Department. The obvious lack of deliberation in the drafting of our laws could perhaps explain the deviation of some of our laws from the goal of uniform procedure which B.P. 129 sought to promote. In exempli gratia, Executive Order No. 226 or the Omnibus Investments Code of 1987 provides that all appeals shall be filed directly with the Supreme Court within thirty (30) days from receipt of the order or decision. Noteworthy is the fact that presently, the Supreme Court entertains ordinary appeals only from decisions of the Regional Trial Courts in criminal cases where the penalty imposed is reclusion perpetua or higher. Judgments of regional trial courts may be appealed to the Supreme Court only by petition for review on certiorari within fifteen (15) days from notice of judgment in accordance with Rule 45 of the Rules of Court in relation to Section 17 of the Judiciary Act of 1948, as amended, this being the clear intendment of the provision of the Interim Rules that "(a)ppeals to the Supreme Court shall be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court." Thus, the right of appeal provided in E.O. 226 within thirty (30) days from receipt of the order or decision is clearly not in consonance with the present procedure before this Court. Only decisions, orders or rulings of a Constitutional Commission (Civil Service Commission, Commission on Elections or Commission on Audit), may be brought to the Supreme Court on original petitions for certiorari under Rule 65 by the aggrieved party within thirty (30) days form receipt of a copy thereof. 7 Under this contextual backdrop, this Court, pursuant to its Constitutional power under Section 5(5), Article VIII of the 1987 Constitution to promulgate rules concerning pleading, practice and procedure in all courts, and by way of implementation of B.P. 129, issued Circular 1-91 prescribing the rules governing appeals to the Court of Appeals from final orders or decisions of the Court of Tax Appeals and quasijudicial agencies to eliminate unnecessary contradictions and confusing rules of procedure. Contrary to petitioner's contention, although a circular is not strictly a statute or law, it has, however, the force and effect of law according to settled jurisprudence. 8 In Inciong v. de Guia, 9 a circular of this Court was treated as law. In adopting the recommendation of the Investigating Judge to impose a sanction on a judge who violated Circular No. 7 of this Court dated September 23, 1974, as amended by Circular No. 3 dated April 24, 1975 and Circular No. 20 dated October 4, 1979, requiring raffling of cases, this Court quoted the ratiocination of the Investigating Judge, brushing aside the contention of respondent judge that assigning cases instead of raffling is a common practice and holding that respondent could not go against the circular of this Court until it is repealed or otherwise modified, as "(L)aws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse, or customs or practice to the contrary." 10 The argument that Article 82 of E.O. 226 cannot be validly repealed by Circular 1-91 because the former grants a substantive right which, under the Constitution cannot be modified, diminished or increased by this Court in the exercise of its rule-making powers is not entirely defensible as it seems. Respondent correctly argued that Article 82 of E.O. 226 grants the right of appeal from decisions or final orders of the BOI and in granting such right, it also provided where and in what manner such appeal can be brought. These latter portions simply deal with procedural aspects which this Court has the power to regulate by virtue of its constitutional rule-making powers. REMLAW Page 83
regulate by virtue of its constitutional rule-making powers. The case of Bustos v. Lucero 11 distinguished between rights created by a substantive law and those arising from procedural law: Substantive law creates substantive rights . . . . Substantive rights is a term which includes those rights which one enjoys under the legal system prior to the disturbance of normal relations (60 C.J., 980). Substantive law is that part of the law which creates, defines and regulates rights, or which regulates rights and duties which give rise to a cause of action, as oppossed to adjective or remedial law, which prescribes the method of enforcing rights or obtains a redress for their invasion. 12 Indeed, the question of where and in what manner appeals from decisions of the BOI should be brought pertains only to procedure or the method of enforcing the substantive right to appeal granted by E.O. 226. In other words, the right to appeal from decisions or final orders of the BOI under E.O. 226 remains and continues to be respected. Circular 1-91 simply transferred the venue of appeals from decisions of this agency to respondent Court of Appeals and provided a different period of appeal, i.e., fifteen (15) days from notice. It did not make an incursion into the substantive right to appeal. The fact that BOI is not expressly included in the list of quasi-judicial agencies found in the third sentence of Section 1 of Circular 1-91 does not mean that said circular does not apply to appeals from final orders or decision of the BOI. The second sentence of Section 1 thereof expressly states that "(T) hey shall also apply to appeals from final orders or decisions of any quasi-judicial agency from which an appeal is now allowed by statute to the Court of Appeals or the Supreme Court." E.O. 266 is one such statute. Besides, the enumeration is preceded by the words "(A)mong these agencies are . . . ," strongly implying that there are other quasi-judicial agencies which are covered by the Circular but which have not been expressly listed therein. More importantly, BOI does not fall within the purview of the exclusions listed in Section 2 of the circular. Only the following final decisions and interlocutory orders are expressly excluded from the circular, namely, those of: (1) the National Labor Relations Commission; (2) the Secretary of Labor and Employment; (3) the Central Board of Assessment Appeals and (4) other quasi-judicial agencies from which no appeal to the courts is prescribed or allowed by statute. Since in DBP v. CA 13 we upheld the appellate jurisdiction of the Court of Appeals over the Court of Tax Appeals despite the fact that the same is not among the agencies reorganized by B.P. 129, on the ground that B.P. 129 is broad and comprehensive, there is no reason why BOI should be excluded from Circular 1-91, which is but implementary of said law. Clearly, Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as the manner and method of enforcing the right to appeal from decisions of the BOI are concerned. Appeals from decisions of the BOI, which by statute was previously allowed to be filed directly with the Supreme Court, should now be brought to the Court of Appeals. WHEREFORE, in view of the foregoing reasons, the instant petition for certiorari and prohibition with application for temporary restraining order and preliminary injunction is hereby DISMISSED for lack of merit. The Temporary Restraining Order issued on July 19, 1993 is hereby LIFTED. Pasted from
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Sarah Ampong v. CSC GR 167916 Aug 26, 2008 Sunday, November 14, 2010 11:21 PM
[G.R. No. 167916, August 26, 2008]
SARAH P. AMPONG VS. CIVIL SERVICE COMMISSION, CSC-REGIONAL OFFICE NO. 11, RESPONDENT. REYES, R.T., J.: CAN the Civil Service Commission (CSC) properly assume jurisdiction over administrative proceedings against a judicial employee involving acts of dishonesty as a teacher, committed prior to her appointment to the judiciary? Before Us is a petition for review on certiorari assailing the Decision[1] of the Court of Appeals (CA) affirming the CSC's exercise of administrative jurisdiction over petitioner. The Facts The following facts are uncontroverted: On November 10, 1991, a Professional Board Examination for Teachers (PBET)[2] was held in Davao City. A certain Evelyn Junio-Decir[3] applied for and took the examination at Room 16, Kapitan Tomas Monteverde Elementary School. She passed with a rating of 74.27%.[4] At the time of the PBET examinations, petitioner Sarah P. Ampong (nee Navarra) and Decir were public school teachers under the supervision of the Department of Education, Culture and Sports (DECS).[5] Later, on August 3, 1993, Ampong transferred to the Regional Trial Court (RTC) in Alabel, Sarangani Province, where she was appointed as Court Interpreter III. On July 5, 1994, a woman representing herself as Evelyn Decir went to the Civil Service Regional Office (CSRO) No. XI, Davao City, to claim a copy of her PBET Certificate of Eligibility. During the course of the transaction, the CSRO personnel noticed that the woman did not resemble the picture of the examinee in the Picture Seat Plan (PSP). Upon further probing, it was confirmed that the person claiming the eligibility was different from the one who took the examinations. It was petitioner Ampong who took and passed the examinations under the name Evelyn Decir. The CSRO conducted a preliminary investigation and determined the existence of a prima facie case against Decir and Ampong for Dishonesty, Grave Misconduct and Conduct Prejudicial to the Best Interest of the Service. On August 23, 1994, they were formally charged and required to file answers under oath. The formal charge reads: That sometime before the conduct of the November 10, 1991 Professional Board Examination for Teachers (PBET), a certain Ms. Evelyn B. Junio (now Decir) took the said examination at Rm. 16 Kapitan Tomas Monteverde Elementary School, Davao City, with a passing rate of 74.27%; That on July 5, 1994 she appeared before the CSC Region XI Office to get her Guro Certificate; That upon verification, it was found out that the picture attached in the Picture Seat Plan, marked as Annex "A" and "A-1," respectively, were not the same compared to the picture attached in the CSC Form 212 of Evelyn JunioDecir marked herein as annex "B," "B-1," respectively. There was also a marked difference in the signatures affixed in the said annexes; That further investigations revealed that it was the pictures of Ms. Sarah Navarra, wife of her husband's first cousin, who took the said examination in behalf of Ms. Evelyn Junio-Decir, a provisional teacher; That the said act of Mesdames Decir and Navarra are acts of dishonesty and conduct prejudicial to the best interest of the service; that in (sic) taking the CS examination for and in behalf of another undermines the sanctity of the CS examinations; All these contrary to existing civil service laws and regulations. (Emphasis supplied) In her sworn statement dated November 3, 1994, Decir denied the charges against her. She reasoned out that it must have been the examination proctor who pasted the wrong picture on the PSP and that her signatures were different because she was still signing her maiden name at the time of the REMLAW Page 85
her signatures were different because she was still signing her maiden name at the time of the examination. In her Answer, Decir contended that: 2. The same accusation is denied, the truth being: a. When I took the Professional Board Examination for Teachers (PBET) in the year 1991, I handed my 1x1 I.D. picture to the proctor assigned in the examination room who might have inadvertently pasted in the Seat Plan [the] wrong picture instead [of] my own picture; b. With respect to the marked difference in my signature both appearing in the aforesaid Seat Plan and also with the Form 212, the disparity lies in that in the year 1991, when I took the afroresaid examination, I was still sporting my maiden name Evelyn B. Junio in order to coincide with all my pertinent supporting papers, like the special order (s.o.), appointment and among others, purposely to take said communications. However, immediately after taking the PBET Examination in 1991, I started using the full name of Evelyn Junio-Decir.[6] Even before filing an Answer, petitioner Ampong voluntarily appeared at the CSRO on February 2, 1995 and admitted to the wrongdoing. When reminded that she may avail herself of the services of counsel, petitioner voluntarily waived said right.
On March 13, 1995, petitioner gave another admission in the following tenor: Q:
Now, what is then your intention in coming to this Region inasmuch as you are still intending to file an answer to the formal charge?
A:
I came here because I want to admit personally. So that I will not be coming here anymore. I will submit my case for Resolution.
Q:
So, you intend to waive your right for the formal hearing and you also admit orally on the guilt of the charge on the Formal Charge dated August 24, 1994?
A:
Yes, Ma'am.
Q:
What else do you want to tell the Commission?
A:
x x x Inasmuch as I am already remorseful, I am repenting of the wrong that I have done. I am hoping that the Commission can help x x x so that I will be given or granted another chance to serve the government. xxx x
Q:
Now inasmuch as you have declared that you have admitted the guilt that you took the examination for and in behalf of Evelyn Junio Decir, are you telling this to the Commission without the assistance of the counsel or waiver of your right to be assisted by counsel.
A:
Yes, Ma'am. I am waiving my right. [7] (Emphasis supplied)
Petitioner reiterated her admission in her sworn Answer dated March 16, 1995: 3. That, during the commission of the act, I was still under the Department of Education, Culture and Sports, as Teacher in-charge of San Miguel Primary School, Malungon North District, way back in 1991, when the husband of Evelyn Junio-Decir, my husband's cousin came to me and persuaded me to take the examination in behalf of his wife to which I disagreed but he earnestly begged so that I was convinced to agree because I pity his wife considering that she is an immediate relative, and there was no monetary consideration involved in this neither a compensatory reward for me, as I was overcome by their persuasion; 4. That, despite the fact that I was a teacher, I was not aware that the acts I was charged, is a ground for disciplinary action and punishable by dismissal; 5. That I should not have conformed to this anomalous transaction considering that I was born in a Christian family, and was brought up in the fear of Lord, and had been a consistent officer of the Church Board, had been a religious leader for so many years, and had been the organizer of the REMLAW Page 86
Church Board, had been a religious leader for so many years, and had been the organizer of the Music Festival of the Association of Evangelical Churches of Malungon, Sarangani Province, thus I was devoted to church work and was known to be of good conduct; and that my friends and acquaintances can vouch to that, but I was just forced by circumstances to agree to the spouses Godfre and Evelyn Decir.[8] (Emphasis added) CSC Finding and Penalty On March 21, 1996, the CSC found petitioner Ampong and Decir guilty of dishonesty, dismissing them from the service. The dispositive part of the CSC resolution states: WHEREFORE, the Commission hereby finds Evelyn J. Decir and Sarah P. Navarra guilty of Dishonesty. Accordingly, they are meted the penalty of dismissal with all its accessory penalties. The PBET rating of Decir is revoked.[9] Petitioner moved for reconsideration, raising for the first time the issue of jurisdiction.[10] She argued that the exclusive authority to discipline employees of the judiciary lies with the Supreme Court; that the CSC acted with abuse of discretion when it continued to exercise jurisdiction despite her assumption of duty as a judicial employee. She contended that at the time the case was instituted on August 23, 1994, the CSC already lost jurisdiction over her. She was appointed as Interpreter III of the RTC, Branch 38, Alabel, Sarangani Province on August 3, 1993. The CSC denied the motion for reconsideration.[11] According to the Commission, to allow petitioner to evade administrative liability would be a mockery of the country's administrative disciplinary system. It will open the floodgates for others to escape prosecution by the mere expedient of joining another branch of government. In upholding its jurisdiction over petitioner, the CSC differentiated between administrative supervision exercised by the Supreme Court and administrative jurisdiction granted to the Commission over all civil service employees: Moreover, it must be pointed out that administrative supervision is distinct from administrative jurisdiction. While it is true that this Commission does not have administrative supervision over employees in the judiciary, it definitely has concurrent jurisdiction over them. Such jurisdiction was conferred upon the Civil Service Commission pursuant to existing law specifically Section 12(11), Chapter 3, Book V of the Administrative Code of 1987 (Executive Order No. 292) which provides as follows: "(11) Hear and decide administrative cases instituted by or through it directly or on appeal, including contested appointment, and review decisions and actions of its offices and of the agencies attached to it x x x." The fact that court personnel are under the administrative supervision of the Supreme Court does not totally isolate them from the operations of the Civil Service Law. Appointments of all officials and employees in the judiciary is governed by the Civil Service Law (Section 5(6), Article VIII, 1987 Constitution). (Emphasis supplied) CA Disposition Via petition for review under Rule 43, petitioner elevated the matter to the CA.[12] She insisted that as a judicial employee, it is the Supreme Court and not the CSC that has disciplinary jurisdiction over her.
In a Decision dated November 30, 2004,[13] the CA denied the petition for lack of merit. The CA noted that petitioner never raised the issue of jurisdiction until after the CSC ruled against her. Rather, she willingly appeared before the commission, freely admitted her wrongdoing, and even requested for clemency. Thus, she was estopped from questioning the Commission's jurisdiction. The appellate court opined that while lack of jurisdiction may be assailed at any stage, a party's active participation in the proceedings before a court, tribunal or body will estop such party from assailing its jurisdiction. The CA further ruled that a member of the judiciary may be under the jurisdiction of two different bodies. As a public school teacher or a court interpreter, petitioner was part of the civil service, subject to its rules and regulations. When she committed acts in violation of the Civil Service Law, the CSC was clothed with administrative jurisdiction over her. Issue REMLAW Page 87
clothed with administrative jurisdiction over her. Issue
Petitioner, through this petition, assigns the lone error that: The Honorable Court of Appeals-First Division decided a question of substance in a way not in accord with law and jurisprudence, gravely erred in facts and in law, and has sanctioned such departure and grave error because it ignored or was not aware of Garcia v. De la Peña, 229 SCRA 766 (1994) and Adm. Matter No. OCA I.P.I. 97-329-P (CSC v. Ampong) dated January 31, 2001, which reiterate the rule that exclusive authority to discipline employees of the judiciary lies with the Supreme Court, in issuing the questioned decision and resolution; which grave error warrant reversal of the questioned decision and resolution.[14] Put simply, the issue boils down to whether the CSC has administrative jurisdiction over an employee of the Judiciary for acts committed while said employee was still with the Executive or Education Department. Our Ruling The answer to the question at the outset is in the negative but We rule against the petition on the ground of estoppel. It is true that the CSC has administrative jurisdiction over the civil service. As defined under the Constitution and the Administrative Code, the civil service embraces every branch, agency, subdivision, and instrumentality of the government, and government-owned or controlled corporations.[15] Pursuant to its administrative authority, the CSC is granted the power to "control, supervise, and coordinate the Civil Service examinations."[16] This authority grants to the CSC the right to take cognizance of any irregularity or anomaly connected with the examinations.[17] However, the Constitution provides that the Supreme Court is given exclusive administrative supervision over all courts and judicial personnel.[18] By virtue of this power, it is only the Supreme Court that can oversee the judges' and court personnel's compliance with all laws, rules and regulations. It may take the proper administrative action against them if they commit any violation. No other branch of government may intrude into this power, without running afoul of the doctrine of separation of powers.[19] Thus, this Court ruled that the Ombudsman cannot justify its investigation of a judge on the powers granted to it by the Constitution. It violates the specific mandate of the Constitution granting to the Supreme Court supervisory powers over all courts and their personnel; it undermines the independence of the judiciary.[20] In Civil Service Commission v. Sta. Ana,[21] this Court held that impersonating an examinee of a civil service examination is an act of dishonesty. But because the offender involved a judicial employee under the administrative supervision of the Supreme Court, the CSC filed the necessary charges before the Office of the Court Administrator (OCA), a procedure which this Court validated. A similar fate befell judicial personnel in Bartolata v. Julaton,[22] involving judicial employees who also impersonated civil service examinees. As in Sta. Ana, the CSC likewise filed the necessary charges before the OCA because respondents were judicial employees. Finding respondents guilty of dishonesty and meting the penalty of dismissal, this Court held that "respondents' machinations reflect their dishonesty and lack of integrity, rendering them unfit to maintain their positions as public servants and employees of the judiciary."[23] Compared to Sta. Ana and Bartolata, the present case involves a similar violation of the Civil Service Law by a judicial employee. But this case is slightly different in that petitioner committed the offense before her appointment to the judicial branch. At the time of commission, petitioner was a public school teacher under the administrative supervision of the DECS and, in taking the civil service examinations, under the CSC. Petitioner surreptitiously took the CSC-supervised PBET exam in place of another person. When she did that, she became a party to cheating or dishonesty in a civil service-supervised examination.
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It is well settled that the jurisdiction to try a case is to be determined by the law in force at the time of the institution of the action, not at the time of the commission of the offense.[24] Consonant with this principle, the time of commission is not material to determining which court has jurisdiction. It stands to reason that administrative jurisdiction over petitioner belongs to the Supreme Court, the action having been instituted by the CSC at the time when petitioner was already a judicial employee. Indeed, the standard procedure is for the CSC to bring its complaint against petitioner, a judicial employee, before the OCA. Records show that the CSC did not adhere to this procedure in the present case. However, we are constrained to uphold the ruling of the CSC based on the principle of estoppel. The previous actions of petitioner have estopped her from attacking the jurisdiction of the CSC. A party who has affirmed and invoked the jurisdiction of a court or tribunal exercising quasi-judicial functions to secure an affirmative relief may not afterwards deny that same jurisdiction to escape a penalty.[25] As this Court declared in Aquino v. Court of Appeals:[26] In the interest of sound administration of justice, such practice cannot be tolerated. If we are to sanction this argument, then all the proceedings had before the lower court and the Court of Appeals while valid in all other respects would simply become useless.[27] Under the principle of estoppel, a party may not be permitted to adopt a different theory on appeal to impugn the court's jurisdiction.[28] In Emin v. De Leon,[29] this Court sustained the exercise of jurisdiction by the CSC, while recognizing at the same time that original disciplinary jurisdiction over public school teachers belongs to the appropriate committee created for the purpose as provided for under the Magna Carta for Public School Teachers.[30] It was there held that a party who fully participated in the proceedings before the CSC and was accorded due process is estopped from subsequently attacking its jurisdiction.
Petitioner was given ample opportunity to present her side and adduce evidence in her defense before the CSC. She filed with it her answer to the charges leveled against her. When the CSC found her guilty, she moved for a reconsideration of the ruling. These circumstances all too clearly show that due process was accorded to petitioner. Petitioner's admission of guilt stands. Apart from her full participation in the proceedings before the CSC, petitioner admitted to the offense charged - that she impersonated Decir and took the PBET exam in the latter's place. We note that even before petitioner filed a written answer, she voluntarily went to the CSC Regional Office and admitted to the charges against her. In the same breath, she waived her right to the assistance of counsel. Her admission, among others, led the CSC to find her guilty of dishonesty, meting out to her the penalty of dismissal. Now, she assails said confession, arguing that it was given without aid of counsel. In police custodial investigations, the assistance of counsel is necessary in order for an extra-judicial confession to be made admissible in evidence against the accused in a criminal complaint. If assistance was waived, the waiver should have been made with the assistance of counsel.[31]
But while a party's right to the assistance of counsel is sacred in proceedings criminal in nature, there is no such requirement in administrative proceedings. In Lumiqued v. Exevea,[32] this Court ruled that a party in an administrative inquiry may or may not be assisted by counsel. Moreover, the administrative body is under no duty to provide the person with counsel because assistance of counsel is not an absolute requirement.[33] Petitioner's admission was given freely. There was no compulsion, threat or intimidation. As found by the CSC, petitioner's admission was substantial enough to support a finding of guilt. The CSC found petitioner guilty of dishonesty. It is categorized as "an act which includes the procurement and/or use of fake/spurious civil service eligibility, the giving of assistance to ensure the REMLAW Page 89
procurement and/or use of fake/spurious civil service eligibility, the giving of assistance to ensure the commission or procurement of the same, cheating, collusion, impersonation, or any other anomalous act which amounts to any violation of the Civil Service examination."[34] Petitioner impersonated Decir in the PBET exam, to ensure that the latter would obtain a passing mark. By intentionally practicing a deception to secure a passing mark, their acts undeniably involve dishonesty.[35] This Court has defined dishonesty as the "(d)isposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray."[36] Petitioner's dishonest act as a civil servant renders her unfit to be a judicial employee. Indeed, We take note that petitioner should not have been appointed as a judicial employee had this Court been made aware of the cheating that she committed in the civil service examinations. Be that as it may, petitioner's present status as a judicial employee is not a hindrance to her getting the penalty she deserves. The conduct and behavior of everyone connected with an office charged with the dispensation of justice is circumscribed with a heavy burden or responsibility. The image of a court, as a true temple of justice, is mirrored in the conduct, official or otherwise, of the men and women who work thereat, from the judge to the least and lowest of its personnel.[37] As the Court held in another administrative case for dishonesty: x x x Any act which diminishes or tends to diminish the faith of the people in the judiciary shall not be countenanced. We have not hesitated to impose the utmost penalty of dismissal for even the slightest breach of duty by, and the slightest irregularity in the conduct of, said officers and employees, if so warranted. Such breach and irregularity detract from the dignity of the highest court of the land and erode the faith of the people in the judiciary. xxx x As a final point, we take this opportunity to emphasize that no quibbling, much less hesitation or circumvention, on the part of any employee to follow and conform to the rules and regulations enunciated by this Court and the Commission on Civil Service, should be tolerated. The Court, therefore, will not hesitate to rid its ranks of undesirables who undermine its efforts toward an effective and efficient system of justice.[38] (Emphasis added) We will not tolerate dishonesty for the Judiciary expects the best from all its employees.[39] Hindi namin papayagan ang pandaraya sapagkat inaasahan ng Hudikatura ang pinakamabuti sa lahat nitong kawani. WHEREFORE, the petition is DENIED for lack of merit. Pasted from
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BP 129, as amended by RA 7902 Sunday, November 14, 2010 11:21 PM
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RA 8246 Sunday, November 14, 2010 11:21 PM
REPUBLIC ACT NO. 8246 AN ACT CREATING ADDITIONAL DIVISIONS IN THE COURT OF APPEALS, INCREASING THE NUMBER OF COURT OF APPEALS JUSTICES FROM FIFTY-ONE (51) TO SIXTY-NINE (69), AMENDING FOR THE PURPOSE BATAS PAMBANSA BILANG 129, AS AMENDED OTHERWISE KNOWN AS THE JUDICIARY REORGANIZATION ACT OF 1980, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES. Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: Section 1. Sec. 3, Chapter 1 of Batas Pambansa Blg. 129, as amended, is hereby further amended to read as follows: "Sec. 3. Organization. - There is hereby created a Court of Appeals which shall consist of a Presiding Justice and sixty-eight (68) Associate Justices who shall be appointed by the President of the Philippines. The Presiding Justice shall be so designated in his appointment, and the Associate Justices shall have precedence according to the dates of their respective appointments, or when the appointments of two or more of them shall bear the same date, according to the order in which their appointments were issued by the President. Any member who is reappointed to the Court after rendering service in any other position in the government shall retain the precedence to which he was entitled under his original appointment, and his service in the court shall, for all intents and purposes, be considered as continuous and uninterrupted." Sec. 2. Sec. 4 of Batas Pambansa Blg. 129, as amended, is hereby further amended to read as follows: "Sec. 4. Exercise of Powers and Functions. - The Court of Appeals shall exercise its powers, functions, and duties through twenty-three (23) divisions, each composed of three (3) members. The Court may sit en banc for the purpose of exercising administrative, ceremonial or other non-adjudicatory functions." Sec. 3. Sec. 10 of Batas Pambansa Blg. 129, as amended, is hereby further amended to read as follows: "Sec. 10. Place of Holding Sessions. - The Court of Appeals shall have its permanent stations as follows: the first seventeen (17) divisions shall be stationed in the City of Manila for cases coming from the First to the Fifth Judicial Regions; the Eighteenth, Nineteenth, and Twentieth Divisions shall be in Cebu City for cases coming from the Sixth, Seventh and Eighth Judicial Regions; the Twenty-first, Twenty-second and Twenty-third Divisions shall be in Cagayan de Oro City for cases coming from the Ninth, Tenth, Eleventh, and Twelfth Judicial Regions. Whenever demanded by public interest, or whenever justified by an increase in case load, the Supreme Court, upon its own initiative or upon recommendation of the Presiding Justice of the Court of Appeals, may authorize any division of the Court to hold sessions periodically, or for such periods and at such places as the Supreme Court may determine, for the purpose of hearing and deciding cases. Trials or hearings in the Court of Appeals must be continuous and must be completed within three (3) months unless extended by the Chief Justice of the Supreme Court." Sec. 4. The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into law and thereafter. Sec. 5. Upon the effectivity of this Act, all pending cases, except those which have been submitted for resolution, shall be referred to the proper division of the Court of Appeals. Sec. 6. Nothing in this Act shall be construed to allow the transfer, except in cases of temporary assignment, of any member of the Court of Appeals to any place or station without his or her written consent, or to undermine the security of tenure of its members as provided in the Constitution, or alter the seniority in said Court in accordance with existing laws. Sec. 7. The Supreme Court is hereby authorized and empowered to constitute a Study Committee composed of a member of the Judiciary, the prosecution, the Integrated Bar of the Philippines (IBP), a representative of the
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member of the Judiciary, the prosecution, the Integrated Bar of the Philippines (IBP), a representative of the association of law colleges and law professors, and a member of the public at large. The Committee shall undertake a serious study as to the feasibility and desirability of setting up a Regional Circuit Courts of Appeals in lieu and in place of the present Court of Appeals System. The Supreme Court shall submit the findings and recommendations of this Committee to Congress one (1) year after the effectivity of this Act. Sec. 8. Separability Clause. - If any portion or provision of this Act is declared unconstitutional, the remainder of this Act or any provision not affected thereby shall remain in force and effect. Sec. 9. Repealing Clause. - All laws, presidential decrees, letters of instruction, executive orders, rules and regulations, or any part thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly. Sec. 10. Effectivity. - This Act shall take effect after fifteen (15) days following its publication in two (2) newspapers of general circulation. Approved: 30 December 1996 Pasted from
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CGP Transport v. PU Leasing GR 164547 Mar 28, 2007 Sunday, November 14, 2010 11:21 PM
G.R. No. 164547 March 28, 2007 CGP TRANSPORTATION AND SERVICES CORPORATION, Petitioner, vs. PCI LEASING AND FINANCE, INCORPORATED, Respondent. DE C I S I O N CHICO-NAZARIO, J.: Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court seeking to annul and set aside the 26 March 2004 Decision1 and 13 July 2004 Resolution2 of the Court of Appeals in CA G.R. SP No. 68528 entitled "PCI Leasing and Finance, Inc. v. Hon. Alberto L. Lerma in His Capacity as Presiding Judge of Branch 256 of the Regional Trial Court of Muntinlupa City and CGP Transportation and Services Corporation." In the assailed decision, the Court of Appeals set aside the 27 March 20013 and 30 August 20014 Orders of the Regional Trial Court (RTC), Branch 256, of the City of Muntinlupa in LRC Case No. 99-020 entitled "In re: Petition for Issuance of Writ of Possession for Real Properties Covered by Transfer Certificates of Title Nos. 172319 and 180241 of the Register of Deeds for Makati City (CGP Transportation & Services Corporation Properties)." Herein respondent PCI Leasing and Finance, Incorporated (PCI) was originally the petitioner in the aforequoted case, while herein petitioner CGP Transportation and Services Corporation (CGP) was the oppositor therein. This case stemmed from the extra-judicial foreclosure proceedings instituted by herein respondent PCI against the Real Estate Mortgage5 and the Amendment of Real Estate Mortgage 6 executed by herein petitioner CGP. The facts are as follows: Petitioner CGP obtained two loans from respondent PCI, the collective principal sum of which amounted to Sixteen Million (P16,000,000.00) pesos. Both loans were secured by real estate mortgages over two parcels of land7 located in Bo. Cupang, Muntinlupa City, and covered by Transfer Certificates of Title Nos. 172319 and 180241 issued by the Registry of Deeds of Makati City. Petitioner CGP failed to pay its indebtedness to respondent PCI pursuant to the terms and conditions extant on the face of the Promissory Notes covering the two loans aforementioned. Accordingly, the latter filed a petition for extra-judicial foreclosure of the real properties subject of the Real Estate Mortgage and the Amendment of Real Estate Mortgage, pursuant to Act No. 3135,8 as amended. During the public auction held thereafter, respondent PCI was the highest bidder of the subject real properties. Consequently, the corresponding Certificates of Sale were issued in the name of respondent PCI. On 19 November 1997, the above-mentioned Certificates of Sale were registered with the Registry of Deeds of Makati City. Petitioner CGP, however, failed to redeem the real properties during the redemption period; thus, respondent PCI insisted that actual possession thereof be turned over to it. Expectedly, petitioner CGP balked at the idea and refused the demand. On 12 April 1999, respondent PCI9 filed before the Regional Trial Court of Muntinlupa City, Branch 256, and docketed as LRC Case No. 99-020, a petition for an exparte issuance of a Writ of Possession. Petitioner CGP opposed the subject petition. On 15 November 2000, the RTC issued an Order ruling against oppositor (herein petitioner) CGP’s stance. The Order, in part, reads: The petitioner is correct, the law expressly authorized the purchaser to petition for a writ of possession during the redemption period by filing an Ex-parte Motion under oath for that purpose and that the pendency of any separate civil action can be no obstacle to the issuance of the writ of possession which is a ministerial act of the trial court after a title on the property has been consolidated in the mortgage. Accordingly, Ex-parte reception of evidence is scheduled on December 1, 2000, at 2:00 o’clock in the afternoon.10 In its Motion for Reconsideration, petitioner CGP averred that the scheduled hearing was violative of the writ of preliminary injunction issued in its favor by the same trial court, albeit in a different case involving the same parties – particularly Civil Case No. 99-234, respecting a complaint for the annulment of the foreclosure proceedings earlier mentioned. It argued that notwithstanding the fact that the REMLAW Page 94
of the foreclosure proceedings earlier mentioned. It argued that notwithstanding the fact that the complaint for annulment of foreclosure proceedings had already been dismissed by the trial court, such order had not yet become final and executory inasmuch as it was appealed to the Court of Appeals. That being the case, the writ should still be considered in effect and subsisting. On 27 March 2001, the RTC reconsidered its Order, viz: [F]inding the grounds relied upon by the oppositor to be meritorious and considering further that there are several motions to be resolved yet by the court, the Motion for Reconsideration is GRANTED, the order of this court dated October 20, 2000 is set aside and the ex-parte proceedings is hereby nullified and set aside. The Preliminary Injunction previously issued is reinstated.11 Consequently, it was respondent PCI’s turn to file a Motion for Reconsideration. In an Order dated 30 August 2001, the RTC stood pat on its position that the Opposition filed by herein petitioner CGP raised issues that needed to be heard in the presence of both parties. Said Order stated: This resolves the Motion for Reconsideration filed by petitioner on the order of this court dated March 27, 2001, which granted the motion for reconsideration filed by Oppositor to the Order dated November 15, 2000. There is basis to the pending motion of petitioner insofar as the reinstatement of preliminary injunction earlier issued by this court and submission for resolution of motions are concerned, as they all refer to Civil Case No. 99-234. This Court recognizes the snafu brought about by the several pleadings and pending incidents both in the instant case and Civil Case No. 99-234 which involved the same parties and the same subject matter. Be that as it may, this court, after a careful review of the verified opposition of the oppositor, including it annexes, is not inclined to grant the ex-parte proceedings as asserted by the petitioner. This court reviewed the grounds of oppositor in its motion for reconsideration of the order dated November 15, 2000, which allowed ex-parte presentation of evidence in this case. These grounds are: (a) Presence on record of a verified opposition to the petition and (b) there was an injunction earlier issued by this court on September 3, 1999 on the complaint for annulment of foreclosure proceedings of the subject properties filed by oppositor in Civil Case No. 99-234 also before this court. It is the considered view of this court that the verified opposition on record joined issues that need to be heard in the presence of both parties, a basic requirement of due process. The general rule frowns [on] ex-parte proceedings. When this court issued a writ of injunction in Civil Case No. 99-234, taking into consideration the allegations in the complaint it was convinced that there was a need for a status quo between the parties until all the issues joined therein are heard and disposed. On technical ground, the complaint in Civil Case No. 99-234 was dismissed by this court. Although it may be too late for this court to say, there were indeed pending incidents that needed to be resolved in Civil Case No. 99-234. Precisely, when this court mentioned of pending motions, it was actually referring to the pending incidents in Civil Case No. 99-234, as correctly pointed out by the Oppositor, petitioner at the time of the dismissal of the complaint in Civil Case No. 99-234, it has not filed yet its answer to the complaint in intervention of the plaintiff-intervenor. Petitioner, apparently, took advantage of the inadvertence in the issuance of the order of dismissal in Civil Case No. 99-234 when it kept silent of the fact that it has not filed yet an answer to the complaint in intervention. This court is cognizant of the rule that the dismissal of the complaint on the merits automatically dissolves the injunction issued therein even if the decision or order of dismissal is on appeal. The dismissal of this court however, of the complaint in Civil Case No. 99-234 was not the result of trial on the merits but rather on mere technicality. It is in this light that this court believes that considering that the dissolution of the injunction was the consequence of the order of dismissal of the complaint in Civil Case No. 99-234, which was not the result of a trial on the merits, and the said order of dismissal is now the subject of appeal, there is a need to suspend the proceedings in this case until the said appeal is disposed.12 Aggrieved, respondent PCI filed before this Court, a Petition for Certiorari under Rule 65 of the Revised Rules of Court, premised on the following grounds: 1. THE PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IT NULLIFIED AND SET ASIDE THE EX PARTE PROCEEDINGS IN THE CASE A QUO. 2. THE PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IT REINSTATED IN THE CASE A QUO THE PRELIMINARY INJUNCTION REMLAW Page 95
EXCESS OF JURISDICTION, WHEN IT REINSTATED IN THE CASE A QUO THE PRELIMINARY INJUNCTION WHICH WAS ISSUED IN ANOTHER CASE (CIVIL CASE NO. 99-234). 3. THE PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IT SET ASIDE IN THE CASE A QUO THE ORDER DATED 20 OCTOBER 2000 WHICH WAS ISSUED IN CIVIL CASE NO. 99-234. 4. THE PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IT SUSPENDED THE PROCEEDINGS A QUO UNTIL THE APPEAL IN CIVIL CASE NO. 99-234 IS RESOLVED.13 The petition (G.R. No. 150483) was, however, referred to the Court of Appeals by this Court for appropriate action in a Resolution,14 dated 3 December 2001, pursuant to Section 6, Rule 56 of the 1997 Revised Rules of Civil Procedure, factual issues being involved. In response to the referral, the Court of Appeals docketed the petition as CA G.R. SP No. 68528. In its Decision promulgated on 26 March 2004, the Court of Appeals granted herein respondent PCI’s petition and set aside the RTC Order dated 30 August 2001. The dispositive portion reads: WHEREFORE, the instant petition is hereby GRANTED. The orders dated March 27, 2001 and August 28 (sic), 2001 of the Regional Trial Court, Branch 256, Muntinlupa City, in LRC Case No. 99-020 are SET ASIDE. Further, the public respondent judge is ordered to continue with the proceedings and to decide the case with dispatch.15 The appellate court found public respondent RTC Judge to have gravely abused his discretion amounting to lack or excess of jurisdiction in suspending the proceedings in LRC Case No. 99-020 relating to the writ of possession asked for by herein respondent PCI. The Court of Appeals did not favor the RTC Judge who, "in effect took cognizance of the proceedings in Civil Case No. 99-234, an action for annulment of foreclosure proceedings filed by"16 herein petitioner CGP – one that is entirely separate from the case earlier filed. Moreover, "[w]ith the dismissal of the main case, (an) injunction (issued therein) is automatically lifted and the dissolution thereof is not appealable." The Court of Appeals then clarified that though the preceding principle is the general rule, the circumstances surrounding the reinstatement of the subject writ of preliminary injunction do not necessarily entitle the application of the exception stated in Section 4, Rule 39 of the 1997 Revised Rules of Civil Procedure, which states: SEC. 4. Judgments not stayed by appeal. – Judgments in actions for injunction, receivership, accounting and support, and such other judgments as are now or may hereafter be declared to be immediately executory, shall be enforceable after their rendition and shall not be stayed by an appeal taken therefrom, unless otherwise ordered by the trial court. On appeal therefrom, the appellate court in its discretion may make an order suspending, modifying, restoring or granting the injunction, receivership, accounting, or award of support. The stay of execution shall be upon such terms as to bond or otherwise as may be considered proper for the security or protection of the rights of the adverse party. It likewise noted that the fact that there was no dispute vis-à-vis herein petitioner CGP’s failure to redeem the foreclosed real properties within the period, herein respondent PCI’s right to possession thereof is quite patent and absolute; and that "any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of a writ of possession xxx."17 On 13 July 2004, the Court of Appeals denied the motion for reconsideration filed by herein petitioner CGP. Hence, this Petition for Review on Certiorari filed under Rule 45 of the 1997 Revised Rules of Civil Procedure. Petitioner CGP does not question at all the substantive aspect of the decision of the Court of Appeals. It’s petition is predicated solelyon the issue of "whether or not the Honorable Court of Appeals gravely erred in giving due course to the petition for certiorari of respondent, there being already a final finding by this Honorable Court in its Resolution dated December 3, 2001, in G.R. No. 150483, that the said petition raised questions of facts and therefore not proper for petition for certiorari."18 In its one page argument, Petitioner CGP contends, in whole, that: It is undisputed that this Honorable Court in its resolution dated December 3, 2001 in G.R. No. 150483 has found that issues of facts are raised in the petition filed therein. That these conclusion and finding of this Honorable Court are final and therefore no court for that matter, including the Court of Appeals, can disturb the same. [In fact and in truth, the factual issues are pending for resolution in the case before the Court of Appeals, in the case entitled CGP TRANSPORTATION AND SERVICES CORPORATION,
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Plaintiff-appellant versus PCI LEASING AND FINANCE CORPORATION, defendant-appellee docketed as C.A. G.R. No. 69466.] With this factual backdrop, petitioner honestly believes, that there can be no other fate on the said petition [of respondent] but the dismissal, it being a settled jurisprudence that in a petition for review, only questions of law can be raised. Even the Honorable Court of Appeals agree on this point when it says in its aforequoted decision, citing the doctrine laid down by this Honorable Court in BCI Employees & Workers Union v. Marcos, 39 SCRA 178, that "It is however basic that when facts are disputed, certiorari is not an appropriate remedy".19 Respondent PCI, in contrast, maintains that in rendering its assailed Decision, the "… Honorable Court of Appeals simply discharged the duty assigned to it by this Honorable Court," apropos the latter’s 3 December 2001 Resolution. We sustain respondent PCI’s importunings and dismiss petitioner CGP’s petition. Although the form or mode of the original petition filed by herein respondent PCI from the Order of the RTC was a special civil action for certiorari, an incorrect mode of appeal there being questions of fact as assigned errors, i.e., the existence and relevancy of specific surrounding circumstance, their relation to each other and to the whole situation,20 this Court, in order to serve the demands of substantial justice, considers and disposes of the case as an appeal by certiorari instead. In an appeal by certiorari under Rule 45, only questions of law may be raised.21 In petitions such as the one filed in G.R. No. 150483, questions of fact may not be the proper subject of appeal under Rule 45 as this mode of appeal is generally confined to questions of law.22 Well entrenched is the rule that this Court is not a trier of facts.23 The resolution of factual issues is the function of lower courts, whose findings on these matters are received with respect and are in fact binding on us subject to certain exceptions.24 Cases where an appeal involved questions of fact, of law, or both fall within the exclusive appellate jurisdiction of the Court of Appeals.25 This is attested to by Section 15, Rule 44 of the 1997 Revised Rules of Civil Procedure. The section reads: SEC. 15. Questions that may be raised on appeal. – x x x he may include in his assignment of errors any question of law or fact that has been raised in the court below and which is within the issues framed by the parties. It was on this score that we referred the subject petition to the appellate court. Under Section 5(f) of Rule 56 of the 1997 Revised Rules of Civil Procedure, an appeal may be dismissed on the ground of erroneous choice or mode of appeal. Said section reads: SEC. 5. Grounds for dismissal of appeal. – The appeal MAY be dismissed motu proprio or on motion of the respondent on the following grounds: xxx x (f) Error in the choice or mode of appeal. This notwithstanding, the Court may refer the case to the Court of Appeals under par. 2, Section 6 of the same rule. Said section states: SEC. 6. Disposition of improper appeal. – x x x An appeal by certiorari taken to the Supreme Court from the Regional Trial Court submitting issues of fact may be referred to the Court of Appeals for decision or appropriate action. The determination of the Supreme Court on whether or not issues of fact are involved shall be final. [Emphasis supplied.] This Court’s discretion to refer the case to the Court of Appeals is by reason of the term "may" in both sections. Such term denotes discretion on our part in dismissing an appeal or referring one to the Court of Appeals. Besides, it must be borne in mind that procedural rules are intended to ensure proper administration of law and justice. The rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice.26 A deviation from its rigid enforcement may thus be allowed to attain its prime objective, for after all, the dispensation of justice is the core reason for the existence of the courts. In the case at bar, substantial ends of justice warranted the referral of the case to the appellate court for further appropriate proceedings. WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed 26 March 2004 Decision and 13 July 2004 Resolution, both of the Court of Appeals, in CA G.R. SP No. 68528 entitled "PCI Leasing and Finances, Inc. v. Hon. Alberto L. Lerma, In His Capacity as Presiding Judge of Branch 256 of the Regional Trial Court of Muntinlupa City and CGP Transportation and Services Corporation," are AFFIRMED. REMLAW Page 97
AFFIRMED. No costs. Pasted from
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RA 9282 Sunday, November 14, 2010 11:21 PM
Republic of the Philippines Congress of the Philippines Metro Manila Twelfth Congress Third Regular Session Begun and held in Metro Manila, on Monday, the twenty-eight day of July, two thousand three. Republic Act No. 9282 March 30 2004 AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OR REPUBLIC ACT NO. 1125, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: Section 1. Section 1 of Republic Act No. 1125, as amended is hereby further amended to read as follows: "SECTION 1. Court; Justices; Qualifications; Salary; Tenure. - There is hereby created a Court of Tax Appeals (CTA) which shall be of the same level as the Court of Appeals, possessing all the inherent powers of a Court of Justice, and shall consist of a Presiding Justice and five (5) Associate Justices. The incumbent Presiding Judge and Associate Judges shall continue in office and bear the new titles of Presiding Justice and Associate Justices. The Presiding Justice and the most Senior Associate Justice shall serve as chairmen of the two (2) Divisions. The additional three (3) Justices and succeeding members of the Court shall be appointed by the President upon nomination by the Judicial and Bar Council. The Presiding Justice shall be so designated in his appointment, and the Associate Justices shall have precedence according to the date of their respective appointments, or when the appointments of two (2) or more of them shall bear the same date, according to the order in which their appointments were issued by the President. They shall have the same qualifications, rank, category, salary, emoluments and other privileges, be subject to the same inhibitions and disqualifications, and enjoy the same retirements and other benefits as those provided for under existing laws for the Presiding Justice and Associate Justices of the Court of Appeals. "Whenever the salaries of the Presiding Justice and the Associate Justices of the Court of Appeals are increased, such increases in salaries shall be deemed correspondingly extended to and enjoyed by the Presiding Justice and Associate Justices of the CTA. "The Presiding Justice and Associate Justices shall hold office during good behavior, until they reach the age of seventy (70), or become incapacitated to discharge the duties of their office, unless sooner removed for the same causes and in the same manner provided by law for members of the judiciary of equivalent rank." Section 2. Section 2 of the same Act is hereby amended to read as follows: "SEC. 2. Sitting En Banc or Division; Quorum; Proceedings. - The CTA may sit en banc or in two (2) Divisions, each Division consisting of three (3) Justices. "Four (4) Justices shall constitute a quorum for sessions en banc and two (2) Justices for sessions of a Division: Provided, That when the required quorum cannot be constituted due to any vacancy, disqualification, inhibition, disability, or any other lawful cause, the Presiding Justice shall designate any Justice of other Divisions of the Court to sit temporarily therein. "The affirmative votes of four (4) members of the Court en banc or two (2) members of a Division, as the case may be, shall be necessary for the rendition of a decision or resolution." Section 3. Section 3 of the same Act is hereby amended to read as follows: "SEC. 3. Clerk of Court; Division Clerks of Court; Appointment; Qualification; Compensation. - The CTA shall have a Clerk of Court and three (3) Division Clerks of Court who shall be appointed by the Supreme Court. No person shall be appointed Clerk of Court or Division Clerk of Court unless he is duly authorized to practice law in the Philippines. The Clerk of Court and Division Clerks of Court shall exercise the same powers and perform the same duties in regard to all matters within the Court's jurisdiction, as are REMLAW Page 99
exercised and performed by the Clerk of Court and Division Clerks of Court of the Court of Appeals, in so far as the same may be applicable or analogous; and in the exercise of those powers and the performance of those duties they shall be under the direction of the Court. The Clerk of Court and the Division Clerks of Court shall have the same rank, privileges, salary, emoluments, retirement and other benefits as those provided for the Clerk of Court and Division Clerks of Court of the Court of Appeals, respectively.' Section 4. Section 4 of the same Act is hereby amended to read as follows: "SEC. 4. Other Subordinate Employees. - The Supreme Court shall appoint all officials and employees of the CTA, in accordance with the Civil Service Law. The Supreme Court shall fix their salaries and prescribe their duties." Section 5. Section 5 of the same Act is hereby amended to read as follows: "SEC. 5. Disqualifications. - No Justice or other officer or employee of the CTA shall intervene, directly or indirectly, in the management or control of any private enterprise which in any way may be affected by the functions of the Court. Justices of the Court shall be disqualified from sitting in any case on the same grounds provided under Rule one hundred thirty-seven of the Rules of Court for the disqualification of judicial officers. No person who has once served in the Court in a permanent capacity, either as Presiding Justice or as Associate Justice thereof, shall be qualified to practice as counsel before the Court for a period of one (1) year from his retirement or resignation." Section 6. Section 6 of the same Act is hereby amended to read as follows: "SEC. 6. Place of Office. - The CTA shall have its principal office in Metro Manila and shall hold hearings at such time and place as it may, by order in writing, designate." Section 7. Section 7 of the same Act is hereby amended to read as follows: "Sec. 7. Jurisdiction. - The CTA shall exercise: "a. Exclusive appellate jurisdiction to review by appeal, as herein provided: "1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue; "2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial; "3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction; "4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs; "5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial or city board of assessment appeals; "6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from decisions of the Commissioner of Customs which are adverse to the Government under Section 2315 of the Tariff and Customs Code; "7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or article, and the Secretary of Agriculture in the case of agricultural product, commodity or article, involving dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No. 8800, where either party may appeal the decision to impose or not to impose said duties. "b. Jurisdiction over cases involving criminal offenses as herein provided: "1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue or the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this paragraph where the principal amount o taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried REMLAW Page 100
less than One million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA shall be appellate. Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filling of such civil action separately from the criminal action will be recognized. "2. Exclusive appellate jurisdiction in criminal offenses: "a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases originally decided by them, in their respected territorial jurisdiction. "b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction. "c. Jurisdiction over tax collection cases as herein provided: "1. Exclusive original jurisdiction in tax collection cases involving final and executory assessments for taxes, fees, charges and penalties: Provided, however, That collection cases where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court. "2. Exclusive appellate jurisdiction in tax collection cases: "a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection cases originally decided by them, in their respective territorial jurisdiction. "b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction." Section 8. Section 10 of the same Act is hereby amended to read as follows: "SEC. 10. Power to Administer Oaths; Issue Subpoena; Punish for Contempt. - The Court shall have the power to administer oaths, receive evidence, summon witnesses by subpoena duces tecum, subject in all respects to the same restrictions and qualifications as applied in judicial proceedings of a similar nature. The Court shall, in accordance with Rule seventy-one of the Rules of Court, have the power to punish for contempt for the same causes, under the same procedure and with the same penalties provided therein." Section 9. Section 11 of the same Act is hereby amended to read as follows: "SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. "Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. A Division of the CTA shall hear the appeal: Provided, however, That with respect to decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial Court in the exercise of its appellate jurisdiction appeal shall be made by filing a petition for review under a procedure analogous to that provided for under rule 43 of the 1997 Rules of Civil Procedure with the CTA, which shall hear the case en banc. "All other cases involving rulings, orders or decisions filed with the CTA as provided for in Section 7 shall be raffled to its Divisions. A party adversely affected by a ruling, order or decision of a Division of the CTA may file a motion for reconsideration of new trial before the same Division of the CTA within fifteens (15) days from notice thereof: Provide, however, That in criminal cases, the general rule applicable in regular Courts on matters of prosecution and appeal shall likewise apply. "No appeal taken to the CTA from the decision of the Commissioner of Internal Revenue or the Commissioner of Customs or the Regional Trial Court, provincial, city or municipal treasurer or the Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may REMLAW Page 101
Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may be shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction of his tax liability as provided by existing law: Provided, however, That when in the opinion of the Court the collection by the aforementioned government agencies may jeopardize the interest of the Government and/or the taxpayer the Court any stage of the proceeding may suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court. "In criminal and collection cases covered respectively by Section 7(b) and (c) of this Act, the Government may directly file the said cases with the CTA covering amounts within its exclusive and original jurisdiction." Section 10. Section 13 of the same Act is hereby amended to read as follows: "SEC. 13. Decision, Maximum Period for Termination of Cases. - Cases brought before the Court shall be decided in accordance with Section 15, paragraph (1), Article VIII (Judicial Department) of the 1987 Constitution. Decisions of the Court shall be in writing, stating clearly and distinctly the facts and the law on which they are based, and signed by the Justices concurring therein. The Court shall provide for the publication of its decision in the Official Gazette in such form and manner as may best be adopted for public information and use. "The Justices of the Court shall each certify on their applications for leave, and upon salary vouchers presented by them for payment, or upon the payrolls under which their salaries are paid, that all proceedings, petitions and motions which have been submitted to the Court for determination or decision for a period required by the law or the Constitution, as the case may be, have been determined or decided by the Court on or before the date of making the certificate, and no leave shall be granted and no salary shall be paid without such certificate." Section 11. Section 18 of the same Act is hereby amended as follows: "SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matter arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA and disposed of in accordance with the provisions of this Act. "A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new trial, may file a petition for review with the CTA en banc." "SEC. 19. Review by Certiorari. - A party adversely affected by a decision or ruling of the CTA en banc may file with the Supreme Court a verified petition for review on certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure." Section 13. Distraint of Personal Property and/or Levy on Real Property. - Upon the issuance of any ruling, order or decision by the CTA favorable to the national government, the CTA shall issue an order authorizing the Bureau of Internal Revenue, through the Commissioner to seize and distraint any goods, chattels, or effects, and the personal property, including stocks and other securities, debts, credits, bank accounts, and interests in and rights to personal property and/or levy the real property of such persons in sufficient quantity to satisfy the tax or charge together with any increment thereto incident to delinquency. This remedy shall not be exclusive and shall not preclude the Court from availing of other means under the Rules of Court. Section 14. Retention of Personnel; Security of Tenure; Upgrading of Positions and Salaries. - All existing permanent personnel of the CTA shall not be adversely affected by this Act. They shall continue in office and shall not be removed or separated from the service except for cause as provided for by existing laws. Further, the present positions and salaries of personnel shall be upgraded to the level of their counterparts in the Court of Appeals. Section 15. Transitory Provisions. - In consonance with the above provision, the incumbent Presiding Judge and Associate Judges shall comprise a Division pending the constitution of the entire Court. Section 16. Appropriations. - The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into law and thereafter. Section 17. Repealing Clause. - All laws, executive orders, executive issuances or letter of instructions, or any part thereof, inconsistent with or contrary to the provisions of this Act are hereby deemed repealed, amended or modified accordingly. Section 18. Separability Clause. - If for any reason, any section or provision of this Act shall be declared unconstitutional or invalid, the other parts thereof not affected thereby shall remain valid. REMLAW Page 102
unconstitutional or invalid, the other parts thereof not affected thereby shall remain valid. Section 19. Effectivity Clause - This Act shall take effect after fifteen (15) days following its publication in at least (2) newspapers of general circulation. Approved,
FRANKLIN DRILON JOSE DE VENECIA JR. President of the Senate Speaker of the House of Representatives This Act which is a consolidation of Senate Bill No. 2712 and House Bill No. 6673 was finally passed by the Senate and the House of Representatives on December 8, 2003 and February 2, 2004, respectively. OSCAR G. YABES ROBERTO P. NAZARENO Secretary of Senate Secretary General House of Represenatives Approved: March 30 2004 GLORIA MACAPAGAL-ARROYO President of the Philippines Pasted from
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RA 8249 Sunday, November 14, 2010 11:21 PM
Republic Act No. 8249 February 5, 1997 AN ACT FURTHER DEFINING THE JURISDICTION OF THE SANDIGANBAYAN, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 1606, AS AMENDED, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:: Section 1. The first paragraph of Section 1 of Presidential Decree No. 1606, as amended, is hereby further amended to read as follows: "SECTION 1. Sandiganbayan; Composition, Qualifications; Tenure; Removal and Compensation. - A special court, of the same level as the Court of Appeals and possessing all the inherent powers of a court ofjustice, to be known as the Sandiganbayan is hereby created composed of a presiding justice and fourteen associate justices who shall be appointed by the President." Section 2. Section 2 of the same decree is hereby further amended to read as follows: "SECTION 2. Official Station; Place of Holding Sessions. - The Sandiganbayan shall have its principal office in the Metro Manila area and shall hold sessions thereat for the trial and determination of cases filed with it: Provided, however, That cases originating from the principal geographical regions of the country, that is, from Luzon, Visayas or Mindanao, shall be heard in their respective regions of origin except only when the greater convenience of the accused and of the witnesses, or other compelling considerations require the contrary, in which instance a case originating from one geographical region may be heard in another geographical region: Provided, further, That for this purpose the presiding justice shall authorize any divisions of the court to hold sessions at any time and place outside Metro Manila and, where the interest of justice so requires, outside the territorial boundaries of the Philippines. The Sandiganbayan may require the services of the personnel and the use of facilities of the courts or other government offices where any of the divisions is holding sessions and the personnel of such courts or offices shall be subject to the orders of the Sandiganbayan." Section 3. The second paragraph of Section 3 of the same decree is hereby deleted. Section 4. Section 4 of the same decree is hereby further amended to read as follows: "a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Penal Code, where one or more of the accused are officials occupying the following positions in the government whether in a permanent, acting or interim capacity, at the time of the commission of the offense: "(1) Officials of the executive branch occupying the positions of regional director and higher, otherwise classified as Grade '27' and higher, of the Compensation and Position Classification Act of 1989 (Republic Act No. 6758), specifically including: "(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan and provincial treasurers, assessors, engineers and other provincial department heads; "(b) City mayors, vice-mayors, members of the sangguniang panlungsod, city treasurers, assessors engineers and other city department heads; "(c) Officials of the diplomatic service occupying the position of consul and higher; "(d) Philippine army and air force colonels, naval captains, and all officers of higher rank; "(e) Officers of the Philippine National Police while occupying the position of provincial director and those holding the rank of senior superintendent or higher; "(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the Office of the Ombudsman and special prosecutor; "(g) Presidents, directors or trustees, or managers of government-owned or -controlled corporations, state universities or educational institutions or foundations; "(2) Members of Congress and officials thereof classified as Grade'27'and up under the Compensation and Position Classification Act of 1989; "(3) Members of the judiciary without prejudice to the provisions of the Constitution; REMLAW Page 104
"(3) Members of the judiciary without prejudice to the provisions of the Constitution; "(4) Chairmen and members of Constitutional Commissions, without prejudice to the provisions of the Constitution; and "(5) All other national and local officials classified as Grade'27'and higher under the Compensation and Position Classification Act of 1989. "b. Other offenses orfelonies whether simple or complexed with other crimes committed by the public officials and employees mentioned in subsection a of this section in relation to their office. "c. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14A, issued in 1986. "In cases where none of the accused are occupying positions corresponding to salary grade '27' or higher, as prescribed in the said Republic Act No. 6758, or military or PNP officers mentioned above, exclusive original jurisdiction thereof shall be vested in the proper regional trial court, metropolitan trial court, municipal trial court and municipal circuit trial court ' as the case may be, pursuant to their respective jurisdiction as provided in Batas Pambansa Blg. 129, as amended. "The Sandiganbayan shall exercise exclusive appellate jurisdiction over final judgments, resolutions or orders or regional trial courts whether in the exercise of their own original jurisdiction orof their appellate jurisdiction as herein provided. "The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of its appellate jurisdiction and over petitions of similar nature, including quo warranto, arising or that may arise in cases filed or which may be filed under Executive Order Nos. 1,2,14 and 14-A, issued in 1986: Provided, That the jurisdiction over these petitions shall not be exclusive of the Supreme Court. The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing rules that the Supreme Court has promulgated and may hereafter promulgate, relative to appeals/petitions for review to the Court of Appeals, shall apply to appeals and petitions for review filed with the Sandiganbayan. In all cases elevated to the Sandiganbayan and from the Sandiganbayan to the Supreme Court, the Office of the Ombudsman, through its special prosecutor, shall represent the People of the Philippines, except in cases filed pursuant to Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986. "In case private individuals are charged as co-principals, accomplices or accessories with the public officers or employees, including those employed in govemment-owned or controlled corporations, they shall be tried jointly with said public officers and employees in the proper courts which shall exercise exclusive jurisdiction over them. "Any provisions of law or Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability shall at all times be simultaneously instituted with, and jointly determined in, the same proceeding by the Sandiganbayan or the appropriate courts, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action shall be recognized: Provided, however, That where the civil action had therefore been filed separately but judgment therein has not yet been rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be transferred to the Sandiganbayan or the appropriate court, as the case may be, for consolidation and joint determination with the criminal action, otherwise the separate civil action shall be deemed abandoned." Section 5. Section 7 of the same decree is hereby further amended to read as follows: 'SECTION 7. Form, Finality and Enforcement of Decisions. - All decisions and final orders determining the merits of a case or finally disposing of the action or proceedings of the Sandijanbayan shall contain complete findings of the facts and the law on which they are based, on all issues properly raised before it and necessary in deciding the case. "A petition for reconsideration of any final order or decision may be filed within fifteen (15) days from promulgation or notice of the final order on judgment, and such motion for reconsideration shall be decided within thirty (30) days from submission thereon. "Decisions and final orders ofthe Sandiganbyan shall be appealable to the Supreme Court by petition for review on certiorari raising pure questions of law in accordance with Rule 45 of the Rules of Court. Whenever, in any case decided by the Sandiganbayan, the penalty of reclusion perpetua, life imprisonment or death is imposed, the decision shall be appealable to the Supreme Court in the manner prescribed in the Rules of Court. REMLAW Page 105
prescribed in the Rules of Court. "Judgments and orders of the Sandiganbayan shall be executed and enforced in the manner provided by law. "Decisions and final orders of other courts in cases cognizable by said courts under this decree as well as those rendered by them in the exercise of their appellate jurisdiction shall be appealable to, or be reviewable by, the Sandiganbayan in the manner provided by Rule 122 of the Rules of the Court. "In case, however, the imposed penalty by the Sandiganbayan or the regional trial court in the proper exercise of their respective jurisdictions, is death, review by the Supreme Court shall be automatic, whether or not accused files an appeal." Section 6. Appropriations. - The amount necessary to carry out the initial implementation of this Act shall be charged against the current fiscal year appropriations of the Sandiganbayan. Thereafter, such sums as may be needed for its continued implementation shall be included in the annual General Appropriations Act. Section 7. Transitory Provision. - This Act shall apply to all cases pending in any court over which trial has not begun as of the approval hereof Section 8. Separability of Provisions. - If for any reason any provision of this Act is declared unconstitutional or invalid, such parts or portions not affected thereby shall remain in full force and effect. Section 9. Repealing Clause. - All acts, decrees, general orders and circulars, or parts thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly. Section 10. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication in at least two (2) newspapers of general circulation. Approved: (Sgd.) ERNESTO M. MACEDA (Sgd.) JOSE DE VENECIA, JR. President of the Senate Speaker of the House of Representatives This Act which is a consolidation of House Bill No. 5323 and Senate Bill No. 844 was finally passed by the House of Representatives and the Senate on January 28,1997 and January 29, 1997, respectively. (Sgd.) LORENZO E. LEYNES, JR. (Sgd.) ROBERTO P. NAZARENO Secretary of Senate Secretary General House of Represenatives Approved: February 5, 1997 (Sgd.) FIDEL V. RAMOS President of the Philippines Pasted from
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BP 129, as amended by RA 7691, Sec. 5 Sunday, November 14, 2010 11:21 PM
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Bokingco v. CA, GR No. 161739, May 4, 2006 Sunday, November 14, 2010 11:22 PM
G.R. No. 161739 May 4, 2006 ALFREDO BOKINGO vs. CA, HEIRS OF CELESTINO BUSA, represented by FELICIDAD BUSA-PANAL and ERNESTO M. CAMPOS CALLEJO, SR., J.: Before the Court is the petition for review on certiorari filed by Alfredo Bokingo seeking to reverse and set aside the Decision1 dated December 17, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 71510 which dismissed his petition for certiorari filed therewith. The factual and procedural antecedents are as follows: Petitioner Alfredo Bokingo is one of the defendants in the complaint for injunction and damages filed by Ernesto Campos, the Heirs of Celestino Busa,2 the Heirs of Felicidad Busa-Panal 3 and the Heirs of Concordia Busa.4 The complaint was filed with the Regional Trial Court (RTC) of Butuan City, Branch 3 thereof, and docketed as Civil Case No. 1003. The complaint alleged as follows: CAUSE OF ACTION 3. Plaintiffs [herein respondents] are co-owners of the land subject matter. By virtue of the right of representation, the heirs of FELICIDAD BUSA-PANAL and CONCORDIA S. BUSA and REYNALDO S. BUSA, respectively; 4. Defendants in this case are heirs of MIGUEL BOKINGO; 5. Defendants ALFREDO BOKINGO [herein petitioner], WENCESLAO B. AMBRAY, JR., ROSA B. AMBRAY, CELIA A. ALMORA and JOSELITO B. AMBRAY, filed an application for titling of a parcel of land before the Department of Environment and Natural Resources, Office of the CENRO, Ochoa Avenue, Butuan City; 6. The land subject matter of the application of defendants is a parcel of land located at Baan (Buhangin), Butuan City, containing an area of 2.1600 hectares, more or less; 7. The land subject matter of the application for titling of defendants is a parcel of land inherited by plaintiffs from their father, the late CELESTINO BUSA. This parcel of land is described particularly as: TAX DECLARATION NO. GR.-10-002-0189-A "A parcel of land covered by Tax Declaration No. GR-10-002-0189-A, situated in Buhangin, Butuan City, containing an area of 2.1600 HAS., more or less. Bounded on the North – Elisa Busa, South Pastor Ago, East – Ho. Miguel Bokingo and on the West – Baan River." 8. When plaintiffs knew of defendants’ application, plaintiffs filed a protest against defendants’ application on February 5, 1996. Attached as Annex A is the Protest; 9. On November 24, 1998, the Provincial Environment and Natural Resources Officer, HUGO I. BAÑOSIA, resolved the Protest in favor of Plaintiffs-the protestant in the DENR case. Attached as Annex B is the order; 10. On January 6, 1999, the Provincial Environment and Natural Resources Officer, HUGO T. BAÑOSIA, issued a certification stating that the order dated November 24, 1998 has become final and executory. Attached as Annex C is the machine copy of the Certification; 11. On September 9, 1999, the same DENR Officer HUGO T. BAÑOSIA issued an Order of Execution which states that: In complying herewith, the Land Management Officer III concerned should be instructed to set forth the whole proceeding in writing signed by the parties and witnesses, if possible, submit and return to this Office within sixty (60) days from receipt hereof, to be used as evidence should it be necessary to institute any action, criminal or otherwise, against any party who may refuse to obey the same. SO ORDERED, Butuan City, September 9, 1999. 12. Plaintiffs requested on June 23, 1999, for a Survey Authority to survey the land subject matter of this case before the CENRO Office of Butuan City. Attached as Annex D is the Survey Application; 13. On July 30, 1999, A Survey Authority was issued by the CENRO of Butuan City, authorizing plaintiff ENGR. ERNESTO M. CAMPOS, JR., to survey the land subject matter of the DENR case and the case at bar. Attached as Annex E is the Survey Authority; REMLAW Page 108
the case at bar. Attached as Annex E is the Survey Authority; 14. On November 18, 1999 at 11:00 A.M., FELICIDAD BUSA-PANAL, MILAGROS BUSA SIMOGAN, TERESITA BUSA LINAO, JIMMY BUSA-PANAL, son of Felicidad Busa-Panal, ALFREDO BUSA-PANAL, son-in-law of Concordia S. Busa, personnel of the Butuan PNP and the personnel of ENGR. ERNESTO M. CAMPOS went to the area subject matter of this case to survey the land. Unfortunately, Defendant SPO3 FERDINAND B. DACILLO and Defendant ALFREDO BOKINGO, representatives of defendants, told the survey group to stop and not to enter the area subject matter of this case. Attached as Annex F is the report of CENRO Officer who [was] present during the November 18, 1999 survey which was stopped by SPO3 FERDINAND B. DACILLO and ALFREDO BOKINGO; 15. Plaintiff[s] availed of the Barangay Justice System to resolve the controversy regarding the survey but to no avail, defendants still refused to allow plaintiffs to survey the area. Thus, a Certificate to File Action was issued by the Lupong Tagapamayapa. Copy of the same is hereto attached as Annex G; 16. The defendants did not exercise honesty and good faith in their acts which is a violation of Article 19 of the New Civil Code, and which entitles the plaintiffs for damages; 17. The acts of defendants constrained the plaintiff*s+ to litigate and to incur attorney’s fees in the amount of PhP10,000.00 plus litigation expenses estimated at PhP10,000.00. PRAYER Wherefore, premises considered, it is respectfully prayed that after hearing, this Honorable Court: 1) Enjoin permanently the illegal acts of defendants of preventing the survey of the land subject matter of this case by ENGR. ERNESTO M. CAMPOS; 2) Order defendants to pay plaintiffs the sum of P10,000.00 as attorney’s fees, P10,000.00 as litigation expenses; 3) Order defendants to pay damages to plaintiff; 4) Such other reliefs just and reasonable under the circumstances. 5 Petitioner Bokingo, as one of the defendants in the above complaint, filed with the court a quo a motion to dismiss alleging that the latter has no jurisdiction over the subject matter of the claim. Specifically, petitioner Bokingo contended that it could be gleaned from the complaint that the issue between the parties involved the possession of the land. As such, the assessed value of the land was crucial to determine the court’s jurisdiction over the subject matter in accordance with either Section 19(2) 6 or Section 33(3) 7 of Batasang Pambansa Blg. 1298 as amended by Republic Act No. 7691. If the assessed value thereof is P20,000.00 or less, then the Municipal Trial Court (MTC) has jurisdiction over the subject matter. Otherwise, jurisdiction is with the RTC. Petitioner Bokingo pointed out in his Motion to Dismiss that the assessed value of the land subject matter of the complaint was not indicated. Nonetheless, he proffered that based on his father’s tax declaration covering the subject land, its assessed value was only P14,410.00. Consequently, it was allegedly clear that the court a quo, a Regional Trial Court, had no jurisdiction over the subject matter of the complaint filed by the respondents. Rather, in view of the assessed value of the subject land which was allegedly less than the P15,000.00, jurisdiction properly belonged to the MTC. Petitioner Bokingo thus urged the court a quo to dismiss the complaint filed by the respondents for lack of jurisdiction over the subject matter thereof. Acting thereon, the court a quo issued the Order dated March 13, 2002 denying the motion to dismiss. It pointed out that the complaint’s allegation is that the respondents, as plaintiffs, are entitled to have the subject land surveyed after petitioner Bokingo’s and his co-claimants’ application for the titling of the subject land was dismissed by the Provincial Environment and Natural Resources Officer (PENRO) and the respondents were declared to have a better right to file a public land application covering the same. Further, the relief being sought in the complaint is injunction in order that the respondents’ right to survey the subject land would not be defeated. Based on these allegations, the court a quo held that it had jurisdiction over the subject matter of the claim under Section 2 of Rule 58 of the Rules of Court which provides in part that "[a] preliminary injunction may be granted by the court where the action or proceeding is pending." It accordingly denied petitioner Bokingo’s motion to dismiss the complaint for lack of jurisdiction.1avvphil.net Petitioner Bokingo forthwith filed with the Court of Appeals a petition for certiorari alleging grave abuse of discretion on the part of the court a quo in denying his motion to dismiss. REMLAW Page 109
of discretion on the part of the court a quo in denying his motion to dismiss. On December 17, 2003, the CA rendered the assailed Decision dismissing the said petition for lack of merit, in fact and in law. It ruled that the remedy of certiorari is unavailing to petitioner Bokingo because "an order denying a motion to dismiss is interlocutory and cannot be the subject of the extraordinary petition for certiorari or mandamus."9 It was noted that the records fail to disclose that petitioner Bokingo filed a motion for reconsideration of the order of the court a quo. According to the CA, such omission warranted the outright dismissal of the petition for certiorari. Finally, it was not shown or even alleged in the petition that the court a quo, in issuing the assailed order, acted with grave abuse of discretion amounting to lack of jurisdiction. The issue raised by petitioner Bokingo, the CA held, was proper for an appeal but not a petition for certiorari. Aggrieved, petitioner Bokingo now comes to the Court seeking the reversal of the said decision of the CA which dismissed his petition for certiorari filed therewith. He insists that the complaint filed by the respondents with the court a quo is a possessory action. To determine which court, the RTC or MTC, has primary jurisdiction, petitioner Bokingo theorizes that it is necessary that the assessed value of the land be alleged in the initiatory complaint. Absent such allegation, the court where the case was filed should allegedly preliminarily determine the assessed value of the subject property to determine whether or not it has jurisdiction over the subject matter of the claim. In the present case, according to petitioner Bokingo, the assessed value of the subject land is only P14,410.00; hence, jurisdiction thereof properly belongs to the MTC in accordance with Section 19(2) or 33(3) of BP Blg. 129 as amended by RA 7691. The petition is bereft of merit. Preliminarily, the Court finds no reversible error in the dismissal by the CA of petitioner Bokingo’s petition for certiorari filed therewith. As correctly held by the CA, the mere fact that he failed to move for the reconsideration of the court a quo’s order denying his motion to dismiss was sufficient cause for the outright dismissal of the said petition. Certiorari as a special civil action will not lie unless a motion for reconsideration is first filed before the respondent court to allow it an opportunity to correct its errors, if any.10 Petitioner Bokingo did not proffer any compelling reason to warrant deviation by the CA from this salutary rule. As further observed by the CA, petitioner Bokingo failed to even allege grave abuse of discretion on the part of the court a quo in rendering the order denying his motion to dismiss. In any case, the present petition lacks substantive merit. It is axiomatic that the nature of the action and which court has original and exclusive jurisdiction over the same is determined by the material allegations of the complaint, the type of relief prayed for by the plaintiff, and the law in effect when the action is filed, irrespective of whether the plaintiffs are entitled to some or all of the claims asserted therein.11 The caption of the complaint is not determinative of the nature of the action. Nor does the jurisdiction of the court depend upon the answer of the defendant or agreement of the parties, or to the waiver or acquiescence of the parties.12 A careful perusal of the respondents’ complaint, quoted earlier, shows that it alleges that per the Order dated November 24, 1998 of PENRO of Butuan City, petitioner Bokingo’s and his co-claimants’ application for titling of the subject land was rejected. On the other hand, in the same order it was declared that the respondents, if qualified, may file an appropriate public land application covering the same land. It was further alleged that the said order became final and executory, and in connection therewith, the respondents were authorized by the City Environment and Natural Resources Officer (CENRO) of Butuan City to conduct a survey on the subject land. However, petitioner Bokingo, through his representatives, unjustly prevented the conduct of the said survey. Even when the matter regarding the survey was submitted to the Lupong Tagapamayapa, petitioner Bokingo still allegedly refused to allow the respondents to survey the subject land. Hence, the Complaint for Injunction filed by the respondents where the principal relief sought is to enjoin permanently the illegal acts of the defendants therein, including petitioner Bokingo, of preventing the survey of the land subject matter of the case. In this connection, it is well to note that the Court had the occasion to explain that "in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, the nature of the principal action, or remedy sought must first be ascertained. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and jurisdiction over the action will depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, the action is one where the subject of litigation may not be estimated in REMLAW Page 110
the principal relief sought, the action is one where the subject of litigation may not be estimated in terms of money, which is cognizable exclusively by Regional Trial Courts."13 As gleaned from the complaint, the principal relief sought by the respondents in their complaint is for the court a quo to issue an injunction against petitioner Bokingo and his representatives to permanently enjoin them from preventing the survey of the subject land. For clarity, the prayer of the complaint reads: Wherefore, premises considered, it is respectfully prayed that after hearing, this Honorable Court: 1) Enjoin permanently the illegal acts of defendants of preventing the survey of the land subject matter of this case by ENGR. ERNESTO M. CAMPOS; 2) Order defendants to pay plaintiffs the sum of P10,000.00 as attorney’s fees, P10,000.00 as litigation expenses; 3) Order defendants to pay damages to plaintiff; 4) Such other reliefs just and reasonable under the circumstances. 14 Contrary to the view posited by petitioner Bokingo, the cause of action of the respondents’ complaint is not, as yet, to recover the possession of the subject land. There are three kinds of actions to judicially recover possession of real property and these are distinguished in this wise: What really distinguishes an action for unlawful detainer from a possessory action (accion publiciana) and from a reinvindicatory action (accion reinvindicatoria) is that the first is limited to the question of possession de facto. An unlawful detainer suit (accion interdictal) together with forcible entry are the two forms of an ejectment suit that may be filed to recover possession of real property. Aside from the summary action of ejectment, accion publiciana or the plenary action to recover the right of possession and accion reinvindicatoria or the action to recover ownership which includes recovery of possession, make up the three kinds of actions to judicially recover possession.15 Significantly, the respondents’ complaint has not sought to recover the possession or ownership of the subject land. Rather, it is principally an action to enjoin petitioner Bokingo and his representatives from committing acts that would tend to prevent the survey of the subject land. It cannot be said therefore that it is one of a possessory action. The respondents, as plaintiffs in the court a quo, to be entitled to the injunctive relief sought, need to establish the following requirements: (1) the existence of a right to be protected; and (2) that the acts against which the injunction is to be directed are violative of the said right. As such, the subject matter of litigation is incapable of pecuniary estimation and properly cognizable exclusively by the court a quo, a Regional Trial Court under Section 19 (1) of BP Blg. 129, as amended by RA 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 litigation is incapable of pecuniary estimation; xxx Hence, the court a quo did not err in denying petitioner Bokingo’s motion to dismiss. WHEREFORE, premises considered, the petition is DENIED and the assailed Decision dated December 17, 2003 of the Court of Appeals in CA-G.R. SP No. 71510 is AFFIRMED in toto. Pasted from
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RCP v. CA GR 136109 Aug 1, 2002; Sunday, November 14, 2010 11:22 PM
[G.R. No. 136109. August 1, 2002] RADIO COMMUNICATIONS OF THE PHILIPPINES, INC., vs. COURT OF APPEALS and MANUEL DULAWON YNARES-SANTIAGO, J.: This is a petition for review of the decision of the Court of Appeals in CA-G.R. SP No. 45987 dated April 30, 1998 and its resolution dated October 15, 1998 denying the motion for reconsideration. On June 18, 1997, private respondent Manuel Dulawon filed with the Regional Trial Court of Tabuk, Kalinga, Branch 25, a complaint for breach of contract of lease with damages against petitioner Radio Communications of the Philippines, Inc. (RCPI). Petitioner filed a motion to dismiss the complaint for lack of jurisdiction contending that it is the Municipal Trial Court which has jurisdiction as the complaint is basically one for collection of unpaid rentals in the sum of P84,000.00, which does not exceed the jurisdictional amount of P100,000.00 for Regional Trial Courts. The trial court denied the motion to dismiss, as well as petitioner’s motion for reconsideration. Hence, petitioner went to the Court of Appeals on a petition for certiorari. On April 30, 1998, the Court of Appeals dismissed the petition. The dispositive portion thereof reads: WHEREFORE, the petition is hereby DENIED DUE COURSE and is DISMISSED. Costs against petitioner. SO ORDERED. The motion for reconsideration of the foregoing decision was denied on October 15, 1998. Hence, this petition. The issue for resolution in this petition is whether or not the Regional Trial Court has jurisdiction over the complaint filed by private respondent. Pertinent portion of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, provides: 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 litigation is incapable of pecuniary estimation; xxx xx x xxx (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 One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two hundred thousand pesos (P200,000.00). Corollary thereto, Administrative Circular No. 09-94, states: xxx xx x xxx 2. The exclusion of the term “damages of whatever kind” in determining the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. 129, as amended by R.A. No. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court. xxx xx x x x x. In Russell, et al., v. Vestil, et al., the Court held that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, the nature of the principal action or remedy sought must first be ascertained. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and jurisdiction over the action will depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, the action is one where the subject of the litigation may not be estimated in terms of money, which is cognizable exclusively by Regional Trial Courts. It is axiomatic that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. In the case at bar, the allegations in the complaint plainly show that private respondent’s cause of action is breach of contract. The pertinent portion of the complaint recites: xxx xx x xxx REMLAW Page 112
is breach of contract. The pertinent portion of the complaint recites: xxx xx x xxx 2. That sometime during the end of the year 1995, defendant through its appropriate officials negotiated with plaintiff the lease of a portion of the latter’s building x x x 3. That the lease contract was effective for a period of three (3) years of from January 1, 1996 to January 1, 1998 with advance payment for the year 1996. The advance was not however given in lump sum but on installment. One check that was given in payment of one month’s rental for 1996 was even stale and had to be changed only after demand; 4. That as per contract the monthly rental for 1997 was P3,300.00 while for 1998, it is P3,700.00; 5. That the defendant surreptitiously removed its equipments and other personalities from the leased premises and failed to pay rentals due for the months of January to March 1997 to the damage and prejudice of plaintiff; that this failure and refusal on the part of plaintiff accelerated the payment of all rentals for each month for the years 1997 and 1998; 6. That the acts of defendant amounts to a breach of contract which is unlawful and malicious, as in fact, it caused plaintiff serious anxiety, emotional stress, and sleepless nights for which he is entitled to moral damages; 7. That plaintiff conveyed his feelings to Mr. Ronald C. Manalastas as evidenced by a letter dated January 7, 1997 a copy of which is hereto attached to form part hereof as Annex “B”. This was later followed by a letter of plaintiff’s counsel a machine copy of which is hereto attached to form part hereof and marked as Annex “C”. Both these letters landed on deaf ears thereby aggravating the worries/anxieties of plaintiff; 8. That the period agreed is for the benefit of both parties and any unilateral termination constitutes breach of contract; 9. That defendant actually used the leased premises during the year 1996; that had it not been for the contract, plaintiff could have leased the premises to other persons for business purposes; that this unlawful and malicious breach of contract cannot be lawfully countenanced hence defendant must be taught a lesson by being ordered to pay exemplary damages; xxx xx x x x x. It is settled that a breach of contract is a cause of action either for specific performance or rescission of contracts. In Manufacturer’s Distributors, Inc. v. Siu Liong, the Court held that actions for specific performance are incapable of pecuniary estimation and therefore fall under the jurisdiction of the Regional Trial Court. Here, the averments in the complaint reveal that the suit filed by private respondent was primarily one for specific performance as it was aimed to enforce their three-year lease contract which would incidentally entitle him to monetary awards if the court should find that the subject contract of lease was breached. As alleged therein, petitioner’s failure to pay rentals due for the period from January to March 1997, constituted a violation of their contract which had the effect of accelerating the payment of monthly rentals for the years 1997 and 1998. The same complaint likewise implied a premature and unilateral termination of the term of the lease with the closure of and removal all communication equipment in the leased premises. Under the circumstances, the court has to scrutinize the facts and the applicable laws in order to determine whether there was indeed a violation of their lease agreement that would justify the award of rentals and damages. The prayer, therefore, for the payment of unpaid rentals in the amount of P84,000.00 plus damages consequent to the breach is merely incidental to the main action for specific performance. Similarly, in Manufacturer’s Distributor’s Inc., the Court explained – xxx xx x xxx That plaintiff’s complaint also sought the payment by the defendant of P3,376.00, plus interest and attorney’s fees, does not give a pecuniary estimation to the litigation, for the payment of such amounts can only be ordered as a consequence of the specific performance primarily sought. In other words, such payment would be but an incident or consequence of defendant's liability for specific performance. If no such liability is judicially declared, the payment can not be awarded. Hence, the amounts sought do not represent the value of the subject of litigation. “Subject matter over which jurisdiction can not be conferred by consent, has reference, not to the res or property involved in the litigation nor to a particular case, but to the class of cases, the purported subject of litigation, the nature of the action and of the relief sought (Appeal of Maclain, 176 NW. 817).” Specifically, it has been held that: “The Court has no jurisdiction of a suit for specific performance of a contract, although the damages REMLAW Page 113
“The Court has no jurisdiction of a suit for specific performance of a contract, although the damages alleged for its breach, if permitted, are within the amount of which that court has jurisdiction.” (Mebane Cotton Breeding Station. vs. Sides, 257 SW. 302; 21 C.J.S. 59, note). xxx xx x xxx Clearly, the action for specific performance case, irrespective of the amount of rentals and damages sought to be recovered, is incapable of pecuniary estimation, hence cognizable exclusively by the Regional Trial Court. The trial court, therefore, did not err in denying petitioner’s motion to dismiss. WHEREFORE, in view of all the foregoing, the petition is DENIED and the assailed decision of the Court of Appeals in CA-G.R. SP No. 45987 is AFFIRMED. Pasted from
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Honorio Bernardo v. Heirs of Eusebio Villegas GR 183357 Mar 15, 2010; Sunday, November 14, 2010 11:22 PM
HONORIO BERNARDO, Petitioner, vs. HEIRS OF EUSEBIO VILLEGAS, Respondents. DE C I S I O N PEREZ, J.: This petition for review on certiorari under Rule 45 of the Rules of Court seeks to assail the validity of the Decision1 dated 21 April 2008 of the Court of Appeals, which affirmed the judgment of the Regional Trial Court (RTC) of Binangonan, Rizal in Civil Case No. R-00-035. This controversy stemmed from a Complaint dated 14 November 2000 for accion publiciana filed by respondent Heirs of Eusebio Villegas against petitioner Honorio Bernardo, Romeo Gaza (Gaza) and Monina Francisco (Francisco). Respondents had earlier filed an ejectment case against the trio, docketed as Civil Case No. 99-065 with the Municipal Trial Court (MTC) of Binangonan, Rizal, which case was dismissed on the ground of lack of jurisdiction for having been filed beyond the one-year prescriptive period for filing a forcible entry case.2 Respondents alleged in the Complaint that their father, Eusebio Villegas, is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. 46891 with an area of 18,369 square meters and situated in Barangay Pag-asa, Binangonan, Rizal; that petitioner, by stealth and in the guise of merely grazing his cattle, surreptitiously entered into possession of a portion of respondents’ land; that petitioner conspired and confederated with Gaza and Francisco by illegally constructing their own houses on the subject land; that the issue of possession was brought to the barangay for conciliation but no settlement was reached by the parties; and that petitioner, Gaza and Francisco had forcibly, unlawfully and unjustly possessed and continue to possess the subject property and had refused to vacate the same. In his Answer, petitioner denied taking possession of any portion of the property of respondents. He argued that the cause of action is barred by the judgment in the ejectment case. He claimed that he had been in possession of his land since the early 1950s.3 As he did before the MTC, petitioner also alleged lack of jurisdiction on the part of the RTC. Gaza alleged that he has been occupying an abandoned river bed adjacent to the property allegedly owned by respondents.4 Gaza averred that he entered into a written agreement with petitioner, who claimed to own the land and allowed him to build a nipa hut thereon.5 An ocular inspection was conducted by the trial court judge. On 5 March 2007, the trial court rendered judgment in favor of respondents and ordered petitioner, Gaza and Francisco to vacate the subject land covered by TCT No. 46891 and to pay jointly and severally respondents the amount of P30,000.00 as attorney’s fees and the cost of suit.6 The trial court held that the suit, being an accion publiciana, falls within its jurisdiction. It found that the houses of petitioner and Gaza were inside the titled property of respondents. Its findings were based on the testimony of one of the respondents, Estelito Villegas; the relocation plan prepared by Engineer Rico J. Rasay; and the Technical Report on Verification Survey submitted by Engineer Robert C. Pangyarihan, petitioner’s own witness.7 The trial court noted that petitioner failed to present any title or tax declaration to prove ownership or possessory right.8 On appeal, the Court of Appeals affirmed the ruling of the trial court. In his appeal, petitioner questioned the jurisdiction of the trial court over the subject matter and argued that in their complaint, the respondents failed to state the assessed value of the property in dispute. The appellate court ruled that petitioner is estopped from raising the issue of jurisdiction because he failed to file a motion to dismiss on such ground and, instead, actively participated in the proceedings before the trial court. With respect to the argument that being indispensable parties, all of the heirs of Eusebio Villegas should have been impleaded as parties, the appellate court disagreed and invoked Article 487 of the Civil Code, REMLAW Page 115
have been impleaded as parties, the appellate court disagreed and invoked Article 487 of the Civil Code, which provides that any one of the co-owners may bring an action for ejectment. The appellate court construed said provision to cover all kinds of actions for recovery of possession.9 The appellate court sustained the trial court’s finding that the portions of the land occupied by petitioner and Gaza are owned by respondents. The appellate court likewise ruled that respondents could not be guilty of laches considering that Estelito Villegas, upon seeing for the first time in 1996 that petitioner was already building his house on the premises, verbally asked him to discontinue the construction.10 His motion for reconsideration having been denied, petitioner filed the instant petition. Petitioner insists that the trial court had no jurisdiction over the subject matter of the action for failure of respondents to allege the assessed value of the property involved in their complaint. Petitioner belies the ruling of the appellate court that he failed to raise objections before the trial court. Petitioner reiterates that he raised the defense of lack of jurisdiction as early as in his Answer filed before the trial court. Moreover, he argues that even if he did not raise the defense of lack of jurisdiction, the trial court should have dismissed the complaint motu proprio. Petitioner disputes the application to him of the doctrine of estoppel by laches in Tijam v. Sibonghanoy.11 Petitioner avers that unlike in Tijam, he raised the issue of jurisdiction, not only in his answer, but also in his appeal. 12 Respondents defend the ruling of the Court of Appeals and maintain that petitioner is estopped from challenging the jurisdiction of the trial court.13 The issue presented before this Court is simple: Whether or not estoppel bars petitioner from raising the issue of lack of jurisdiction. Under Batas Pambansa Bilang 129, the plenary action of accion publiciana must be brought before the regional trial courts. With the modifications introduced by Republic Act No. 769114 in 1994, the jurisdiction of the regional trial courts was limited to real actions where the assessed value exceeds P20,000.00, and P50,000.00 where the action is filed in Metro Manila, thus: SEC. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive original jurisdiction: xxx x (2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts. Under the law as modified, jurisdiction is determined by the assessed value of the property. A reading of the complaint shows that respondents failed to state the assessed value of the disputed land. The averments read: xxx x 3. EUSEBIO VILLEGAS, deceased father of hte plaintiffs, is the registered owner of a parcel of land situated in Barangay Pag-asa (formerly Barangay Tayuman), Binangonan, Rizal with a land area of 18,369 square meters. The same is covered by and embraced in Transfer Certificate of Title No. 46891 of the Registry of Deeds for the Province of Rizal. x x x. 4. Plaintiffs are the legal heirs of EUSEBIO VILLEGAS and succeeded to the subject parcel of land by virtue of their inheritance rights as compulsory heirs of said deceased Eusebio Villegas and upon his death, immediately took over and were enjoying the peaceful possession of the said parcel of land and exercising said rights of possession and ownership thereof; 5. That sometime in 1996, defendant Honorio Bernardo, by stealth and in guise of merely grazing his cattle, without the consent of the plaintiffs, surreptitiously entered into the possession of a portion of the subject parcel of land. Employing threats and intimidations, he claimed later that the area he illegally occupied is purportedly not part and parcel of the land owned by the plaintiff’s predecessor, Eusebio Villegas, and forcibly fenced and built his house on the portion of land he illegally occupied; 6. Not being content with his own forcible and unlawful invasion, usurpation and incursion into the plaintiffs’ parcel of land, and in furtherance of his desire to forcibly exclude the plaintiffs of their lawful and for possession of the subject portion of plaintiffs’ parcel of land, defendant Bernardo, conspired and confederated with defendants Romeo Gaza and Monina Francisco by surreptitiously and illegally constructing their own houses on the subject parcel of land through stealth and intimidation; REMLAW Page 116
constructing their own houses on the subject parcel of land through stealth and intimidation; 7. That the issue of the possession of the subject parcel of land was brought under the Barangay Justice System in 1996 for conciliation but, no settlement was reached by the parties. Copies of the Certifications issued by the Barangay for that matter is hereto attached and marked as Annex "B"; 8. That the defendants have forcibly, unlawfully, and unjustly dispossessed and still continues to forcibly, unlawfully, and unjustly dispossesses the plaintiffs of their lawful rights of possession and ownership on a portion of the subject property since 1966 up to the present; 9. Because of the unjust refusal of the defendants to vacate the premises, plaintiffs were constrained to engage the services of counsel to protect their interest on the property for an agreed attorney’s fee of P50,000.00, and have incurred litigation expenses[;] 10. By reason of the unlawful and forcible invasion by the defendants of the property of the plaintiffs which was accompanied by threats and intimidation, the plaintiffs have suffered and continue to suffer anxiety and sleepless nights for which the defendants should be made to indemnify by way of moral damages in the amount of at least P100,000.00; 11. To serve as an example to others who might be minded to commit similar wanton and unlawful acts, defendants should be held answerable for exemplary damages of not less than P50,000.00.15 This fact was noted by the Court of Appeals in its Decision but it proceeded to rule in this wise: Records show that at the time plaintiffs-appellees filed their complaint below, R.A. No. 7691 which amended Batas Pambansa Blg. 129 was already in effect. However, the complaint failed to allege the assessed value of the real property involved. Although appellant indeed raised the issue of jurisdiction in his answer, he had not filed a motion to dismiss on this ground nor reiterated the matter thereafter but actively participated in the proceedings after the denial of his demurrer to evidence anchored on the failure of the plaintiffs to identify in their complaint all the heirs of the registered owner and supposed lack of technical description of the property in the certificate of title. Indeed, appellant is now estopped to question the trial court’s jurisdiction over the subject matter and nature of the case having actively pursued throughout the trial, by filing various pleadings and presenting all relevant documentary and testimonial evidence, his theory that the portion occupied by him is not covered by the torrens title of Eusebio Villegas.16 We agree. As already shown, nowhere in the complaint was the assessed value of the subject property ever mentioned. There is no showing on the face of the complaint that the RTC has jurisdiction exclusive of the MTC. Indeed, absent any allegation in the complaint of the assessed value of the property, it cannot readily be determined which of the two trial courts had original and exclusive jurisdiction over the case.17 The general rule is that the jurisdiction of a court may be questioned at any stage of the proceedings.18 Lack of jurisdiction is one of those excepted grounds where the court may dismiss a claim or a case at any time when it appears from the pleadings or the evidence on record that any of those grounds exists, even if they were not raised in the answer or in a motion to dismiss. 19 The reason is that jurisdiction is conferred by law, and lack of it affects the very authority of the court to take cognizance of and to render judgment on the action.20 However, estoppel sets in when a party participates in all stages of a case before challenging the jurisdiction of the lower court. One cannot belatedly reject or repudiate its decision after voluntarily submitting to its jurisdiction, just to secure affirmative relief against one's opponent or after failing to obtain such relief. The Court has, time and again, frowned upon the undesirable practice of a party submitting a case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse.21 In Tijam, the Court held that it is iniquitous and unfair to void the trial court’s decision for lack of jurisdiction considering that it was raised only after fifteen (15) years of tedious litigation, thus: The facts of this case show that from the time the Surety became a quasi-party on July 31, 1948, it could have raised the question of the lack of jurisdiction of the Court of First Instance of Cebu to take cognizance of the present action by reason of the sum of money involved which, according to the law then in force, was within the original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at several stages of the proceedings in the court a quo as well as in the Court of Appeals, it invoked the jurisdiction of said courts to obtain affirmative relief and submitted its case for a final adjudication on the merits. It was only after an adverse decision was rendered by the Court of Appeals that it finally REMLAW Page 117
the merits. It was only after an adverse decision was rendered by the Court of Appeals that it finally woke up to raise the question of jurisdiction. Were we to sanction such conduct on its part, We would in effect be declaring as useless all the proceedings had in the present case since it was commenced on July 19, 1948 and compel the judgment creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent but revolting.22 The principle of justice and equity as espoused in Tijam should be applied in this case. The MTC dismissed the ejectment case upon its ruling that the case is for accion publiciana. It did not assert jurisdiction over the case even if it could have done so based on the assessed value of the property subject of the accion publiciana. And there was no showing, indeed, not even an allegation, that the MTC was not aware of its jurisdictional authority over an accion publiciana involving property in the amount stated in the law. Moreover, petitioner did not bring up the issue of jurisdictional amount that would have led the MTC to proceed with the trial of the case. Petitioner obviously considered the dismissal to be in his favor. When, as a result of such dismissal, respondents brought the case as accion publiciana before the RTC, petitioner never brought up the issue of jurisdictional amount. What petitioner mentioned in his Answer before the RTC was the generally phrased allegation that "the Honorable Court has no jurisdiction over the subject matter and the nature of the action in the aboveentitled case."23 This general assertion, which lacks any basis, is not sufficient. Clearly, petitioner failed to point out the omission of the assessed value in the complaint. Petitioner actively participated during the trial by adducing evidence and filing numerous pleadings, none of which mentioned any defect in the jurisdiction of the RTC. It was only on appeal before the Court of Appeals, after he obtained an adverse judgment in the trial court, that petitioner, for the first time, came up with the argument that the decision is void because there was no allegation in the complaint about the value of the property. Clearly, petitioner is estopped from questioning the jurisdiction of the RTC. We note that the decisions of the RTC and of the Court of Appeals discussed extensively the merits of the case, which has been pending for nearly ten (10) years. It was handled by two (2) judges and its records had to be reconstituted after the fire that gutted the courthouse. 24 If we were to accede to petitioner’s prayer, all the effort, time and expenses of parties who participated in the litigation would be wasted. Quite obviously, petitioner wants a repetition of the process hoping for the possibility of a reversal of the decision. The Court will not countenance such practice. Significantly, the Technical Report on Verification Survey25 by Engineer Robert C. Pangyarihan, which was attached to and formed part of the records, contained a tax declaration26 indicating that the subject property has an assessed value of P110,220.00. It is basic that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been issued by the proper government agency.27 Under Republic Act No. 7691, the RTC in fact has jurisdiction over the subject matter of the action.1avvphi1> Taking into consideration the decision of the MTC proclaiming that the case is one for accion publiciana and the assessed value of the property as evidenced by the case records, jurisdiction pertains, rightfully so, with the RTC. Perforce, the petition should be denied. WHEREFORE, the decision of the Court of Appeals dated 21 April 2008, affirming the judgment of the Regional Trial Court of Binangonan, Rizal dated 5 March 2007, is AFFIRMED. SO ORDERED. Pasted from
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Encarnacion v. Amigo, GR No. 169793 Sep 15, 2006 Sunday, November 14, 2010 11:22 PM
G.R. No. 169793 September 15, 2006 VICTORIANO M. ENCARNACION vs. NIEVES AMIGO YNARES-SANTIAGO, J.: This petition for review assails the June 30, 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 73857, ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings. The antecedent facts are as follows: Petitioner Victoriano M. Encarnacion is the registered owner of Lot No. 2121-B-1, consisting of 100 square meters and covered by TCT No. T-256650; and Lot No. 2121-B-2 consisting of 607 square meters with TCT No. T-256651, located at District 1, National Hi-way, Cauayan, Isabela. Said two lots originally form part of Lot No. 2121, a single 707 square meter track of land owned by Rogelio Valiente who sold the same to Nicasio Mallapitan on January 18, 1982. On March 21, 1985, Mallapitan sold the land to Victoriano Magpantay. After the death of the latter in 1992, his widow, Anita N. Magpantay executed an Affidavit of Waiver2 on April 11, 1995 waving her right over the property in favor of her son-in-law, herein petitioner, Victoriano Encarnacion. Thereafter, the latter caused the subdivision of the land into two lots3 and the issuance of titles in his name on July 18, 1996.4 Respondent Nieves Amigo allegedly entered the premises and took possession of a portion of the property sometime in 1985 without the permission of the then owner, Victoriano Magpantay. Said occupation by respondent continued even after TCT Nos. T-256650 and T-256651 were issue to petitioner. Consequently, petitioner, through his lawyer sent a letter5 dated Febuary 1, 2001 demanding that the respondent vacate the subject property. As evidenced by the registry return receipt, the demand letter was delivered by registered mail to the respondent on February 12, 2001. Notwithstanding receipt of the demand letter, respondent still refused to vacate the subject property. Thereafter, on March 2, 2001, petitioner filed a complaint6 for ejectment, damages with injunction and prayer for restraining order with the Municipal Trial Court in Cities of Isabela which was docketed as CV-01-030. In his Answer, respondent alleged that he has been in actual possession and occupation of a portion of the subject land since 1968 and that the issuance of Free Patent and titles in the name of petitioner was tainted with irregularities.7 On October 24, 2001, the Municipal Trial Court in Cities rendered judgment, which reads: WHERE[FO]RE, there being a preponderance of evidence, a JUDGMENT is hereby rendered in favor of the plaintiff VICTORIANO M. ENCARNACION and against the defendant NIEVES AMIGOE (sic) as follows: a) ORDERING the defendant to vacate the portion of the parcels of land described in Transfer Certificates of Title Nos. T-256650 and T-256651 he is now occupying and surrender it to the plaintiff; b) ORDERING the defendant to pay the plaintiff the sum of FIVE THOUSAND PESOS (P5,000) as attorney's fees, and c) ORDERING the defendant to pay rentals equivalent [to] P500.00 per month from February, 2001 until the portion of the land occupied by him is surrendered to the plaintiff. COSTS against the defendant. SO ORDERED.8 On appeal, the Regional Trial Court of Cauayan, Isabela, Branch 20, ruled as follows: WHEREFORE, judgment is hereby rendered dismissing the case on the ground that as the Municipal Court had no jurisdiction over the case, this Court acquired no appellate jurisdiction thereof. Costs against plaintiff-appellee. SO ORDERED.9 Aggrieved, petitioner filed a petition for review10 under Rule 42 of the Rules of Court before the Court of Appeals which promulgated the assailed Decision remanding the case to the Regional Trial Court. The REMLAW Page 119
Appeals which promulgated the assailed Decision remanding the case to the Regional Trial Court. The dispositive portion thereof reads: WHEREFORE, premises considered, this case is hereby REMANDED to Branch 20, Regional Trial Court of Cauayan, Isabela for further proceedings. No costs. SO ORDERED.11 Hence the present petition raising the sole issue: [WHETHER] THE COURT OF APPEALS ERRED IN HOLDING THAT THE PROPER ACTION IN THIS CASE IS ACCION PUBLICIANA AND NOT UNLAWFUL DETAINER AS DETERMINED BY THE ALLEGATIONS IN THE COMPLAINT FILED BY PETITIONER. 12 The petition lacks merit. In this jurisdiction, the three kinds of actions for the recovery of possession of real property are: 1. Accion interdictal, or an ejectment proceeding which may be either that for forcible entry (detentacion) or unlawful detainer (desahucio), which is a summary action for recovery of physical possession where the dispossession has not lasted for more than one year, and should be brought in the proper inferior court; 2. Accion publiciana or the plenary action for the recovery of the real right of possession, which should be brought in the proper Regional Trial Court when the dispossession has lasted for more than one year; and 3. Accion reinvindicatoria or accion de reivindicacion, which is an action for the recovery of ownership which must be brought in the proper Regional Trial Court. 13 Based on the foregoing distinctions, the material element that determines the proper action to be filed for the recovery of the possession of the property in this case is the length of time of dispossession. Under the Rules of Court, the remedies of forcible entry and unlawful detainer are granted to a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person. These remedies afford the person deprived of the possession to file at any time within one year after such unlawful deprivation or withholding of possession, an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.14 Thus, if the dispossession has not lasted for more than one year, an ejectment proceeding is proper and the inferior court acquires jurisdiction. On the other hand, if the dispossession lasted for more than one year, the proper action to be filed is an accion publiciana which should be brought to the proper Regional Trial Court. After a careful evaluation of the evidence on record of this case, we find that the Court of Appeals committed no reversible error in holding that the proper action in this case is accion publiciana; and in ordering the remand of the case to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings. Well settled is the rule that jurisdiction of the court over the subject matter of the action is determined by the allegations of the complaint at the time of its filing, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted.15 On its face, the complaint must show enough ground for the court to assume jurisdiction without resort to parol testimony.16 From the allegations in the complaint, it appears that the petitioner became the owner of the property on April 11, 1995 by virtue of the waiver of rights executed by his mother-in-law. He filed the complaint for ejectment on March 2, 2001 after his February 1, 2001 letter to the respondent demanding that the latter vacate the premises remained unheeded. While it is true that the demand letter was received by the respondent on February 12, 2001, thereby making the filing of the complaint for ejectment fall within the requisite one year from last demand for complaints for unlawful detainer, it is also equally true that petitioner became the owner of the subject lot in 1995 and has been since that time deprived possession of a portion thereof. From the date of the petitioner's dispossession in 1995 up to his filing of his complaint for ejectment in 2001, almost 6 years have elapsed. The length of time that the petitioner REMLAW Page 120
his complaint for ejectment in 2001, almost 6 years have elapsed. The length of time that the petitioner was dispossessed of his property made his cause of action beyond the ambit of an accion interdictal and effectively made it one for accion publiciana. After the lapse of the one-year period, the suit must be commenced in the Regional Trial Court via an accion publiciana which is a suit for recovery of the right to possess. It is an ordinary civil proceeding to determine the better right of possession of realty independently of title. It also refers to an ejectment suit filed after the expiration of one year from the accrual of the cause of action or from the unlawful withholding of possession of the realty. 17 Previously, we have held that if the owner of the land knew that another person was occupying his property way back in 1977 but the said owner only filed the complaint for ejectment in 1995, the proper action would be one for accion publiciana and not one under the summary procedure on ejectment. As explained by the Court: We agree with the Court of Appeals that if petitioners are indeed the owners of the subject lot and were unlawfully deprived of their right of possession, they should present their claim before the regional trial court in an accion publiciana or an accion reivindicatoria, and not before the metropolitan trial court in a summary proceeding for unlawful detainer or forcible entry. For even if one is the owner of the property, the possession thereof cannot be wrested from another who had been in physical or material possession of the same for more than one year by resorting to a summary action for ejectment. 18 Hence, we agree with the Court of Appeals when it declared that: The respondent's actual entry on the land of the petitioner was in 1985 but it was only on March 2, 2001 or sixteen years after, when petitioner filed his ejectment case. The respondent should have filed an accion publiciana case which is under the jurisdiction of the RTC. However, the RTC should have not dismissed the case. Section 8, Rule 40 of the Rules of Court provides: SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. — If an appeal is taken from an order of the lower court dismissing the case without a trial on the merits, the Regional Trial Court may affirm or reverse it, as the case may be. In case of affirmance and the ground of dismissal is lack of jurisdiction over the subject matter, the Regional Trial Court, if it has jurisdiction thereover, shall try the case on the merits as if the case was originally filed with it. In case of reversal, the case shall be remanded for further proceedings. If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice. The RTC should have taken cognizance of the case. If the case is tried on the merits by the Municipal Court without jurisdiction over the subject matter, the RTC on appeal may no longer dismiss the case if it has original jurisdiction thereof. Moreover, the RTC shall no longer try the case on the merits, but shall decide the case on the basis of the evidence presented in the lower court, without prejudice to the admission of the amended pleadings and additional evidence in the interest of justice.19 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated June 30, 2005 in CAG.R. SP No. 73857 ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings, is AFFIRMED. Pasted from
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Planters Products v. Fertiphil GR 166006 Mar 14, 2008 Sunday, November 14, 2010 11:28 PM
[G.R. No. 166006, March 14, 2008] PLANTERS PRODUCTS, INC. vs. FERTIPHIL CORPORATION,
FACTS: Petitioner PPI and private respondent Fertiphil are private corporations incorporated under Philippine laws.[3] They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals.
On June 3, 1985, then President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465 which provided, among others, for the imposition of a capital recovery component (CRC) on the domestic sale of all grades of fertilizers in the Philippines.[4] The LOI provides: 3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula a capital contribution component of not less than P10 per bag. This capital contribution shall be collected until adequate capital is raised to make PPI viable. Such capital contribution shall be applied by FPA to all domestic sales of fertilizers in the Philippines.[5] Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer it sold in the domestic market to the Fertilizer and Pesticide Authority (FPA). FPA then remitted the amount collected to the Far East Bank and Trust Company, the depositary bank of PPI. Fertiphil paid P6,689,144 to FPA from July 8, 1985 to January 24, 1986. After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. With the return of democracy, Fertiphil demanded from PPI a refund of the amounts it paid under LOI No. 1465, but PPI refused to accede to the demand.[7] Fertiphil filed a complaint for collection and damages[8] against FPA and PPI with the RTC in Makati. It questioned the constitutionality of LOI No. 1465 for being unjust, unreasonable, oppressive, invalid and an unlawful imposition that amounted to a denial of due process of law.[9] Fertiphil alleged that the LOI solely favored PPI, a privately owned corporation, which used the proceeds to maintain its monopoly of the fertilizer industry. In its Answer,[10] FPA, through the Solicitor General, countered that the issuance of LOI No. 1465 was a valid exercise of the police power of the State in ensuring the stability of the fertilizer industry in the country. It also averred that Fertiphil did not sustain any damage from the LOI because the burden imposed by the levy fell on the ultimate consumer, not the seller. HELD: On Locus Standi
Whether or not the complaint for collection is characterized as a private or public suit, Fertiphil has locus standi to file it. Fertiphil suffered a direct injury from the enforcement of LOI No. 1465. It was required, and it did pay, the P10 levy imposed for every bag of fertilizer sold on the domestic market. It may be true that Fertiphil has passed some or all of the levy to the ultimate consumer, but that does not disqualify it from attacking the constitutionality of the LOI or from seeking a refund. As seller, it bore the ultimate burden of paying the levy. It faced the possibility of severe sanctions for failure to pay the levy. The fact of payment is sufficient injury to Fertiphil. On theJurisdiction of the RTC It is settled that the RTC has jurisdiction to resolve the constitutionality of a statute, presidential decree or an executive order. This is clear from Section 5, Article VIII of the 1987 Constitution, which provides: SECTION 5. The Supreme Court shall have the following powers: REMLAW Page 122
SECTION 5. The Supreme Court shall have the following powers: (2) Review, revise, reverse, modify, or affirm on appeal orcert i o ra ri, as the law or the Rules of Court may provide, final judgments and orders of lower courtsin: (a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. The P10 levy under LOI No. 1465 is an exercise of the power of taxation.
We agree with the RTC that the imposition of the levy was an exercise by the State of its taxation power. While it is true that the power of taxation can be used as an implement of police power,[41] the primary purpose of the levy is revenue generation. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax. The P10 levy under LOI No. 1465 is too excessive to serve a mere regulatory purpose. The levy, no doubt, was a big burden on the seller or the ultimate consumer. It increased the price of a bag of fertilizer by as much as five percent.[45] A plain reading of the LOI also supports the conclusion that the levy was for revenue generation. The LOI expressly provided that the levy was imposed â¼ until adequate capital is raised to make PPI viable. Taxes are exacted only for a public purpose. The P10 levy is unconstitutional because it was not for a public purpose. The levy was imposed to give undue benefit to PPI. The purpose of a law is evident from its text or inferable from other secondary sources. Here, We agree with the RTC and that CA that the levy imposed under LOI No. 1465 was not for a public purpose. First, the LOI expressly provided that the levy be imposed to benefit PPI, a private company. The purpose is explicit from Clause 3 of the law, thus: The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula a capital contribution component of not less than P10 per bag. This capital contribution shall be collected until adequate capital is raised to make PPI viable. Such capital contribution shall be applied by FPA to all domestic sales of fertilizers in the Philippines. It is clear from the Letter of Understanding that the levy was imposed precisely to pay the corporate debts of PPI. We cannot agree with PPI that the levy was imposed to ensure the stability of the fertilizer industry in the country. The letter of understanding and the plain text of the LOI clearly indicate that the levy was exacted for the benefit of a private corporation. The LOI is still unconstitutional even if enacted under the police power; it did not promote public interest. Even if We consider LOI No. 1695 enacted under the police power of the State, it would still be invalid for failing to comply with the test of â¼ lawful subjectsâ¼ and â¼ lawful means.â¼ Jurisprudence states the test as follows: (1) the interest of the public generally, as distinguished from those of particular class, requires its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.
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REYES, R.T., J.: THE Regional Trial Courts (RTC) have the authority and jurisdiction to consider the constitutionality of statutes, executive orders, presidential decrees and other issuances. The Constitution vests that power not only in the Supreme Court but in all Regional Trial Courts. The principle is relevant in this petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) affirming with modification that of the RTC in Makati City,[2] finding petitioner Planters Products, Inc. (PPI) liable to private respondent Fertiphil Corporation (Fertiphil) for the levies it paid under Letter of Instruction (LOI) No. 1465. The Facts Petitioner PPI and private respondent Fertiphil are private corporations incorporated under Philippine laws.[3] They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals. On June 3, 1985, then President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465 which provided, among others, for the imposition of a capital recovery component (CRC) on the domestic sale of all grades of fertilizers in the Philippines.[4] The LOI provides: 3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula a capital contribution component of not less than P10 per bag. This capital contribution shall be collected until adequate capital is raised to make PPI viable. Such capital contribution shall be applied by FPA to all domestic sales of fertilizers in the Philippines.[5] (Underscoring supplied) Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer it sold in the domestic market to the Fertilizer and Pesticide Authority (FPA). FPA then remitted the amount collected to the Far East Bank and Trust Company, the depositary bank of PPI. Fertiphil paid P6,689,144 to FPA from July 8, 1985 to January 24, 1986.[6] After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. With the return of democracy, Fertiphil demanded from PPI a refund of the amounts it paid under LOI No. 1465, but PPI refused to accede to the demand.[7] Fertiphil filed a complaint for collection and damages[8] against FPA and PPI with the RTC in Makati. It questioned the constitutionality of LOI No. 1465 for being unjust, unreasonable, oppressive, invalid and an unlawful imposition that amounted to a denial of due process of law.[9] Fertiphil alleged that the LOI solely favored PPI, a privately owned corporation, which used the proceeds to maintain its monopoly of the fertilizer industry. In its Answer,[10] FPA, through the Solicitor General, countered that the issuance of LOI No. 1465 was a valid exercise of the police power of the State in ensuring the stability of the fertilizer industry in the country. It also averred that Fertiphil did not sustain any damage from the LOI because the burden imposed by the levy fell on the ultimate consumer, not the seller.
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RTC Disposition On November 20, 1991, the RTC rendered judgment in favor of Fertiphil, disposing as follows: WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the plaintiff and against the defendant Planters Product, Inc., ordering the latter to pay the former: 1) the sum of P6,698,144.00 with interest at 12% from the time of judicial demand; 2) the sum of P100,000 as attorney’s fees; 3) the cost of suit. SO ORDERED.[11] Ruling that the imposition of the P10 CRC was an exercise of the State’s inherent power of taxation, the RTC invalidated the levy for violating the basic principle that taxes can only be levied for public purpose, viz.: It is apparent that the imposition of P10 per fertilizer bag sold in the country by LOI 1465 is purportedly in the exercise of the power of taxation. It is a settled principle that the power of taxation by the state is plenary. Comprehensive and supreme, the principal check upon its abuse resting in the responsibility of the members of the legislature to their constituents. However, there are two kinds of limitations on the power of taxation: the inherent limitations and the constitutional limitations. One of the inherent limitations is that a tax may be levied only for public purposes: The power to tax can be resorted to only for a constitutionally valid public purpose. By the same token, taxes may not be levied for purely private purposes, for building up of private fortunes, or for the redress of private wrongs. They cannot be levied for the improvement of private property, or for the benefit, and promotion of private enterprises, except where the aid is incident to the public benefit. It is well-settled principle of constitutional law that no general tax can be levied except for the purpose of raising money which is to be expended for public use. Funds cannot be exacted under the guise of taxation to promote a purpose that is not of public interest. Without such limitation, the power to tax could be exercised or employed as an authority to destroy the economy of the people. A tax, however, is not held void on the ground of want of public interest unless the want of such interest is clear. (71 Am. Jur. pp. 371-372) In the case at bar, the plaintiff paid the amount of P6,698,144.00 to the Fertilizer and Pesticide Authority pursuant to the P10 per bag of fertilizer sold imposition under LOI 1465 which, in turn, remitted the amount to the defendant Planters Products, Inc. thru the latter’s depository bank, Far East Bank and Trust Co. Thus, by virtue of LOI 1465 the plaintiff, Fertiphil Corporation, which is a private domestic corporation, became poorer by the amount of P6,698,144.00 and the defendant, Planters Product, Inc., another private domestic corporation, became richer by the amount of P6,698,144.00. Tested by the standards of constitutionality as set forth in the afore-quoted jurisprudence, it is quite evident that LOI 1465 insofar as it imposes the amount of P10 per fertilizer bag sold in the country and orders that the said amount should go to the defendant Planters Product, Inc. is unlawful because it violates the mandate that a tax can be levied only for a public purpose and not to benefit, aid and promote a private enterprise such as Planters Product, Inc.[12] PPI moved for reconsideration but its motion was denied.[13] PPI then filed a notice of appeal with the RTC but it failed to pay the requisite appeal docket fee. In a separate but related proceeding, this Court[14] allowed the appeal of PPI and remanded the case to the CA for proper disposition. CA Decision On November 28, 2003, the CA handed down its decision affirming with modification that of the RTC, with the following fallo: IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION
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IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION that the award of attorney’s fees is hereby DELETED.[15] In affirming the RTC decision, the CA ruled that the lis mota of the complaint for collection was the constitutionality of LOI No. 1465, thus: The question then is whether it was proper for the trial court to exercise its power to judicially determine the constitutionality of the subject statute in the instant case. As a rule, where the controversy can be settled on other grounds, the courts will not resolve the constitutionality of a law (Lim v. Pacquing, 240 SCRA 649 [1995]). The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of political departments are valid, absent a clear and unmistakable showing to the contrary. However, the courts are not precluded from exercising such power when the following requisites are obtaining in a controversy before it: First, there must be before the court an actual case calling for the exercise of judicial review. Second, the question must be ripe for adjudication. Third, the person challenging the validity of the act must have standing to challenge. Fourth, the question of constitutionality must have been raised at the earliest opportunity; and lastly, the issue of constitutionality must be the very lis mota of the case (Integrated Bar of the Philippines v. Zamora, 338 SCRA 81 [2000]). Indisputably, the present case was primarily instituted for collection and damages. However, a perusal of the complaint also reveals that the instant action is founded on the claim that the levy imposed was an unlawful and unconstitutional special assessment. Consequently, the requisite that the constitutionality of the law in question be the very lis mota of the case is present, making it proper for the trial court to rule on the constitutionality of LOI 1465.[16] The CA held that even on the assumption that LOI No. 1465 was issued under the police power of the state, it is still unconstitutional because it did not promote public welfare. The CA explained: In declaring LOI 1465 unconstitutional, the trial court held that the levy imposed under the said law was an invalid exercise of the State’s power of taxation inasmuch as it violated the inherent and constitutional prescription that taxes be levied only for public purposes. It reasoned out that the amount collected under the levy was remitted to the depository bank of PPI, which the latter used to advance its private interest. On the other hand, appellant submits that the subject statute’s passage was a valid exercise of police power. In addition, it disputes the court a quo’s findings arguing that the collections under LOI 1465 was for the benefit of Planters Foundation, Incorporated (PFI), a foundation created by law to hold in trust for millions of farmers, the stock ownership of PPI. Of the three fundamental powers of the State, the exercise of police power has been characterized as the most essential, insistent and the least limitable of powers, extending as it does to all the great public needs. It may be exercised as long as the activity or the property sought to be regulated has some relevance to public welfare (Constitutional Law, by Isagani A. Cruz, p. 38, 1995 Edition). Vast as the power is, however, it must be exercised within the limits set by the Constitution, which requires the concurrence of a lawful subject and a lawful method. Thus, our courts have laid down the test to determine the validity of a police measure as follows: (1) the interests of the public generally, as distinguished from those of a particular class, requires its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals (National Development Company v. Philippine Veterans Bank, 192 SCRA 257 [1990]). It is upon applying this established tests that We sustain the trial court’s holding LOI 1465 unconstitutional. To be sure, ensuring the continued supply and distribution of fertilizer in the country is an undertaking imbued with public interest. However, the method by which LOI 1465 sought to achieve this is by no means a measure that will promote the public welfare. The government’s commitment to support the successful rehabilitation and continued viability of PPI, a private corporation, is an unmistakable attempt to mask the subject statute’s impartiality. There is no way to treat the self-interest of a favored entity, like PPI, as identical with the general interest of the country’s farmers or even the Filipino people in general. Well to stress, substantive due process exacts fairness and equal protection disallows distinction where none is needed. When a statute’s public
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exacts fairness and equal protection disallows distinction where none is needed. When a statute’s public purpose is spoiled by private interest, the use of police power becomes a travesty which must be struck down for being an arbitrary exercise of government power. To rule in favor of appellant would contravene the general principle that revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private individuals.[17] The CA did not accept PPI’s claim that the levy imposed under LOI No. 1465 was for the benefit of Planters Foundation, Inc., a foundation created to hold in trust the stock ownership of PPI. The CA stated: Appellant next claims that the collections under LOI 1465 was for the benefit of Planters Foundation, Incorporated (PFI), a foundation created by law to hold in trust for millions of farmers, the stock ownership of PFI on the strength of Letter of Undertaking (LOU) issued by then Prime Minister Cesar Virata on April 18, 1985 and affirmed by the Secretary of Justice in an Opinion dated October 12, 1987, to wit: “2. Upon the effective date of this Letter of Undertaking, the Republic shall cause FPA to include in its fertilizer pricing formula a capital recovery component, the proceeds of which will be used initially for the purpose of funding the unpaid portion of the outstanding capital stock of Planters presently held in trust by Planters Foundation, Inc. (Planters Foundation), which unpaid capital is estimated at approximately P206 million (subject to validation by Planters and Planters Foundation) (such unpaid portion of the outstanding capital stock of Planters being hereafter referred to as the ‘Unpaid Capital’), and subsequently for such capital increases as may be required for the continuing viability of Planters. The capital recovery component shall be in the minimum amount of P10 per bag, which will be added to the price of all domestic sales of fertilizer in the Philippines by any importer and/or fertilizer mother company. In this connection, the Republic hereby acknowledges that the advances by Planters to Planters Foundation which were applied to the payment of the Planters shares now held in trust by Planters Foundation, have been assigned to, among others, the Creditors. Accordingly, the Republic, through FPA, hereby agrees to deposit the proceeds of the capital recovery component in the special trust account designated in the notice dated April 2, 1985, addressed by counsel for the Creditors to Planters Foundation. Such proceeds shall be deposited by FPA on or before the 15th day of each month. The capital recovery component shall continue to be charged and collected until payment in full of (a) the Unpaid Capital and/or (b) any shortfall in the payment of the Subsidy Receivables, (c) any carrying cost accruing from the date hereof on the amounts which may be outstanding from time to time of the Unpaid Capital and/or the Subsidy Receivables and (d) the capital increases contemplated in paragraph 2 hereof. For the purpose of the foregoing clause (c), the ‘carrying cost’ shall be at such rate as will represent the full and reasonable cost to Planters of servicing its debts, taking into account both its peso and foreign currency-denominated obligations.†(Records, pp. 42-43) Appellant’s proposition is open to question, to say the least. The LOU issued by then Prime Minister Virata taken together with the Justice Secretary’s Opinion does not preponderantly demonstrate that the collections made were held in trust in favor of millions of farmers. Unfortunately for appellant, in the absence of sufficient evidence to establish its claims, this Court is constrained to rely on what is explicitly provided in LOI 1465 – that one of the primary aims in imposing the levy is to support the successful rehabilitation and continued viability of PPI.[18] PPI moved for reconsideration but its motion was denied.[19] It then filed the present petition with this Court. Issues Petitioner PPI raises four issues for Our consideration, viz.: I THE CONSTITUTIONALITY OF LOI 1465 CANNOT BE COLLATERALLY ATTACKED AND BE DECREED VIA A DEFAULT JUDGMENT IN A CASE FILED FOR COLLECTION AND DAMAGES WHERE THE ISSUE OF CONSTITUTIONALITY IS NOT THE VERY LIS MOTA OF THE CASE. NEITHER CAN LOI 1465 BE CHALLENGED BY ANY PERSON OR ENTITY WHICH HAS NO STANDING TO DO SO. II
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II LOI 1465, BEING A LAW IMPLEMENTED FOR THE PURPOSE OF ASSURING THE FERTILIZER SUPPLY AND DISTRIBUTION IN THE COUNTRY, AND FOR BENEFITING A FOUNDATION CREATED BY LAW TO HOLD IN TRUST FOR MILLIONS OF FARMERS THEIR STOCK OWNERSHIP IN PPI CONSTITUTES A VALID LEGISLATION PURSUANT TO THE EXERCISE OF TAXATION AND POLICE POWER FOR PUBLIC PURPOSES. III THE AMOUNT COLLECTED UNDER THE CAPITAL RECOVERY COMPONENT WAS REMITTED TO THE GOVERNMENT, AND BECAME GOVERNMENT FUNDS PURSUANT TO AN EFFECTIVE AND VALIDLY ENACTED LAW WHICH IMPOSED DUTIES AND CONFERRED RIGHTS BY VIRTUE OF THE PRINCIPLE OF “OPERATIVE FACTâ€PRIOR TO ANY DECLARATION OF UNCONSTITUTIONALITY OF LOI 1465. IV THE PRINCIPLE OF UNJUST VEXATION (SHOULD BE ENRICHMENT) FINDS NO APPLICATION IN THE INSTANT CASE.[20] (Underscoring supplied)
Our Ruling We shall first tackle the procedural issues of locus standi and the jurisdiction of the RTC to resolve constitutional issues. Fertiphil has locus standi because it suffered direct injury; doctrine of standing is a mere procedural technicality which may be waived. PPI argues that Fertiphil has no locus standi to question the constitutionality of LOI No. 1465 because it does not have a “personal and substantial interest in the case or will sustain direct injury as a result of its enforcement.â €*21+ It asserts that Fertiphil did not suffer any damage from the CRC imposition because †œincidence of the levy fell on the ultimate consumer or the farmers themselves, not on the seller fertilizer company.â€*22+ We cannot agree. The doctrine of locus standi or the right of appearance in a court of justice has been adequately discussed by this Court in a catena of cases. Succinctly put, the doctrine requires a litigant to have a material interest in the outcome of a case. In private suits, locus standi requires a litigant to be a “real party in interest,â € which is defined as †œthe party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit.â€*23+ In public suits, this Court recognizes the difficulty of applying the doctrine especially when plaintiff asserts a public right on behalf of the general public because of conflicting public policy issues. [24] On one end, there is the right of the ordinary citizen to petition the courts to be freed from unlawful government intrusion and illegal official action. At the other end, there is the public policy precluding excessive judicial interference in official acts, which may unnecessarily hinder the delivery of basic public services. In this jurisdiction, We have adopted the “direct injury testâ€to determine locus standi in public suits. In People v. Vera,*25+ it was held that a person who impugns the validity of a statute must have “a personal and substantial interest in the case such that he has sustained, or will sustain direct injury as a result.†The â €œdirect injury testâ€in public suits is similar to the “real party in interestâ€rule for private suits under Section 2, Rule 3 of the 1997 Rules of Civil Procedure.[26] Recognizing that a strict application of the “direct injuryâ€test may hamper public interest, this Court relaxed the requirement in cases of “transcendental importanceâ€or with “far reaching implications.†Being a mere procedural technicality, it has also been held that locus standi may be waived in the public interest.[27] Whether or not the complaint for collection is characterized as a private or public suit, Fertiphil has locus standi to file it. Fertiphil suffered a direct injury from the enforcement of LOI No. 1465. It was required, and it did pay, the
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file it. Fertiphil suffered a direct injury from the enforcement of LOI No. 1465. It was required, and it did pay, the P10 levy imposed for every bag of fertilizer sold on the domestic market. It may be true that Fertiphil has passed some or all of the levy to the ultimate consumer, but that does not disqualify it from attacking the constitutionality of the LOI or from seeking a refund. As seller, it bore the ultimate burden of paying the levy. It faced the possibility of severe sanctions for failure to pay the levy. The fact of payment is sufficient injury to Fertiphil. Moreover, Fertiphil suffered harm from the enforcement of the LOI because it was compelled to factor in its product the levy. The levy certainly rendered the fertilizer products of Fertiphil and other domestic sellers much more expensive. The harm to their business consists not only in fewer clients because of the increased price, but also in adopting alternative corporate strategies to meet the demands of LOI No. 1465. Fertiphil and other fertilizer sellers may have shouldered all or part of the levy just to be competitive in the market. The harm occasioned on the business of Fertiphil is sufficient injury for purposes of locus standi. Even assuming arguendo that there is no direct injury, We find that the liberal policy consistently adopted by this Court on locus standi must apply. The issues raised by Fertiphil are of paramount public importance. It involves not only the constitutionality of a tax law but, more importantly, the use of taxes for public purpose. Former President Marcos issued LOI No. 1465 with the intention of rehabilitating an ailing private company. This is clear from the text of the LOI. PPI is expressly named in the LOI as the direct beneficiary of the levy. Worse, the levy was made dependent and conditional upon PPI becoming financially viable. The LOI provided that “the capital contribution shall be collected until adequate capital is raised to make PPI viable.†The constitutionality of the levy is already in doubt on a plain reading of the statute. It is Our constitutional duty to squarely resolve the issue as the final arbiter of all justiciable controversies. The doctrine of standing, being a mere procedural technicality, should be waived, if at all, to adequately thresh out an important constitutional issue. RTC may resolve constitutional issues; the constitutional issue was adequately raised in the complaint; it is the lis mota of the case. PPI insists that the RTC and the CA erred in ruling on the constitutionality of the LOI. It asserts that the constitutionality of the LOI cannot be collaterally attacked in a complaint for collection.[28] Alternatively, the resolution of the constitutional issue is not necessary for a determination of the complaint for collection.[29] Fertiphil counters that the constitutionality of the LOI was adequately pleaded in its complaint. It claims that the constitutionality of LOI No. 1465 is the very lis mota of the case because the trial court cannot determine its claim without resolving the issue.[30] It is settled that the RTC has jurisdiction to resolve the constitutionality of a statute, presidential decree or an executive order. This is clear from Section 5, Article VIII of the 1987 Constitution, which provides: SECTION 5. The Supreme Court shall have the following powers: xx xx (2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and orders of lower courts in: (a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Underscoring supplied) In Mirasol v. Court of Appeals,[31] this Court recognized the power of the RTC to resolve constitutional issues, thus: On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to consider the constitutionality of a statute, presidential decree, or executive order. The Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation not only in this Court, but in all Regional Trial Courts.[32]
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In the recent case of Equi-Asia Placement, Inc. v. Department of Foreign Affairs,[33] this Court reiterated: There is no denying that regular courts have jurisdiction over cases involving the validity or constitutionality of a rule or regulation issued by administrative agencies. Such jurisdiction, however, is not limited to the Court of Appeals or to this Court alone for even the regional trial courts can take cognizance of actions assailing a specific rule or set of rules promulgated by administrative bodies. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts.[34] Judicial review of official acts on the ground of unconstitutionality may be sought or availed of through any of the actions cognizable by courts of justice, not necessarily in a suit for declaratory relief. Such review may be had in criminal actions, as in People v. Ferrer[35] involving the constitutionality of the now defunct Anti-Subversion law, or in ordinary actions, as in Krivenko v. Register of Deeds[36] involving the constitutionality of laws prohibiting aliens from acquiring public lands. The constitutional issue, however, (a) must be properly raised and presented in the case, and (b) its resolution is necessary to a determination of the case, i.e., the issue of constitutionality must be the very lis mota presented.[37] Contrary to PPI’s claim, the constitutionality of LOI No. 1465 was properly and adequately raised in the complaint for collection filed with the RTC. The pertinent portions of the complaint allege: 6. The CRC of P10 per bag levied under LOI 1465 on domestic sales of all grades of fertilizer in the Philippines, is unlawful, unjust, uncalled for, unreasonable, inequitable and oppressive because: xx xx (c) It favors only one private domestic corporation, i.e., defendant PPPI, and imposed at the expense and disadvantage of the other fertilizer importers/distributors who were themselves in tight business situation and were then exerting all efforts and maximizing management and marketing skills to remain viable; xx xx (e) It was a glaring example of crony capitalism, a forced program through which the PPI, having been presumptuously masqueraded as “theâ€fertilizer industry itself, was the sole and anointed beneficiary; 7. The CRC was an unlawful; and unconstitutional special assessment and its imposition is tantamount to illegal exaction amounting to a denial of due process since the persons of entities which had to bear the burden of paying the CRC derived no benefit therefrom; that on the contrary it was used by PPI in trying to regain its former despicable monopoly of the fertilizer industry to the detriment of other distributors and importers.[38] (Underscoring supplied) The constitutionality of LOI No. 1465 is also the very lis mota of the complaint for collection. Fertiphil filed the complaint to compel PPI to refund the levies paid under the statute on the ground that the law imposing the levy is unconstitutional. The thesis is that an unconstitutional law is void. It has no legal effect. Being void, Fertiphil had no legal obligation to pay the levy. Necessarily, all levies duly paid pursuant to an unconstitutional law should be refunded under the civil code principle against unjust enrichment. The refund is a mere consequence of the law being declared unconstitutional. The RTC surely cannot order PPI to refund Fertiphil if it does not declare the LOI unconstitutional. It is the unconstitutionality of the LOI which triggers the refund. The issue of constitutionality is the very lis mota of the complaint with the RTC. The P10 levy under LOI No. 1465 is an exercise of the power of taxation. At any rate, the Court holds that the RTC and the CA did not err in ruling against the constitutionality of the LOI. PPI insists that LOI No. 1465 is a valid exercise either of the police power or the power of taxation. It claims that the LOI was implemented for the purpose of assuring the fertilizer supply and distribution in the country and for benefiting a foundation created by law to hold in trust for millions of farmers their stock ownership in PPI. Fertiphil counters that the LOI is unconstitutional because it was enacted to give benefit to a private company. The
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Fertiphil counters that the LOI is unconstitutional because it was enacted to give benefit to a private company. The levy was imposed to pay the corporate debt of PPI. Fertiphil also argues that, even if the LOI is enacted under the police power, it is still unconstitutional because it did not promote the general welfare of the people or public interest. Police power and the power of taxation are inherent powers of the State. These powers are distinct and have different tests for validity. Police power is the power of the State to enact legislation that may interfere with personal liberty or property in order to promote the general welfare,[39] while the power of taxation is the power to levy taxes to be used for public purpose. The main purpose of police power is the regulation of a behavior or conduct, while taxation is revenue generation. The “lawful subjectsâ€and “lawful meansâ€tests are used to determine the validity of a law enacted under the police power.[40] The power of taxation, on the other hand, is circumscribed by inherent and constitutional limitations. We agree with the RTC that the imposition of the levy was an exercise by the State of its taxation power. While it is true that the power of taxation can be used as an implement of police power,[41] the primary purpose of the levy is revenue generation. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax.[42] In Philippine Airlines, Inc. v. Edu,[43] it was held that the imposition of a vehicle registration fee is not an exercise by the State of its police power, but of its taxation power, thus: It is clear from the provisions of Section 73 of Commonwealth Act 123 and Section 61 of the Land Transportation and Traffic Code that the legislative intent and purpose behind the law requiring owners of vehicles to pay for their registration is mainly to raise funds for the construction and maintenance of highways and to a much lesser degree, pay for the operating expenses of the administering agency. x x x Fees may be properly regarded as taxes even though they also serve as an instrument of regulation. Taxation may be made the implement of the state's police power (Lutz v. Araneta, 98 Phil. 148). If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax. Such is the case of motor vehicle registration fees. The same provision appears as Section 59(b) in the Land Transportation Code. It is patent therefrom that the legislators had in mind a regulatory tax as the law refers to the imposition on the registration, operation or ownership of a motor vehicle as a “tax or fee.â€x x x Simply put, if the exaction under Rep. Act 4136 were merely a regulatory fee, the imposition in Rep. Act 5448 need not be an “additionalâ€tax. Rep. Act 4136 also speaks of other “feesâ€such as the special permit fees for certain types of motor vehicles (Sec. 10) and additional fees for change of registration (Sec. 11). These are not to be understood as taxes because such fees are very minimal to be revenue-raising. Thus, they are not mentioned by Sec. 59(b) of the Code as taxes like the motor vehicle registration fee and chauffeurs’ license fee. Such fees are to go into the expenditures of the Land Transportation Commission as provided for in the last proviso of Sec. 61.[44] (Underscoring supplied) The P10 levy under LOI No. 1465 is too excessive to serve a mere regulatory purpose. The levy, no doubt, was a big burden on the seller or the ultimate consumer. It increased the price of a bag of fertilizer by as much as five percent.[45] A plain reading of the LOI also supports the conclusion that the levy was for revenue generation. The LOI expressly provided that the levy was imposed “until adequate capital is raised to make PPI viable.†Taxes are exacted only for a public purpose. The P10 levy is unconstitutional because it was not for a public purpose. The levy was imposed to give undue benefit to PPI. An inherent limitation on the power of taxation is public purpose. Taxes are exacted only for a public purpose. They cannot be used for purely private purposes or for the exclusive benefit of private persons.[46] The reason for this is simple. The power to tax exists for the general welfare; hence, implicit in its power is the limitation that it should be used only for a public purpose. It would be a robbery for the State to tax its citizens and use the funds generated for a private purpose. As an old United States case bluntly put it: “To lay with one hand, the power of the government on the property of the citizen, and with the other to bestow it upon favored individuals to aid private enterprises and build up private fortunes, is nonetheless a robbery because it is done under the forms of law and is called taxation.â€*47+
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The term “public purposeâ€is not defined. It is an elastic concept that can be hammered to fit modern standards. Jurisprudence states that “public purposeâ€should be given a broad interpretation. It does not only pertain to those purposes which are traditionally viewed as essentially government functions, such as building roads and delivery of basic services, but also includes those purposes designed to promote social justice. Thus, public money may now be used for the relocation of illegal settlers, low-cost housing and urban or agrarian reform. While the categories of what may constitute a public purpose are continually expanding in light of the expansion of government functions, the inherent requirement that taxes can only be exacted for a public purpose still stands. Public purpose is the heart of a tax law. When a tax law is only a mask to exact funds from the public when its true intent is to give undue benefit and advantage to a private enterprise, that law will not satisfy the requirement of â €œpublic purpose.†The purpose of a law is evident from its text or inferable from other secondary sources. Here, We agree with the RTC and that CA that the levy imposed under LOI No. 1465 was not for a public purpose. First, the LOI expressly provided that the levy be imposed to benefit PPI, a private company. The purpose is explicit from Clause 3 of the law, thus: 3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula a capital contribution component of not less than P10 per bag. This capital contribution shall be collected until adequate capital is raised to make PPI viable. Such capital contribution shall be applied by FPA to all domestic sales of fertilizers in the Philippines.[48] (Underscoring supplied) It is a basic rule of statutory construction that the text of a statute should be given a literal meaning. In this case, the text of the LOI is plain that the levy was imposed in order to raise capital for PPI. The framers of the LOI did not even hide the insidious purpose of the law. They were cavalier enough to name PPI as the ultimate beneficiary of the taxes levied under the LOI. We find it utterly repulsive that a tax law would expressly name a private company as the ultimate beneficiary of the taxes to be levied from the public. This is a clear case of crony capitalism. Second, the LOI provides that the imposition of the P10 levy was conditional and dependent upon PPI becoming financially “viable.â€This suggests that the levy was actually imposed to benefit PPI. The LOI notably does not fix a maximum amount when PPI is deemed financially “viable.†Worse, the liability of Fertiphil and other domestic sellers of fertilizer to pay the levy is made indefinite. They are required to continuously pay the levy until adequate capital is raised for PPI. Third, the RTC and the CA held that the levies paid under the LOI were directly remitted and deposited by FPA to Far East Bank and Trust Company, the depositary bank of PPI.[49] This proves that PPI benefited from the LOI. It is also proves that the main purpose of the law was to give undue benefit and advantage to PPI. Fourth, the levy was used to pay the corporate debts of PPI. A reading of the Letter of Understanding[50] dated May 18, 1985 signed by then Prime Minister Cesar Virata reveals that PPI was in deep financial problem because of its huge corporate debts. There were pending petitions for rehabilitation against PPI before the Securities and Exchange Commission. The government guaranteed payment of PPI’s debts to its foreign creditors. To fund the payment, President Marcos issued LOI No. 1465. The pertinent portions of the letter of understanding read: Republic of the Philippines Office of the Prime Minister Manila LETTER OF UNDERTAKING May 18, 1985 TO: THE BANKING AND FINANCIAL INSTITUTIONS LISTED IN ANNEX A HERETO WHICH ARE CREDITORS (COLLECTIVELY, THE “CREDITORSâ€) OF PLANTERS PRODUCTS, INC. (“PLANTERSâ€) Gentlemen:
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This has reference to Planters which is the principal importer and distributor of fertilizer, pesticides and agricultural chemicals in the Philippines. As regards Planters, the Philippine Government confirms its awareness of the following: (1) that Planters has outstanding obligations in foreign currency and/or pesos, to the Creditors, (2) that Planters is currently experiencing financial difficulties, and (3) that there are presently pending with the Securities and Exchange Commission of the Philippines a petition filed at Planters’ own behest for the suspension of payment of all its obligations, and a separate petition filed by Manufacturers Hanover Trust Company, Manila Offshore Branch for the appointment of a rehabilitation receiver for Planters. In connection with the foregoing, the Republic of the Philippines (the “Republicâ€) confirms that it considers and continues to consider Planters as a major fertilizer distributor. Accordingly, for and in consideration of your expressed willingness to consider and participate in the effort to rehabilitate Planters, the Republic hereby manifests its full and unqualified support of the successful rehabilitation and continuing viability of Planters, and to that end, hereby binds and obligates itself to the creditors and Planters, as follows: xx xx
2. Upon the effective date of this Letter of Undertaking, the Republic shall cause FPA to include in its fertilizer pricing formula a capital recovery component, the proceeds of which will be used initially for the purpose of funding the unpaid portion of the outstanding capital stock of Planters presently held in trust by Planters Foundation, Inc. (“Planters Foundationâ€), which unpaid capital is estimated at approximately P206 million (subject to validation by Planters and Planters Foundation) such unpaid portion of the outstanding capital stock of Planters being hereafter referred to as the “Unpaid Capitalâ€), and subsequently for such capital increases as may be required for the continuing viability of Planters. xx xx
The capital recovery component shall continue to be charged and collected until payment in full of (a) the Unpaid Capital and/or (b) any shortfall in the payment of the Subsidy Receivables, (c) any carrying cost accruing from the date hereof on the amounts which may be outstanding from time to time of the Unpaid Capital and/or the Subsidy Receivables, and (d) the capital increases contemplated in paragraph 2 hereof. For the purpose of the foregoing clause (c), the “carrying costâ€shall be at such rate as will represent the full and reasonable cost to Planters of servicing its debts, taking into account both its peso and foreign currency-denominated obligations. REPUBLIC OF THE PHILIPPINES By: (signed) CESAR E. A. VIRATA Prime Minister and Minister of Finance[51] It is clear from the Letter of Understanding that the levy was imposed precisely to pay the corporate debts of PPI. We cannot agree with PPI that the levy was imposed to ensure the stability of the fertilizer industry in the country. The letter of understanding and the plain text of the LOI clearly indicate that the levy was exacted for the benefit of a private corporation. All told, the RTC and the CA did not err in holding that the levy imposed under LOI No. 1465 was not for a public purpose. LOI No. 1465 failed to comply with the public purpose requirement for tax laws. The LOI is still unconstitutional even if enacted under the police power; it did not promote public interest. Even if We consider LOI No. 1695 enacted under the police power of the State, it would still be invalid for failing to comply with the test of “lawful subjectsâ€and “lawful means.â€Jurisprudence states the test as follows: (1) the interest of the public generally, as distinguished from those of particular class, requires its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.[52]
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upon individuals.[52] For the same reasons as discussed, LOI No. 1695 is invalid because it did not promote public interest. The law was enacted to give undue advantage to a private corporation. We quote with approval the CA ratiocination on this point, thus: It is upon applying this established tests that We sustain the trial court’s holding LOI 1465 unconstitutional. To be sure, ensuring the continued supply and distribution of fertilizer in the country is an undertaking imbued with public interest. However, the method by which LOI 1465 sought to achieve this is by no means a measure that will promote the public welfare. The government’s commitment to support the successful rehabilitation and continued viability of PPI, a private corporation, is an unmistakable attempt to mask the subject statute’s impartiality. There is no way to treat the self-interest of a favored entity, like PPI, as identical with the general interest of the country’s farmers or even the Filipino people in general. Well to stress, substantive due process exacts fairness and equal protection disallows distinction where none is needed. When a statute’s public purpose is spoiled by private interest, the use of police power becomes a travesty which must be struck down for being an arbitrary exercise of government power. To rule in favor of appellant would contravene the general principle that revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private individuals. (Underscoring supplied) The general rule is that an unconstitutional law is void; the doctrine of operative fact is inapplicable. PPI also argues that Fertiphil cannot seek a refund even if LOI No. 1465 is declared unconstitutional. It banks on the doctrine of operative fact, which provides that an unconstitutional law has an effect before being declared unconstitutional. PPI wants to retain the levies paid under LOI No. 1465 even if it is subsequently declared to be unconstitutional. We cannot agree. It is settled that no question, issue or argument will be entertained on appeal, unless it has been raised in the court a quo.[53] PPI did not raise the applicability of the doctrine of operative fact with the RTC and the CA. It cannot belatedly raise the issue with Us in order to extricate itself from the dire effects of an unconstitutional law. At any rate, We find the doctrine inapplicable. The general rule is that an unconstitutional law is void. It produces no rights, imposes no duties and affords no protection. It has no legal effect. It is, in legal contemplation, inoperative as if it has not been passed.[54] Being void, Fertiphil is not required to pay the levy. All levies paid should be refunded in accordance with the general civil code principle against unjust enrichment. The general rule is supported by Article 7 of the Civil Code, which provides: ART. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary. When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play.[55] It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration.[56] The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy[57] or would put in limbo the acts done by a municipality in reliance upon a law creating it.[58] Here, We do not find anything iniquitous in ordering PPI to refund the amounts paid by Fertiphil under LOI No. 1465. It unduly benefited from the levy. It was proven during the trial that the levies paid were remitted and deposited to its bank account. Quite the reverse, it would be inequitable and unjust not to order a refund. To do so would unjustly enrich PPI at the expense of Fertiphil. Article 22 of the Civil Code explicitly provides that “every person who, through an act of performance by another comes into possession of something at the expense of the
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person who, through an act of performance by another comes into possession of something at the expense of the latter without just or legal ground shall return the same to him.†We cannot allow PPI to profit from an unconstitutional law. Justice and equity dictate that PPI must refund the amounts paid by Fertiphil. WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated November 28, 2003 is AFFIRMED.
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Badillo v. CA GR 131903 June 26, 2008 Sunday, November 14, 2010 11:28 PM
[G.R. No. 131903, June 26, 2008] OSCAR R. BADILLO, GIOVANNI C. ONG, EDGAR A. RAGASA REPRESENTED BY HEIRS CYNTHIA G. RAGASA, AND THEIR CHILDREN JOSEPH, CATHERINE AND CHARMAINE ALL SURNAMED RAGASA, ROLANDO SANCADA, AND DIONISIO UMBALIN VS. COURT OF APPEALS, REGISTER OF DEEDS OF QUEZON CITY, GOLDKEY DEVELOPMENT CORPORATION, JOSEFA CONEJERO, IGNACIO D. SONORON, PEDRO DEL ROSARIO, AND DOWAL REALTY AND MANAGEMENT SYSTEM COMPANY CARPIO, J.: The Case This petition for certiorari[1] assails the 17 September 1997 Decision[2] of the Court of Appeals in CA-G.R. CV No. 50035. The Court of Appeals dismissed the appeal filed by petitioners Oscar R. Badillo, Giovanni C. Ong, Edgar A. Ragasa, Rolando Sancada, and Dionisio Umbalin (petitioners) questioning the 5 June 1995 Order[3] of Branch 222 of the Regional Trial Court of Quezon City in Civil Case No. Q-91-10510 for Annulment of Documents with Prayer for Issuance of Prohibitory and Mandatory Injunction and Damages. The Facts Petitioners alleged that they are the registered owners of several lots adjoining a road lot known as Lot 369-A-29 or Apollo Street of subdivision plan Psd-37971 (road lot). The road lot is a short access road which connects petitioners' properties to the main road known as Road 20. The road lot is covered by Transfer Certificate of Title (TCT) No. RT-20895 (22682) and registered in the name of respondent Pedro del Rosario (del Rosario). Annotated at the back of TCT No. RT-20895 is a court-ordered Entry No. 605/T-22655 which reads as follows: "It is hereby made of record that as per order of the Court, the street lot covered by this title shall not be closed or disposed of by the registered owner without previous approval of the court."[4] Petitioners alleged that in gross violation of the court order, del Rosario sold an unsegregated portion of the road lot to his co-respondents Josefa Conejero (Conejero) and Ignacio Sonoron (Sonoron) without obtaining prior court approval. Del Rosario, Conejero, and Sonoron then entered into a partition agreement to divide the road lot into four lots which resulted in the partial cancellation of TCT No. RT-20895 and the subsequent issuance of TCT Nos. 35899 and 35100 in the name of Conejero, TCT No. 35101 in the name of del Rosario, and TCT No. 35102 in the name of Sonoron.[5] Petitioners stated that del Rosario sold TCT No. 35101 to Goldkey Development Corporation (Goldkey).[6] Petitioners alleged that the Register of Deeds violated the court order when it allowed the registration of the sales and the subsequent issuance of new titles without first obtaining judicial approval. Petitioners claimed that Goldkey had built cement fences on the lot, thus blocking the ingress and egress of petitioners.[7] Petitioners prayed that the sales made in favor of Conejero, Sonoron, and Goldkey and the partition of the road lot be declared void.[8] In its Comment, Goldkey alleged that the Housing and Land Use Regulatory Board (HLURB) has exclusive jurisdiction over the cases mentioned in Section 1 of Presidential Decree No. (PD) 1344.[9] Goldkey argued that the Court of Appeals correctly dismissed petitioners' appeal because petitioners merely assigned an error involving a pure question of law. Goldkey added that petitioners are using the present petition as a substitute for an already lost appeal since petitioners' counsel had received the decision on 17 October 1997 and the present petition was posted only on 16 December 1997.[10] In May 1991, petitioners filed an initial complaint with the Office of the Building Official (building official) of Quezon City, docketed as Building Case No. R-10-91-006 entitled Giovanni C. Ong, et al. v. Manuel Chua (building case).[11] Petitioners, who initiated the building case when Goldkey started putting up fences in some portions of the property, claimed that the parcel of land was a road lot.[12] On 10 September 1991, the HLURB issued a Development Permit to Goldkey allowing it to develop the land into residential townhouse units. The permit also mentioned that the project is classified as "Residential Townhouse Subdivision" and, as evaluated, the same is "in accordance with the Zoning Ordinance of Quezon City."[13] REMLAW Page 137
Subdivision" and, as evaluated, the same is "in accordance with the Zoning Ordinance of Quezon City."[13] On 4 November 1991,[14] petitioners filed a case for Annulment of Title and Damages[15] with the Regional Trial Court of Quezon City. Subsequently, the building official of Quezon City resolved the building case against petitioners and this decision became final and executory.[16] The ruling held that the property is not a road lot but a residential lot.[17] On 5 June 1995, Branch 222 of the Regional Trial Court (trial court) of Quezon City issued an order dismissing the case for lack of jurisdiction over the subject matter. The Ruling of the Trial Court The trial court dismissed petitioners' case for lack of jurisdiction over the subject matter. The trial court pointed out that there was a decision rendered by the building official of Quezon City declaring the disputed property a residential lot and not a road lot; hence, the building official issued a building permit. The HLURB also issued a permit for the development of the land into a townhouse project. Petitioners did not appeal both rulings. The trial court stated that petitioners' contention that the property is a road lot had been rendered moot by the finding of the building official which made the contrary declaration. If petitioners had any objection to the ruling, they should have appealed the same to the Secretary of Public Works and Highways as provided in Section 307 of Executive Order No. (EO) 1096. The findings of administrative agencies which have expertise are generally accorded not only respect but even finality. The trial court also stated that the property had been approved by the HLURB for development into a townhouse project. The subject land was therefore removed from the jurisdiction of the regular courts. The HLURB's decision was also not appealed to the Office of the President as provided in Section 4 of PD 1344 which gave the HLURB quasi-judicial powers. The Ruling of the Appellate Court On 17 September 1997, the Court of Appeals dismissed the appeal on the ground that it has no jurisdiction to entertain the same. The appellate court stated that the original and amended complaints filed by petitioners were both premised on the claim that the subject parcels of land were subdivision road lots that were illegally converted into residential lots and thereafter disposed by del Rosario, the subdivision developer. Therefore, petitioners' complaints were filed for the purpose of enforcing a contractual and statutory obligation of del Rosario to preserve a subdivision road lot for street purposes. As such, the agency with jurisdiction is the HLURB, pursuant to the provisions of PD 957, 1216, and 1344, EO 648 dated 7 February 1981 and EO 90 dated 17 December 1986. Further, the appellate court ruled that the error assigned by petitioners involves the issue on what law will apply to determine the jurisdiction of a tribunal over the subject matter of the complaints. Petitioners' assigned error involves a pure question of law; hence, petitioners appealed to the wrong forum. Petitioners should have elevated their appeal to the Supreme Court and not to the Court of Appeals by way of a simple appeal. Hence, this petition. The Issues Petitioners raise three issues in this petition: 1. Whether the appellate court acted without or in excess of jurisdiction or with grave abuse of discretion by dismissing petitioners' appeal on the ground that jurisdiction does not lie with the regular courts but with the HLURB; 2. Whether the Court of Appeals acted without or in excess of jurisdiction or grave abuse of discretion by dismissing petitioners' appeal on the ground that petitioners did not assign any error of fact; and 3. Whether a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is the proper remedy for petitioners. The Ruling of the Court The petition lacks merit. The HLURB is the sole regulatory body for housing and land development.[18] The extent to which an administrative agency may exercise its powers depends on the provisions of the statute creating such agency.[19] Courts will not determine a controversy where the issues for resolution demand the exercise of sound administrative discretion.[20] Jurisdiction Lies with the HLURB PD 957,[21] otherwise known as "The Subdivision and Condominium Buyers' Protective Decree," granted the National
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PD 957,[21] otherwise known as "The Subdivision and Condominium Buyers' Protective Decree," granted the National Housing Authority (NHA) the exclusive jurisdiction to regulate the real estate business. The scope of the regulatory authority lodged in the NHA is indicated in the second whereas clause which states: "WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers," (Emphasis supplied) Thus, Section 22 of PD 957 provides: Sec. 22. Alteration of Plans. - No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and/or other form of subdivision development as contained in the approved subdivision plan and/or represented in its advertisements, without the permission of the Authority and the written conformity or consent of the duly organized homeowners association, or in the absence of the latter, by the majority of the lot buyers in the subdivision. (Emphasis supplied) PD 1344[22] amended PD 957 by empowering the NHA to issue writs of execution in the enforcement of its decisions. Section 1 of PD 1344 states: 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.(Emphasis supplied) Under EO 648,[23] the NHA's functions were transferred to the Human Settlement Regulatory Commission. Section 8 of EO 648 provides: Section 8. Transfer of Functions. - The regulatory functions of the National Housing Authority pursuant to Presidential Decrees No. 957, 1216, 1344 and other related laws are hereby transferred to the Commission, together with such applicable personnel, appropriation, records, equipment and property necessary for the enforcement and implementation of such functions. Among these regulatory functions are: (1) Regulation of the real estate trade and business; (2) Registration of subdivision lots and condominium projects; (3) Issuance of license to sell subdivision lots and condominium units in the registered units; (4) Approval of performance bond and the suspension of license to sell; (5) Registration of dealers, brokers and salesmen engaged in the business of selling subdivision lots or condominium units; (6) Revocation of registration of dealers, brokers and salesmen; (7) Approval or mortgage on any subdivision lot or condominium unit made by the owner or developer; (8) Granting of permits for the alteration of plans and the extension of period for completion of subdivision or condominium projects; (9) Approval of the conversion to other purposes of roads and open spaces found within the project which have been donated to the city or municipality concerned; (10) Regulation of the relationship between lessors and lessees; and (11) Hear and decide cases on unsound real estate business practices; claims involving refund filed against project owners, developers, dealers, brokers or salesmen and cases of specific performance. (Emphasis supplied) EO 90 [24] renamed the Human Settlement Regulatory Commission the Housing and Land Use Regulatory Board. The HLURB retained the regulatory and adjudicatory functions of the NHA. Clearly, the scope and limitation of the HLURB's jurisdiction are well-defined. The HLURB's jurisdiction to hear and decide cases is determined by the nature of the cause of action, the subject matter or property involved, and the parties.[25] In the present case, petitioners are the registered owners of several lots adjoining a subdivision road lot connecting their properties to the main road. Petitioners allege that the subdivision lot owners sold the road lot to a developer who is now constructing cement fences, thus blocking the passageway from their lots to the main road. In sum, petitioners are enforcing their statutory and contractual rights against the subdivision owners. This is a specific performance case which falls under the HLURB's exclusive jurisdiction. In Osea v. Ambrosio,[26] the Court held that the provisions of PD 957 were intended to encompass all questions relating to subdivisions. This intention was aimed to provide for an appropriate government agency, which is the HLURB, to which all parties aggrieved in the implementation of provisions and the enforcement of contractual rights with respect to said category of real estate may take recourse. Petitioners claim that respondents violated the annotation at the back of TCT No. RT-20895 by selling an unsegregated portion of the lot without obtaining prior court approval. The date of entry of this annotation is 18 August 1953. When PD 957, PD 1344, and EO 648 were enacted in 1976, 1978, and 1981, respectively, this annotation was impliedly modified such that the conversion of the road lot in the subdivision plan would fall under the HLURB's jurisdiction pursuant to these laws.
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pursuant to these laws. Petitioners argue that they can file a specific performance case to compel respondents to comply with their contractual and statutory obligation to maintain the road lot. However, petitioners can only be granted complete relief if the subject sales are declared void and the subsequent partition is declared illegal. Petitioners further contend that the HLURB, having only the jurisdiction to hear and decide specific performance cases, can only compel petitioners to file a case for annulment of title and prosecute the action. Petitioners insist that in the final analysis, a case for annulment of title would still have to be filed with the ordinary courts.[27] In Peña v. GSIS,[28] the Court ruled that when an administrative agency is conferred quasi-judicial functions, all controversies relating to the subject matter pertaining to its specialization are deemed to be included within its jurisdiction. Split jurisdiction is not favored. As observed in C.T. Torres Enterprises, Inc. v. Hibionada:[29] The argument that only courts of justice can adjudicate claims resoluble under the provisions of the Civil Code is out of step with the fast-changing times. There are hundreds of administrative bodies now performing this function by virtue of a valid authorization from the legislature. This quasi-judicial function, as it is called, is exercised by them as an incident of the principal power entrusted to them of regulating certain activities falling under their particular expertise. In the Solid Homes case for example the Court affirmed the competence of the Housing and Land Use Regulatory Board to award damages although this is an essentially judicial power exercisable ordinarily only by the courts of justice. This departure from the traditional allocation of governmental powers is justified by expediency, or the need of the government to respond swiftly and competently to the pressing problems of the modern world. Finally, in Cristobal v. Court of Appeals,[30] we held that "questions relating to non-compliance with the requisites for conversion of subdivision lots are properly cognizable by the NHA, now the HLURB, pursuant to Section 22 of PD 957 and not by the regular courts." Appeal by Certiorari Involving Questions of Law Section 2, Rule 41 of the Rules of Court states: Sec. 2. Mode of appeal.(a) Ordinary Appeal. - The appeal to the Court of Appeals in cases decided by the Regional 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 certiorari in accordance with Rule 45.(Emphasis supplied) In Sevilleno v. Carilo,[31] citing Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals, this Court summarized the rule on appeals: (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. (Emphasis supplied) In First Bancorp, Inc. v. Court of Appeals,[32] this Court also explained the two modes of appeal from a final order of the trial court in the exercise of its original jurisdiction: (1) by writ of error under Section 2(a), Rule 41 of the Rules of Court if questions of fact or questions of fact and law are raised or involved; or (2) appeal by certiorari under Section 2(c), Rule 41, in relation to Rule 45, where only questions of law are raised or involved. (Emphasis supplied) In the present case, petitioners raised only one issue in their Appellants' Brief - whether "the Honorable Trial Court a quo seriously erred in holding that it has no jurisdiction over the subject matter of the case when in fact it has already
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seriously erred in holding that it has no jurisdiction over the subject matter of the case when in fact it has already acquired jurisdiction over the persons of the defendants and the subject matter of the case." The question on jurisdiction is undoubtedly one of law. We have held that "a question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted."[33] Consequently, it is not disputed that the issue brought by petitioners to the Court of Appeals involves solely the trial court's jurisdiction over the subject matter of the case. The appellate court can determine the issue raised without reviewing or evaluating the evidence. As petitioners' appeal solely involves a question of law, the appellate court did not err in dismissing the appeal on the ground of lack of jurisdiction pursuant to Section 2, Rule 50 of the Rules of Court which provides: 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 purely of 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. (Emphasis supplied) Rule 65 is not a remedy for lost appeal. Petitioners should have directly taken their appeal to this Court by filing a petition for review on certiorari under Rule 45 and not an ordinary appeal with the Court of Appeals under Rule 41 nor a petition for certiorari with this Court under Rule 65. As held in Balayan v. Acorda,[34] "the special civil action for certiorari is a limited form of review and is a remedy of last recourse." It lies only where there is no appeal or plain, speedy, and adequate remedy in the ordinary course of law. In the present case, petitioners chose the wrong mode of appeal. Hence, the instant petition cannot prevail since a petition for certiorari is not a substitute for a lost appeal, especially if the loss or lapse was an error in petitioners' choice of remedy. We have held in David v. Cordova[35] that: A petition for certiorari cannot be a substitute for an appeal from a lower court decision. Where appeal is available to the aggrieved party, the action for certiorari will not be entertained. The remedies of appeal (including petitions for review) and certiorari are mutually exclusive, not alternate or successive. Hence, certiorari is not and cannot be a substitute for an appeal, especially if one's own negligence or error in one's choice of remedy occasioned such loss or lapse. One of the requisites of certiorari is that there be no available appeal or any plain, speedy and adequate remedy. Where an appeal is available, certiorari will not prosper, even if the ground therefore is grave abuse of discretion. (Emphasis supplied) There were instances when the Court has relaxed the rule on the special civil action for certiorari as a substitute for failure to file a timely petition for review on certiorari under Rule 45 such as where the application of this rule would result in a manifest failure or miscarriage of justice.[36] Although the Court has the discretion to treat a petition for certiorari as having been filed under Rule 45, there is nothing in the present case to warrant a liberal application of the rules. WHEREFORE, we DISMISS the petition. We AFFIRM the 17 September 1997 Decision of the Court of Appeals. Costs against petitioners.
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Fort Bonifacio v Domingo GR 180768 Feb 27, 2009 Sunday, November 14, 2010 11:29 PM
G.R. No. 180765 February 27, 2009 FORT BONIFACIO DEVELOPMENT CORPORATION vs. MANUEL N. DOMINGO CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner Fort Bonifacio Development Corporation, seeking to reverse and set aside the Decision dated 19 July 20071 and the Resolution dated 10 December 20072 of the Court of Appeals in CA-G.R. SP No. 97731. The appellate court, in its assailed Decision, affirmed the Order3 of the Regional Trial Court (RTC) of Pasay City, Branch 109, in Civil Case No. 06-2000-CFM, denying the Motion to Dismiss of petitioner; and in its assailed Resolution, refused to reconsider its decision. Petitioner, a domestic corporation duly organized under Philippine laws, is engaged in the real estate development business. Respondent is the assignee of L and M Maxco Specialist Engineering Construction (LMM Construction) of its receivables from petitioner. On 5 July 2000, petitioner entered into a Trade Contract with LMM Construction for partial structural and architectural works on one of its projects, the Bonifacio Ridge Condominium. According to the said Contract, petitioner had the right to withhold the retention money equivalent to 5% of the contract price for a period of one year after the completion of the project. Retention money is a portion of the contract price, set aside by the project owner, from all approved billings and retained for a certain period to guarantee the performance by the contractor of all corrective works during the defect-liability period.4 Due to the defect and delay in the work of LMM Construction on the condominium project, petitioner unilaterally terminated the Trade Contract5 and hired another contractor to finish the rest of the work left undone by LMM Construction. Despite the pre-termination of the Trade Contract, petitioner was liable to pay LMM Construction a fraction of the contract price in proportion to the works already performed by the latter.6 On 30 July 2004, petitioner received the first Notice of Garnishment against the receivables of LMM Construction issued by the Construction Industry Arbitration Commission (CIAC) in connection with CIAC Case No. 11-2002 filed by Asia-Con Builders against LMM Construction, wherein LMM Construction was adjudged liable to Asia-Con Builders for the amount of P5,990,927.77. On 30 April 2005, petitioner received a letter dated 18 April 2005 from respondent inquiring on the retention money supposedly due to LMM Construction and informing petitioner that a portion of the amount receivable by LMM Construction therefrom was already assigned to him as evidenced by the Deed of Assignment executed by LMM Construction in respondent’s favor on 28 February 2005. LMM Construction assigned its receivables from petitioner to respondent to settle the alleged unpaid obligation of LMM Construction to respondent amounting to P804,068.21. Through its letter dated 11 October 2005, addressed to respondent, petitioner acknowledged that LMM Construction did have receivables still with petitioner, consisting of the retention money; but petitioner also advised respondent that the retention money was not yet due and demandable and may be ascertained only after the completion of the corrective works undertaken by the new contractor on the condominium project. Petitioner also notified respondent that part of the receivables was also being garnished by the other creditors of LMM Construction. Unsatisfied with the reply of petitioner, respondent sent another letter dated 14 October 2005 asserting his ownership over a portion of the retention money assigned to him and maintaining that the amount thereof pertaining to him can no longer be garnished to satisfy the obligations of LMM Construction to other persons since it already ceased to be the property of LMM Construction by virtue of the Deed of Assignment. Attached to respondent’s letter was the endorsement of LMM Construction dated 17 January 2005 approving respondent’s claim upon petitioner in the amount of P804,068.21 chargeable against the retention money that may be received by LMM Construction from the petitioner. Before respondent’s claim could be fully addressed, petitioner, on 6 June 2005, received the second Notice of Garnishment against the receivables of LMM Construction, this time, issued by the National Labor Relations Commission (NLRC) to satisfy the liability of LMM Construction to Nicolas Consigna in NLRC Case No. 00-07-05483-2003. REMLAW Page 142
NLRC Case No. 00-07-05483-2003. On 13 July 2005, petitioner received an Order of Delivery of Money issued by the Office of the Clerk of Court and Ex-Officio Sheriff enforcing the first Notice of Garnishment and directing petitioner to deliver to Asia-Con Builders, through the Sheriff, the amount of P5,990,227.77 belonging to LMM Construction. In compliance with the said Order, petitioner was able to deliver to Asia-Con Builders on 22 July 2005 and on 11 August 2005 partial payments amounting to P1,170,601.81, covered by the appropriate Acknowledgement Receipts. A third Notice of Garnishment against the receivables of LMM Construction, already accompanied by an Order of Delivery of Money, both issued by the RTC of Makati, Branch 133, was served upon petitioner on 26 January 2006. The Order enjoined petitioner to deliver the amount of P558,448.27 to the Sheriff to answer for the favorable judgment obtained by Concrete Masters, Inc. (Concrete Masters) against LMM Construction in Civil Case No. 05-164. Petitioner, in a letter dated 31 January 2006, categorically denied respondent’s claim on the retention money, reasoning that after the completion of the rectification works on the condominium project and satisfaction of the various garnishment orders, there was no more left of the retention money of LMM Construction. It would appear, however, that petitioner fully satisfied the first Notice of Garnishment in the amount of P5,110,833.44 only on 31 January 2006,7 the very the same date that it expressly denied respondent’s claim. Also, petitioner complied with the Notice of Garnishment and its accompanying Order of Delivery of Money in the amount of P558,448.27 on 8 February 2006, a week after its denial of respondent’s claim.8 The foregoing events prompted respondent to file a Complaint for collection of sum of money, against both LMM Construction and petitioner, docketed as Civil Case No. 06-0200-CFM before the RTC of Pasay City, Branch 109. Instead of filing an Answer, petitioner filed a Motion to Dismiss Civil Case No. 06-0200-CFM on the ground of lack of jurisdiction over the subject matter. Petitioner argued that since respondent merely stepped into the shoes of LMM Construction as its assignor, it was the CIAC and not the regular courts that had jurisdiction over the dispute as provided in the Trade Contract. On 6 June 2006, the RTC issued an Order denying the Motion to Dismiss of petitioner, ruling that a fullblown trial was necessary to determine which one between LMM Construction and petitioner should be made accountable for the sum due to respondent. Petitioner sought remedy from the Court of Appeals by filing a Petition for Certiorari, docketed as CAG.R. SP No. 97731, challenging the RTC Order dated 6 June 2006 for having been rendered by the trial court with grave abuse of discretion. In its Decision promulgated on 19 July 2007, the Court of Appeals dismissed the Petition for Certiorari and affirmed the 6 June 2006 Order of the RTC denying the Motion to Dismiss of petitioner. The appellate court rejected the argument of petitioner that respondent, as the assignee of LMM Construction, was bound by the stipulation in the Trade Contract that disputes arising therefrom should be brought before the CIAC. The Court of Appeals declared that respondent was not privy, but a third party, to the Trade Contract; and money claims of third persons against the contractor, developer, or owner of the project are lodged in the regular courts and not in the CIAC. Similarly ill-fated was petitioner’s Motion for Reconsideration, which was denied by the Court of Appeals in its Resolution dated 10 December 2007. Petitioner now comes to this Court via this instant Petition for Review on Certiorari praying for the reversal of the 19 July 2007 Decision of the Court of Appeals and 6 June 2006 Order of the RTC and, ultimately, for the dismissal of Civil Case No. 06-0200-CFM pending before the RTC. For the resolution of this Court is the sole issue of: WHETHER OR NOT THE RTC HAS JURISDICTION OVER CIVIL CASE NO. 06-0200-CFM. The jurisdiction of CIAC is defined under Executive Order No. 1008 as follows: SECTION 4. Jurisdiction.—The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the disputes arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration. The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and REMLAW Page 143
jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration. The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual provisions; amount of damages and penalties; commencement time and delays; maintenance and defects; payment default of employer or contractor and changes in contract cost. Excluded from the coverage of this law are disputes arising from employer-employee relationships which shall continue to be covered by the Labor Code of the Philippines. In assailing the 19 July 2007 Decision of the Court of Appeals, petitioner invoked Article 1311 of the Civil Code on relativity of contracts. According to said provision, all contracts shall only take effect between the contracting parties, their assigns and heirs except when the rights and obligations arising from the contract are not transmissible. Petitioner argues that the appellate court, in recognizing the existence of the Deed of Assignment executed by LMM Construction -- in favor of respondent -- of its receivables under the Trade Contract, should have considered the concomitant result thereof, i.e., that respondent became a party to the Trade Contract and, therefore, bound by the arbitral clause therein. Respondent counters that the CIAC is devoid of jurisdiction over money claims of third persons against the contractor, developer or owner of the project. The jurisdiction of the CIAC is limited to settling disputes arising among contractors, developers and/or owners of construction projects. It does not include the determination of who among the many creditors of the contractor should enjoy preference in payment of its receivables from the developer/owner. It is an elementary rule of procedural law that jurisdiction of the court over the subject matter is determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. As a necessary consequence, the jurisdiction of the court cannot be made to depend upon the defenses set up in the answer or upon the motion to dismiss; for otherwise, the question of jurisdiction would almost entirely depend upon the defendant. What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted.9 Accordingly, the issues in the instant case can only be properly resolved by an examination and evaluation of respondent’s allegations in his Complaint in Civil Case No. 06-0200-CFM. The allegations in respondent’s Complaint are clear and simple: That LMM Construction had an outstanding obligation to respondent in the amount of P804,068.21; that in payment of the said amount, LMM Construction assigned to respondent its receivables from petitioner, which assignment was properly made known to petitioner as early as 18 April 2005; that despite due notice of such assignment, petitioner still refused to deliver the amount assigned to respondent, giving preference, instead, to the garnishing creditors of LMM Construction; that at the time petitioner was notified of the assignment, only one notice of garnishment, the first Notice of Garnishment, was received by it; that had petitioner properly recognized respondent’s right as an assignee of a portion of the receivables of LMM Construction, there could have been sufficient residual amounts to satisfy respondent’s claim; and that, uncertain over which one between LMM Construction and petitioner he may resort to for payment, respondent named them both as defendants in Civil Case No. 06-0200-CFM. A scrupulous examination of the aforementioned allegations in respondent’s Complaint unveils the fact that his cause of action springs not from a violation of the provisions of the Trade Contract, but from the non-payment of the monetary obligation of LMM Construction to him. A cause of action is a party’s act or omission that violates the rights of the other.10 The right of the respondent that was violated, prompting him to initiate Civil Case No. 06-0200-CFM, was his right to receive payment for the financial obligation incurred by LMM Construction and to be preferred over the other creditors of LMM Construction, a right which pre-existed and, thus, was separate and distinct from the right to payment of LMM Construction under the Trade Contract. Petitioner’s unceasing reliance on Article 131111 of the Civil Code on relativity of contracts is unavailing. It is true that respondent, as the assignee of the receivables of LMM Construction from petitioner under the Trade Contract, merely stepped into the shoes of LMM Construction. However, it bears to emphasize that the right of LMM Construction to such receivables from petitioner under the Trade Contract is not even in dispute in Civil Case No. 06-0200-CFM. What respondent puts in issue before the RTC is the purportedly arbitrary exercise of discretion by the petitioner in giving preference to the claims of the other creditors of LMM Construction over the receivables of the latter. It is encouraged that disputes arising from construction contracts be referred first to the CIAC for their arbitration and settlement, since such cases would often require expertise and technical knowledge in REMLAW Page 144
arbitration and settlement, since such cases would often require expertise and technical knowledge in construction. Hence, some of the matters over which the CIAC may exercise jurisdiction, upon agreement of the parties to the construction contract, "include but [are] not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual provisions; amount of damages and penalties; commencement time and delays; maintenance and defects; payment default of employer or contractor and changes in contract cost."12 Although the jurisdiction of the CIAC is not limited to the afore-stated enumeration, other issues which it could take cognizance of must be of the same or a closely related kind or species applying the principle of ejusdem generis in statutory construction. Respondent’s claim is not even construction-related at all. Construction is defined as referring to all onsite works on buildings or altering structures, from land clearance through completion including excavation, erection and assembly and installation of components and equipment.13 Petitioner’s insistence on the application of the arbitration clause of the Trade Contract to respondent is clearly anchored on an erroneous premise that respondent is seeking to enforce a right under the same. Again, the right to the receivables of LMM Construction from petitioner under the Trade Contract is not being impugned herein. In fact, petitioner readily conceded that LMM Construction still had receivables due from petitioner, and respondent did not even have to refer to a single provision in the Trade Contract to assert his claim. What respondent is demanding is that a portion of such receivables amounting to P804,068.21 should have been paid to him first before the other creditors of LMM Construction, which, clearly, does not require the CIAC’s expertise and technical knowledge of construction. The adjudication of Civil Case No. 06-0200-CFM necessarily involves the application of pertinent statutes and jurisprudence to matters such as obligations, contracts of assignment, and, if appropriate, even preference of credits, a task more suited for a trial court to carry out after a full-blown trial, than an arbitration body specifically devoted to construction contracts. This Court recognizes the laudable objective of voluntary arbitration to provide a speedy and inexpensive method of settling disputes by allowing the parties to avoid the formalities, delay, expense and aggravation which commonly accompany ordinary litigation, especially litigation which goes through the entire hierarchy of courts. It cannot, however, altogether surrender to arbitration those cases, such as the one at bar, the extant facts of which plainly call for the exercise of jurisdiction by the regular courts for their resolution. WHEREFORE, premises considered, the instant Petition is DENIED. The Decision dated 19 July 2007 and the Resolution dated 10 December 2007 of the Court of Appeals in CA-G.R. SP No. 97731 are hereby AFFIRMED in toto. Costs against the petitioner. Pasted from
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Land Bank v. Ralla Balista GR 164631 Jun 26, 2009 Sunday, November 14, 2010 11:29 PM
G.R. No. 164631 June 26, 2009 LAND BANK OF THE PHILIPPINES vs. RENE RALLA BELISTA PERALTA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by Land Bank of the Philippines (petitioner), seeking to annul and set aside the May 26, 2004 Decision1 and the July 28, 2004 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 81096. The antecedent facts and proceedings, as narrated by the CA, are as follows: It appears that spouses Pablo Ralla and Carmen Munoz Ralla had donated their eight (8) parcels of lot located in Ligao, Albay to their daughter, Rene Ralla Belista, the herein private respondent. The eight (8) parcels of lot were placed by the Department of Agrarian Reform (DAR, for brevity) under the coverage of the Comprehensive Agrarian Reform Program (Presidential Decree No. 27 and Executive Order No. 228). Consequently, private respondent claimed payment of just compensation over said agricultural lands. It further appears that the DAR's evaluation of the subject farms was only P227,582.58, while petitioner Land Bank of the Philippines (LBP, for brevity) assessed the same at P317,259.31. Believing that her lots were grossly underestimated, private respondent, on 11 November 2002, filed a Petition for Valuation and Payment of Just Compensation against petitioning bank before the DARABRegional Adjudicator for Region V (RARAD-V) docketed as DCN D-05-02-VC-005. On 07 July 2003, the RARAD-V issued a Decision, in favor of herein private respondent, the fallo of which reads: Wherefore, just compensation for the subject areas is hereby preliminarily fixed at TWO MILLION EIGHT HUNDRED NINETY-SIX THOUSAND and FOUR HUNDRED EIGHT & 91/100 (P2,896,408.91) PESOS. Land Bank of the Philippines, Legaspi City, is hereby ordered to pay herein petitioner said amount pursuant to existing rules and guidelines, minus the sum already remitted per Order dated January 2, 2003. SO ORDERED. As both parties interposed their respective motions for reconsideration, the RARAD-V eventually issued an Order dated 8 October 2003, the decretal portion of which reads: Wherefore, the Decision dated July 7, 2003 is MODIFIED, fixing the valuation claim of petitioner herein with respect to her due share in the above lots to the tune of Two Million Five Hundred Forty Thousand, Two Hundred Eleven and 58/100 (P2,540,211.58) Pesos. Land Bank Legaspi City is hereby ordered to pay herein petitioner said amount pursuant to existing rules and guidelines, minus the sum already paid per Order dated January 2, 2003. SO ORDERED. Aggrieved, petitioner Bank, on 28 October 2003, filed an original Petition for Determination of Just Compensation at the same sala of the RTC, docketed as Agrarian Case No. 03-06. The court a quo motu propio dismissed the case when it issued the herein first assailed Order dated 12 November 2003 "for failure to exhaust administrative remedies and/or comply with Sections 5, 6, and 7, Rule XIX, 2003 DARAB Rules of Procedure. Petitioner LBP lodged a Motion for Reconsideration arguing, inter alia, "that the DARAB 2003 Rules of Procedure does not apply to SAC nor its precursor DARAB Case and that the ground for dismissal of the case is not among the instances when a court may dismiss a case on its motion." As the court a quo denied its Motion for Reconsideration in an Order dated 28 November 2003, petitioner LBP elevated the case before the Tribunal through the present Petition for Review, theorizing: I. WHETHER OR NOT THE SAC A QUO ERRED IN DISMISSING THE CASE MOTU PROPIO ON THE GROUND OF PLAINTIFF'S FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES. II. WHETHER OR NOT SECTIONS 5, 6, AND 7, RULE XIX OF THE DARAB 2003 RULES OF PROCEDURE APPLY TO CASES FILED AND PENDING BEFORE THE DARAB OR ITS ADJUDICATORS PRIOR TO ITS EFFECTIVITY AND TO CASES FILED AND PENDING WITH THE SPECIAL AGRARIAN COURTS.3 On May 26, 2004, the CA rendered its assailed Decision dismissing the petition. The CA ruled that under Section 5, Rule XIX of the 2003 DARAB Rules of Procedure, an appeal from the adjudicator's resolution shall be filed before the DARAB and not before the RTC; that petitioner's filing of the case before the RTC without first seeking the intervention of the DARAB is violative of the doctrine of nonREMLAW Page 146
case before the RTC without first seeking the intervention of the DARAB is violative of the doctrine of nonexhaustion of administrative remedies. The CA found that petitioner's petition for determination of just compensation was filed in the RTC on October 28, 2003 when the 2003 DARAB Rules of Procedure was already in effect, i.e., on February 8, 2003, and under its transitory provision, it is provided that the 2003 Rules shall govern all cases filed on or after its effectivity; and, since an appeal from the adjudicator's resolution should first be filed with the DARAB, the RTC, sitting as a Special Agrarian Court (SAC), did not err in dismissing petitioner's petition. Petitioner filed a motion for reconsideration, which was denied in a Resolution dated July 28, 2004. Petitioner is now before the Court raising the following arguments: 1. THE COURT OF APPEALS ERRED IN LAW IN DISMISSING THE PETITION FOR REVIEW CONSIDERING THAT THE LBP DID NOT VIOLATE THE "DOCTRINE OF NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES" WHEN IT FILED THE ORIGINAL PETITION FOR DETERMINATION OF JUST COMPENSATION BEFORE THE COURT A QUO WITHOUT FIRST SEEKING THE INTERVENTION OF THE DARAB. 2. THE COURT OF APPEALS ERRED IN DECLARING THAT THE APPLICABLE RULE IS THE 2003 DARAB RULES OF PROCEDURE, DESPITE THE FACT THAT THE PETITION (FOR VALUATION AND PAYMENT OF JUST COMPENSATION) WAS FILED BEFORE THE RARAD ON NOVEMBER 11, 2002.4 Petitioner contends that the petition for valuation and payment of just compensation was filed with the DARAB- Regional Adjudicator for Region V (RARAD) on November 11, 2002, long before the effectivity of the 2003 Rules of Procedure; that under the transitory provision of the 2003 DARAB Rules, all cases pending with the Board and the adjudicators prior to the date of the Rules' effectivity shall be governed by the DARAB Rules prevailing at the time of their filing; that clear from the transitory provision that it is the proceeding of the DARAB which is governed by the 2003 DARAB Rules of Procedure, thus, it is the date of filing of the petition with the DARAB or any of its adjudicators which is the reckoning date of the applicability of the 2003 DARAB Rules and not the date of filing with the SAC; that under the 1994 DARAB Rules prevailing at the time of the filing of the respondent's claim for just compensation, the Rules provided that the decision of the adjudicator on land valuation and preliminary determination of just compensation shall not be appealable to the Board, but shall be brought directly to the RTC; that it was in the observance of the 1994 DARAB Rules that petitioner brought the adjudicator's decision to the RTC sitting as SAC. In his Comment, respondent claims that petitioner's petition with the RTC is an original action and, since the case was filed at a time when appeal to the DARAB Central Office was already provided in the 2003 DARAB Rules before resorting to judicial action, the RTC correctly dismissed the petition, which was correctly affirmed by the CA. Petitioner filed a Reply reiterating its arguments in the petition. The issue for resolution is whether it is necessary that in cases involving claims for just compensation under Republic Act (RA) No. 6657 that the decision of the Adjudicator must first be appealed to the DARAB before a party can resort to the RTC sitting as SAC. The court rules in the negative. Sections 50 and 57 of RA No. 6657 provide: Section 50. Quasi-judicial Powers of the DAR. – The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural Resources (DENR) x x x Section 57. Special Jurisdiction. – The Special Agrarian Court shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. x x x The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision. Clearly, under Section 50, DAR has primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive jurisdiction of the DA and the DENR. Further exception to the DAR's original and exclusive jurisdiction are all petitions for the determination of just compensation to landowners and the prosecution of all criminal offenses under RA No. 6657, which are within the jurisdiction of the RTC sitting as a Special Agrarian Court. Thus, jurisdiction on just compensation cases for the taking of lands under RA No. 6657 is vested in the courts. In Republic v. CA,5 the Court explained: REMLAW Page 147
6657 is vested in the courts. In Republic v. CA, 5 the Court explained: Thus, Special Agrarian Courts, which are Regional Trial Courts, are given original and exclusive jurisdiction over two categories of cases, to wit: (1) "all petitions for the determination of just compensation to landowners" and (2) "the prosecution of all criminal offenses under *R.A. No. 6657+." The provisions of §50 must be construed in harmony with this provision by considering cases involving the determination of just compensation and criminal cases for violations of R.A. No. 6657 as excepted from the plenitude of power conferred on the DAR. Indeed, there is a reason for this distinction. The DAR is an administrative agency which cannot be granted jurisdiction over cases of eminent domain (for such are takings under R.A. No. 6657) and over criminal cases. Thus, in EPZA v. Dulay and Sumulong v. Guerrero - we held that the valuation of property in eminent domain is essentially a judicial function which cannot be vested in administrative agencies, while in Scoty’s Department Store v. Micaller, we struck down a law granting the then Court of Industrial Relations jurisdiction to try criminal cases for violations of the Industrial Peace Act.6 In a number of cases, the Court has upheld the original and exclusive jurisdiction of the RTC, sitting as SAC, over all petitions for determination of just compensation to landowners in accordance with Section 57 of RA No. 6657. In Land Bank of the Philippines v. Wycoco,7 the Court upheld the RTC's jurisdiction over Wycoco's petition for determination of just compensation even where no summary administrative proceedings was held before the DARAB which has primary jurisdiction over the determination of land valuation. The Court held: In Land Bank of the Philippines v. Court of Appeals, the landowner filed an action for determination of just compensation without waiting for the completion of DARAB’s re-evaluation of the land. This, notwithstanding, the Court held that the trial court properly acquired jurisdiction because of its exclusive and original jurisdiction over determination of just compensation, thus – … It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners." This "original and exclusive" jurisdiction of the RTC would be undermined if the DAR would vest in administrative officials original jurisdiction in compensation cases and make the RTC an appellate court for the review of administrative decisions. Thus, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into an appellate jurisdiction would be contrary to Sec. 57 and, therefore, would be void. Thus, direct resort to the SAC [Special Agrarian Court] by private respondent is valid. In the case at bar, therefore, the trial court properly acquired jurisdiction over Wycoco’s complaint for determination of just compensation. It must be stressed that although no summary administrative proceeding was held before the DARAB, LBP was able to perform its legal mandate of initially determining the value of Wycoco's land pursuant to Executive Order No. 405, Series of 1990.8 x x x In Land Bank of the Philippines v. Natividad,9 wherein Land Bank questioned the alleged failure of private respondents to seek reconsideration of the DAR's valuation, but instead filed a petition to fix just compensation with the RTC, the Court said: At any rate, in Philippine Veterans Bank v. CA, we held that there is nothing contradictory between the DAR’s primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform, which includes the determination of questions of just compensation, and the original and exclusive jurisdiction of regional trial courts over all petitions for the determination of just compensation. The first refers to administrative proceedings, while the second refers to judicial proceedings.1avvphi1 In accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR to determine in a preliminary manner the just compensation for the lands taken under the agrarian reform program, but such determination is subject to challenge before the courts. The resolution of just compensation cases for the taking of lands under agrarian reform is, after all, essentially a judicial function. Thus, the trial court did not err in taking cognizance of the case as the determination of just compensation is a function addressed to the courts of justice. 10 In Land Bank of the Philippines v. Celada,11 where the issue was whether the SAC erred in assuming jurisdiction over respondent's petition for determination of just compensation despite the pendency of the administrative proceedings before the DARAB, the Court stated that: It would be well to emphasize that the taking of property under RA No. 6657 is an exercise of the power of eminent domain by the State. The valuation of property or determination of just compensation in eminent domain proceedings is essentially a judicial function which is vested with the courts and not with administrative agencies. Consequently, the SAC properly took cognizance of respondent's petition for REMLAW Page 148
administrative agencies. Consequently, the SAC properly took cognizance of respondent's petition for determination of just compensation.12 The RTC dismissed petitioner's petition for determination of just compensation relying on Sections 5, 6 and 7 of Article XIX of the 2003 DARAB Rules of Procedure, to wit: Section 5. Appeal. A party who disagrees with the resolution of the Adjudicator may bring the matter to the Board by filing with the Adjudicator concerned a Notice of Appeal within fifteen (15) days from receipt of the resolution. The filing of a Motion for Reconsideration of said resolution shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the appeal within the remaining period, but in no case shall it be less than five (5) days. Section 6. When Resolution Deemed Final. Failure on the part of the aggrieved party to contest the resolution of the Adjudicator within the aforecited reglementary period provided shall be deemed a concurrence by such party with the land valuation, hence said valuation shall become final and executory. Section 7. Filing of Original Action with the Special Agrarian Court for Final Determination. The party who disagrees with the decision of the Board may contest the same by filing an original action with the Special Agrarian Court (SAC) having jurisdiction over the subject property within fifteen (15) days from his receipt of the Board's decision. Notably, the above-mentioned provisions deviated from Section 11, Rule XIII of the 1994 DARAB Rules of Procedure which provides: Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation – The decision of the Adjudicator on land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board, but shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration. where DARAB acknowledges that the decision of just compensation cases for the taking of lands under RA 6657 is a power vested in the courts.13 Although Section 5, Rule XIX of the 2003 DARAB Rules of Procedure provides that the land valuation cases decided by the adjudicator are now appealable to the Board, such rule could not change the clear import of Section 57 of RA No. 6657 that the original and exclusive jurisdiction to determine just compensation is in the RTC. Thus, Section 57 authorizes direct resort to the SAC in cases involving petitions for the determination of just compensation.14 In accordance with the said Section 57, petitioner properly filed the petition before the RTC and, hence, the RTC erred in dismissing the case. Jurisdiction over the subject matter is conferred by law.15 Only a statute can confer jurisdiction on courts and administrative agencies while rules of procedure cannot.16 WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated May 26, 2004 and the Resolution dated July 28, 2004, of the Court of Appeals in CA-G.R. SP No. 81096, are REVERSED and SET ASIDE. The Regional Trial Court, Branch 3, Legaspi City, sitting as Special Agrarian Court, is directed to hear without delay petitioner's petition for the determination of just compensation.
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Mun of Pateros v. CA GR 157714 Jun 16, 2009 Sunday, November 14, 2010 11:29 PM
G.R. No. 157714 June 16, 2009 MUNICIPALITY OF PATEROS vs. THE HONORABLE COURT OF APPEALS, THE MUNICIPALITY OF MAKATI, THE DIRECTOR OF LANDS, and THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES NACHURA, J.: Before this Court is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision2 dated January 22, 2003, which denied the appeal of petitioner Municipality of Pateros (Pateros) for undertaking a wrong mode of appeal. Subject of the appeal was the Order3 of the Regional Trial Court (RTC) of Makati City, Branch 139, dated June 14, 1996, which dismissed petitioner’s complaint for lack of jurisdiction. The Facts The property subject of this case consists of portions of then Fort William McKinley, now known as Fort Bonifacio (subject property), currently comprising Barangays Cembo, South Cembo, West Rembo, East Rembo, Comembo, Pembo, and Pitogo (entire property). The subject property is allegedly situated within the territorial jurisdiction of respondent Municipality (now City) of Makati (Makati) per Proclamation No. 24754 issued on January 7, 1986 (Proclamation No. 2475) by former President Ferdinand E. Marcos (President Marcos). Subsequently, on January 31, 1990, former President Corazon C. Aquino (President Aquino) issued Proclamation No. 518, 5 amending Proclamation No. 2475. Parenthetically, it may be noted that a similar boundary dispute over the entire property exists between the Municipality (now City) of Taguig and Makati, docketed as Civil Case No. 63896 and pending before the RTC of Pasig City, Branch 153. As Proclamation Nos. 2475 and 518 respectively stated that the entire property is situated in Makati, Pateros, on January 18, 1991, filed an action6 for Judicial Declaration of the Territorial Boundaries of Pateros against Makati before the RTC of Pasig City, Branch 154 (Pasig RTC). The case was, however, dismissed for lack of jurisdiction inasmuch as the subject property is located in Makati and it should have been filed before the Makati RTC.7 Heeding the directive of the Pasig RTC, Pateros, on December 8, 1993, filed with the RTC of Makati a Complaint8 against Makati and co-respondents, Director of Lands and the Department of Environment and Natural Resources (DENR), for the Judicial Declaration of the Territorial Boundaries of Pateros with a prayer for the issuance of a writ of Preliminary Injunction and Temporary Restraining Order (TRO). Pateros claimed that, based on historical and official records, it had an original area of one thousand thirty-eight (1,038) hectares, more or less. However, when a cadastral mapping was conducted by the Bureau of Lands in 1978, Pateros was appalled to learn that its territorial boundaries had been substantially reduced to merely one hundred sixty-six (166) hectares. Pateros opined that this disparity was brought about by the issuance of Proclamation Nos. 2475 and 518. Thus, Pateros prayed that the RTC judicially declare the territorial boundaries of Pateros based on supporting pieces of evidence, and that it nullify Proclamation No. 2475. Makati filed a Motion to Dismiss,9 contending that the issue was not the nullification of Proclamation No. 2475; that the RTC had no jurisdiction over the subject matter of the action because original jurisdiction to resolve boundary disputes among municipalities situated in Metro Manila is vested in the Metropolitan Manila Authority (MMA); that the RTC's jurisdiction is merely appellate; that the complaint failed to state a cause of action as Pateros failed to exhaust administrative remedies by failing to settle the dispute amicably; and that Pateros' claims had already been barred by laches because Makati, throughout the years, had already developed the subject property and had spent millions on such development. Makati also filed a Motion to Suspend Proceedings,10 arguing that the bill converting Makati into a city was pending approval before the Senate and portions of the subject property are included in the proposed charter. Makati, thus, opined that the continuation of the RTC proceedings would create a conflict between the judicial and the legislative branches. In its Order11 dated October 21, 1994, the RTC granted Makati’s Motion. On July 19, 1994, Republic Act No. 785412 was enacted into law, converting Makati into a highly urbanized city. Pateros then moved for the revival of the proceedings before the RTC,13 which it granted in its Order14 dated March 17, 1995. However, due to the pending Motion to Dismiss earlier filed by Makati, the RTC required the parties to submit their respective Memoranda. The RTC's Ruling On June 14, 1996, the RTC issued an Order, dismissing the case on the ground of lack of jurisdiction. The RTC REMLAW Page 150
On June 14, 1996, the RTC issued an Order, dismissing the case on the ground of lack of jurisdiction. The RTC held that Proclamation No. 2475 specifically declared that the subject property is within the territorial jurisdiction of Makati and, inasmuch as the Proclamation was not declared unconstitutional, the same is a valid and subsisting law. In the main, citing Sections 1015 and 11, 16 Article X of the 1987 Constitution, and pursuant to this Court's ruling in Municipality of Sogod v. Rosal, 17 the RTC held that the modification or substantial alteration of boundaries of municipalities can be done only through a law enacted by Congress which shall be subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. Hence, the RTC opined that it is without jurisdiction to fix the territorial boundaries of the parties. Pateros filed a Motion for Reconsideration18 which was, however, denied by the RTC in its Order19 dated August 30, 1996. Aggrieved, Pateros appealed to the CA. 20 The CA's Ruling On January 22, 2003, the CA denied Pateros' appeal. The CA held that the RTC did not make any findings of fact but merely applied various provisions of law and jurisprudence. Thus, the case presented a pure question of law, which Pateros should have brought directly to the Supreme Court, pursuant to Section 5(2),21 Article VIII of the 1987 Constitution and Section 2,22 Rule 41 of the Revised Rules of Civil Procedure. The CA also held that it would amount to grave abuse of discretion amounting to lack of jurisdiction if the CA insisted on resolving the issues raised therein. Thus, by undertaking a wrong mode of appeal and citing Section 2,23 Rule 50 of the Revised Rules of Civil Procedure, the CA denied Pateros' appeal. Pateros filed a Motion for Reconsideration, 24 which the CA denied in its Resolution25 dated March 27, 2003. The Issue Hence, this Petition based on the sole ground that the CA committed grave abuse of discretion in dismissing the appeal for lack of jurisdiction.26 Pateros asseverates that the issues raised before the CA involved mixed questions of fact and law, because Pateros sought the determination of its territorial boundaries and the nullification of Proclamation No. 2475; that Pateros does not seek the alteration, modification, or creation of another or a new local government unit (LGU), but is concerned only with its territorial boundaries which, according to existing records, consisted of 1,038 hectares; that non-presentation of evidence before the RTC does not make the appeal purely a question of law, because the parties were prevented from presenting any evidence due to the RTC's erroneous dismissal of the case based on lack of jurisdiction; that Proclamation Nos. 2475 and 518 suffer from Constitutional infirmity; that the alteration or modification of the boundaries of municipalities or cities can only be made by a law enacted by Congress and approved by the majority of the votes cast in a plebiscite in the political units directly affected; that Proclamation No. 2475, although issued by then President Marcos during the Marcos era, was not a legislative enactment, pursuant to Section 6 of the 1976 Amendment to the Constitution; and granting, without admitting, that Proclamation No. 2475 is a law, it should be subject to approval by the majority of the votes cast in a plebiscite in the political units directly affected. Thus, Pateros prays that the assailed CA Decision be reversed and set aside, and that the RTC be directed to proceed with the trial of the instant case.27 On the other hand, Makati claims that the sole issue in Pateros' appeal before the CA is jurisdiction and as the question of jurisdiction is a question of law and as the CA lacks jurisdiction over pure questions of law, therefore, Pateros resorted to a wrong mode of appeal. The issues raised by Pateros do not consist of questions of fact as the RTC rendered the assailed Order based on Makati's Motion to Dismiss and no trial on the merits was ever conducted. Makati points out that the CA quoted the decision of the RTC's discourse in order to show that only a question of law was involved in Pateros' appeal. Thus, Makati posits that Pateros defies the rules on trial, evidence, and jurisdiction in a desperate bid to extricate itself from its mistake in taking a wrong mode of appeal, i.e., by notice of appeal to the CA rather than a petition for review on certiorari under Rule 45 of the Revised Rules of Civil Procedure filed before this Court. Makati submits that the dismissal of Pateros' appeal was proper, as mandated by Section 2, Rule 50 of the said Rules. Due to the availment of the wrong mode of appeal, the RTC's Order dismissing the case already attained finality.28 The Director of Lands and the DENR, through the Office of the Solicitor General (OSG), share the stand and arguments of Makati. The OSG stresses that the parties never presented any evidence before the RTC which resolved the case based on the parties' undisputed factual submissions and the application thereto of the pertinent laws, Rules of Civil Procedure, and jurisprudence. Hence, the OSG concludes that the appeal before the CA involved a pure question of law.29 Our Ruling We agree that Pateros indeed committed a procedural infraction. It is clear that the issue raised by Pateros to the CA involves the jurisdiction of the RTC over the subject matter of the case. The jurisdiction of a court over the subject matter of the action is a matter of law; it is conferred by the Constitution or by law. REMLAW Page 151
the subject matter of the action is a matter of law; it is conferred by the Constitution or by law. Consequently, issues which deal with the jurisdiction of a court over the subject matter of a case are pure questions of law. As Pateros' appeal solely involves a question of law, it should have directly taken its appeal to this Court by filing a petition for review on certiorari under Rule 45, not an ordinary appeal with the CA under Rule 41. The CA did not err in holding that Pateros pursued the wrong mode of appeal.30 However, in the interest of justice and in order to write finis to this controversy, we opt to relax the rules. Our ruling in Atty. Ernesto A. Tabujara III and Christine S. Dayrit v. People of the Philippines and Daisy Afable31 provides us with ample justification, viz.: While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the swift unclogging of the dockets of the courts is a laudable objective, it nevertheless must not be met at the expense of substantial justice. The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses. This is in keeping with the principle that rules of procedure are mere tools designed to facilitate the attainment of justice, and that strict and rigid application of rules which would result in technicalities that tend to frustrate rather than promote substantial justice must always be avoided. It is a far better and more prudent cause of action for the court to excuse a technical lapse and afford the parties a review of the case to attain the ends of justice, rather than dispose of the case on technicality and cause grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice.1avvphi1 In those rare cases to which we did not stringently apply the procedural rules, there always existed a clear need to prevent the commission of a grave injustice. Our judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement of procedural laws and the guarantee that every litigant is given the full opportunity for a just and proper disposition of his cause. The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. Time and again, we have consistently held that rules must not be applied so rigidly as to override substantial justice. Given the circumstances surrounding the instant case, we find sufficient reason to relax the rules. Thus, we now resolve the sole issue of whether the RTC has jurisdiction to entertain the boundary dispute between Pateros and Makati. Apart from the doctrine that the jurisdiction of a tribunal over the subject matter of an action is conferred by law, it is also the rule that the court’s exercise of jurisdiction is determined by the material allegations of the complaint or information and the law applicable at the time the action was commenced. Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, by acquiescence, or even by express consent of the parties. Thus, the jurisdiction of a court over the nature of the action and the subject matter thereof cannot be made to depend upon the defenses set up in court or upon a motion to dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the defendant. Once jurisdiction is vested, the same is retained up to the end of the litigation.32 It is worth stressing that, at the time the instant case was filed, the 1987 Constitution and the Local Government Code (LGC) of 1991 were already in effect. Thus, the law in point is Section 118 of the LGC, which provides: Section. 118. Jurisdictional Responsibility for Settlement of Boundary Disputes. — Boundary disputes between and among local government units shall, as much as possible, be settled amicably. To this end: (a) Boundary disputes involving two (2) or more barangays in the same city or municipality shall be referred for settlement to the sangguniang panlungsod or sangguniang bayan concerned. (b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for settlement to the sangguniang panlalawigan concerned. (c) Boundary disputes involving municipalities or component cities of different provinces shall be jointly referred for settlement to the sanggunians of the province concerned. (d) Boundary disputes involving a component city or municipality on the one hand and a highly urbanized city on the other, or two (2) or more highly urbanized cities, shall be jointly referred for settlement to the respective sanggunians of the parties. (e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute was referred thereto, it shall issue a certification to that effect. Thereafter, the dispute shall be formally tried by the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the certification referred to above. 33 Notably, when Pateros filed its complaint with the RTC of Makati, Makati was still a municipality. We take judicial notice of the fact that there was no Sangguniang Panlalawigan that could take cognizance of the boundary dispute, as provided in Section 118(b) of the LGC. Neither was it feasible to apply Section 118(c) or REMLAW Page 152
boundary dispute, as provided in Section 118(b) of the LGC. Neither was it feasible to apply Section 118(c) or Section 118(d), because these two provisions clearly refer to situations different from that obtaining in this case. Also, contrary to Makati's postulation, the former MMA did not also have the authority to take the place of the Sangguniang Panlalawigan because the MMA's power was limited to the delivery of basic urban services requiring coordination in Metropolitan Manila. The MMA's governing body, the Metropolitan Manila Council, although composed of the mayors of the component cities and municipalities, was merely given the power of: (1) formulation of policies on the delivery of basic services requiring coordination and consolidation; and (2) promulgation of resolutions and other issuances, approval of a code of basic services, and exercise of its rule-making power.34 Thus, there is no merit in Makati’s argument that Pateros failed to exhaust administrative remedies inasmuch as the LGC is silent as to the governing body in charge of boundary disputes involving municipalities located in the Metropolitan Manila area. However, now that Makati is already a highly urbanized city, the parties should follow Section 118(d) of the LGC and should opt to amicably settle this dispute by joint referral to the respective sanggunians of the parties. This has become imperative because, after all, no attempt had been made earlier to settle the dispute amicably under the aegis of the LGC. The specific provision of the LGC, now made applicable because of the altered status of Makati, must be complied with. In the event that no amicable settlement is reached, as envisioned under Section 118(e) of the LGC, a certification shall be issued to that effect, and the dispute shall be formally tried by the Sanggunian concerned within sixty (60) days from the date of the aforementioned certification. In this regard, Rule III of the Rules and Regulations Implementing the LGC shall govern. 35 Only upon failure of these intermediary steps will resort to the RTC follow, as specifically provided in Section 119 of the LGC: Section 119. Appeal. — Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in dispute. The Regional Trial Court shall decide the appeal within one (1) year from the filing thereof. Pending final resolution of the disputed area prior to the dispute shall be maintained and continued for all legal purposes. On this score, the jurisdiction of the RTC over boundary disputes among LGUs was settled in National Housing Authority v. Commission on the Settlement of Land Problems,36 where this Court recognized the appellate jurisdiction of the proper RTC. The jurisdiction of the RTC was clarified in Municipality of Kananga v. Judge Madrona, 37 where this Court held that, even in the absence of any specific provision of law, "RTCs have general jurisdiction to adjudicate all controversies except those expressly withheld from their plenary powers. They have the power not only to take judicial cognizance of a case instituted for judicial action for the first time, but also to do so to the exclusion of all other courts at that stage. Indeed, the power is not only original, but also exclusive." Corollarily, we feel obliged to inform Congress of the need to pass a law specifically delineating the metes and bounds of the disputing LGUs. In Mariano, Jr. v. COMELEC, 38 we held that the existence of a boundary dispute does not per se present an unsurmountable difficulty which will prevent Congress from defining with reasonable certitude the territorial jurisdiction of an LGU. Congress, by virtue of the powers vested in it by the Constitution, could very well put an end to this dispute. We reiterate what we already said about the importance and sanctity of the territorial jurisdiction of an LGU: The importance of drawing with precise strokes the territorial boundaries of a local unit of government cannot be overemphasized. The boundaries must be clear for they define the limits of the territorial jurisdiction of a local government unit. It can legitimately exercise powers of government only within the limits of its territorial jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any uncertainty in the boundaries of local government units will sow costly conflicts in the exercise of governmental powers which ultimately will prejudice the people's welfare. This is the evil sought to be avoided by the Local Government Unit in requiring that the land area of a local government unit must be spelled out in metes and bounds, with technical descriptions.39 WHEREFORE, the instant Petition is DENIED, having been mooted by the conversion of respondent Municipality of Makati into a highly urbanized city. The parties are hereby DIRECTED to comply with Section 118(d) and (e) of the Local Government Code, and Rule III of the Rules and Regulations Implementing the Local Government Code of 1991 without prejudice to judicial recourse, as provided in the Local Government Code. No costs.
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Tricorp v. CA GR 165742 Jun 30, 2009 Sunday, November 14, 2010 11:29 PM
G.R. No. 165742 June 30, 2009 TRI-CORP LAND & DEVELOPMENT, INC., represented by SOLITA S. JIMENEZ-PAULINO, Petitioner, vs. COURT OF APPEALS and GREYSTONE CORPORATION, Respondents. DE C I S I O N QUISUMBING, J.: This petition for certiorari under Rule 65 of the Rules of Court assails the Decision1 dated June 9, 2004 and Resolution2 dated September 21, 2004 of the Court of Appeals in CA-G.R. CV No. 71285. The Court of Appeals affirmed the Orders dated November 15, 20003 and June 11, 20014 of the Regional Trial Court (RTC) of Makati City, Branch 139 in LRC Case No. M-4086 dismissing the complaint filed by petitioner Tri-Corp Land and Development, Inc. (Tri-Corp) against respondent Greystone Corporation (Greystone) for lack of jurisdiction. The facts, culled from the records, are as follows: On February 12, 1998, Greystone executed in favor of Tri-Corp a Contract to Sell 5 whereby Tri-Corp agreed to pay the purchase price, exclusive of interest, in the amount of P13,500,000 and payable in installments, of a unit of Casa Madeira, a residential condominium project located at Fatima Street, San Miguel Village, Makati City. Said unit, covered by Condominium Certificate of Title (CCT) No. 512326 was to be used as a family residence of Tri-Corp’s officers and stockholders. However, when Tri-Corp applied for membership with the San Miguel Village Homeowner’s Association (SMVHA), it was denied and not given gate passes for its vehicles. The reason cited by SMVHA for Tri-Corp’s denial of application was that the construction of the Casa Madeira condominium project was in violation of village restrictions annotated as Entry No. 319767 and inscribed on October 9, 1961 at the back of Transfer Certificates of Title Nos. 2058278 and 2058289 covering the lots on which the condominium project was constructed. SMVHA filed a case against Greystone for this violation and prayed for the cancellation of the CCTs of the Casa Madeira condominium project before the Housing and Land Use Regulatory Board (HLURB). The case was docketed as HLURB Case No. REM-10045. Upon learning of the pending case, Tri-Corp filed a Complaint-in-Intervention10 in said case for suspension of payments until the issue of violation of the village restriction and validity of the CCT to the condominium unit sold shall have been resolved. TriCorp, likewise, filed a petition11 dated September 28, 2000, against Greystone before the HLURB for Suspension and Cancellation of Certificate of Registration and License to Sell of Greystone. Greystone, in turn, filed an ejectment suit against Tri-Corp before the Metropolitan Trial Court of Makati City, for failure to pay under the Contract to Sell. The complaint was docketed as Civil Case No. 63308. Tri-Corp was ejected by the Sheriff in the said case for its refusal to pay the supersedeas bond. Civil Case No. 63308 is still pending on appeal.12 Tri-Corp also filed before the RTC of Makati City, sitting as a Land Registration Court, a Petition for Correction of Error /Misrepresentation in the Master Deed entered as Memorandum on TCTs Nos. 205827 and 205828 with prayer for Temporary Restraining Order and Injunction.13 The case was docketed as LRC Case No. M-4086. Tri-Corp alleged in its petition that Greystone used different descriptions of the condominium project in order to circumvent existing laws, rules and regulations on registration of real estate projects, to wit: [1] Thus, to obtain approval of the San Miguel Village Association Construction and Permits Committee, it styled its project as a "2-Unit Duplex Residence, to conform with association rules. [2] To obtain approval of Barangay Poblacion, Makati City, and the issuance of Certificate of Registration and Clearance No. 2758 on the same project, it dubbed the same project as a "3storey townhouse", to suit barangay guidelines. [3] To obtain from the City of Makati Building Permit No. C1096-01259, it called the same project a "4-unit Residential Bldg." "Two-storey duplex", to comply with zoning ordinances. [4] To obtain from the HLURB the Preliminary Approval of Condominium Plan, it described Casa Madeira as a "Condominium Project", for the purpose of complying with PD 957 and its REMLAW Page 155
Madeira as a "Condominium Project", for the purpose of complying with PD 957 and its implementing rules. [5] To obtain from the HLURB the Final Approval, it called the project a Condominium Plan/Subdivision Townhouse, for the same purpose. [6] To obtain from the HLURB a development permit, it called the project a condominium for the same purpose. [7] To obtain from the HLURB a Certificate of Locational Viability for the same project, it was designated as a "2 Storey with Attic Residential Condominium", for the same purpose. [8] To obtain from the Department of Environment and Natural Resources, National Capital Region an Environmental Compliance Certificate (ECC) it designated the project as "four units, two storey with attic townhouse project", to comply with the requirement of law. [9] To obtain from the HLURB Certificate of Registration No. 97-09-3003, it called Casa Madeira a condominium project, for the purpose of complying with PD 957 and its implementing rules. [10] These misrepresentations misled the petitioner as buyer and also mis[led] the buying public as to the real nature of [the] project. 14 [Emphasis supplied.] During the hearing on Tri-Corp’s application for a Writ of Preliminary Injunction on September 28, 2000, Greystone raised the issue of jurisdiction. Greystone contended in its Memorandum15 that the RTC had no jurisdiction to try and decide the case because it involves an unsound real estate practice within the jurisdiction of the HLURB, Tri-Corp is not a party in interest, and same issues had been raised by Tri-Corp in the HLURB. In an Order dated November 15, 2000, the RTC dismissed the case for lack of jurisdiction. The dispositive portion of the order states: IN VIEW OF THE FOREGOING PREMISES, based on law and jurisprudence, the COURT hereby ORDERS that: (a) The prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction is hereby DENIED for lack of merit. (b) The Complaint dated 19 September 1990 (sic) is hereby DISMISSED, the same being within the exclusive jurisdiction of [the] HLURB pursuant to PD[s] 987 and 1344. SO ORDERED.16 Tri-Corp filed a motion for reconsideration but it was denied by the RTC in an Order dated June 11, 2001. Tri-Corp appealed to the Court of Appeals. In a Decision promulgated on June 9, 2004, the Court of Appeals affirmed the orders of the RTC. The dispositive portion of the decision states: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the appealed orders dated November 15, 2000 and June 11, 2001 must be, as they hereby, are AFFIRMED. Without costs in this instance. SO ORDERED.17 Tri-Corp filed a motion for reconsideration but it was denied by the Court of Appeals in a Resolution promulgated on September 21, 2004 for being filed out of time and for being without merit. Alleging that the Court of Appeals committed grave abuse of discretion in affirming the orders of the RTC, Tri-Corp filed this original action for certiorari under Rule 65. Tri-Corp alleges that: I. THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DECLARED THE MOTION FOR RECONSIDERATION AS HAVING BEEN FILED OUT OF TIME DESPITE PROOFS OF TRAVEL. II. THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION IN DECLARING THAT HEREIN PETITIONER IS NOT A PARTY IN INTEREST. III. THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT RESOLVED THE INSTANT CASE IN FAVOR OF RESPONDENT GREYSTONE WITHOUT DUE REGARD TO THE PROTECTIVE MANTLE ENSHRINED UNDER PD 957 TOWARDS BUYERS OF CONDOMINIUM UNITS.18 In sum, the issue is, did the Court of Appeals act with grave abuse of discretion in denying Tri-Corp’s motion for reconsideration for being filed out of time, in declaring Tri-Corp as not a party in interest, and in affirming the RTC’s Order dismissing the case for lack of jurisdiction? REMLAW Page 156
in affirming the RTC’s Order dismissing the case for lack of jurisdiction? In its Memorandum,19 Tri-Corp asserts that it disagrees with the findings of the appellate court that its motion for reconsideration was filed out of time since it would be absurd to consider receipt by its mailbox as receipt by Tri-Corp when its representative, Solita S. Jimenez-Paulino, was not physically present in the Philippines.20 Tri-Corp further argues that the conclusion that Tri-Corp is not a party in interest is also absurd since Tri-Corp stands to lose an enormous amount at the instance of Greystone who stands to gain without giving anything of value.21 Tri-Corp also argues that the Court of Appeals overlooked the fact that the case is one for cancellation of inscriptions and cancellation of the CCT, which is within the ambit of the Register of Deeds to perform, and the case is not a simple buyer-seller of condominium relationship but one which seeks the alteration of annotations and cancellation of titles with the jurisdiction of the RTC sitting as a Land Registration Court.22 On the other hand, Greystone, in its Memorandum,23 argues that it is clear that since Tri-Corp’s mailbox, MBE Center, received a copy of the decision of the Court of Appeals on June 16, 2004, it had until July 1, 2004 within which to file a motion for reconsideration. Its motion for reconsideration, which was filed only on July 13, 200424 was clearly filed out of time. As defined, grave abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to lack or excess of jurisdiction or, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.25 After review, we find that the Court of Appeals did not act with grave abuse of discretion because of the following reasons: First, the petitioner in this case is Tri-Corp and not Solita Jimenez-Paulino. The reckoning time therefore to count the period to file Tri-Corp’s motion for reconsideration was the date the decision was received by Tri-Corp’s mailbox and not the date when it was received by its representative, Solita S. JimenezPaulino.1avvphi1 Second, the Court of Appeals, in ruling that Tri-Corp is not a party in interest, pointed out in its decision that the contract to sell entered into by both parties contains a stipulation that in case of default or nonpayment of the stipulated amortizations and the rentals, Greystone has the option to rescind the contract and forfeit all amounts paid as liquidated damages. Greystone rescinded the contract.26 As the contract to sell has been rescinded, there is legal basis to hold that Tri-Corp is no longer a party in interest. Third, the Court of Appeals decision affirming the trial court’s Orders dismissing Tri-Corp’s petition on the ground that it does not have jurisdiction over the case, has legal basis. Section 1 of Presidential Decree No. 134427 entitled "Empowering the National Housing Authority to Issue Writ of Execution in the Enforcement of its Decisions under Presidential Decree No. 957" provides: 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, or salesman. [Emphasis supplied.] In this case, Tri-Corp’s chief quest is the cancellation of Entry No. 31976 from TCTs Nos. 205827 and 205828, and the cancellation of the CCT of the unit sold to it, and it alludes to Greystone’s use of different descriptions of the condominium project in order to circumvent existing laws, rules and regulations on registration of real estate projects in its petition. Under these circumstances, Tri-Corp is alluding to steps allegedly taken by Greystone in consummating an alleged unsound real estate business practice. The HLURB has the technical expertise to resolve this technical issue. Jurisdiction therefore properly pertains to the HLURB. In view of the foregoing, it cannot be said that the Court of Appeals, in affirming the RTC Orders dismissing the case for lack of jurisdiction, acted with grave abuse of discretion that would warrant the filing of a petition for certiorari under Rule 65 against it. REMLAW Page 157
filing of a petition for certiorari under Rule 65 against it. WHEREFORE, the instant petition is DISMISSEDfor lack of merit. Costs against petitioner. Pasted from
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?Ma. Luisa Dazon v. Kenneth Yap and People Jan 15, 2010 Sunday, November 14, 2010 11:29 PM
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Sec 5, RA 8369 Family Courts Act of 1997 Sunday, November 14, 2010 11:29 PM
REPUBLIC ACT NO. 8369 AN ACT ESTABLISHING FAMILY COURTS, GRANTING THEM EXCLUSIVE ORIGINAL JURISDICTION OVER CHILD AND FAMILY CASES, AMENDING BATAS PAMBANSA BILANG 129,AS AMENDED, OTHERWISE KNOWN AS ACT OF 1980, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES. Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: Section 1. Title. - This Act shall be known as the "Family Courts Act of 1997".
Sec. 2. Statement of National Policies. - The State shall protect the rights and promote the welfare of children in keeping with the mandate of the Constitution and the precepts of the United Nations Convention on the rights of the Child. The State shall provide a system of adjudication for youthful offenders which takes into account their peculiar circumstances. The State recognizes the sanctity of family life and shall protect and strengthen the family as a basic autonomous social institution. The courts shall preserve the solidarity of the family, provide procedures for the reconciliation of spouses and the amicable settlement of family controversy. Sec. 3. Establishment of Family Courts. - There shall be established a Family Court in every province and city in the country. In case where the city is the capital of the province, the Family Court shall be established in the municipality which has the highest population. Sec. 4. Qualification and Training of Family Court Judges. - Sec. 15 of Batas Pambansa Blg. 129, as amended, is hereby further amended to read as follows: "Sec. 15. (a) Qualification. - No person shall be appointed Regional Trial Judge or Presiding Judge of the Family Court unless he is a natural-born citizen of the Philippines, at least thirty-five (35) years of age, and, for at least ten (10) years, has been engaged in the practice of law in the Philippines or has held a public office in the Philippines requiring admission to the practice of law as indispensable requisite. "(b) Training of Family Court Judges. - The Presiding Judge, as well as the court personnel of the Family Courts, shall undergo training and must have the experience and demonstrated ability in dealing with child and family cases. "The Supreme Court shall provide a continuing education program on child and family laws, procedure and other related disciplines to judges and personnel of such courts." Sec. 5. Jurisdiction offamily Courts. - The Family Courts shall have exclusive original jurisdiction to hear and decide the following cases: a) 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 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: Provided, That if the minor is found guilty, the court shall promulgate sentence and ascertain any civil liability which the accused may have incurred. The sentence, however, shall be suspended without need of application pursuant to Ptesidential Decree No. 603, otherwise known as the "Child and Youth Welfare Code"; b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter; c) Petitions for adoption of children and the revocation thereof; d) Complaints for annulment of marriage, declaration of nullity of marriage and those relating to marital status and property relations of husband and wife or those living together under different status and agreements, and petitions for dissolution of conjugal partnership of gains; REMLAW Page 160
different status and agreements, and petitions for dissolution of conjugal partnership of gains; e) Petitions for support and/or acknowledgment; f) Summary judicial proceedings brought under the provisions of Executive Order No. 209, otherwise known as the "Family Code of the Philippines"; g) Petitions for declaration of status of children as abandoned, dependent o neglected children, petitions for voluntary or involuntary commitment of children; the suspension, termination, or restoration of parental authority and other cases cognizable under Presidential Decree No. 603, Executive Order No. 56, (Series of 1986), and other related laws; h) Petitions for the constitution of the family home; i) Cases against minors cognizable under the Dangerous Drugs Act, as amended; j) Violations of Republic Act No. 7610, otherwise known as the "Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act," as amended by Republic Act No. 7658; and k) Cases of domestic violence against: 1) Women - which are acts of gender based violence that results, or are likely to result in physical, sexual or psychological harm or suffering to women; and other forms of physical abuse such as battering or threats and coercion which violate a woman's personhood, integrity and freedom movement; and
2) Children - which include the commission of all forms of abuse, neglect, cruelty, exploitation, violence, and discrimination and all other conditions prejudicial to their development. If an act constitutes a criminal offense, the accused or batterer shall be subject to criminal proceedings and the corresponding penalties. If any question involving any of the above matters should arise as an incident in any case pending in the regular courts, said incident shall be determined in that court. Sec. 6. Use of Income. - All Family Courts shall be allowed the use of ten per cent (10%) of their income derived from filing and other court fees under Rule 141 of the Rules of Court for research and other operating expenses including capital outlay: Provided, That this benefit shall likewise be enjoyed by all courts of justice.
The Supreme Court shall promulgate the necessary guidelines to effectively implement the provisions of this Sec. Sec. 7. Special Provisional Remedies. - In cases of violence among immediate family members living in the same domicile or household, the Family Court may issue a restraining order against the accused of defendant upon verified application by the complainant or the victim for relief from abuse. The court may order the temporary custody of children in all civil actions for their custody. The court may also order support pendente lite, including deduction from the salary and use of conjugal home and other properties in all civil actions for support. Sec. 8. Supervision of Youth Detention Homes. - The judge of the Family Court shall have direct control and supervision of the youth detention home which the local government unit shall establish to separate the youth offenders from adult criminals: Provided, however, That alternatives to detention and institutional care shall be made available to the accused including counseling, recognizance, bail, community continuum, or diversions from the justice system: Provided, further, That the human rights of the accused are fully respected in a manner appropriate to their well-being. Sec. 9. Social Services and Counseling Division. - Under the guidance ofthe Department of Social Welfare and Development (DSWD), a Social Services and Counseling Division (SSCD) shall be established in each judicial region as the Supreme Court shall deem necessary based on the number of REMLAW Page 161
established in each judicial region as the Supreme Court shall deem necessary based on the number of juvenile and family cases existing in such jurisdiction. It shall provide appropriate social services to all juvenile and family cases filed with the court and recommend the proper social action. It shall also develop programs, formulate uniform policies and procedures, and provide technical supervision and monitoring of all SSCD in coordination with the judge. Sec. 10. Social Services and Counseling Division Staff. - The SSCD shall have a staff composed of qualified social workers and other personnel with academic preparation in behavioral sciences to carry out the duties'of conducting intake assessment, social case studies, casework and counseling, and othersocial services that may be needed in connection with cases filed with the court: Provided, however, That in adoption cases and in petitions for declaration of abandonment, the case studies may be prepared by social workers of duly licensed child caring or child placement agencies, or the DSWD. When warranted, the division shall recommend that the court avail itself of consultative services of psychiatrists, psychologists, and other qualified specialists presently employed in other departments of the government in connection with its cases.
The position of Social Work Adviser shall be created under the Office of the Court Administrator, who shall monitor and supervise the SSCD ofthe Regional Trial Court. Sec. 11. Alternative Social Services. - In accordance with Sec. 17 of this Act, in areas where no Family Court has been established or no Regional Trial Court was designated by the Supreme Court due to the limited number of cases, the DSWD shall designate and assign qualified, trained, and DSWD accredited social workers of the local government units to handle juvenile and family cases filed in the designated Regional Trial Court of the place. Sec. 12. Privacy and Confidentiality of Proceedings. - All hearings and conciliation of the child and family cases shall be treated in a manner consistent with the promotion of the child's and the family's dignity and worth, and shall respect their privacy at all stages of the proceedings. Records of the cases shall be dealt with utmost confidentiality and the identity of parties shall not be divulged unless necessary and with authority of the judge. Sec. 13. Special Rules of Procedure. - The Supreme Court shall promulgate special rules of procedure for the transfer of cases to the new courts during the transition period and for the disposition of family cases with the best interests of the child and the protection of the family as primary consideration taking into account the United Nations Convention on the Rights of the Child. Sec. 14. Appeals. - Decisions and orders of the court shall be appealed in the same manner and subject to the same conditions as appeals from the ordinary Regional Trial Courts. Sec. 15. Appropriations. - The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following in its enactment into law and thereafter. Sec. 16. Implementing Rules and Regulations. - The Supreme Court, in coordination with the DSWD, shall formulate the necessary rules and regulations for the effective implementation of the social aspects of this Act. Sec. 17. Transitory Provisions. - Pending the establishment of such Family Courts, the Supreme Court shall designate from among the branches ofthe Regional Trial Court at least one Family Court in each of the cities of Manila, Quezon, Pasay, Caloocan, Makati, Pasig, Mandaluyong, Muntinlupa, Laoag, Baguio, Santiago, Dagupan, Olongapo, Cabanatuan, San Jose, Angeles, Cavite, Batangas, Lucena, Naga, Iriga, Legazpi, Roxas, Iloilo, Bacolod, Dumaguete, Tacloban, Cebu, Mandaue, Tagbilaran, Surigao, Butuan, Cagayan de Oro, Davao, General Santos, Oroquieta, Ozamis, Dipolog, Zamboanga, Pagadian, Iligan, and in such other places as the Supreme Court may deem necessary. Additional cases other than those provided in Sec. 5 may be assigned to the Family Courts when their REMLAW Page 162
Additional cases other than those provided in Sec. 5 may be assigned to the Family Courts when their dockets permit: Provided, That such additional cases shall not be heard on the same day family cases are heard. In areas where there are no Family Courts, the cases referred to in Sec. 5 of this Act shall be adjudicated by the Regional Trial Court. Sec. 18. Separability Clause. - In case any provision of this Act is declared unconstitutional, the other provisions shall remain in effect. Sec. 19. Repealing Clause. - All other laws, decrees, executive orders, rules or regulations inconsistent herewith are hereby repealed, amended or modified accordingly.
Sec. 20. Effectivity. - This Act shall take effect fifteen (15) days after its publication in at least two (2) national newspapers of general circulation. Approved October 28, 1997. Pasted from
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A.M. No. 02-11-10-SC Rules on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages Sunday, November 14, 2010 11:29 PM
A.M. No. 02-11-10-SC March 4, 2003 RE: PROPOSED RULE ON DECLARATION OF ABSOLUTE NULLITY OF VOID MARRIAGES AND ANNULMENT OF VOIDABLE MARRIAGES RESOL UTI ON Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court's consideration and approval the Proposed Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages, the Court Resolved to APPROVE the same. The Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003 March 4, 2003 Davide, C.J. Bellosillo, Puno, Vitug Mendoza, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio Morales, Callejo, Sr. and Azcuna Ynares-Santiago, on leave Corona, on official leave RULE ON DECLARATION OF ABSOLUTE NULLITY OF VOID MARIAGES AND ANNULMENT OF VOIDABLE MARRIAGES Section 1. Scope - This Rule shall govern petitions for declaration of absolute nullity of void marriages and annulment of voidable marriages under the Family Code of te Philippines. The Rules of Court shall apply suppletorily. Section 2. Petition for declaration of absolute nullity of void marriages. (a) Who may file. - A petition for declaration of absolute nullity of void marriage may be filed solely by the husband or the wife. (n) (b) Where to file. - The petition shal be filed in the Family Court. (c) Imprecriptibility ofaction or defense. - An Action or defense for the declaration of absolute nullity of void marriage shall not prescribe. (d) What to allege. - A petition under Article 36 of Family Code shall specially allege te complete facts showing the either or both parties were psychologically incapacitated from complying with the essential marital obligations of marriages at the time of the celebration of marriage even if such incapacity becomes manifest only after its celebration. The complete facts should allege the physical manifestations, if any, as are indicative of psychological incapacity at the time of the celebration of the marriage but expert opinion need not be alleged. Section 3. Petition for annulment of voidable marriages. (a) Who may file. - The following persons may file a petition for annulment of voidable marriage based on any of the grounds under article 45 of the Family Code and within the period herein indicated: (1) The contracting party whose parent, or guardian, or person exercising substitute parental authority did not give his or her consent, within five years after attaining the age of twenty-one unless, after attaining the age of twenty-one, such party freely cohabitated with the other as husband or wife; or the parent, guardian or person having legal charge of the contracting party , at any time before such party has reached the age of twenty-one; (2) The sane spouse who had no knowledge of the other's insanity; or by any relative, guardian, or person having legal charge of the insane, at any time before the death of either party; or by the insane spouse during the a lucid interval or after regaining sanity, provided that the petitioner , after coming to reason, has not freely cohabited with the other as husband or wife; (3) The injured party whose consent was obtained by fraud, within five years after the discovery of the fraud, provided that said party, with full knowledge of the facts constituting the fraud, has not freely cohabited with the other as husband or wife; (4) The injured party whose consent was obtained by force, intimidation, or undue influence, within five REMLAW Page 164
cohabited with the other as husband or wife; (4) The injured party whose consent was obtained by force, intimidation, or undue influence, within five years from the time the force intimidation, or undue influence disappeared or ceased, provided that the force, intimidation, or undue influence having disappeared or ceased, said party has not thereafter freely cohabited with the other as husband or wife; (5) The injured party where the other spouse is physically incapable of consummating the marriage with the other and such incapability continues and appears to be incurable, within five years after the celebration of marriage; and (6) Te injured party where the other party was afflicted with a sexually-transmissible disease found to be serious and appears to be incurable, within five years after the celebration of marriage. (b) Where to file. - The petition shall be filed in the Family Court. Section 4. Venue. - The Petition shall be filed in the Family Court of the province or city where the petitioner or the respondent has been residing for at least six months prior to the date of filing. Or in the case of non-resident respondent, where he may be found in the Philippines, at the election of the petitioner. Section 5. Contents and form of petition. - (1) The petition shall allege the complete facts constituting the cause of action. (2) It shall state the names and ages of the common children of the parties and specify the regime governing their property relations, as well as the properties involved. If there is no adequate provision in a written agreement between the parties, the petitioner may apply for a provisional order for spousal support, the custody and support of common children, visitation rights, administration of community or conjugal property, and other matters similarly requiringurgent action. (3) It must be verified and accompanied celebration of marriage. (b) Where to file.-The petition shall be filed in the Family Court. Section 4. Venue. - The petition shall be filed in the Family Court of the province or city where the petitioner or the respondent has been residing for at least six months prior to the date of filing, or in the case of a non-resident respondent, where he may be found in the Philippines at the election of the petitioner. Section 5. Contents and form of petition. - (1) The petition shall allege the complete facts constituting the cause of action. (2) it shall state the names and ages of the common children of the parties and specify the regime governing their property relations, as well as the properties involved. If there is no adequate provision in a written agreement between the parties, the petitioner may apply for a provisional order for spousal support, custody and support of common children, visitation rights, administration of community or conjugal property, and other matters similarly requiring urgent action. (3) it must be verified and accompanied by a certification against forum shopping. The verification and certification must be signed personally by me petitioner. No petition may be filed solely by counsel or through an attorney-in-fact. If the petitioner is in a foreign country, the verification and certification against forum shopping shall be authenticated by the duly authorized officer of the Philippine embassy or legation, consul general, consul or vice-consul or consular agent in said country. (4) it shall be filed in six copies. The petitioner shall serve a copy of the petition on the Office of the Solicitor General and the Office of the City or Provincial Prosecutor, within five days from the date of its filing and submit to the court proof of such service within the same period. Failure to comply with any of the preceding requirements may be a ground for immediate dismissal of the petition. Section 6. Summons. - The service of summons shall be governed by Rule 14 of the Rules of Court and by the following rules: (1) Where the respondent cannot be located at his given address or his whereabouts are unknown and cannot be ascertained by diligent inquiry, service of summons may, by leave of court, be effected upon him by publication once a week for two consecutive weeks in a newspaper of general circulation in the Philippines and in such places as the court may order In addition, a copy of the summons shall be served on the respondent at his last known address by registered mail or any other means the court may deem
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sufficient. (2) The summons to be published shall be contained in an order of the court with the following data: (a) title of the case; (b) docket number; (c) nature of the petition; (d) principal grounds of the petition and the reliefs prayed for; and (e) a directive for the respondent to answer within thirty days from the last issue of publication. Section 7. Motion to dismiss. - No motion to dismiss the petition shall be allowed except on the ground of lack of jurisdiction over the subject matter or over the parties; provided, however, that any other ground that might warrant a dismissal of the case may be raised as an affirmative defense in an answer. Section 8. Answer. - (1) The respondent shall file his answer within fifteen days from service of summons, or within thirty days from the last issue of publication in case of service of summons by publication. The answer must be verified by the respondent himself and not by counsel or attorney-infact. (2) If the respondent fails to file an answer, the court shall not declare him or her in default. (3) Where no answer is filed or if the answer does not tender an issue, the court shall order the public prosecutor to investigate whether collusion exists between the parties. Section 9. Investigation report of public prosecutor. - (1) Within one month after receipt of the court order mentioned in paragraph (3) of Section 8 above, the public prosecutor shall submit a report to the court stating whether the parties are in collusion and serve copies thereof on the parties and their respective counsels, if any. (2) If the public prosecutor finds that collusion exists, he shall state the on the finding of collusion within ten days from receipt of a copy of a report The court shall set the report for hearing and If convinced that the parties are in collusion, it shall dismiss the petition. (3) If the public prosecutor reports that no collusion exists, the court shall set the case for pre-trial. It shall be the duty of the public prosecutor to appear for the State at the pre-trial. Section 10. Social worker. - The court may require a social worker to conduct a case study and submit the corresponding report at least three days before the pre-trial. The court may also require a case study at any stage of the case whenever necessary. Section 11. Pre-trial. (1) Pre-trial mandatory. - A pre-trial is mandatory. On motion or motu proprio, the court shall set the pre-trial after the last pleading has been served and filed, or upon receipt of the report of the public prosecutor that no collusion exists between the parties. (2) Notice of pre-trial. - (a) The notice of pre-trial shall contain: (1) the date of pre-trial conference; and (2) an order directing the parties to file and serve their respective pre-trial briefs in such manner as shall ensure the receipt thereof by the adverse party at least three days before the date of pre-trial. (b) The notice shall be served separately on the parties and their respective counsels as well as on the public prosecutor. It shall be their duty to appear personally at the pre-trial. (c) Notice of pre-trial shall be sent to the respondent even if he fails to file an answer. In case of summons by publication and the respondent failed to file his answer, notice of pre-trial shall be sent to respondent at his last known address. Section 12. Contents of pre-trial brief. - The pre-trial brief shall contain the following: (a) A statement of the willingness of the parties to enter into agreements as may be allowed by law, indicating the desired terms thereof; (b) A concise statement of their respective claims together with the applicable laws and authorities; (c) Admitted facts and proposed stipulations of facts, as well as the disputed factual and legal issues; (d) All the evidence to be presented, including expert opinion, if any, briefly stating or describing the nature and purpose thereof; (e) The number and names of the witnesses and their respective affidavits; and (f) Such other matters as the court may require. Failure to file the pre-trial brief or to comply with its required contents shall have the same effect as failure to appear at the pre-trial under the succeeding paragraphs. Section 13. Effect of failure to appear at the pre-trial. - {a) If the petitioner fails to appear personally, the case shall be dismissed unless his counsel or a duly authorized representative appears in court and proves a valid excuse for the non-appearance of the petitioner. (b) If the respondent has filed his answer but fails to appear, the court shall proceed with the pre-trial REMLAW Page 166
(b) If the respondent has filed his answer but fails to appear, the court shall proceed with the pre-trial and require the public prosecutor to investigate the non-appearance of the respondent and submit within fifteen days thereafter a report to the court stating whether his non-appearance is due to any collusion between the parties. If there Is no collusion, the court shall require the public prosecutor to intervene for the State during the trial on the merits to prevent suppression or fabrication of evidence. Section 14. Pre-trial conference. -At the pre-trial conference, the court: (a) May refer the issues to a mediator who shall assist the parties in reaching an agreement on matters not prohibited by law. The mediator shall render a report within one month from referral which, for good reasons, the court may extend for a period not exceeding one month. (b) In case mediation is not availed of or where it fails, the court shall proceed with the pre-trial conference, on which occasion it shall consider the advisability of receiving expert testimony and such other makers as may aid in the prompt disposition of the petition. Section 15. Pre-trial order. - {a) The proceedings in the pre-trial shall be recorded. Upon termination of the pre-trial, the court shall Issue a pre-trial order which shall recite in detail the matters taken up In the conference, the action taken thereon, the amendments allowed on the pleadings, and except as to the ground of declaration of nullity or annulment, the agreements or admissions made by the parties on any of the matters considered, including any provisional order that may be necessary or agreed upon by the parties. (b) Should the action proceed to trial, the order shall contain a recital of the following; (1) Facts undisputed, admitted, and those which need not be proved subject to Section 16 of this Rule; (2) Factual and legal issues to be litigated; (3) Evidence, including objects and documents, that have been marked and will be presented; (4) Names of witnesses who will be presented and their testimonies in the form of affidavits; and (5) Schedule of the presentation of evidence. (c) The pre-trial order shall also contain a directive to the public prosecutor to appear for the State and take steps to prevent collusion between the parties at any stage of the proceedings and fabrication or suppression of evidence during the trial on the merits. (d) The parlies shall not be allowed to raise issues or present witnesses and evidence other than those stated in the pre-trial order. The order shall control the trial of the case, unless modified by the court to prevent manifest injustice. (e) The parties shall have five days from receipt of the pre-trial order to propose corrections or modifications. Section 16. Prohibited compromise. - The court-shall not allow compromise on prohibited matters, such as the following: (a) The civil status of persons; (b) The validity of a marriage or of a legal separation; (c) Any ground for legal separation; (d) Future support; (e) The jurisdiction of courts; and (f) Future legitime. Section 17. Trial. - (1) The presiding judge shall personally conduct the trial of the case. No delegation of the reception of evidence to a commissioner shall be allowed except as to matters involving property relations of the spouses. (2) The grounds for declaration of absolute nullity or annulment of marriage must be proved. No judgment on the pleadings, summary judgment, or confession of judgment shall be allowed. (3) The court may order the exclusion from the courtroom of all persons, including members of the press, who do not have a direct interest in the case. Such an order may be made if the court determines on the record that requiring a party to testify in open court would not enhance the ascertainment of truth; would cause to the party psychological harm or inability to effectively communicate due to embarrassment, fear, or timidity; would violate the right of a party to privacy; or would be offensive to decency or public morals. (4) No copy shall be taken nor any examination or perusal of the records of the case or parts thereof be made by any person other than a party or counsel of a party, except by order of the court. Section 18. Memoranda. - The court may require the parties and the public prosecutor, in consultation REMLAW Page 167
Section 18. Memoranda. - The court may require the parties and the public prosecutor, in consultation with the Office of the Solicitor General, to file their respective memoranda support of their claims within fifteen days from the date the trial is terminated. It may require the Office of the Solicitor General to file its own memorandum if the case is of significant interest to the State. No other pleadings or papers may be submitted without leave of court. After the lapse of the period herein provided, the case will be considered submitted for decision, with or without the memoranda. Section 19. Decision. - (1) If the court renders a decision granting the petition, it shall declare therein that the decree of absolute nullity or decree of annulment shall be issued by the court only after compliance with Article 50 and 51 of the Family Code as implemented under the Rule on Liquidation, Partition and Distribution of Properties. (2) The parties, including the Solicitor General and the public prosecutor, shall be served with copies of the decision personally or by registered mail. If the respondent summoned by publication failed to appear in the action, the dispositive part of the decision shall be published once in a newspaper of general circulation. (3) The decision becomes final upon the expiration of fifteen days from notice to the parties. Entry of judgment shall be made if no motion for reconsideration or new trial, or appeal Is filed by any of the parties the public prosecutor, or the Solicitor General. (4) Upon the finality of the decision, the court shall forthwith issue the corresponding decree if the parties have no properties. If the parties have properties, the court shall observe the procedure prescribed in Section 21 of this Rule. The entry of judgment shall be registered in the Civil Registry where the marriage was recorded and In the Civil Registry where the Family Court'granting the petition for declaration of absolute nullity or annulment of marriage is located. Section 20. Appeal. (1) Pre-condition. - No appeal from the decision shall be allowed unless the appellant has filed a motion for reconsideration or new trial within fifteen days from notice of judgment. (2) Notice of appeal. - An aggrieved party or the Solicitor General may appeal from the decision by filing a Notice of Appeal within fifteen days from notice of denial of the motion for reconsideration or new trial. The appellant shall serve a copy of the notice of appeal on the adverse parties. Section 21. Liquidation, partition and distribution, custody, support of common children and delivery of their presumptive iegltimes. - Upon entry of the judgment granting the petition, or, in case of appeal, upon receipt of the entry of judgment of the appellate court granting the petition, the Family Court, on motion of either party, shall proceed with the liquidation, partition and distribution of the properties of the spouses, including custody, support of common children and delivery of their presumptive legitimes pursuant to Articles 50 and 51 of the Family Code unless such matters had been adjudicated in previous judicial proceedings. Section 22. Issuance of Decree of Declaration of Absolute Nullity or Annulment of Marriage." (a) The court shall issue the Decree after; (1) Registration of the entry of judgment granting the petition for declaration of nullity or annulment of marriage in the Civil Registry where the marriage was celebrated and in the Civil Registry of the place where the Family Court is located; (2) Registration of the approved partition and distribution of the properties of the spouses, in the proper Register of Deeds where the real properties are located; and (3) The delivery of the children's presumptive legitimes in cash, property, or sound securities. (b) The court shall quote in the Decree the dispositive portion of the judgment entered and attach to the Decree the approved deed of partition. Except in the case of children under Articles 36 and 53 of the Family Code, the court shall order the Local Civil Registrar to issue an amended birth certificate indicating the new civil status of the children affected. Section 23. Registration and publication of the decree; decree as best evidence. - (a) The prevailing party shall cause the registration of the Decree in the Civil Registry where the marriage was registered, the Civil Registry of the place where the Family Court is situated, and in the National Census and Statistics Office. He shall report td the court compliance with this requirement within thirty days from receipt of the copy of the Decree. REMLAW Page 168
the copy of the Decree. (b) In case service of summons was made by publication, the parties shall cause the publication of the Decree once in a newspaper of general circulation. (c) The registered Decree shall be the best evidence to prove the declaration of absolute nullity or annulment of marriage and shall serve as notice to third persons concerning the properties of petitioner and respondent as well as the properties or presumptive legitimes delivered to their common children. Section 24. Effect of death of a party; duty of the Family Court or Appellate Court. - (a) In case a party dies at any stage of the proceedings before the entry of judgment, the court shall order the case closed and terminated, without prejudice to the settlement of the estate in proper proceedings in the regular courts. (b) If the party dies after the entry of judgment of nullity or annulment, the judgment shall be binding upon the parties and their successors in interest in the settlement of the estate in the regular courts. Section 25. Effectlvity. - This Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003. Pasted from
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A.M. No. 02-11-11 Rule on Legal Separation Sunday, November 14, 2010 11:29 PM
A.M. No. 02-11-11-SC March 4, 2003 RE: PROPOSED RULE ON LEGAL SEPARATION RESOL UTI ON Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court's consideration and approval the Proposed Rule on Legal Separation, the Court Resolved to APPROVED the same. The Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003 March 4, 2003 Davide Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr. and Azcuna, JJ. Ynares-Santiago, on leave, Corona, officially on leave. RULE ON LEGAL SEPARATION Section 1. Scope. - This Rule shall govern petitions for legal separation under the Family Code of the Philippines. The Rules of Court shall apply suppletorily. Section 2. Petition. - (a) Who may and when to file. - (1) A petition for legal separation may be filed only by the husband or the wife, as the case may be within five years from the time of the occurrence of any of the following causes: (a) Repeated physical violence or grossly abusive conduct directed against the petitioner, a common child, or a child of the petitioner; (b) Physical violence or moral pressure to compel the petitioner to change religious or political affiliation; (c) Attempt of respondent to corrupt or induce the petitioner, a common child, or a child of the petitioner, to engage in prostitution, or connivance in such corruption or inducement; (d) Final judgment sentencing the respondent to imprisonment of more than six years, even if pardoned; (e) Drug addiction or habitual alcoholism of the respondent; (f) Lesbianism or homosexuality of the respondent; (g) Contracting by the respondent of a subsequent bigamous marriage, whether in or outside the Philippines; (h) Sexual infidelity or perversion of the respondent; (i) Attempt on the life of petitioner by the respondent; or (j) Abandonment of petitioner by respondent without justifiable cause for more than one year. (b) Contents and form. - The petition for legal separation shall: (1) Allege the complete facts constituting the cause of action. (2) State the names and ages of the common children of the parties, specify the regime governing their property relations, the properties involved, and creditors, if any. If there is no adequate provision in a written agreement between the parties, the petitioner may apply for a provisional order for spousal support, custody and support of common children, visitation rights, administration of community or conjugal property, and other similar matters requiring urgent action, (3) Be verified and accompanied by a certification against forum shopping. The verification and certification must be personally signed by the petitioner. No petition may be filed solely by counsel or through an attorney-in-fact. If the petitioner is in a foreign country, the verification and certification against forum shopping shall be authenticated by the duly authorized officer of the Philippine embassy or legation, consul general, consul or vice-consul or consular agent in said country (4) Be filed in six copies. The petitioner shall, within five days from such filing, furnish a copy of the petition to the City or Provincial Prosecutor and the creditors, if any, and submit to the court proof of such service within the same period. Failure to comply with the preceding requirements may be a ground for immediate dismissal of REMLAW Page 170
such service within the same period. Failure to comply with the preceding requirements may be a ground for immediate dismissal of the petition. (c) Venue. - The petition shall be filed in the Family Court of the province or city where the petitioner or the respondent has been residing for at least six months prior to the date of filing "or in The case of a non-resident respondent, where he may be found in the Philippines, at the election of the petitioner. Section 3. Summons. - The service of summons shall be governed by Rule 14 of the Rules of Court and by the following rules: (a) Where the respondent cannot be located at his given address or his whereabouts are unknown and cannot be ascertained by diligent inquiry, service of summons may, by leave of court, be effected upon him by publication once a week for two consecutive weeks in a newspaper of general circulation in the Philippines and in such place as the court may order. In addition, a copy of the summons shall be served on respondent at his last known address by registered mail or by any other means the court may deem sufficient. (b) The summons to be published shall be contained in an order of the court with the following data; (1) title of the case; (2) docket number; (3) nature of the petition; (4) principal grounds of the petition and the reliefs prayed for, and (5) a directive for respondent to answer within thirty days from the last issue of publication. Section 4. Motion to Dismiss. - No motion to dismiss the petition shall be allowed except on the ground of lack of jurisdiction over the subject matter or over the parties; provided, however, that any other ground that might warrant a dismissal of the case may be raised as an affirmative defense in an answer. Section 5. Answer. - (a) The respondent shall file his answer within fifteen days from receipt of summons, or within thirty days from the last issue of publication in case of service of summons by publication. The answer must be verified by respondent himself and not by counsel or attorney-in-fact. (b) If the respondent fails to file an answer, the court shall not declare him in default. (c) Where no answer is filed/or if the answer does not tender an issue the court shall order the public prosecutor to investigate whether collusion exists between the parties. Section 6. Investigation Report of Public Prosecutor. - (a) Within one one month after receipt of the court order mentioned in paragraph (c) of the preceeding section, the public prosecutor shall submit a report to the court on whether the parties are in collusion and serve copies on the parties and their respective counsels, if any. (b) If the public prosecutor finds that collusion exists, he shall state the basis thereof in his report. The parties shall file their respective comments on the finding of collusion within ten days from receipt of copy of the report. The court shall set the report for hearing and if convinced that parties are in collusion,-it shall dismiss the petition. (c) If the public prosecutor reports that no collusion exists, the court shall set the case for pre-trial. It shall be the duty of the public prosecutor to appear for the State at the pre-trial. Section 7. Social Worker. - The court may require a social worker to conduct a case study and to submit the corresponding report at least three days before the pre-trial. The court may also require a case study at any stage of the case whenever necessary, Section 8. Pre-trial. (a) Pre-trial mandatory.-A pre-trial is mandatory. On motion or motu proprio, the court shall set the pretrial after the last pleading has been served and filed, or upon receipt of the report of the public prosecutor that no collusion exists between the parties on a date not earlier than six months from date of the filing of the petition. (b) Notice of Pre-trial.-(1) The notice of pre-trial shall contain: (a) the date of pre-trial conference; and (b) an order directing the parties to file and serve their respective pre-trial briefs in such manner as shall ensure the receipt thereof by the adverse party at least three days before the date of pre-trial. (2) The notice shall be served separately on the parties and their respective counsels as well as on the public prosecutor. It shall be their duty to appear personally at the pre-trial. (3) Notice of pre-trial shall be sent to the respondent even if he fails to file an answer. In case of summons by publication and the respondent failed to file his answer, notice of pre-trial shall be sent to respondent at his last known address. Section 9. Contents of pre-trial brief. - The pre-trial brief shall contain the following: (1) A statement of the willingness of the parties to enter into agreements as may be allowed by law, REMLAW Page 171
Section 9. Contents of pre-trial brief. - The pre-trial brief shall contain the following: (1) A statement of the willingness of the parties to enter into agreements as may be allowed by law, indicating the desired terms thereof; (2) A concise statement of their respective claims together with the applicable laws and authorities; (3) Admitted facts and proposed stipulations of facts, as well as the disputed factual and legal issues; (4) All the evidence to be presented, including expert opinion, if any, briefly stating or describing the nature and purpose thereof; (5) The number and names of the witnesses and their respective affidavits; and (6) Such other matters as the court may require. Failure to file the pre-trial brief or to comply with its required contents shall have the same effect as failure to appear at the pre-trial under the succeeding section. Section 10. Effect of failure to appear at the pre-trial. - (1) If the petitioner fails to appear personally, the case shall be dismissed unless his counsel or a duly authorized representative appears in court and proves a valid excuse for the non-appearance of the petitioner. (2) If the respondent filed his answer but fails to appear, the court shall proceed with the pre-trial and require the public prosecutor to investigate the non-appearance of the respondent and submit within fifteen days a report to the court stating whether his non-appearance is due to any collusion between the parties/ If there is no collusion the court shall require the public prosecutor to intervene for the State during the trial on the.merits to prevent suppression or fabrication of evidence. Section 11. Pre-trial conference. - At the pre-trial conference, the court may refer the issues to a mediator who shall assist the parties in reaching an agreement on matters not prohibited by law. The mediator shall render a report within one month from referral which, for good reasons, the court may extend for a period not exceeding one month. In case mediation is not availed of or where it fails, the court shall proceed with the pre-trial conference, on which occasion it shall consider the advisability of receiving expert testimony and such other matters as may aid in the prompt disposition of the petition. Section 12. Pre-trial order. - (a) The proceedings in the pre-trial shall be recorded. Upon termination of the pre-trial, the court shall issue a pre-trial order which shall recite in detail the matters taken up in the conference, the action taken thereon, the amendments allowed on the pleadings, and, except as to the ground of legal separation, the agreements or admissions made by the parties on any of the matters considered, including any provisional order that may be necessary or agreed upon by the parties. (b) Should the action proceed to trial, the order shall contain a recital of the following: (1) Facts undisputed, admitted, and those which need not be proved subject to Section 13 of this Rule; (2) Factual and legal issues to be litigated; (3) Evidence, including objects and documents, that have been marked and will be presented; (4) Names of witnesses who will be presented and their testimonies in the form of affidavits; and (5) Schedule of the presentation of evidence. The pre-trial order shall also contain a directive to the public prosecutor to appear for the State and take steps to prevent collusion between the parties at any stage of the proceedings and fabrication or suppression of evidence during the trial on the merits. (c) The parties shall not be allowed to raise issues or present witnesses and evidence other than those stated in the pre-trial order. The order shall control the trial of the case unless modified by the court to prevent manifest injustice. (d) The parties shall have five days from receipt of the pre-trial order to propose corrections or modifications. Section 13. Prohibited compromise. - The court shall not allow compromise on prohibited matters, such as the following: (1) The civil status of persons; (2) The validity of a marriage or of a legal separation; (3) Any ground lor legal separation; (4) Future support; (5) The jurisdiction of courts; and (6) Future legitime. Section 14. Trial. - (a) The presiding judge shall personally conduct the trial of the case. No delegation of the reception of evidence to a commissioner shall be allowed except as to matters involving property relations of the spouses. REMLAW Page 172
relations of the spouses. (b) The grounds for legal separation must be proved. No judgment on the pleadings, summary judgment, or confession of judgment shall be allowed. (c) The court may order the exclusion from the courtroom of all persons, including members of the press, who do not have a direct interest in the case. Such an order may be made if the court determines on the record othat requiring a party to testify in open court would not enhance the ascertainment of truth; would cause to the party psychological harm or inability to effectively communicate due to embarrassment, fear, or timidity; would violate the party's right to privacy; or would be offensive to decency (d) No copy shall be taken nor any examination or perusal of the records of the case or parts thereof be made by any person other than a party or counsel of a party, except by order of the court. Section 15. Memoranda. - The court may require the parties and the public prosecutor to file their respective memoranda in support of their claims within fifteen days from the date the trial is terminated. No other pleadings or papers may be submitted without leave of court. After the lapse of the period herein provided, the case will be considered submitted for decision, with or without the memoranda. Section 16. Decision. - (a) The court shall deny the petition on any of the following grounds: (1) The aggrieved party has condoned the offense or act complained of or has consented to the commission of the offense or act complained of; (2) There is connivance in the commission of the offense-or act constituting the ground for legal separation; (3) Both parties have given ground for legal separation; (4) There is collusion between the parties to obtain the decree of legal separation; or (5) The action is barred by prescription. (b) If the court renders a decision granting the petition, it shall declare therein that the Decree of Legal Separation shall be issued by the court only after full compliance with liquidation under the Family Code. However, in the absence of any property of.the parties, the court shall forthwith issue a Decree of Legal Separation which shall be registered in the Civil Registry where the marriage was recorded and in the Civil Registry where the Family Court granting the legal separation is located. (c) The decision shall likewise declare that: (1) The spouses are entitled to live separately from each other but the marriage bond is not severed; (2) The obligation of mutual support between the spouses ceases; and (3) The offending spouse is disqualified from inheriting from the innocent spouse by intestate succession, and provisions in favor of the offending spouse made in the will of the innocent spouse are revoked by operation of law. (d) The parties, including the Solicitor General and the public prosecutor, shall be served with copies of the decision personally or by registered mail. If the respondent summoned by publication failed to appear in the action, the dispositive part of the decision shall also be published once in a newspaper of general circulation. Section 17. Appeal. (a) Pre-condition. - No appeal from the decision shall be allowed unless the appellant has filed a motion for reconsideration or new trial within fifteen days from notice of judgment. (b) Notice of Appeal - An aggrieved party or the Solicitor General may appeal from the decision by filing a Notice of Appeal within fifteen days from notice of denial of the motion for reconsideration or new trial. The appellant shall serve a copy of the notice of appeal upon the adverse parties. Section 18. Liquidation, partition and distribution, custody, and support of minor children. - Upon entry of the judgment granting the petition, or, in case of appeal, upon receipt of the entry of judgment of the appellate court granting the petition, the Family Court, on motion of either party, shall proceed with the liquidation, partition and distribution of the properties of the spouses, including custody and support of common children, under the Family Code unless such matters had been adjudicated in previous judicial proceedings. Section 19. Issuance of Decree of Legal Separation. - (a) The court shall issue the Decree of Legal Separation after: (1) registration of the entry of judgment granting the petition tor legal separation in the Civil Registry where the marriage was celebrated and in the Civil Registry where the Family Court is located; and REMLAW Page 173
where the marriage was celebrated and in the Civil Registry where the Family Court is located; and (2) registration of the approved partition and distribution of the properties of the spouses, in the proper Register of Deeds where the real properties are located. (b) The court shall quote in the Decree the dispositive portion of the judgment entered and attach to the Decree the approved deed of partition. Section 20. Registration and publication of the Decree of Legal Separation; decree as best evidence. (a) Registration of decree.-The prevailing party shall cause the registration of the Decree in the Civil Registry where the marriage was registered, in the Civil Registry of the place where the Family Court is situated, and in the National Census and Statistics Office. He shall report to the court compliance with this requirement within thirty days iron receipt of the copy of the Decree. (b) Publication of decree.-- In case service of summons was made by publication, the parties shall cause the publication of the Decree once in a newspaper of general circulation. (c) Best evidence.-The registered Decree shall be the best evidence to prove the legal separation of the parties and shall serve as notice to third persons concerning the properties of petitioner and respondent. Section 21. Effect of death of a party; duty of the Family Court or Appellate Court. - (a) In case a party dies at any stage of me proceedings before the entry of judgment, the court shall order the case closed and terminated without prejudice to the settlement of estate proper proceedings in the regular courts. (b) If the party dies after the entry of judgment, the same shall be binding upon the parties and their successors in interest in the settlement of the estate in the regular courts. Section 22. Petition for revocation of donations. - (a) Within five (5) years from the date the decision granting the petition for legal separation has become final, the innocent spouse may file a petition under oath the same proceeding for legal separation to revoke the donations in favor of the offending spouse. (b)The revocation of the donations shall be recorded in the Register of Deeds of Deeds in the places where the properties are located. (c)Alienations, liens, and encumbrances registered in good faith. before the recording of the petition for revocation in the registries of property shall be respected. (d)After the issuance of the Decree of Legal Separation, the innocent spouse may revoke the designation of the offending spouse as a beneficiary in any insurance policy even if such designation be stipulated as irrevocable. The revocation or change shall take effect upon written notification thereof to the insurer. Section 23. Decree of Reconciliation. - (a) If the spouses had reconciled, a joint manifestation under oath, duly signed by the spouses, may be filed in the same proceeding for legal separation. (b) If the reconciliation occurred while the proceeding for legal separation is pending, the court shall immediately issue an order terminating the proceeding. (c) If the reconciliation occurred after the rendition of the judgment granting the petition for legal separation but before the issuance of the Decree, the spouses shall express in their manifestation whether or not they agree to revive the former regime of their property relations or choose a new regime. The court shall immediately issue a Decree of Reconciliation declaring that the legal separation proceeding is set aside and specifying the regime of property relations under which the spouses shall be covered. (d) If the spouses reconciled after the issuance of the Decree, the court, upon proper motion, shall issue a decree of reconciliation declaring therein that the Decree is set aside but the separation of property and any forfeiture of the share of the guilty spouse already effected subsists, unless the spouses have agreed to revive their former regime of property relations or adopt a new regime. (e) In case of paragraphs (b), (c), and (d). if the reconciled spouses choose to adopt a regime of property relations different from that which they had prior to the filing of the petition for legal separation, the spouses shall comply with Section 24 hereof. (f) The decree of reconciliation shall be recorded in the Civil Registries where the marriage and the Decree had been registered. Section 24. Revival of property regime or adoption of another. (a) In case of reconciliation under Section 23, paragraph (c) above, the parties shall file a verified motion for revival of regime of property relations or the adoption of another regime of property relations in the same proceeding for legal separation attaching to said motion their agreement for the approval of the REMLAW Page 174
same proceeding for legal separation attaching to said motion their agreement for the approval of the court. (b) The agreement which shall be verified shall specify the following: (1) The properties to be contributed to the restored or new regime; (2) Those to be retained as separate properties of each spouse; and (3) The names of all their known creditors, their addresses, and the amounts owing to each. (c) The creditors shall be furnished with copies of the motion and the agreement. (d) The court shall require the spouses to cause the publication of their verified motion for two consecutive weeks in a newspaper of general circulation. (e) After due hearing, and the court decides to grant the motion, it shall issue an order directing the parties to record the order in the proper registries of property within thirty days from receipt of a copy of the order and submit proof of compliance within the same period. Section 25. Effectivity. - This Rule shall take effect on March 15,2003 following its publication in a newspaper of general circulation not later than March 7, 2003. Pasted from
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A.M. No. 02-11-12 Rule on Provisional Orders Sunday, November 14, 2010 11:29 PM
A.M. No. 02-11-12-SC March 4, 2003 RE: PROPOSED RULE ON PROVISIONAL ORDERS RESOL UTI ON Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court's consideration and approval the Proposed Rule on Provisional Orders, the Court Resolved to APPROVED the same. The Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003 March 4, 2003 Davide Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr. and Azcuna, JJ. Ynares-Santiago, on leave, Corona, officially on leave. RULE ON PROVISIONAL ORDERS Section 1. When Issued, - Upon receipt of a verified petition for declaration of absolute nullity of void marriage or for annulment of voidable marriage, or for legal separation, and at any time during the proceeding, the court, motu proprio or upon application under oath of any of the parties, guardian or designated custodian, may issue provisional orders and protection orders with or without a hearing. These orders may be enforced immediately, with or without a bond, and for such period and under such terms" and conditions as the court may deem necessary. Section 2. Spousal Support. - In determining support for the spouses, the court may be guided by the following rules: (a) In the absence of adequate provisions in a written agreement between the spouses, the spouses may be supported from the properties of the absolute community or the conjugal partnership. (b) The court may award support to either spouse in such amount and for such period of time as the court may deem just and reasonable based on their standard of living during the marriage. (c) The court may likewise consider the following factors: (1) whether the spouse seeking support is the custodian of a child whose circumstances make it appropriate for that spouse not to seek outside employment; (2) the time necessary to acquire sufficient education and training to enable the spouse seeking support to find appropriate employment, and that spouse's future earning capacity; (3) theduration of the marriage; (4) the comparative financial resources of the spouses, including their comparative earning abilities in the labor market; (5) the needs and obligations of each spouse; (6) the contribution of each spouse to the marriage, including services rendered in home-making, child care, education, and career building of the other spouse; (7) the age and health of the spouses; (8) the physical and emotional conditions of the spouses; (9) the ability of the supporting spouse to give support, taking into account that spouse's earning capacity, earned and unearned income, assets, and standard of living; and (10) any other factor the court may deem just and equitable. (d) The Family Court may direct the deduction of the provisional support from the salary of the spouse. Section 3. Child Support. - The common children of the spouses shall be supported from the properties of the absolute community or the conjugal partnership. Subject to the sound discretion of the court, either parent or both may be ordered to give an amount necessary for the support, maintenance, and education of the child. It shall be in proportion to the resources or means of the giver and to the necessities of the recipient. In determining the amount of provisional support, the court may likewise consider the following factors: (1) the financial resources of the custodial and non-custodial parent and those of the child; (2) the physical and emotional health of the child and his or her special needs and aptitudes; (3) the standard of living the child has been accustomed to; (4) the non-monetary contributions that the parents will make toward the care and well-being of the child. REMLAW Page 176
parents will make toward the care and well-being of the child. The Family Court may direct the deduction of the provisional support from the salary of the parent. Section 4. Child Custody. - In determining the right party or person to whom the custody of the child of the parties may be awarded pending the petition, the court shall consider the best interests of the child and shall give paramount consideration to the material and moral welfare of the child. The court may likewise consider the following factors: (a) the agreement of the parties; (b) the desire and ability of each parent to foster an open and loving relationship between the child and the other parent; (c) the child's health, safety, and welfare; (d) any history of child or spousal abase by the person seeking custody or who has had any filial relationship with the child, including anyone courting the parent; (e) the nature and frequency of contact with both parents; (f) habitual use of alcohol or regulated substances; (g) marital misconduct; (h) the most suitable physical, emotional, spiritual, psychological and educational environment; and (i) the preference of the child, if over seven years of age and of sufficient discernment, unless the parent chosen is unfit. The court may award provisional custody in the following order of preference: (1) to both parents jointly; (2) to either parent taking into account all relevant considerations under the foregoing paragraph, especially the choice of the child over seven years of age, unless the parent chosen is unfit; (3} to the surviving grandparent, or if there are several of them, to the grandparent chosen by the child over seven years of age and of sufficient discernment, unless the grandparent is unfit or disqualified; (4) to the eldest brother or sister over twenty-one years of age, unless he or she is unfit or disqualified; (5) to the child's actual custodian over twenty-one years of age, unless unfit or disqualified; or (6) to any other person deemed by the court suitable to provide proper care and guidance for the child. The custodian temporarily designated by the" court shall give the court and the parents five days notice of any plan to change the residence of the child or take him out of his residence for more than three days provided it does not prejudice the visitation rights of the parents. Section 5. Visitation Rights. - Appropriate visitation rights shall be provided to the parent who is not awarded provisional custody unless found unfit or disqualified by the court. . Section 6. Hold Departure Order. - Pending resolution of the petition, no child of the parties shall be brought out of the country without prior order from the court. The court, motu proprio or upon application under oath, may issue ex-parte a hold departure order, addressed to the Bureau of Immigration and Deportation, directing it not to allow the departure of the child from the Philippines without the permission of the court. The Family Court issuing the hold departure order shall furnish the Department of Foreign Affairs and the Bureau of Immigration and Deportation of the Department of Justice a copy of the hold departure order issued within twenty-four hours from the time of its issuance and through the fastest available means of transmittal. The hold-departure order shall contain the following information: (a) the complete name (including the middle name), the date and place of birth, and the place of last residence of the person against whom a hold-departure order has been issued or whose departure from the country has been enjoined; (b) the complete title and docket number of the case in which the hold departure was issued; (c) the specific nature of the case; and (d) the date of the hold-departure order. If available, a recent photograph of the person against whom a hold-departure order has been issued or whose departure from the country has been enjoined should also be included. The court may recall the order. motu proprio or upon verified motion of any of the parties after summary hearing, subject to such terms and conditions as may be necessary for the best interests of the child. Section 7. Order of Protection. - The court may issue an Order of Protection requiring any person: (a) to stay away from the home, school, business, or place of employment of the child, other parent or any other party, and to stay away from any other specific place designated by the court; (b) to refrain from harassing, intimidating, or threatening such child or the other parent or any person to whom custody of the child is awarded; (c) to refrain from acts of commission or omission that create an unreasonable risk to the health, safety, or welfare of the child; REMLAW Page 177
or welfare of the child; (d) to permit a parent, or a person entitled to visitation by a court order or a separation agreement, to visit the child at stated periods; (e) to permit a designated party to enter the residence during a specified period of time in order to take persona! belongings not contested in a proceeding pending with the Family Court; (f) to comply with such other orders as are necessary for the protection of the child. Section 8. Administration of Common Property. - If a spouse without just cause abandons the other orfails to comply with his or her obligations to the family, the court may, upon application of the aggrieved party under oath, issue a provisional order appointing the applicant or a third person as receiver or sole administrator of the common property subject to such precautionary conditions it may impose. The receiver or administrator may not dispose of or encumber any common property or specific separate property of either spouse without prior authority of the court. The provisional order issued by the court shall be registered in the proper Register of Deeds and annotated in all titles of properties subject of the receivership or administration. Section 9. Effectivity. - This Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003. Pasted from
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A.M. No. 03-04-04-SC Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors Sunday, November 14, 2010 11:29 PM
A.M. No. 03-04-04-SC April 22, 2003 RE: PROPOSED RULE ON CUSTODY OF MINORS AND WRIT OF HABEAS CORPUS IN RELATION TO CUSTODY OF MINORS RESOLUTION Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court’s consideration and approval the Proposed Rule on custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors, the Court Resolved to APPROVE the same. The Rule shall take effect on May 15, 2003 following its publication in a newspaper of general circulation not later than April 30, 2003. April 22, 2003 Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna, JJ., concur. Quisumbing, J., on official leave. RULE ON CUSTODY OF MINORS AND WRIT OF HABEAS CORPUS IN RELATION TO CUSTODY OF MINORS SECTION 1. Applicability. - This rule shall apply to petitions for custody of minors and writs of habeas corpus in relation thereto. The Rules of Court shall apply suppletorily. Section 2. Petition for custody of minors; who may file.- A verified petition for the rightful custody of a minor may be filed by any person claiming such right. The party against whom it may be filed shall be designated as the respondent. Section 3. Where to file petition. - The petition for custody of minors shall be filed with the Family Court of the province or city where the petitioner resides or where the minor may be found. Section 4. Contents of petition. - The verified petition shall allege the following: (a) The personal circumstances of the petitioner and of the respondent; (b) The name, age and present whereabouts of the minor and his or her relationship to the petitioner and the respondent; (c) The material operative facts constituting deprivation of custody; and (d) Such other matters which are relevant to the custody of the minor. The verified petition shall be accompanied by a certificate against forum shopping, which the petitioner must sign personally. Section 5. Summons; personal service on respondent. - If the court is satisfied that the petition is sufficient in form and substance, it shall direct the clerk of court to issue summons, which shall be served together with a copy of the petition personally on the respondent. Section 6. Motion to Dismiss. - A motion to dismiss the petition is not allowed except on the ground of lack of jurisdiction over the subject matter or over the parties. Any other ground that might warrant the dismissal of the petition may be raised as an affirmative defense in the answer. Section 7. Verified Answer. - The respondent shall file an answer to the petition, personally verified by him, within five days after service of summons and a copy of the petition. Section 8. Case study; duty of social worker. - Upon the filing of the verified answer or the expiration of the period to file it, the court may order a social worker to make a case study of the minor and the parties and to submit a report and recommendation to the court at least three days before the scheduled pre-trial. Section 9. Notice of mandatory pre-trial. - Within fifteen days after the filing of the answer or the expiration of the period to file answer, the court shall issue an order: (1) fixing a date for the pre-trial conference; (2) directing the parties to file and serve their respective pre-trial briefs in such manner as shall ensure receipt thereof by the adverse party at least three days before the date of pre-trial; and (3) requiring the respondent to present the minor before the court. REMLAW Page 179
requiring the respondent to present the minor before the court. The notice of its order shall be served separately on both the parties and their respective counsels. The pre-trial is mandatory. Section 10. Contents of pre-trial brief. - The pre-trial brief shall contain the following: (a) A statement of the willingness of the parties to enter into agreements that may be allowed by law, indicating its terms; (b) A concise statement of their respective claims together with the applicable laws and authorities; (c) Admitted facts and proposed stipulations of facts; (d) The disputed factual and legal issues; (e) All the evidence to be presented, briefly stating or describing its nature and purpose; (f) The number and names of the witnesses and their respective affidavits which shall serve as the affiant's testimony on direct examination; and (g) Such other matters as the court may require to be included in the pre-trial brief. Failure to file the pre-trial brief or to comply with its required contents shall have the same effect as failure to appear at the pre-trial. Section 11. Effect of failure to appear at the pre-trial.-(a) If the petitioner fails to appear personally at the pre-trial, the case shall be dismissed, unless his counsel or a duly authorized representative appears in court and proves a valid excuse for the non-appearance of the petitioner. (b) If the respondent has filed his answer but fails to appear at the pre-trial, the petitioner shall be allowed to present his evidence ex parte. The court shall then render judgment on the basis of the pleadings and the evidence thus presented. Section 12. What may be done at pre-trial. - At the pre-trial, the parties may agree on the custody of the minor. If the parties fail to agree, the court may refer the matter to a mediator who shall have five days to effect an agreement between the parties. If the issue is not settled through mediation, the court shall proceed with the pre-trial conference, on which occasion it shall consider such other matters as may aid in the prompt disposition of the petition. Section 13. Provisional order awarding custody. - After an answer has been filed or after expiration of the period to file it, the court may issue a provisional order awarding custody of the minor. As far as practicable, the following order of preference shall be observed in the award of custody: (a) Both parents jointly; (b) Either parent, taking into account all relevant considerations, especially the choice of the minor over seven years of age and of sufficient discernment, unless the parent chosen is unfit; (c) The grandparent, or if there are several grandparents, the grandparent chosen by the minor over seven years of age and of sufficient discernment, unless the grandparent chosen is unfit or disqualified; (d) The eldest brother or sister over twenty-one years of age, unless he or she is unfit or disqualified; (e) The actual custodian of the minor over twenty-one years of age, unless the former is unfit or disqualified; or (f) Any other person or institution the court may deem suitable to provide proper care and guidance for the minor. Section 14. Factors to consider in determining custody. - In awarding custody, the court shall consider the best interests of the minor and shall give paramount consideration to his material and moral welfare. The best interests of the minor refer to the totality of the circumstances and conditions as are most congenial to the survival, protection, and feelings of security of the minor encouraging to his physical, psychological and emotional development. It also means the least detrimental available alternative for safeguarding the growth and development of the minor. The court shall also consider the following: (a) Any extrajudicial agreement which the parties may have bound themselves to comply with respecting the rights of the minor to maintain direct contact with the non custodial parent on a regular basis, except when there is an existing threat or danger of physical, mental, sexual or emotional violence which endangers the safety and best interests of the minor; (b) The desire and ability of one parent to foster an open and loving relationship between the minor and the other parent; (c) The health, safety and welfare of the minor; (d) Any history of child or spousal abuse by the person seeking custody or who has had any filial relationship with the minor, including anyone courting the parent; REMLAW Page 180
relationship with the minor, including anyone courting the parent; (e) The nature and frequency of contact with both parents; (f) Habitual use of alcohol, dangerous drugs or regulated substances; (g) Marital misconduct; (h) The most suitable physical, emotional, spiritual, psychological and educational environment for the holistic development and growth of the minor; and (i) The preference of the minor over seven years of age and of sufficient discernment, unless the parent chosen is unfit. Section 15. Temporary visitation rights. - The court shall provide in its order awarding provisional custody appropriate visitation rights to the non-custodial parent or parents, unless the court finds said parent or parents unfit or disqualified. The temporary custodian shall give the court and non custodial parent or parents at least five days' notice of any plan to change the residence of the minor or take him out of his residence for more than three days provided it does not prejudice the visitation rights of the non-custodial parent or parents. Section 16. Hold Departure Order. - The minor child subject of the petition shall not be brought out of the country without prior order from the court while the petition is pending. The court, motu proprio or upon application under oath, may issue ex parte a hold departure order, addressed to the Bureau of Immigration and Deportation, directing it not to allow the departure of the minor from the Philippines without the permission of the court. The Family Court issuing the hold departure order shall furnish the Department of Foreign Affairs and the Bureau of Immigration and Deportation of the Department of Justice a copy of the hold departure order within twenty-four hours from its issuance and through the fastest available means of transmittal. The hold departure order shall contain the following information: (a) The complete name (including the middle name), the date and place of birth, the nationality and the place of last residence of the person against whom a hold departure order has been issued or whose departure from the country has been enjoined; (b) The complete title and docket number of the case in which the hold departure order was issued; (c) The specific nature of the case; (d) The date of the hold departure order; and (e) A recent photograph, if available, of the party against whom a hold departure order has been issued or whose departure from the country has been enjoined. The court may recall the hold departure order motu proprio, or upon verified motion of any of the parties after summary hearing, subject to such terms and conditions as may be necessary for the best interests of the minor. Section 17. Protection Order. - The court may issue a Protection Order requiring any person: (a) To stay away from the home, school, business, or place of employment of the minor, other parent or any other party, or from any other specific place designated by the court; (b) To cease and desist from harassing, intimidating, or threatening such minor or the other parent or any person to whom custody of the minor is awarded; (c) To refrain from acts of commission or omission that create an unreasonable risk to the health, safety, or welfare of the minor; (d) To permit a parent, or a party entitled to visitation by a court order or a separation agreement, to visit the minor at stated periods; (e) To permit a designated party to enter the residence during a specified period of time in order to take personal belongings not contested in a proceeding pending with the Family Court; and (f) To comply with such other orders as are necessary for the protection of the minor. Section 18. Judgment. - After trial, the court shall render judgment awarding the custody of the minor to the proper party considering the best interests of the minor. If it appears that both parties are unfit to have the care and custody of the minor, the court may designate either the paternal or maternal grandparent of the minor, or his oldest brother or sister, or any reputable person to take charge of such minor, or commit him to any suitable home for children. In its judgment, the court may order either or both parents to give an amount necessary for the support, maintenance and education of the minor, irrespective of who may be its custodian. In determining the amount of support, the court may consider the following factors: (1) the financial resources of the custodial and non-custodial parent and those of the minor; (2) the physical and emotional health, REMLAW Page 181
custodial and non-custodial parent and those of the minor; (2) the physical and emotional health, special needs, and aptitude of the minor; (3) the standard of living the minor has been accustomed to; and (4) the non-monetary contributions that the parents would make toward the care and well-being of the minor. The court may also issue any order that is just and reasonable permitting the parent who is deprived of the care and custody of the minor to visit or have temporary custody. Section 19. Appeal. - No appeal from the decision shall be allowed unless the appellant has filed a motion for reconsideration or new trial within fifteen days from notice of judgment. An aggrieved party may appeal from the decision by filing a Notice of Appeal within fifteen days from notice of the denial of the motion for reconsideration or new trial and serving a copy thereof on the adverse parties. Section 20. Petition for writ of habeas corpus. - A verified petition for a writ of habeas corpus involving custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which the Family Court belongs. However, the petition may be filed with the regular court in the absence of the presiding judge of the Family Court, provided, however, that the regular court shall refer the case to the Family Court as soon as its presiding judge returns to duty. The petition may also be filed with the appropriate regular courts in places where there are no Family Courts. The writ issued by the Family Court or the regular court shall be enforceable in the judicial region where they belong. The petition may likewise be filed with the Supreme Court, Court of Appeals, or with any of its members and, if so granted, the writ shall be enforceable anywhere in the Philippines. The writ may be made returnable to a Family Court or to any regular court within the region where the petitioner resides or where the minor may be found for hearing and decision on the merits. Upon return of the writ, the court shall decide the issue on custody of minors. The appellate court, or the member thereof, issuing the writ shall be furnished a copy of the decision. Section 21. Confidentiality of proceedings. - The hearings on custody of minors may, at the discretion of the court, be closed to the public and the records of the case shall not be released to non-parties without its approval. Section 22. Effectivity. - This Rule shall take effect on May 15, 2003 following its publication in a newspaper of general circulation not later than April 30, 2003. Pasted from
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A.M. No. 03-02-05-SC Rule on Guardianship of Minors Sunday, November 14, 2010 11:29 PM
[A.M. No. 03-02-05-SC 2003-05-01]
RE: PROPOSED RULE ON GUARDIANSHIP OF MINORS RESOL UTI ON Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court’s consideration and approval the Proposed Rule on Guardianship of Minors, the Court Resolved to APPROVE the same.
The Rule shall take effect on May 1, 2003 following its publication in a newspaper of general circulation not later than April 15, 2003. April 1, 2003. <>I>Davide, Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Moralez,Callejo Sr., Azcuna, JJ., concur RULE ON GUARDIANSHIP OF MINORS Section 1. Applicability of the Rule. – This Rule shall apply to petitions for guardianship over the person or property, or both, of a minor. The father and the mother shall jointly exercise legal guardianship over the person and property of their unemancipated common child without the necessity of a court appointment. In such case, this Rule shall be suppletory to the provisions of the Family Code on guardianship. Sec. 2. Who may petition for appointment of guardian. – On grounds authorized by law, any relative or other person on behalf of a minor, or the minor himself if fourteen years of age or over, may petition the Family Court for the appointment of a general guardian over the person or property, or both, of such minor. The petition may also be filed by the Secretary of Social Welfare and Development and by the Secretary of Health in the case of an insane minor who needs to be hospitalized. Sec. 3. Where to file petition. – A petition for guardianship over the person or property, or both, of a minor may be filed in the Family Court of the province or city where the minor actually resides. If he resides in a foreign country, the petition shall be flied with the Family Court of the province or city where his property or any part thereof is situated.
Sec. 4. Grounds of petition.-The grounds for the appointment of a guardian over the person or property, or both, of a minor are the following: (a) death, continued absence, or incapacity of his parents; (b) suspension, deprivation or termination of parental authority;
(c) remarriage of his surviving parent, if the latter Is found unsuitable to exercise parental authority; or (d) when the best interests of the minor so require.
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Sec. 5. Qualifications of guardians. – In appointing a guardian, the court shall consider the guardian’s: (a) moral character; (b) physical, mental and psychological condition; (c) financial status;
(d) relationship of trust with the minor; (e) availability to exercise the powers and duties of a guardian for the full period of the guardianship; (f) lack of conflict of interest with the minor; and
(g) ability to manage the property of the minor. Sec. 6. Who may be appointed guardian of the person or property, or both, of a minor. – In default of parents or a court-appointed guardian, the court may appoint a guardian of the person or property, or both, of a minor, observing as far as practicable, the following order of preference: (a) the surviving grandparent and In case several grandparents survive, the court shall select any of them taking Into account all relevant considerations; (b) the oldest brother or sister of the minor over twenty-one years of age, unless unfit or disqualified; (c) the actual custodian of the minor over twenty-one years of age, unless unfit or disqualified; and (d) any other person, who in the sound discretion of the court, would serve the best interests of the minor.
Sec. 7. Contents of petition. – A petition for the appointment of a general guardian must allege the following: (a) The jurisdictional facts; (b) The name, age and residence of the prospective ward;
(c) The ground rendering the appointment necessary or convenient; (d) The death of the parents of the minor or the termination, deprivation or suspension of their parental authority; (e) The remarriage of the minor’s surviving parent;
(f) The names, ages, and residences of relatives within the 4th civil degree of the minor, and of persons having him in their care and custody; (g) The probable value, character and location of the property of the minor; and (h) The name, age and residence of the person for whom letters of guardianship are prayed.
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The petition shall be verified and accompanied by a certification against forum shopping. However, no defect in the petition or verification shall render void the issuance of letters of guardianship. Sec. 8. Time and notice of hearing. – When a petition for the appointment of a general guardian is filed, the court shall fix a time and place for its hearing, and shall cause reasonable notice to be given to the persons mentioned in the petition, including the minor if he is fourteen years of age or over, and may direct other general or special notice to be given.
Sec. 9. Case study report. – The court shall order a social worker to conduct a case study of the minor and all the prospective guardians and submit his report and recommendation to the court for its guidance before the scheduled hearing. The social worker may intervene on behalf of the minor if he finds that the petition for guardianship should be denied. Sec. 10. Opposition to petition. – Any interested person may contest the petition by filing a written opposition based on such grounds as the majority of the minor or the unsuitability of the person for whom letters are prayed, and pray that the petition be denied, or that letters of guardianship issue to himself, or to any suitable person named in the opposition. Sec. 11. Hearing and order for letters to issue. – At the hearing of the petition, it must be shown that the requirement of notice has been complied with. The prospective ward shall be presented to the court. The court shall hear the evidence of the parties in support of their respective allegations. If warranted, the court shall appoint a suitable guardian of the person or property, or both, of the minor. At the discretion of the court, the hearing on guardianship may be closed to the public and the records of the case shall not be released without its approval.
Sec. 12. When and how a guardian of the property for non-resident minor is appointed; notice. – When the minor resides outside the Philippines but has property in the Philippines, any relative or friend of such minor, or any one interested in his property, in expectancy or otherwise, may petition the Family Court for the appointment of a guardian over the property. Notice of hearing of the petition shall be given to the minor by publication or any other means as the court may deem proper. The court may dispense with the presence of the non-resident minor. If after hearing the court is satisfied that such non-resident is a minor and a guardian is necessary or convenient, it may appoint a guardian over his property. Sec. 13. Service of final and executory judgment or order. – The final and executory judgment or order shall be served upon the Local Civil Registrar of the municipality or city where the minor resides and the Register of Deeds of the place where his property or part thereof is situated shall annotate the same in the corresponding title, and report to the court his compliance within fifteen days from receipt of the order.
Sec. 14. Bond of guardian; amount; conditions.-Before he enters upon the execution of his trust, or letters of guardianship issue, an appointed guardian may be required to post a bond in such sum as the court shall determine and conditioned as follows: (a) To make and return to the court, within three months after the issuance of his letters of guardianship, a true and complete Inventory of all the property, real and personal, of his ward which shall come to his possession or knowledge or to the possession or knowledge of any other person in his behalf; (b) To faithfully execute the duties of his trust, to manage and dispose of the property according to this rule for the best interests of the ward, and to provide for his proper care, custody and education; REMLAW Page 185
rule for the best interests of the ward, and to provide for his proper care, custody and education;
(c) To render a true and Just account of all the property of the ward in his hands, and of all proceeds or interest derived therefrom, and of the management and disposition of the same, at the time designated by this rule and such other times as the court directs; and at the expiration of his trust, to settle his accounts with the court and deliver and pay over all the property, effects, and monies remaining in his hands, or due from him on such settlement, to the person lawfully entitled thereto; and (d) To perform all orders of the court and such other duties as may be required by law. Sec. 15. Where to file the bond; action thereon. – The bond posted by a guardian shall be filed in the Family Court and, In case of breach of any of its conditions, the guardian may be prosecuted in the same proceeding for the benefit of the ward or of any other person legally interested in the property. Whenever necessary, the court may require the guardian to post a new bond and may discharge from further liability the sureties on the old bond after due notice to interested persons, if no injury may result therefrom to those interested in the property. Sec. 16. Bond of parents as guardians of property of minor. – lf the market value of the property or the annual Income of the child exceeds P50,000.00, the parent concerned shall furnish a bond In such amount as the court may determine, but in no case less than ten per centurn of the value of such property or annual income, to guarantee the performance of the obligations prescribed for general guardians. A verified petition for approval of the bond shall be flied in the Family Court of the place where the child resides or, if the child resides in a foreign country, in the Family Court of the place where the property or any part thereof is situated. The petition shall be docketed as a summary special proceeding In which all incidents and issues regarding the performance of the obligations of a general guardian shall be heard and resolved. Sec. 17. General duties of guardian. – A guardian shall have the care and custody of the person of his ward and the management of his property, or only the management of his property. The guardian of the property of a nonresident minor shall have the management of all his property within the Philippines. A guardian shall perform the following duties:
(a) To pay the just debts of the ward out of the personal property and the income of the real property of the ward, If the same is sufficient; otherwise, out of the real property of the ward upon obtaining an order for its sale or encumbrance; (b) To settle all accounts of his ward, and demand, sue for, receive all debts due him, or may, with the approval of the court, compound for the same and give discharges to the debtor on receiving a fair and just dividend of the property and effects; and to appear for and represent the ward in all actions and special proceedings, unless another person is appointed for that purpose; (c) To manage the property of the ward frugally and without waste, and apply the income and profits thereon, insofar as may be necessary, to the comfortable and suitable maintenance of the ward; and if such income and profits be insufficient for that purpose, to sell or encumber the real or personal property, upon being authorized by the court to do so; (d) To consent to a partition of real or personal property owned by the ward jointly or in common with others upon authority granted by the court after hearing, notice to relatives of the ward, and a careful investigation as to the necessity and propriety of the proposed action;
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(e) To submit to the court a verified inventory of the property of his ward within three months after his appointment, and annually thereafter, the rendition of which may be required upon the application of an interested person; (f) To report to the court any property of the ward not included in the inventory which is discovered, or succeeded to, or acquired by the ward within three months after such discovery, succession, or acquisition; and
(g) To render to the court for its approval an accounting of the property one year from his appointment, and every year thereafter or as often as may be required. Sec. 18. Power and duty of the court – The court may: (a) Request the assistance of one or more commissioners in the appraisal of the property of the ward reported in the initial and subsequent inventories; (b) Authorize reimbursement to the guardian, other than a parent, of reasonable expenses incurred in the execution of his trust, and allow payment of compensation for his services as the court may deem just, not exceeding ten per centum of the net income of the ward, if any; otherwise, in such amount the court determines to be a reasonable compensation for his services; and
(c) Upon complaint of the guardian or ward, or of any person having actual or prospective interest in the property at the ward, require any person suspected of having embezzled, concealed, or disposed of any money, goods or interest, or a written instrument belonging to the ward or his property to appear for examination concerning any thereof and issue such orders as would secure the property against such embezzlement, concealment or conveyance. Sec. 19. Petition to sell or encumber property.-When the income of a property under guardianship is insufficient to maintain and educate the ward, or when it is for his benefit that his personal or real property or any part thereof be sold, mortgaged or otherwise encumbered, and the proceeds invested in safe and productive security, or in the improvement or security of other real property, the guardian may file a verified petition setting forth such facts, and praying that an order issue authorizing the sale or encumbrance of the property. Sec. 20. Order to show cause. – If the sale or encumbrance is necessary or would be beneficial to the ward, the court shall order his next of kin and all person/s interested in the property to appear at a reasonable time and place therein specified and show cause why the petition should not be granted. Sec. 21. Hearing on return of order; costs. – At the time and place designated in the order to show cause, the court shall hear the allegations and evidence of the petitioner and next of kin, and other persons interested, together with their witnesses, and grant or deny the petition as the best interests of the ward may require. Sec. 22. Contents of order for sale or encumbrance and its duration; bond. – If, after full examination, it is necessary, or would be beneficial to the ward, to sell or encumber the property, or some portion of it, the court shall order such sale or encumbrance the proceeds of which shall be expended for the maintenance or the education of the ward, or invested as the circumstances may require. The order shall specify the grounds for the sale or encumbrance and may direct that the property ordered sold be disposed of at public sale, subject to such conditions as to the time and manner of payment, and security where a part of the payment is deferred. The original bond of the guardian shall stand as security for the proper appropriation of the proceeds of the sale or encumbrance, but the court may, if deemed expedient, require an additional bond as a condition for the sale or encumbrance. The authority to sell or encumber shall not extend beyond one year, unless renewed by the court. REMLAW Page 187
to sell or encumber shall not extend beyond one year, unless renewed by the court. Sec. 23. Court may order investment of proceeds and direct management of property. – The court may authorize and require the guardian to invest the proceeds of sales or encumbrances, and any other money of his ward in his hands, in real or personal property, for the best interests of the ward, and may make such other orders for the management, investment, and disposition of the property and effects, as circumstances may warrant. Sec. 24. Grounds for removal or resignation of guardian. – When a guardian becomes insane or otherwise incapable of discharging his trust or is found thereafter to be unsuitable, or has wasted or mismanaged the property of the ward, or has failed to render an account or make a return for thirty days after it is due, the court may, upon reasonable notice to the guardian, remove him as such and require him to surrender the property of the ward to the person found to be lawfully entitled thereto. The court may allow the guardian to resign for justifiable causes.
Upon the removal or resignation of the guardian, the court shall appoint a new one. No motion for removal or resignation shall be granted unless the guardian has submitted the proper accounting of the property of the ward and the court has approved the same. Sec. 25. Ground for termination of guardianship. – The court motu proprio or upon verified motion of any person allowed to file a petition for guardianship may terminate the guardianship on the ground that the ward has come of age or has died. The guardian shall notify the court of such fact within ten days of its occurrence. Sec. 26. Service of final and executory judgment or order. – The final and executory judgment or order shall be served upon the Local Civil Registrar of the municipality or city where the minor resides and the Register of Deeds of the province or city where his property or any part thereof is situated. Both the Local Civil Registrar and’ the Register of Deeds shall enter the final and executory judgment or order in the appropriate books in their offices. Sec. 27. Effect of the rule. – This Rule amends Rules 92 to 97 inclusive of the Rules of Court on guardianship of minors. Guardianship of incompetents who are not minors shall continue to be under the jurisdiction of the regular courts and governed by the Rules of Court. Sec. 28. Effectivity. - This Rule shall take effect on May 1, 2003 following its publication in a newspaper of general circulation not later than April 15, 2003. Pasted from
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A.M. No. 02-6-02-SC Rule on Adoption Sunday, November 14, 2010 11:29 PM
[A.m. No. 02-6-02-SC 2002-08-02]
RULE ON ADOPTION A. DOMESTIC ADOPTION
Section 1. Applicability of the Rule. – This Rule covers the domestic adoption of Filipino children. Sec. 2. Objectives. – (a) The best interests of the child shall be the paramount consideration in all matters relating to his care, custody and adoption, in accordance with Philippine laws, the United Nations (UN) Convention on the Rights of the Child, UN Declaration on Social and Legal Principles Relating to the Protection and Welfare of Children with Special Reference to Foster Placement and Adoption, Nationally and Internationally, and the Hague Convention on the Protection of Children and Cooperation in Respect of Inter-country Adoption. (b) The State shall provide alternative protection and assistance through foster care or adoption for every child who is a foundling, neglected, orphaned, or abandoned. To this end, the State shall: (i) (i) ensure that every child remains under the care and custody of his parents and is provided with love, care, understanding and security for the full and harmonious development of his personality. Only when such efforts prove insufficient and no appropriate placement or adoption within the child’s extended family is available shall adoption by an unrelated person be considered. (ii) safeguard the biological parents from making hasty decisions in relinquishing their parental authority over their child;
(iii) (iii) prevent the child from unnecessary separation from his biological parents; (iv) conduct public information and educational campaigns to promote a positive environment for adoption; (v) ensure that government and private sector agencies have the capacity to handle adoption inquiries, process domestic adoption applications and offer adoption-related services including, but not limited to, parent preparation and post-adoption education and counseling; (vi) encourage domestic adoption so as to preserve the child’s identity and culture in his native land, and only when this is not available shall inter-country adoption be considered as a last resort; and (vii) protect adoptive parents from attempts to disturb their parental authority and custody over their adopted child. Any voluntary or involuntary termination of parental authority shall be administratively or judicially declared so as to establish the status of the child as “legally available for adoption” and his custody transferred to the Department of Social Welfare and Development or to any duly licensed and accredited child-placing or child-caring agency, which entity shall be authorized to take steps for the permanent placement of the child.
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Sec. 3. Definition of Terms. – For purposes of this Rule: (a) (a) “Child” is a person below eighteen (18) years of age at the time of the filing of the petition for adoption. (b) (b) “A child legally available for adoption” refers to a child who has been voluntarily or involuntarily committed to the Department or to a duly licensed and accredited child-placing or child-caring agency, freed of the parental authority of his biological parents, or in case of rescission of adoption, his guardian or adopter(s). (c) (c) “Voluntarily committed child” is one whose parents knowingly and willingly relinquish parental authority over him in favor of the Department. (d) (d) “Involuntarily committed child” is one whose parents, known or unknown, have been permanently and judicially deprived of parental authority over him due to abandonment; substantial, continuous or repeated neglect and abuse; or incompetence to discharge parental responsibilities.
(e) (e) “Foundling” refers to a deserted or abandoned infant or child whose parents, guardian or relatives are unknown; or a child committed to an orphanage or charitable or similar institution with unknown facts of birth and parentage and registered in the Civil Register as a “foundling.” (f) (f) “Abandoned child” refers to one who has no proper parental care or guardianship or whose parents have deserted him for a period of at least six (6) continuous months and has been judicially declared as such. (g) (g) “Dependent child” refers to one who is without a parent, guardian or custodian or one whose parents, guardian or other custodian for good cause desires to be relieved of his care and custody and is dependent upon the public for support. (h) (h) “Neglected child” is one whose basic needs have been deliberately not attended to or inadequately attended to, physically or emotionally, by his parents or guardian. (i) (i) “Physical neglect” occurs when the child is malnourished, ill-clad and without proper shelter.
(j) (j) “Emotional neglect” exists when a child is raped, seduced, maltreated, exploited, overworked or made to work under conditions not conducive to good health or made to beg in the streets or public places, or placed in moral danger, or exposed to drugs, alcohol, gambling, prostitution and other vices. (k) (k) “Child-placement agency” refers to an agency duly licensed and accredited by the Department to provide comprehensive child welfare services including, but not limited to, receiving applications for adoption, evaluating the prospective adoptive parents and preparing the adoption home study report. (l) (l) “Child-caring agency” refers to an agency duly licensed and accredited by the Department that provides 24-hour residential care services for abandoned, orphaned, neglected or voluntarily committed children. (m) (m) “Department” refers to the Department of Social Welfare and Development. (n) (n) “Deed of Voluntary Commitment” refers to the written and notarized instrument relinquishing parental authority and committing the child to the care and custody of the REMLAW Page 190
relinquishing parental authority and committing the child to the care and custody of the Department executed by the child’s biological parents or in their absence, mental incapacity or death, by the child’s legal guardian, to be witnessed by an authorized representative of the Department after counseling and other services have been made available to encourage the biological parents to keep the child. (o) (o) “Child Study Report” refers to a study made by the court social worker of the child’s legal status, placement history, psychological, social, spiritual, medical, ethno-cultural background and that of his biological family needed in determining the most appropriate placement for him. (p) (p) “Home Study Report” refers to a study made by the court social worker of the motivation and capacity of the prospective adoptive parents to provide a home that meets the needs of a child. (q) (q) “Supervised trial custody” refers to the period of time during which a social worker oversees the adjustment and emotional readiness of both adopters and adoptee in stabilizing their filial relationship. (r) (r) “Licensed Social Worker” refers to one who possesses a degree in bachelor of science in social work as a minimum educational requirement and who has passed the government licensure examination for social workers as required by Republic Act No. 4373. (s) (s) “Simulation of birth” is the tampering of the civil registry to make it appear in the birth records that a certain child was born to a person who is not his biological mother, thus causing such child to lose his true identity and status. (t) (t) “Biological Parents” refer to the child’s mother and father by nature. (u) (u) “Pre-Adoption Services” refer to psycho-social services provided by professionally-trained social workers of the Department, the social services units of local governments, private and government health facilities, Family Courts, licensed and accredited child-caring and childplacement agencies and other individuals or entities involved in adoption as authorized by the Department.
(v) (v) “Residence” means a person’s actual stay in the Philippines for three (3) continuous years immediately prior to the filing of a petition for adoption and which is maintained until the adoption decree is entered. Temporary absences for professional, business, health, or emergency reasons not exceeding sixty (60) days in one (1) year does not break the continuity requirement. (w) (w) “Alien” refers to any person, not a Filipino citizen, who enters and remains in the Philippines and is in possession of a valid passport or travel documents and visa. SEC. 4. Who may adopt. – The following may adopt:
(1) Any Filipino citizen of legal age, in possession of full civil capacity and legal rights, of good moral character, has not been convicted of any crime involving moral turpitude; who is emotionally and psychologically capable of caring for children, at least sixteen (16) years older than the adoptee, and who is in a position to support and care for his children in keeping with the means of the family. The requirement of a 16-year difference between the age of the adopter and adoptee may be waived when the adopter is the biological parent of the adoptee or is the spouse of the adoptee’s parent; (2) Any alien possessing the same qualifications as above-stated for Filipino nationals: Provided, That his country has diplomatic relations with the Republic of the Philippines, that he has been living in the Philippines for at least three (3) continuous years prior to the filing of the petition for REMLAW Page 191
living in the Philippines for at least three (3) continuous years prior to the filing of the petition for adoption and maintains such residence until the adoption decree is entered, that he has been certified by his diplomatic or consular office or any appropriate government agency to have the legal capacity to adopt in his country, and that his government allows the adoptee to enter his country as his adopted child. Provided, further, That the requirements on residency and certification of the alien’s qualification to adopt in his country may be waived for the following: (i) a former Filipino citizen who seeks to adopt a relative within the fourth (4th) degree of consanguinity or affinity; or (ii) one who seeks to adopt the legitimate child of his Filipino spouse; or (iii) one who is married to a Filipino citizen and seeks to adopt jointly with his spouse a relative within the fourth (4th) degree of consanguinity or affinity of the Filipino spouse. (3) The guardian with respect to the ward after the termination of the guardianship and clearance of his financial accountabilities. Husband and wife shall jointly adopt, except in the following cases:
(i) if one spouse seeks to adopt the legitimate child of one spouse by the other spouse; or (ii) if one spouse seeks to adopt his own illegitimate child: Provided, however, That the other spouse has signified his consent thereto; or (iii) if the spouses are legally separated from each other.
In case husband and wife jointly adopt or one spouse adopts the illegitimate child of the other, joint parental authority shall be exercised by the spouses.
SEC. 5. Who may be adopted. – The following may be adopted: (1) (1) Any person below eighteen (18) years of age who has been voluntarily committed to the Department under Articles 154, 155 and 156 of P.D. No. 603 or judicially declared available for adoption;
(2) (2) The legitimate child of one spouse, by the other spouse; (3) (3) An illegitimate child, by a qualified adopter to raise the status of the former to that of legitimacy; (4) (4) A person of legal age regardless of civil status, if, prior to the adoption, said person has been consistently considered and treated by the adopters as their own child since minority; (5) (5) A child whose adoption has been previously rescinded; or (6) (6) A child whose biological or adoptive parents have died: Provided, That no proceedings shall be initiated within six (6) months from the time of death of said parents. (7) (7) A child not otherwise disqualified by law or these rules.
Sec. 6. Venue. – The petition for adoption shall be filed with the Family Court of the province or city REMLAW Page 192
Sec. 6. Venue. – The petition for adoption shall be filed with the Family Court of the province or city where the prospective adoptive parents reside.
Sec. 7. Contents of the Petition. – The petition shall be verified and specifically state at the heading of the initiatory pleading whether the petition contains an application for change of name, rectification of simulated birth, voluntary or involuntary commitment of children, or declaration of child as abandoned, dependent or neglected.
1) 1) If the adopter is a Filipino citizen, the petition shall allege the following: (a) (a) The jurisdictional facts;
(b) (b) That the petitioner is of legal age, in possession of full civil capacity and legal rights; is of good moral character; has not been convicted of any crime involving moral turpitude; is emotionally and psychologically capable of caring for children; is at least sixteen (16) years older than the adoptee, unless the adopter is the biological parent of the adoptee or is the spouse of the adoptee’s parent; and is in a position to support and care for his children in keeping with the means of the family and has undergone pre-adoption services as required by Section 4 of Republic Act No. 8552. 2) 2) If the adopter is an alien, the petition shall allege the following:
(a) (a) The jurisdictional facts; (b) (b) Sub-paragraph 1(b) above;
(c) (c) That his country has diplomatic relations with the Republic of the Philippines; (d) (d) That he has been certified by his diplomatic or consular office or any appropriate government agency to have the legal capacity to adopt in his country and his government allows the adoptee to enter his country as his adopted child and reside there permanently as an adopted child; and
(e) (e) That he has been living in the Philippines for at least three (3) continuous years prior to the filing of the petition and he maintains such residence until the adoption decree is entered. The requirements of certification of the alien’s qualification to adopt in his country and of residency may be waived if the alien:
(i) is a former Filipino citizen who seeks to adopt a relative within the fourth degree of consanguinity or affinity; or (ii) seeks to adopt the legitimate child of his Filipino spouse; or (iii) is married to a Filipino citizen and seeks to adopt jointly with his spouse a relative within the fourth degree of consanguinity or affinity of the Filipino spouse. 3) 3) If the adopter is the legal guardian of the adoptee, the petition shall allege that guardianship had been terminated and the guardian had cleared his financial accountabilities. 4) 4) If the adopter is married, the spouse shall be a co-petitioner for joint adoption except if: (a) one spouse seeks to adopt the legitimate child of the other, or REMLAW Page 193
(a) one spouse seeks to adopt the legitimate child of the other, or
(b) if one spouse seeks to adopt his own illegitimate child and the other spouse signified written consent thereto, or (c) if the spouses are legally separated from each other. 5) 5) If the adoptee is a foundling, the petition shall allege the entries which should appear in his birth certificate, such as name of child, date of birth, place of birth, if known; sex, name and citizenship of adoptive mother and father, and the date and place of their marriage. 6) 6) If the petition prays for a change of name, it shall also state the cause or reason for the change of name. In all petitions, it shall be alleged:
(a) The first name, surname or names, age and residence of the adoptee as shown by his record of birth, baptismal or foundling certificate and school records. (b) That the adoptee is not disqualified by law to be adopted. (c) The probable value and character of the estate of the adoptee.
(d) The first name, surname or names by which the adoptee is to be known and registered in the Civil Registry. A certification of non-forum shopping shall be included pursuant to Section 5, Rule 7 of the 1997 Rules of Civil Procedure.
Sec. 8. Rectification of Simulated Birth. – In case the petition also seeks rectification of a simulated of birth, it shall allege that: (a) (a) Petitioner is applying for rectification of a simulated birth; (b) (b) The simulation of birth was made prior to the date of effectivity of Republic Act No. 8552 and the application for rectification of the birth registration and the petition for adoption were filed within five years from said date; (c) (c) The petitioner made the simulation of birth for the best interests of the adoptee; and
(d) (d) The adoptee has been consistently considered and treated by petitioner as his own child.
Sec. 9. Adoption of a foundling, an abandoned, dependent or neglected child. – In case the adoptee is a foundling, an abandoned, dependent or neglected child, the petition shall allege: (a) (a) The facts showing that the child is a foundling, abandoned, dependent or neglected; (b) (b) The names of the parents, if known, and their residence. If the child has no known or living parents, then the name and residence of the guardian, if any; (c) (c) The name of the duly licensed child-placement agency or individual under whose care the child is in custody; and
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child is in custody; and (d) (d) That the Department, child-placement or child-caring agency is authorized to give its consent.
Sec. 10. Change of name. – In case the petition also prays for change of name, the title or caption must contain: (a) (a) The registered name of the child; (b) (b) Aliases or other names by which the child has been known; and (c) (c) The full name by which the child is to be known.
Sec. 11. Annexes to the Petition. – The following documents shall be attached to the petition: A. Birth, baptismal or foundling certificate, as the case may be, and school records showing the name, age and residence of the adoptee;
B. Affidavit of consent of the following: 1. The adoptee, if ten (10) years of age or over; 2. The biological parents of the child, if known, or the legal guardian, or the child-placement agency, child-caring agency, or the proper government instrumentality which has legal custody of the child; 3. The legitimate and adopted children of the adopter and of the adoptee, if any, who are ten (10) years of age or over; 4. The illegitimate children of the adopter living with him who are ten (10) years of age or over; and
5. The spouse, if any, of the adopter or adoptee. C. Child study report on the adoptee and his biological parents; D. If the petitioner is an alien, certification by his diplomatic or consular office or any appropriate government agency that he has the legal capacity to adopt in his country and that his government allows the adoptee to enter his country as his own adopted child unless exempted under Section 4(2); E. Home study report on the adopters. If the adopter is an alien or residing abroad but qualified to adopt, the home study report by a foreign adoption agency duly accredited by the Inter-Country Adoption Board; and F. Decree of annulment, nullity or legal separation of the adopter as well as that of the biological parents of the adoptee, if any.
Sec. 12. Order of Hearing. – If the petition and attachments are sufficient in form and substance, the court shall issue an order which shall contain the following: (1) the registered name of the adoptee in the birth certificate and the names by which the REMLAW Page 195
(1) the registered name of the adoptee in the birth certificate and the names by which the adoptee has been known which shall be stated in the caption; (2) the purpose of the petition; (3) the complete name which the adoptee will use if the petition is granted; (4) the date and place of hearing which shall be set within six (6) months from the date of the issuance of the order and shall direct that a copy thereof be published before the date of hearing at least once a week for three successive weeks in a newspaper of general circulation in the province or city where the court is situated; Provided, that in case of application for change of name, the date set for hearing shall not be within four (4) months after the last publication of the notice nor within thirty (30) days prior to an election. The newspaper shall be selected by raffle under the supervision of the Executive Judge.
(5) a directive to the social worker of the court, the social service office of the local government unit or any child-placing or child-caring agency, or the Department to prepare and submit child and home study reports before the hearing if such reports had not been attached to the petition due to unavailability at the time of the filing of the latter; and (6) a directive to the social worker of the court to conduct counseling sessions with the biological parents on the matter of adoption of the adoptee and submit her report before the date of hearing. At the discretion of the court, copies of the order of hearing shall also be furnished the Office of the Solicitor General through the provincial or city prosecutor, the Department and the biological parents of the adoptee, if known. If a change in the name of the adoptee is prayed for in the petition, notice to the Solicitor General shall be mandatory.
Sec. 13. Child and Home Study Reports. – In preparing the child study report on the adoptee, the concerned social worker shall verify with the Civil Registry the real identity and registered name of the adoptee. If the birth of the adoptee was not registered with the Civil Registry, it shall be the responsibility of the social worker to register the adoptee and secure a certificate of foundling or late registration, as the case may be. The social worker shall establish that the child is legally available for adoption and the documents in support thereof are valid and authentic, that the adopter has sincere intentions and that the adoption shall inure to the best interests of the child. In case the adopter is an alien, the home study report must show the legal capacity to adopt and that his government allows the adoptee to enter his country as his adopted child in the absence of the certification required under Section 7(b) of Republic Act No. 8552. If after the conduct of the case studies, the social worker finds that there are grounds to deny the petition, he shall make the proper recommendation to the court, furnishing a copy thereof to the petitioner.
Sec. 14. Hearing. – Upon satisfactory proof that the order of hearing has been published and jurisdictional requirements have been complied with, the court shall proceed to hear the petition. The petitioner and the adoptee must personally appear and the former must testify before the presiding REMLAW Page 196
petitioner and the adoptee must personally appear and the former must testify before the presiding judge of the court on the date set for hearing. The court shall verify from the social worker and determine whether the biological parent has been properly counseled against making hasty decisions caused by strain or anxiety to give up the child; ensure that all measures to strengthen the family have been exhausted; and ascertain if any prolonged stay of the child in his own home will be inimical to his welfare and interest.
Sec. 15. Supervised Trial Custody. – Before issuance of the decree of adoption, the court shall give the adopter trial custody of the adoptee for a period of at least six (6) months within which the parties are expected to adjust psychologically and emotionally to each other and establish a bonding relationship. The trial custody shall be monitored by the social worker of the court, the Department, or the social service of the local government unit, or the child-placement or child-caring agency which submitted and prepared the case studies. During said period, temporary parental authority shall be vested in the adopter. The court may, motu proprio or upon motion of any party, reduce the period or exempt the parties if it finds that the same shall be for the best interests of the adoptee, stating the reasons therefor.
An alien adopter however must complete the 6-month trial custody except the following: a) a former Filipino citizen who seeks to adopt a relative within the fourth (4th) degree of consanguinity or affinity; or b) one who seeks to adopt the legitimate child of his Filipino spouse; or
c) one who is married to a Filipino citizen and seeks to adopt jointly with his or her spouse the latter’s relative within the fourth (4th) degree of consanguinity or affinity. If the child is below seven (7) years of age and is placed with the prospective adopter through a preadoption placement authority issued by the Department, the court shall order that the prospective adopter shall enjoy all the benefits to which the biological parent is entitled from the date the adoptee is placed with him. The social worker shall submit to the court a report on the result of the trial custody within two weeks after its termination.
Sec. 16. Decree of Adoption. – If the supervised trial custody is satisfactory to the parties and the court is convinced from the trial custody report and the evidence adduced that the adoption shall redound to the best interests of the adoptee, a decree of adoption shall be issued which shall take effect as of the date the original petition was filed even if the petitioners die before its issuance. The decree shall: A. State the name by which the child is to be known and registered;
B. Order: 1) the Clerk of Court to issue to the adopter a certificate of finality upon expiration of the 15-day reglementary period within which to appeal; 2) the adopter to submit a certified true copy of the decree of adoption and the certificate of finality to the Civil Registrar where the child was originally registered within thirty (30) days from REMLAW Page 197
finality to the Civil Registrar where the child was originally registered within thirty (30) days from receipt of the certificate of finality. In case of change of name, the decree shall be submitted to the Civil Registrar where the court issuing the same is situated. 3) 3) the Civil Registrar of the place where the adoptee was registered: a. to annotate on the adoptee’s original certificate of birth the decree of adoption within thirty (30) days from receipt of the certificate of finality;
b. to issue a certificate of birth which shall not bear any notation that it is a new or amended certificate and which shall show, among others, the following: registry number, date of registration, name of child, sex, date of birth, place of birth, name and citizenship of adoptive mother and father, and the date and place of their marriage, when applicable; c. to seal the original certificate of birth in the civil registry records which can be opened only upon order of the court which issued the decree of adoption; and d. to submit to the court issuing the decree of adoption proof of compliance with all the foregoing within thirty days from receipt of the decree.
If the adoptee is a foundling, the court shall order the Civil Registrar where the foundling was registered, to annotate the decree of adoption on the foundling certificate and a new birth certificate shall be ordered prepared by the Civil Registrar in accordance with the decree.
Sec. 17. Book of Adoptions. – The Clerk of Court shall keep a book of adoptions showing the date of issuance of the decree in each case, compliance by the Civil Registrar with Section 16(B)(3) and all incidents arising after the issuance of the decree.
Sec. 18. Confidential Nature of Proceedings and Records. –All hearings in adoption cases, after compliance with the jurisdictional requirements shall be confidential and shall not be open to the public. All records, books and papers relating to the adoption cases in the files of the court, the Department, or any other agency or institution participating in the adoption proceedings shall be kept strictly confidential. If the court finds that the disclosure of the information to a third person is necessary for security reasons or for purposes connected with or arising out of the adoption and will be for the best interests of the adoptee, the court may, upon proper motion, order the necessary information to be released, restricting the purposes for which it may be used.
Sec. 19. Rescission of Adoption of the Adoptee. – The petition shall be verified and filed by the adoptee who is over eighteen (18) years of age, or with the assistance of the Department, if he is a minor, or if he is over eighteen (18) years of age but is incapacitated, by his guardian or counsel. The adoption may be rescinded based on any of the following grounds committed by the adopter:
1) repeated physical and verbal maltreatment by the adopter despite having undergone counseling; 2) attempt on the life of the adoptee; 3) sexual assault or violence; or
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3) sexual assault or violence; or 4) abandonment or failure to comply with parental obligations. Adoption, being in the best interests of the child, shall not be subject to rescission by the adopter. However, the adopter may disinherit the adoptee for causes provided in Article 919 of the Civil Code.
Sec. 20. Venue. – The petition shall be filed with the Family Court of the city or province where the adoptee resides.
Sec. 21. Time within which to file petition. – The adoptee, if incapacitated, must file the petition for rescission or revocation of adoption within five (5) years after he reaches the age of majority, or if he was incompetent at the time of the adoption, within five (5) years after recovery from such incompetency.
Sec. 22. Order to Answer. – The court shall issue an order requiring the adverse party to answer the petition within fifteen (15) days from receipt of a copy thereof. The order and copy of the petition shall be served on the adverse party in such manner as the court may direct.
Sec. 23. Judgment. – If the court finds that the allegations of the petition are true, it shall render judgment ordering the rescission of adoption, with or without costs, as justice requires. The court shall order that the parental authority of the biological parent of the adoptee, if known, or the legal custody of the Department shall be restored if the adoptee is still a minor or incapacitated and declare that the reciprocal rights and obligations of the adopter and the adoptee to each other shall be extinguished. The court shall further declare that successional rights shall revert to its status prior to adoption, as of the date of judgment of judicial rescission. Vested rights acquired prior to judicial rescission shall be respected.
It shall also order the adoptee to use the name stated in his original birth or foundling certificate. The court shall further order the Civil Registrar where the adoption decree was registered to cancel the new birth certificate of the adoptee and reinstate his original birth or foundling certificate.
Sec. 24. Service of Judgment. – A certified true copy of the judgment together with a certificate of finality issued by the Branch Clerk of the Court which rendered the decision in accordance with the preceding Section shall be served by the petitioner upon the Civil Registrar concerned within thirty (30) days from receipt of the certificate of finality. The Civil Registrar shall forthwith enter the rescission decree in the register and submit proof of compliance to the court issuing the decree and the Clerk of Court within thirty (30) days from receipt of the decree. The Clerk of Court shall enter the compliance in accordance with Section 17 hereof.
SEC. 25. Repeal. - This supersedes Rule 99 on Adoption and Rule 100 of the Rules of Court.
B. Inter-Country Adoption
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B. Inter-Country Adoption
Sec. 26. Applicability. – The following sections apply to inter-country adoption of Filipino children by foreign nationals and Filipino citizens permanently residing abroad.
SEC. 27. Objectives. – The State shall: a) a) consider inter-country adoption as an alternative means of child care, if the child cannot be placed in a foster or an adoptive family or cannot, in any suitable manner, be cared for in the Philippines; b) ensure that the child subject of inter-country adoption enjoys the same protection accorded to children in domestic adoption; and c) take all measures to ensure that the placement arising therefrom does not result in improper financial gain for those involved.
Sec. 28. Where to File Petition. – A verified petition to adopt a Filipino child may be filed by a foreign national or Filipino citizen permanently residing abroad with the Family Court having jurisdiction over the place where the child resides or may be found.
It may be filed directly with the Inter-Country Adoption Board.
Sec. 29. Who may be adopted. – Only a child legally available for domestic adoption may be the subject of inter-country adoption. Sec. 30. Contents of Petition. – The petitioner must allege: a) a) his age and the age of the child to be adopted, showing that he is at least twenty-seven (27) years of age and at least sixteen (16) years older than the child to be adopted at the time of application, unless the petitioner is the parent by nature of the child to be adopted or the spouse of such parent, in which case the age difference does not apply; b) b) if married, the name of the spouse who must be joined as co-petitioner except when the adoptee is a legitimate child of his spouse; c) c) that he has the capacity to act and assume all rights and responsibilities of parental authority under his national laws, and has undergone the appropriate counseling from an accredited counselor in his country; d) d) that he has not been convicted of a crime involving moral turpitude;
e) e) that he is eligible to adopt under his national law; f) f) that he can provide the proper care and support and instill the necessary moral values and example to all his children, including the child to be adopted; g) g) that he agrees to uphold the basic rights of the child, as embodied under Philippine laws and the U. N. Convention on the Rights of the Child, and to abide by the rules and regulations issued to implement the provisions of Republic Act No. 8043; h) h) that he comes from a country with which the Philippines has diplomatic relations and whose REMLAW Page 200
h) h) that he comes from a country with which the Philippines has diplomatic relations and whose government maintains a similarly authorized and accredited agency and that adoption of a Filipino child is allowed under his national laws; and i) i) that he possesses all the qualifications and none of the disqualifications provided in this Rule, in Republic Act No. 8043 and in all other applicable Philippine laws.
Sec. 31. Annexes. - The petition for adoption shall contain the following annexes written and officially translated in English: a) a) Birth certificate of petitioner;
b) b) Marriage contract, if married, and, if applicable, the divorce decree, or judgment dissolving the marriage; c) c) Sworn statement of consent of petitioner’s biological or adopted children above ten (10) years of age; d) d) Physical, medical and psychological evaluation of the petitioner certified by a duly licensed physician and psychologist; e) e) Income tax returns or any authentic document showing the current financial capability of the petitioner; f) f) Police clearance of petitioner issued within six (6) months before the filing of the petitioner;
g) g) Character reference from the local church/minister, the petitioner’s employer and a member of the immediate community who have known the petitioner for at least five (5) years; h) h) Full body postcard-size pictures of the petitioner and his immediate family taken at least six (6) months before the filing of the petition.
Sec. 32. Duty of Court. – The court, after finding that the petition is sufficient in form and substance and a proper case for inter-country adoption, shall immediately transmit the petition to the Inter-Country Adoption Board for appropriate action.
SEC. 33. Effectivity. - This Rule shall take effect on August 22, 2002 following its publication in a newspaper of general circulation. Pasted from
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Summary Proceedings under the Family Code, Title XI, Chapters 1 to 3 Sunday, November 14, 2010 11:30 PM
TITLE XI SUMMARY JUDICIAL PROCEEDINGS IN THE FAMILY LAW Chapter 1. Prefatory Provisions Art. 238. Until modified by the Supreme Court, the procedural rules provided for in this Title shall apply as regards separation in fact between husband and wife, abandonment by one of the other, and incidents involving parental authority. (n) Chapter 2. Separation in Fact Art. 239. When a husband and wife are separated in fact, or one has abandoned the other and one of them seeks judicial authorization for a transaction where the consent of the other spouse is required by law but such consent is withheld or cannot be obtained, a verified petition may be filed in court alleging the foregoing facts. The petition shall attach the proposed deed, if any, embodying the transaction, and, if none, shall describe in detail the said transaction and state the reason why the required consent thereto cannot be secured. In any case, the final deed duly executed by the parties shall be submitted to and approved by the court. (n) Art. 240. Claims for damages by either spouse, except costs of the proceedings, may be litigated only in a separate action. (n) Art. 241. Jurisdiction over the petition shall, upon proof of notice to the other spouse, be exercised by the proper court authorized to hear family cases, if one exists, or in the regional trial court or its equivalent sitting in the place where either of the spouses resides. (n) Art. 242. Upon the filing of the petition, the court shall notify the other spouse, whose consent to the transaction is required, of said petition, ordering said spouse to show cause why the petition should not be granted, on or before the date set in said notice for the initial conference. The notice shall be accompanied by a copy of the petition and shall be served at the last known address of the spouse concerned. (n) Art. 243. A preliminary conference shall be conducted by the judge personally without the parties being assisted by counsel. After the initial conference, if the court deems it useful, the parties may be assisted by counsel at the succeeding conferences and hearings. (n) Art. 244. In case of non-appearance of the spouse whose consent is sought, the court shall inquire into the reasons for his failure to appear, and shall require such appearance, if possible. (n) Art. 245. If, despite all efforts, the attendance of the non-consenting spouse is not secured, the court may proceed ex parte and render judgment as the facts and circumstances may warrant. In any case, the judge shall endeavor to protect the interests of the non-appearing spouse. (n) Art. 246. If the petition is not resolved at the initial conference, said petition shall be decided in a summary hearing on the basis of affidavits, documentary evidence or oral testimonies at the sound discretion of the court. If testimony is needed, the court shall specify the witnesses to be heard and the subject-matter of their testimonies, directing the parties to present said witnesses. (n) Art. 247. The judgment of the court shall be immediately final and executory. (n) Art. 248. The petition for judicial authority to administer or encumber specific separate property of the abandoning spouse and to use the fruits or proceeds thereof for the support of the family shall also be governed by these rules. (n) Chapter 3. Incidents Involving Parental Authority Art. 249. Petitions filed under Articles 223, 225 and 235 of this Code involving parental authority shall be verified.. (n) Art. 250. Such petitions shall be verified and filed in the proper court of the place where the child resides. (n) Art. 251. Upon the filing of the petition, the court shall notify the parents or, in their absence or REMLAW Page 202
Art. 251. Upon the filing of the petition, the court shall notify the parents or, in their absence or incapacity, the individuals, entities or institutions exercising parental authority over the child. (n) Art. 252. The rules in Chapter 2 hereof shall also govern summary proceedings under this Chapter insofar as they are applicable. (n) Pasted from
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Chapter 4 Sunday, November 14, 2010 11:30 PM
Art. 51(action of a child for presumptive legitime), Art. 69 (judicial declaration of family domicile in case of disagreement of the spouses), Art. 73 (spouse’s objection to the profession of the other spouse), Arts. 96 and 124 (annulment of husband’s decision in the administration and enjoyment of community or conjugal property; appointment of spouse as sole administrator except cases of “incompetent” other spouse which shall be under Rules 93 and 95) and Art. 217 (entrusting children to homes and orphanages).
Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the spouse present has a well-founded belief that the absent spouse was already dead. In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient. For the purpose of contracting the subsequent marriage under the preceding paragraph the spouse present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse. (83a) Art. 51. In said partition, the value of the presumptive legitimes of all common children, computed as of the date of the final judgment of the trial court, shall be delivered in cash, property or sound securities, unless the parties, by mutual agreement judicially approved, had already provided for such matters. The children or their guardian or the trustee of their property may ask for the enforcement of the judgment. The delivery of the presumptive legitimes herein prescribed shall in no way prejudice the ultimate successional rights of the children accruing upon the death of either of both of the parents; but the value of the properties already received under the decree of annulment or absolute nullity shall be considered as advances on their legitime. (n) Art. 69. The husband and wife shall fix the family domicile. In case of disagreement, the court shall decide. The court may exempt one spouse from living with the other if the latter should live abroad or there are other valid and compelling reasons for the exemption. However, such exemption shall not apply if the same is not compatible with the solidarity of the family. (110a) Art. 73. Either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other. The latter may object only on valid, serious, and moral grounds. In case of disagreement, the court shall decide whether or not: (1) The objection is proper, and (2) Benefit has occurred to the family prior to the objection or thereafter. If the benefit accrued prior to the objection, the resulting obligation shall be enforced against the separate property of the spouse who has not obtained consent. The foregoing provisions shall not prejudice the rights of creditors who acted in good faith. (117a) Section 4. Ownership, Administrative, Enjoyment and Disposition of the Community Property Art. 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (206a) Section 5. Administration of the Conjugal Partnership Property Art. 124. The administration and enjoyment of the conjugal partnership shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (165a) Art. 217. In case of foundlings, abandoned neglected or abused children and other children similarly situated, parental authority shall be entrusted in summary judicial proceedings to heads of children's homes, orphanages and similar institutions duly accredited by the proper government agency. (314a)
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Madrinan v. Madrinan GR 159374 Jul 12, 2007 Sunday, November 14, 2010 11:30 PM
FELIPE N. MADRIÑAN, G.R. No. 159374 Petitioner, Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ,* - v e r s u s - CORONA, AZCUNA and GARCIA,** JJ. FRANCISCA R. MADRIÑAN, Respondent. Promulgated: July 12, 2007 x-- - - - -- - - - -- - - - -- - - - -- - - - -- - - - - -- - - - -- - - - - x DE C I S I O N CORONA, J.: When a family breaks up, the children are always the victims. The ensuing battle for custody of the minor children is not only a thorny issue but also a highly sensitive and heart-rending affair. Such is the case here. Even the usually technical subject of jurisdiction became emotionally charged. Petitioner Felipe N. Madriñan and respondent Francisca R. Madriñan were married on July 7, 1993 in Parañaque City. They resided in San Agustin Village, Brgy. Moonwalk, Parañaque City. Their union was blessed with three sons and a daughter: Ronnick, born on January 30, 1994; Phillip, born on November 19, 1996; Francis Angelo, born on May 12, 1998 and Krizia Ann, born on December 12, 2000. After a bitter quarrel on May 18, 2002, petitioner allegedly left their conjugal abode and took their three sons with him to Ligao City, Albay and subsequently to Sta. Rosa, Laguna. Respondent sought the help of her parents and parents-in-law to patch things up between her and petitioner to no avail. She then brought the matter to the Lupong Tagapamayapa in their barangay but this too proved futile. Thus respondent filed a petition for habeas corpus of Ronnick, Phillip and Francis Angelo in the Court of Appeals, alleging that petitioner’s act of leaving the conjugal dwelling and going to Albay and then to Laguna disrupted the education of their children and deprived them of their mother’s care. She prayed that petitioner be ordered to appear and produce their sons before the court and to explain why they should not be returned to her custody. Petitioner and respondent appeared at the hearing on September 17, 2002. They initially agreed that petitioner would return the custody of their three sons to respondent. Petitioner, however, had a change of heart[1] and decided to file a memorandum. On September 3, 2002, petitioner filed his memorandum[2] alleging that respondent was unfit to take custody of their three sons because she was habitually drunk, frequently went home late at night or in the wee hours of the morning, spent much of her time at a beer house and neglected her duties as a mother. He claimed that, after their squabble on May 18, 2002, it was respondent who left, taking their daughter with her. It was only then that he went to Sta. Rosa, Laguna where he worked as a tricycle driver. He submitted a certification from the principal of the Dila Elementary School in Sta. Rosa, Laguna that Ronnick and Phillip were enrolled there. He also questioned the jurisdiction of the Court of Appeals claiming that under Section 5(b) of RA 8369 (otherwise known as the “Family Courts Act of 1997”) family REMLAW Page 205
claiming that under Section 5(b) of RA 8369 (otherwise known as the “Family Courts Act of 1997”) family courts have exclusive original jurisdiction to hear and decide the petition for habeas corpus filed by respondent.[3] For her part, respondent averred that she did not leave their home on May 18, 2002 but was driven out by petitioner. She alleged that it was petitioner who was an alcoholic, gambler and drug addict. Petitioner’s alcoholism and drug addiction impaired his mental faculties, causing him to commit acts of violence against her and their children. The situation was aggravated by the fact that their home was adjacent to that of her in-laws who frequently meddled in their personal problems.[4] On October 21, 2002, the Court of Appeals[5] rendered a decision[6] asserting its authority to take cognizance of the petition and ruling that, under Article 213 of the Family Code, respondent was entitled to the custody of Phillip and Francis Angelo who were at that time aged six and four, respectively, subject to the visitation rights of petitioner. With respect to Ronnick who was then eight years old, the court ruled that his custody should be determined by the proper family court in a special proceeding on custody of minors under Rule 99 of the Rules of Court. Petitioner moved for reconsideration of the Court of Appeals decision but it was denied. Hence, this recourse.
Petitioner challenges the jurisdiction of the Court of Appeals over the petition for habeas corpus and insists that jurisdiction over the case is lodged in the family courts under RA 8369. He invokes Section 5(b) of RA 8369: Section 5. Jurisdiction of Family Courts. – The Family Courts shall have exclusive original jurisdiction to hear and decide the following cases: xxx x xx x xx b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter; xxx x xx x xx
Petitioner is wrong. In Thornton v. Thornton,*7+ this Court resolved the issue of the Court of Appeals’ jurisdiction to issue writs of habeas corpus in cases involving custody of minors in the light of the provision in RA 8369 giving family courts exclusive original jurisdiction over such petitions: The Court of Appeals should take cognizance of the case since there is nothing in RA 8369 that revoked its jurisdiction to issue writs of habeas corpus involving the custody of minors. xxx x xx x xx We rule therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their jurisdiction over habeas corpus cases involving the custody of minors. xxx x xx x xx The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of Appeals and Supreme Court to issue writs of habeas corpus relating to the custody of minors. Further, it cannot be said that the provisions of RA 8369, RA 7092 [An Act Expanding the Jurisdiction of the Court of Appeals] and BP 129 [The Judiciary Reorganization Act of 1980] are absolutely incompatible since RA 8369 does not prohibit the Court of Appeals and the Supreme Court from issuing writs of habeas corpus in cases involving the custody of minors. Thus, the provisions of RA 8369 must be read in harmony with RA 7029 and BP 129 – that family courts have concurrent jurisdiction with the Court of Appeals and the Supreme Court in petitions for habeas corpus where the custody of minors is at issue.[8] (emphases supplied) The jurisdiction of the Court of Appeals over petitions for habeas corpus was further affirmed by A.M. No. 03-03-04-SC (April 22, 2004) in Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors: REMLAW Page 206
to Custody of Minors:
In any case, whatever uncertainty there was has been settled with the adoption of A.M. No. 03-03-04-SC Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors. Section 20 of the rule provides that: Section 20. Petition for writ of habeas corpus. – A verified petition for a writ of habeas corpus involving custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which the Family Court belongs. xxx x xx x xx The petition may likewise be filed with the Supreme Court, Court of Appeals, or with any of its members and, if so granted, the writ shall be enforceable anywhere in the Philippines. The writ may be made returnable to a Family Court or to any regular court within the region where the petitioner resides or where the minor may be found for hearing and decision on the merits.
From the foregoing, there is no doubt that the Court of Appeals and Supreme Court have concurrent jurisdiction with family courts in habeas corpus cases where the custody of minors is involved.[9] (emphases supplied) We note that after petitioner moved out of their Parañaque residence on May 18, 2002, he twice transferred his sons to provinces covered by different judicial regions. This situation is what the Thornton interpretation of RA 8369’s provision on jurisdiction precisely addressed: [The reasoning that by giving family courts exclusive jurisdiction over habeas corpus cases, the lawmakers intended them to be the sole courts which can issue writs of habeas corpus] will result in an iniquitous situation, leaving individuals like [respondent] without legal recourse in obtaining custody of their children. Individuals who do not know the whereabouts of minors they are looking for would be helpless since they cannot seek redress from family courts whose writs are enforceable only in their respective territorial jurisdictions. Thus, if a minor is being transferred from one place to another, which seems to be the case here, the petitioner in a habeas corpus case will be left without legal remedy. This lack of recourse could not have been the intention of the lawmakers when they passed [RA 8369].[10] Moreover, a careful reading of Section 5(b) of RA 8369 reveals that family courts are vested with original exclusive jurisdiction in custody cases, not in habeas corpus cases. Writs of habeas corpus which may be issued exclusively by family courts under Section 5(b) of RA 8369 pertain to the ancillary remedy that may be availed of in conjunction with a petition for custody of minors under Rule 99 of the Rules of Court. In other words, the issuance of the writ is merely ancillary to the custody case pending before the family court. The writ must be issued by the same court to avoid splitting of jurisdiction, conflicting decisions, interference by a co-equal court and judicial instability.
The rule therefore is: when by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer.[11] Once a court acquires jurisdiction over the subject matter of a case, it does so to the exclusion of all other courts, including related incidents and ancillary matters. Accordingly, the petition is hereby DENIED. Pasted from
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Yu v Yu GR 164915 Mar 10, 2006 Sunday, November 14, 2010 11:30 PM
G.R. No. 164915 March 10, 2006 ERIC JONATHAN YU, Petitioner, vs. CAROLINE T. YU, Respondent. DE C I S I O N CARPIO MORALES, J.: On January 11, 2002, Eric Jonathan Yu (petitioner) filed a petition for habeas corpus before the Court of Appeals alleging that his estranged wife Caroline Tanchay-Yu (respondent) unlawfully withheld from him the custody of their minor child Bianca. The petition, which included a prayer for the award to him of the sole custody of Bianca, was docketed as CA-G.R. SP No. 68460. Subsequently or on March 3, 2002, respondent filed a petition against petitioner before the Pasig Regional Trial Court (RTC) for declaration of nullity of marriage and dissolution of the absolute community of property. The petition included a prayer for the award to her of the sole custody of Bianca and for the fixing of schedule of petitioner’s visiting rights "subject only to the final and executory judgment of the Court of Appeals in CA-G.R. SP No. 68460." In the meantime, the appellate court, by Resolution of March 21, 2002, awarded petitioner full custody of Bianca during the pendency of the habeas corpus case, with full visitation rights of respondent. Petitioner and respondent later filed on April 5, 2002 before the appellate court a Joint Motion to Approve Interim Visitation Agreement which was, by Resolution of April 24, 2002, approved. On April 18, 2002, respondent filed before the appellate court a Motion for the Modification of her visiting rights under the Interim Visitation Agreement. To the Motion, petitioner filed an Opposition with Motion to Cite Respondent for Contempt of Court in light of her filing of the petition for declaration of nullity of marriage before the Pasig RTC which, so he contended, constituted forum shopping. By Resolution of July 5, 2002, the appellate court ordered respondent and her counsel to make the necessary amendment in her petition for declaration of nullity of marriage before the Pasig City RTC in so far as the custody aspect is concerned, under pain of contempt. In compliance with the appellate court’s Resolution of July 5, 2002, respondent filed a Motion to Admit Amended Petition before the Pasig RTC. She, however, later filed in December 2002 a Motion to Dismiss her petition, without prejudice, on the ground that since she started residing and conducting business at her new address at Pasay City, constraints on resources and her very busy schedule rendered her unable to devote the necessary time and attention to the petition. The Pasig RTC granted respondent’s motion and accordingly dismissed the petition without prejudice, by Order of March 28, 2003. On June 12, 2003, petitioner filed his own petition for declaration of nullity of marriage and dissolution of the absolute community of property before the Pasig RTC, docketed as JDRC Case No. 6190, with prayer for the award to him of the sole custody of Bianca, subject to the final resolution by the appellate court of his petition for habeas corpus. The appellate court eventually dismissed the habeas corpus petition, by Resolution of July 3, 2003, for having become moot and academic, "the restraint on the liberty of the person alleged to be in restraint [having been] lifted." In the meantime, respondent filed on July 24, 2003 before the Pasay RTC a petition for habeas corpus, which she denominated as "Amended Petition," praying for, among other things, the award of the sole custody to her of Bianca or, in the alternative, pending the hearing of the petition, the issuance of an order "replicating and reiterating the enforceability of the Interim Visiting Agreement" which was approved by the appellate court. The petition was docketed as SP Proc. No. 03-0048. Not to be outdone, petitioner filed on July 25, 2003 before the Pasig RTC in his petition for declaration of nullity of marriage an urgent motion praying for the custody of Bianca for the duration of the case. Acting on respondent’s petition, Branch 113 of the Pasay RTC issued a Writ of Habeas Corpus, a Hold Departure Order and Summons addressed to petitioner, drawing petitioner to file a motion to dismiss the petition on the ground of lack of jurisdiction, failure to state a cause of action, forum shopping and litis pendentia, he citing the pending petition for declaration of nullity of marriage which he filed before REMLAW Page 208
the Pasig RTC. The Pasay RTC, in the meantime, issued an Order of August 12, 2003 declaring that pending the disposition of respondent’s petition, Bianca should stay with petitioner from Sunday afternoon to Saturday morning and "with the company of her mother from Saturday 1:00 in the afternoon up to Sunday 1:00 in the afternoon." To this Order, petitioner filed a Motion for Reconsideration, arguing that the Pasay RTC did not have jurisdiction to issue the same. He likewise filed a Manifestation of August 14, 2003 stating that he was constrained to submit to the said court’s order but with the reservation that he was not submitting the issue of custody and himself to its jurisdiction. Respondent soon filed her Answer with Counter-Petition on the nullity case before the Pasig RTC wherein she also prayed for the award of the sole custody to her of Bianca, subject to the final disposition of the habeas corpus petition which she filed before the Pasay RTC. By Omnibus Order of October 30, 2003, the Pasig RTC asserted its jurisdiction over the custody aspect of the petition filed by petitioner and directed the parties to comply with the provisions of the Interim Visitation Agreement, unless they agreed to a new bilateral agreement bearing the approval of the court; and granted custody of Bianca to petitioner for the duration of the case. The Pasay RTC in the meantime denied, by Order of November 27, 2003, petitioner’s motion to dismiss. The court, citing Sombong v. Court of Appeals,1 held that in custody cases involving minors, the question of illegal and involuntary restraint of liberty is not the underlying rationale for the availability of a writ of habeas corpus as a remedy; rather, a writ of habeas corpus is prosecuted for the purpose of determining the right of custody over the child.2 And it further held that the filing before it of the habeas corpus case by respondent, who is a resident of Pasay, is well within the ambit of the provisions of A.M. No. 03-04-04-SC.3 On the issue of forum shopping, the Pasay RTC held that it is petitioner, not respondent, who committed forum shopping, he having filed (on June 12, 2003) the petition for declaration of nullity of marriage before the Pasig RTC while his petition for habeas corpus before the Court of Appeals was still pending.4 The Pasay RTC held that assuming arguendo that petitioner’s filing before the Pasig RTC of the declaration of nullity of marriage case did not constitute forum shopping, it (the Pasay RTC) acquired jurisdiction over the custody issue ahead of the Pasig RTC, petitioner not having amended his petition before the Pasig RTC as soon as the Court of Appeals dismissed his petition for habeas corpus5 (on July 3, 2003). Finally, the Pasay RTC held that there was no litis pendentia because two elements thereof are lacking, namely, 1) identity of the rights asserted and reliefs prayed for, the relief being founded on the same facts, and 2) identity with respect to the two preceding particulars in the two cases such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case.6 Petitioner thereupon assailed the Pasay RTC’s denial of his Motion to Dismiss via Petition for Certiorari, Prohibition and Mandamus before the appellate court wherein he raised the following issues: A. RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION BY DENYING PETITIONER’S MOTION TO DISMISS DESPITE THE EVIDENT LACK OF JURISDICTION OVER THE SUBJECT MATTER OF CUSTODY, LITIS PENDENTIA, AND DELIBERATE AND WILLFUL FORUM-SHOPPING ON THE PART OF RESPONDENT CAROLINE T. YU. 7 B. RESPONDENT JUDGE ACTED WHIMSICALLY, CAPRICIOUSLY AND ARBITRARILY IN ISSUING THE AUGUST 12, 2003 ORDER GRANTING RESPONDENT CAROLINE T. YU OVERNIGHT VISITATION RIGHTS OVER THE MINOR CHILD BIANCA AND DENYING PETITIONER’S URGENT MOTION FOR RECONSIDERATION OF THE SAID ORDER. 8 (Underscoring supplied) By Decision of August 10, 2004,9 the appellate court denied petitioner’s petition, it holding that the assumption of jurisdiction by the Pasay RTC over the habeas corpus case does not constitute grave abuse of discretion; the filing by respondent before the Pasay RTC of a petition for habeas corpus could not be considered forum shopping in the strictest sense of the word as before she filed it after petitioner’s petition for habeas corpus filed before the appellate court was dismissed; and it was petitioner who committed forum shopping when he filed the declaration of nullity of marriage case while his habeas corpus petition was still pending before the appellate court. In fine, the appellate court held that since respondent filed the petition for declaration of nullity of marriage before the Pasig RTC during the pendency of the habeas corpus case he filed before the appellate court, whereas respondent filed the habeas corpus petition before the Pasay RTC on July 24, REMLAW Page 209
appellate court, whereas respondent filed the habeas corpus petition before the Pasay RTC on July 24, 2003 after the dismissal on July 3, 2003 by the appellate court of petitioner’s habeas corpus case, jurisdiction over the issue custody of Bianca did not attach to the Pasig RTC. As for the questioned order of the Pasay RTC which modified the Interim Visiting Agreement, the appellate court, noting that the proper remedy for the custody of Bianca was filed with the Pasay RTC, held that said court had the authority to issue the same. Hence, the present petition filed by petitioner faulting the appellate court for I. . . . DECLARING THAT PETITIONER ERIC YU COMMITTED FORUM-SHOPPING IN FILLING THE PETITION FOR DECLARATION OF NULLITY OF MARRIAGE WITH PRAYER FOR CUSTODY BEFORE THE PASIG FAMILY COURT AND THAT THE LATTER COURT WAS BARRED FROM ACQUIRING JURISDICTION OVER THE CUSTODY ASPECT OF THE NULLITY CASE IN RECKLESS DISREGARD OF THE PRINCIPLE THAT THE FILING OF A PETITION FOR NULLITY OF MARRIAGE BEFORE THE FAMILY COURTS VESTS THE LATTER WITH EXCLUSIVE JURISDICTION TO DETERMINE THE NECESSARY ISSUE OF CUSTODY. II. . . . APPL[YING] THE LAW OF THE CASE DOCTRINE BY RULING THAT THE PASIG FAMILY COURT HAS NO JURISDICTION OVER THE CUSTODY ASPECT OF THE NULLITY CASE ON THE BASIS OF THE JULY 5, 2002 RESOLUTION OF THE COURT OF APPEALS IN CA GR SP NO. 68460 WHEN THE SAID RESOLUTION CLEARLY APPLIES ONLY TO THE NULLITY CASE FILED BY PRIVATE RESPONDENT ON MARCH 7, 2002 DOCKETED AS JDRC CASE NO. 5745 AND NOT TO HEREIN PETITIONER’S JUNE 12, 2003 PETITION FOR NULLITY DOCKETED AS JDRC CASE NO. 6190. III. . . . DECLARING THAT THE PASIG FAMILY COURT MUST YIELD TO THE JURISDICTION OF THE PASAY COURT INSOFAR AS THE ISSUE OF CUSTODY IS CONCERNED IN GRAVE VIOLATION OF THE DOCTRINE OF JUDICIAL STABILITY AND NON-INTERFERENCE. IV. . . . RULING THAT PRIVATE RESPONDENT CAROLINE DID NOT COMMIT FORUM-SHOPING IN FILING THE HABEAS CORPUS CASE WITH PRAYER FOR CUSTODY BEFORE THE RESPONDENT PASAY COURT DESPITE THE FACT THAT AN EARLIER FILED PETITION FOR DECLARATION OF NULLITY OF MARRIAGE WITH PRAYER FOR CUSTODY IS STILL PENDING BEFORE THE PASIG FAMILY COURT WHEN THE FORMER CASE WAS INSTITUTED. V. . . . RULING THAT RESPONDENT CAROLINE YU DID NOT SUBMIT TO THE JURISDICTION OF THE PASIG FAMILY COURT BASED ON AN ERRONEOUS FACTUAL FINDING THAT SHE FILED ON AUGUST 25, 2003 AN OMNIBUS OPPOSITION IN PETITIONER’S ACTION FOR NULLITY BEFORE THE PASIG COURT.10 (Underscoring supplied) The petition is impressed with merit. The main issue raised in the present petition is whether the question of custody over Bianca should be litigated before the Pasay RTC or before the Pasig RTC. Judgment on the issue of custody in the nullity of marriage case before the Pasig RTC, regardless of which party would prevail, would constitute res judicata on the habeas corpus case before the Pasay RTC since the former has jurisdiction over the parties and the subject matter. There is identity in the causes of action in Pasig and Pasay because there is identity in the facts and evidence essential to the resolution of the identical issue raised in both actions11 – whether it would serve the best interest of Bianca to be in the custody of petitioner rather than respondent or vice versa. Since the ground invoked in the petition for declaration of nullity of marriage before the Pasig RTC is respondent’s alleged psychological incapacity to perform her essential marital obligations12 as provided in Article 36 of the Family Code, the evidence to support this cause of action necessarily involves evidence of respondent’s fitness to take custody of Bianca. Thus, the elements of litis pendentia, to wit: a) identity of parties, or at least such as representing the same interest in both actions; b) identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and c) the identity in the two cases should be such that the judgment that may be rendered in the pending case would, regardless of which party is successful, amount to res judicata in the other,13 are present. Respondent argues in her Comment to the petition at bar that the Pasig RTC never acquired jurisdiction over the custody issue raised therein. "[T]he subsequent dismissal of the habeas corpus petition by the Court of Appeals on 3 July 2003 could not have the effect of conferring jurisdiction over the issue on the Pasig court. For the Pasig court to acquire jurisdiction over the custody issue after the dismissal of the habeas corpus petition before the Court of Appeals, the rule is that petitioner must furnish the occasion for the acquisition of jurisdiction by repleading his cause of action for custody and invoking said cause anew."14 (Emphasis and REMLAW Page 210
by repleading his cause of action for custody and invoking said cause anew."14 (Emphasis and underscoring supplied) And respondent cites Caluag v. Pecson,15 wherein this Court held: Jurisdiction of the subject matter of a particular case is something more than the general power conferred by law upon a court to take cognizance of cases of the general class to which the particular case belongs. It is not enough that a court has power in abstract to try and decide the class litigations [sic] to which a case belongs; it is necessary that said power be properly invoked, or called into activity, by the filing of a petition, or complaint or other appropriate pleading. (Underscoring supplied by Caroline.) 16 Specific provisions of law govern the case at bar, however. Thus Articles 49 and 50 of the Family Code provide: Art. 49. During the pendency of the action [for annulment or declaration of nullity of marriage] and in the absence of adequate provisions in a written agreement between the spouses, the Court shall provide for the support of the spouses and the custody and support of their common children. x x x It shall also provide for appropriate visitation rights of the other parent. (Emphasis and underscoring supplied)17 Art. 50. x x x x The final judgment in such cases [for the annulment or declaration of nullity of marriage] shall provide for the liquidation, partition and distribution of the properties of the spouses, the custody and support of the common children, and the delivery of their presumptive legitimes, unless such other matters had been adjudicated in previous judicial proceedings." (Emphasis and underscoring added) By petitioner’s filing of the case for declaration of nullity of marriage before the Pasig RTC he automatically submitted the issue of the custody of Bianca as an incident thereof. After the appellate court subsequently dismissed the habeas corpus case, there was no need for petitioner to replead his prayer for custody for, as above-quoted provisions of the Family Code provide, the custody issue in a declaration of nullity case is deemed pleaded. That that is so gains light from Section 21 of the "Rule on Declaration Of Absolute Nullity Of Void Marriages and Annulment of Voidable Marriages"18 which provides: Sec. 21. Liquidation, partition and distribution, custody, support of common children and delivery of their presumptive legitimes.–Upon entry of the judgment granting the petition, or, in case of appeal, upon receipt of the entry of judgment of the appellate court granting the petition, the Family Court, on motion of either party, shall proceed with the liquidation, partition and distribution of the properties of the spouses, including custody, support of common children and delivery of their presumptive legitimes pursuant to Articles 50 and 51 of the Family Code unless such matters had been adjudicated in previous judicial proceedings. (Emphasis and underscoring supplied) Since this immediately-quoted provision directs the court taking jurisdiction over a petition for declaration of nullity of marriage to resolve the custody of common children, by mere motion of either party, it could only mean that the filing of a new action is not necessary for the court to consider the issue of custody of a minor.19 The only explicit exception to the earlier-quoted second paragraph of Art. 50 of the Family Code is when "such matters had been adjudicated in previous judicial proceedings," which is not the case here. The elements of litis pendentia having been established, the more appropriate action criterion guides this Court in deciding which of the two pending actions to abate.20 The petition filed by petitioner for the declaration of nullity of marriage before the Pasig RTC is the more appropriate action to determine the issue of who between the parties should have custody over Bianca in view of the express provision of the second paragraph of Article 50 of the Family Code. This must be so in line with the policy of avoiding multiplicity of suits.21 The appellate court thus erroneously applied the law of the case doctrine when it ruled that in its July 5, 2002 Resolution that the pendency of the habeas corpus petition in CA-G.R. SP No. 68460 prevented the Pasig RTC from acquiring jurisdiction over the custody aspect of petitioner’s petition for declaration of nullity. The factual circumstances of the case refelected above do not justify the application of the law of the case doctrine which has been defined as follows: Law of the case has been defined as the opinion delivered on a former appeal. It is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon REMLAW Page 211
court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court." (Emphasis and underscoring supplied, italics in the original) 22 WHEREFORE, the petition is GRANTED. The August 10, 2004 decision of the Court of Appeals is REVERSED and SET ASIDE,and another is entered DISMISSING Pasay City Regional Trial Court Sp. Proc. No. 03-0048-CFM and ordering Branch 69 of Pasig City Regional Trial Court to continue, with dispatch, the proceedings in JDRC No. 6190. Pasted from
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Sec. 5.2, RA 8799 Sunday, November 14, 2010 11:30 PM
Section 5. Powers and Functions of the Commission.– 5.2. The Commission’s jurisdiction over all cases enumerated under section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payment/rehabilitation cases filed as of 30 June 2000 until finally disposed. Pasted from
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A.M. No. 01-2-04-SC Interim Rules of Procedure Governing Intracorporate Controversies Sunday, November 14, 2010 11:31 PM
The Lawphil Project - Arellano Law Foundation A.M. No. 01-2-04-SC. March 13, 2001
A.M. No. 01-2-04-SC. March 13, 2001 Re: PROPOSED INTERIM RULES OF PROCEDURE GOVERNING INTRA-CORPORATE CONTROVERSIES UNDER R. A. NO. 8799 RESOLUTION INTERIM RULES OF PROCEDURE FOR INTRA-CORPORATE CONTROVERSIES RULE 1 GENERAL PROVISIONS SECTION 1. (a) Cases covered. – These Rules shall govern the procedure to be observed in civil cases involving the following: 1. Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association; 2. Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; 3. Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations; 4. Derivative suits; and 5. Inspection of corporate books. (b) prohibition against nuisance and harassment suits. - Nuisance and harassment suits are prohibited. In determining whether a suit is a nuisance or harassment suit, the court shall consider, among others, the following: 1. The extent of the shareholding or interest of the initiating stockholder or member; 2. Subject matter of the suit; 3. Legal and factual basis of the complaint; 4. Availability of appraisal rights for the act or acts complained of; and 5. Prejudice or damage to the corporation, partnership, or association in relation to the relief sought. In case of nuisance or harassment suits, the court may, moto proprio or upon motion, forthwith dismiss the case. SEC. 2. Suppletory application of the Rules of Court. – The Rules of Court, in so far as they may be applicable and are not inconsistent with these Rules, are hereby adopted to form an integral part of these Rules. SEC. 3. Construction. – These Rules shall be liberally construed in order to promote their objective of securing a just, summary, speedy and inexpensive determination of every action or proceeding. SEC. 4. Executory nature of decisions and orders. – All decisions and orders issued under these Rules shall immediately be executory. No appeal or petition taken therefrom shall stay the enforcement or implementation of the decision or order, unless restrained by an appellate court. Interlocutory orders shall not be subject to appeal. REMLAW Page 214
shall not be subject to appeal. SEC. 5. Venue. – All actions covered by these Rules shall be commenced and tried in the Regional Trial Court which has jurisdiction over the principal office of the corporation, partnership, or association concerned. Where the principal office of the corporation, partnership or association is registered in the Securities and Exchange Commission as Metro Manila, the action must be filed in the city or municipality where the head office is located. SEC. 6. Service of pleadings. – When so authorized by the court, any pleading and/or document required by these Rules may be filed with the court and/or served upon the other parties by facsimile transmission (tax) or electronic mail (e-mail. In such cases, the date of transmission shall be deemed to be prima facie the date of service. SEC. 7. Signing of pleadings, motions and other papers. – Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in the attorney’s individual name, whose address shall be stated. A party who is not represented by an attorney shall sign the pleading, motion, or other paper and state his address. The signature of an attorney or party constitutes a certification by the signer that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing jurisprudence; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion, or other paper is not signed, it shall be stricken off the record unless it is promptly signed by the pleader or movant, after he is notified of the omission. SEC. 8. Prohibited pleadings. – The following pleadings are prohibited: 1. Motion to dismiss; 2. Motion for a bill of particulars; 3. Motion for new trial, or for reconsideration of judgment or order, or for re-opening of trial; 4. Motion for extension of time to file pleadings, affidavits or any other paper, except those filed due to clearly compelling reasons. Such motion must be verified and under oath; and 5. Motion for postponement and other motions of similar intent, except those filed due to clearly compelling reasons. Such motion must be verified and under oath. SEC. 9. Assignment of cases. – All cases filed under these Rules shall be tried by judges designated by the Supreme Court to hear and decide cases transferred from the Securities and Exchange Commission to the Regional Trial Courts and filed directly with said courts pursuant to Republic Act No. 8799, otherwise known as the Securities and Regulation Cod RULE 2 COMMENCEMENT OF ACTION AND PLEADINGS SECTION 1. Commencement of action. – An action under these Rules is commenced by the filing of a verified complaint with the proper Regional Trial Court. SEC. 2. Pleadings allowed. – The only pleadings allowed to be filed under these Rules are the complaint, answer, compulsory counterclaims or cross-claims pleaded in the answer, and the answer to the counterclaims or cross-claims. SEC. 3. Verification. – The complaint and the answer shall be verified by an affidavit stating that the affiant has read the pleading and the allegations therein are true and correct based on his own personal knowledge or on authentic records. SEC. 4. Complaint. – The complaint shall state or contain: 1. the names, addresses, and other relevant personal or juridical circumstances of the parties; 2. all facts material and relevant to the plaintiff’s cause or causes of action, which shall be supported by affidavits of the plaintiff or his witnesses and copies of documentary and other evidence supportive of such cause or causes of action; 3. the law, rule, or regulation relied upon, violated, or sought to be enforced; 4. a certification that (a) the plaintiff has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency, and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other action or claim, a complete statement of the present status thereof; and (c) if he REMLAW Page 215
other action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court; and 5. the relief sought. SEC. 5. Summons. – The summons and the complaint shall be served together not later than five (5) days from the date of filing of the complaint. a. Service upon domestic private juridical entities. – If the defendant is a domestic corporation, service shall be deemed adequate if made upon any of the statutory or corporate officers as fixed by the by-laws or their respective secretaries. If the defendant is a partnership, service shall be deemed adequate if made upon any of the managing or general partners or upon their respective secretaries. If the defendant is an association, service shall be deemed adequate if made upon any of its officers or their respective secretaries. b. Service upon foreign private juridical entity. – When the defendant is a foreign private juridical entity which is transacting or has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. SEC. 6. Answer. – The defendant shall file his answer to the complaint, serving a copy thereof on the plaintiff, within fifteen (15) days from service of summons. In the answer, the defendant shall: 1. Specify each material allegation of fact the truth of which he admits; 2. Specify each material allegation of fact the truth of which he does not admit. Where the defendant desires to deny only a part of an averment, he shall specify so much of it as true and material and shall deny only the remainder; 3. Specify each material allegation of fact as to which truth he has no knowledge or information sufficient to form a belief, and this shall have the effect of a denial; 4. State the defenses, including grounds for a motion to dismiss under the Rules of Court; 5. State the law, rule, or regulation relied upon; 6. Address each of the causes of action stated in the complaint; 7. State the facts upon which he relies for his defense, including affidavits of witnesses and copies of documentary and other evidence supportive of such cause or causes of action; 8. State any compulsory counterclaim/s and cross-claim/s; and 9. State the relief sought. The answer to counterclaims or cross-claims shall be filed within ten (10) days from service of the answer in which they are pleaded. SEC. 7. Effect of failure to answer. – If the defendant fails to answer within the period above provided, he shall be considered in default. Upon motion or motu proprio, the court shall render judgment either dismissing the complaint or granting the relief prayed for as the records may warrant. In no case shall the court award a relief beyond or different from that prayed for. SEC. 8. Affidavits, documentary and other evidence. – Affidavits shall be based on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify on the matters stated therein. The affidavits shall be in question and answer form, and shall comply with the rules on admissibility of evidence. Affidavits of witnesses as well as documentary and other evidence shall be attached to the appropriate pleading; Provided, however, that affidavits, documentary and other evidence not so submitted may be attached to the pre-trial brief required under these Rules. Affidavits and other evidence not so submitted shall not be admitted in evidence, except in the following cases: 1. Testimony of unwilling, hostile, or adverse party witnesses. A witness is presumed prima facie hostile if he fails or refuses to execute an affidavit after a written request therefor; 2. If the failure to submit the evidence is for meritorious and compelling reasons; and 3. Newly discovered evidence. In case of (2) and (3) above, the affidavit and evidence must be submitted not later than five (5) days prior to its introduction in evidence. RULE 3 REMLAW Page 216
RULE 3 MODES OF DISCOVERY SECTION 1. In general. – A party can only avail of any of the modes of discovery not later than fifteen (15) days from the joinder of issues. SEC. 2. Objections. – Any mode of discovery such as interrogatories, request for admission, production or inspection of documents or things, may be objected to within ten (10) days from receipt of the discovery device and only on the ground that the matter requested is patently incompetent, immaterial, irrelevant or privileged in nature. The court shall rule on the objections not later than fifteen (15) days from the filing thereof. SEC. 3. Compliance. –Compliance with any mode of discovery shall be made within ten (10) days from receipt of the discovery device, or if there are objections, from receipt of the ruling of the court. SEC. 4. Sanctions. – The sanctions prescribed in the Rules of Court for failure to avail of, or refusal to comply with, the modes of discovery shall apply. In addition, the court may, upon motion, declare a party non-suited or as in default, as the case may be, if the refusal to comply with a mode of discovery is patently unjustified.
RULE 4 PRE-TRIAL SECTION 1. Pre-trial conference; mandatory nature. – Within five (5) days after the period for availment of, and compliance with, the modes of discovery prescribed in Rule 3 hereof, whichever comes later, the court shall issue and serve an order immediately setting the case for pre-trial conference and directing the parties to submit their respective pre-trial briefs. The parties shall file with the court and furnish each other copies of their respective pre-trial brief in such manner as to ensure its receipt by the court and the other party at least five (5) days before the date set for the pre-trial. The parties shall set forth in their pre-trial briefs, among other matters, the following: 1. Brief statement of the nature of the case, which shall summarize the theory or theories of the party in clear and concise language; 2. Allegations expressly admitted by either or both parties; 3. Allegations deemed admitted by either or both parties; 4. Documents not specifically denied under oath by either or both parties; 5. Amendments to the pleadings; 6. Statement of the issues, which shall separately summarize the factual and legal issues involved in the case; 7. Names of witnesses to be presented and the summary of their testimony as contained in their affidavits supporting their positions on each of the issues; 8. All other pieces of evidence, whether documentary or otherwise and their respective purposes; 9. Specific proposals for an amicable settlement; 10. Possibility of referral to mediation or other alternative modes of dispute resolution; 11. Proposed schedule of hearings; and 12. Such other matters as may aid in the just and speedy disposition of the case. SEC. 2. Nature and purpose of pre-trial conference. – During the pre-trial conference, the court shall, with its active participation, ensure that the parties consider in detail all of the following: 1. The possibility of an amicable settlement; 2. Referral of the dispute to mediation or other forms of dispute resolution; 3. Facts that need not be proven, either because they are matters of judicial notice or expressly or deemed admitted; 4. Amendments to the pleadings; 5. The possibility of obtaining stipulations and admissions of facts and documents; 6. Objections to the admissibility of testimonial, documentary and other evidence; 7. Objections to the form or substance of any affidavit, or part thereof; 8. Simplification of the issues; 9. The possibility of submitting the case for decision on the basis of position papers, affidavits, documentary and real evidence; 10. A complete schedule of hearing dates; and REMLAW Page 217
10. A complete schedule of hearing dates; and 11. Such other matters as may aid in the speedy and summary disposition of the case. SEC. 3. Termination. – The preliminary conference shall be terminated not later than ten (10) days after its commencement, whether or not the parties have agreed to settle amicably. SEC. 4. Judgment before pre-trial. – If, after submission of the pre-trial briefs, the court determines that, upon consideration of the pleadings, the affidavits and other evidence submitted by the parties, a judgment may be rendered, the court may order the parties to file simultaneously their respective memoranda within a non-extendible period of twenty (20) days from receipt of the order. Thereafter, the court shall render judgment, either full or otherwise, not later than ninety (90) days from the expiration of the period to file the memoranda. SEC. 5. Pre-trial order; judgment after pre-trial. – The proceedings in the pre-trial shall be recorded. Within ten (10) days after the termination of the pre-trial, the court shall issue an order which shall recite in detail the matters taken up in the conference, the actions taken thereon, the amendments allowed in the pleadings, and the agreements or admissions made by the parties as to any of the matters considered. The court shall rule on all objections to or comments on the admissibility of any documentary or other evidence, including any affidavit or any part thereof. Should the action proceed to trial, the order shall explicitly define and limit the issues to be tried and shall strictly follow the form set forth in Annex "A" of these Rules. The contents of the order shall control the subsequent course of the action, unless modified before trial to prevent manifest injustice. After the pre-trial, the court may render judgment, either full or partial, as the evidence presented during the pre-trial may warrant.
RULE 5 TRIAL SECTION 1. Witnesses. – If the court deems necessary to hold hearings to determine specific factual matters before rendering judgment, it shall, in the pre-trial order, set the case for trial on the dates agreed upon by the parties. Only persons whose affidavits were submitted may be presented as witnesses, except in cases specified in section 8, Rule 2 of these Rules. The affidavits of the witnesses shall serve as their direct testimonies, subject to cross-examination in accordance with existing rules on evidence. SEC. 2. Trial schedule. – Unless judgment is rendered pursuant to Rule 4 of these Rules, the initial hearing shall be held not later than thirty (30) days from the date of the pre-trial order. The hearings shall be completed not later than sixty (60) days from the date of the initial hearing, thirty (30) days of which shall be allotted to the plaintiffs and thirty (30) days to the defendants in the manner prescribed in the rep-trial order. The failure of a party to present a witness on a scheduled hearing date shall be deemed a waiver of such hearing date. However, a party may present such witness or witnesses within his remaining allotted hearing dates. SEC. 3. Written offer of evidence. – Evidence not otherwise admitted by the parties or ruled upon by the court during the pre-trial conference shall be offered in writing not later than five (5) days from the completion of the presentation of evidence of the party concerned. The opposing party shall have five (5) days from receipt of the offer to file his comments or objections. The court shall make its ruling on the offer within five (5) days from the expiration of the period to file comments or objections. SEC. 4. Memoranda. – Immediately after ruling on the last offer of evidence, the court shall order the parties to simultaneously file, within thirty (30) days from receipt of the order, their respective memoranda. The memoranda shall contain the following: 1. A "Statement of the Case," which is a clear and concise statement of the nature of the action and a summary of the proceedings; 2. A "Statement of the Facts," which is a clear and concise statement in narrative form of the established facts, with reference to the testimonial, documentary or other evidence in support thereof; 3. A "Statement of the issues," which is a clear and concise statement of the issues presented to the court for resolution; 4. The "Arguments," which is a clear and concise presentation of the argument in support of each issue; and REMLAW Page 218
each issue; and 5. The "Relief," which is a specification of the order or judgment which the party seeks to obtain. No reply memorandum shall be allowed. SEC. 5. Decision after trial. – The court shall render a decision not later than (90) days from the lapse of the period to file the memoranda, with or without said pleading having been filed. RULE 6 ELECTION CONTESTS SECTION 1. Cases covered. – The provisions of this rule shall apply to election contests in stock and nonstock corporations. SEC. 2. Definition. – An election contest refers to any controversy or dispute involving title or claim to any elective office in a stock or non-stock corporation, the validation of proxies, the manner and validity of elections, and the qualifications of candidates, including the proclamation of winners, to the office of director, trustee or other officer directly elected by the stockholders in a close corporation or by members of a non-stock corporation where the articles of incorporation or by-laws so provide. SEC. 3. Complaint. –In addition to the requirements in section 4, Rule 2 of these Rules, the complaint in an election contest must state the following: 1. The case was filed within fifteen (15) days from the date of the election if the by-laws of the corporation do not provide for a procedure for resolution of the controversy, or within fifteen (15) days from the resolution of the controversy by the corporation as provided in its by-laws; and 2. The plaintiff has exhausted all intra-corporate remedies in election cases as provided for in the by-laws of the corporation. SEC. 4. Duty of the court upon the filing of the complaint. – Within two (2) days from the filing of the complaint, the court, upon a consideration of the allegations thereof, may dismiss the complaint outright if it is not sufficient in form and substance, or, if it is sufficient, order the issuance of summons which shall be served, together with a copy of the complaint, on the defendant within two (2) days from its issuance. SEC. 5. Answer. – The defendant shall file his answer to the complaint, serving a copy thereof on the plaintiff, within ten (10) days from service of summons and the complaint. The answer shall contain the matters required in section 6, Rule 2 of these Rules. SEC. 6. Affidavits, documentary and other evidence. – The parties shall attach to the complaint and answer the affidavits of witnesses, documentary and other evidence in support thereof, if any. Acting on the Memorandum of the Committee on SEC Cases submitting for this Court’s consideration and approval the Proposed Interim Rules of Procedure for Intra-Corporate Controversies, the Court Resolved to APPROVE the same. The Interim Rules shall take effect on April 1, 2001 following its publication in two (2) newspapers of general circulation. March 13, 2001, Manila. (Sgd.) HILARIO G. DAVIDE, JR., Chief Justice (Sgd.) JOSUE N. BELLOSILLO, Associate Justice (Sgd.) JOSE A. R. MELO, Associate Justice (Sgd.) REYNATO S. PUNO, Associate Justice (Sgd.) JOSE C. VITUG, Associate Justice (Sgd.) SANTIAGO M. KAPUNAN, Associate Justice (Sgd.) VICENTE V. MENDOZA, Associate Justice (Sgd.) ARTEMIO V. PANGANIBAN, Associate Justice (Sgd.) LEONARDO A. QUISUMBING, Associate Justice
(Sgd.) (Sgd.) BERNARDO P. PARDO ARTURO B. BUENA Associate Justice Associate Justice
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(Sgd.) (Sgd.) MINERVA P. GONZAGA-REYES CONSUELO YNARES-SANTIAGO Associate Justice Associate Justice (Sgd). (Sgd.) SABINO R. DE LEON, JR. ANGELINA SANDOVAL-GUTIERREZ Associate Justice Associate Justice The Lawphil Project - Arellano Law Foundation
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A.M. 00-8-10-SC Interim Rules of Procedure on Corporate Rehabilitation (note FRIA) Sunday, November 14, 2010 11:31 PM
EN BANC Agenda for December 2, 2008 Item No. 76 EN BANC A.M. NO. 00-8-10-SC RULES OF PROCEDURE ON CORPORATE REHABILITATION RESOLUTION Acting on the recommendation of The Subcommittee on Special Rules for Special Commercial Courts, submitting for the consideration and approval of the Court the proposed “Rules of Procedure on Corporate Rehabilitation (2008),” the Court Resolved to APPROVE the same. The Rule shall take effect on January 16, 2009 following its publication in two (2) newspapers of general circulation. December 2, 2008. ——————— RULES OF PROCEDURE ON CORPORATE REHABILITATION (2008) RULE 1 COVERAGE SECTION 1. Scope.—These Rules shall apply to petitions for rehabilitation of corporations, partnerships and associations pursuant to Presidential Decree No. 902-A, as amended. SEC. 2. Applicability to Rehabilitation Cases Transferred from the Securities and Exchange Commission. — Cases for rehabilitation transferred from the Securities and Exchange Commission to the Regional Trial Courts pursuant to Republic Act No. 8799, otherwise known as The Securities Regulation Code, shall likewise be governed by these Rules. RULE 2 DEFINITION OF TERMS AND CONSTRUCTION SEC. 1. Definition of Terms.—For purposes of these Rules: “Administrative Expenses” shall refer to (a) reasonable and necessary expenses that are incurred in connection with the filing of the petition; (b) expenses incurred in the ordinary course of business after the issuance of the stay order, excluding interest payable to the creditors for loans and credit accommodations existing at the time of the issuance of the stay order; and (c) other expenses that are authorized under these Rules. “Affidavit of General Financial Condition” shall refer to a verified statement on the general financial condition of the debtor required in Section 2, Rule 4 of these Rules. “Affiliate” is a corporation that directly or indirectly, through one or more intermediaries, is controlled by, or is under the common control of another corporation, which thereby becomes its parent corporation. “Asset” is anything of value that can be in the form of money, such as cash at the bank or amounts owed; fixed assets such as property or equipment; or intangibles including intellectual property, the book value of which is shown in the last three audited financial statements immediately preceding the filing of the petition. In case the debtor is less than three years in operation, it is sufficient that the book value is based on the audited financial statement/s for the two years or year immediately preceding the filing of the petition, as the case may be. “Board of Directors” shall include the executive committee or the management of a partnership or association. “Claim” shall include all claims or demands of whatever nature or character against a debtor or its property, whether for money or otherwise. “Control” is the power of a parent corporation to direct or govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. Control is presumed to exist when the parent REMLAW Page 221
an enterprise so as to obtain benefits from its activities. Control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than one–half (1/2) of the voting power of an enterprise unless, in exceptional circumstances, it can clearly be demonstrated that such ownership does not constitute control. Control also exists even when the parent owns one-half (1/2) or less of the voting power of an enterprise when there is power: (a) Over more than one-half (1/2) of the voting rights by virtue of an agreement with investors; (b) To direct or govern the financial and operating policies of the enterprise under a statute or an agreement; (c) To appoint or remove the majority of the members of the board of directors or equivalent governing body; or (d) To cast the majority votes at meetings of the board of directors or equivalent governing body. “Creditor” shall mean any holder of a Claim. “Court” shall refer to the proper Regional Trial Court designated to hear and decide the cases contemplated under these Rules. “Days” shall refer to calendar days unless otherwise provided in these Rules. “Debtor” shall mean any corporation, partnership or association or a group of companies, whether supervised or regulated by the Securities and Exchange Commission or other government agencies, on whose behalf a petition for rehabilitation has been filed under these Rules. “Foreign court” means a judicial or other authority competent to control or supervise a foreign proceeding. “Foreign proceeding” means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of rehabilitation or re-organization. “Foreign representative” means a person or entity, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or rehabilitation of the debtor or to act as a representative of the foreign proceeding. “Group of companies” refers to, and can cover only, corporations that are financially related to one another as parent corporations, subsidiaries and affiliates. When the petition covers a group of companies, all reference under these Rules to “debtor” shall include and apply to the group of companies. “Liabilities” shall refer to monetary claims against the debtor, including stockholder’s advances that have been recorded in the debtor’s audited financial statements as advances for future subscriptions. “Parent” is a corporation which has control over another corporation directly or indirectly through one or more intermediaries. “Rehabilitation” shall mean the restoration of the debtor to a position of successful operation and solvency, if it is shown that its continuance of operation is economically feasible and its creditors can recover by way of the present value of payments projected in the plan, more if the corporation continues as a going concern than if it is immediately liquidated. “Secured claim” shall refer to any claim whose payment or fulfillment is secured by contract or by law, including any claim or credit enumerated under Articles 2241 and 2242 of the Civil Code and Article 110, as amended, of the Labor Code of the Philippines. “Subsidiary” means a corporation more than fifty percent (50%) of the voting stock of which is owned or controlled directly or indirectly through one or more intermediaries by another corporation, which thereby becomes its parent corporation. “Unsecured claim” shall mean any claim other than a secured claim. SEC. 2. Construction. — These Rules shall be liberally construed to carry out the objectives of Sections 5(d), 6(c) and 6(d) of Presidential Decree No. 902-A, as amended, and to assist the parties in obtaining a just, expeditious and inexpensive determination of cases. Where applicable, the Rules of Court shall apply suppletorily to proceedings under these Rules. RULE 3 GENERAL PROVISIONS SEC. 1. Nature of Proceedings.—Any proceeding initiated under these Rules shall be considered in rem. Jurisdiction over all persons affected by the proceedings shall be considered as acquired upon REMLAW Page 222
Jurisdiction over all persons affected by the proceedings shall be considered as acquired upon publication of the notice of the commencement of the proceedings in any newspaper of general circulation in the Philippines in the manner prescribed by these Rules. The proceedings shall also be summary and non-adversarial in nature. The following pleadings are prohibited: (a) Motion to dismiss; (b) Motion for a bill of particulars; (c) Petition for relief; (d) Motion for extension; (e) Motion for postponement; (f) Third-party complaint; (g) Intervention; (h) Motion to hear affirmative defenses; and (i) Any pleading or motion which is similar to or of like effect as any of the foregoing. Any pleading, motion, opposition, defense or claim filed by any interested party shall be supported by verified statements that the affiant has read the same and that the factual allegations therein are true and correct of his personal knowledge or based on authentic records, and shall contain as annexes such documents as may be deemed by the party submitting the same as supportive of the allegations in the affidavits. The court may decide matters on the basis of affidavits and other documentary evidence. Where necessary, the court shall conduct clarificatory hearings before resolving any matter submitted to it for resolution. SEC. 2. Venue. — Petitions for rehabilitation pursuant to these Rules shall be filed in the regional trial court which has jurisdiction over the principal office of the debtor as specified in its articles of incorporation or partnership. Where the principal office of the corporation, partnership or association is registered in the Securities and Exchange Commission as Metro Manila, the action must be filed in the regional trial court of the city or municipality where the head office is located. A joint petition by a group of companies shall be filed in the Regional Trial Court which has jurisdiction over the principal office of the parent company, as specified in its Articles of Incorporation. SEC. 3. Service of Pleadings and Documents.— When so authorized by the court, any pleading and/or document required by these Rules may be filed with the court and/or served upon the other parties by facsimile transmission (fax) or electronic mail (e-mail). In such cases, the date of transmission shall be deemed to be the date of service. Where the pleading or document is voluminous, the court may, upon motion, waive the requirement of service; provided that a copy thereof together with all its attachments is duly filed with the court and is made available for examination and reproduction by any party, and provided, further, that a notice of such filing and availability is duly served on the parties. SEC. 4. Trade Secrets and Other Confidential Information. — Upon motion, the court may issue an order to protect trade secrets or other confidential research, development or commercial information belonging to the debtor. SEC. 5. Executory Nature of Orders. — Any order issued by the court under these Rules is immediately executory. A petition to review the order shall not stay the execution of the order unless restrained or enjoined by the appellate court. Unless otherwise provided in these Rules, the review of any order or decision of the court or an appeal therefrom shall be in accordance with the Rules of Court; provided, however, that the reliefs ordered by the trial or appellate courts shall take into account the need for resolution of proceedings in a just, equitable and speedy manner. SEC. 6. Nullification of Illegal Transfers and Preferences. — Upon motion the court may nullify any transfer of property or any other conveyance, sale, payment or agreement made in violation of its stay order or in violation of these Rules. SEC. 7. Stay Order. — If the court finds the petition to be sufficient in form and substance, it shall, not later than five (5) working days from the filing of the petition, issue an order: (a) appointing a rehabilitation receiver and fixing his bond; (b) staying enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor, its guarantors and persons not solidarily liable with the debtor; provided, that the stay order shall not cover claims against letters of credit and similar security arrangements issued by a third party to secure the payment of the debtor’s obligations; provided, further, that the stay order shall not cover foreclosure by a creditor of property not belonging to a debtor under corporate rehabilitation; provided, REMLAW Page 223
foreclosure by a creditor of property not belonging to a debtor under corporate rehabilitation; provided, however, that where the owner of such property sought to be foreclosed is also a guarantor or one who is not solidarily liable, said owner shall be entitled to the benefit of excussion as such guarantor; (c) prohibiting the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (d) prohibiting the debtor from making any payment of its liabilities except as provided in items (e), (f) and (g) of this Section or when ordered by the court pursuant to Section 10 of Rule 3; (e) prohibiting the debtor’s suppliers of goods or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and goods supplied after the issuance of the stay order; (f) directing the payment in full of all administrative expenses incurred after the issuance of the stay order; (g) directing the payment of new loans or other forms of credit accommodations obtained for the rehabilitation of the debtor with prior court approval; (h) fixing the dates of the initial hearing on the petition not earlier than forty-five (45) days but not later than sixty (60) days from the filing thereof; (i) directing the petitioner to publish the Order in a newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks; (j) directing the petitioner to furnish a copy of the petition and its annexes, as well as the stay order, to the creditors named in the petition and the appropriate regulatory agencies such as, but not limited to, the Securities and Exchange Commission, the Bangko Sentral ng Pilipinas, the Insurance Commission, the National Telecommunications Commission, the Housing and Land Use Regulatory Board and the Energy Regulatory Commission; (k) directing the petitioner that foreign creditors with no known addresses in the Philippines be individually given a copy of the stay order at their foreign addresses; (l) directing all creditors and all interested parties (including the regulatory agencies concerned) to file and serve on the debtor a verified comment on or opposition to the petition, with supporting affidavits and documents, not later than fifteen (15) days before the date of the first initial hearing and putting them on notice that their failure to do so will bar them from participating in the proceedings; and (m) directing the creditors and interested parties to secure from the court copies of the petition and its annexes within such time as to enable themselves to file their comment on or opposition to the petition and to prepare for the initial hearing of the petition. The issuance of a stay order does not affect the right to commence actions or proceedings insofar as it is necessary to preserve a claim against the debtor. SEC. 8. Service of Stay Order on Rehabilitation Receiver. — The petitioner shall immediately serve a copy of the stay order on the rehabilitation receiver appointed by the court, who shall manifest his acceptance or non-acceptance of his appointment not later than ten (10) days from receipt of the order. SEC. 9. Period of Stay Order. — The stay order shall be effective from the date of its issuance until the approval of the rehabilitation plan or the dismissal of the petition. SEC. 10. Relief from, Modification, or Termination of Stay Order. — (a) The court may, upon motion, terminate, modify, or set conditions for the continuance of the stay order, or relieve a claim from the coverage thereof upon showing that (1) any of the allegations in the petition, or any of the contents of any attachment, or the verification thereof has ceased to be true; (2) a creditor does not have adequate protection over property securing its claim; (3) the debtor’s secured obligation is more than the fair market value of the property subject of the stay and such property is not necessary for the rehabilitation of the debtor; or (4) the property covered by the stay order is not essential or necessary to the rehabilitation and the creditor’s failure to enforce its claim will cause more damage to the creditor than to the debtor. (b) For purposes of this Section, the creditor lacks adequate protection if it can be shown that: (1) The debtor fails or refuses to honor a pre-existing agreement with the creditor to keep the property insured; (2) The debtor fails or refuses to take commercially reasonable steps to maintain the property; or (3) The property has depreciated to an extent that the creditor is undersecured. (c) Upon showing of the creditor’s lack of adequate protection, the court shall order the rehabilitation receiver to (1) make arrangements to provide for the insurance or maintenance of the property, or (2) to make payments or otherwise provide additional or replacement security such that the obligation is fully secured. If such arrangements are not feasible, the court shall modify the stay order to allow the secured creditor lacking adequate protection to enforce its claim against the debtor; provided, however, that the court may deny the creditor the remedies in this paragraph if such remedies would prevent the continuation of the debtor as a going concern or otherwise prevent the approval and implementation of REMLAW Page 224
continuation of the debtor as a going concern or otherwise prevent the approval and implementation of a rehabilitation plan. SEC. 11. Qualifications of Rehabilitation Receiver. — (a) In the appointment of the rehabilitation receiver, the following qualifications shall be taken into consideration by the court: (1) Expertise and acumen to manage and operate a business similar in size and complexity to that of the debtor; (2) Knowledge in management, finance and rehabilitation of distressed companies; (3) General familiarity with the rights of creditors in suspension of payments or rehabilitation, and general understanding of the duties and obligations of a rehabilitation receiver; (4) Good moral character, independence and integrity; (5) Lack of conflict of interest as defined in this Section; and (6) Willingness and ability to file a bond in such amount as may be determined by the court. (b) Without limiting the generality of the following, a rehabilitation receiver may be deemed to have a conflict of interest if: (1) He is a creditor or stockholder of the debtor; (2) He is engaged in a line of business which competes with the debtor; (3) He is, or was within two (2) years from the filing of the petition, a director, officer, or employee of the debtor or any of its present creditors, or the auditor or accountant of the debtor; (4) He is or was within two (2) years from the filing of the petition, an underwriter of the outstanding securities of the debtor; (5) He is related by consanguinity or affinity within the fourth civil degree to any creditor, stockholder, director, officer, employee, or underwriter of the debtor; or (6) He has any other direct or indirect material interest in the debtor or any creditor. SEC. 12. Powers and Functions of Rehabilitation Receiver. — The rehabilitation receiver shall not take over the management and control of the debtor but shall closely oversee and monitor the operations of the debtor during the pendency of the proceedings. For this purpose, the rehabilitation receiver shall have the powers, duties and functions of a receiver under Presidential Decree No. 902-A, as amended, and the Rules of Court. The rehabilitation receiver shall be considered as an officer of the court. He shall be primarily tasked to study the best way to rehabilitate the debtor and to ensure that the value of the debtor’s property is reasonably maintained pending the determination of whether or not the debtor should be rehabilitated, as well as implement the rehabilitation plan after its approval. Accordingly, he shall have the following powers and functions: (a) To verify the accuracy of the petition, including its annexes such as the Schedule of Debts and Liabilities and the Inventory of Assets submitted in support of the petition; (b) To accept and incorporate, when justified, amendments to the Schedule of Debts and Liabilities; (c) To recommend to the court the disallowance of claims and rejection of amendments to the Schedule of Debts and Liabilities that lack sufficient proof and justification; (d) To submit to the court and make available for review by the creditors, a revised Schedule of Debts and Liabilities; (e) To investigate the acts, conduct, properties, liabilities and financial condition of the debtor, the operation of its business and the desirability of the continuance thereof; and, any other matter relevant to the proceeding or to the formulation of a rehabilitation plan; (f) To examine under oath the directors and officers of the debtor and any other witnesses that he may deem appropriate; (g) To make available to the creditors documents and notices necessary for them to follow and participate in the proceedings; (h) To report to the court any fact ascertained by him pertaining to the causes of the debtor’s problems, fraud, preferences, dispositions, encumbrances, misconduct, mismanagement and irregularities committed by the stockholders, directors, management, or any other person against the debtor; (i) To employ such person or persons such as lawyers, accountants, appraisers and staff as are necessary in performing his functions and duties as rehabilitation receiver; (j) To monitor the operations of the debtor and to immediately report to the court any material adverse change in the debtor’s business; REMLAW Page 225
change in the debtor’s business; (k) To evaluate the existing assets and liabilities, earnings and operations of the debtor; (l) To determine and recommend to the court the best way to salvage and protect the interests of the creditors, stockholders and the general public; (m) To study the rehabilitation plan proposed by the debtor or any rehabilitation plan submitted during the proceedings, together with any comments made thereon; (n) To prohibit and report to the court any encumbrance, transfer or disposition of the debtor’s property outside of the ordinary course of business or what is allowed by the court; (o) To prohibit and report to the court any payments outside of the ordinary course of business; (p) To have unlimited access to the debtor’s employees, premises, books, records and financial documents during business hours; (q) To inspect, copy, photocopy or photograph any document, paper, book, account or letter, whether in the possession of the debtor or other persons; (r) To gain entry into any property for the purpose of inspecting, measuring, surveying or photographing it or any designated relevant object or operation thereon; (s) To take possession, control and custody of the debtor’s assets; (t) To notify counterparties and the court as to contracts that the debtor has decided to continue to perform or breach; (u) To be notified of and to attend all meetings of the board of directors and stockholders of the debtor; (v) To recommend any modification of an approved rehabilitation plan as he may deem appropriate; (w) To bring to the attention of the court any material change affecting the debtor’s ability to meet the obligations under the rehabilitation plan; (x) To recommend the appointment of a management committee in the cases provided for under Presidential Decree No. 902-A, as amended; (y) To recommend the termination of the proceedings and the dissolution of the debtor if he determines that the continuance in business of such entity is no longer feasible or profitable or no longer works to the best interest of the stockholders, parties-litigants, creditors or the general public; (z) To apply to the court for any order or directive that he may deem necessary or desirable to aid him in the exercise of his powers and performance of his duties and functions; and (aa) To exercise such other powers as may from time to time be conferred upon him by the court. SEC. 13. Oath and Bond. — Before entering upon his powers, duties and functions, the rehabilitation receiver must be sworn in to perform them faithfully, and must post a bond executed in favor of the debtor in such sum as the court may direct, to guarantee that he will faithfully discharge his duties and obey the orders of the court. If necessary, he shall also declare under oath that he will perform the duties of a trustee of the assets of the debtor, will act honestly and in good faith, and deal with the assets of the debtor in a commercially reasonable manner. SEC. 14. Fees and Expenses. — The rehabilitation receiver and the persons hired by him shall be entitled to reasonable professional fees and reimbursement of expenses which shall be considered as administrative expenses. SEC. 15. Immunity from Suit. — The rehabilitation receiver shall not be subject to any action, claim or demand in connection with any act done or omitted by him in good faith in the exercise of his functions and powers herein conferred. SEC. 16. Reports. — The rehabilitation receiver shall file a written report every three (3) months to the court or as often as the court may require on the general condition of the debtor. The report shall include, at the minimum, interim financial statements of the debtor. SEC. 17. Dismissal of Rehabilitation Receiver. — A rehabilitation receiver may, upon motion, be dismissed by the court on the following grounds: (a) if he fails, without just cause, to perform any of his powers and functions under these Rules; or (b) on any of the grounds for removing a trustee under the general principles of trusts. SEC. 18. Rehabilitation Plan. — The rehabilitation plan shall include (a) the desired business targets or goals and the duration and coverage of the rehabilitation; (b) the terms and conditions of such rehabilitation which shall include the manner of its implementation, giving due regard to the interests of secured creditors such as, but not limited, to the non-impairment of their security liens or interests; (c) the material financial commitments to support the rehabilitation plan; (d) the means for REMLAW Page 226
interests; (c) the material financial commitments to support the rehabilitation plan; (d) the means for the execution of the rehabilitation plan, which may include debt to equity conversion, restructuring of the debts, dacion en pago or sale or exchange or any disposition of assets or of the interest of shareholders, partners or members; (e) a liquidation analysis setting out for each creditor that the present value of payments it would receive under the plan is more than that which it would receive if the assets of the debtor were sold by a liquidator within a six-month period from the estimated date of filing of the petition; and (f) such other relevant information to enable a reasonable investor to make an informed decision on the feasibility of the rehabilitation plan. SEC. 19. Repayment Period. — If the rehabilitation plan extends the period for the debtor to pay its contractual obligations, the new period should not extend beyond fifteen (15) years from the expiration of the stipulated term existing at the time of filing of the petition. SEC. 20. Effects of Rehabilitation Plan. — The approval of the rehabilitation plan by the court shall result in the following: (a) The plan and its provisions shall be binding upon the debtor and all persons who may be affected thereby, including the creditors, whether or not such persons have participated in the proceedings or opposed the plan or whether or not their claims have been scheduled; (b) The debtor shall comply with the provisions of the plan and shall take all actions necessary to carry out the plan; (c) Payments shall be made to the creditors in accordance with the provisions of the plan; (d) Contracts and other arrangements between the debtor and its creditors shall be interpreted as continuing to apply to the extent that they do not conflict with the provisions of the plan; and (e) Any compromises on amounts or rescheduling of timing of payments by the debtor shall be binding on creditors regardless of whether or not the plan is successfully implemented. SEC. 21. Revocation of Rehabilitation Plan on Grounds of Fraud. — Upon motion, within ninety (90) days from the approval of the rehabilitation plan, and after notice and hearing, the court may revoke the approval thereof on the ground that the same was secured through fraud. SEC. 22. Alteration or Modification of Rehabilitation Plan. — An approved rehabilitation plan may, upon motion, be altered or modified if, in the judgment of the court, such alteration or modification is necessary to achieve the desired targets or goals set forth therein. SEC. 23. Termination of Proceedings. — The court shall, upon motion or upon recommendation of the rehabilitation receiver, terminate the proceeding in any of the following cases: (a) Dismissal of the petition; (b) Failure of the debtor to submit the rehabilitation plan; (c) Disapproval of the rehabilitation plan by the court; (d) Failure to achieve the desired targets or goals as set forth in the rehabilitation plan; (e) Failure of the debtor to perform its obligations under the plan; (f) Determination that the rehabilitation plan may no longer be implemented in accordance with its terms, conditions, restrictions or assumptions; or (g) Successful implementation of the rehabilitation plan. SEC. 24. Discharge of Rehabilitation Receiver. — Upon termination of the rehabilitation proceedings, the rehabilitation receiver shall submit his final report and accounting within such period of time as the court will allow him. Upon approval of his report and accounting, the court shall order his discharge. RULE 4 DEBTOR-INITIATED REHABILITATION SEC. 1. Who May Petition. — Any debtor who foresees the impossibility of meeting its debts when they respectively fall due, may petition the proper regional trial court for rehabilitation. A group of companies may jointly file a petition for rehabilitation under these Rules when one or more of its constituent corporations foresee the impossibility of meeting debts when they respectively fall due, and the financial distress would likely adversely affect the financial condition and/or operations of the other member companies of the group and/or the participation of the other member companies of the group is essential under the terms and conditions of the proposed rehabilitation plan. SEC. 2. Contents of Petition. — (a) The petition filed by the debtor must be verified and must set forth with sufficient particularity all the following material facts: (1) the name and business of the debtor; (2) the nature of the business of the debtor; (3) the history of the debtor; (4) the cause of its inability to pay its debts; (5) all the pending REMLAW Page 227
the debtor; (3) the history of the debtor; (4) the cause of its inability to pay its debts; (5) all the pending actions or proceedings known to the debtor and the courts or tribunals where they are pending; (6) threats or demands to enforce claims or liens against the debtor; and (7) the manner by which the debtor may be rehabilitated and how such rehabilitation may benefit the general body of creditors, employees and stockholders. (b) The petition shall be accompanied by the following documents: (1) An audited financial statement of the debtor at the end of its last fiscal year; (2) Interim financial statements as of the end of the month prior to the filing of the petition; (3) A Schedule of Debts and Liabilities which lists all the creditors of the debtor, indicating the name and last address of record of each creditor; the amount of each claim as to principal, interest, or penalties due as of the date of filing; the nature of the claim; and any pledge, lien, mortgage judgment or other security given for the payment thereof; (4) An Inventory of Assets which must list with reasonable specificity all the assets of the debtor, stating the nature of each asset, the location and condition thereof, the book value or market value of the asset, and attaching the corresponding certificate of title therefor in case of real property, or the evidence of title or ownership in case of movable property, the encumbrances, liens or claims thereon, if any, and the identities and addresses of the lienholders and claimants. The Inventory shall include a Schedule of Accounts Receivable which must indicate the amount of each, the persons from whom due, the date of maturity and the degree of collectibility categorizing them as highly collectible to remotely collectible; (5) A rehabilitation plan which conforms with the minimal requirements set out in Section 18 of Rule 3; (6) A Schedule of Payments and Disposition of Assets which the debtor may have effected within three (3) months immediately preceding the filing of the petition; (7) A Schedule of Cash Flow of the debtor for three (3) months immediately preceding the filing of the petition, and a detailed schedule of the projected cash flow for the succeeding three (3) months; (8) A Statement of Possible Claims by or against the debtor which must contain a brief statement of the facts which might give rise to the claim and an estimate of the probable amount thereof; (9) An Affidavit of General Financial Condition which shall contain answers to the questions or matters prescribed in Annex “A” hereof; (10) At least three (3) nominees for the position of rehabilitation receiver as well as their qualifications and addresses, including but not limited to their telephone numbers, fax numbers and e-mail address; and (11) A certificate attesting under oath that (i) the filing of the petition has been duly authorized; and (ii) the directors and stockholders of the debtor have irrevocably approved and/or consented to, in accordance with existing laws, all actions or matters necessary and desirable to rehabilitate the debtor including, but not limited to, amendments to the articles of incorporation and by-laws or articles of partnership; increase or decrease in the authorized capital stock; issuance of bonded indebtedness; alienation, transfer, or encumbrance of assets of the debtor; and modification of shareholders’ rights. (c) Five (5) copies of the petition shall be filed with the court. SEC. 3. Verification by Debtor. — The petition filed by the debtor must be verified by an affidavit of a responsible officer of the debtor and shall be in a form substantially as follows: “I, _________________, (position) of (name of petitioner), do solemnly swear that the petitioner has been duly authorized to file the petition and that the stockholders and board of directors (or governing body) have approved and/or consented to, in accordance with law, all actions or matters necessary or desirable to rehabilitate the debtor. The petition is being filed to protect the interests of the debtor, the stockholders, the investors and the creditors of the debtor, which warrant the appointment of a rehabilitation receiver. There is no petition for insolvency filed with any other body, court or tribunal affecting the petitioner. The Inventory of Assets and the Schedule of Debts and Liabilities contains a full, correct and true description of all debts and liabilities and of all goods, effects, estate and property of whatever kind or class belonging to petitioner. The Inventory also contains a full, correct and true statement of all debts owing or due to petitioner, or to any person or persons in trust for petitioner and of all securities and contracts whereby any money may hereafter become due or payable to petitioner or by or through which any benefit or advantage may accrue to petitioner. The petition contains a concise statement of the facts giving rise, or which might give rise, to any cause of action in favor of petitioner. Petitioner has no land, money, stock, expectancy, or property of any kind, REMLAW Page 228
action in favor of petitioner. Petitioner has no land, money, stock, expectancy, or property of any kind, except those set forth in the Inventory of Assets. Petitioner has, in no instance, created or acknowledged a debt for a greater sum than the true and correct amount. Petitioner, its officers, directors and stockholders have not, directly or indirectly, concealed, fraudulently sold or otherwise fraudulently disposed of, any part of petitioner’s real or personal property, estate, effects or rights of action, and petitioner, its officers, directors and stockholders have not in any way compounded with any of its creditors in order to give preference to such creditors, or to receive or to accept any profit or advantage therefrom, or to defraud or deceive in any manner any creditor to whom petitioner is indebted. Petitioner, its officers, directors, and stockholders have been acting in good faith and with due diligence. SEC. 4. Opposition to or Comment on Petition. — Every creditor of the debtor or any interested party shall file his verified opposition to or comment on the petition not later than fifteen (15) days before the date of the initial hearing fixed in the stay order. After such time, no creditor or interested party shall be allowed to file any comment thereon or opposition thereto without leave of court. If the Schedule of Debts and Liabilities omits a claim or liability, the creditor concerned shall attach to its comment or opposition a verified statement of the obligations allegedly due it. SEC. 5. Initial Hearing. — (a) On or before the initial hearing set in the order mentioned in Section 7 of Rule 3, the petitioner shall file a publisher’s affidavit showing that the publication requirements and a petitioner’s affidavit showing that the notification requirement for foreign creditors had been complied with, as required in the stay order. (b) Before proceeding with the initial hearing, the court shall determine whether the jurisdictional requirements set forth above had been complied with. After finding that such requirements are met, the court shall ensure that the parties consider in detail all of the following: (1) Amendments to the rehabilitation plan proposed by the debtor; (2) Simplification of the issues; (3) The possibility of obtaining stipulations and admission of facts and documents, including resort to request for admission under Rule 26 of the Rules of Court; (4) The possibility of amicably agreeing on any issue brought up in the comments on, or opposition to, the petition; (5) Referral of any accounting, financial and other technical issues to an expert; (6) The possibility of submitting the petition for decision on the basis of the comments, opposition, affidavits and other documents on record; (7) The possibility of a new rehabilitation plan voluntarily agreed upon by the debtor and its creditors; and (8) Such other matters as may aid in the speedy and summary disposition of the case. SEC. 6. Additional Hearings. — The court may hold additional hearings as part of the initial hearing contemplated in these Rules but the initial hearing must be concluded not later than ninety (90) days from the initial date of the initial hearing fixed in the stay order. SEC. 7. Order After Initial Hearing. — (a) Within twenty (20) days after the last hearing, the court shall issue an order which shall: (1) Give due course to the petition and immediately refer the petition and its annexes to the rehabilitation receiver who shall evaluate the rehabilitation plan and submit his recommendations to the court not later than ninety (90) days from the date of the last initial hearing, if the court is satisfied that there is merit to the petition, otherwise the court shall immediately dismiss the petition; and (2) Recite in detail the matters taken up in the initial hearing and the actions taken thereon, including a substitute rehabilitation plan contemplated in Sections 5 (b)(7) and (8) of this Rule; (b) If the debtor and creditors agree on a new rehabilitation plan pursuant to Section 5 (b)(7) of this Rule, the order shall so state the fact and require the rehabilitation receiver to supply the details of the plan and submit it for the approval of the court not later than sixty (60) days from the date of the last initial hearing. The court shall approve the new rehabilitation plan not later than ninety (90) days from the date of the last initial hearing upon concurrence of the following: (1) Approval or endorsement of creditors holding at least two-thirds (2/3) of the total liabilities of the debtor including secured creditors holding more than fifty percent (50%) of the total secured claims of REMLAW Page 229
debtor including secured creditors holding more than fifty percent (50%) of the total secured claims of the debtor and unsecured creditors holding more than fifty percent (50%) of the total unsecured claims of the debtor; (2) The rehabilitation plan complies with the requirements specified in Section 18 of Rule 3; (3) The rehabilitation plan would provide the objecting class of creditors with payments whose present value projected in the plan would be greater than that which they would have received if the assets of the debtor were sold by a liquidator within a six (6)-month period from the date of filing of the petition; and (4) The rehabilitation receiver has recommended approval of the plan. The approval by the court of the new rehabilitation plan shall have the same effect as approval of a rehabilitation plan under Section 20 of Rule 3. SEC. 8. Creditors’ Meetings. — If no new rehabilitation plan is agreed upon by the debtor and the creditors, the rehabilitation receiver, at any time before he submits his evaluation on the debtorproposed rehabilitation plan to the court as prescribed in Section 7(a)(1) of this Rule, shall, either alone or with the debtor, meet with the creditors or any interested party to discuss the plan with a view to clarifying or resolving any matter connected therewith. SEC. 9. Comments on or Opposition to Rehabilitation Plan. — Any creditor or interested party of record may file comments on or opposition to the proposed rehabilitation plan, with a copy given to the rehabilitation receiver, not later than sixty (60) days from the date of the last initial hearing. The court shall conduct summary and non-adversarial proceedings to receive evidence, if necessary, in hearing the comments on and opposition to the plan. SEC. 10. Modification of Proposed Rehabilitation Plan. — The debtor may modify its rehabilitation plan in the light of the comments of the rehabilitation receiver and creditors or any interested party and submit a revised or substitute rehabilitation plan for the final approval of the court. Such rehabilitation plan must be submitted to the court not later than ten (10) months from the date of the date of filing of the petition. SEC. 11. Approval of Rehabilitation Plan. — The court may approve a rehabilitation plan even over the opposition of creditors of the debtor if, in its judgment, the rehabilitation of the debtor is feasible and the opposition of the creditors is manifestly unreasonable. The opposition of the creditors is manifestly unreasonable if the following are present: (a) The rehabilitation plan complies with the requirements specified in Section 18 of Rule 3; (b) The rehabilitation plan would provide the objecting class of creditors with payments whose present value projected in the plan would be greater than that which they would have received if the assets of the debtor were sold by a liquidator within a six (6)month period from the date of filing of the petition; and (c) The rehabilitation receiver has recommended approval of the plan. In approving the rehabilitation plan, the court shall ensure that the rights of the secured creditors are not impaired. The court shall also issue the necessary orders or processes for its immediate and successful implementation. It may impose such terms, conditions, or restrictions as the effective implementation and monitoring thereof may reasonably require, or for the protection and preservation of the interests of the creditors should the plan fail. SEC. 12. Period to Decide Petition. — The court shall decide the petition within one (1) year from the date of filing of the petition, unless the court, for good cause shown, is able to secure an extension of the period from the Supreme Court. RULE 5 CREDITOR-INITIATED REHABILITATION SEC. 1. Who May Petition. — Any creditor or creditors holding at least twenty percent (20%) of the debtor’s total liabilities may file a petition with the proper regional trial court for rehabilitation of a debtor that cannot meet its debts as they respectively fall due. SEC. 2. Requirements for Creditor-Initiated Petitions. — Where the petition is filed by a creditor or creditors under this Rule, it is sufficient that the petition is accompanied by a rehabilitation plan and a list of at least three (3) nominees to the position of rehabilitation receiver and verified by a sworn statement that the affiant has read the petition and that its contents are true and correct of his personal knowledge or based on authentic records and that the petition is being filed to protect the interests of
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the debtor, the stockholders, the investors and the creditors of the debtor. SEC. 3. Applicability of Provisions Relating to Debtor-Initiated Rehabilitation. — The provisions of Sections 5 to 12 of Rule 4 shall apply to rehabilitation under this Rule. RULE 6 PRE-NEGOTIATED REHABILITATION SEC. 1. Pre-negotiated Rehabilitation Plan. — A debtor that foresees the impossibility of meeting its debts as they fall due may, by itself or jointly with any of its creditors, file a verified petition for the approval of a pre-negotiated rehabilitation plan. The petition shall comply with Section 2 of Rule 4 and be supported by an affidavit showing the written approval or endorsement of creditors holding at least two-thirds (2/3) of the total liabilities of the debtor, including secured creditors holding more than fifty percent (50%) of the total secured claims of the debtor and unsecured creditors holding more than fifty percent (50%) of the total unsecured claims of the debtor. SEC. 2. Issuance of Order. — If the court finds the petition sufficient in form and substance, it shall, not later than five (5) working days from the filing of the petition, issue an order which shall: (a) Identify the debtor, its principal business or activity/ies and its principal place of business; (b) Direct the publication of the order in a newspaper of general circulation once a week for at least two (2) consecutive weeks, with the first publication to be made within seven (7) days from the time of its issuance; (c) Direct the service by personal delivery of a copy of the petition on each creditor who is not a petitioner holding at least five percent (5%) of the total liabilities of the debtor, as determined in the schedule attached to the petition, within three (3) days; (d) Direct the petitioner to furnish a copy of the petition and its annexes, as well as the stay order, to the relevant regulatory agency; (e) State that copies of the petition and the rehabilitation plan are available for examination and copying by any interested party; (f) Direct creditors and other parties interested (including the Securities and Exchange Commission and the relevant regulatory agencies such as, but not limited to, the Bangko Sentral ng Pilipinas, the Insurance Commission, the National Telecommunications Commission, the Housing and Land Use Regulatory Board and the Energy Regulatory Commission) in opposing the petition or rehabilitation plan to file their verified objections thereto or comments thereon within a period of not later than twenty (20) days from the second publication of the order, with a warning that failure to do so will bar them from participating in the proceedings; (g) Appoint the rehabilitation receiver named in the plan, unless the court finds that he is not qualified under these Rules in which case it may appoint a qualified rehabilitation receiver of its choice; (h) Stay enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor, its guarantors and persons not solidarily liable with the debtor; provided, that the stay order shall not cover claims against letters of credit and similar security arrangements issued by a third party to secure the payment of the debtor’s obligations; provided further, that the stay order shall not cover foreclosure by a creditor of property not belonging to a debtor under corporate rehabilitation; provided, however, that where the owner of such property sought to be foreclosed is also a guarantor or one who is not solidarily liable, said owner shall be entitled to the benefit of excussion as such guarantor; (i) Prohibit the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (j) Prohibit the debtor from making any payment of its liabilities outstanding as of the date of filing of the petition; (k) Prohibit the debtor’s suppliers of goods or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and goods supplied after the issuance of the stay order; (l) Direct the payment in full of all administrative expenses incurred after the issuance of the stay order; and (m) Direct the payment of new loans or other forms of credit accommodations obtained for the rehabilitation of the debtor with prior court approval. SEC. 3. Approval of Plan. — Within ten (10) days from the date of the second publication of the order referred to in Section 2 of this Rule, the court shall approve the rehabilitation plan unless a creditor or REMLAW Page 231
referred to in Section 2 of this Rule, the court shall approve the rehabilitation plan unless a creditor or other interested party submits a verified objection to it in accordance with the next succeeding section. SEC. 4. Objection to Petition or Rehabilitation Plan. — Any creditor or other interested party may submit to the court a verified objection to the petition or the rehabilitation plan. The objections shall be limited to the following: (a) The petition or the rehabilitation plan or their attachments contain material omissions or are materially false or misleading; (b) The terms of rehabilitation are unattainable; or (c) The approval or endorsement of creditors required under Section 1 of this Rule has not been obtained Copies of any objection to the petition or the rehabilitation plan shall be served on the petitioning debtor and/or creditors. SEC. 5. Hearing on Objections. — The court shall set the case for hearing not earlier than ten (10) days and no later than twenty (20) days from the date of the second publication of the order mentioned in Section 2 of this Rule on the objections to the petition or rehabilitation plan. If the court finds that the objection is in accordance with the immediately preceding section, it shall direct the petitioner to cure the defect within a period fifteen (15) days from receipt of the order. SEC. 6. Period for Approval of Rehabilitation Plan. — The court shall decide the petition not later than one hundred twenty (120) days from the date of the filing of the petition. If the court fails to do so within said period, the rehabilitation plan shall be deemed approved SEC. 7. Effects of Approval of Rehabilitation Plan. — Approval of the rehabilitation plan under this Rule shall have the same legal effect as approval of a rehabilitation plan under Section 20 of Rule 3. SEC. 8. Revocation of Approved Rehabilitation Plan. — Not later than thirty (30) days from the approval of a rehabilitation plan under this Rule, the plan may, upon motion and after notice and hearing, be revoked on the ground that the approval was secured by fraud or that the petitioner has failed to cure the defect ordered by the court pursuant to Section 5 of this Rule. SEC. 9. Effect of Rule on Pending Petitions. — Any pending petition for rehabilitation that has not undergone the initial hearing prescribed under the Interim Rules of Procedure for Corporate Rehabilitation at the time of the effectivity of these Rules may be converted into a rehabilitation proceeding under this Rule. RULE 7 RECOGNITION OF FOREIGN PROCEEDINGS SEC. 1. Scope of Application. — This Rule applies where (a) assistance is sought in a Philippine court by a foreign court or a foreign representative in connection with a foreign proceeding; (b) assistance is sought in a foreign State in connection with a domestic proceeding governed by these Rules; or (c) a foreign proceeding and a domestic proceeding are concurrently taking place. The sole fact that a petition is filed pursuant to this Rule does not subject the foreign representative or the foreign assets and affairs of the debtor to the jurisdiction of the local courts for any purpose other than the petition. SEC. 2. Non-Recognition of Foreign Proceeding. — Nothing in this Rule prevents the court from refusing to take an action governed by this Rule if (a) the action would be manifestly contrary to the public policy of the Philippines; and (b) if the court finds that the country of which the petitioner is a national does not grant recognition to a Philippine rehabilitation proceeding in a manner substantially in accordance with this Rule. SEC. 3. Petition for Recognition of Foreign Proceeding. — A foreign representative may apply with the Regional Trial Court where the debtor resides for recognition of the foreign proceeding in which the foreign representative has been appointed. A petition for recognition shall be accompanied by: (a) A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or (b) A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or (c) In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative. REMLAW Page 232
representative. SEC. 4. Recognition of Foreign Proceeding. — A foreign proceeding shall be recognized if: (a) The proceeding is a foreign proceeding as defined herein; (b) The person or body applying for recognition is a foreign representative as defined herein; and (c) The petition meets the requirements of Section 3 of this Rule; SEC. 5. Period to Recognize Foreign Proceeding. — A petition for recognition of a foreign proceeding shall be decided within thirty (30) days from the filing thereof. SEC. 6. Notification to Court. — From the time of filing the petition for recognition of the foreign proceeding, the foreign representative shall inform the court promptly of: (a) Any substantial change in the status of the foreign proceeding or the status of the foreign representative’s appointment; and (b)Any other foreign proceeding regarding the same debtor that becomes known to the foreign representative. SEC. 7. Provisional Relief that May be Granted upon Application for Recognition of Foreign Proceeding. — From the time of filing a petition for recognition until the same is decided upon, the court may, upon motion of the foreign representative where relief is urgently needed to protect the assets of the debtor or the interests of the creditors, grant relief of a provisional nature, including: (a) Staying execution against the debtor’s assets; (b) Entrusting the administration or realization of all or part of the debtor’s assets located in the Philippines to the foreign representative or another person designated by the court in order to protect and preserve the value of assets that, by their nature or because of other circumstances, are perishable, susceptible to devaluation or otherwise in jeopardy; (c) Any relief mentioned in Sections 9(a)(1), (2) and (7) of this Rule. SEC. 8. Effects of Recognition of Foreign Proceeding. — Upon recognition of a foreign proceeding: (a) Commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities is stayed; provided, that such stay does not affect the right to commence individual actions or proceedings to the extent necessary to preserve a claim against the debtor. (b) Execution against the debtor’s assets is stayed; and (c) The right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended. SEC. 9. Relief That May be Granted After Recognition of Foreign Proceeding. — (a) Upon recognition of a foreign proceeding, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, upon motion of the foreign representative, grant any appropriate relief including: (1) Staying the commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities to the extent they have not been stayed under Section 8(a) of this Rule; (2) Staying execution against the debtor’s assets to the extent it has not been stayed under Section 8(b) of this Rule; (3) Suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent this right has not been suspended under Section 8(c) of this Rule; (4) Providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities; (5) Entrusting the administration or realization of all or part of the debtor’s assets located in the Philippines to the foreign representative or another person designated by the court; (6) Extending the relief granted under Section 7 of this Rule; (7) Granting any additional relief that may be available to the rehabilitation receiver under these laws. (b) Upon recognition of a foreign proceeding, the court may, at the request of the foreign representative, entrust the distribution of all or part of the debtor’s assets located in the Philippines to the foreign representative or another person designated by the court; provided that the court is satisfied that the interests of local creditors are adequately protected. SEC. 10. Protection of Creditors and Other Interested Persons. — (a) In granting or denying relief under this Rule or in modifying or terminating the relief under paragraph (c) of this Section, the court must be satisfied that the interests of the creditors and other interested persons, including the debtor, are adequately protected. REMLAW Page 233
persons, including the debtor, are adequately protected. (b) The court may subject the relief granted under Section 7 or Section 9 of this Rule to conditions it considers appropriate. (c) The court may, upon motion of the foreign representative or a person affected by the relief granted under Section 7 or Section 9 of this Rule, or on its own motion, modify or terminate such relief. SEC. 11. Actions to Avoid Acts Detrimental to Creditors. — Upon recognition of a foreign proceeding, the foreign representative acquires the standing to initiate actions to avoid or otherwise render ineffective acts detrimental to creditors that are available under these Rules. SEC. 12. Intervention by Foreign Representative in Philippine Proceedings. — Upon recognition of a foreign proceeding, the foreign representative may intervene in any action or proceeding in the Philippines in which the debtor is a party. SEC. 13. Cooperation and Direct Communication with Foreign Courts and Foreign Representatives. — In matters covered by this Rule, the court shall cooperate to the maximum extent possible with foreign courts or foreign representatives. The court is entitled to communicate directly with, or request information or assistance directly from, foreign courts or foreign representatives. SEC. 14. Forms of Cooperation. — Cooperation may be implemented by any appropriate means, including but not limited to the following: (a) Appointment of a person or body to act at the discretion of the court; (b) Communication of information by any means considered appropriate by the court; (c) Coordination of the administration and supervision of the debtor’s assets and affairs; (d) Approval or implementation by courts of agreements concerning the coordination of proceedings; (e) Coordination of concurrent proceedings regarding the same debtor; (f) Suspension of proceedings against the debtor; (g) Limiting the relief to assets that should be administered in a foreign proceeding pending in a jurisdiction other than the place where the debtor has its principal place of business (foreign non-main proceeding) or information required in that proceeding; and (h) Implementation of rehabilitation or re-organization plan for the debtor. Nothing in this Rule limits the power of the court to provide additional assistance to the foreign representative under other applicable laws. SEC. 15. Commencement of Local Proceeding after Recognition of Foreign Proceeding. — After the recognition of a foreign proceeding, a local proceeding under these Rules may be commenced only if the debtor is doing business in the Philippines, the effects of the proceedings shall be restricted to the assets of the debtor located in the country and, to the extent necessary to implement cooperation and coordination under Sections 13 and 14 of this Rule, to the other assets of the debtor that, under local laws, must be administered in that proceeding. SEC. 16. Local and Foreign Proceedings. — Where a foreign proceeding and a local proceeding are taking place concurrently regarding the same debtor, the court shall seek cooperation and coordination under Sections 13 and 14 of this Rule. Any relief granted to the foreign proceeding must be made consistent with the relief granted in the local proceeding. RULE 8 PROCEDURAL REMEDIES SEC. 1. Motion for Reconsideration. — A party may file a motion for reconsideration of any order issued by the court prior to the approval of the rehabilitation plan. No relief can be extended to the party aggrieved by the court’s order on the motion through a special civil action for certiorari under Rule 65 of the Rules of Court. Such order can only be elevated to the Court of Appeals as an assigned error in the petition for review of the decision or order approving or disapproving the rehabilitation plan. An order issued after the approval of the rehabilitation plan can be reviewed only through a special civil action for certiorari under Rule 65 of the Rules of Court. SEC. 2. Review of Decision or Order on Rehabilitation Plan. — An order approving or disapproving a rehabilitation plan can only be reviewed through a petition for review to the Court of Appeals under Rule 43 of the Rules of Court within fifteen (15) days from notice of the decision or order. RULE 9 FINAL PROVISIONS SEC. 1. Severability. — If any provision or section of these Rules is held invalid, the other provisions or REMLAW Page 234
SEC. 1. Severability. — If any provision or section of these Rules is held invalid, the other provisions or sections shall not be affected thereby. SEC. 2. Transitory Provision. — Unless the court orders otherwise to prevent manifest injustice, any pending petition for rehabilitation that has not undergone the initial hearing prescribed under the Interim Rules of Procedure for Corporate Rehabilitation at the time of the effectivity of these Rules shall be governed by these Rules. SEC. 3. Effectivity. — These Rules shall take effect on 16 January 2009 following its publication in two (2) newspapers of general circulation in the Philippines. Pasted from
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Oscar Reyes v. RTC Makati GR 165744 Aug 11, 2008 Sunday, November 14, 2010 11:31 PM
[G.R. No. 165744, August 11, 2008] OSCAR C. REYES, PETITIONER, VS. HON. REGIONAL TRIAL COURT OF MAKATI, BRANCH 142, ZENITH INSURANCE CORPORATION, AND RODRIGO C. REYES, RESPONDENTS. DE CI S I ON BRION, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Decision of the Court of Appeals (CA)[1] promulgated on May 26, 2004 in CA-G.R. SP No. 74970. The CA Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November 29, 2002[2] in Civil Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and Damages") which denied petitioner Oscar C. Reyes' (Oscar) Motion to Declare Complaint as Nuisance or Harassment Suit. BACKGROUND FACTS Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964, while Anastacia died in 1993. Although Pedro's estate was judicially partitioned among his heirs sometime in the 1970s, no similar settlement and partition appear to have been made with Anastacia's estate, which included her shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively.[3] On May 9, 2000, Zenith and Rodrigo filed a complaint[4] with the Securities and Exchange Commission (SEC) against Oscar, docketed as SEC Case No. 05-00-6615. The complaint stated that it is "a derivative suit initiated and filed by the complainant Rodrigo C. Reyes to obtain an accounting of the funds and assets of ZENITH INSURANCE CORPORATION which are now or formerly in the control, custody, and/or possession of respondent [herein petitioner Oscar] and to determine the shares of stock of deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated [by Oscar] for himself [and] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased spouses, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares."[5] [Emphasis supplied.] In his Answer with Counterclaim,[6] Oscar denied the charge that he illegally acquired the shares of Anastacia Reyes. He asserted, as a defense, that he purchased the subject shares with his own funds from the unissued stocks of Zenith, and that the suit is not a bona fide derivative suit because the requisites therefor have not been complied with. He thus questioned the SEC's jurisdiction to entertain the complaint because it pertains to the settlement of the estate of Anastacia Reyes. When Republic Act (R.A.) No. 8799[7] took effect, the SEC's exclusive and original jurisdiction over cases enumerated in Section 5 of Presidential Decree (P.D.) No. 902-A was transferred to the RTC designated as a special commercial court.[8] The records of Rodrigo's SEC case were thus turned over to the RTC, Branch 142, Makati, and docketed as Civil Case No. 00-1553. On October 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit.[9] He claimed that the complaint is a mere nuisance or harassment suit and should, according to the Interim Rules of Procedure for IntraCorporate Controversies, be dismissed; and that it is not a bona fide derivative suit as it partakes of the nature of a petition for the settlement of estate of the deceased Anastacia that is outside the jurisdiction of a special commercial court. The RTC, in its Order dated November 29, 2002 (RTC Order), denied the motion in part and declared: A close reading of the Complaint disclosed the presence of two (2) causes of action, namely: a) a derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar] with prayer to appoint a management committee; and b) an action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its
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determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties' brothers and sisters. The latter is not a derivative suit and should properly be threshed out in a petition for settlement of estate. Accordingly, the motion is denied. However, only the derivative suit consisting of the first cause of action will be taken cognizance of by this Court.[10] Oscar thereupon went to the CA on a petition for certiorari, prohibition, and mandamus[11] and prayed that the RTC Order be annulled and set aside and that the trial court be prohibited from continuing with the proceedings. The appellate court affirmed the RTC Order and denied the petition in its Decision dated May 26, 2004. It likewise denied Oscar's motion for reconsideration in a Resolution dated October 21, 2004. Petitioner now comes before us on appeal through a petition for review on certiorari under Rule 45 of the Rules of Court. ASSIGNMENT OF ERRORS Petitioner Oscar presents the following points as conclusions the CA should have made: 1. that the complaint is a mere nuisance or harassment suit that should be dismissed under the Interim Rules of Procedure of Intra-Corporate Controversies; and 2. that the complaint is not a bona fide derivative suit but is in fact in the nature of a petition for settlement of estate; hence, it is outside the jurisdiction of the RTC acting as a special commercial court. Accordingly, he prays for the setting aside and annulment of the CA decision and resolution, and the dismissal of Rodrigo's complaint before the RTC. THE COURT'S RULING We find the petition meritorious. The core question for our determination is whether the trial court, sitting as a special commercial court, has jurisdiction over the subject matter of Rodrigo's complaint. To resolve it, we rely on the judicial principle that "jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations of the complaint, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein."[12] Jurisdiction of Special Commercial Courts P.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special commercial court) exercises exclusive jurisdiction: SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnership, and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, 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 appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations. The allegations set forth in Rodrigo's complaint principally invoke Section 5, paragraphs (a) and (b) above as basis for the exercise of the RTC's special court jurisdiction. Our focus in examining the allegations of the complaint shall therefore be on these two provisions. Fraudulent Devices and Schemes The rule is that a complaint must contain a plain, concise, and direct statement of the ultimate facts constituting the plaintiff's cause of action and must specify the relief sought.[13] Section 5, Rule 8 of the Revised Rules of Court provides that in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity.[14] These rules find specific application to Section 5(a) of P.D. No. 902-A which speaks of corporate devices or schemes that amount to fraud or misrepresentation detrimental to the public and/or to the stockholders.
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In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the following: 3. This is a complaint...to determine the shares of stock of the deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated for himself [herein petitioner Oscar] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased Spouses Pedro and Anastacia Reyes, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares with the corresponding equivalent amount of P7,099,934.82 plus interest thereon from 1978 representing his obligations to the Associated Citizens' Bank that was paid for his account by his late mother, Anastacia C. Reyes. This amount was not collated or taken into account in the partition or distribution of the estate of their late mother, Anastacia C. Reyes. 3.1. Respondent Oscar C. Reyes, through other schemes of fraud including misrepresentation, unilaterally, and for his own benefit, capriciously transferred and took possession and control of the management of Zenith Insurance Corporation which is considered as a family corporation, and other properties and businesses belonging to Spouses Pedro and Anastacia Reyes. xxxx 4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered by TCT No. 225324 was illegally and fraudulently used by respondent as a collateral. xxxx 5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doña Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein. xxxx 9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondent's [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto. xxxx 10.1 By refusal of the respondent to account of his [sic] shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children, including the complainant Rodrigo C. Reyes herein, to their damage and prejudice. xxxx 11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance Corporation[,] particularly the number of shares of stocks illegally and fraudulently transferred to him from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or partition in equal shares among their children. [Emphasis supplied.] Allegations of deceit, machination, false pretenses, misrepresentation, and threats are largely conclusions of law that, without supporting statements of the facts to which the allegations of fraud refer, do not sufficiently state an effective cause of action.[15] The late Justice Jose Feria, a noted authority in Remedial Law, declared that fraud and mistake are required to be averred with particularity in order to enable the opposing party to controvert the particular facts allegedly constituting such fraud or mistake.[16] Tested against these standards, we find that the charges of fraud against Oscar were not properly supported by the required factual allegations. While the complaint contained allegations of fraud purportedly committed by him, these allegations are not particular enough to bring the controversy within the special commercial court's jurisdiction; they are not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can
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not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can be characterized as "illegal and fraudulent" were not explained nor elaborated on. Not every allegation of fraud done in a corporate setting or perpetrated by corporate officers will bring the case within the special commercial court's jurisdiction. To fall within this jurisdiction, there must be sufficient nexus showing that the corporation's nature, structure, or powers were used to facilitate the fraudulent device or scheme. Contrary to this concept, the complaint presented a reverse situation. No corporate power or office was alleged to have facilitated the transfer of the shares; rather, Oscar, as an individual and without reference to his corporate personality, was alleged to have transferred the shares of Anastacia to his name, allowing him to become the majority and controlling stockholder of Zenith, and eventually, the corporation's President. This is the essence of the complaint read as a whole and is particularly demonstrated under the following allegations: 5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doña Anastacia C. Reyes, shares of stocks and *sic+ valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein. xxxx 9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondent's [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto. [Emphasis supplied.] In ordinary cases, the failure to specifically allege the fraudulent acts does not constitute a ground for dismissal since such defect can be cured by a bill of particulars. In cases governed by the Interim Rules of Procedure on Intra-Corporate Controversies, however, a bill of particulars is a prohibited pleading.[17] It is essential, therefore, for the complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke the court's special commercial jurisdiction. We note that twice in the course of this case, Rodrigo had been given the opportunity to study the propriety of amending or withdrawing the complaint, but he consistently refused. The court's function in resolving issues of jurisdiction is limited to the review of the allegations of the complaint and, on the basis of these allegations, to the determination of whether they are of such nature and subject that they fall within the terms of the law defining the court's jurisdiction. Regretfully, we cannot read into the complaint any specifically alleged corporate fraud that will call for the exercise of the court's special commercial jurisdiction. Thus, we cannot affirm the RTC's assumption of jurisdiction over Rodrigo's complaint on the basis of Section 5(a) of P.D. No. 902-A.[18] Intra-Corporate Controversy A review of relevant jurisprudence shows a development in the Court's approach in classifying what constitutes an intracorporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties.[19] The types of relationships embraced under Section 5(b), as declared in the case of Union Glass & Container Corp. v. SEC,[20] were as follows: a) between the corporation, partnership, or association and the public; b) between the corporation, partnership, or association and its stockholders, partners, members, or officers; c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is concerned; and d) among the stockholders, partners, or associates themselves. [Emphasis supplied.] The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC, regardless of the subject matter of the dispute. This came to be known as the relationship test. However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc.,[21]the Court introduced the nature of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute.
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the dispute. Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate.[22] The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties' correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists. The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the nature of the question under controversy.[23] This two-tier test was adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:[24] To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy. The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are 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 franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. Given these standards, we now tackle the question posed for our determination under the specific circumstances of this case: Application of the Relationship Test Is there an intra-corporate relationship between the parties that would characterize the case as an intra-corporate dispute? We point out at the outset that while Rodrigo holds shares of stock in Zenith, he holds them in two capacities: in his own right with respect to the 4,250 shares registered in his name, and as one of the heirs of Anastacia Reyes with respect to the 136,598 shares registered in her name. What is material in resolving the issues of this case under the allegations of the complaint is Rodrigo's interest as an heir since the subject matter of the present controversy centers on the shares of stocks belonging to Anastacia, not on Rodrigo's personally-owned shares nor on his personality as shareholder owning these shares. In this light, all reference to shares of stocks in this case shall pertain to the shareholdings of the deceased Anastacia and the parties' interest therein as her heirs. Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the decedent. Accordingly, upon Anastacia's death, her children acquired legal title to her estate (which title includes her shareholdings in Zenith), and they are, prior to the estate's partition, deemed co-owners thereof.[25] This status as coowners, however, does not immediately and necessarily make them stockholders of the corporation. Unless and until there is compliance with Section 63 of the Corporation Code on the manner of transferring shares, the heirs do not become registered stockholders of the corporation. Section 63 provides: Section 63. Certificate of stock and transfer of shares. - The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares transferred. [Emphasis supplied.] No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation. Simply stated, the transfer of title by means of succession, though effective and valid between the parties involved (i.e., between the decedent's estate and her heirs), does not bind the corporation and third parties. The transfer must be registered in the books of the corporation to make the transferee-heir a stockholder entitled to recognition as such both by the corporation and by third parties.[26] We note, in relation with the above statement, that in Abejo v. Dela Cruz[27] and TCL Sales Corporation v. Court of
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We note, in relation with the above statement, that in Abejo v. Dela Cruz[27] and TCL Sales Corporation v. Court of Appeals[28] we did not require the registration of the transfer before considering the transferee a stockholder of the corporation (in effect upholding the existence of an intra-corporate relation between the parties and bringing the case within the jurisdiction of the SEC as an intra-corporate controversy). A marked difference, however, exists between these cases and the present one. In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of shares of the corporation; after the transferee had established prima facie ownership over the shares of stocks in question, registration became a mere formality in confirming their status as stockholders. In the present case, each of Anastacia's heirs holds only an undivided interest in the shares. This interest, at this point, is still inchoate and subject to the outcome of a settlement proceeding; the right of the heirs to specific, distributive shares of inheritance will not be determined until all the debts of the estate of the decedent are paid. In short, the heirs are only entitled to what remains after payment of the decedent's debts;[29] whether there will be residue remains to be seen. Justice Jurado aptly puts it as follows: No succession shall be declared unless and until a liquidation of the assets and debts left by the decedent shall have been made and all his creditors are fully paid. Until a final liquidation is made and all the debts are paid, the right of the heirs to inherit remains inchoate. This is so because under our rules of procedure, liquidation is necessary in order to determine whether or not the decedent has left any liquid assets which may be transmitted to his heirs.[30] [Emphasis supplied.] Rodrigo must, therefore, hurdle two obstacles before he can be considered a stockholder of Zenith with respect to the shareholdings originally belonging to Anastacia. First, he must prove that there are shareholdings that will be left to him and his co-heirs, and this can be determined only in a settlement of the decedent's estate. No such proceeding has been commenced to date. Second, he must register the transfer of the shares allotted to him to make it binding against the corporation. He cannot demand that this be done unless and until he has established his specific allotment (and prima facie ownership) of the shares. Without the settlement of Anastacia's estate, there can be no definite partition and distribution of the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer. And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an intra-corporate relationship as premise for an intra-corporate controversy within the jurisdiction of a special commercial court. In sum, we find that - insofar as the subject shares of stock (i.e., Anastacia's shares) are concerned - Rodrigo cannot be considered a stockholder of Zenith. Consequently, we cannot declare that an intra-corporate relationship exists that would serve as basis to bring this case within the special commercial court's jurisdiction under Section 5(b) of PD 902-A, as amended. Rodrigo's complaint, therefore, fails the relationship test. Application of the Nature of Controversy Test The body rather than the title of the complaint determines the nature of an action.[31] Our examination of the complaint yields the conclusion that, more than anything else, the complaint is about the protection and enforcement of successional rights. The controversy it presents is purely civil rather than corporate, although it is denominated as a "complaint for accounting of all corporate funds and assets." Contrary to the findings of both the trial and appellate courts, we read only one cause of action alleged in the complaint. The "derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar]" does not constitute a separate cause of action but is, as correctly claimed by Oscar, only an incident to the "action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties' brothers and sisters." There can be no mistake of the relationship between the "accounting" mentioned in the complaint and the objective of partition and distribution when Rodrigo claimed in paragraph 10.1 of the complaint that: 10.1 By refusal of the respondent to account of [sic] his shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children including the complainant Rodrigo C. Reyes herein to their damage and prejudice. We particularly note that the complaint contained no sufficient allegation that justified the need for an accounting other than to determine the extent of Anastacia's shareholdings for purposes of distribution. Another significant indicator that points us to the real nature of the complaint are Rodrigo's repeated claims of illegal and fraudulent transfers of Anastacia's shares by Oscar to the prejudice of the other heirs of the decedent; he cited these allegedly fraudulent acts as basis for his demand for the collation and distribution of Anastacia's shares to the heirs. These claims tell us unequivocally that the present controversy arose from the parties' relationship as heirs of Anastacia and not as shareholders of Zenith. Rodrigo, in filing the complaint, is enforcing his rights as a co-heir and not as a stockholder of Zenith. The injury he seeks to remedy is one suffered by an heir (for the impairment of his successional rights) and not by the corporation nor by Rodrigo as a shareholder on record.
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rights) and not by the corporation nor by Rodrigo as a shareholder on record. More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of illegal acquisition by Oscar is the distribution of Anastacia's shareholdings without a prior settlement of her estate - an objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special commercial court, has no jurisdiction to settle, partition, and distribute the estate of a deceased. A relevant provision - Section 2 of Rule 90 of the Revised Rules of Court - that contemplates properties of the decedent held by one of the heirs declares: Questions as to advancement made or alleged to have been made by the deceased to any heir may be heard and determined by the court having jurisdiction of the estate proceedings; and the final order of the court thereon shall be binding on the person raising the questions and on the heir. [Emphasis supplied.] Worth noting are this Court's statements in the case of Natcher v. Court of Appeals:[32] Matters which involve settlement and distribution of the estate of the decedent fall within the exclusive province of the probate court in the exercise of its limited jurisdiction. xxxx It is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a special proceeding because it is subject to specific prescribed rules. [Emphasis supplied.] That an accounting of the funds and assets of Zenith to determine the extent and value of Anastacia's shareholdings will be undertaken by a probate court and not by a special commercial court is completely consistent with the probate court's limited jurisdiction. It has the power to enforce an accounting as a necessary means to its authority to determine the properties included in the inventory of the estate to be administered, divided up, and distributed. Beyond this, the determination of title or ownership over the subject shares (whether belonging to Anastacia or Oscar) may be conclusively settled by the probate court as a question of collation or advancement. We had occasion to recognize the court's authority to act on questions of title or ownership in a collation or advancement situation in Coca v. Pangilinan[33] where we ruled: It should be clarified that whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction or of its limited probate jurisdiction is in reality not a jurisdictional question. In essence, it is a procedural question involving a mode of practice "which may be waived." As a general rule, the question as to title to property should not be passed upon in the testate or intestate proceeding. That question should be ventilated in a separate action. That general rule has qualifications or exceptions justified by expediency and convenience. Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice to its final determination in a separate action. Although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are all heirs, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, the probate court is competent to decide the question of ownership. [Citations omitted. Emphasis supplied.] In sum, we hold that the nature of the present controversy is not one which may be classified as an intra-corporate dispute and is beyond the jurisdiction of the special commercial court to resolve. In short, Rodrigo's complaint also fails the nature of the controversy test. DERIVATIVE SUIT Rodrigo's bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction on the RTC (as a special commercial court) if he cannot comply with the requisites for the existence of a derivative suit. These requisites are: a. the party bringing suit should be a shareholder during the time of the act or transaction complained of, the number of shares not being material; b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief, but the latter has failed or refused to heed his plea; and c. the cause of action actually devolves on the corporation; the wrongdoing or harm having been or being caused to the corporation and not to the particular stockholder bringing the suit. [34] Based on these standards, we hold that the allegations of the present complaint do not amount to a derivative suit. First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging to Anastacia; he only stands as a transferee-heir whose rights to the share are inchoate and unrecorded. With respect to his own individually-held shareholdings, Rodrigo has not alleged any individual cause or basis as a shareholder on record to proceed against Oscar. Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some
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Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some particularity in his complaint that he has exhausted his remedies within the corporationby making a sufficient demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is denied.[35] Paragraph 8 of the complaint hardly satisfies this requirement since what the rule contemplates is the exhaustion of remedies within the corporate setting: 8. As members of the same family, complainant Rodrigo C. Reyes has resorted [to] and exhausted all legal means of resolving the dispute with the end view of amicably settling the case, but the dispute between them ensued. Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation due to Oscar's acts. If indeed he illegally and fraudulently transferred Anastacia's shares in his own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or wrongdoing against the corporation that he can champion in his capacity as a shareholder on record.[36] In summary, whether as an individual or as a derivative suit, the RTC - sitting as special commercial court - has no jurisdiction to hear Rodrigo's complaint since what is involved is the determination and distribution of successional rights to the shareholdings of Anastacia Reyes. Rodrigo's proper remedy, under the circumstances, is to institute a special proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint. WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court of Appeals dated May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the Regional Trial Court, Branch 142, Makati, docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of jurisdiction. SO ORDERED.
Pasted from
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BP 129, as amended by RA 7691, Secs. 2 to 4 Sunday, November 14, 2010 11:31 PM
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?Sps Fajardo v. Anita Flores GR 167891 Jan 15, 2010 Sunday, November 14, 2010 11:31 PM
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Vda De Barrera et al v. Heirs of Vicente Legaspi GR 174346 Sept 12, 2008; Sunday, November 14, 2010 11:31 PM
[G.R. No. 174346, September 12, 2008] FERNANDA GEONZON VDA. DE BARRERA AND JOHNNY OCO, JR., PETITIONERS, VS. HEIRS OF VICENTE LEGASPI, REPRESENTED BY PEDRO LEGASPI, RESPONDENTS. DE C I SI O N CARPIO MORALES, J.: Under review before this Court is the July 31, 2006 Decision of the Court of Appeals, [1 ] which affirmed that of the Regional Trial Court, Branch 16, of Tangub City in Civil Case No. TC-97-001, ordering the defendants-petitioners herein, Fernanda Geonzon vda. de Barrera and Johnny Oco. Jr. to return possession of the subject property to the plaintiffs-herein respondents, Heirs of Vicente Legaspi. On October 1, 1996, petitioner Johnny Oco Jr. (Oco), said to be a "peace officer connected with the PNP," accompanied by "unidentified CAFGU members," forced his way into respondents' 0.9504-hectare irrigated farmland located at Liloan, Bonifacio, Misamis Occidental. After dispossessing respondents of the property, Oco and company used a tractor to destroy the planted crops, took possession of the land, and had since tended it. [2 ] Respondents thus filed on February 7, 1997 a complaint before the Regional Trial Court of Tangub City for Reconveyance of Possession with Preliminary Mandatory Injunction and Damages[3 ] against petitioners. In their Answer, petitioners claimed that the subject land forms part of a three-hectare property described in OCT No. P-447 issued on February 10, 1956 in the name of Andrea Lacson who sold a 2-hectare portion thereof to Eleuterio Geonzon who, in turn, sold 1.1148 thereof to his sister petitioner Fernanda Geonzon vda. de Barrera (Fernanda). [4 ] Respondents, on the other hand, asserted that the land was occupied, possessed and cultivated by their predecessor-in-interest Vicente Legaspi and his wife Lorenza since 1935;[5 ] after a subdivision survey was conducted in November 30, 1976, it was found out that the land formed part of the titled property of Andrea Lacson;[6 ] and despite this discovery, they never filed any action to recover ownership thereof since they were left undisturbed in their possession,[7 ] until October 1, 1996 when petitioners forced their way into it. Petitioners raised the issue of ownership as a special affirmative defense. [8 ] In their Memorandum, however, they questioned the jurisdiction of the RTC over the subject matter of the complaint, the assessed value of the land being only P11,160,[9 ] as reflected in Tax Declaration No. 7565.[1 0 ]
1. 2.
By Decision of November 27, 1998, the trial court found for respondents, disposing as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs [herein respondents] and against the defendants [-herein petitioners]: Ordering the latter to return the possession of the land in question to the plaintiffs and Ordering the latter to desist from further depriving and disturbing plaintiffs' peaceful possession thereof, unless there be another court judgment to the contrary. SO ORDERED.
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SO ORDERED. On the issue of jurisdiction over the subject matter, the trial court, maintaining that it had, held: The Court is not persuaded by [the defendants'] arguments. What determines the nature of the action as well as the jurisdiction of the [c]ourt are the facts alleged in the complaint and not those alleged in the answer of the defendants. xxx x In [p]ar. 2 of plaintiffs' complaint, the land in question was described as a riceland "situated at Liloan, Bonifacio, Misamis Occ. and declared under [T]ax [D]eclaration No. 7564 in the name of Vicente Legaspi and bounded on the north by a creek, on the east Sec. 12, on the south Lot No. 007 and on the west also by Lot No. 007 which tax declaration cancels former [T]ax [D]eclaration No. 12933 under the name of Lorenza Bacul Legaspi which likewise cancels [T]ax [D]eclaration No. 5454 covering the bigger portion of the land under which the land described under [T]ax [D]eclaration No. 7565 is part and parcel thereof [sic]; the present estimated value being P50,000."[1 1 ] (Emphasis and underscoring supplied) Petitioners thereupon appealed to the Court of Appeals which affirmed the trial court's disposition of the issue of jurisdiction over the subject matter. On the merits, the appellate court affirmed too the trial court's decision, finding that "both testimonial and documentary evidence on record established that appellees, through their predecessors-in-interest, have been in peaceful, continuous, public and actual possession of the property in dispute even before the year 1930."[1 2 ] The appellate court emphasized that in an accion publiciana, the only issue involved is the determination of possession de jure.[1 3 ] Hence, the present petition for review which raises the following issues: I. . . . WHETHER OWNERSHIP AND TITLE CANNOT BE AN ISSUE TO DETERMINE WHO HAS A BETTER RIGHT [TO] THE PORTION LITIGATED; AND II. WHETHER . . . THE NATURE OF THE ACTION AS WELL AS THE JURISDICTION OF THE COURT DEPEND ON THE FACTS AS ALLEGED IN THE COMPLAINT.[1 4 ] For obvious reasons, the issue of lack of jurisdiction over the subject matter shall be first considered. Section 33 of Batas Pambansa Bilang 129, (the Judiciary Reorganization Act of 1980), as amended by Republic Act No. 7691 provides for the jurisdiction of metropolitan trial courts, municipal trial courts and municipal circuit trial courts, to wit: xxx x (3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots. (Emphasis, italics and underscoring supplied) Before the amendments introduced by Republic Act No. 7691, the plenary action of accion publiciana was to be brought before the regional trial court. [1 5 ] With the modifications introduced by R.A. No. 7691 in 1994, the jurisdiction of the first level courts has been expanded to include jurisdiction over other real actions where the assessed value does not exceed P20,000, P50,000 where the action is filed in Metro Manila. The first level courts thus have exclusive original jurisdiction over accion publiciana and accion reivindicatoria where the assessed value of the real property does not exceed the aforestated amounts. Accordingly, the jurisdictional element is the assessed value of the property. Assessed value is understood to be "the worth or value of property established by taxing
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Assessed value is understood to be "the worth or value of property established by taxing authorities on the basis of which the tax rate is applied. Commonly, however, it does not represent the true or market value of the property."[1 6 ] The subject land has an assessed value of P11,160 as reflected in Tax Declaration No. 7565, a common exhibit of the parties. The bare claim of respondents that it has a value of P50,000 thus fails. The case, therefore, falls within the exclusive original jurisdiction of the municipal trial court. It was error then for the RTC to take cognizance of the complaint based on the allegation that "the present estimated value [of the land is] P50,000," which allegation is, oddly, handwritten on the printed pleading. The estimated value, commonly referred to as fair market value,[1 7 ] is entirely different from the assessed value of the property. Lack of jurisdiction is one of those excepted grounds where the court may dismiss a claim or a case at any time when it appears from the pleadings or the evidence on record that any of those grounds exists, even if they were not raised in the answer or in a motion to dismiss.[1 8 ] That the issue of lack of jurisdiction was raised by petitioners only in their Memorandum filed before the trial court did not thus render them in estoppel. En passant, the Court notes that respondents' cause of action - accion publiciana is a wrong mode. The dispossession took place on October 1, 1996 and the complaint was filed four months thereafter or on February 7, 1997. Respondents' exclusion from the property had thus not lasted for more than one year to call for the remedy of accion publiciana. In fine, since the RTC has no jurisdiction over the complaint filed by respondents, all the proceedings therein as well as the Decision of November 27, 1998, are null and void. The complaint should perforce be dismissed. This leaves it unnecessary to still dwell on the first issue. WHEREFORE, the petition is hereby GRANTED. The challenged July 31, 2006 Decision of the Court of Appeals is SET ASIDE. The decision of Branch 16 of the Regional Trial Court of Tangub City in Civil Case No. TC-97-001 is declared NULL and VOID for lack of jurisdiction.
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Ouano v. PGTT Gr No. 134230 July 7, 2002; Sunday, November 14, 2010 11:31 PM
G.R. No. 134230 July 17, 2002 JOVENAL OUANO, petitioner, vs. PGTT INTERNATIONAL INVESTMENT CORPORATION and HON. JUDGE RAMON G. CODILLA, JR., respondents. SANDOVAL-GUTIERREZ, J.: PGTT International Investment Corporation (PGTT), respondent, is a corporation duly organized under existing laws, with address at YASCO Bldg., M. J. Cuenco Ave., Cebu City. On December 11, 1997, PGTT filed with the Regional Trial Court (RTC), Branch 20, Cebu City, a verified complaint against Jovenal Ouano, petitioner, docketed as Civil Case No. CEB- 21319, entitled "PGTT INTERNATIONAL INVESTMENT CORPORATION, Plaintiff, vs. JUVENAL OUANO, Defendant," for "Recovery of Ownership and Possession of Real Property and Damages."1 In its complaint, PGTT alleged that it is the owner of Lot Nos. 1-10, Block 2 of the Sunnymeade Crescent Subdivision located at Pit-os, Talamban, Cebu City. Sometime in October of 1996, PGTT found that Ouano uprooted the concrete monuments of the said lots, plowed them and planted corn thereon. Despite PGTT’s demand that he vacate the lots and restore them to their original condition, Ouano refused, claiming he is the owner and lawful possessor of the 380 square meters he occupied. Due to Ouano’s wrongful act, PGTT was deprived of the use of its property and suffered damages in the amount of P100,000.00 a year. Likewise, PGTT was constrained to file the subject action and hired the services of his counsel for P100,000.00. PGTT prayed: "WHEREFORE, in view of all the foregoing, it is most respectfully prayed that after due notice and hearing, judgment be rendered ordering defendant (Jovenal Ouano) to vacate the premises and restore the lots to their original condition; pay plaintiff (PGTT) P100,000.00 as damages per year, beginning October, 1996 until he shall have vacated the premises and restored the lots to their original condition; pay P100,000.00 as attorney's fees; and pay P50,000.00 as expenses of litigation. "Plaintiff prays for such other reliefs and remedies, just and equitable under the premises." 2 On February 5, 1998, Ouano filed a motion to dismiss the complaint on the ground that it is the Municipal Trial Court (MTC), not the RTC, which has jurisdiction over it considering that the assessed value of the lots involved is only P2,910, as indicated in the latest tax declaration,3 citing Section 19 (paragraph 2) and Section 33 (paragraph 3) of Batas Pambansa Bilang 129 (The Judiciary Reorganization Act of 1980), as amended by Republic Act No. 7691.4 In its opposition to Ouano’s motion, PGTT contends that the RTC has jurisdiction since the market value of the lots is P49,760.00.5 Besides, the complaint is not only an action for recovery of ownership and possession of real property, but also for damages exceeding P100,000.00, over which claim the RTC has exclusive original jurisdiction under Section 19 (paragraph 8) of the same law. On March 6, 1998, the RTC, presided by Judge Ramon G. Codilla, Jr., issued an Order denying the motion to dismiss, holding that: "This court believes that this court has jurisdiction to try this case considering that the real properties consist of ten parcels of land in a subdivision and the court takes note that there is a discrepancy somewhere by the Office of the City Assessor in the Assessment of the parcels of land for only less than P2,000.00 and that the government is very much at a loss by these unrealistic valuation." 6 Ouano filed a motion for reconsideration but was likewise denied by the RTC in its Order dated May 27, 1998. The trial court ruled it has jurisdiction over the case because "(i)t is of judicial knowledge that the real properties situated in Cebu City command a higher valuation than those indicated in the tax declaration. The observation of plaintiff’s (PGTT’s) counsel as to the issue on damages is likewise sustained considering that, being a corporation, it may have incurred damages in the form of unrealized profits."7 Hence the present petition for certiorari filed by Ouano under Rule 65 of the 1997 Rules of Civil Procedure, as amended, assailing the Orders of respondent judge dated March 6, 1998 and May 27, 1998 as having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. At the outset, it is necessary to stress that a direct recourse to this Court is highly improper, for it violates the established policy of strict observance of the judicial hierarchy of courts.8 We need to reiterate, for the guidance of petitioner, that this Court’s original jurisdiction to issue a writ of certiorari (as well as prohibition, mandamus, quo warranto, habeas corpus and injunction) is concurrent with the Court of Appeals (CA), as in the present case, and with the RTCs in proper cases within their respective regions.9 However, this concurrence of jurisdiction does not grant a party seeking any of the extraordinary writs the absolute freedom to file his petition with the court of his choice. This Court is a court of last resort, and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and immemorial tradition.10 The hierarchy of courts determines the appropriate forum for such petitions. Thus, petitions for the issuance of such extraordinary writs against the first level ("inferior") courts should be filed with the RTC, and those against the latter, with the CA.11 A direct invocation of this Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This
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allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is the established policy. It is a policy that is necessary to prevent inordinate demands upon this Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further overcrowding of its docket.12 Unfortunately, the instant petition does not allege any special and compelling reason to justify a direct recourse to this Court. However, we deem it more appropriate and practical to resolve the controversy in order to avoid further delay, but only in this instance. The lone issue for our resolution is whether the RTC has jurisdiction over Civil Case No. CEB-21319. The complaint seeks to recover from private respondent the ownership and possession of the lots in question and the payment of damages. Since the action involves ownership and possession of real property, the jurisdiction over the subject matter of the claim is determined by the assessed value, not the market value, thereof, pursuant to Batas Pambansa Blg. 129, as amended by R.A. 7691. Section 33 (paragraph 3) of the said law provides: "Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. – Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise: x x x. (3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots. x x x." (Emphasis ours) Likewise, Section 19 (paragraph 2) of the same law reads: "Sec. 19. Jurisdiction in civil cases. - The Regional Trial Court shall exercise exclusive original jurisdiction: x x x. (2) In all civil actions, which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x." (Emphasis ours) It is undisputed that the assessed value of the property involved, as shown by the corresponding tax declaration, is only P2,910.00. As such, the complaint is well within the MTC’s P20,000.00 jurisdictional limit. The finding of respondent judge that the value of the lots is higher than that indicated in the tax declaration and that, therefore, the RTC has jurisdiction over the case is highly speculative. It is elementary that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been issued by the proper government agency. Respondent judge further held that since the complaint also seeks the recovery of damages exceeding P100,000.00, then it is within the competence of the RTC pursuant to Section 19 (paragraph 8) of Batas Pambansa Blg. 129, as amended by R.A. 7691, which states: "SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction: xxx "(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 One Hundred Thousand Pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above mentioned items exceeds Two hundred thousand pesos (P200,000.00)." (Emphasis ours) The above provision does not apply to the instant case. It is applicable only to "all other cases" other than an action involving title to, or possession of real property in which the assessed value is the controlling factor in determining the court’s jurisdiction. Besides, the same provision explicitly excludes from the determination of the jurisdictional amount the demand for "interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs". The exclusion of such damages is reiterated in Section 33, paragraph 3 of the same Batas Pambansa Blg. 129, as amended, quoted earlier. The said damages are merely incidental to, or a consequence of, the main cause of action for recovery of ownership and possession of real property. In this connection, this Court issued Administrative Circular No. 09-94 setting the guidelines in the implementation of R.A. 7691. Paragraph 2 states: "2. The exclusion of the term ‘damages of whatever kind’ in determining the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court." (Emphasis ours) We thus find that in issuing the assailed orders denying petitioner’s motion to dismiss, thus taking cognizance of the case, the RTC committed grave abuse of discretion. WHEREFORE, the instant petition is GRANTED. The assailed Orders issued by respondent RTC on March 6, 1998 and May 27, 1998 in Civil Case No. CEB-21319 are SET ASIDE. Accordingly, the complaint is ordered DISMISSED. SO ORDERED.
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SO ORDERED.
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RA 7160 (Local Government Code of 1991) Secs 399-422 Sunday, November 14, 2010 11:31 PM
CHAPTER VII Katarungang Pambarangay Section 399. Lupong Tagapamayapa. (a) There is hereby created in each barangay a lupong tagapamayapa, hereinafter referred to as the lupon, composed of the punong barangay, as chairman and ten (10) to twenty (20) members. The lupon shall be constituted every three (3) years in the manner provided herein. (b) Any person actually residing or working, in the barangay, not otherwise expressly disqualified by law, and possessing integrity, impartiality, independence of mind, sense of fairness, and reputation for probity, may be appointed a member of the lupon. (c) A notice to constitute the lupon, which shall include the names of proposed members who have expressed their willingness to serve, shall be prepared by the punong barangay within the first fifteen (15) days from the start of his term of office. Such notice shall be posted in three (3) conspicuous places in the barangay continuously for a period of not less than three (3) weeks; (d) The punong barangay, taking into consideration any opposition to the proposed appointment or any recommendations for appointment as may have been made within the period of posting, shall within ten (10) days thereafter, appoint as members those whom he determines to be suitable therefor. Appointments shall be in writing, signed by the punong barangay, and attested to by the barangay secretary. (e) The list of appointed members shall be posted in three (3) conspicuous places in the barangay for the entire duration of their term of office; and (f) In barangays where majority of the inhabitants are members of indigenous cultural communities, local systems of settling disputes through their councils of datus or elders shall be recognized without prejudice to the applicable provisions of this Code. Section 400. Oath and Term of Office. - Upon appointment, each lupon member shall take an oath of office before the punong barangay. He shall hold office until a new lupon is constituted on the third year following his appointment unless sooner terminated by resignation, transfer of residence or place of work, or withdrawal of appointment by the punong barangay with the concurrence of the majority of all the members of the lupon. Section 401. Vacancies. - Should a vacancy occur in the lupon for any cause, the punong barangay shall immediately appoint a qualified person who shall hold office only for the unexpired portion of the term. Section 402. Functions of the Lupon. - The lupon shall: (a) Exercise administrative supervision over the conciliation panels provided herein; (b) Meet regularly once a month to provide a forum for exchange of ideas among its members and the public on matters relevant to the amicable settlement of disputes, and to enable various conciliation panel members to share with one another their observations and experiences in effecting speedy resolution of disputes; and (c) Exercise such other powers and perform such other duties and functions as may be prescribed by law or ordinance. Section 403. Secretary of the Lupon. - The barangay secretary shall concurrently serve as the secretary of the lupon. He shall record the results of mediation proceedings before the punong barangay and shall submit a report thereon to the proper city or municipal courts. He shall also receive and keep the records of proceedings submitted to him by the various conciliation panels. Section 404. Pangkat ng Tagapagkasundo. (a) There shall be constituted for each dispute brought before the lupon a conciliation panel to be known as the pangkat ng tagapagkasundo, hereinafter referred to as the pangkat, consisting of three (3) members who shall be chosen by the parties to the dispute from the list of members of the lupon. Should the parties fail to agree on the pangkat membership, the same shall be determined by lots drawn by the lupon chairman. (b) The three (3) members constituting the pangkat shall elect from among themselves the chairman and the secretary. The secretary shall prepare the minutes of the pangkat proceedings and submit a copy duly attested to by the chairman to the lupon secretary and to the proper city or municipal court. REMLAW Page 252
copy duly attested to by the chairman to the lupon secretary and to the proper city or municipal court. He shall issue and cause to be served notices to the parties concerned. The lupon secretary shall issue certified true copies of any public record in his custody that is not by law otherwise declared confidential. Section 405. Vacancies in the Pangkat. - Any vacancy in the pangkat shall be chosen by the parties to the dispute from among the other lupon members. Should the parties fail to agree on a common choice, the vacancy shall be filled by lot to be drawn by the lupon chairman. Section 406. Character of Office and Service of Lupon Members. (a) The lupon members, while in the performance of their official duties or on the occasion thereof, shall be deemed as persons in authority, as defined in the Revised Penal Code. (b) The lupon or pangkat members shall serve without compensation, except as provided for in Section 393 and without prejudice to incentives as provided for in this Section and in Book IV of this Code. The Department of the Interior and Local Government shall provide for a system of granting economic or other incentives to the lupon or pangkat members who adequately demonstrate the ability to judiciously and expeditiously resolve cases referred to them. While in the performance of their duties, the lupon or pangkat members, whether in public or private employment, shall be deemed to be on official time, and shall not suffer from any diminution in compensation or allowance from said employment by reason thereof. Section 407. Legal Advice on Matters Involving Questions of Law. - The provincial, city legal officer or prosecutor or the municipal legal officer shall render legal advice on matters involving questions of law to the punong barangay or any lupon or pangkat member whenever necessary in the exercise of his functions in the administration of the katarungang pambarangay. Section 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except: (a) Where one party is the government, or any subdivision or instrumentality thereof; (b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions; (c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand pesos (P5,000.00); (d) Offenses where there is no private offended party; (e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (g) Such other classes of disputes which the President may determine in the interest of Justice or upon the recommendation of the Secretary of Justice. The court in which non-criminal cases not falling within the authority of the lupon under this Code are filed may, at any time before trial motu propio refer the case to the lupon concerned for amicable settlement. Section 409. Venue. (a) Disputes between persons actually residing in the same barangay shall be brought for amicable settlement before the lupon of said barangay. (b) Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complaint. (c) All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated. (d) Those arising at the workplace where the contending parties are employed or at the institution where such parties are enrolled for study, shall be brought in the barangay where such workplace or institution is located. Objections to venue shall be raised in the mediation proceedings before the punong barangay; otherwise, the same shall be deemed waived. Any legal question which may confront the punong barangay in resolving objections to venue herein referred to may be submitted to the Secretary of REMLAW Page 253
barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice, or his duly designated representative, whose ruling thereon shall be binding. Section 410. Procedure for Amicable Settlement. (a) Who may initiate proceeding - Upon payment of the appropriate filing fee, any individual who has a cause of action against another individual involving any matter within the authority of the lupon may complain, orally or in writing, to the lupon chairman of the barangay. (b) Mediation by lupon chairman - Upon receipt of the complaint, the lupon chairman shall within the next working day summon the respondent(s), with notice to the complainant(s) for them and their witnesses to appear before him for a mediation of their conflicting interests. If he fails in his mediation effort within fifteen (15) days from the first meeting of the parties before him, he shall forthwith set a date for the constitution of the pangkat in accordance with the provisions of this Chapter. (c) Suspension of prescriptive period of offenses - While the dispute is under mediation, conciliation, or arbitration, the prescriptive periods for offenses and cause of action under existing laws shall be interrupted upon filing the complaint with the punong barangay. The prescriptive periods shall resume upon receipt by the complainant of the complainant or the certificate of repudiation or of the certification to file action issued by the lupon or pangkat secretary: Provided, however, That such interruption shall not exceed sixty (60) days from the filing of the complaint with the punong barangay. (d) Issuance of summons; hearing; grounds for disqualification - The pangkat shall convene not later than three (3) days from its constitution, on the day and hour set by the lupon chairman, to hear both parties and their witnesses, simplify issues, and explore all possibilities for amicable settlement. For this purpose, the pangkat may issue summons for the personal appearance of parties and witnesses before it. In the event that a party moves to disqualify any member of the pangkat by reason of relationship, bias, interest, or any other similar grounds discovered after the constitution of the pangkat, the matter shall be resolved by the affirmative vote of the majority of the pangkat whose decision shall be final. Should disqualification be decided upon, the resulting vacancy shall be filled as herein provided for. (e) Period to arrive at a settlement - The pangkat shall arrive at a settlement or resolution of the dispute within fifteen (15) days from the day it convenes in accordance with this section. This period shall, at the discretion of the pangkat, be extendible for another period which shall not exceed fifteen (15) days, except in clearly meritorious cases. Section 411. Form of settlement. - All amicable settlements shall be in writing, in a language or dialect known to the parties, signed by them, and attested to by the lupon chairman or the pangkat chairman, as the case may be. When the parties to the dispute do not use the same language or dialect, the settlement shall be written in the language known to them. Section 412. Conciliation. (a) Pre-condition to Filing of Complaint in Court. - No complaint, petition, action, or proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any other government office for adjudication, unless there has been a confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon or pangkat chairman or unless the settlement has been repudiated by the parties thereto. (b) Where Parties May Go Directly to Court. - The parties may go directly to court in the following instances: (1) Where the accused is under detention; (2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings; (3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property and support pendente lite; and (4) Where the action may otherwise be barred by the statute of limitations. (c) Conciliation among members of indigenous cultural communities. - The customs and traditions of indigenous cultural communities shall be applied in settling disputes between members of the cultural communities. Section 413. Arbitration. (a) The parties may, at any stage of the proceedings, agree in writing that they shall abide by the arbitration award of the lupon chairman or the pangkat. Such agreement to arbitrate may be repudiated within five (5) days from the date thereof for the same grounds and in accordance with the procedure REMLAW Page 254
within five (5) days from the date thereof for the same grounds and in accordance with the procedure hereinafter prescribed. The arbitration award shall be made after the lapse of the period for repudiation and within ten (10) days thereafter. (b) The arbitration award shall be in writing in a language or dialect known to the parties. When the parties to the dispute do not use the same language or dialect, the award shall be written in the language or dialect known to them. Section 414. Proceedings Open to the Public; Exception. - All proceedings for settlement shall be public and informal: Provided, however, That the lupon chairman or the pangkat chairman, as the case may be, may motu proprio or upon request of a party, exclude the public from the proceedings in the interest of privacy, decency, or public morals. Section 415. Appearance of Parties in Person. - In all katarungang pambarangay proceedings, the parties must appear in person without the assistance of counsel or representative, except for minors and incompetents who may be assisted by their next-of-kin who are not lawyers. Section 416. Effect of Amicable Settlement and Arbitration Award. - The amicable settlement and arbitration award shall have the force and effect of a final judgment of a court upon the expiration of ten (10) days from the date thereof, unless repudiation of the settlement has been made or a petition to nullify the award has been filed before the proper city or municipal court. However, this provision shall not apply to court cases settled by the lupon under the last paragraph of Section 408 of this Code, in which case the compromise or the pangkat chairman shall be submitted to the court and upon approval thereof, have the force and effect of a judgment of said court. Section 417. Execution. - The amicable settlement or arbitration award may be enforced by execution by the lupon within six (6) months from the date of the settlement. After the lapse of such time, the settlement may be enforced by action in the appropriate city or municipal court. Section 418. Repudiation. - Any party to the dispute may, within ten (10) days from the date of the settlement, repudiate the same by filing with the lupon chairman a statement to that effect sworn to before him, where the consent is vitiated by fraud, violence, or intimidation. Such repudiation shall be sufficient basis for the issuance of the certification for filing a complaint as hereinabove provided. Section 419. Transmittal of Settlement and Arbitration. - Award to the Court. - The secretary of the lupon shall transmit the settlement or the arbitration award to the appropriate city or municipal court within five (5) days from the date of the award or from the lapse of the ten-day period repudiating the settlement and shall furnish copies thereof to each of the parties to the settlement and the lupon chairman. Section 420. Power to Administer Oaths. - The punong barangay, as chairman of the lupong tagapamayapa, and the members of the pangkat are hereby authorized to administer oaths in connection with any matter relating to all proceedings in the implementation of the katarungang pambarangay. Section 421. Administration; Rules and Regulations. - The city or municipal mayor, as the case may be, shall see to the efficient and effective implementation and administration of the katarungang pambarangay. The Secretary of Justice shall promulgate the rules and regulations necessary to implement this Chapter. Section 422. Appropriations. - Such amount as may be necessary for the effective implementation of the katarungang pambarangay shall be provided for in the annual budget of the city or municipality concerned. Pasted from
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Leo Wee v. George de Castro et al GR 1764095 Aug 20, 2008; Sunday, November 14, 2010 11:31 PM
[G.R. No. 176405, August 20, 2008] LEO WEE, PETITIONER, VS. GEORGE DE CASTRO (ON HIS BEHALF AND AS ATTORNEY-IN-FACT OF ANNIE DE CASTRO AND FELOMINA UBAN) AND MARTINIANA DE CASTRO, RESPONDENTS. DE C I SI O N CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari[1 ] under Rule 45 of the Revised Rules of Court filed by petitioner Leo Wee, seeking the reversal and setting aside of the Decision[2 ] dated 19 September 2006 and the Resolution[3 ] dated 25 January 2007 of the Court of Appeals in CA-G.R. SP No. 90906. The appellate court, in its assailed Decision, reversed the dismissal of Civil Case. No. 1990, an action for ejectment instituted by respondent George de Castro, on his own behalf and on behalf of Annie de Castro, Felomina de Castro Uban and Jesus de Castro[4 ] against petitioner, by the Municipal Trial Court (MTC) of Alaminos City, which was affirmed by the Regional Trial Court (RTC), Branch 54, Alaminos City, Pangasinan; and, ruling in favor of the respondents, ordered the petitioner to vacate the subject property. In its assailed Resolution dated 25 January 2007, the Court of Appeals refused to reconsider its earlier Decision of 19 September 2006. In their Complaint [5 ] filed on 1 July 2002 with the MTC of Alaminos City, docketed as Civil Case No. 1990, respondents alleged that they are the registered owners of the subject property, a two-storey building erected on a parcel of land registered under Transfer Certificate of Title (TCT) No. 16193 in the Registry of Deeds of Pangasinan, described and bounded as follows: A parcel of land (Lot 13033-D-2, Psd-01550-022319, being a portion of Lot 13033-D, Psd-018529, LRC Rec. No.____) situated in Pob., Alaminos City; bounded on the NW. along line 1-2 by Lot 13035-D-1 of the subdivision plan; on the NE. along line 2-3 by Vericiano St.; on the SE. along line 3-4 by Lot 13033-D-2 of the subdivision plan; on the SW. along line 4-1 by Lot 575, Numeriano Rabago. It is coverd by TCT No. 16193 of the Register of Deeds of Pangasinan (Alaminos City) and declared for taxation purposes per T.D. No. 2075, and assessed in the sum of P93,400.00.[6 ] Respondents rented out the subject property to petitioner on a month to month basis for P9,000.00 per month.[7 ] Both parties agreed that effective 1 October 2001, the rental payment shall be increased from P9,000.00 to P15,000.00. Petitioner, however, failed or refused to pay the corresponding increase on rent when his rental obligation for the month of 1 October 2001 became due. The rental dispute was brought to the Lupon Tagapagpamayapa of Poblacion, Alaminos, Pangasinan, in an attempt to amicably settle the matter but the parties failed to reach an agreement, resulting in the issuance by the Barangay Lupon of a Certification to file action in court on 18 January 2002. On 10 June 2002, respondent George de Castro sent a letter to petitioner terminating their lease agreement and demanding that the latter vacate and turn over the subject property to respondents. Since petitioner stubbornly refused to comply with said demand letter, respondent George de Castro, together with his siblings and co-respondents, Annie de Castro, Felomina de Castro Uban and Jesus de Castro, filed the Complaint for ejectment before the MTC. It must be noted, at this point, that although the Complaint stated that it was being filed by all of the respondents, the Verification and the Certificate of Non-Forum Shopping were signed by respondent George de Castro alone. He would subsequently attach to his position paper filed before the MTC on 28 October 2002 the Special Powers of Attorney (SPAs) executed by his sisters Annie de Castro and Felomina de Castro Uban dated 7 February
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executed by his sisters Annie de Castro and Felomina de Castro Uban dated 7 February 2002 and 14 March 2002 respectively, authorizing him to institute the ejectment case against petitioner. Petitioner, on the other hand, countered that there was no agreement between the parties to increase the monthly rentals and respondents' demand for an increase was exorbitant. The agreed monthly rental was only for the amount of P9,000.00 and he was religiously paying the same every month. Petitioner then argued that respondents failed to comply with the jurisdictional requirement of conciliation before the Barangay Lupon prior to the filing of Civil Case. No. 1990, meriting the dismissal of their Complaint therein. The Certification to file action issued by the Barangay Lupon appended to the respondents' Complaint merely referred to the issue of rental increase and not the matter of ejectment. Petitioner asserted further that the MTC lacked jurisdiction over the ejectment suit, since respondents' Complaint was devoid of any allegation that there was an "unlawful withholding" of the subject property by the petitioner. [8 ] During the Pre-Trial Conference[9 ] held before the MTC, the parties stipulated that in May 2002, petitioner tendered to respondents the sum of P9,000.00 as rental payment for the month of January 2002; petitioner paid rentals for the months of October 2001 to January 2002 but only in the amount of P9,000.00 per month; respondents, thru counsel, sent a letter to petitioner on 10 June 2002 terminating their lease agreement which petitioner ignored; and the Barangay Lupon did issue a Certification to file action after the parties failed to reach an agreement before it. After the submission of the parties of their respective Position Papers, the MTC, on 21 November 2002, rendered a Decision[1 0 ] dismissing respondents' Complaint in Civil Case No. 1990 for failure to comply with the prior conciliation requirement before the Barangay Lupon. The decretal portion of the MTC Decision reads: WHEREFORE, premised considered, judgment is hereby rendered ordering the dismissal of this case. Costs against the [herein respondents]. On appeal, docketed as Civil Case No. A-2835, the RTC of Alaminos, Pangasinan, Branch 54, promulgated its Decision[1 1 ] dated 27 June 2005 affirming the dismissal of respondents' Complaint for ejectment after finding that the appealed MTC Decision was based on facts and law on the matter. The RTC declared that since the original agreement entered into by the parties was for petitioner to pay only the sum of P9.000.00 per month for the rent of the subject property, and no concession was reached by the parties to increase such amount to P15.000.00, petitioner cannot be faulted for paying only the originally agreed upon monthly rentals. Adopting petitioner's position, the RTC declared that respondents' failure to refer the matter to the Barangay court for conciliation process barred the ejectment case, conciliation before the Lupon being a condition sine qua non in the filing of ejectment suits. The RTC likewise agreed with petitioner in ruling that the allegation in the Complaint was flawed, since respondents failed to allege that there was an "unlawful withholding" of possession of the subject property, taking out Civil Case No. 1990 from the purview of an action for unlawful detainer. Finally, the RTC decreed that respondents' Complaint failed to comply with the rule that a co-owner could not maintain an action without joining all the other co-owners. Thus, according to the dispositive portion of the RTC Decision: WHEREFORE the appellate Court finds no cogent reason to disturb the findings of the court a quo. The Decision dated November 21, 2002 appealed from is hereby AFFIRMED IN TOTO.[1 2 ] Undaunted, respondents filed a Petition for Review on Certiorari[1 3 ] with the Court of Appeals where it was docketed as CA-G.R. SP No. 90906. Respondents argued in their Petition that the RTC gravely erred in ruling that their failure to comply with the conciliation process was fatal to their Complaint, since it is only respondent George de Castro who resides in Alaminos City, Pangasinan, while respondent Annie de Castro resides in Pennsylvania, United States of America (USA); respondent Felomina de Castro Uban, in California, USA; and respondent Jesus de Castro, now substituted by his wife, Martiniana, resides in Manila. Respondents further claimed that the MTC was not divested of jurisdiction over their Complaint for ejectment because of the mere absence therein of the term "unlawful withholding" of their subject property, considering that they had sufficiently
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"unlawful withholding" of their subject property, considering that they had sufficiently alleged the same in their Complaint, albeit worded differently. Finally, respondents posited that the fact that only respondent George de Castro signed the Verification and the Certificate of Non-Forum Shopping attached to the Complaint was irrelevant since the other respondents already executed Special Powers of Attorney (SPAs) authorizing him to act as their attorney-in-fact in the institution of the ejectment suit against the petitioner. On 19 September 2006, the Court of Appeals rendered a Decision granting the respondents' Petition and ordering petitioner to vacate the subject property and turn over the same to respondents. The Court of Appeals decreed: WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated June 27, 2005 issued by the RTC of Alaminos City, Pangasinan, Branch 54, is REVERSED and SET ASIDE. A new one is hereby rendered ordering [herein petitioner] Leo Wee to SURRENDER and VACATE the leased premises in question as well as to pay the sum of P15,000.00 per month reckoned from March, 2002 until he shall have actually turned over the possession thereof to petitioners plus the rental arrearages of P30,000.00 representing unpaid increase in rent for the period from October, 2001 to February, 2002, with legal interest at 6% per annum to be computed from June 7, 2002 until finality of this decision and 12% thereafter until full payment thereof. Respondent is likewise hereby ordered to pay petitioners the amount of P20,000.00 as and for attorney's fees and the costs of suit.[1 4 ] In a Resolution dated 25 January 2007, the appellate court denied the Motion for Reconsideration interposed by petitioner for lack of merit. Petitioner is now before this Court via the Petition at bar, making the following assignment of errors: I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT CONCILIATION PROCESS IS NOT A JURISDICTIONAL REQUIREMENT THAT NON-COMPLIANCE THEREWITH DOES NOT AFFECT THE JURISDICTION IN EJECTMENT CASE; II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE SUFFICIENCY OF THE ALLEGATIONS IN THE COMPLAINT FOR EJECTMENT DESPITE THE WANT OF ALLEGATION OF "UNLAWFUL WITHOLDING PREMISES" (sic) QUESTIONED BY PETITIONER; III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FILING OF THE COMPLAINT OF RESPONDENT GEORGE DE CASTRO WITHOUT JOINING ALL HIS OTHER CO-OWNERS OVER THE SUBJECT PROPERTY IS PROPER; IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING SUPREME COURT CIRCULAR NO. 10 WHICH DIRECTS A PLEADER TO INDICATE IN HIS PLEADINGS HIS OFFICIAL RECEIPT OF HIS PAYMENT OF HIS IBP DUES.[1 5 ] Petitioner avers that respondents failed to go through the conciliation process before the Barangay Lupon, a jurisdictional defect that bars the legal action for ejectment. The Certification to file action dated 18 January 2002 issued by the Barangay Lupon, appended by the respondents to their Complaint in Civil Case No. 1990, is of no moment, for it attested only that there was confrontation between the parties on the matter of rental increase but not on unlawful detainer of the subject property by the petitioner. If it was the intention of the respondents from the very beginning to eject petitioner from the subject property, they should have brought up the alleged unlawful stay of the petitioner on the subject property for conciliation before the Barangay Lupon. The barangay justice system was established primarily as a means of easing up the congestion of cases in the judicial courts. This could be accomplished through a proceeding before the barangay courts which, according to the one who conceived of the system, the
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late Chief Justice Fred Ruiz Castro, is essentially arbitration in character; and to make it truly effective, it should also be compulsory. With this primary objective of the barangay justice system in mind, it would be wholly in keeping with the underlying philosophy of Presidential Decree No. 1508 (Katarungang Pambarangay Law), which would be better served if an out-of-court settlement of the case is reached voluntarily by the parties. [1 6 ] To ensure this objective, Section 6 of Presidential Decree No. 1508 requires the parties to undergo a conciliation process before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a precondition to filing a complaint in court subject to certain exceptions. The said section has been declared compulsory in nature. [1 7 ] Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160 (The Local Government Code), which took effect on 1 January 1992. The pertinent provisions of the Local Government Code making conciliation a precondition to the filing of complaints in court are reproduced below: SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. - No complaint, petition, action, or proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any other government office for adjudication, unless there has been a confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon or pangkat chairman or unless the settlement has been repudiated by the parties thereto. (b) Where parties may go directly to court. - The parties may go directly to court in the following instances: (1) Where the accused is under detention; (2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings; (3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property, and support pendente lite; and (4) Where the action may otherwise be barred by the statute of limitations. (c) Conciliation among members of indigenous cultural communities. - The customs and traditions of indigenous cultural communities shall be applied in settling disputes between members of the cultural communities. SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except: (a) Where one party is the government or any subdivision or instrumentality thereof; (b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions; (c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand pesos (P5,000.00); (d) Offenses where there is no private offended party; (e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (f) Disputes involving parties who actually reside in barangays of different cities or
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(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice. There is no question that the parties to this case appeared before the Barangay Lupon for conciliation proceedings. There is also no dispute that the only matter referred to the Barangay Lupon for conciliation was the rental increase, and not the ejectment of petitioner from the subject property. This is apparent from a perusal of the Certification to file action in court issued by the Barangay Lupon on 18 January 2002, to wit: CERTIFICATION TO FILE COMPLAINTS
1.
2.
This is to certify that: There was personal confrontation between parties before the barangay Lupon regarding rental increase of a commercial building but conciliation failed; Therefore, the corresponding dispute of the above-entitled case may now be filed in Court/Government Office.[1 8 ] (Emphasis ours.) The question now to be resolved by this Court is whether the Certification dated 18 January 2002 issued by the Barangay Lupon stating that no settlement was reached by the parties on the matter of rental increase sufficient to comply with the prior conciliation requirement under the Katarungang Pambarangay Law to authorize the respondents to institute the ejectment suit against petitioner. The Court rules affirmatively. While it is true that the Certification to file action dated 18 January 2002 of the Barangay Lupon refers only to rental increase and not to the ejectment of petitioner from the subject property, the submission of the same for conciliation before the Barangay Lupon constitutes sufficient compliance with the provisions of the Katarungang Pambarangay Law. Given the particular circumstances of the case at bar, the conciliation proceedings for the amount of monthly rental should logically and reasonably include also the matter of the possession of the property subject of the rental, the lease agreement, and the violation of the terms thereof. We now proceed to discuss the meat of the controversy. The contract of lease between the parties did not stipulate a fixed period. Hence, the parties agreed to the payment of rentals on a monthly basis. On this score, Article 1687 of the Civil Code provides: Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month. (Emphasis supplied.) The rentals being paid monthly, the period of such lease is deemed terminated at the end of each month. Thus, respondents have every right to demand the ejectment of petitioners at the end of each month, the contract having expired by operation of law. Without a lease contract, petitioner has no right of possession to the subject property and must vacate the same. Respondents, thus, should be allowed to resort to an action for ejectment before the MTC to recover possession of the subject property from petitioner. Corollarily, petitioner's ejectment, in this case, is only the reasonable consequence of his unrelenting refusal to comply with the respondents' demand for the payment of rental increase agreed upon by both parties. Verily, the lessor's right to rescind the contract of
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lease for non-payment of the demanded increased rental was recognized by this Court in Chua v. Victorio[1 9 ]: The right of rescission is statutorily recognized in reciprocal obligations, such as contracts of lease. In addition to the general remedy of rescission granted under Article 1191 of the Civil Code, there is an independent provision granting the remedy of rescission for breach of any of the lessor or lessee's statutory obligations. Under Article 1659 of the Civil Code, the aggrieved party may, at his option, ask for (1) the rescission of the contract; (2) rescission and indemnification for damages; or (3) only indemnification for damages, allowing the contract to remain in force. Payment of the rent is one of a lessee's statutory obligations, and, upon nonpayment by petitioners of the increased rental in September 1994, the lessor acquired the right to avail of any of the three remedies outlined above. (Emphasis supplied.) Petitioner next argues that respondent George de Castro cannot maintain an action for ejectment against petitioner, without joining all his co-owners. Article 487 of the New Civil Code is explicit on this point: ART. 487. Any one of the co-owners may bring an action in ejectment. This article covers all kinds of action for the recovery of possession, i.e., forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion). As explained by the renowned civilist, Professor Arturo M. Tolentino[2 0 ]: A co-owner may bring such an action, without the necessity of joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all. If the action is for the benefit of the plaintiff alone, such that he claims possession for himself and not for the co-ownership, the action will not prosper. (Emphasis added.) In the more recent case of Carandang v. Heirs of De Guzman,[21] this Court declared that a co-owner is not even a necessary party to an action for ejectment, for complete relief can be afforded even in his absence, thus: In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may bring an action, any kind of action for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be afforded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners. Moreover, respondents Annie de Castro and Felomina de Castro Uban each executed a Special Power of Attorney, giving respondent George de Castro the authority to initiate Civil Case No. 1990. A power of attorney is an instrument in writing by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal. The written authorization itself is the power of attorney, and this is clearly indicated by the fact that it has also been called a "letter of attorney."[2 2 ] Even then, the Court views the SPAs as mere surplusage, such that the lack thereof does not in any way affect the validity of the action for ejectment instituted by respondent George de Castro. This also disposes of petitioner's contention that respondent George de Castro lacked the authority to sign the Verification and the Certificate of Non-Forum Shopping. As the Court ruled in Mendoza v. Coronel[2 3 ]: We likewise hold that the execution of the certification against forum shopping by the attorney-in-fact in the case at bar is not a violation of the requirement that the parties must personally sign the same. The attorney-in-fact, who has authority to file, and who actually filed the complaint as the representative of the plaintiff co-owner, pursuant to a Special Power of Attorney, is a party to the ejectment suit. In fact, Section 1, Rule 70 of the Rules of Court includes the representative of the owner in an ejectment suit
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Rule 70 of the Rules of Court includes the representative of the owner in an ejectment suit as one of the parties authorized to institute the proceedings.(Emphasis supplied.) Failure by respondent George de Castro to attach the said SPAs to the Complaint is innocuous, since it is undisputed that he was granted by his sisters the authority to file the action for ejectment against petitioner prior to the institution of Civil Case No. 1990. The SPAs in his favor were respectively executed by respondents Annie de Castro and Felomina de Castro Uban on 7 February 2002 and 14 March 2002; while Civil Case No. 1990 was filed by respondent George de Castro on his own behalf and on behalf of his siblings only on 1 July 2002, or way after he was given by his siblings the authority to file said action. The Court quotes with approval the following disquisition of the Court of Appeals: Moreover, records show that [herein respondent] George de Castro was indeed authorized by his sisters Annie de Castro and Felomina de Castro Uban, to prosecute the case in their behalf as shown by the Special Power of Attorney dated February 7, 2002 and March 14, 2002. That these documents were appended only to [respondent George de Castro's] position paper is of no moment considering that the authority conferred therein was given prior to the institution of the complaint in July, 2002. x x x. [2 4 ] Respondent deceased Jesus de Castro's failure to sign the Verification and Certificate of Non-Forum Shopping may be excused since he already executed an Affidavit [2 5 ] with respondent George de Castro that he had personal knowledge of the filing of Civil Case No. 1990. In Torres v. Specialized Packaging Development Corporation,[2 6 ] the Court ruled that the personal signing of the verification requirement was deemed substantially complied with when, as in the instant case, two out of 25 real parties-in-interest, who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the petition, signed the verification attached to it. In the same vein, this Court is not persuaded by petitioner's assertion that respondents' failure to allege the jurisdictional fact that there was "unlawful withholding" of the subject property was fatal to their cause of action. It is apodictic that what determines the nature of an action as well as which court has jurisdiction over it are the allegations in the complaint and the character of the relief sought. In an unlawful detainer case, the defendant's possession was originally lawful but ceased to be so upon the expiration of his right to possess. Hence, the phrase "unlawful withholding" has been held to imply possession on the part of defendant, which was legal in the beginning, having no other source than a contract, express or implied, and which later expired as a right and is being withheld by defendant. [2 7 ] In Barba v. Court of Appeals,[2 8 ] the Court held that although the phrase "unlawfully withholding" was not actually used by therein petitioner in her complaint, the Court held that her allegations, nonetheless, amounted to an unlawful withholding of the subject property by therein private respondents, because they continuously refused to vacate the premises even after notice and demand. In the Petition at bar, respondents alleged in their Complaint that they are the registered owners of the subject property;the subject property was being occupied by the petitioner pursuant to a monthly lease contract; petitioner refused to accede to respondents' demand for rental increase; the respondents sent petitioner a letter terminating the lease agreement and demanding that petitioner vacate and turn over the possession of the subject property to respondents; and despite such demand, petitioner failed to surrender the subject property to respondents.[2 9 ] The Complaint sufficiently alleges the unlawful withholding of the subject property by petitioner, constitutive of unlawful detainer, although the exact words "unlawful withholding" were not used. In an action for unlawful detainer, an allegation that the defendant is unlawfully withholding possession from the plaintiff is deemed sufficient, without necessarily employing the terminology of the law. [3 0 ] Petitioner's averment that the Court of Appeals should have dismissed respondents' Petition in light of the failure of their counsel to attach the Official Receipt of his updated payment of Integrated Bar of the Philippines (IBP) dues is now moot and academic, since respondents' counsel has already duly complied therewith. It must be stressed that judicial cases do not come and go through the portals of a court of law by the mere mandate of technicalities. [3 1 ]
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come and go through the portals of a court of law by the mere mandate of technicalities. [3 1 ] Where a rigid application of the rules will result in a manifest failure or miscarriage of justice, technicalities should be disregarded in order to resolve the case. [3 2 ] Finally, we agree in the ruling of the Court of Appeals that petitioner is liable for the payment of back rentals, attorney's fees and cost of the suit. Respondents must be duly indemnified for the loss of income from the subject property on account of petitioner's refusal to vacate the leased premises. WHEREFORE, premises considered, the instant Petition is DENIED. The Decision dated 19 September 2006 and Resolution dated 25 January 2007 of the Court of Appeals in CA-G.R. SP No. 90906 are hereby AFFIRMED in toto. Costs against petitioner.
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Aquino v. Aure, GR 153567 Feb 18, 2008 Sunday, November 14, 2010 11:31 PM
G.R. No. 153567 February 18, 2008 LIBRADA M. AQUINO, petitioner, vs. ERNEST S. AURE1, respondent. DEC I SI O N CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari2 under Rule 45 of the Revised Rules of Court filed by petitioner Librada M. Aquino (Aquino), seeking the reversal and the setting aside of the Decision3 dated 17 October 2001 and the Resolution 4 dated 8 May 2002 of the Court of Appeals in CA-G.R. SP No. 63733. The appellate court, in its assailed Decision and Resolution, reversed the Decision5 of the Regional Trial Court (RTC) of Quezon City, Branch 88, affirming the Decision6 of the Metropolitan Trial Court (MeTC) of Quezon City, Branch 32, which dismissed respondent Ernesto Aure’s (Aure) complaint for ejectment on the ground, inter alia, of failure to comply with barangay conciliation proceedings. The subject of the present controversy is a parcel of land situated in Roxas District, Quezon City, with an area of 449 square meters and covered by Transfer Certificate of Title (TCT) No. 205447 registered with the Registry of Deeds of Quezon City (subject property).7 Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for ejectment against Aquino before the MeTC docketed as Civil Case No. 17450. In their Complaint, Aure and Aure Lending alleged that they acquired the subject property from Aquino and her husband Manuel (spouses Aquino) by virtue of a Deed of Sale8 executed on 4 June 1996. Aure claimed that after the spouses Aquino received substantial consideration for the sale of the subject property, they refused to vacate the same.9 In her Answer,10 Aquino countered that the Complaint in Civil Case No. 17450 lacks cause of action for Aure and Aure Lending do not have any legal right over the subject property. Aquino admitted that there was a sale but such was governed by the Memorandum of Agreement 11 (MOA) signed by Aure. As stated in the MOA, Aure shall secure a loan from a bank or financial institution in his own name using the subject property as collateral and turn over the proceeds thereof to the spouses Aquino. However, even after Aure successfully secured a loan, the spouses Aquino did not receive the proceeds thereon or benefited therefrom. On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in favor of Aquino and dismissed the Complaint for ejectment of Aure and Aure Lending for non-compliance with the barangay conciliation process, among other grounds. The MeTC observed that Aure and Aquino are residents of the same barangay but there is no showing that any attempt has been made to settle the case amicably at the barangay level. The MeTC further observed that Aure Lending was improperly included as plaintiff in Civil Case No. 17450 for it did not stand to be injured or benefited by the suit. Finally, the MeTC ruled that since the question of ownership was put in issue, the action was converted from a mere detainer suit to one "incapable of pecuniary estimation" which properly rests within the original exclusive jurisdiction of the RTC. The dispositive portion of the MeTC Decision reads: WHEREFORE, premises considered, let this case be, as it is, hereby ordered DISMISSED. [Aquino’s] counterclaim is likewise dismissed. 12 On appeal, the RTC affirmed the dismissal of the Complaint on the same ground that the dispute was not brought before the Barangay Council for conciliation before it was filed in court. In a Decision dated 14 December 2000, the RTC stressed that the barangay conciliation process is a conditio sine qua non for the filing of an ejectment complaint involving residents of the same barangay, and failure to comply therewith constitutes sufficient cause for the dismissal of the action. The RTC likewise validated the ruling of the MeTC that the main issue involved in Civil Case No. 17450 is incapable of pecuniary estimation and cognizable by the RTC. Hence, the RTC ruled: WHEREFORE, finding no reversible error in the appealed judgment, it is hereby affirmed in its entirety.13 Aure’s Motion for Reconsideration was denied by the RTC in an Order 14 dated 27 February 2001. Undaunted, Aure appealed the adverse RTC Decision with the Court of Appeals arguing that the lower court erred in dismissing his Complaint for lack of cause of action. Aure asserted that misjoinder of parties was not a proper ground for dismissal of his Complaint and that the MeTC should have only ordered the exclusion of Aure Lending as plaintiff without prejudice to the
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continuation of the proceedings in Civil Case No. 17450 until the final determination thereof. Aure further asseverated that mere allegation of ownership should not divest the MeTC of jurisdiction over the ejectment suit since jurisdiction over the subject matter is conferred by law and should not depend on the defenses and objections raised by the parties. Finally, Aure contended that the MeTC erred in dismissing his Complaint with prejudice on the ground of non-compliance with barangay conciliation process. He was not given the opportunity to rectify the procedural defect by going through the barangay mediation proceedings and, thereafter, refile the Complaint. 15 On 17 October 2001, the Court of Appeals rendered a Decision, reversing the MeTC and RTC Decisions and remanding the case to the MeTC for further proceedings and final determination of the substantive rights of the parties. The appellate court declared that the failure of Aure to subject the matter to barangay conciliation is not a jurisdictional flaw and it will not affect the sufficiency of Aure’s Complaint since Aquino failed to seasonably raise such issue in her Answer. The Court of Appeals further ruled that mere allegation of ownership does not deprive the MeTC of jurisdiction over the ejectment case for jurisdiction over the subject matter is conferred by law and is determined by the allegations advanced by the plaintiff in his complaint. Hence, mere assertion of ownership by the defendant in an ejectment case will not oust the MeTC of its summary jurisdiction over the same. The decretal part of the Court of Appeals Decision reads: WHEREFORE, premises considered, the petition is hereby GRANTED - and the decisions of the trial courts below REVERSED and SET ASIDE. Let the records be remanded back to the court a quo for further proceedings – for an eventual decision of the substantive rights of the disputants.16 In a Resolution dated 8 May 2002, the Court of Appeals denied the Motion for Reconsideration interposed by Aquino for it was merely a rehash of the arguments set forth in her previous pleadings which were already considered and passed upon by the appellate court in its assailed Decision. Aquino is now before this Court via the Petition at bar raising the following issues: I. WHETHER OR NOT NON-COMPLIANCE WITH THE BARANGAY CONCILIATION PROCEEDINGS IS A JURISDICT IONAL DEFECT THAT WARRANTS THE DISMISSAL OF THE COMPLAINT. II. WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS THE MeTC OF ITS JURISDICTION OVER AN EJECTMENT CASE. The barangay justice system was established primarily as a means of easing up the congestion of cases in the judicial courts. This could be accomplished through a proceeding before the barangay courts which, according to the conceptor of the system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in character, and to make it truly effective, it should also be compulsory. With this primary objective of the barangay justice system in mind, it would be wholly in keeping with the underlying philosophy of Presidential Decree No. 1508, otherwise known as the Katarungang Pambarangay Law, and the policy behind it would be better served if an out-of-court settlement of the case is reached voluntarily by the parties.17 The primordial objective of Presidential Decree No. 1508 is to reduce the number of court litigations and prevent the deterioration of the quality of justice which has been brought by the indiscriminate filing of cases in the courts.18 To ensure this objective, Section 6 of Presidential Decree No. 1508 19 requires the parties to undergo a conciliation process before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a precondition to filing a complaint in court subject to certain exceptions 20 which are inapplicable to this case. The said section has been declared compulsory in nature. 21 Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160, otherwise known as The Local Government Code, which took effect on 1 January 1992. The pertinent provisions of the Local Government Code making conciliation a precondition to filing of complaints in court, read: SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. – No complaint, petition, action, or proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any other government office for adjudication, unless there has been a confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon chairman or pangkat chairman or unless the settlement has been repudiated by the parties thereto. (b) Where parties may go directly to court. – The parties may go directly to court in the following instances: (1) Where the accused is under detention; (2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings; (3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property, and support pendente lite; and REMLAW Page 265
attachment, delivery of personal property, and support pendente lite; and (4) Where the action may otherwise be barred by the statute of limitations. (c) Conciliation among members of indigenous cultural communities. – The customs and traditions of indigenous cultural communities shall be applied in settling disputes between members of the cultural communities. SEC. 408. Subject Matter for Amicable Settlement; Exception Therein. – The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except: (a) Where one party is the government or any subdivision or instrumentality thereof; (b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions; (c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand pesos (P5,000.00); (d) Offenses where there is no private offended party; (e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice. There is no dispute herein that the present case was never referred to the Barangay Lupon for conciliation before Aure and Aure Lending instituted Civil Case No. 17450. In fact, no allegation of such barangay conciliation proceedings was made in Aure and Aure Lending’s Complaint before the MeTC. The only issue to be resolved is whether non-recourse to the barangay conciliation process is a jurisdictional flaw that warrants the dismissal of the ejectment suit filed with the MeTC. Aquino posits that failure to resort to barangay conciliation makes the action for ejectment premature and, hence, dismissible. She likewise avers that this objection was timely raised during the pre-trial and even subsequently in her Position Paper submitted to the MeTC. We do not agree. It is true that the precise technical effect of failure to comply with the requirement of Section 412 of the Local Government Code on barangay conciliation (previously contained in Section 5 of Presidential Decree No. 1508) is much the same effect produced by non-exhaustion of administrative remedies -- the complaint becomes afflicted with the vice of pre-maturity; and the controversy there alleged is not ripe for judicial determination. The complaint becomes vulnerable to a motion to dismiss.22 Nevertheless, the conciliation process is not a jurisdictional requirement, so that non-compliance therewith cannot affect the jurisdiction which the court has otherwise acquired over the subject matter or over the person of the defendant.23 As enunciated in the landmark case of Royales v. Intermediate Appellate Court24: Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect the sufficiency of the plaintiff's cause of action and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity; but the same would not prevent a court of competent jurisdiction from exercising its power of adjudication over the case before it, where the defendants, as in this case, failed to object to such exercise of jurisdiction in their answer and even during the entire proceedings a quo. While petitioners could have prevented the trial court from exercising jurisdiction over the case by seasonably taking exception thereto, they instead invoked the very same jurisdiction by filing an answer and seeking affirmative relief from it. What is more, they participated in the trial of the case by cross-examining respondent Planas. Upon this premise, petitioners cannot now be allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the court to which they had submitted themselves voluntarily. x x x (Emphasis supplied.) In the case at bar, we similarly find that Aquino cannot be allowed to attack the jurisdiction of the MeTC over Civil Case No. 17450 after having submitted herself voluntarily thereto. We have scrupulously examined Aquino’s Answer before the MeTC in Civil Case No. 17450 and there is utter lack of any objection on her part to any deficiency in the complaint which could oust the MeTC of its jurisdcition. We thus quote with approval the disquisition of the Court of Appeals: Moreover, the Court takes note that the defendant [Aquino] herself did not raise in defense the aforesaid lack of conciliation proceedings in her answer, which raises the exclusive affirmative defense of simulation. By this acquiescence, defendant [Aquino] is deemed to have waived such objection. As held in a case of similar circumstances, the failure of a defendant [Aquino] REMLAW Page 266
such objection. As held in a case of similar circumstances, the failure of a defendant [Aquino] in an ejectment suit to specifically allege the fact that there was no compliance with the barangay conciliation procedure constitutes a waiver of that defense. x x x. 25 By Aquino’s failure to seasonably object to the deficiency in the Complaint, she is deemed to have already acquiesced or waived any defect attendant thereto. Consequently, Aquino cannot thereafter move for the dismissal of the ejectment suit for Aure and Aure Lending’s failure to resort to the barangay conciliation process, since she is already precluded from doing so. The fact that Aquino raised such objection during the pre-trial and in her Position Paper is of no moment, for the issue of non-recourse to barangay mediation proceedings should be impleaded in her Answer. As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure: Sec. 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. (Emphasis supplied.) While the aforequoted provision applies to a pleading (specifically, an Answer) or a motion to dismiss, a similar or identical rule is provided for all other motions in Section 8 of Rule 15 of the same Rule which states: Sec. 8. Omnibus Motion. - Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived. The spirit that surrounds the foregoing statutory norm is to require the party filing a pleading or motion to raise all available exceptions for relief during the single opportunity so that single or multiple objections may be avoided.26 It is clear and categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to raise defenses and objections in a motion to dismiss or in an answer is deemed a waiver thereof; and basic is the rule in statutory construction that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. 27 As has been our consistent ruling, where the law speaks in clear and categorical language, there is no occasion for interpretation; there is only room for application. 28 Thus, although Aquino’s defense of non-compliance with Presidential Decree No. 1508 is meritorious, procedurally, such defense is no longer available for failure to plead the same in the Answer as required by the omnibus motion rule. Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997 Rules of Civil Procedure provide only three instances when the court may motu proprio dismiss the claim, and that is when the pleadings or evidence on the record show that (1) the court has no jurisdiction over the subject matter; (2) there is another cause of action pending between the same parties for the same cause; or (3) where the action is barred by a prior judgment or by a statute of limitations. Thus, it is clear that a court may not motu proprio dismiss a case on the ground of failure to comply with the requirement for barangay conciliation, this ground not being among those mentioned for the dismissal by the trial court of a case on its own initiative. Aquino further argues that the issue of possession in the instant case cannot be resolved by the MeTC without first adjudicating the question of ownership, since the Deed of Sale vesting Aure with the legal right over the subject property is simulated. Again, we do not agree. Jurisdiction in ejectment cases is determined by the allegations pleaded in the complaint. As long as these allegations demonstrate a cause of action either for forcible entry or for unlawful detainer, the court acquires jurisdiction over the subject matter. This principle holds, even if the facts proved during the trial do not support the cause of action thus alleged, in which instance the court -- after acquiring jurisdiction -- may resolve to dismiss the action for insufficiency of evidence. The necessary allegations in a Complaint for ejectment are set forth in Section 1, Rule 70 of the Rules of Court, which reads: SECTION 1. Who may institute proceedings, and when. – Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person may at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs. In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997, alleged as follows: 2. [Aure and Aure Lending] became the owners of a house and lot located at No. 37 Salazar REMLAW Page 267
In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997, alleged as follows: 2. [Aure and Aure Lending] became the owners of a house and lot located at No. 37 Salazar Street corner Encarnacion Street, B.F. Homes, Quezon City by virtue of a deed of absolute sale executed by [the spouses Aquino] in favor of [Aure and Aure Lending] although registered in the name of x x x Ernesto S. Aure; title to the said property had already been issued in the name of [Aure] as shown by a transfer Certificate of Title , a copy of which is hereto attached and made an integral part hereof as Annex A; 3. However, despite the sale thus transferring ownership of the subject premises to [Aure and Aure Lending] as above-stated and consequently terminating [Aquino’s] right of possession over the subject property, [Aquino] together with her family, is continuously occupying the subject premises notwithstanding several demands made by [Aure and Aure Lending] against [Aquino] and all persons claiming right under her to vacate the subject premises and surrender possession thereof to [Aure and Aure Lending] causing damage and prejudice to [Aure and Aure Lending] and making [Aquino’s] occupancy together with those actually occupying the subject premises claiming right under her, illegal. 29 It can be inferred from the foregoing that Aure, together with Aure Lending, sought the possession of the subject property which was never surrendered by Aquino after the perfection of the Deed of Sale, which gives rise to a cause of action for an ejectment suit cognizable by the MeTC. Aure’s assertion of possession over the subject property is based on his ownership thereof as evidenced by TCT No. 156802 bearing his name. That Aquino impugned the validity of Aure’s title over the subject property and claimed that the Deed of Sale was simulated should not divest the MeTC of jurisdiction over the ejectment case.30 As extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v. Court of Appeals31: As the law on forcible entry and unlawful detainer cases now stands, even where the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts nevertheless have the undoubted competence to resolve the issue of ownership albeit only to determine the issue of possession. x x x. The law, as revised, now provides instead that when the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession. On its face, the new Rule on Summary Procedure was extended to include within the jurisdiction of the inferior courts ejectment cases which likewise involve the issue of ownership. This does not mean, however, that blanket authority to adjudicate the issue of ownership in ejectment suits has been thus conferred on the inferior courts. At the outset, it must here be stressed that the resolution of this particular issue concerns and applies only to forcible entry and unlawful detainer cases where the issue of possession is intimately intertwined with the issue of ownership. It finds no proper application where it is otherwise, that is, where ownership is not in issue, or where the principal and main issue raised in the allegations of the complaint as well as the relief prayed for make out not a case for ejectment but one for recovery of ownership. Apropos thereto, this Court ruled in Hilario v. Court of Appeals32: Thus, an adjudication made therein regarding the issue of ownership should be regarded as merely provisional and, therefore, would not bar or prejudice an action between the same parties involving title to the land. The foregoing doctrine is a necessary consequence of the nature of forcible entry and unlawful detainer cases where the only issue to be settled is the physical or material possession over the real property, that is, possession de facto and not possession de jure." In other words, inferior courts are now "conditionally vested with adjudicatory power over the issue of title or ownership raised by the parties in an ejectment suit." These courts shall resolve the question of ownership raised as an incident in an ejectment case where a determination thereof is necessary for a proper and complete adjudication of the issue of possession. 33 WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated 17 October 2001 and its ResolutioResolution dated 8 May 2002 in CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs against the petitioner.
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Makati Ins. V. Reyes et al GR 167403 Aug 6, 2008 Sunday, November 14, 2010 11:31 PM
[G.R. No. 165744, August 11, 2008]
OSCAR C. REYES, PETITIONER, VS. HON. REGIONAL TRIAL COURT OF MAKATI, BRANCH 142, ZENITH INSURANCE CORPORATION, AND RODRIGO C. REYES, RESPONDENTS. DECIS ION BRION, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Decision of the Court of Appeals (CA) [1] promulgated on May 26, 2004 in CA-G.R. SP No. 74970. The CA Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November 29, 2002[2] in Civil Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and Damages") which denied petitioner Oscar C. Reyes' (Oscar) Motion to Declare Complaint as Nuisance or Harassment Suit. BACKGROUND FACTS Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964, while Anastacia died in 1993. Although Pedro's estate was judicially partitioned among his heirs sometime in the 1970s, no similar settlement and partition appear to have been made with Anastacia's estate, which included her shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively.[3] On May 9, 2000, Zenith and Rodrigo filed a complaint[4] with the Securities and Exchange Commission (SEC) against Oscar, docketed as SEC Case No. 05-00-6615. The complaint stated that it is "a derivative suit initiated and filed by the complainant Rodrigo C. Reyes to obtain an accounting of the funds and assets of ZENITH INSURANCE CORPORATION which are now or formerly in the control, custody, and/or possession of respondent [herein petitioner Oscar] and to determine the shares of stock of deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated [by Oscar] for himself [and] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased spouses, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares."[5] [Emphasis supplied.]
In his Answer with Counterclaim,[6] Oscar denied the charge that he illegally acquired the shares of Anastacia Reyes. He asserted, as a defense, that he purchased the subject shares with his own funds from the unissued stocks of Zenith, and that the suit is not a bona fide derivative suit because the requisites therefor have not been complied with. He thus questioned the SEC's jurisdiction to entertain the complaint because it pertains to the settlement of the estate of Anastacia Reyes. When Republic Act (R.A.) No. 8799[7] took effect, the SEC's exclusive and original jurisdiction over cases enumerated in Section 5 of Presidential Decree (P.D.) No. 902-A was transferred to the RTC designated as a special commercial court.[8] The records of Rodrigo's SEC case were thus turned over to the RTC, Branch 142, Makati, and docketed as Civil Case No. 00-1553.
On October 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit.[9] He claimed that the complaint is a mere nuisance or harassment suit and should, according to the Interim Rules of Procedure for Intra-Corporate Controversies, be dismissed; and that it is not a bona fide REMLAW Page 269
Rules of Procedure for Intra-Corporate Controversies, be dismissed; and that it is not a bona fide derivative suit as it partakes of the nature of a petition for the settlement of estate of the deceased Anastacia that is outside the jurisdiction of a special commercial court. The RTC, in its Order dated November 29, 2002 (RTC Order), denied the motion in part and declared: A close reading of the Complaint disclosed the presence of two (2) causes of action, namely: a) a derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar] with prayer to appoint a management committee; and b) an action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties' brothers and sisters. The latter is not a derivative suit and should properly be threshed out in a petition for settlement of estate. Accordingly, the motion is denied. However, only the derivative suit consisting of the first cause of action will be taken cognizance of by this Court.[10] Oscar thereupon went to the CA on a petition for certiorari, prohibition, and mandamus[11] and prayed that the RTC Order be annulled and set aside and that the trial court be prohibited from continuing with the proceedings. The appellate court affirmed the RTC Order and denied the petition in its Decision dated May 26, 2004. It likewise denied Oscar's motion for reconsideration in a Resolution dated October 21, 2004.
Petitioner now comes before us on appeal through a petition for review on certiorari under Rule 45 of the Rules of Court. ASSIGNMENT OF ERRORS Petitioner Oscar presents the following points as conclusions the CA should have made: 1. that the complaint is a mere nuisance or harassment suit that should be dismissed under the Interim Rules of Procedure of Intra-Corporate Controversies; and 2. that the complaint is not a bona fide derivative suit but is in fact in the nature of a petition for settlement of estate; hence, it is outside the jurisdiction of the RTC acting as a special commercial court. Accordingly, he prays for the setting aside and annulment of the CA decision and resolution, and the dismissal of Rodrigo's complaint before the RTC. THE COURT'S RULING
We find the petition meritorious. The core question for our determination is whether the trial court, sitting as a special commercial court, has jurisdiction over the subject matter of Rodrigo's complaint. To resolve it, we rely on the judicial principle that "jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations of the complaint, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein."[12] Jurisdiction of Special Commercial Courts
P.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special commercial court) exercises exclusive jurisdiction: SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnership, and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission.
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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 appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations. The allegations set forth in Rodrigo's complaint principally invoke Section 5, paragraphs (a) and (b) above as basis for the exercise of the RTC's special court jurisdiction. Our focus in examining the allegations of the complaint shall therefore be on these two provisions.
Fraudulent Devices and Schemes The rule is that a complaint must contain a plain, concise, and direct statement of the ultimate facts constituting the plaintiff's cause of action and must specify the relief sought.[13] Section 5, Rule 8 of the Revised Rules of Court provides that in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity.[14] These rules find specific application to Section 5(a) of P.D. No. 902-A which speaks of corporate devices or schemes that amount to fraud or misrepresentation detrimental to the public and/or to the stockholders. In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the following: 3. This is a complaint...to determine the shares of stock of the deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated for himself [herein petitioner Oscar] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased Spouses Pedro and Anastacia Reyes, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares with the corresponding equivalent amount of P7,099,934.82 plus interest thereon from 1978 representing his obligations to the Associated Citizens' Bank that was paid for his account by his late mother, Anastacia C. Reyes. This amount was not collated or taken into account in the partition or distribution of the estate of their late mother, Anastacia C. Reyes.
3.1. Respondent Oscar C. Reyes, through other schemes of fraud including misrepresentation, unilaterally, and for his own benefit, capriciously transferred and took possession and control of the management of Zenith Insurance Corporation which is considered as a family corporation, and other properties and businesses belonging to Spouses Pedro and Anastacia Reyes. xxx x
4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered by TCT No. 225324 was illegally and fraudulently used by respondent as a collateral. xxx x 5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doña Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein.
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xxx x 9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondent's [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto.
xxx x 10.1 By refusal of the respondent to account of his [sic] shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children, including the complainant Rodrigo C. Reyes herein, to their damage and prejudice.
xxx x 11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance Corporation[,] particularly the number of shares of stocks illegally and fraudulently transferred to him from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or partition in equal shares among their children. [Emphasis supplied.] Allegations of deceit, machination, false pretenses, misrepresentation, and threats are largely conclusions of law that, without supporting statements of the facts to which the allegations of fraud refer, do not sufficiently state an effective cause of action.[15] The late Justice Jose Feria, a noted authority in Remedial Law, declared that fraud and mistake are required to be averred with particularity in order to enable the opposing party to controvert the particular facts allegedly constituting such fraud or mistake.[16] Tested against these standards, we find that the charges of fraud against Oscar were not properly supported by the required factual allegations. While the complaint contained allegations of fraud purportedly committed by him, these allegations are not particular enough to bring the controversy within the special commercial court's jurisdiction; they are not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can be characterized as "illegal and fraudulent" were not explained nor elaborated on. Not every allegation of fraud done in a corporate setting or perpetrated by corporate officers will bring the case within the special commercial court's jurisdiction. To fall within this jurisdiction, there must be sufficient nexus showing that the corporation's nature, structure, or powers were used to facilitate the fraudulent device or scheme. Contrary to this concept, the complaint presented a reverse situation. No corporate power or office was alleged to have facilitated the transfer of the shares; rather, Oscar, as an individual and without reference to his corporate personality, was alleged to have transferred the shares of Anastacia to his name, allowing him to become the majority and controlling stockholder of Zenith, and eventually, the corporation's President. This is the essence of the complaint read as a whole and is particularly demonstrated under the following allegations: 5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doña Anastacia C. Reyes, shares of stocks and *sic+ valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein. xxx x
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9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondent's [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto. [Emphasis supplied.] In ordinary cases, the failure to specifically allege the fraudulent acts does not constitute a ground for dismissal since such defect can be cured by a bill of particulars. In cases governed by the Interim Rules of Procedure on Intra-Corporate Controversies, however, a bill of particulars is a prohibited pleading.[17] It is essential, therefore, for the complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke the court's special commercial jurisdiction. We note that twice in the course of this case, Rodrigo had been given the opportunity to study the propriety of amending or withdrawing the complaint, but he consistently refused. The court's function in resolving issues of jurisdiction is limited to the review of the allegations of the complaint and, on the basis of these allegations, to the determination of whether they are of such nature and subject that they fall within the terms of the law defining the court's jurisdiction. Regretfully, we cannot read into the complaint any specifically alleged corporate fraud that will call for the exercise of the court's special commercial jurisdiction. Thus, we cannot affirm the RTC's assumption of jurisdiction over Rodrigo's complaint on the basis of Section 5(a) of P.D. No. 902-A.[18] Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Court's approach in classifying what constitutes an intra-corporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties.[19] The types of relationships embraced under Section 5(b), as declared in the case of Union Glass & Container Corp. v. SEC,[20] were as follows: a) between the corporation, partnership, or association and the public; b) between the corporation, partnership, or association and its stockholders, partners, members, or officers; c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is concerned; and d) among the stockholders, partners, or associates themselves. [Emphasis supplied.]
The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC, regardless of the subject matter of the dispute. This came to be known as the relationship test. However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc.,[21]the Court introduced the nature of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute.
Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate.[22] The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties' correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists. REMLAW Page 273
exist, then no intra-corporate controversy exists.
The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the nature of the question under controversy.[23] This two-tier test was adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:[24] To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy. The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are 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 franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. Given these standards, we now tackle the question posed for our determination under the specific circumstances of this case: Application of the Relationship Test Is there an intra-corporate relationship between the parties that would characterize the case as an intracorporate dispute?
We point out at the outset that while Rodrigo holds shares of stock in Zenith, he holds them in two capacities: in his own right with respect to the 4,250 shares registered in his name, and as one of the heirs of Anastacia Reyes with respect to the 136,598 shares registered in her name. What is material in resolving the issues of this case under the allegations of the complaint is Rodrigo's interest as an heir since the subject matter of the present controversy centers on the shares of stocks belonging to Anastacia, not on Rodrigo's personally-owned shares nor on his personality as shareholder owning these shares. In this light, all reference to shares of stocks in this case shall pertain to the shareholdings of the deceased Anastacia and the parties' interest therein as her heirs. Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the decedent. Accordingly, upon Anastacia's death, her children acquired legal title to her estate (which title includes her shareholdings in Zenith), and they are, prior to the estate's partition, deemed co-owners thereof.[25] This status as co-owners, however, does not immediately and necessarily make them stockholders of the corporation. Unless and until there is compliance with Section 63 of the Corporation Code on the manner of transferring shares, the heirs do not become registered stockholders of the corporation. Section 63 provides: Section 63. Certificate of stock and transfer of shares. - The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares transferred. [Emphasis supplied.] No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation.
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Simply stated, the transfer of title by means of succession, though effective and valid between the parties involved (i.e., between the decedent's estate and her heirs), does not bind the corporation and third parties. The transfer must be registered in the books of the corporation to make the transfereeheir a stockholder entitled to recognition as such both by the corporation and by third parties.[26] We note, in relation with the above statement, that in Abejo v. Dela Cruz[27] and TCL Sales Corporation v. Court of Appeals[28] we did not require the registration of the transfer before considering the transferee a stockholder of the corporation (in effect upholding the existence of an intra-corporate relation between the parties and bringing the case within the jurisdiction of the SEC as an intra-corporate controversy). A marked difference, however, exists between these cases and the present one. In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of shares of the corporation; after the transferee had established prima facie ownership over the shares of stocks in question, registration became a mere formality in confirming their status as stockholders. In the present case, each of Anastacia's heirs holds only an undivided interest in the shares. This interest, at this point, is still inchoate and subject to the outcome of a settlement proceeding; the right of the heirs to specific, distributive shares of inheritance will not be determined until all the debts of the estate of the decedent are paid. In short, the heirs are only entitled to what remains after payment of the decedent's debts;[29] whether there will be residue remains to be seen. Justice Jurado aptly puts it as follows: No succession shall be declared unless and until a liquidation of the assets and debts left by the decedent shall have been made and all his creditors are fully paid. Until a final liquidation is made and all the debts are paid, the right of the heirs to inherit remains inchoate. This is so because under our rules of procedure, liquidation is necessary in order to determine whether or not the decedent has left any liquid assets which may be transmitted to his heirs.[30] [Emphasis supplied.] Rodrigo must, therefore, hurdle two obstacles before he can be considered a stockholder of Zenith with respect to the shareholdings originally belonging to Anastacia. First, he must prove that there are shareholdings that will be left to him and his co-heirs, and this can be determined only in a settlement of the decedent's estate. No such proceeding has been commenced to date. Second, he must register the transfer of the shares allotted to him to make it binding against the corporation. He cannot demand that this be done unless and until he has established his specific allotment (and prima facie ownership) of the shares. Without the settlement of Anastacia's estate, there can be no definite partition and distribution of the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer. And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an intra-corporate relationship as premise for an intra-corporate controversy within the jurisdiction of a special commercial court. In sum, we find that - insofar as the subject shares of stock (i.e., Anastacia's shares) are concerned Rodrigo cannot be considered a stockholder of Zenith. Consequently, we cannot declare that an intracorporate relationship exists that would serve as basis to bring this case within the special commercial court's jurisdiction under Section 5(b) of PD 902-A, as amended. Rodrigo's complaint, therefore, fails the relationship test.
Application of the Nature of Controversy Test The body rather than the title of the complaint determines the nature of an action.[31] Our examination of the complaint yields the conclusion that, more than anything else, the complaint is about the protection and enforcement of successional rights. The controversy it presents is purely civil rather than corporate, although it is denominated as a "complaint for accounting of all corporate funds and assets." Contrary to the findings of both the trial and appellate courts, we read only one cause of action alleged in the complaint. The "derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar]" does not constitute a separate cause of action but is, as correctly claimed by Oscar, only an incident to the "action REMLAW Page 275
constitute a separate cause of action but is, as correctly claimed by Oscar, only an incident to the "action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties' brothers and sisters." There can be no mistake of the relationship between the "accounting" mentioned in the complaint and the objective of partition and distribution when Rodrigo claimed in paragraph 10.1 of the complaint that: 10.1 By refusal of the respondent to account of [sic] his shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children including the complainant Rodrigo C. Reyes herein to their damage and prejudice. We particularly note that the complaint contained no sufficient allegation that justified the need for an accounting other than to determine the extent of Anastacia's shareholdings for purposes of distribution. Another significant indicator that points us to the real nature of the complaint are Rodrigo's repeated claims of illegal and fraudulent transfers of Anastacia's shares by Oscar to the prejudice of the other heirs of the decedent; he cited these allegedly fraudulent acts as basis for his demand for the collation and distribution of Anastacia's shares to the heirs. These claims tell us unequivocally that the present controversy arose from the parties' relationship as heirs of Anastacia and not as shareholders of Zenith. Rodrigo, in filing the complaint, is enforcing his rights as a co-heir and not as a stockholder of Zenith. The injury he seeks to remedy is one suffered by an heir (for the impairment of his successional rights) and not by the corporation nor by Rodrigo as a shareholder on record. More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of illegal acquisition by Oscar is the distribution of Anastacia's shareholdings without a prior settlement of her estate - an objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special commercial court, has no jurisdiction to settle, partition, and distribute the estate of a deceased. A relevant provision - Section 2 of Rule 90 of the Revised Rules of Court - that contemplates properties of the decedent held by one of the heirs declares: Questions as to advancement made or alleged to have been made by the deceased to any heir may be heard and determined by the court having jurisdiction of the estate proceedings; and the final order of the court thereon shall be binding on the person raising the questions and on the heir. [Emphasis supplied.] Worth noting are this Court's statements in the case of Natcher v. Court of Appeals:[32]
Matters which involve settlement and distribution of the estate of the decedent fall within the exclusive province of the probate court in the exercise of its limited jurisdiction. xxx x It is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a special proceeding because it is subject to specific prescribed rules. [Emphasis supplied.] That an accounting of the funds and assets of Zenith to determine the extent and value of Anastacia's shareholdings will be undertaken by a probate court and not by a special commercial court is completely consistent with the probate court's limited jurisdiction. It has the power to enforce an accounting as a necessary means to its authority to determine the properties included in the inventory of the estate to be administered, divided up, and distributed. Beyond this, the determination of title or ownership over the subject shares (whether belonging to Anastacia or Oscar) may be conclusively settled by the probate court as a question of collation or advancement. We had occasion to recognize the court's authority to act on questions of title or ownership in a collation or advancement situation in Coca v. Pangilinan[33] where we ruled: It should be clarified that whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction or of its limited probate jurisdiction is in reality not a jurisdictional question. In essence, it is a procedural question involving a mode of practice "which may be waived." As a general rule, the question as to title to property should not be passed upon in the testate or intestate proceeding. That question should be ventilated in a separate action. That general rule has REMLAW Page 276
intestate proceeding. That question should be ventilated in a separate action. That general rule has qualifications or exceptions justified by expediency and convenience. Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice to its final determination in a separate action. Although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are all heirs, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, the probate court is competent to decide the question of ownership. [Citations omitted. Emphasis supplied.] In sum, we hold that the nature of the present controversy is not one which may be classified as an intra-corporate dispute and is beyond the jurisdiction of the special commercial court to resolve. In short, Rodrigo's complaint also fails the nature of the controversy test.
DERIVATIVE SUIT Rodrigo's bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction on the RTC (as a special commercial court) if he cannot comply with the requisites for the existence of a derivative suit. These requisites are: a. the party bringing suit should be a shareholder during the time of the act or transaction complained of, the number of shares not being material; b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief, but the latter has failed or refused to heed his plea; and c. the cause of action actually devolves on the corporation; the wrongdoing or harm having been or being caused to the corporation and not to the particular stockholder bringing the suit. [34] Based on these standards, we hold that the allegations of the present complaint do not amount to a derivative suit.
First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging to Anastacia; he only stands as a transferee-heir whose rights to the share are inchoate and unrecorded. With respect to his own individually-held shareholdings, Rodrigo has not alleged any individual cause or basis as a shareholder on record to proceed against Oscar. Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some particularity in his complaint that he has exhausted his remedies within the corporation by making a sufficient demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is denied.[35] Paragraph 8 of the complaint hardly satisfies this requirement since what the rule contemplates is the exhaustion of remedies within the corporate setting: 8. As members of the same family, complainant Rodrigo C. Reyes has resorted [to] and exhausted all legal means of resolving the dispute with the end view of amicably settling the case, but the dispute between them ensued. Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation due to Oscar's acts. If indeed he illegally and fraudulently transferred Anastacia's shares in his own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or wrongdoing against the corporation that he can champion in his capacity as a shareholder on record.[36] In summary, whether as an individual or as a derivative suit, the RTC - sitting as special commercial court - has no jurisdiction to hear Rodrigo's complaint since what is involved is the determination and distribution of successional rights to the shareholdings of Anastacia Reyes. Rodrigo's proper remedy, under the circumstances, is to institute a special proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint. REMLAW Page 277
deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint.
WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court of Appeals dated May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the Regional Trial Court, Branch 142, Makati, docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of jurisdiction. Pasted from
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Rural Bank of Seven Lakes v. Dan GR 174109 Dec 24, 2008; Sunday, November 14, 2010 11:32 PM
RURAL BANK OF THE SEVEN LAKES (S.P.C.), Inc., petitioner, vs. BELEN A. DAN, respondent. DECIS ION CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner Rural Bank of the Seven Lakes (RBSL), seeking to reverse and set aside the Decision1 dated 21 October 2002 and its Resolution2 dated 7 August 2006 of the Court of Appeals in CA-G.R. SP No. 59193. In its assailed Decision, the appellate court reversed the Decision3 dated 9 May 2000 of the Securities and Exchange Commission (SEC) en banc, which upheld the dismissal by the SEC Hearing Officer of SEC Case No. 03-99-6229, instituted by respondent Belen A. Dan (Dan), for failure to prosecute. The factual and procedural antecedents of this instant Petition are as follows: RBSL is a domestic corporation duly authorized by the Central Bank of the Philippines to engage in the banking business. In 1975, Dan was employed by RBSL as an assistant bookkeeper. She rose from the ranks and, in 1982, she was appointed bank manager by the RBSL Board of Directors.4 Sometime in 1998, RBSL discovered that Dan committed unsound banking practices, which included the granting of loans to herself, her relatives, and close friends. Accordingly, Dan was charged with the following offenses: (a) violation of Section 5 of Republic Act No. 7353;5 (b) loss of confidence; (c) serious misconduct; (d) willful disobedience to the lawful order of the employer; (e) willful breach of trust; and (f) incompetence. On 30 September 1998, Dan was preventively suspended from employment by the RBSL pending the investigation of the charges against her. After the hearing held before the RBSL, Dan was determined to have committed the offenses charged. Consequently, Dan’s appointment as bank manager was revoked by the RBSL Board of Directors through Board Resolution No. 1998-127 dated 10 November 1998.6 On 4 March 1999, Dan filed a Petition7 before the SEC, docketed as SEC Case No. 03-99-6229, praying, inter alia, for the nullification of (a) her preventive suspension and (b) the revocation of her appointment as bank manager; as well as the payment of her backwages and moral and exemplary damages. During the pendency of SEC Case No. 03-99-6229, Dan instituted an action for damages against RBSL before the Regional Trial Court (RTC) of San Pablo City, Branch 32, docketed as Civil Case SP No. 5734-2000. In her Complaint in said civil case, Dan alleged that she suffered serious anxiety as a result of her wrongful separation from employment by RBSL. RBSL filed a motion to dismiss Civil Case SP No. 5734-2000 on the ground of forum shopping, averring that the said case was based exactly on the same cause of action as that in SEC Case No. 03-99-6229 pending before the SEC, namely, the wrongful termination of Dan’s employment. The RTC, in its Order dated 4 September 2000, granted the motion of RBSL and dismissed Civil Case SP No. 5734-2000. The RTC denied Dan’s Motion for Reconsideration in an Order dated 3 December 2000. Dan challenged the RTC Orders dated 4 September 2000 and 3 December 2000, dismissing Civil Case SP No. 5734-2000, in her appeal before the Court of Appeals.8 In the meantime, the SEC Hearing Officer called SEC Case No. 03-99-6229 for hearing on 3 November 1999, but Dan failed to appear on the said date.9 Thus, the SEC Hearing Officer was prompted to reset the hearing to 29 November 1999, with a warning that should Dan again fail to appear on the date set, the SEC Hearing Officer would already be constrained to dismiss the case.10 On 24 November 1999, Dan’s counsel filed an Urgent Motion for Cancellation of the 29 November 1999 hearing, since he had another hearing scheduled on the same date. In an Order11 dated 24 November 1999, the SEC Hearing Officer granted the motion and reset the hearing to 6 December 1999, with a stern warning that he would no longer entertain further postponement. Notwithstanding the explicit warning of the SEC Hearing Officer, Dan’s counsel still failed to attend the hearing set on 6 December 1999, finally causing the Hearing Officer to dismiss SEC Case No. 03-99-6229 for failure to prosecute.12 REMLAW Page 279
the Hearing Officer to dismiss SEC Case No. 03-99-6229 for failure to prosecute.12 On appeal, the SEC en banc rendered its Decision13 dated 9 May 2000, affirming the Order dated 6 December 1999 of the SEC Hearing Officer, which dismissed SEC Case No. 03-99-6229 for non-suit. Unyielding, Dan filed before the Court of Appeals a Petition for Review14 under Rule 43 of the Revised Rules of Court assailing the Decision dated 9 May 2000 of the SEC en banc. Dan invoked in her Petition equitable justice to justify her counsel’s several postponements of the hearing before the SEC Hearing Officer. Dan urged the appellate court to afford her ample opportunity to fully ventilate her side of the controversy, in consonance with the Constitutional dicta on due process; and not dispose of her case on technicality. Dan also argued that the issue involving the postponements of the hearing was rendered moot and academic, considering the issuance by the SEC Hearing Officer, with the conformity of RBSL, of the orders granting her counsel’s motions for postponement. Lastly, Dan asserted that the failure of her counsel to appear on the hearing scheduled on 6 December 1999 constituted gross and inexcusable neglect which should not bind her.15 In response, the RBSL underscored the procedural lapses flagrantly committed by Dan. RBSL alleged that Dan violated the rule against forum shopping by stating in her Complaint in Civil Case SP No. 5734-2000 before the RTC, that she had no knowledge of the pendency of any action involving the same party and the same subject matter, despite her prior institution of SEC Case No. 03-99-6229 before the SEC. RBSL also pointed out that Dan’s appeal before the SEC En Banc lacked verification as required by Section 2, Rule II of the 1999 SEC Rules of Procedure. Aside from these procedural flaws, RBSL further contended that, in repeatedly disregarding the hearings set in SEC Case No. 03-99-6229, Dan only showed that she was not interested in prosecuting the case.16 On 21 October 2002, the Court of Appeals promulgated its Decision17 in favor of Dan, thus, reversing the Decision dated 9 May 2000 of the SEC en banc. According to the appellate court, the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. In the highest interest of justice and equity, the Court of Appeals directed the SEC Hearing Officer to allow Dan to complete the presentation of her evidence. The Motion for Reconsideration of RBSL was denied by the Court of Appeals in its Resolution18 dated 7 August 2006. Hence, this instant Petition for Review on Certiorari19 filed by RBSL assigning the following errors: I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT [DAN] HAD NOT VIOLATED THE RULE AGAINST FORUM-SHOPPING. II. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT THE REQUIREMENT OF A VERIFICATION IN APPEALS BEFORE THE SEC CAN BE RELAXED. III. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DISREGARDING *DAN’S+ FAILURE TO PROSECUTE HER CASE. RBSL accuses Dan of forum shopping in instituting SEC Case No. 03-99-6229 before the SEC and Civil Case SP No. 5734-2000 before the RTC. RBSL alleged that Dan had trifled with the courts and abused their processes by improperly instituting several cases from the same cause of action. Forum shopping is a deplorable practice of litigants of resorting to two different fora for the purpose of obtaining the same relief, to increase his or her chances of obtaining a favorable judgment. What is pivotal to consider in determining whether forum shopping exists or not is the vexation caused to the courts and the parties-litigants by a person who asks appellate courts and/or administrative entities to rule on the same related causes and/or to grant the same or substantially the same relief, in the process creating the possibility of conflicting decisions by the different courts or fora upon the same issues.20 The grave evil sought to be avoided by the rule against forum shopping is the rendition by two competent tribunals of two separate, and contradictory decisions. Unscrupulous party litigants, taking advantage of a variety of competent tribunals, may repeatedly try their luck in several different fora until a favorable result is reached. To avoid the resultant confusion, this Court adheres strictly to the rules against forum shopping, and any violation of these rules results in the dismissal of a case.21 To stamp out this abominable practice which seriously impairs the efficient administration of justice, this Court promulgated Administrative Circulars No. 28-91 and No. 04-94, which are now embodied as REMLAW Page 280
Court promulgated Administrative Circulars No. 28-91 and No. 04-94, which are now embodied as Section 5, Rule 7 of the Rules of Court, which reads: SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. The test for determining the existence of forum shopping is whether the elements of litis pendentia are present, or whether a final judgment in one case amounts to res judicata in another. Thus, there is forum shopping when the following elements are present: (a) identity of parties, or at least such parties as represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars, such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration; said requisites are also constitutive of the requisites for auter action pendant or lis pendens.22 The Court holds that the afore-mentioned requisites are all present in the instant case. First, the parties in SEC Case No. 03-99-6229 and Civil Case No. SP No. 5734-2000 are the same, no other than Dan and RBSL. Second, there is also the identity of rights asserted and reliefs prayed for in these two cases. Dan’s Complaint in Civil Case No. SP No. 5734-2000 before the RTC was for the payment of moral damages and litigation expenses premised on the alleged wrongful revocation of her appointment as bank manager of RBSL. While the primary relief sought by Dan in filing SEC Case No. 03-99-6229 was for the nullification of the revocation of her appointment as bank manage of RBSL, she also prayed in the same Petition for the payment of the moral damages she suffered by reason thereof. Undeniably, the damages Dan seeks to recover in these two cases arose from the same set of facts and a singular cause of action: the purportedly unjust revocation of her appointment as bank manager of RBSL. And thirdly, a judgment rendered in either SEC Case No. 03-99-6229 and Civil Case No. SP No. 5734-2000 shall constitute res judicata on the other. Before they could award the moral damages Dan prayed for, both the SEC and the RTC must first resolve the issue of whether the revocation of Dan’s appointment was valid. Should the SEC determine that the revocation of Dan’s appointment was proper and, consequently, refuse to award moral damages, then the RTC would be bound thereby and could not render a contrary ruling on the very same issue. Dismissal of the case and contempt is the inevitable consequence of Dan’s violation of the prohibition against forum shopping. As discussed in Sps. Ong v. Court of Appeals23: The distinction between the prohibition against forum shopping and the certification requirement should by now be too elementary to be misunderstood. To reiterate, compliance with the certification against forum shopping is separate from and independent of the avoidance of the act of forum shopping itself. There is a difference in the treatment between failure to comply with the certification requirement and violation of the prohibition against forum shopping not only in terms of imposable sanctions but also in the manner of enforcing them. The former constitutes sufficient cause for the dismissal without prejudice of the complaint or initiatory pleading upon motion and after hearing, while the latter is a ground for summary dismissal thereof and for direct contempt. x x x. (Emphasis supplied.) Dan committed another procedural faux pas in filing an appeal before the SEC en banc without the required verification. REMLAW Page 281
required verification. The SEC Rules of Procedure on verification under Section 2, Rule III thereof states: SECTION 2. Verification. – All pleadings filed with the Commission shall be verified by an affidavit that the affiant has read the pleading and the allegations therein are true and correct of his own knowledge and belief. A pleading which "contains a verification based on information and belief," or upon "knowledges, information and belief," or which lacks a proper verification, shall be treated as an unsigned pleading and shall not be considered as filed. It is not controverted that Dan’s appeal was not verified at all. The Court of Appeals, however, held that the absence of verification in Dan’s appeal before the SEC en banc is excusable and does not warrant the dismissal of the same. Echoing the ruling of the appellate court, Dan pleads for the liberal interpretation of the procedural rules in the interest of substantial justice. The Court is not persuaded. The Court cannot sanction Dan’s utter disregard of procedural rules. It must be emphasized that procedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in certain instances, the Court allows a relaxation in the application of the rules, it never intends to forge a weapon for erring litigants to violate the rules with impunity. The liberal interpretation and application of rules apply only in proper cases of demonstrable merit and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. Party litigants and their counsel are well advised to abide by, rather than flaunt, procedural rules, for these rules illumine the path of the law and rationalize the pursuit of justice.24 It is this symbiosis between form and substance that guarantees that discernible result.25 The use of the words "substantial justice" is not a magic wand that will automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled or dismissed, simply because their non-observance may have resulted in prejudice to a party’s substantive rights. Like all rules, they are required to be followed except only for the most persuasive of reasons, when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.26 Thus, as called upon by the respondents, the Court yields to the time-honored principle "Justice is for all." Litigants must have equal footing in a court of law; the rules are laid down for the benefit of all and should not be made dependent upon a suitor’s sweet time and own bidding.27 Considering the circumstances in the instant case, the Court finds no justification for the relaxation of the procedural rules. Other than invoking the Court’s liberality, Dan miserably failed to give any reason for her failure to comply with the procedural requirement of submitting a verification with her appeal to the SEC en banc. Without a valid explanation, the Court cannot be expected to be liberal or indulgent. Finally, the Court finds that the Court of Appeals erred in pronouncing that the dismissal of SEC Case No. 03-99-6229 for failure to prosecute by the SEC Hearing Officer, as affirmed by the SEC en banc, was unjustified. It cannot sustain the reasoning of the appellate court that the postponements of the hearing were not intended to delay the proceedings before the SEC and caused no substantial prejudice to RBSL. To the contrary, this Court sees no fault on the part of the SEC Hearing Officer when it finally decided to dismiss SEC Case No. 03-99-6229 after the repeated non-appearance of Dan and/or her counsel on the scheduled dates for the hearing of her case. The true test for the exercise of the power to dismiss a case on the ground of failure to prosecute is whether, under the prevailing circumstances, the plaintiff is culpable for want of due diligence in failing to proceed with reasonable promptitude. 28 It must be recalled that the hearing of SEC Case No. 03-99-6229 was originally set on 3 November 1999. It was reset to 24 November 1999 for non-appearance of Dan’s counsel. However, the hearing was postponed again upon motion of Dan’s counsel, who already had another hearing scheduled on the same date; hence, the hearing was moved to 6 December 1999. Despite the fact that the hearing was reset on her account, Dan’s counsel still failed to appear before the Hearing Officer on 6 December 1999. Neither Dan nor her counsel provided an explanation for their latest absence. These events demonstrate a total lack of regard and respect for the proceedings taking place before the SEC on the part of Dan and her counsel. Dan blames her counsel for being negligent in handling her case before SEC Case No. 03-99-6229. REMLAW Page 282
Dan blames her counsel for being negligent in handling her case before SEC Case No. 03-99-6229. However, other than her counsel’s failure to attend the scheduled hearings, Dan did not allege or present evidence demonstrative of her counsel’s gross or inexcusable negligence, sufficient to release her from the binding effects of her counsel’s acts. It is a well-settled rule that a client is bound by his counsel’s conduct, negligence, and mistakes in handling the case; the client cannot be heard to complain that the result might have been different had his lawyer proceeded differently.29 The only exception to the general rule -- that a client is bound by the mistakes of his counsel -- which this Court finds acceptable is when the reckless or gross negligence of counsel deprives the client of due process of law, or when the application of the rule results in the outright deprivation of one’s property through a technicality.30 None of the exceptions exist in the instant case. Moreover, Dan herself is guilty of some measure of negligence. If only she kept herself updated as to the developments in SEC Case No. 03-99-6229, she would have come to know that there had already been several postponements of the hearings therein. She could have reminded and/or demanded of her counsel to give due attention to her case and to attend the next hearing set. It must be stressed that a plaintiff is bound to prosecute his complaint with assiduousness. Plaintiff is obliged to give the necessary assistance to his counsel, as his interest in the outcome of the case is at stake.31 Failure to do so would justify the dismissal of the case.32 It is wrong for plaintiff to expect that all he needs to do is sit back, relax and await a favorable outcome.33 The actuations of Dan and her counsel concerning SEC Case No. 02-99-6229 are replete with negligence, laxity, and truancy, which justify the dismissal of the said case. The evident complacency, if not delinquency, of Dan and her counsel in SEC Case No. 02-99-6229 does not merit the Court’s sympathy and consideration. For failure to diligently pursue her Petition in SEC Case No. 02-99-6229, Dan violated the right of RBSL to speedy trial. She also sorely tried the patience of the administrative agency and wasted its precious time and attention. And given the foregoing finding of this Court of negligence and fault on the part of Dan herself, Dan cannot seek protection behind the protective veil of equity in consonance with the basic principle in law that he who comes to court must come with clean hands.34 A final word. Equitable relief is not the supremacy but the entitlement of due process previously denied the litigant.35 There was no denial of due process in the instant case that would warrant us to restore a right that was already lost upon the initiative and fault of Dan. WHEREFORE, in view of the foregoing, the instant Petition is GRANTED. The Decision dated 21 October 2002 and Resolution dated 7 August 2006 of the Court of Appeals in CA-G.R. SP No. 59193 are REVERSED and SET ASIDE. The Decision of the Securities and Exchange Commission en banc, dated 9 May 2000, affirming the dismissal of SEC Case No. 03-99-6229, is hereby REINSTATED. No costs. SO ORDERED. Pasted from
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?Ceroferr v. CA 376 SCRA 144 Sunday, November 14, 2010 11:32 PM
Moreover, a defendant who moves to dismiss the complaint on the ground of lack of cause of action hypothetically admits all the averments thereof. The test of sufficiency of the facts found in a complaint as constituting a cause of action is whether or not admitting the facts alleged the court can render a valid judgment upon the same in accordance with the prayer thereof. The hypothetical admission extends to the relevant and material facts well pleaded in the complaint and inferences fairly deducible therefrom. Hence, if the allegations in the complaint furnish sufficient basis by which the complaint can be maintained, the same should not be dismissed regardless of the defense that may be assessed by the defendants. Pasted from
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?Camarines Sur Electric v. Aquino GR 167691 Sep 23, 2008 Sunday, November 14, 2010 11:32 PM
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Vinzons-Chato v. Fortune GR 141309 Dec 23, 2008 Sunday, November 14, 2010 11:34 PM
LIWAYWAY VINZONS-CHATO, petitioner, vs. FORTUNE TOBACCO CORPORATION, respondent. RESOLUTION NACHURA, J.: It is a fundamental principle in the law of public officers that a duty owing to the public in general cannot give rise to a liability in favor of particular individuals.1 The failure to perform a public duty can constitute an individual wrong only when a person can show that, in the public duty, a duty to himself as an individual is also involved, and that he has suffered a special and peculiar injury by reason of its improper performance or non-performance.2 By this token, the Court reconsiders its June 19, 2007 Decision3 in this case. As culled from the said decision, the facts, in brief, are as follows: On June 10, 1993, the legislature enacted Republic Act No. 7654 (RA 7654), which took effect on July 3, 1993. Prior to its effectivity, cigarette brands 'Champion," "Hope," and "More" were considered local brands subjected to an ad valorem tax at the rate of 20-45%. However, on July 1, 1993, or two days before RA 7654 took effect, petitioner issued RMC 37-93 reclassifying "Champion," "Hope," and "More" as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax. RMC 37-93 in effect subjected "Hope," "More," and "Champion" cigarettes to the provisions of RA 7654, specifically, to Sec. 142, (c)(1) on locally manufactured cigarettes which are currently classified and taxed at 55%, and which imposes an ad valorem tax of "55% provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack." On July 2, 1993, at about 5:50 p.m., BIR Deputy Commissioner Victor A. Deoferio, Jr. sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one in particular. On July 15, 1993, Fortune Tobacco received, by ordinary mail, a certified xerox copy of RMC 37-93. On July 20, 1993, respondent filed a motion for reconsideration requesting the recall of RMC 37-93, but was denied in a letter dated July 30, 1993. The same letter assessed respondent for ad valorem tax deficiency amounting to P9,598,334.00 (computed on the basis of RMC 37-93) and demanded payment within 10 days from receipt thereof. On August 3, 1993, respondent filed a petition for review with the Court of Tax Appeals (CTA), which on September 30, 1993, issued an injunction enjoining the implementation of RMC 37-93. In its decision dated August 10, 1994, the CTA ruled that RMC 37-93 is defective, invalid, and unenforceable and further enjoined petitioner from collecting the deficiency tax assessment issued pursuant to RMC No. 37-93. This ruling was affirmed by the Court of Appeals, and finally by this Court in Commissioner of Internal Revenue v. Court of Appeals. It was held, among others, that RMC 37-93, has fallen short of the requirements for a valid administrative issuance. On April 10, 1997, respondent filed before the RTC a complaint for damages against petitioner in her private capacity. Respondent contended that the latter should be held liable for damages under Article 32 of the Civil Code considering that the issuance of RMC 37-93 violated its constitutional right against deprivation of property without due process of law and the right to equal protection of the laws. Petitioner filed a motion to dismiss contending that: (1) respondent has no cause of action against her because she issued RMC 37-93 in the performance of her official function and within the scope of her authority. She claimed that she acted merely as an agent of the Republic and therefore the latter is the one responsible for her acts; (2) the complaint states no cause of action for lack of allegation of malice or bad faith; and (3) the certification against forum shopping was signed by respondent's counsel in violation of the rule that it is the plaintiff or the principal party who should sign the same. On September 29, 1997, the RTC denied petitioner's motion to dismiss holding that to rule on the allegations of petitioner would be to prematurely decide the merits of the case without allowing the parties to present evidence. It further held that the defect in the certification against forum shopping was cured by respondent's submission of the corporate secretary's certificate authorizing its counsel to execute the certification against forum shopping. x x x x xxx x REMLAW Page 286
execute the certification against forum shopping. x x x x xxx x The case was elevated to the Court of Appeals via a petition for certiorari under Rule 65. However, same was dismissed on the ground that under Article 32 of the Civil Code, liability may arise even if the defendant did not act with malice or bad faith. The appellate court ratiocinated that Section 38, Book I of the Administrative Code is the general law on the civil liability of public officers while Article 32 of the Civil Code is the special law that governs the instant case. Consequently, malice or bad faith need not be alleged in the complaint for damages. It also sustained the ruling of the RTC that the defect of the certification against forum shopping was cured by the submission of the corporate secretary's certificate giving authority to its counsel to execute the same.4 [Citations and underscoring omitted.] In the aforesaid June 19, 2007 Decision, we affirmed the disposition of the Court of Appeals (CA) and directed the trial court to continue with the proceedings in Civil Case No. 97-341-MK.5 Petitioner, on July 20, 2007, subsequently moved for the reconsideration of the said decision.6 After respondent filed its comment, the Court, in its April 14, 2008 Resolution,7 denied with finality petitioner's motion for reconsideration. Undaunted, petitioner filed, on April 29, 2008 her Motion to Refer [the case] to the Honorable Court En Banc.8 She contends that the petition raises a legal question that is novel and is of paramount importance. The earlier decision rendered by the Court will send a chilling effect to public officers, and will adversely affect the performance of duties of superior public officers in departments or agencies with rule-making and quasi-judicial powers. With the said decision, the Commissioner of Internal Revenue will have reason to hesitate or refrain from performing his/her official duties despite the due process safeguards in Section 228 of the National Internal Revenue Code.9 Petitioner hence moves for the reconsideration of the June 19, 2007 Decision.10 In its June 25, 2008 Resolution,11 the Court referred the case to the En Banc. Respondent consequently moved for the reconsideration of this resolution. We now resolve both motions. There are two kinds of duties exercised by public officers: the "duty owing to the public collectively" (the body politic), and the "duty owing to particular individuals, thus: 1. Of Duties to the Public. - The first of these classes embraces those officers whose duty is owing primarily to the public collectively --- to the body politic --- and not to any particular individual; who act for the public at large, and who are ordinarily paid out of the public treasury. The officers whose duties fall wholly or partially within this class are numerous and the distinction will be readily recognized. Thus, the governor owes a duty to the public to see that the laws are properly executed, that fit and competent officials are appointed by him, that unworthy and ill-considered acts of the legislature do not receive his approval, but these, and many others of a like nature, are duties which he owes to the public at large and no one individual could single himself out and assert that they were duties owing to him alone. So, members of the legislature owe a duty to the public to pass only wise and proper laws, but no one person could pretend that the duty was owing to himself rather than to another. Highway commissioners owe a duty that they will be governed only by considerations of the public good in deciding upon the opening or closing of highways, but it is not a duty to any particular individual of the community. These illustrations might be greatly extended, but it is believed that they are sufficient to define the general doctrine. 2. Of Duties to Individuals. - The second class above referred to includes those who, while they owe to the public the general duty of a proper administration of their respective offices, yet become, by reason of their employment by a particular individual to do some act for him in an official capacity, under a special and particular obligation to him as an individual. They serve individuals chiefly and usually receive their compensation from fees paid by each individual who employs them. A sheriff or constable in serving civil process for a private suitor, a recorder of deeds in recording the deed or mortgage of an individual, a clerk of court in entering up a private judgment, a notary public in protesting negotiable paper, an inspector of elections in passing upon the qualifications of an elector, each owes a general duty of official good conduct to the public, but he is also under a special duty to the particular individual concerned which gives the latter a peculiar interest in his due performance.12 In determining whether a public officer is liable for an improper performance or non-performance of a duty, it must first be determined which of the two classes of duties is involved. For, indeed, as the eminent Floyd R. Mechem instructs, "[t]he liability of a public officer to an individual or the public is REMLAW Page 287
eminent Floyd R. Mechem instructs, "[t]he liability of a public officer to an individual or the public is based upon and is co-extensive with his duty to the individual or the public. If to the one or the other he owes no duty, to that one he can incur no liability."13 Stated differently, when what is involved is a "duty owing to the public in general", an individual cannot have a cause of action for damages against the public officer, even though he may have been injured by the action or inaction of the officer. In such a case, there is damage to the individual but no wrong to him. In performing or failing to perform a public duty, the officer has touched his interest to his prejudice; but the officer owes no duty to him as an individual.14 The remedy in this case is not judicial but political.15 The exception to this rule occurs when the complaining individual suffers a particular or special injury on account of the public officer's improper performance or non-performance of his public duty. An individual can never be suffered to sue for an injury which, technically, is one to the public only; he must show a wrong which he specially suffers, and damage alone does not constitute a wrong.16 A contrary precept (that an individual, in the absence of a special and peculiar injury, can still institute an action against a public officer on account of an improper performance or non-performance of a duty owing to the public generally) will lead to a deluge of suits, for if one man might have an action, all men might have the like-the complaining individual has no better right than anybody else.17 If such were the case, no one will serve a public office. Thus, the rule restated is that an individual cannot have a particular action against a public officer without a particular injury, or a particular right, which are the grounds upon which all actions are founded.18 Juxtaposed with Article 3219 of the Civil Code, the principle may now translate into the rule that an individual can hold a public officer personally liable for damages on account of an act or omission that violates a constitutional right only if it results in a particular wrong or injury to the former. This is consistent with this Court's pronouncement in its June 19, 2007 Decision (subject of petitioner's motion for reconsideration) that Article 32, in fact, allows a damage suit for "tort for impairment of rights and liberties."20 It may be recalled that in tort law, for a plaintiff to maintain an action for damages for the injuries of which he complains, he must establish that such injuries resulted from a breach of duty which the defendant owed the plaintiff, meaning a concurrence of injury to the plaintiff and legal responsibility by the person causing it. Indeed, central to an award of tort damages is the premise that an individual was injured in contemplation of law.21 Thus, in Lim v. Ponce de Leon,22 we granted the petitioner's claim for damages because he, in fact, suffered the loss of his motor launch due to the illegal seizure thereof. In Cojuangco, Jr. v. Court of Appeals,23 we upheld the right of petitioner to the recovery of damages as there was an injury sustained by him on account of the illegal withholding of his horserace prize winnings. In the instant case, what is involved is a public officer's duty owing to the public in general. The petitioner, as the then Commissioner of the Bureau of Internal Revenue, is being taken to task for Revenue Memorandum Circular (RMC) No. 37-93 which she issued without the requisite notice, hearing and publication, and which, in Commissioner of Internal Revenue v. Court of Appeals,24 we declared as having "fallen short of a valid and effective administrative issuance."25 A public officer, such as the petitioner, vested with quasi-legislative or rule-making power, owes a duty to the public to promulgate rules which are compliant with the requirements of valid administrative regulations. But it is a duty owed not to the respondent alone, but to the entire body politic who would be affected, directly or indirectly, by the administrative rule. Furthermore, as discussed above, to have a cause of action for damages against the petitioner, respondent must allege that it suffered a particular or special injury on account of the non-performance by petitioner of the public duty. A careful reading of the complaint filed with the trial court reveals that no particular injury is alleged to have been sustained by the respondent. The phrase "financial and business difficulties"26 mentioned in the complaint is a vague notion, ambiguous in concept, and cannot translate into a "particular injury." In contrast, the facts of the case eloquently demonstrate that the petitioner took nothing from the respondent, as the latter did not pay a single centavo on the tax assessment levied by the former by virtue of RMC 37-93. With no "particular injury" alleged in the complaint, there is, therefore, no delict or wrongful act or omission attributable to the petitioner that would violate the primary rights of the respondent. Without such delict or tortious act or omission, the complaint then fails to state a cause of action, because a REMLAW Page 288
such delict or tortious act or omission, the complaint then fails to state a cause of action, because a cause of action is the act or omission by which a party violates a right of another.27 A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to plaintiff for which the latter may maintain an action for recovery of damages.28 The remedy of a party whenever the complaint does not allege a cause of action is to set up this defense in a motion to dismiss, or in the answer. A motion to dismiss based on the failure to state a cause of action in the complaint hypothetically admits the truth of the facts alleged therein. However, the hypothetical admission is limited to the "relevant and material facts well-pleaded in the complaint and inferences deducible therefrom. The admission does not extend to conclusions or interpretations of law; nor does it cover allegations of fact the falsity of which is subject to judicial notice."29 The complaint may also be dismissed for lack of cause of action if it is obvious from the complaint and its annexes that the plaintiff is not entitled to any relief.30 The June 19, 2007 Decision and the dissent herein reiterates that under Article 32 of the Civil Code, the liability of the public officer may accrue even if he/she acted in good faith, as long as there is a violation of constitutional rights, citing Cojuangco, Jr. v. Court of Appeals,31 where we said: Under the aforecited article, it is not necessary that the public officer acted with malice or bad faith. To be liable, it is enough that there was a violation of the constitutional rights of petitioners, even on the pretext of justifiable motives or good faith in the performance of duties.32 The complaint in this case does not impute bad faith on the petitioner. Without any allegation of bad faith, the cause of action in the respondent's complaint (specifically, paragraph 2.02 thereof) for damages under Article 32 of the Civil Code would be premised on the findings of this Court in Commissioner of Internal Revenue v. Court of Appeals (CIR v. CA),33 where we ruled that RMC No. 37-93, issued by petitioner in her capacity as Commissioner of Internal Revenue, had "fallen short of a valid and effective administrative issuance." This is a logical inference. Without the decision in CIR v. CA, the bare allegations in the complaint that respondent's rights to due process of law and to equal protection of the laws were violated by the petitioner's administrative issuance would be conclusions of law, hence not hypothetically admitted by petitioner in her motion to dismiss. But in CIR v. CA, this Court did not declare RMC 37-93 unconstitutional; certainly not from either the due process of law or equal protection of the laws perspective. On due process, the majority, after determining that RMC 37-93 was a legislative rule, cited an earlier Revenue Memorandum Circular (RMC No. 10-86) requiring prior notice before RMC's could become "operative." However, this Court did not make an express finding of violation of the right to due process of law. On the aspect of equal protection, CIR v. CA said: "Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of taxation;" a statement that does not amount to a positive indictment of petitioner for violation of respondent's constitutional right. Even if one were to ascribe a constitutional infringement by RMC 37-93 on the non-uniformity of tax provisions, the nature of the constitutional transgression falls under Section 28, Article VI-not Section 1, Article III-of the Constitution. This Court's own summation in CIR v. CA: "All taken, the Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid and effective administrative issuance," does not lend itself to an interpretation that the RMC is unconstitutional. Thus, the complaint's reliance on CIR v. CA-which is cited in, and a copy of which is annexed to, the complaint-as suggestive of a violation of due process and equal protection, must fail. Accordingly, from the foregoing discussion, it is obvious that paragraph 2.02 of respondent's complaint loses the needed crutch to sustain a valid cause of action against the petitioner, for what is left of the paragraph is merely the allegation that only respondent's "Champion", "Hope" and "More" cigarettes were reclassified. If we divest the complaint of its reliance on CIR v. CA, what remains of respondent's cause of action for violation of constitutional rights would be paragraph 2.01, which reads: 2.01. On or about July 1, 1993, defendant issued Revenue Memorandum Circular No. 37-93 (hereinafter referred to as RMC No. 37-93) reclassifying specifically "Champion", "Hope" and "More" as locally manufactured cigarettes bearing a foreign brand. A copy of the aforesaid circular is attached hereto and made an integral part hereof as ANNEX "A". The issuance of a circular and its implementation resulted in REMLAW Page 289
made an integral part hereof as ANNEX "A". The issuance of a circular and its implementation resulted in the "deprivation of property" of plaintiff. They were done without due process of law and in violation of the right of plaintiff to the equal protection of the laws. (Italics supplied.) But, as intimated above, the bare allegations, "done without due process of law" and "in violation of the right of plaintiff to the equal protection of the laws" are conclusions of law. They are not hypothetically admitted in petitioner's motion to dismiss and, for purposes of the motion to dismiss, are not deemed as facts. In Fluor Daniel, Inc. Philippines v. EB. Villarosa & Partners Co., Ltd.,34 this Court declared that the test of sufficiency of facts alleged in the complaint as constituting a cause of action is whether or not, admitting the facts alleged, the court could render a valid verdict in accordance with the prayer of the complaint. In the instant case, since what remains of the complaint which is hypothetically admitted, is only the allegation on the reclassification of respondent's cigarettes, there will not be enough facts for the court to render a valid judgment according to the prayer in the complaint. Furthermore, in an action for damages under Article 32 of the Civil Code premised on violation of due process, it may be necessary to harmonize the Civil Code provision with subsequent legislative enactments, particularly those related to taxation and tax collection. Judicial notice may be taken of the provisions of the National Internal Revenue Code, as amended, and of the law creating the Court of Tax Appeals. Both statutes provide ample remedies to aggrieved taxpayers; remedies which, in fact, were availed of by the respondent-without even having to pay the assessment under protest-as recounted by this Court in CIR v. CA, viz.: In a letter, dated 19 July 1993, addressed to the appellate division of the BIR, Fortune Tobacco requested for a review, reconsideration and recall of RMC 37-93. The request was denied on 29 July 1993. The following day, or on 30 July 1993, the CIR assessed Fortune Tobacco for ad valorem tax deficiency amounting to P9,598,334.00. On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA.35 The availability of the remedies against the assailed administrative action, the opportunity to avail of the same, and actual recourse to these remedies, contradict the respondent's claim of due process infringement. At this point, a brief examination of relevant American jurisprudence may be instructive. 42 U.S. Code 1983, a provision incorporated into the Civil Rights Act of 1871, presents a parallel to our own Article 32 of the Civil Code, as it states: Every person who, under color of any statute, ordinance, regulation, custom, usage, or any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity or other proper proceeding for redress. This provision has been employed as the basis of tort suits by many petitioners intending to win liability cases against government officials when they violate the constitutional rights of citizens. Webster Bivens v. Six Unknown Named Agents of Federal Bureau of Investigation,36 has emerged as the leading case on the victim's entitlement to recover money damages for any injuries suffered as a result of flagrant and unconstitutional abuses of administrative power. In this case, federal narcotics officers broke into Bivens' home at 6:30 a.m. without a search warrant and in the absence of probable cause. The agents handcuffed Bivens, searched his premises, employed excessive force, threatened to arrest his family, subjected him to a visual strip search in the federal court house, fingerprinted, photographed, interrogated and booked him. When Bivens was brought before a United States Commissioner, however, charges against him were dismissed. On the issue of whether violation of the Fourth Amendment "by a federal agent acting under color of authority gives rise to a cause of action for damages consequent upon his constitutional conduct," the U.S. Supreme Court held that Bivens is entitled to recover damages for injuries he suffered as a result of the agents' violation of the Fourth Amendment. A number of subsequent decisions have upheld Bivens. For instance, in Scheuer v. Rhodes,37 a liability suit for money damages was allowed against Ohio Governor James Rhodes by petitioners who represented three students who had been killed by Ohio National Guard troops at Kent State University as they protested against U.S. involvement in Vietnam. In Wood v. Strickland,38 local school board members were sued by high school students who argued that they had been deprived of constitutional REMLAW Page 290
members were sued by high school students who argued that they had been deprived of constitutional due process rights when they were expelled from school for having spiked a punch bowl at a school function without the benefit of a full hearing. In Butz v. Economou,39 Economou, whose registration privilege as a commodities futures trader was suspended, without prior warning, by Secretary of Agriculture Earl Butz, sued on a Bivens action, alleging that the suspension was aimed at "chilling" his freedom of expression right under the First Amendment. A number of other cases40 with virtually the same conclusion followed. However, it is extremely dubious whether a Bivens action against government tax officials and employees may prosper, if we consider the pronouncement of the U.S. Supreme Court in Schweiker v. Chilicky,41 that a Bivens remedy will not be allowed when other "meaningful safeguards or remedies for the rights of persons situated as (is the plaintiff)" are available. It has also been held that a Bivens action is not appropriate in the civil service system42 or in the military justice system.43 In Frank Vennes v. An Unknown Number of Unidentified Agents of the United States of America,44 petitioner Vennes instituted a Bivens action against agents of the Internal Revenue Service (IRS) who alleged that he (Vennes) owed $250,000 in tax liability, instituted a jeopardy assessment, confiscated Vennes' business, forced a total asset sale, and put Vennes out of business, when in fact he owed not a dime. The U.S. Court of Appeals, Eighth Circuit, ruled: The district court dismissed these claims on the ground that a taxpayer's remedies under the Internal Revenue Code preclude such a Bivens action. Vennes cites to us no contrary authority, and we have found none. Though the Supreme Court has not addressed this precise question, it has strongly suggested that the district court correctly applied Bivens: When the design of a Government program suggests that Congress has provided what it considers adequate remedial mechanisms for constitutional violations that may occur in the course of its administration, we have not created additional Bivens remedies. xxx x Congress has provided specific and meaningful remedies for taxpayers who challenge overzealous tax assessment and collection activities. A taxpayer may challenge a jeopardy assessment both administratively and judicially, and may sue the government for a tax refund, and have authorized taxpayer actions against the United States to recover limited damages resulting from specific types of misconduct by IRS employees. These carefully crafted legislative remedies confirm that, in the politically sensitive realm of taxation, Congress's refusal to permit unrestricted damage action by taxpayers has not been inadvertent. Thus, the district court correctly dismissed Vennes's Bivens claims against IRS agents for their tax assessment and collection activities. In still another Bivens action, instituted by a taxpayer against IRS employees for alleged violation of due process rights concerning a tax dispute, the U.S. District Court of Minnesota said: In addition, the (Tax) Code provides taxpayers with remedies, judicial and otherwise, for correcting and redressing wrongful acts taken by IRS employees in connection with any collection activities. Although these provisions do not provide taxpayers with an all-encompassing remedy for wrongful acts of IRS personnel, the rights established under the Code illustrate that it provides all sorts of rights against the overzealous officialdom, including, most fundamentally, the right to sue the government for a refund if forced to overpay taxes, and it would make the collection of taxes chaotic if a taxpayer could bypass the remedies provided by Congress simply by bringing a damage suit against IRS employees.45 American jurisprudence obviously validates the contention of the petitioner. Finally, we invite attention to Section 227, Republic Act No. 8424 (Tax Reform Act of 1997), which provides: Section 227. Satisfaction of Judgment Recovered Against any Internal Revenue Officer. - When an action is brought against any Internal Revenue officer to recover damages by reason of any act done in the performance of official duty, and the Commissioner is notified of such action in time to make defense against the same, through the Solicitor General, any judgment, damages or costs recovered in such action shall be satisfied by the Commissioner, upon approval of the Secretary of Finance, or if the same be paid by the person sued shall be repaid or reimbursed to him. No such judgment, damages or costs shall be paid or reimbursed in behalf of a person who has acted negligently or in bad faith, or with willful oppression. Because the respondent's complaint does not impute negligence or bad faith to the petitioner, any money judgment by the trial court against her will have to be assumed by the Republic of the REMLAW Page 291
money judgment by the trial court against her will have to be assumed by the Republic of the Philippines. As such, the complaint is in the nature of a suit against the State.46 WHEREFORE, premises considered, we GRANT petitioner's motion for reconsideration of the June 19, 2007 Decision and DENY respondent's motion for reconsideration of the June 25, 2008 Resolution. Civil Case No. CV-97-341-MK, pending with the Regional Trial Court of Marikina City, is DISMISSED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: REYNATO S. PUNO Chief Justice LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO Associate Justice Associate Justice
ANTONIO T. CARPIO Associate Justice
MA. ALICIA AUSTRIA-MARTINEZ Associate Justice
*RENATO C.
CORONA Associate Justice
CONCHITA CARPIO MORALES Associate Justice
ADOLFO S. AZCUNA Associate Justice
DANTE O. TINGA Associate Justice
MINITA V. CHICO-NAZARIO Associate Justice
PRESBITERO J. VELASCO, JR. Associate Justice
RUBEN T. REYES Associate Justice
TERESITA J. LEONARDO-DE CASTRO Associate Justice
ARTURO D. BRION Associate Justice
CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. REYNATO S. PUNO Chief Justice Footnotes * On leave. 1 Cruz, The Law of Public Officers, 2007 ed., p. 223. 2 Moss v. Cummins, 44 Mich. 359, 360-361, 6 N.W. 843, 844 (1880). 3 Rollo, pp. 630-645; Vinzons-Chato v. Fortune Tobacco Corporation, G.R. No. 141309, June 19 2007, 525 SCRA 11. 4 Id. at 632-634. 5 Id. at 643. 6 Id. at 646. 7 Id. at 859. 8 Id. at 860-882. 9 Id. at 860-864. 10 Id. at 881. 11 Id. at 891. 12 Mechem, A Treatise on the Law of Public Offices and Officers (1890), pp. 386-387. 13 Id. at 390. 14 Id. at 390-391. 15 Supra note 1. 16 Supra note 12, at 390-391. 17 Butler v. Kent, 19 Johns. 223, 10 Am. Dec. 219 (1821). REMLAW Page 292
16
Supra note 12, at 390-391. Johns. 223, 10 Am. Dec. 219 (1821). 18 Id. 19 Article 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom of religion; (2) Freedom of speech; (3) Freedom to write for the press or to maintain a periodical publication; (4) Freedom from arbitrary or illegal detention; (5) Freedom of suffrage; (6) The right against deprivation of property without due process of law; (7) The right to a just compensation when private property is taken for public use; (8) The right to the equal protection of the laws; (9) The right to be secure in one's person, house, papers, and effects against unreasonable searches and seizures; (10) The liberty of abode and of changing the same; (11) The privacy of communication and correspondence; (12) The right to become a member of associations or societies for purposes not contrary to law; (13) The right to take part in a peaceable assembly to petition the Government for redress of grievances; (14) The right to be free from involuntary servitude in any form; (15) The right of the accused against excessive bail; (16) The right of the accused to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy and public trial, to meet witnesses face to face, and to have compulsory process to secure the attendance of witnesses in his behalf; (17) Freedom from being compelled to be a witness against one's self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness; (18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; and (19) Freedom of access to the courts. In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted) and may be proved by preponderance of evidence. The indemnity shall include moral damages. Exemplary damages may also be adjudicated. The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal Code or other penal statute. 20 Vinzons-Chato v. Fortune Tobacco Corporation, supra note 3. 21 Sps. Custodio v. Court of Appeals, 323 Phil. 575 (1996), cited in Laynesa v. Uy, G.R. No. 149553, February 29, 2008, 547 SCRA 200. 22 No. L-22554, August 29, 1975, 66 SCRA 299. 23 G.R. No. 119398, July 2, 1999, 309 SCRA 602, 621. 24 G.R. No. 119761, August 29, 1996, 261 SCRA 236. 25 Id. at 252. 26 Rollo, p. 686. 27 Drilon v. Court of Appeals, G.R. No. 106922, April 20, 2001. 28 Id. 29 Id. 30 Fluor Daniel, Inc. Philippines v. EB. Villarosa & Partners Co., Ltd., G.R. No. 159648, July 27, 2007. 31 G.R. No. 119398, July 2, 1999, 309 SCRA 602. 32 Id. at 620-621. 33 G. R. No. 119761, August 29, 1996. 34 G.R. No. 159648, July 27, 2008. 35 Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 119761, August 29, 1996, 261 SCRA 236, 244. 17 Butler v. Kent, 19
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236, 244. 36 403 U.S. 388 (1971), 91 S. Ct. 1999, 29 L. Ed. 2d. 619 37 416 U.S. 232 (1974). 38 420 U.S. 308 (1975). 39 434 U.S. 994 (1978). 40 E.g., Carlson v. Green, 446 U.S. 14 (1980); Martinez v. State of California, 444 U.S. 277 (1980). 41 487 U.S. 412 (1988). 42 Bush v. Lucas, 462 U.S. 367 (1983). 43 Chappell v. Wallace, 462 U.S. 296 (1983). 44 26 F. 3d 1448 (1994), 74 A.F.T.R. 2d 94-5144. 45 Tonn v. United States of America, 847 F. Supp. 711, 73 A.F.T.R. 2d 94-727 46 See Veterans Manpower and Protective Services, Inc. v. Court of Appeals, 214 SCRA 286. Pasted from
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BPI Family v. De Coscuella, GR No. 167724, Jun 27, 2006 Sunday, November 14, 2010 11:34 PM
BPI FAMILY SAVINGS BANK, INC., Petitioner, vs. MARGARITA VDA. DE COSCOLLUELA, Respondent. DE C I S I O N CALLEJO, SR., J.: Assailed before this Court is a Petition for Review under Rule 45 of the Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 69732 granting respondent’s petition for certiorari, and its resolution denying petitioner’s motion for reconsideration. The Antecedents Respondent Margarita Coscolluela and her husband Oscar Coscolluela obtained an agricultural sugar crop loan from the Far East Bank & Trust Co. (FEBTC) Bacolod City Branch (later merged with petitioner Bank of the Philippine Islands) for crop years 1997 and 1998.2 However, in the book of FEBTC, the loan account of the spouses was treated as a single account,3 which amounted to P13,592,492.00 as evidenced by 67 Promissory Notes4 executed on various dates, from August 29, 1996 to January 23, 1998, to wit: 1avvphil.net Promissory Note No.
Date
Amount (in Phil. Peso) 148,000
1.
02-052-960971
29 August 1996
2.
02-052-961095
23 September 1996 1,200,000
3.
02-052-961122
27 September 1996 550,000
4.
02-052-961205
11 October 1996
180,000
5.
02-052-961231
18 October 1996
155,000
6.
02-052-961252
24 October 1996
190,000
7.
02-052-961274
30 October 1996
115,000
8.
02-052-961310
8 November 1996
90,000
9.
02-052-961373
21 November 1996
125,000
10.
02-052-961442
6 December 1996
650,000
11.
02-052-961464
12 December 1996
240,000
12.
02-052-961498
19 December 1996
164,000
13.
02-052-961542
27 December 1996
200,000
14.
02-052-970018
3 January 1997
120,000
15.
02-052-970052
10 January 1997
185,000
16.
02-052-970078
15 January 1997
80,000
17.
02-052-970087
17 January 1997
170,000
18.
02-052-970131
23 January 1997
180,000
19.
02-052-970163
31 January 1997
220,000
20.
02-052-970190
7 February 1997
110,000
21.
02-052-970215
13 February 1997
170,000
22.
02-052-970254
20 February 1997
140,000
23.
02-052-970293
28 February 1997
130,000
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23.
02-052-970293
28 February 1997
130,000
24.
02-052-970345
7 March 1997
90,000
25.
02-052-970367
13 March 1997
50,000
26.
02-052-970402
21 March 1997
160,000
27.
02-052-970422
26 March 1997
190,000
28.
02-052-970453
4 April 1997
82,000
29.
02-052-970478
11 April 1997
150,000
30.
02-052-970502
17 April 1997
80,000
31.
02-052-970539
25 April 1997
145,000
32.
02-052-970558
30 April 1997
135,000
33.
02-052-970589
8 May 1997
54,000
34.
02-052-970770
25 June 1997
646,492
35.
02-052-970781
27 June 1997
160,000
36.
02-052-970819
4 July 1997
250,000
37.
02-052-970852
11 July 1997
350,000
38.
02-052-970926
1 August 1997
170,000
39.
02-052-970949
5 August 1997
200,000
40.
02-052-970975
8 August 1997
120,000
41.
02-052-970999
15 August 1997
150,000
42.
02-052-971028
22 August 1997
110,000
43.
02-052-971053
29 August 1997
130,000
44.
02-052-971073
4 September 1997
90,000
45.
02-052-971215
12 September 1997 160,000
46.
02-052-971253
19 September 1997 190,000
47.
02-052-971280
26 September 1997 140,000
48.
02-052-971317
2 October 1997
115,000
49.
02-052-971340
10 October 1997
115,000
50.
02-052-971351
15 October 1997
700,000
51.
02-052-971362
16 October 1997
90,000
52.
02-052-971394
24 October 1997
185,000
53.
02-052-971407
29 October 1997
170,000
54.
02-052-971449
6 November 1997
105,000
55.
02-052-971464
13 November 1997
170,000
56.
02-052-971501
20 November 1997
150,000
57.
02-052-971527
25 November 1997
620,000
58.
02-052-971538
28 November 1997
130,000
59.
02-052-971569
4 December 1997
140,000
60.
02-052-971604
12 December 1997
220,000
61.
02-052-971642
18 December 1997
185,000
62.
02-052-971676
23 December 1997
117,000
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62.
02-052-971676
23 December 1997
117,000
63.
02-052-971688
29 December 1997
100,000
64.
02-052-980019
7 January 1998
195,000
65.
02-052-980032
8 January 1998
170,000
66.
02-052-980064
15 January 1998
225,000
67.
02-052-980079
23 January 1998
176,000
The promissory notes listed under Nos. 1 to 33 bear the maturity date of February 9, 1998, with a 30day extension of up to March 11, 1998, while those listed under Nos. 34 to 67 bear December 28, 1998 as maturity date. Meanwhile, on June 13, 1997, the spouses Coscolluela executed a real estate mortgage in favor of FEBTC over their parcel of land located in Bacolod City covered by Transfer Certificate of Title (TCT) No. T-109329 as security of loans on credit accommodation obtained by the spouses from FEBTC and those that may be obtained by the mortgagees which was fixed at P7,000,000.00, as well as those that may be extended by the mortgagor to the mortgagees.5 Under the terms and conditions of the real estate mortgage, in the event of failure to pay the mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall become immediately due; upon such breach or violation of the terms and conditions thereof, FEBTC may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed FEBTC as its attorney-in-fact with full power and authority to enter the premises where the mortgaged property is located and to take actual possession and control thereof without need of any order of any court, nor written permission from the spouses, and with special power to sell the mortgaged property at a public or private sale at the option of the mortgagee; and that the spouses expressly waived the term of 30 days or any other terms granted by law as the period which must elapse before the mortgage agreement may be foreclosed and, in any case, such period has already lapsed. The mortgage was registered with the Registry of Deeds of Bacolod and was annotated in the title of the land on June 20, 1997.6 Meantime, Oscar died intestate and was survived by his widow, herein respondent. For failure to settle the outstanding obligation on the maturity dates, FEBTC sent a final demand letter7 to respondent on March 10, 1999 demanding payment, within five days from notice, of the principal of the loan amounting to P13,481,498.68, with past due interests and penalties or in the total amount of P19,482,168.31 as of March 9, 1999.8 Respondent failed to settle her obligation. On June 10, 1999, FEBTC filed a petition for the extrajudicial foreclosure of the mortgaged property, significantly only for the total amount of P4,687,006.68 exclusive of balance, interest and penalty, covered by promissory notes from 1 to 33, except nos. 2 and 10.9 While the extrajudicial foreclosure proceeding was pending, petitioner FEBTC filed a complaint10 with the Regional Trial Court (RTC) of Makati City, Branch 64, against respondent for the collection of the principal amount of P8,794,492.00 plus interest and penalty, or the total amount of P12,672,000.31, representing the amounts indicated in the rest of the promissory notes, specifically Promissory Note Nos. 34 to 67, as well as those dated December 6, 1996 and September 23, 1996: PN No.
Date
Amount
Annex
2-052-980079
January 02, 1998
176,000.00
A
2-052-980064
January 15, 1998
225,000.00
B
2-052-980032
January 08, 1998
170,000.00
C
2-052-980019
January 07, 1998
195,000.00
D
2-052-971688
December 29, 1997
100,000.00
E
2-052-971676
December 23, 1997
117,000.00
F
2-052-971642
December 18, 1997
185,000.00
G
2-052-971604
December 12, 1997
220,000.00
H
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2-052-971604
December 12, 1997
220,000.00
H
2-052-971569
December 04, 1997
140,000.00
I
2-052-971538
November 28, 1997
130,000.00
J
2-052-971527
November 25, 1997
620,000.00
K
2-052-971501
November 20, 1997
150,000.00
L
2-052-971464
November 13, 1997
170,000.00
M
2-052-971449
November 06, 1997
105,000.00
N
2-052-971407
October 29, 1997
170,000.00
O
2-052-971394
October 24, 1997
185,000.00
P
2-052-971362
October 16, 1997
90,000.00
Q
2-052-971351
October 15, 1997
700,000.00
R
2-052-971340
October 15, 1997
115,000.00
S
2-052-971317
October 02, 1997
115,000.00
T
2-052-971280
September 26, 1997 140,000.00
U
2-052-971253
September 19, 1997 190,000.00
V
2-052-971215
September 12, 1997 160,000.00
W
2-052-971073
September 04, 1997 90,000.00
X
2-052-971053
August 29, 1997
130,000.00
Y
2-052-971028
August 22, 1997
110,000.00
Z
2-052-970999
August 15, 1997
150,000.00
AA
2-052-970975
August 08, 1997
120,000.00
BB
2-052-970949
August 05, 1997
200,000.00
CC
2-052-970926
August 01, 1997
170,000.00
DD
2-052-970852
July 11, 1997
350,000.00
EE
2-052-970819
July 04, 1997
250,000.00
FF
2-052-970781
June 27, 1997
160,000.00
GG
2-052-970770
June 25, 1997
646,492.00
HH
2-052-961442
December 06, 1996
650,000.00
II
2-052-961095
September 23, 1996 1,200,000.00 JJ11
Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus: WHEREFORE, it is respectfully prayed that, after trial, judgment be rendered in its favor and against defendants ordering them to pay the following: a. The amount TWELVE MILLION SIX HUNDRED SEVENTY-TWO THOUSAND PESOS and 31/100 (P12,672,000.31), with additional stipulated interest and penalty equivalent to one (1%) percent of the amount due for every thirty (30) days or fraction thereof, until fully paid; b. Expense of litigation amounting to P50,000.00; c. The amount of P500,000.00 as attorney’s fees. Other reliefs just and equitable in the premises are similarly prayed for.12 In her answer, respondent alleged, by way of special and affirmative defense, that the complaint was barred by litis pendentia, specifically, the pending petition for the extrajudicial foreclosure of the real estate mortgage, thus: 8) That plaintiff is guilty of forum shopping, in that some of the promissory notes attached to plaintiff’s complaint are also the same promissory notes which were made the basis of the plaintiff in their extrajudicial foreclosure of mortgage filed against the defendant-spouses and also marked in evidence in REMLAW Page 298
extrajudicial foreclosure of mortgage filed against the defendant-spouses and also marked in evidence in support of their opposition to the issuance of the preliminary injunction in Civil Case No. 99-10864; 9) That plaintiff-bank has not only charged but over charged the defendant-spouses with excessive and exorbitant interest over and above those authorized by law. And in order to add more injury to the defendants, plaintiff also included other charges not legally collectible from the defendant-spouses; 10) That the act of the plaintiff-bank in seeking to collect twice on the same promissory notes is not only unfair and unjust but also condemnable as plaintiff seek to unjustly enrich itself at the expense of the defendants; 11) That there is another action pending between the same parties for the same cause; 12) That the claim or demand set forth in the plaintiff’s complaint has either been waived, abandoned or otherwise extinguished.13 Petitioner presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as sole witness. He testified that the spouses Coscolluela were granted an agricultural sugar loan which is designed to finance the cultivation and plantation of sugar farms of the borrowers.14 Borrowers were allowed to make successive drawdowns or availments against the loan as their need arose. Each drawdown is covered by a promissory note with uniform maturity dates.15 The witness also testified that the loan account of the spouses was a "single loan account."16 After petitioner rested its case, respondent filed a demurrer to evidence17 contending, among others, that, with Ganuelas’ admission, there is only one loan account secured by the real estate mortgage, that the promissory notes were executed as evidence of the loans. Plaintiff was thus barred from instituting a personal action for collection of the drawdowns evidenced by Promissory Note Nos. 2, 10, and 34 to 67 after instituting a petition for extrajudicial foreclosure of the real estate mortgage for the amount covered by Promissory Note Nos. 1, 3 to 9, and 11 to 33. Respondent insisted that by filing a complaint for a sum of money, petitioner thereby split its cause of action against her; hence, the complaint must perforce be dismissed on the ground of litis pendentia. Petitioner opposed the demurrer arguing that while the loans were considered as a single account, each promissory note executed by respondent constituted a separate contract. It reiterated that its petition for the extrajudicial and foreclosure of the real estate mortgage before the Ex-Oficio Provincial Sheriff involves obligations different and separate from those in its action for a sum of money before the court. Thus, petitioner could avail of the personal action for the collection of the amount evidenced by the 36 promissory notes not subject of its petition for the extrajudicial foreclosure of the real estate mortgage. Petitioner insists that the promissory notes subject of its collection suit should be treated separately from the other set of obligations, that is, the 31 promissory notes subject of its extrajudicial foreclosure petition.18 In its Order19 dated January 10, 2002, the trial court denied the demurrer on the ground that the promissory notes executed by respondent and her deceased husband contained different amounts, and each note covered a loan distinct from the others. Thus, petitioner had the option to file a petition for the extrajudicial foreclosure of the real estate mortgage covering 31 of the promissory notes, and, as to the rest, to file an ordinary action for collection. Petitioner, thus, merely opted to institute an action for collection of the debt on the 36 promissory notes, and waived its action for the foreclosure of the security given on these notes. Respondent filed a motion for reconsideration,20 which the trial court denied in its February 19, 2002 Order,21 prompting her to file a certiorari petition22 under Rule 65 with the CA, assailing the January 10, 2002 and February 19, 2002 Orders of the trial court. Respondent alleged that: 1. PUBLIC RESPONDENT GRAVELY ABUSED HER DISCRETION TANTAMOUNT TO LACK AND/OR EXCESS OF JURISDICTION IN HOLDING THAT THE RESPONDENT BANK CAN FILE SIMULTANEOUS ACTIONS FOR FORECLOSURE AND FOR COLLECTION. Meanwhile, on January 6, 2003, the parcel of land subject of the aforementioned real estate mortgage was sold at public auction where petitioner emerged as the highest bidder.23 On September 30, 2004, the CA rendered its Decision24 granting the petition, holding, under prevailing jurisprudence, the remedies – either a real action to foreclose the mortgage or a personal action to collect the debt – of a mortgage creditor are alternative and not cumulative. Since respondent availed of the first one, it was deemed to have waived the second. Further, the filing of both actions results in a splitting of a single cause of action. Thus, in denying her Demurrer to Evidence, the RTC committed
REMLAW Page 299
grave abuse of discretion as it overruled settled judicial pronouncements. The dispositive part of the decision states: WHEREFORE, the instant petition is GRANTED. The assailed Orders dated January 10, 2002 and February 19, 2002 are SET ASIDE. SO ORDERED. The CA cited the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icarañgal and Oriental Commercial Co., Inc.25 Aggrieved, petitioner filed a motion for reconsideration26 on October 12, 2004. Respondent filed her opposition27 to the motion on October 26, 2004. The CA thereafter denied the motion in a resolution promulgated on April 6, 2005.28 Petitioner filed the instant petition for review on certiorari, alleging that: I. THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI OF RESPONDENT ON THE GROUND OF GRAVE ABUSE OF DISCRETION. xxx x The Trial Court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in denying the Demurrer to Evidence filed by the respondents. Petitioner, in instituting a petition for the Extra Judicial Foreclosure of the Mortgage of respondents based on 31 promissory notes executed by respondents and another action to collect on a separate set of 36 promissory notes, did not split their cause of action. xxx x The trial court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it denied respondents’ Demurrer to Evidence. In this wise, the Petition for Certiorari filed by respondents should not have been granted.29 During the pendency of this appeal, petitioner filed with this Court on December 2, 2005 a manifestation and joint motion for substitution, informing the court that petitioner bank has assigned to the Philippine Asset Investment, Inc. all its rights, title and interest over its non-performing loan accounts pursuant to Republic Act No. 9182 entitled "The Special Purpose Vehicle Act of 2002." The issues raised in this case are (1) whether the petition for certiorari under Rule 65 of the Rules of Court filed by respondent in the CA was the proper remedy to assail the January 10, 2002 Order of the trial court; (2) whether the appellate court issued its January 10, 2002 Order with grave abuse of its discretion amounting to excess or lack of jurisdiction. Petitioner avers that the January 10, 2002 Order of the RTC denying the Demurrer to Evidence of respondent was interlocutory, and as such could not be the subject of a petition for certiorari. 30 The RTC did not commit a grave abuse of its discretion in issuing its January 10, 2002 Order. Petitioner maintains that respondent executed 67 separate loan obligations evidenced by 67 separate promissory notes, with different amounts and maturity dates. It avers that each of the loans, as evidenced by each of the promissory notes, may properly be the subject of a separate action; thus, each promissory note is an actionable document. Moreover, the real estate mortgage executed by the spouses secured an obligation only to a fixed amount of P7,000,000.00 which is covered by Promissory Note Nos. 1 to 31, whereas the loans secured by the spouses covered by the Promissory Note Nos. 32 to 67 for the total amount of P12,672,000.31 were not secured by the real estate mortgage. Petitioner insists that it was proper to file the petition for extrajudicial foreclosure of the real estate mortgage only for respondent’s loan account covered by the 36 promissory notes for the amount of P7,755,733.64. It was not barred from filing a separate action for the collection of the P12,672,000.31 against respondent in the RTC for the drawdowns as evidenced by Promissory Note Nos. 34 to 67. What should apply, petitioner asserts, is the ruling of this Court in Caltex Philippines, Inc. v. Intermediate Appellate Court31 and Quiogue v. Bautista,32 and not the ruling of this Court in Bachrach which involves only one promissory note. Petitioner insists that, although respondent and her husband had a joint account with it, they had separate loan obligations as evidenced by the promissory notes; hence, it had separate causes of action for each and every drawdown evidenced by a promissory note. For her part, respondent admits having executed the promissory notes. However, as testified to by Ganuelas, the witness for petitioner, she and her husband only have one loan account with petitioner, hence, the latter had only one cause of action against her either for the collection of the entire loan account or for the extrajudicial foreclosure of the real estate mortgage, also for the entire amount of the REMLAW Page 300
account or for the extrajudicial foreclosure of the real estate mortgage, also for the entire amount of the loan. Petitioner cannot split her single loan account by filing a simple collection suit and a petition for extrajudicial foreclosure of the real estate mortgage without violating the rule against splitting a single cause of action. Respondent asserts that the real estate mortgage executed by respondent and her deceased husband was a security not only of their loan account in the amount of P7,000,000.00 but for all other loans that may have been extended to them in excess of that amount. The petition is unmeritorious. On the first issue, we agree with petitioner’s contention that the general rule is that an order denying a motion to dismiss or demurrer to evidence is interlocutory and is not appealable. Consequently, defendant must go to trial and adduce its evidence, and appeal, in due course, from an adverse decision of the trial court. However, the rule admits of exceptions. Where the denial by the trial court of a motion to dismiss or demurrer to evidence is tainted with grave abuse of discretion amounting to excess or lack of jurisdiction, the aggrieved party may assail the order of dismissal on a petition for certiorari under Rule 65 of the Rules of Court. A wide breadth of discretion is granted in certiorari proceedings in the interest of substantial justice and to prevent a substantial wrong.33 As the Court held in Preferred Home Specialties, Inc. v. Court of Appeals:34 It bears stressing that a writ of certiorari is of the highest utility and importance for curbing excessive jurisdiction and correcting errors and most essential to the safety of the people and the public welfare. Its scope has been broadened and extended, and is now one of the recognized modes for the correction of errors by this Court. The cases in which it will lie cannot be defined. To do so would be to destroy its comprehensiveness and limit its usefulness. The appropriate function of a certiorari writ is to relieve aggrieved parties from the injustice arising from errors of law committed in proceedings affecting justiciable rights when no other means for an adequate and speedy relief is open. It is founded upon a sense of justice, to release against wrongs otherwise irreconcilable, wrongs which go unredressed because of want of adequate remedy which would be a grave reproach to any system of jurisprudence.35 The aggrieved party is entitled to a writ of certiorari where the trial court commits a grave abuse of discretion amounting to excess or lack of jurisdiction in denying a motion to dismiss a complaint on the ground of litis pendentia. An appeal while available eventually is cumbersome and inadequate for it requires the parties to undergo a useless and time-consuming and expensive trial. The second case constitutes a rude if not debilitating imposition on the trial and the docket of the judiciary.36 In the present case, we agree with the ruling of the CA that the RTC acted with grave abuse of discretion amounting to excess or lack of jurisdiction when it denied the Demurrer to Evidence of respondent and, in the process, ignored applicable rulings of this Court. Although respondent had the right to appeal the decision of the trial court against her after trial, however, she, as defendant, need not use up funds and undergo the tribulations of a trial and thereafter appeal from an adverse decision. Section 3, Rule 2 of the 1997 Rules of Civil Procedure provides that a party may not institute more than one suit for a single cause of action and, if two or more suits are instituted on the basis of the same cause of action, the filing of one on a judgment upon the merits in any one is available as ground for the dismissal of the other or others.37 A party will not be permitted to split up a single cause of action and make it a basis for several suits.38 A party seeking to enforce a claim must present to the court by the pleadings or proofs or both, all the grounds upon which he expects a judgment in his favor. He is not at liberty to split up his demands and prosecute it by piecemeal, or present only a portion of the grounds upon which special relief is sought, and leave the rest to be presented in a second suit if the first fails.39 The law does not permit the owner of a single or entire cause of action or an entire or indivisible demand to divide and split the cause or demand so as to make it the subject of several actions. The whole cause must be determined in one action. Indeed, in Goldberg v. Eastern Brewing Co.,40 the New York Supreme Court emphasized that: It was held in the case of Bendernagle v. Cocks, 19 Wend. 207 (32 Am.Dec. 448), that where a party had several demands or existing causes of action growing out of the same contract or resting in matter of account, which may be joined and sued for in the same action, they must be joined; and if the demands or causes of action be split up, and a suit brought for part only, and subsequently a second suit for the residue is brought, the first action may be pleaded in abatement or in bar of the second action. x x x 41 The rule against splitting causes of action is not altogether one of original legal right but is one of REMLAW Page 301
The rule against splitting causes of action is not altogether one of original legal right but is one of interposition based upon principles of public policy and of equity to prevent the inconvenience and hardship incident to repeated and unnecessary litigation.42 It is not always easy to determine whether in a particular case under consideration, the cause of action is single and entire or separate. The question must often be determined, not by the general rules but by reference to the facts and circumstances of the particular case. Where deeds arising out of contract are distinct and separate, they give rise to separate cause of action for which separate action may be maintained; but it is also true that the same contract may give rise to different causes of action either by reason of successive breaches thereof or by reason of different stipulations or provisions of the contract.43 The true rule which determines whether a party has only a single and entire cause of action for all that is due him, and which must be sued for in one action, or has a severable demand for which he may maintain separate suits, is whether the entire amount arises from one and the same act or contract or the several parts arise from distinct and different acts or contracts.44 Where there are entirely distinct and separate contracts, they give rise to separate causes of action for which separate actions may be instituted and presented. When money is payable by installments, a distinct cause of action assails upon the following due by each installment and they may be recovered in successive action. On the other hand, where several claims payable at different times arise out of the same transactions, separate actions may be brought as each liability accounts. But where no action is brought until more than one is due, all that are due must be included in one action; and that if an action is brought to recover upon one or more that are due but not upon all that are due, a recovery in such action will be a bar to a several or other actions brought to recover one or more claims of the other claims that were due at the time the first action was brought.45 The weight of authority is that in the absence of special controlling circumstances, an open or continuous running account between the same parties constitutes a single and indivisible demand, the aggregate of all the items of the account constituting the amount due. But the rule is otherwise where it affirmatively appears that the parties regarded the different items of the account as separate transactions and not parts of an ordinary running account. And there may also be, even between the same parties, distinct and separate actions upon which separate actions may be maintained.46 In fine, what is decisive is that there be either an express contract, or the circumstances must be such as to raise an implied contract embracing all the items to make them, when they arise, at different times, a single or entire demand or cause of action.47 Decisive of the principal issue is the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icarañgal and Oriental Commercial Co., Inc.48 in which it ruled that on the nonpayment of a note secured by a mortgage, the creditor has a single cause of action against the debtor. The single cause of action consists in the recovery of the credit with execution of the suit. In a mortgage credit transaction, the credit gives rise to a personal action for collection of the money. The mortgage is the guarantee which gives rise to a mortgage foreclosure suit to collect from the very property that secured the debt.49 The action of the creditor is anchored on one and the same cause: the nonpayment by the debtor of the debt to the creditor-mortgagee. Though the debt may be covered by a promissory note or several promissory notes and is covered by a real estate mortgage, the latter is subsidiary to the former and both refer to one and the same obligation. A mortgage creditor may institute two alternative remedies against the mortgage debtor, either a personal action for the collection of debt, or a real action to foreclose the mortgage, but not both. Each remedy is complete by itself. As explained by this Court: We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. By such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a personal action will leave open to him all the properties of the debtor for attachment and execution, even including the mortgaged property itself. And, if he waives such personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency judgment, in which case, all the properties of the defendant, other than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely accidental and are all under his right of election. On the other REMLAW Page 302
of one or the other remedy are purely accidental and are all under his right of election. On the other hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the residence of the plaintiff, and then again in the place where the property lies.50 If the mortgagee opts to foreclose the real estate mortgage, he thereby waives the action for the collection of the debt and vice versa.51 If the creditor is allowed to file its separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be authorized plural redress for a single breach of contract at so much costs to the court and with so much vexation and oppressiveness to the debtor.52 In the present case, petitioner opted to file a petition for extrajudicial foreclosure of the real estate mortgage but only for the principal amount of P4,687,006.08 or in the total amount of P7,755,733.64 covering only 31 of the 67 promissory notes. By resorting to the extrajudicial foreclosure of the real estate mortgage, petitioner thereby waived its personal action to recover the amount covered not only by said promissory notes but also of the rest of the promissory notes. This is so because when petitioner filed its petition before the Ex-Oficio Provincial Sheriff on June 10, 1999, the entirety of the loan account of respondent under the 67 promissory notes was already due. The obligation of respondent under Promissory Note Nos. 1 to 33 became due on February 9, 1998 but was extended up to March 11, 1998, whereas, those covered by Promissory Note Nos. 34 to 67 matured on December 28, 1998. Petitioner should have caused the extrajudicial foreclosure of the real estate mortgage for the recovery of the entire obligation of respondent, on all the promissory notes. By limiting the account for which the real estate mortgage was being foreclosed to the principal amount of P4,687,006.68, exclusive of interest and penalties, petitioner thereby waived recovery of the rest of respondent’s agricultural loan account. It must be stressed that the parties agreed in the Real Estate Mortgage that in the event that respondent shall fail to pay the mortgage obligation "or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding shall become immediately due, payable and defaulted," thus: 3. The terms and conditions of the Mortgage have been violated when the Mortgagors failed and/or refused to pay, notwithstanding repeated demands, the installment and/or maturity amount of the Mortgage obligation which became due and payable on the said date; 4. Under the terms and conditions of the Mortgage Agreement, in the event the Mortgagors fail and/or refuse to pay the Mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall, without need for demand, notice, or any other act or deed, become immediately due, payable and defaulted; 5. The Mortgage Agreement provides that upon such breach or violation of the terms and conditions thereof, the Mortgagee may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed the Mortgagee as its attorney-in-fact with full power and authority to enter the premises where the Mortgaged property is located and to take actual possession and control thereof without need of any order of any Court, nor written permission from the Mortgagors, and with special power to sell the Mortgaged Property at a public or private sale at the option of the Mortgagee.53 Petitioner cannot split the loan account of respondent by filing a petition for the extrajudicial foreclosure of the real estate mortgage for the principal amount of P4,687,006.68 covered by the first set of promissory notes, and a personal action for the collection of the principal amount of P12,672,000.31 covered by the second set of promissory notes without violating the proscription against splitting a single cause of action against respondent. The contention of petitioner that respondent’s loan account that was secured by the real estate mortgage was limited only to those covered by the Promissory Note Nos. 1 to 33 or for the total amount of P7,000,000.00 is belied by the real estate mortgage and by its own evidence. Under the deed, the mortgage was to secure the payment of a credit accommodation already obtained by respondent, the principal of all of which was fixed at P7,000,000.00, as well as any other obligation that may be extended to respondent, including interest and expenses, to wit: That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to secure REMLAW Page 303
that may be extended to respondent, including interest and expenses, to wit: That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to secure the payment of the same and those that may hereafter be obtained, the principal of all of which is hereby fixed at SEVEN MILLION PESOS ONLY (P7,000,000.00), Philippine Currency, as well as those that the MORTGAGEE may extend to the MORTGAGOR, including interest and expenses or any other obligation owing to the MORTGAGEE, whether direct or indirect, principal or secondary, as appears in the accounts, books and records of the MORTGAGEE, the MORTGAGOR does hereby transfer and convey by way of mortgage unto the MORTGAGEE, its successors or assigns, the parcels of land which are described in the list inserted on the back of this document and/or appended herein, together with all the buildings and improvements now existing or which may hereafter be erected or constructed thereon, of which the MORTGAGOR declares that he/it is the absolute owner free from all liens and encumbrances. However, if the MORTGAGOR shall pay to the MORTGAGEE, its successors or assigns, the obligation secured by this mortgage when due, together with interest, and shall keep and perform all and singular the covenants and agreements herein contained for the MORTGAGOR to keep and perform, then this mortgage shall be void, otherwise, it shall remain in full force and effect.54 (Emphasis supplied) The testimony of Ganuelas in the RTC relative to the real estate mortgage follows: Q The real estate mortgage states: "That for and in consideration of credit accommodation obtained from the mortgagee." This simply means, Mr. Witness, that this mortgage is offered to secure loans already obtained by the mortgagor from the mortgagee Far East Bank and Trust Company. I am referring only to that phrase, obtained from the mortgagee, is that correct? A Yes, Sir. Q So from this phrase in the real estate mortgage, this mortgage was constituted to secure the credit accommodation already obtained by the mortgagor, the defendant spouses, as of the time of the execution of the real estate mortgage, is that correct? A Yes, Sir. Q Now since the loan secured by the defendants are evidenced by promissory notes, will you agree with me, Mr. Witness, that this real estate mortgage was executed for promissory notes already executed by the defendant spouses as of the time of the execution of the mortgage on June 13, 1997, is that correct? A Yes, Sir. ATTY. MIRANO: For purposes of identification, we respectfully request that this phrase: "that for and in consideration of the credit accommodation obtained from the mortgagee" be bracketed and mark as Exhibit 6-B. (Acting court interpreter marking said phrase as Exhibit 6-B.) Q Now in accordance with the terms of this real estate mortgage, this real estate mortgage was executed by the defendant spouses not only to secure the loan already obtained by the said spouses as of the time of the execution of the mortgage on June 13, 1997 but also all other loans that may be extended by Far East Bank and Trust Company to the defendant spouses after the execution of the mortgage as stated in this portion of the real estate mortgage which we quote: "to secure the payment as and those that may hereafter be obtained," is that correct? A Yes, Sir. Q So from your statement, Mr. Witness, this real estate mortgage was offered by the defendant spouses as a security for the loans they already secured as of the time of the execution of the mortgage but also for the loans that they will secure thereafter, is that correct? A Yes, Sir.55 (Emphasis supplied) As gleaned from the plain terms of the real estate mortgage, the real estate of respondent served as continuing security liable for future advancements or obligations beyond the amount of P7,000,000.00. The mortgage partakes of the nature of contract for future advancements. As explained by this Court in the early case of Lim Julian v. Lutero:56 The rule, of course, is well settled that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage. The exact amount, however, for which the mortgage is given need not always be specifically named. The amount for which the mortgage is given may be stated in definite or general terms, as is frequently the case in mortgages to secure future advancements. The amount named in the mortgage does not limit the amount for which it may stand as security, if, from the four corners of the document, the intent to secure future indebtedness or future advancements is apparent. Where the plain terms, of the mortgage, evidence such an intent, they will control as against a REMLAW Page 304
Where the plain terms, of the mortgage, evidence such an intent, they will control as against a contention of the mortgagor that it was the understanding of the parties that the mortgage was security only for the specific amount named. (Citizens’ Savings Bank v. Kock, 117 Mich. 225). In that case, the amount mentioned in the mortgage was $7,000. The mortgage, however, contained a provision that "the mortgagors agree to pay said mortgagee any sum of money which they may now or hereafter owe said mortgagee." At the time the action of foreclosure was brought, the mortgagors owed the mortgagee the sum of $21,522. The defendants contended that the amount to be recovered in an action to foreclose should be limited to the amount named in the mortgage. The court held that the amount named as consideration for the mortgage did not limit the amount for which the mortgage stood as security, if, from the whole instrument the intent to secure future indebtedness could be gathered. The court held that a mortgage to cover future advances is valid. (Michigan Insurance Co. v. Brown, 11 Mich. 265; Jones on Mortgages, 1, sec. 373; Keyes v. Bump’s Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78; Brown v. Kiefer, 71 N.Y. 610; Douglas v. Reynolds, 7 Peters [U.S.] 113; Shores v. Doherty, 65 Wis. 153) Literal accuracy in describing the amount due, secured by a mortgage, is not required, but the description of the debt must be correct and full enough to direct attention to the sources of correct information in regard to it, and be such as not to mislead or deceive as to the amount of it, by the language used. Reading the mortgage before us from its four corners, we find that the description of the debt is full enough to give information concerning the amount due. The mortgage recites that it is given to secure the sum of P12,000, interest, commissions, damages, and all other amounts which may be found to be due at maturity. The terms of the contract are sufficiently clear to put all parties who may have occasion to deal with the property mortgaged upon inquiry. The parties themselves from the very terms of the mortgage could not be in ignorance at any time of the amount of their obligation and the security held to guarantee the payment. When a mortgage is given for future advancements and the money is paid to the mortgagor "little by little" and repayments are made from time to time, the advancements and the repayments must be considered together for the purpose of ascertaining the amount due upon the mortgage at maturity. Courts of equity will not permit the consideration of the repayments only for the purpose of determining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26 Phil. 111) The mere fact that, in contract of advancements, the repayments at any one time exceeds the specific amount mentioned in the mortgage will not have the effect of discharging the mortgage when the advancements at that particular time are greatly in excess of the repayments; especially is this true when the contract of advancement or mortgage contains a specific provision that the mortgage shall cover all "such other amounts as may be then due." Such a provision is added to the contract of advancements or mortgage for the express purpose of covering advancements in excess of the amount mentioned in the mortgage. (Luengo & Martinez v. Moreno, supra) The sum found to be owing by the debtor at the termination of the contract of advancements between him and the mortgagee, during continuing credit, is still secured by the mortgage on the debtor’s property, and the mortgagee is entitled to bring the proper action for the collection of the amounts still due and to request the sale of the property covered by the mortgage. (Luengo & Martinez v. Moreno, supra; Russell v. Davey, 7 Grant Ch. 13; Patterson First National Bank v. Byard, 26 N.J. Equity 225) Under a mortgage to secure the payment of future advancements, the mere fact that the repayments on a particular day equal the amount of the mortgage will not discharge the mortgage before maturity so long as advancements may be demanded and are being received. (Luengo & Martinez v. Moreno, supra) 57 Moreover, the series of loan advancements herein cannot be likened to the credit line discussed in Caltex Philippines, Inc. v. Intermediate Appellate Court,58 as petitioner posited in its reply59 filed before this Court. In Caltex, unlike the instant case, the real estate mortgage executed did not contain a "dragnet" clause 60 that would subsume all past and future debts. The mortgage therein specifically secured only the loans extended prior to the mortgage. Thus, in the said case, the future debts were deemed as constituting a separate transaction from the past debts secured by the mortgage. The ruling of the Court in Quiogue v. Bautista61 is likewise inapplicable. In that case, the Court deemed the loan transactions as separate, considering that those were two separate loans secured by two separate mortgages. In this case, however, there is only one mortgage securing all 67 drawdowns made by respondent. In fine, for the failure of respondent to pay her loan obligation, petitioner had only one cause of action REMLAW Page 305
In fine, for the failure of respondent to pay her loan obligation, petitioner had only one cause of action arising from such non-payment. This single cause of action consists in the recovery of the credit with execution of the security.62 Petitioner is proscribed from splitting its single cause of action by filing an extrajudicial foreclosure proceedings on June 10, 1999 with respect to the amounts in the 31 promissory notes, and, during the pendency thereof, file a collection case on June 23, 1999, with respect to the amounts in the remaining 36 promissory notes. Considering, therefore, that, in the case at bar, petitioner had already instituted extrajudicial foreclosure proceedings of the mortgaged property, it is now barred from availing itself of a personal action for the collection of the indebtedness. IN VIEW OF ALL THE FOREGOING, the instant petition is DISMISSED for lack of merit. Costs against petitioner. SO ORDERED. ROMEO J. CALLEJO, SR. Associate Justice WE CONCUR: ARTEMIO V. PANGANIBAN Chief Justice Chairperson CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ Associate Justice Asscociate Justice MINITA V. CHICO-NAZARIO Associate Justice CE R T I F I C AT I O N Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division. ARTEMIO V. PANGANIBAN Chief Justice Footnotes 1 Penned by Associate Justice Vicente S.E. Veloso, with Associate Justices Roberto A. Barrios and Amelita G. Tolentino, concurring. 2 TSN, August 17, 2001, p. 7. 3 TSN, October 12, 2001, pp. 51-53. 4 Rollo, pp. 63-134, 136-197. 5 Id. at 198-203. 6 Id. at 203. 7 Id. at 135, 204. 8 Id. at 204. 9 Id. at 205-208. 10 Id. at 277-281. 11 Id. at 282-353. 12 Id. at 280-281. 13 Id. at 355-363. 14 TSN, August 17, 2001, p. 8. 15 Id. at 9. 16 Id. at 7. 17 Records, pp. 442-450. 18 Id. at 451-455. 19 Id. at 462-464. 20 Id. at 465-474. 21 Id. at 481-482. 22 Id. at 483-503. 23 CA rollo, p. 108. 24 Rollo, pp. 43-59. REMLAW Page 306
23
CA rollo, p. 108.
24 Rollo, pp. 43-59. 25
68 Phil. 287 (1939). rollo, p. 247-249. 27 Id. at 253-255. 28 Rollo, p. 61-62. 29 Id. at 22, 28. 30 Tadeo v. People, G.R. No. 129774, December 29, 1998, 300 SCRA 744. 31 G.R. No. 74730, August 25, 1989, 176 SCRA 741. 32 114 Phil. 401 (1962). 33 Chu, Sr. v. Benelda Estate Development Corporation, G.R. No. 142313, March 1, 2001, 353 SCRA 424. 34 G.R. No. 163593, December 16, 2005, 478 SCRA 387. 35 Id. at 407-408. 36 Casil v. Court of Appeals, 349 Phil. 187 (1998). 37 Section 4, Rule 2 of the Rules of Court. 38 Bachrach Motor Co., Inc. v. Esteban Icarañgal and Oriental Commercial Co., Inc., supra note 25. 39 Stark v. Starr, 94 U.S. 477, 24 L.Ed. 276 (1876). 40 136 A.D. 692, 121 N.Y.S. 465 (1910). 41 Id. at 694. 42 U.S. v. Pan-American Petroleum Co., 55 F.2d 753 (1932). 43 Fidelity & Deposit Co. of Maryland v. Brown, 65 S.W.2d 1064 (1933). 44 Meyerotto v. Rommel’s Estate, 49 S.W.2d 1081 (1932). 45 Fidelity & Deposit Co. of Maryland v. Brown, supra. 46 Meyerotto v. Rommel’s Estate, supra. 47 Friedman, Keller & Co. v. Olson, 173 S.W. 28 (1915). 48 Supra, note 38. 49 Federal Deposit Insurance Corporation v. Altimar, Inc., 716 F. 7011. 50 Bachrach Motor Co., Inc. V. Esteban Icarañgal and Oriental Commercial Co., Inc., supra note 25, at 294-295. 51 Industrial Finance Corporation v. Apostol, G.R. No. 35453, September 15, 1989, 177 SCRA 521. 52 Bachrach Motor Co., Inc. V. Esteban Icarañgal and Oriental Commercial Co., Inc., supra note 25, at 294. 53 Rollo, pp. 206-207. 54 Id. at 198. 55 TSN, October 12, 2001, pp. 9-13. 56 49 Phil. 703. 57 Id. at 714-716. 58 G.R. No. 74730, August 25, 1989, 176 SCRA 741, 749. 59 Rollo, pp. 556-564. 60 Philippine Bank of Communications v. Court of Appeals, G.R. No. 118552, February 5, 1996, 253 SCRA 241, 253. 61 114 Phil. 401 (1962). 62 Danao v. Court of Appeals, G.R. L-48276, September 30, 1987, 154 SCRA 447, 457. 26 CA
Pasted from
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?UCPB v. Sps. Beluso GR 159912 Aug 17, 2007 Sunday, November 14, 2010 11:34 PM
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Carlos v. Sandoval GR 179922 Dec 16, 2008; Sunday, November 14, 2010 11:34 PM
JUAN DE DIOS CARLOS, petitioner, vs. FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE CARLOS or FELICIDAD SANDOVAL CARLOS or FELICIDAD SANDOVAL VDA. DE CARLOS, and TEOFILO CARLOS II, respondents. DECIS ION REYES, R.T., J.: ONLY a spouse can initiate an action to sever the marital bond for marriages solemnized during the effectivity of the Family Code, except cases commenced prior to March 15, 2003. The nullity and annulment of a marriage cannot be declared in a judgment on the pleadings, summary judgment, or confession of judgment. We pronounce these principles as We review on certiorari the Decision1 of the Court of Appeals (CA) which reversed and set aside the summary judgment2 of the Regional Trial Court (RTC) in an action for declaration of nullity of marriage, status of a child, recovery of property, reconveyance, sum of money, and damages. The Facts The events that led to the institution of the instant suitare unveiled as follows: Spouses Felix B. Carlos and Felipa Elemia died intestate. They left six parcels of land to their compulsory heirs, Teofilo Carlos and petitioner Juan De Dios Carlos. The lots are particularly described as follows: Parcel No. 1 Lot No. 162 of the MUNTINLUPA ESTATE SUBDIVISION, Case No. 6137 of the Court of Land Registration. Exemption from the provisions of Article 567 of the Civil Code is specifically reserved. Area: 1 hectare, 06 ares, 07 centares. Parcel No. 2 A parcel of land (Lot No. 159-B), being a portion of Lot 159, situated in the Bo. of Alabang, Municipality of Muntinlupa, Province of Rizal, x x x containing an area of Thirteen Thousand Four Hundred Forty One (13,441) square meters. Parcel No. 3 A parcel of land (Lot 159-B-2 of the subd. plan [LRC] Psd-325903, approved as a non-subd. project), being a portion of Lot 159-B [LRC] Psd- Alabang, Mun. of Muntinlupa, Metro Manila, Island of Luzon. Bounded on the NE, points 2 to 4 by Lot 155, Muntinlupa Estate; on the SE, point 4 to 5 by Lot 159-B-5; on the S, points 5 to 1 by Lot 159-B-3; on the W, points 1 to 2 by Lot 159-B-1 (Road widening) all of the subd. plan, containing an area of ONE HUNDRED THIRTY (130) SQ. METERS, more or less. PARCEL No. 4 A parcel of land (Lot 28-C of the subd. plan Psd-13-007090, being a portion of Lot 28, Muntinlupa Estate, L.R.C. Rec. No. 6137), situated in the Bo. of Alabang, Mun. of Muntinlupa, Metro Manila. Bounded on the NE, along lines 1-2 by Lot 27, Muntinlupa Estate; on the East & SE, along lines 2 to 6 by Mangangata River; and on the West., along line 6-1, by Lot 28-B of the subd. plan x x x containing an area of ONE THUSAND AND SEVENTY-SIX (1,076) SQUARE METERS. PARCEL No. 5 PARCELA DE TERRENO No. 50, Manzana No. 18, de la subd. de Solocan. Linda por el NW, con la parcela 49; por el NE, con la parcela 36; por el SE, con la parcela 51; y por el SW, con la calle Dos Castillas. Partiendo de un punto marcado 1 en el plano, el cual se halla a S. gds. 01'W, 72.50 mts. Desde el punto 1 de esta manzana, que es un mojon de concreto de la Ciudad de Manila, situado on el esquina E. que forman las Calles Laong Laan y Dos. Castillas, continiendo un extension superficial de CIENTO CINCUENTA (150) METROS CUADRADOS. PARCEL No. 6 PARCELA DE TERRENO No. 51, Manzana No. 18, de la subd. De Solocon. Linda por el NW, con la parcela 50; por el NE, con la parcela 37; por el SE, con la parcela 52; por el SW, con la Calle Dos Castillas. Partiendo de un punto Marcado 1 en el plano, el cual se halla at S. 43 gds. 01'E, 82.50 mts. Desde el punto 1 de esta manzana, que es un mojon de concreto de la Ciudad de Manila, situado on el esquina E. REMLAW Page 309
que forman las Calles Laong Laan y Dos. Castillas, continiendo una extension superficial de CIENTO CINCUENTA (150) METROS CUADRADOS.3 During the lifetime of Felix Carlos, he agreed to transfer his estate to Teofilo. The agreement was made in order to avoid the payment of inheritance taxes. Teofilo, in turn, undertook to deliver and turn over the share of the other legal heir, petitioner Juan De Dios Carlos. Eventually, the first three (3) parcels of land were transferred and registered in the name of Teofilo. These three (3) lots are now covered by Transfer Certificate of Title (TCT) No. 234824 issued by the Registry of Deeds of Makati City; TCT No. 139061 issued by the Registry of Deeds of Makati City; and TCT No. 139058 issued by the Registry of Deeds of Makati City. Parcel No. 4 was registered in the name of petitioner. The lot is now covered by TCT No. 160401 issued by the Registry of Deeds of Makati City. On May 13, 1992, Teofilo died intestate. He was survived by respondents Felicidad and their son, Teofilo Carlos II (Teofilo II). Upon Teofilo's death, Parcel Nos. 5 & 6 were registered in the name of respondent Felicidad and co-respondent, Teofilo II. The said two (2) parcels of land are covered by TCT Nos. 219877 and 210878, respectively, issued by the Registry of Deeds of Manila. In 1994, petitioner instituted a suit against respondents before the RTC in Muntinlupa City, docketed as Civil Case No. 94-1964. In the said case, the parties submitted and caused the approval of a partial compromise agreement. Under the compromise, the parties acknowledged their respective shares in the proceeds from the sale of a portion of the first parcel of land. This includes the remaining 6,691square-meter portion of said land. On September 17, 1994, the parties executed a deed of extrajudicial partition, dividing the remaining land of the first parcel between them. Meanwhile, in a separate case entitled Rillo v. Carlos,4 2,331 square meters of the second parcel of land were adjudicated in favor of plaintiffs Rillo. The remaining 10,000-square meter portion was later divided between petitioner and respondents. The division was incorporated in a supplemental compromise agreement executed on August 17, 1994, with respect to Civil Case No. 94-1964. The parties submitted the supplemental compromise agreement, which was approved accordingly. Petitioner and respondents entered into two more contracts in August 1994. Under the contracts, the parties equally divided between them the third and fourth parcels of land. In August 1995, petitioner commenced an action, docketed as Civil Case No. 95-135, against respondents before the court a quo with the following causes of action: (a) declaration of nullity of marriage; (b) status of a child; (c) recovery of property; (d) reconveyance; and (e) sum of money and damages. The complaint was raffled to Branch 256 of the RTC in Muntinlupa. In his complaint, petitioner asserted that the marriage between his late brother Teofilo and respondent Felicidad was a nullity in view of the absence of the required marriage license. He likewise maintained that his deceased brother was neither the natural nor the adoptive father of respondent Teofilo Carlos II. Petitioner likewise sought the avoidance of the contracts he entered into with respondent Felicidad with respect to the subject real properties. He also prayed for the cancellation of the certificates of title issued in the name of respondents. He argued that the properties covered by such certificates of title, including the sums received by respondents as proceeds, should be reconveyed to him. Finally, petitioner claimed indemnification as and by way of moral and exemplary damages, attorney's fees, litigation expenses, and costs of suit. On October 16, 1995, respondents submitted their answer. They denied the material averments of petitioner's complaint. Respondents contended that the dearth of details regarding the requisite marriage license did not invalidate Felicidad's marriage to Teofilo. Respondents declared that Teofilo II was the illegitimate child of the deceased Teofilo Carlos with another woman. On the grounds of lack of cause of action and lack of jurisdiction over the subject matter, respondents prayed for the dismissal of the case before the trial court. They also asked that their counterclaims for moral and exemplary damages, as well as attorney's fees, be granted. But before the parties could even proceed to pre-trial, respondents moved for summary judgment. Attached to the motion was the affidavit of the justice of the peace who solemnized the marriage. Respondents also submitted the Certificate of Live Birth of respondent Teofilo II. In the certificate, the late Teofilo Carlos and respondent Felicidad were designated as parents. REMLAW Page 310
late Teofilo Carlos and respondent Felicidad were designated as parents. On January 5, 1996, petitioner opposed the motion for summary judgment on the ground of irregularity of the contract evidencing the marriage. In the same breath, petitioner lodged his own motion for summary judgment. Petitioner presented a certification from the Local Civil Registrar of Calumpit, Bulacan, certifying that there is no record of birth of respondent Teofilo II. Petitioner also incorporated in the counter-motion for summary judgment the testimony of respondent Felicidad in another case. Said testimony was made in Civil Case No. 89-2384, entitled Carlos v. Gorospe, before the RTC Branch 255, Las Piñas. In her testimony, respondent Felicidad narrated that corespondent Teofilo II is her child with Teofilo.5 Subsequently, the Office of the City Prosecutor of Muntinlupa submitted to the trial court its report and manifestation, discounting the possibility of collusion between the parties. RTC and CA Dispositions On April 8, 1996, the RTC rendered judgment, disposing as follows: WHEREFORE, premises considered, defendant's (respondent's) Motion for Summary Judgment is hereby denied. Plaintiff's (petitioner's) Counter-Motion for Summary Judgment is hereby granted and summary judgment is hereby rendered in favor of plaintiff as follows: 1. Declaring the marriage between defendant Felicidad Sandoval and Teofilo Carlos solemnized at Silang, Cavite on May 14, 1962, evidenced by the Marriage Certificate submitted in this case, null and void ab initio for lack of the requisite marriage license; 2. Declaring that the defendant minor, Teofilo S. Carlos II, is not the natural, illegitimate, or legally adopted child of the late Teofilo E. Carlos; 3. Ordering defendant Sandoval to pay and restitute to plaintiff the sum of P18,924,800.00 together with the interest thereon at the legal rate from date of filing of the instant complaint until fully paid; 4. Declaring plaintiff as the sole and exclusive owner of the parcel of land, less the portion adjudicated to plaintiffs in Civil Case No. 11975, covered by TCT No. 139061 of the Register of Deeds of Makati City, and ordering said Register of Deeds to cancel said title and to issue another title in the sole name of plaintiff herein; 5. Declaring the Contract, Annex "K" of complaint, between plaintiff and defendant Sandoval null and void, and ordering the Register of Deeds of Makati City to cancel TCT No. 139058 in the name of Teofilo Carlos, and to issue another title in the sole name of plaintiff herein; 6. Declaring the Contract, Annex M of the complaint, between plaintiff and defendant Sandoval null and void; 7. Ordering the cancellation of TCT No. 210877 in the names of defendant Sandoval and defendant minor Teofilo S. Carlos II and ordering the Register of Deeds of Manila to issue another title in the exclusive name of plaintiff herein; 8. Ordering the cancellation of TCT No. 210878 in the name of defendant Sandoval and defendant Minor Teofilo S. Carlos II and ordering the Register of Deeds of Manila to issue another title in the sole name of plaintiff herein. Let this case be set for hearing for the reception of plaintiff's evidence on his claim for moral damages, exemplary damages, attorney's fees, appearance fees, and litigation expenses on June 7, 1996 at 1:30 o'clock in the afternoon. SO ORDERED.6 Dissatisfied, respondents appealed to the CA. In the appeal, respondents argued, inter alia, that the trial court acted without or in excess of jurisdiction in rendering summary judgment annulling the marriage of Teofilo, Sr. and Felicidad and in declaring Teofilo II as not an illegitimate child of Teofilo, Sr. On October 15, 2002, the CA reversed and set aside the RTC ruling, disposing as follows: WHEREFORE, the summary judgment appealed from is REVERSED and SET ASIDE and in lieu thereof, a new one is entered REMANDING the case to the court of origin for further proceedings. SO ORDERED.7 The CA opined: We find the rendition of the herein appealed summary judgment by the court a quo contrary to law and public policy as ensconced in the aforesaid safeguards. The fact that it was appellants who first sought summary judgment from the trial court, did not justify the grant thereof in favor of appellee. Not being an action "to recover upon a claim" or "to obtain a declaratory relief," the rule on summary judgment apply (sic) to an action to annul a marriage. The mere fact that no genuine issue was presented and the REMLAW Page 311
apply (sic) to an action to annul a marriage. The mere fact that no genuine issue was presented and the desire to expedite the disposition of the case cannot justify a misinterpretation of the rule. The first paragraph of Article 88 and 101 of the Civil Code expressly prohibit the rendition of decree of annulment of a marriage upon a stipulation of facts or a confession of judgment. Yet, the affidavits annexed to the petition for summary judgment practically amount to these methods explicitly proscribed by the law. We are not unmindful of appellee's argument that the foregoing safeguards have traditionally been applied to prevent collusion of spouses in the matter of dissolution of marriages and that the death of Teofilo Carlos on May 13, 1992 had effectively dissolved the marriage herein impugned. The fact, however, that appellee's own brother and appellant Felicidad Sandoval lived together as husband and wife for thirty years and that the annulment of their marriage is the very means by which the latter is sought to be deprived of her participation in the estate left by the former call for a closer and more thorough inquiry into the circumstances surrounding the case. Rather that the summary nature by which the court a quo resolved the issues in the case, the rule is to the effect that the material facts alleged in the complaint for annulment of marriage should always be proved. Section 1, Rule 19 of the Revised Rules of Court provides: "Section 1. Judgment on the pleadings. - Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such pleading. But in actions for annulment of marriage or for legal separation, the material facts alleged in the complaint shall always be proved." (Underscoring supplied) Moreover, even if We were to sustain the applicability of the rules on summary judgment to the case at bench, Our perusal of the record shows that the finding of the court a quo for appellee would still not be warranted. While it may be readily conceded that a valid marriage license is among the formal requisites of marriage, the absence of which renders the marriage void ab initio pursuant to Article 80(3) in relation to Article 58 of the Civil Code the failure to reflect the serial number of the marriage license on the marriage contract evidencing the marriage between Teofilo Carlos and appellant Felicidad Sandoval, although irregular, is not as fatal as appellee represents it to be. Aside from the dearth of evidence to the contrary, appellant Felicidad Sandoval's affirmation of the existence of said marriage license is corroborated by the following statement in the affidavit executed by Godofredo Fojas, then Justice of the Peace who officiated the impugned marriage, to wit: "That as far as I could remember, there was a marriage license issued at Silang, Cavite on May 14, 1962 as basis of the said marriage contract executed by Teofilo Carlos and Felicidad Sandoval, but the number of said marriage license was inadvertently not placed in the marriage contract for the reason that it was the Office Clerk who filled up the blanks in the Marriage Contract who in turn, may have overlooked the same." Rather than the inferences merely drawn by the trial court, We are of the considered view that the veracity and credibility of the foregoing statement as well as the motivations underlying the same should be properly threshed out in a trial of the case on the merits. If the non-presentation of the marriage contract - the primary evidence of marriage - is not proof that a marriage did not take place, neither should appellants' non-presentation of the subject marriage license be taken as proof that the same was not procured. The burden of proof to show the nullity of the marriage, it must be emphasized, rests upon the plaintiff and any doubt should be resolved in favor of the validity of the marriage. Considering that the burden of proof also rests on the party who disputes the legitimacy of a particular party, the same may be said of the trial court's rejection of the relationship between appellant Teofilo Carlos II and his putative father on the basis of the inconsistencies in appellant Felicidad Sandoval's statements. Although it had effectively disavowed appellant's prior claims regarding the legitimacy of appellant Teofilo Carlos II, the averment in the answer that he is the illegitimate son of appellee's brother, to Our mind, did not altogether foreclose the possibility of the said appellant's illegitimate filiation, his right to prove the same or, for that matter, his entitlement to inheritance rights as such. Without trial on the merits having been conducted in the case, We find appellee's bare allegation that appellant Teofilo Carlos II was merely purchased from an indigent couple by appellant Felicidad Sandoval, on the whole, insufficient to support what could well be a minor's total forfeiture of the rights arising from his putative filiation. Inconsistent though it may be to her previous statements, appellant Felicidad Sandoval's declaration regarding the illegitimate filiation of Teofilo Carlos II is more credible
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when considered in the light of the fact that, during the last eight years of his life, Teofilo Carlos allowed said appellant the use of his name and the shelter of his household. The least that the trial court could have done in the premises was to conduct a trial on the merits in order to be able to thoroughly resolve the issues pertaining to the filiation of appellant Teofilo Carlos II.8 On November 22, 2006, petitioner moved for reconsideration and for the inhibition of the ponente, Justice Rebecca De Guia-Salvador. The CA denied the twin motions. Issues In this petition under Rule 45, petitioner hoists the following issues: 1. That, in reversing and setting aside the Summary Judgment under the Decision, Annex A hereof, and in denying petitioner's Motion for reconsideration under the Resolution, Annex F hereof, with respect to the nullity of the impugned marriage, petitioner respectfully submits that the Court of Appeals committed a grave reversible error in applying Articles 88 and 101 of the Civil Code, despite the fact that the circumstances of this case are different from that contemplated and intended by law, or has otherwise decided a question of substance not theretofore decided by the Supreme Court, or has decided it in a manner probably not in accord with law or with the applicable decisions of this Honorable Court; 2. That in setting aside and reversing the Summary Judgment and, in lieu thereof, entering another remanding the case to the court of origin for further proceedings, petitioner most respectfully submits that the Court of Appeals committed a serious reversible error in applying Section 1, Rule 19 (now Section 1, Rule 34) of the Rules of Court providing for judgment on the pleadings, instead of Rule 35 governing Summary Judgments; 3. That in reversing and setting aside the Summary Judgment and, in lieu thereof, entering another remanding the case to the court of origin for further proceedings, petitioner most respectfully submits that the Court of Appeals committed grave abuse of discretion, disregarded judicial admissions, made findings on ground of speculations, surmises, and conjectures, or otherwise committed misapplications of the laws and misapprehension of the facts.9 (Underscoring supplied) Essentially, the Court is tasked to resolve whether a marriage may be declared void ab initio through a judgment on the pleadings or a summary judgment and without the benefit of a trial. But there are other procedural issues, including the capacity of one who is not a spouse in bringing the action for nullity of marriage. Our Ruling I. The grounds for declaration of absolute nullity of marriage must be proved. Neither judgment on the pleadings nor summary judgment is allowed. So is confession of judgment disallowed. Petitioner faults the CA in applying Section 1, Rule 1910 of the Revised Rules of Court, which provides: SECTION 1. Judgment on the pleadings. - Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such pleading. But in actions for annulment of marriage or for legal separation, the material facts alleged in the complaint shall always be proved. He argues that the CA should have applied Rule 35 of the Rules of Court governing summary judgment, instead of the rule on judgment on the pleadings. Petitioner is misguided. The CA did not limit its finding solely within the provisions of the Rule on judgment on the pleadings. In disagreeing with the trial court, the CA likewise considered the provisions on summary judgments, to wit: Moreover, even if We are to sustain the applicability of the rules on summary judgment to the case at bench, Our perusal of the record shows that the finding of the court a quo for appellee would still not be warranted. x x x 11 But whether it is based on judgment on the pleadings or summary judgment, the CA was correct in reversing the summary judgment rendered by the trial court. Both the rules on judgment on the pleadings and summary judgments have no place in cases of declaration of absolute nullity of marriage and even in annulment of marriage. With the advent of A.M. No. 02-11-10-SC, known as "Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages," the question on the application of summary judgments or even judgment on the pleadings in cases of nullity or annulment of marriage has been stamped with clarity. The significant principle laid down by the said Rule, which took effect on March 15, 200312 is found in Section 17, viz.: REMLAW Page 313
200312 is found in Section 17, viz.: SEC. 17. Trial. - (1) The presiding judge shall personally conduct the trial of the case. No delegation of evidence to a commissioner shall be allowed except as to matters involving property relations of the spouses. (2) The grounds for declaration of absolute nullity or annulment of marriage must be proved. No judgment on the pleadings, summary judgment, or confession of judgment shall be allowed. (Underscoring supplied) Likewise instructive is the Court's pronouncement in Republic v. Sandiganbayan.13 In that case, We excluded actions for nullity or annulment of marriage from the application of summary judgments. Prescinding from the foregoing discussion, save for annulment of marriage or declaration of its nullity or for legal separation, summary judgment is applicable to all kinds of actions.14 (Underscoring supplied) By issuing said summary judgment, the trial court has divested the State of its lawful right and duty to intervene in the case. The participation of the State is not terminated by the declaration of the public prosecutor that no collusion exists between the parties. The State should have been given the opportunity to present controverting evidence before the judgment was rendered.15 Both the Civil Code and the Family Code ordain that the court should order the prosecuting attorney to appear and intervene for the State. It is at this stage when the public prosecutor sees to it that there is no suppression of evidence. Concomitantly, even if there is no suppression of evidence, the public prosecutor has to make sure that the evidence to be presented or laid down before the court is not fabricated. To further bolster its role towards the preservation of marriage, the Rule on Declaration of Absolute Nullity of Void Marriages reiterates the duty of the public prosecutor, viz.: SEC. 13. Effect of failure to appear at the pre-trial. - (a) x x x (b) x x x If there is no collusion, the court shall require the public prosecutor to intervene for the State during the trial on the merits to prevent suppression or fabrication of evidence. (Underscoring supplied) Truly, only the active participation of the public prosecutor or the Solicitor General will ensure that the interest of the State is represented and protected in proceedings for declaration of nullity of marriages by preventing the fabrication or suppression of evidence.16 II. A petition for declaration of absolute nullity of void marriage may be filed solely by the husband or wife. Exceptions: (1) Nullity of marriage cases commenced before the effectivity of A.M. No. 02-11-10SC; and (2) Marriages celebrated during the effectivity of the Civil Code. Under the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages, the petition for declaration of absolute nullity of marriage may not be filed by any party outside of the marriage. The Rule made it exclusively a right of the spouses by stating: SEC. 2. Petition for declaration of absolute nullity of void marriages. (a) Who may file. - A petition for declaration of absolute nullity of void marriage may be filed solely by the husband or the wife. (Underscoring supplied) Section 2(a) of the Rule makes it the sole right of the husband or the wife to file a petition for declaration of absolute nullity of void marriage. The rationale of the Rule is enlightening, viz.: Only an aggrieved or injured spouse may file a petition for annulment of voidable marriages or declaration of absolute nullity of void marriages. Such petition cannot be filed by compulsory or intestate heirs of the spouses or by the State. The Committee is of the belief that they do not have a legal right to file the petition. Compulsory or intestate heirs have only inchoate rights prior to the death of their predecessor, and, hence, can only question the validity of the marriage of the spouses upon the death of a spouse in a proceeding for the settlement of the estate of the deceased spouse filed in the regular courts. On the other hand, the concern of the State is to preserve marriage and not to seek its dissolution.17 (Underscoring supplied) The new Rule recognizes that the husband and the wife are the sole architects of a healthy, loving, peaceful marriage. They are the only ones who can decide when and how to build the foundations of marriage. The spouses alone are the engineers of their marital life. They are simultaneously the directors and actors of their matrimonial true-to-life play. Hence, they alone can and should decide when to take a cut, but only in accordance with the grounds allowed by law. The innovation incorporated in A.M. No. 02-11-10-SC sets forth a demarcation line between marriages covered by the Family Code and those solemnized under the Civil Code. The Rule extends only to marriages entered into during the effectivity of the Family Code which took effect on August 3, 1988.18 REMLAW Page 314
marriages entered into during the effectivity of the Family Code which took effect on August 3, 1988.18 The advent of the Rule on Declaration of Absolute Nullity of Void Marriages marks the beginning of the end of the right of the heirs of the deceased spouse to bring a nullity of marriage case against the surviving spouse. But the Rule never intended to deprive the compulsory or intestate heirs of their successional rights. While A.M. No. 02-11-10-SC declares that a petition for declaration of absolute nullity of marriage may be filed solely by the husband or the wife, it does not mean that the compulsory or intestate heirs are without any recourse under the law. They can still protect their successional right, for, as stated in the Rationale of the Rules on Annulment of Voidable Marriages and Declaration of Absolute Nullity of Void Marriages, compulsory or intestate heirs can still question the validity of the marriage of the spouses, not in a proceeding for declaration of nullity but upon the death of a spouse in a proceeding for the settlement of the estate of the deceased spouse filed in the regular courts.19 It is emphasized, however, that the Rule does not apply to cases already commenced before March 15, 2003 although the marriage involved is within the coverage of the Family Code. This is so, as the new Rule which became effective on March 15, 200320 is prospective in its application. Thus, the Court held in Enrico v. Heirs of Sps. Medinaceli,21 viz.: As has been emphasized, A.M. No. 02-11-10-SC covers marriages under the Family Code of the Philippines, and is prospective in its application.22 (Underscoring supplied) Petitioner commenced the nullity of marriage case against respondent Felicidad in 1995. The marriage in controversy was celebrated on May 14, 1962. Which law would govern depends upon when the marriage took place.23 The marriage having been solemnized prior to the effectivity of the Family Code, the applicable law is the Civil Code which was the law in effect at the time of its celebration.24 But the Civil Code is silent as to who may bring an action to declare the marriage void. Does this mean that any person can bring an action for the declaration of nullity of marriage? We respond in the negative. The absence of a provision in the Civil Code cannot be construed as a license for any person to institute a nullity of marriage case. Such person must appear to be the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.25 Elsewise stated, plaintiff must be the real party-in-interest. For it is basic in procedural law that every action must be prosecuted and defended in the name of the real party-in-interest.26 Interest within the meaning of the rule means material interest or an interest in issue to be affected by the decree or judgment of the case, as distinguished from mere curiosity about the question involved or a mere incidental interest. One having no material interest to protect cannot invoke the jurisdiction of the court as plaintiff in an action. When plaintiff is not the real party-in-interest, the case is dismissible on the ground of lack of cause of action.27 Illuminating on this point is Amor-Catalan v. Court of Appeals,28 where the Court held: True, under the New Civil Code which is the law in force at the time the respondents were married, or even in the Family Code, there is no specific provision as to who can file a petition to declare the nullity of marriage; however, only a party who can demonstrate "proper interest" can file the same. A petition to declare the nullity of marriage, like any other actions, must be prosecuted or defended in the name of the real party-in-interest and must be based on a cause of action. Thus, in Niñal v. Badayog, the Court held that the children have the personality to file the petition to declare the nullity of marriage of their deceased father to their stepmother as it affects their successional rights. xxx x In fine, petitioner's personality to file the petition to declare the nullity of marriage cannot be ascertained because of the absence of the divorce decree and the foreign law allowing it. Hence, a remand of the case to the trial court for reception of additional evidence is necessary to determine whether respondent Orlando was granted a divorce decree and whether the foreign law which granted the same allows or restricts remarriage. If it is proved that a valid divorce decree was obtained and the same did not allow respondent Orlando's remarriage, then the trial court should declare respondent's marriage as bigamous and void ab initio but reduced the amount of moral damages from P300,000.00 to P50,000.00 and exemplary damages from P200,000.00 to P25,000.00. On the contrary, if it is proved that a valid divorce decree was obtained which allowed Orlando to remarry, then the trial court must dismiss the instant petition to declare nullity of marriage on the ground that petitioner Felicitas AmorCatalan lacks legal personality to file the same.29 (Underscoring supplied) REMLAW Page 315
Catalan lacks legal personality to file the same.29 (Underscoring supplied) III. The case must be remanded to determine whether or not petitioner is a real-party-in-interest to seek the declaration of nullity of the marriage in controversy. In the case at bench, the records reveal that when Teofilo died intestate in 1992, his only surviving compulsory heirs are respondent Felicidad and their son, Teofilo II. Under the law on succession, successional rights are transmitted from the moment of death of the decedent and the compulsory heirs are called to succeed by operation of law.30 Upon Teofilo's death in 1992, all his property, rights and obligations to the extent of the value of the inheritance are transmitted to his compulsory heirs. These heirs were respondents Felicidad and Teofilo II, as the surviving spouse and child, respectively. Article 887 of the Civil Code outlined who are compulsory heirs, to wit: (1) Legitimate children and descendants, with respect to their legitimate parents and ascendants; (2) In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and descendants; (3) The widow or widower; (4) Acknowledged natural children, and natural children by legal fiction; (5) Other illegitimate children referred to in Article 287 of the Civil Code.31 Clearly, a brother is not among those considered as compulsory heirs. But although a collateral relative, such as a brother, does not fall within the ambit of a compulsory heir, he still has a right to succeed to the estate. Articles 1001 and 1003 of the New Civil Code provide: ART. 1001. Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half. ART. 1003. If there are no descendants, ascendants, illegitimate children, or a surviving spouse, the collateral relatives shall succeed to the entire estate of the deceased in accordance with the following articles. (Underscoring supplied) Indeed, only the presence of descendants, ascendants or illegitimate children excludes collateral relatives from succeeding to the estate of the decedent. The presence of legitimate, illegitimate, or adopted child or children of the deceased precludes succession by collateral relatives.32 Conversely, if there are no descendants, ascendants, illegitimate children, or a surviving spouse, the collateral relatives shall succeed to the entire estate of the decedent.33 If respondent Teofilo II is declared and finally proven not to be the legitimate, illegitimate, or adopted son of Teofilo, petitioner would then have a personality to seek the nullity of marriage of his deceased brother with respondent Felicidad. This is so, considering that collateral relatives, like a brother and sister, acquire successional right over the estate if the decedent dies without issue and without ascendants in the direct line. The records reveal that Teofilo was predeceased by his parents. He had no other siblings but petitioner. Thus, if Teofilo II is finally found and proven to be not a legitimate, illegitimate, or adopted son of Teofilo, petitioner succeeds to the other half of the estate of his brother, the first half being allotted to the widow pursuant to Article 1001 of the New Civil Code. This makes petitioner a real-party-interest to seek the declaration of absolute nullity of marriage of his deceased brother with respondent Felicidad. If the subject marriage is found to be void ab initio, petitioner succeeds to the entire estate. It bears stressing, however, that the legal personality of petitioner to bring the nullity of marriage case is contingent upon the final declaration that Teofilo II is not a legitimate, adopted, or illegitimate son of Teofilo. If Teofilo II is proven to be a legitimate, illegitimate, or legally adopted son of Teofilo, then petitioner has no legal personality to ask for the nullity of marriage of his deceased brother and respondent Felicidad. This is based on the ground that he has no successional right to be protected, hence, does not have proper interest. For although the marriage in controversy may be found to be void from the beginning, still, petitioner would not inherit. This is because the presence of descendant, illegitimate,34 or even an adopted child35 excludes the collateral relatives from inheriting from the decedent. Thus, the Court finds that a remand of the case for trial on the merits to determine the validity or nullity of the subject marriage is called for. But the RTC is strictly instructed to dismiss the nullity of marriage case for lack of cause of action if it is proven by evidence that Teofilo II is a legitimate, illegitimate, or legally adopted son of Teofilo Carlos, the deceased brother of petitioner. REMLAW Page 316
legally adopted son of Teofilo Carlos, the deceased brother of petitioner. IV. Remand of the case regarding the question of filiation of respondent Teofilo II is proper and in order. There is a need to vacate the disposition of the trial court as to the other causes of action before it. Petitioner did not assign as error or interpose as issue the ruling of the CA on the remand of the case concerning the filiation of respondent Teofilo II. This notwithstanding, We should not leave the matter hanging in limbo. This Court has the authority to review matters not specifically raised or assigned as error by the parties, if their consideration is necessary in arriving at a just resolution of the case.36 We agree with the CA that without trial on the merits having been conducted in the case, petitioner's bare allegation that respondent Teofilo II was adopted from an indigent couple is insufficient to support a total forfeiture of rights arising from his putative filiation. However, We are not inclined to support its pronouncement that the declaration of respondent Felicidad as to the illegitimate filiation of respondent Teofilo II is more credible. For the guidance of the appellate court, such declaration of respondent Felicidad should not be afforded credence. We remind the CA of the guaranty provided by Article 167 of the Family Code to protect the status of legitimacy of a child, to wit: ARTICLE 167. The child shall be considered legitimate although the mother may have declared against its legitimacy or may have been sentenced as an adulteress. (Underscoring supplied) It is stressed that Felicidad's declaration against the legitimate status of Teofilo II is the very act that is proscribed by Article 167 of the Family Code. The language of the law is unmistakable. An assertion by the mother against the legitimacy of her child cannot affect the legitimacy of a child born or conceived within a valid marriage.37 Finally, the disposition of the trial court in favor of petitioner for causes of action concerning reconveyance, recovery of property, and sum of money must be vacated. This has to be so, as said disposition was made on the basis of its finding that the marriage in controversy was null and void ab initio. WHEREFORE, the appealed Decision is MODIFIEDas follows: 1. The case is REMANDED to the Regional Trial Court in regard to the action on the status and filiation of respondent Teofilo Carlos II and the validity or nullity of marriage between respondent Felicidad Sandoval and the late Teofilo Carlos; 2. If Teofilo Carlos II is proven to be the legitimate, or illegitimate, or legally adopted son of the late Teofilo Carlos, the RTC is strictly INSTRUCTED to DISMISS the action for nullity of marriage for lack of cause of action; 3. The disposition of the RTC in Nos. 1 to 8 of the fallo of its decision is VACATED AND SET ASIDE. The Regional Trial Court is ORDERED to conduct trial on the merits with dispatch and to give this case priority in its calendar. No costs. SO ORDERED. Pasted from
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Estreller v. Ysmael GR 170264 Mar 13, 2009 Sunday, November 14, 2010 11:34 PM
JAMES ESTRELLER, EDUARDO CULIANAN, GREG CARROS, RAQUEL YEE, JOSELITO PENILLA, LORNA DOTE, CRESENCIANA CLEOPAS, TRINIDAD TEVES, SONIA PENILLA, ANITA GOMINTONG, CHING DIONESIO, MARIBEL MANALO, DESIRES HUERTO, and RAYMUNDO CORTES, Petitioners, vs. LUIS MIGUEL YSMAEL and CRISTETA L. SANTOS-ALVAREZ, Respondents.* DE C I S I O N AUSTRIA-MARTINEZ, J.: In the present petition, the Court finds occasion to reassert the legal precepts that a co-owner may file an action for recovery of possession without the necessity of joining all the other co-owners as coplaintiffs since the suit is deemed to be instituted for the benefit of all; and that Section 2 of Presidential Decree (P.D.) No. 2016, reinforced by P.D. No. 1517, which prohibits the eviction of qualified tenants/occupants, extends only to landless urban families who are rightful occupants of the land and its structures, and does not include those whose presence on the land is merely tolerated and without the benefit of contract, those who enter the land by force or deceit, or those whose possession is under litigation. Respondents filed with the Regional Trial Court (RTC), Branch 216, Quezon City, a case for Recovery of Possession against petitioners, claiming ownership of the property subject of dispute located in E. Rodriguez Avenue and La Filonila Streets in Quezon City, by virtue of Transfer Certificate of Title (TCT) No. 41698 issued by the Register of Deeds of Quezon City on June 10, 1958. Respondents alleged that on various dates in 1973, petitioners entered the property through stealth and strategy and had since occupied the same; and despite demands made in March 1993, petitioners refused to vacate the premises, prompting respondents to file the action. 1 Petitioners denied respondents' allegations. According to them, respondent Luis Miguel Ysmael (Ysmael) had no personality to file the suit since he only owned a small portion of the property, while respondent Cristeta Santos-Alvarez (Alvarez) did not appear to be a registered owner thereof. Petitioners also contended that their occupation of the property was lawful, having leased the same from the Magdalena Estate, and later on from Alvarez. Lastly, petitioners asserted that the property has already been proclaimed by the Quezon City Government as an Area for Priority Development under P. D. Nos. 1517 and 2016, which prohibits the eviction of lawful tenants and demolition of their homes. 2 After trial, the RTC rendered its Decision dated September 15, 2000 in favor of respondents. The dispositive portion of the Decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs Luis Miguel Ysmael and Cristeta L. Santos-Alvarez and against defendants ordering the latter and all persons claiming rights under them to immediately vacate the subject property and peacefully surrender the same to the plaintiffs. Defendants are likewise ordered to pay plaintiffs the following: 1. The amount of P400.00 each per month from the date of extra-judicial demand until the subject property is surrendered to plaintiffs as reasonable compensation for the use and possession thereof; 2. The amount of P20,000.00 by way of exemplary damages; 3. The amount of P20,000.00 by way of attorney's fees and litigation expenses; 4. Cost of suit. Corollarily, the counter-claims of defendants are hereby DISMISSED for lack of merit. SO ORDERED.3 Petitioners appealed to the Court of Appeals (CA), which, in a Decision 4 dated March 14, 2005, dismissed their appeal and affirmed in toto the RTC Decision. Hence, the present petition for review under Rule 45 of the Rules of Court, on the following grounds: I THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENTS YSMAEL AND ALVAREZ ARE BOTH "REAL PARTIES IN INTEREST" WHO WOULD BE BENEFITED OR INJURED BY THE JUDGMENT OR THE PARTY ENTITLED TO THE AVAILS OF THE SUIT. II THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND DECIDE THE RELEVANT REMLAW Page 318
THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND DECIDE THE RELEVANT QUESTIONS AND ISSUES PRESENTED BY THE PETITIONERS IN ROMAN NUMERALS II, III AND IV OF THEIR DISCUSSIONS AND ARGUMENTS IN THE APPELLANTS BRIEF WHICH ARE HEREUNTO COPIED OR REPRODUCED. 5 The present petition merely reiterates the issues raised and settled by the RTC and the CA. On this score, it is well to emphasize the rule that the Court’s role in a petition under Rule 45 is limited to reviewing or reversing errors of law allegedly committed by the appellate court. Factual findings of the trial court, especially when affirmed by the CA, are conclusive on the parties. Since such findings are generally not reviewable, this Court is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below, unless the factual findings complained of are devoid of support from the evidence on record or the assailed judgment is based on a misapprehension of facts. 6 The Court then finds that the petition is without merit. Respondents are real parties-in-interest in the suit below and may, therefore, commence the complaint for accion publiciana. On the part of Ysmael, he is a named co-owner of the subject property under TCT No. 41698, together with Julian Felipe Ysmael, Teresa Ysmael, and Ramon Ysmael. 7 For her part, Alvarez was a buyer of a portion of the property, as confirmed in several documents, namely: (1) Decision dated August 30, 1974 rendered by the Regional Trial Court of Quezon City, Branch 9 (IX), in Civil Case No. Q-8426, which was based on a Compromise Agreement between Alvarez and the Magdalena Estate; 8 (2) an unnotarized Deed of Absolute Sale dated May 1985 executed between the Ysmael Heirs and Alvarez;9 and (3) a notarized Memorandum of Agreement between the Ysmael Heirs and Alvarez executed on May 2, 1991.10 Recently, in Wee v. De Castro,11 the Court, citing Article 487 of the Civil Code, reasserted the rule that any one of the co-owners may bring any kind of action for the recovery of co-owned properties since the suit is presumed to have been filed for the benefit of all co-owners. The Court also stressed that Article 487 covers all kinds of action for the recovery of possession, i.e., forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion), thus: In the more recent case of Carandang v. Heirs of De Guzman,this Court declared that a co-owner is not even a necessary party to an action for ejectment, for complete relief can be afforded even in his absence, thus: In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may bring an action, any kind of action for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be afforded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners. (Emphasis supplied) Petitioners persistently question the validity of the transfer of ownership to Alvarez. They insist that Alvarez failed to establish any right over the property since the Deed of Absolute Sale was not inscribed on TCT No. 41698. Interestingly, petitioners debunked their own argument when they themselves claimed in their Answer with Counter-claim that they derived their right to occupy the property from a lease agreement with, first, the Magdalena Estate, and thereafter, Alvarez herself.12 More importantly, the fact that the sale was not annotated or inscribed on TCT No. 41698 does not make it any less valid. A contract of sale has the force of law between the contracting parties and they are expected to abide, in good faith, by their respective contractual commitments. Article 1358 of the Civil Code which requires the embodiment of certain contracts in a public instrument, is only for convenience; and registration of the instrument only adversely affects third parties, and non-compliance therewith does not adversely affect the validity of the contract or the contractual rights and obligations of the parties thereunder. 13 Petitioners further contend that the property subject of the Deed of Absolute Sale – Lot 6, Block 4 of Subd. Plan Psd No. 33309 – is different from that being claimed in this case, which are Lots 2 and 3. They claim that there exists another title covering the subject property, i.e., TCT No. 41698 in the names of Victoria M. Panganiban and Teodoro M. Panganiban. Notably, TCT No. 41698 in the name of the Ysmael Heirs covers several parcels of land under Subd. Plan Psd No. 33309. These include: Lot 2, Block 4; Lot 3, Block 4; and Lot 6, Block 4, each of which contains 1,000 square meters. In the Decision dated August 30, 1974 rendered by the RTC of Quezon City, Branch 9, in Civil Case No. Q-8426, the ownership of 200 square meters of Lot 2, Block 4; 250 square meters of Lot 3, Block 4; and the full 1,000 square meters of Lot 6, Block 4, was conferred on Alvarez. A Deed of Absolute Sale dated May 1985 was later executed by the Ysmael Heirs in favor of Alvarez, but it covered REMLAW Page 319
Absolute Sale dated May 1985 was later executed by the Ysmael Heirs in favor of Alvarez, but it covered only Lot 6, Block 4. Nevertheless, a Memorandum of Agreement dated May 2, 1991 was subsequently entered into by the Ysmael Heirs and Alvarez, whereby all three apportioned parcels of land allocated to Alvarez under the RTC Decision dated August 30, 1974, were finally sold, transferred and conveyed to her. Evidently, while the title was yet to be registered in the name of Alvarez, for all intents and purposes, however, the subject property was already owned by her. The Ysmael Heirs are merely naked owners of the property, while Alvarez is already the beneficial or equitable owner thereof; and the right to the gains, rewards and advantages generated by the property pertains to her. The existence of a title in the same TCT No. 41698, this time in the names of Victoria M. Panganiban and Teodoro M. Panganiban, was adequately explained by the Certification of the Register of Deeds dated March 1, 1994, and which reads: At the instance of RUY ALBERTO S. RONDAIN, I, SAMUEL C. CLEOFE, Register of Deeds of Quezon City, do hereby certify that TCT No. 41698, covering Lot 19, Blk. 8 of the cons.-subd. plan Pos-817, with an area of Three Hundred Seventy Five (375) Square Meters, registered in the name of VICTORIA M. PANGANIBAN; and TEODORO M. PANGANIBAN, married to Elizabeth G. Panganiban, issued on February 8, 1991, is existing and on file in this Registry. This is to certify further that TCT No. 41698 presented by Ruy Alberto S. Rondain covering Lot 3, Blk. 2 of the subd. Plan PSD-3309, with an area of Nine Hundred Ninety Six (996) Square Meters, issued on June 10, 1958 and registered in the name of JUAN FELIPE YSMAEL, TERESA YSMAEL, RAMON YSMAEL, LUIS MIGUEL YSMAEL, which is also an existing title is different and distinct from each other inasmuch as they cover different Lots and Plans. That it is further certified that the similarity in the title numbers is due to the fact that after the fire of June 11, 1988, the Quezon City Registry issued new title numbers beginning with TCT No. 1.14 (Emphasis supplied) Finally, petitioners' claim that they are entitled to the protection against eviction and demolition afforded by P.D. Nos. 2016, 15 1517,16 and Republic Act (R.A.) No. 7279, 17 is not plausible. Section 6 of P.D. No. 1517 grants preferential rights to landless tenants/occupants to acquire land within urban land reform areas, while Section 2 of P.D. No. 2016 prohibits the eviction of qualified tenants/ occupants. In Dimaculangan v. Casalla,18 the Court was emphatic in ruling that the protective mantle of P.D. No. 1517 and P.D. No. 2016 extends only to landless urban families who meet these qualifications: a) they are tenants as defined under Section 3(f) of P.D. No. 1517; b) they built a home on the land they are leasing or occupying; c) the land they are leasing or occupying is within an Area for Priority Development and Urban Land Reform Zone; and d) they have resided on the land continuously for the last 10 years or more. Section 3(f) of P.D. No. No. 1517 defines the term "tenant" covered by the said decree as the "rightful occupant of land and its structures, but does not include those whose presence on the land is merely tolerated and without the benefit of contract, those who enter the land by force or deceit, or those whose possession is under litigation." It has already been ruled that occupants of the land whose presence therein is devoid of any legal authority, or those whose contracts of lease were already terminated or had already expired, or whose possession is under litigation, are not considered "tenants" under the Section 3(f). 19 Petitioners claim that they are lawful lessees of the property. However, they failed to prove any lease relationship or, at the very least, show with whom they entered the lease contract. Respondents, on the other hand, were able to prove their right to enjoy possession of the property. Thus, petitioners, whose occupation of the subject property by mere tolerance has been terminated by respondents, clearly do not qualify as "tenants" covered by these social legislations. Finally, petitioners failed to demonstrate that they qualify for coverage under R. A. No. 7279 or the Urban Development and Housing Act of 1992. R. A. No. 7279 provides for the procedure to be undertaken by the concerned local governments in the urban land development process, to wit: conduct an inventory of all lands and improvements within their respective localities, and in coordination with the National Housing Authority, the Housing and Land Use Regulatory Board, the National Mapping Resource Information Authority, and the Land Management Bureau; identify lands for socialized housing and resettlement areas for the immediate and future needs of the underprivileged and homeless in the urban areas; acquire the lands; and dispose of said lands to the beneficiaries of the program. 20 While there is a Certification that the area bounded by E. Rodriguez, Victoria Avenue, San Juan River and 10th Street of Barangay. Damayang Lagi, Quezon City is included in the list of Areas for Priority Development under Presidential Proclamation No. 1967, 21 REMLAW Page 320
City is included in the list of Areas for Priority Development under Presidential Proclamation No. 1967, 21 there is no showing that the property has already been acquired by the local government for this purpose; or that petitioners have duly qualified as beneficiaries. All told, the Court finds no reason to grant the present petition. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated March 14, 2005 of the Court of Appeals is AFFIRMED. SO ORDERED. Pasted from
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Robert De Galicia v. Mercado, GR No. 146744, Mar 6, 2006; Sunday, November 14, 2010 11:34 PM
ROBERT G. DE GALICIA, Petitioner, vs. MELY MERCADO, Respondent. DE C I S I O N CORONA, J.: Petitioner Robert G. de Galicia was a business partner in RCL Enterprises. On or about December 15, 1997, he was asked by his partner Carmen Arciaga to co-sign with her a Philbank check for P50,000 payable to cash. Allegedly without his knowledge and consent, Arciaga rediscounted the check with respondent Mely Mercado at 8% interest. Respondent gave Arciaga the sum of P46,000, representing the value of the check less 8% as interest. Later, respondent presented the check for payment but it was dishonored for insufficiency of funds. She then filed a complaint for estafa and for violation of Batas Pambansa Blg. (BP) 221 against petitioner and Carmen Arciaga. Petitioner countered by filing in the Regional Trial Court (RTC) of Manila, Branch 32, a case for the declaration of nullity of the agreement to pay interest between respondent and his partner, Arciaga. He prayed that the agreement, together with the rediscounted check, be declared void for being contrary to public policy. After trial, the RTC, in an order dated November 21, 2000, dismissed petitioner’s case for lack of jurisdiction. In another order dated January 15, 2001, it also denied his motion for reconsideration. Treating the complaint as one for recovery of a sum of money, the trial court ruled: Even granting in arguendo, that the action seeks to have the agreement (?) between defendant Mely Mercado and one Carmen Arciaga with respect to the payment of interest to be declared null and void, this Court is in a quandary because one of the parties (Carmen Arciaga) in the so-called agreement is not a party to the present case. Also, even considering and computing the interest rate at 8% or 5%, it is still within the rate of P50,000 and way below the jurisdictional amount vested in the Regional Trial Court. The present action is treated by this Court as one for the recovery of sum of money, construing the same from the facts alleged in the complaint xxx with the present action/complaint having no title of the action. A reading of the instant case indicates that the principal relief sought is for the declaration of the subject check in the amount of P50,000 a nullity. Hence, capable of pecuniary estimation, the so-called agreement merely an incident thereto. After going over the entire record of this case, and further considering that every court has the power to review and amend… its findings and conclusions, this Court finds no reversible error to reconsider its assailed order (dated November 21, 2000). WHEREFORE, the assailed Order (supra) [D]ismissing this case, [S]tands. The Motion for Reconsideration, for lack of merit, is hereby DENIED.2 Via this petition for review under Rule 45 of the 1997 Rules of Civil Procedure, on a pure question of law, petitioner assigns this error to the abovementioned order: THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT FOR LACK OF JURISDICTION OVER ITS SUBJECT MATTER SIMPLY BECAUSE THE AMOUNT INVOLVED [WAS] ONLY P50,000.00.3 In his memorandum,4 petitioner insisted that the complaint for declaration of nullity of the agreement between respondent and Arciaga was within the jurisdiction of the RTC. According to petitioner, the subject matter of the complaint was not for the recovery of a sum of money but for the nullification of the agreement to pay interest, with a prayer to also nullify the check, in which case the action was not capable of pecuniary estimation. He argued that it was error for the trial court to dismiss the complaint on the basis merely that the amount involved was P50,000. Respondent, however, contends that the dismissal by the RTC of the complaint was warranted since the action essentially involved the nullification of the check amounting to P50,000. She insisted that the amount was outside the RTC’s jurisdiction, thus, it could not possibly take cognizance of the case. Respondent added that the RTC did not err in dismissing the complaint because Arciaga, as an REMLAW Page 322
indispensable party, was not impleaded. Under BP 129,5 the RTC shall exercise exclusive jurisdiction on the following actions: (1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation; (2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involve[d] exceeds Twenty [T]housand [P]esos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty [T]housand [P]esos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts. xxx xxx xxx In determining whether or not the subject matter of an action is capable of pecuniary estimation, the Court, in the early case of Singsong v. Isabella Sawmill,6 laid down the following criterion: xxx this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance (now RTC) would depend on the amount involved. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by the courts of first instance (RTC). (emphasis supplied) Based on the foregoing criterion, the subject of the action before the trial court was indeed incapable of pecuniary estimation and therefore cognizable by the RTC. A perusal of the complaint7 reveals that it primarily sought to annul the agreement under which Arciaga obligated herself to pay respondent interest on the amount of the rediscounted check. What was being assailed was the payment of interest. Petitioner was not seeking recovery of a sum of money as found by the trial court. The records do not show that he asked for payment of the amount of the check. Besides, it was not for petitioner to ask for reimbursement of the amount of the check but respondent who gave P46,000 to petitioner’s business partner, Arciaga. Nevertheless, notwithstanding the RTC’s jurisdiction on the subject case, this Court sustains the dismissal of the subject complaint for its failure to implead an indispensable party. Under Rule 3, Section 7 of the 1997 Rules of Civil Procedure, an indispensable party is a party-in-interest without whom there can be no final determination of an action. The interests of such indispensable party in the subject matter of the suit and the relief are so bound with those of the other parties that his legal presence as a party to the proceeding is an absolute necessity.8 As a rule, an indispensable party’s interest in the subject matter is such that a complete and efficient determination of the equities and rights of the parties is not possible if he is not joined.9 Here, we hold that Arciaga was an indispensable party to the suit filed by petitioner against respondent. Her interest in the suit was intertwined with the rights and interest of both petitioner and respondent. She was as involved in the suit as petitioner and respondent, being a co-signatory of the re-discounted check and being privy to the assailed agreement. Had the subject complaint been resolved on the merits, any judgment made by the trial court was going to affect not only respondent but Arciaga as well. Unfortunately, due to the failure of petitioner to implead her in the complaint, any judgment therein could not bind her. It was as if the complaint had not been filed at all. In Aracelona v. Court of Appeals,10 the Court held that the joinder of all indispensable parties must be made under any and all conditions, their presence being a sine qua non for the exercise of the judicial power. There, we ruled that when an indispensable party is not before the court, the action should be dismissed.11 It is interesting to note that petitioner filed the subject complaint after respondent initiated a complaint for estafa and violation of BP 22.12 The filing of the complaint for declaration of nullity of the agreement to pay interest and the nullity of the check appeared to be an afterthought and an attempt to affect the outcome of the criminal complaint against him. WHEREFORE, the petition is hereby DENIED. No costs. SO ORDERED.
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SO ORDERED. Pasted from
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Lagunilla v. Velasco GR 169276 Jun 16, 2009; Sunday, November 14, 2010 11:34 PM
DIONISIA MONIS LAGUNILLA and RAFAEL MONIS, Petitioners, vs. ANDREA MONIS VELASCO and MACARIA MONIS, Respondents. DE C I S I O N NACHURA, J.: For review is the Court of Appeals (CA) Decision1 dated July 13, 2005 in CA-G.R. CV No. 56998 affirming with modification the Regional Trial Court (RTC) Decision2 dated April 24, 1997 in Civil Case No. 466 for Annulment of Documents and Damages. The facts, as culled from the records, are as follows: Rev. Fr. Patricio (Patricio), Magdalena Catalina (Magdalena), Venancio, and respondent Macaria, all surnamed Monis, as well as respondent Andrea Monis - Velasco (Andrea), are siblings. Venancio is the father of petitioners Dionisia Monis Lagunilla and Rafael Monis. During their lifetime, Patricio and Magdalena acquired several properties which included several parcels of land in the province of La Union and another one situated in Quezon City, with an area of 208.35 sq. m. (otherwise known as the Quezon City property).3 The Quezon City property was co-owned by Patricio and Magdalena, together with Andrea and Pedro Velasco. After the death of Patricio and Magdalena, or on February 24, 1993, Andrea and Macaria (to the exclusion of Venancio’s children) executed a Deed of Extrajudicial Settlement with Donation4 (hereinafter referred to as the subject Deed) involving the Quezon City property, and donated the same to Andrea’s son, Pedro Monis Velasco, Jr. (Pedro). By virtue of said Deed, Transfer Certificate of Title (TCT) No. RT-60455 (190472)5 was cancelled and a new one (TCT No. 85837) was issued in the name of Pedro.6 On June 1, 1993, petitioners instituted an action for Annulment of Documents and Damages7 before the Regional Trial Court (RTC) of Balaoan, La Union against respondents. The case was raffled to Branch 34 and was docketed as Civil Case No. 466. In their complaint, petitioners sought the annulment of the subject Deed, allegedly because of the fraudulent act committed by respondents in executing the same. They claimed that respondents misrepresented that they were the only surviving heirs of Patricio and Magdalena when, in fact, they (petitioners) were also surviving heirs by virtue of their right to represent their deceased father Venancio. In short, being Patricio and Magdalena’s nephew and niece, they were asserting their rights, as co-heirs, to the Quezon City property. Respondents’ fraudulent act was, according to petitioners, a ground for the annulment of the subject Deed. As a consequence of the nullity of the extrajudicial settlement, they further sought the cancellation of the title and tax declarations issued pursuant thereto, in the name of Pedro. Respondents countered that nowhere in the subject Deed did they assert to be the only surviving heirs of Patricio and Magdalena. Admittedly, however, they claimed to be the only legitimate sisters of the deceased. They added that annulment of the Deed was not tenable, considering that petitioners already received advances on their share of the properties of the decedent; besides, there were other properties that had not been the subject of partition from which they could obtain reparation, if they are so entitled. Contrary to petitioners’ claim, respondents insisted that there was no way that the subject Deed could be annulled in the absence of any valid ground to rely on.8 No amicable settlement was reached during the pre-trial; thus, trial on the merits ensued. After petitioners rested their case, they moved for the amendment of the complaint to implead additional party and to conform to the evidence presented.9 Petitioners averred that the resolution of the case would affect the interest of Pedro as donee; hence, he is an indispensable party. The RTC, however, denied the motion, as the amendment of the complaint would result in the introduction of a different cause of action prejudicial to respondents. The court further held that the amendment of the complaint would unduly delay the resolution of the case. On April 24, 1997, the RTC decided in favor of respondents, disposing, as follows: WHEREFORE, taken in the above light, the Court hereby orders the case DISMISSED and further orders REMLAW Page 325
WHEREFORE, taken in the above light, the Court hereby orders the case DISMISSED and further orders the plaintiffs to pay the defendants jointly and severally the following, thus: 1) P100,000.00 as moral damages; 2) P50,000.00 as exemplary damages; 3) P100,000.00 as attorney’s fees; and 4) To pay the costs of this suit. SO ORDERED.10 Applying Article 887 of the Civil Code, the RTC ruled that petitioners are not compulsory heirs; thus, they could not invoke bad faith as a ground to rescind the subject Deed. As to respondents’ declaration that they were the only surviving heirs of the decedents, the trial court said that it was, in a way, a nonrecognition of petitioners’ claim that they, too, are heirs. The court, likewise, gave credence to respondents’ claim that petitioners had previously received advances on their share of the inheritance. As to the remedy of rescission, the court declared that it was not available in the instant case because of the existence of other remedies that may be availed of by petitioners, considering that there were other properties from which they could obtain reparation, assuming they are entitled.11 On appeal to the Court of Appeals, the appellate court affirmed with modification the trial court’s decision, viz.: WHEREFORE, premises considered, the assailed decision dated April 24, 1997 of the Regional Trial Court of Balao[a]n, La Union in Civil Case No. 466 is hereby AFFIRMED with MODIFICATION, in that the award of exemplary damages and attorney’s fees is deleted. No pronouncement as to costs. SO ORDERED.12 The appellate court made a definitive conclusion that petitioners, together with respondents, are heirs of Macaria and Patricio. However, considering that petitioners are not compulsory heirs, it agreed with the RTC that they could not use "bad faith" as a ground to rescind the contract as provided for in Article 1104 of the New Civil Code. The appellate court also agreed with the trial court that bad faith on the part of respondents was wanting. While recognizing the doctrine that the subject Deed was not binding on petitioners because they did not participate therein, the appellate court refused to annul the contract on the basis thereof, in view of the existence of other properties previously received by petitioners and those that may still be the subject of partition. The court further denied the prayer to annul the donation made in favor of Pedro, inasmuch as it was belatedly raised by petitioners.13 The appellate court likewise found the deletion of the award of exemplary damages and attorney’s fees proper.141awphi1 Unsatisfied, petitioners come to this Court in this petition for review on certiorari raising the following issues: I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AND MANIFESTLY OVERLOOKED RELEVANT FACTS NOT DISPUTED AND WHICH IF PROPERLY CONSIDERED WOULD JUSTIFY A DIFFERENT CONCLUSION THAT THERE IS FRAUD OR BAD FAITH ON THE PART OF DEFENDANTS-APPELLEES IN EXCLUDING PLAINTIFFS-APPELLANTS FROM THE DEED OF EXTRA JUDICIAL SETTLEMENT WITH DONATION. II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN CONCLUDING THAT "THE MERE ACT OF REPUDIATING THE INTEREST OF A CO-OWNER IS NOT SUFFICIENT TO SUPPORT A FINDING OF BAD FAITH SINCE NO BAD FAITH CAN BE ATTRIBUTED TO A PERSON WHO ONLY EXERCISES A PRIVILEGE GRANTED BY LAW." III. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN CONCLUDING THAT THERE IS ABSENCE OF FRAUD OR BAD FAITH ON THE PART OF DEFENDANTSAPPELLEES IN EXCLUDING PLAINTIFFS-APPELLANTS IN THE EXTRA JUDICIAL SETTLEMENT BASED ON AN INFERENCE THAT IS MANIFESTLY MISTAKEN THAT PLAINTIFFS-APPELLANTS HAVE ALREADY OBTAINED THEIR ADVANCE OF INHERITANCE FROM THE DECEDENTS. IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW AND GRAVE ABUSE OF DISCRETION IN CONCLUDING THAT THE ASSAILED EXTRAJUDICIAL SETTLEMENT CANNOT BE ANNULLED SINCE THE MISREPRESENTATION IS NOT SO GRAVE IN CHARACTER AS TO AMOUNT TO BAD FAITH (AND) RULE 74, SECTION 1, SECOND PARAGRAPH, DOES NOT DISCOUNT THE POSSIBILITY THAT SOME HEIRS MAY HAVE BEEN EXCLUDED IN THE EXECUTION OF THE EXTRAJUDICIAL SETTLEMENT. V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO AN ERROR OF LAW IN CONCLUDING THAT THE DEED OF REMLAW Page 326
DISCRETION TANTAMOUNT TO AN ERROR OF LAW IN CONCLUDING THAT THE DEED OF EXTRAJUDICIAL SETTLEMENT WITH DONATION CANNOT BE ANNULLED. VI. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN AWARDING MORAL DAMAGES DESPITE FINDING THAT THE SUIT WAS MADE IN GOOD FAITH. VII. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT THAT THE MOTION TO AMEND COMPLAINT TO IMPLEAD ADDITIONAL PARTY AND TO CONFORM TO THE EVIDENCE PRESENTED FILED BY THE PLAINTIFFS-APPELLANTS IS NOT PROPER. 15 In fine, petitioners challenge the appellate court’s conclusions on the validity of the extrajudicial settlement with donation and the denial of the motion to amend the complaint to implead an indispensable party and conform to the evidence presented. Much as we would like to make a definitive conclusion on the respective rights of all the parties and decide, once and for all, their interests over the subject property, we are barred by a jurisdictional issue. Jurisdiction is the power invested in courts for administering justice, that is, to hear and decide cases. For the court to exercise the authority to dispose of the case on the merits, it must acquire jurisdiction over the subject matter and the parties.16 Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint. On the other hand, jurisdiction over the person of a party defendant is assured upon the service of summons in the manner required by law or, otherwise, by his voluntary appearance. As a rule, if a defendant has not been summoned, the court acquires no jurisdiction over his person, and a personal judgment rendered against such defendant is null and void. A decision that is null and void for want of jurisdiction of the trial court is not a decision in contemplation of law and can never become final and executory.17 Corollary to the issue of jurisdiction, and equally important, is the mandatory rule on joinder of indispensable parties set forth in Section 7, Rule 3 of the Rules of Court, to wit: SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. The general rule with reference to parties to a civil action requires the joinder of all necessary parties, where possible, and the joinder of all indispensable parties under any and all conditions.18 The evident intent of the Rules on the joinder of indispensable and necessary parties is the complete determination of all possible issues, not only between the parties themselves but also as regards other persons who may be affected by the judgment.19 In this case, petitioners challenge the denial of their motion to amend the complaint to implead Pedro who, they claim, is an indispensable party to the case. We are, therefore, compelled to address this important question. In Regner v. Logarta20 and Arcelona v. CA,21 we laid down the test to determine if a party is an indispensable party, viz.: An indispensable party is a party who has an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest, a party who has not only an interest in the subject matter of the controversy, but also has an interest of such nature that a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the parties already before the court which is effective, complete or equitable. Further, an indispensable party is one who must be included in an action before it may properly go forward. A person is not an indispensable party, however, if his interest in the controversy or subject matter is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them. Also, a person is not an indispensable party if his presence would merely permit complete relief between him and those already parties to the action, or if he has no interest in the subject matter of the action. It is not a sufficient reason to declare a person to be an indispensable party that his presence will avoid multiple litigation.22 In upholding the denial of the motion to amend the complaint, the appellate court concluded that the sole desire of petitioners in instituting the case was the annulment of the extrajudicial settlement. Effectively, it separated the question of the validity of the extrajudicial settlement from the validity of the donation. Accordingly, the court said, the latter issue could be threshed out in a separate proceeding REMLAW Page 327
the donation. Accordingly, the court said, the latter issue could be threshed out in a separate proceeding later. This explains why Pedro was not considered an indispensable party by the trial and appellate courts.1avvphi1 We beg to differ. Even without having to scrutinize the records, a mere reading of the assailed decision readily reveals that Pedro is an indispensable party. At the time of the filing of the complaint, the title to the Quezon City property was already registered in the name of Pedro, after TCT No. 60455 (190472) in the names of Pedro Velasco, Andrea, Magdalena and Patricio Monis was cancelled, pursuant to the extrajudicial settlement with donation executed by respondents. The central thrust of the complaint was that respondents, by themselves, could not have transferred the Quezon City property to Pedro because petitioners, as heirs of Patricio and Magdalena, also have rights over it. Accordingly, petitioners specifically prayed that the extrajudicial settlement with donation be annulled and the transfer certificate of title and tax declarations (in the name of Pedro) issued pursuant thereto be canceled. The pertinent portion of the complaint is quoted for easy reference: WHEREFORE, in view of the foregoing, it is respectfully prayed that judgment be rendered as follows – 1. By ordering the annulment of Annex "A" hereof as well as the cancellation of transfer certificate of title and tax declarations issued pursuant thereto.23 If such prayer and thrust were to be denied (as held by the trial and appellate courts), the problem would be less obvious, as the status quo would be maintained. However, if they were to be upheld, Pedro’s title to the property would undoubtedly be directly and injuriously affected. Even if we only resolve the validity of the extrajudicial settlement, there would be no final adjudication of the case without involving Pedro’s interest. Verily, Pedro’s interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with that of the other parties. His legal presence as a party to the proceedings is, therefore, an absolute necessity.24 His interest in the controversy and in the subject matter is not separable from the interest of the other parties. It is unfortunate that petitioners failed to implead Pedro as defendant in their complaint. Interestingly, however, they realized such mistake, albeit belatedly, and thus sought the amendment of the complaint to join him as a defendant, but the RTC refused to grant the same. Well-settled is the rule that joinder of indispensable parties is mandatory.25 It is a condition sine qua non to the exercise of judicial power.26 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 as to those present.27 Without the presence of indispensable parties to the suit, the judgment of the court cannot attain finality.28 One who is not a party to a case is not bound by any decision of the court; otherwise, he will be deprived of his right to due process.29 That is why the case is generally remanded to the court of origin for further proceedings. 30 In light of these premises, no final ruling can be had on the validity of the extrajudicial settlement. While we wish to abide by the mandate on speedy disposition of cases, we cannot render a premature judgment on the merits. To do so could result in a possible violation of due process. The inclusion of Pedro is necessary for the effective and complete resolution of the case and in order to accord all parties the benefit of due process and fair play.31 Nevertheless, as enunciated in Commissioner Domingo v. Scheer,32 Lotte Phil. Co., Inc. v. Dela Cruz,33 and PepsiCo, Inc. v. Emerald Pizza, Inc.,34 the non-joinder of indispensable parties is not a ground for the dismissal of an action. The remedy is to implead the non-party claimed to be indispensable. Parties may be added by order of the court on motion of the party or on its own initiative at any stage of the action and/or at such times as are just. If the plaintiff refuses to implead an indispensable party despite the order of the court, then the court may dismiss the complaint for the plaintiff’s failure to comply with a lawful court order. In light of the foregoing, a remand of the case to the trial court is imperative. WHEREFORE, the Decision of the Court of Appeals dated July 13, 2005 in CA-G.R. CV No. 56998 is SET ASIDE. Let the case be REMANDED to the Regional Trial Court for the inclusion of Pedro Velasco, Jr. as an indispensable party, and for further proceedings. SO ORDERED. Pasted from
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Josephine Marmo v Moises Anacay GR 182585 Nov 27 2009; Sunday, November 14, 2010 11:34 PM
JOSEPHINE MARMO,* NESTOR ESGUERRA, DANILO DEL PILAR and MARISA DEL PILAR, Petitioners, vs. MOISES O. ANACAY Respondent. DE C I S I O N BRION, J.: Before us is the Petition for Review on Certiorari,1 filed by the spouses Josephine Marmo and Nestor Esguerra and the spouses Danilo del Pilar and Marisa del Pilar (collectively, the petitioners), to reverse and set aside the Decision2 dated December 28, 2007 and the Resolution3 dated April 11, 2008 of the Former Special Eleventh Division of the Court of Appeals (CA) in CA-G.R. SP No. 94673. The assailed CA Decision dismissed the petitioners’ petition for certiorari challenging the Orders dated March 14, 20064 and May 8, 20065 of the Regional Trial Court (RTC), Branch 90, Dasmariñas, Cavite in Civil Case No. 2919-03, while the assailed CA Resolution denied the petitioners’ motion for reconsideration. FACTUAL BACKGROUND The facts of the case, as gathered from the parties’ pleadings, are briefly summarized below: On September 16, 2003, respondent Moises O. Anacay filed a case for Annulment of Sale, Recovery of Title with Damages against the petitioners6 and the Register of Deeds of the Province of Cavite, docketed as Civil Case No. 2919-03.7 The complaint states, among others, that: the respondent is the bona-fide co-owner, together with his wife, Gloria P. Anacay (now deceased), of a 50-square meter parcel of land and the house built thereon, located at Blk. 54, Lot 9, Regency Homes, Brgy. Malinta, Dasmariñas, Cavite, covered by Transfer Certificate of Title (TCT) No. T-815595 of the Register of Deeds of Cavite; they authorized petitioner Josephine to sell the subject property; petitioner Josephine sold the subject property to petitioner Danilo for P520,000.00, payable in monthly installments of P8,667.00 from May 2001 to June 2006; petitioner Danilo defaulted in his installment payments from December 2002 onwards; the respondent subsequently discovered that TCT No. 815595 had been cancelled and TCT No. T-972424 was issued in petitioner Josephine’s name by virtue of a falsified Deed of Absolute Sale dated September 20, 2001; petitioner Josephine subsequently transferred her title to petitioner Danilo; TCT No. T-972424 was cancelled and TCT No. T-991035 was issued in petitioner Danilo’s name. The respondent sought the annulment of the Deed of Absolute Sale dated September 20, 2001 and the cancellation of TCT No. T-991035; in the alternative, he demanded petitioner Danilo’s payment of the balance of P347,000.00 with interest from December 2002, and the payment of moral damages, attorney’s fees, and cost of suit. In her Answer, petitioner Josephine averred, among others, that the respondent’s children, as coowners of the subject property, should have been included as plaintiffs because they are indispensable parties.8 Petitioner Danilo echoed petitioner Josephine’s submission in his Answer.9 Following the pre-trial conference, the petitioners filed a Motion to Dismiss the case for the respondent’s failure to include his children as indispensable parties.10 The respondent filed an Opposition, arguing that his children are not indispensable parties because the issue in the case can be resolved without their participation in the proceedings.11 THE RTC RULING The RTC found the respondent’s argument to be well-taken and thus denied the petitioners’ motion to dismiss in an Order dated March 14, 2006.12 It also noted that the petitioners’ motion was simply filed to delay the proceedings. After the denial of their Motion for Reconsideration,13 the petitioners elevated their case to the CA through a Petition for Certiorari under Rule 65 of the Rules of Court.14 They charged the RTC with grave abuse of discretion amounting to lack of jurisdiction for not dismissing the case after the respondent failed to include indispensable parties. THE CA RULING The CA dismissed the petition15 in a Decision promulgated on December 28, 2007. It found that the RTC did not commit any grave abuse of discretion in denying the petitioners’ motion to dismiss, noting that REMLAW Page 330
did not commit any grave abuse of discretion in denying the petitioners’ motion to dismiss, noting that the respondent’s children are not indispensable parties. The petitioners moved16 but failed17 to secure a reconsideration of the CA Decision; hence, the present petition. Following the submission of the respondent’s Comment18 and the petitioners’ Reply,19 we gave due course to the petition and required the parties to submit their respective memoranda.20 Both parties complied.21 Meanwhile, on April 24, 2009, the petitioners filed with the RTC a Motion to Suspend Proceedings due to the pendency of the present petition. The RTC denied the motion to suspend as well as the motion for reconsideration that followed. The petitioners responded to the denial by filing with us a petition for the issuance of a temporary restraining order (TRO) to enjoin the RTC from proceeding with the hearing of the case pending the resolution of the present petition. THE PETITION and THE PARTIES’ SUBMISSIONS The petitioners submit that the respondent’s children, who succeeded their deceased mother as coowners of the property, are indispensable parties because a full determination of the case cannot be made without their presence, relying on Arcelona v. Court of Appeals,22 Orbeta v. Sendiong,23 and Galicia v. Manliquez Vda. de Mindo.24 They argue that the non-joinder of indispensable parties is a fatal jurisdictional defect. The respondent, on the other hand, counters that the respondent’s children are not indispensable parties because the issue involved in the RTC – whether the signatures of the respondent and his wife in the Deed of Absolute Sale dated September 20, 2001 were falsified - can be resolved without the participation of the respondent’s children. THE ISSUE The core issue is whether the respondent’s children are indispensable parties in Civil Case No. 2919-03. In the context of the Rule 65 petition before the CA, the issue is whether the CA correctly ruled that the RTC did not commit any grave abuse of discretion in ruling that the respondent’s children are not indispensable parties. OUR RULING We see no merit in the petition. General Rule:
The denial of a motion to dismiss is an interlocutory order which is not the proper subject of an appeal or a petition for certiorari.
At the outset, we call attention to Section 1 of Rule 4125 of the Revised Rules of Court governing appeals from the RTC to the CA. This Section provides that an appeal may be taken only from a judgment or final order that completely disposes of the case, or of a matter therein when declared by the Rules to be appealable. It explicitly states as well that no appeal may be taken from an interlocutory order. In law, the word "interlocutory" refers to intervening developments between the commencement of a suit and its complete termination; hence, it is a development that does not end the whole controversy.26 An "interlocutory order" merely rules on an incidental issue and does not terminate or finally dispose of the case; it leaves something to be done before the case is finally decided on the merits.27 An Order denying a Motion to Dismiss is interlocutory because it does not finally dispose of the case, and, in effect, directs the case to proceed until final adjudication by the court. Only when the court issues an order outside or in excess of jurisdiction or with grave abuse of discretion, and the remedy of appeal would not afford adequate and expeditious relief, will certiorari be considered an appropriate remedy to assail an interlocutory order.28 In the present case, since the petitioners did not wait for the final resolution on the merits of Civil Case No. 2919-03 from which an appeal could be taken, but opted to immediately assail the RTC Orders dated March 14, 2006 and May 8, 2006 through a petition for certiorari before the CA, the issue for us to address is whether the RTC, in issuing its orders, gravely abused its discretion or otherwise acted outside or in excess of its jurisdiction. The RTC did not commit grave abuse of discretion in denying the petitioners’ Motion to Dismiss; the respondent’s co-owners are not indispensable parties. The RTC grounded its Order dated March 14, 2006 denying the petitioners’ motion to dismiss on the finding that the respondent’s children, as co-owners of the subject property, are not indispensable parties to the resolution of the case. REMLAW Page 331
parties to the resolution of the case. We agree with the RTC. Section 7, Rule 3 of the Revised Rules of Court29 defines indispensable parties as parties-in-interest without whom there can be no final determination of an action and who, for this reason, must be joined either as plaintiffs or as defendants. Jurisprudence further holds that a party is indispensable, not only if he has an interest in the subject matter of the controversy, but also if his interest is such that a final decree cannot be made without affecting this interest or without placing the controversy in a situation where the final determination may be wholly inconsistent with equity and good conscience. He is a person whose absence disallows the court from making an effective, complete, or equitable determination of the controversy between or among the contending parties. 30 When the controversy involves a property held in common, Article 487 of the Civil Code explicitly provides that "any one of the co-owners may bring an action in ejectment." We have explained in Vencilao v. Camarenta31 and in Sering v. Plazo32 that the term "action in ejectment" includes a suit for forcible entry (detentacion) or unlawful detainer (desahucio).33 We also noted in Sering that the term "action in ejectment" includes "also, an accion publiciana (recovery of possession) or accion reinvidicatoria34 (recovery of ownership)." Most recently in Estreller v. Ysmael,35 we applied Article 487 to an accion publiciana case; in Plasabas v. Court of Appeals36 we categorically stated that Article 487 applies to reivindicatory actions. We upheld in several cases the right of a co-owner to file a suit without impleading other co-owners, pursuant to Article 487 of the Civil Code. We made this ruling in Vencilao, where the amended complaint for "forcible entry and detainer" specified that the plaintiff is one of the heirs who co-owns the disputed properties. In Sering, and Resuena v. Court of Appeals,37 the co-owners who filed the ejectment case did not represent themselves as the exclusive owners of the property. In Celino v. Heirs of Alejo and Teresa Santiago,38 the complaint for quieting of title was brought in behalf of the co-owners precisely to recover lots owned in common.39 In Plasabas, the plaintiffs alleged in their complaint for recovery of title to property (accion reivindicatoria) that they are the sole owners of the property in litigation, but acknowledged during the trial that the property is co-owned with other parties, and the plaintiffs have been authorized by the co-owners to pursue the case on the latter’s behalf. These cases should be distinguished from Baloloy v. Hular40 and Adlawan v. Adlawan41 where the actions for quieting of title and unlawful detainer, respectively, were brought for the benefit of the plaintiff alone who claimed to be the sole owner. We held that the action will not prosper unless the plaintiff impleaded the other co-owners who are indispensable parties. In these cases, the absence of an indispensable party rendered all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present. We read these cases to collectively mean that where the suit is brought by a co-owner, without repudiating the co-ownership, then the suit is presumed to be filed for the benefit of the other coowners and may proceed without impleading the other co-owners. However, where the co-owner repudiates the co-ownership by claiming sole ownership of the property or where the suit is brought against a co-owner, his co-owners are indispensable parties and must be impleaded as partydefendants, as the suit affects the rights and interests of these other co-owners. In the present case, the respondent, as the plaintiff in the court below, never disputed the existence of a co-ownership nor claimed to be the sole or exclusive owner of the litigated lot. In fact, he recognized that he is a "bona-fide co-owner" of the questioned property, along with his deceased wife. Moreover and more importantly, the respondent’s claim in his complaint in Civil Case No. 2919-03 is personal to him and his wife, i.e., that his and his wife’s signatures in the Deed of Absolute Sale in favor of petitioner Josephine were falsified. The issue therefore is falsification, an issue which does not require the participation of the respondent’s co-owners at the trial; it can be determined without their presence because they are not parties to the document; their signatures do not appear therein. Their rights and interests as co-owners are adequately protected by their co-owner and father, respondent Moises O. Anacay, since the complaint was made precisely to recover ownership and possession of the properties owned in common, and, as such, will redound to the benefit of all the co-owners.421avvphi1 In sum, respondent’s children, as co-owners of the subject property, are not indispensable parties to the resolution of the case. We held in Carandang v. Heirs of De Guzman43 that in cases like this, the coowners are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to be filed for the benefit of all.44 Thus, the respondent’s REMLAW Page 332
their participation, since the suit is presumed to be filed for the benefit of all.44 Thus, the respondent’s children need not be impleaded as party-plaintiffs in Civil Case No. 2919-03. We cannot subscribe to the petitioners’ reliance on our rulings in Arcelona v. Court of Appeals,45 Orbeta v. Sendiong46 and Galicia v. Manliquez Vda. de Mindo,47 for these cases find no application to the present case. In these cited cases, the suits were either filed against a co-owner without impleading the other co-owners, or filed by a party claiming sole ownership of a property that would affect the interests of third parties. Arcelona involved an action for security of tenure filed by a tenant without impleading all the co-owners of a fishpond as party-defendants. We held that a tenant, in an action to establish his status as such, must implead all the pro-indiviso co-owners as party-defendants since a tenant who fails to implead all the co-owners as party-defendants cannot establish with finality his tenancy over the entire co-owned land. Orbeta, on the other hand, involved an action for recovery of possession, quieting of title and damages wherein the plaintiffs prayed that they be declared "absolute co-owners" of the disputed property, but we found that there were third parties whose rights will be affected by the ruling and who should thus be impleaded as indispensable parties. In Galicia, we noted that the complaint for recovery of possession and ownership and annulment of title alleged that the plaintiffs’ predecessor-in-interest was deprived of possession and ownership by a third party, but the complaint failed to implead all the heirs of that third party, who were considered indispensable parties. In light of these conclusions, no need arises to act on petitioners’ prayer for a TRO to suspend the proceedings in the RTC and we find no reason to grant the present petition. WHEREFORE, premises considered, we hereby DENY the petition for its failure to show any reversible error in the assailed Decision dated December 28, 2007 and Resolution dated April 11, 2008 of the Court of Appeals in CA-G.R. SP No. 94673, both of which we hereby AFFIRM. Costs against the petitioners. SO ORDERED. Pasted from
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Leonis Navigation v Catalina Villamater GR 179169 Mar 3, 2010 Sunday, November 14, 2010 11:34 PM
LEONIS NAVIGATION CO., INC. and WORLD MARINE PANAMA, S.A., Petitioners, vs. CATALINO U. VILLAMATER and/or The Heirs of the Late Catalino U. Villamater, represented herein by Sonia Mayuyu Villamater; and NATIONAL LABOR RELATIONS COMMISSION, Respondents. DE C I S I O N NACHURA, J.: This is a petition for review on certiorari 1 under Rule 45 of the Rules of Court, seeking to annul and set aside the Decision2 dated May 3, 2007 and the Resolution3 dated July 23, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 85594, entitled "Leonis Navigation Co., Inc., et al. v. Catalino U. Villamater, et al." The antecedents of this case are as follows: Private respondent Catalino U. Villamater (Villamater) was hired as Chief Engineer for the ship MV Nord Monaco, owned by petitioner World Marine Panama, S.A., through the services of petitioner Leonis Navigation Co., Inc. (Leonis), as the latter’s local manning agent. Consequent to this employment, Villamater, on June 4, 2002, executed an employment contract,4 incorporating the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels as prescribed by the Philippine Overseas Employment Administration (POEA). Prior to his deployment, Villamater underwent the required Pre-Employment Medical Examination (PEME). He passed the PEME and was declared "Fit to Work."5 Thereafter, Villamater was deployed on June 26, 2002. Sometime in October 2002, around four (4) months after his deployment, Villamater suffered intestinal bleeding and was given a blood transfusion. Thereafter, he again felt weak, lost considerable weight, and suffered intermittent intestinal pain. He consulted a physician in Hamburg, Germany, who advised hospital confinement. Villamater was diagnosed with Obstructive Adenocarcinoma of the Sigmoid, with multiple liver metastases, possibly local peritoneal carcinosis and infiltration of the bladder, possibly lung metastasis, and anemia; Candida Esophagitis; and Chronic Gastritis. He was advised to undergo chemotherapy and continuous supportive treatment, such as pain-killers and blood transfusion.6 Villamater was later repatriated, under medical escort, as soon as he was deemed fit to travel. As soon as he arrived in the Philippines, Villamater was referred to company-designated physicians. The diagnosis and the recommended treatment abroad were confirmed. He was advised to undergo six (6) cycles of chemotherapy. However, Dr. Kelly Siy Salvador, one of the company-designated physicians, opined that Villamater’s condition "appears to be not work-related," but suggested a disability grading of 1.7 In the course of his chemotherapy, when no noticeable improvement occurred, Villamater filed a complaint8 before the Arbitration Branch of the National Labor Relations Commission (NLRC) for payment of permanent and total disability benefits in the amount of US$80,000.00, reimbursement of medical and hospitalization expenses in the amount of P11,393.65, moral damages in the sum of P1,000,000.00, exemplary damages in the amount of P1,000,000.00, as well as attorney’s fees. After the submission of the required position papers, the Labor Arbiter rendered a decision9 dated July 28, 2003 in favor of Villamater, holding that his illness was compensable, but denying his claim for moral and exemplary damages. The Labor Arbiter disposed as follows— WHEREFORE, foregoing premises considered, judgment is hereby rendered declaring complainant’s illness to be compensable and ordering respondents LEONIS NAVIGATION CO., INC. and WORLD MARINE PANAMA, S.A. liable to pay, jointly and severally, complainant CATALINO U. VILLAMATER, the amount of US$60,000.00 or its Philippine Peso equivalent at the time of actual payment, representing the latter’s permanent total disability benefits plus ten percent (10%) thereof as Attorney’s Fees. All other claims are dismissed for lack of merit. SO ORDERED.10 Petitioners appealed to the NLRC. Villamater also filed his own appeal, questioning the award of the Labor Arbiter and claiming that the 100% degree of disability should be compensated in the amount of US$80,000.00, pursuant to Section 2, Article XXI of the ITF-JSU/AMOSUP Collective Bargaining Agreement (CBA) between petitioners and Associated Marine Officers & Seamen’s Union of the REMLAW Page 334
Agreement (CBA) between petitioners and Associated Marine Officers & Seamen’s Union of the Philippines, which covered the employment contract of Villamater. On February 4, 2004, the NLRC issued its resolution,11 dismissing the respective appeals of both parties and affirming in toto the decision of the Labor Arbiter. Petitioners filed their motion for reconsideration of the February 4, 2004 resolution, but the NLRC denied the same in its resolution dated June 15, 2004. Aggrieved, petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. After the filing of the required memoranda, the CA rendered its assailed May 3, 2007 Decision, dismissing the petition. The appellate court, likewise, denied petitioners’ motion for reconsideration in its July 23, 2007 Resolution. Hence, this petition based on the following grounds, to wit: First, the Court of Appeals erroneously held that *the+ Commission’s Dismissal Decision does not constitute grave abuse of discretion amounting to lack or excess of jurisdiction but mere error of judgment, considering that the decision lacks evidentiary support and is contrary to both evidence on record and prevailing law and jurisprudence. Second, the Court of Appeals seriously erred in upholding the NLRC’s decision to award Grade 1 Permanent and Total Disability Benefits in favor of seaman Villamater despite the lack of factual and legal basis to support such award, and more importantly, when it disregarded undisputed facts and substantial evidence presented by petitioners which show that seaman Villamater’s illness was not work-related and hence, not compensable, as provided by the Standard Terms of the POEA Contract. Third, the Court of Appeals erred in holding that non-joinder of indispensable parties warrant the outright dismissal of the Petition for Review on Certiorari. Fourth, the Court of Appeals erroneously held that final and executory decisions or resolutions of the NLRC render appeals to superior courts moot and academic. Last, the Court of Appeals seriously erred in upholding the award of attorney’s fees considering that the grant has neither factual nor legal basis.12 Before delving into the merits of this petition, we deem it fit to discuss the procedural issues raised by petitioners. First. It is worthy to note that the CA dismissed the petition, considering that (1) the June 15, 2004 Resolution of the NLRC had already become final and executory on June 26, 2004, and the same was already recorded in the NLRC Book of Entries of Judgments; and that (2) the award of the Labor Arbiter was already executed, thus, the case was closed and terminated. According to Sections 14 and 15, Rule VII of the 2005 Revised Rules of Procedure of the NLRC— Section 14. Finality of decision of the commission and entry of judgment. – a) Finality of the Decisions, Resolutions or Orders of the Commission. – Except as provided in Section 9 of Rule X, the decisions, resolutions or orders of the Commission shall become final and executory after ten (10) calendar days from receipt thereof by the parties. b) Entry of Judgment. – Upon the expiration of the ten (10) calendar day period provided in paragraph (a) of this Section, the decision, resolution, or order shall be entered in a book of entries of judgment. The Executive Clerk or Deputy Executive Clerk shall consider the decision, resolution or order as final and executory after sixty (60) calendar days from date of mailing in the absence of return cards, certifications from the post office, or other proof of service to parties. Section 15. Motions for reconsideration. – Motion for reconsideration of any decision, resolution or order of the Commission shall not be entertained except when based on palpable or patent errors; provided that the motion is under oath and filed within ten (10) calendar days from receipt of decision, resolution or order, with proof of service that a copy of the same has been furnished, within the reglementary period, the adverse party; and provided further, that only one such motion from the same party shall be entertained. Should a motion for reconsideration be entertained pursuant to this SECTION, the resolution shall be executory after ten (10) calendar days from receipt thereof.13 Petitioners received the June 15, 2004 resolution of the NLRC, denying their motion for reconsideration, on June 16, 2004. They filed their petition for certiorari before the CA only on August 9, 2004,14 or 54 calendar days from the date of notice of the June 15, 2004 resolution. Considering that the abovementioned 10-day period had lapsed without petitioners filing the appropriate appeal, the NLRC issued an Entry of Judgment dated June 28, 2004. REMLAW Page 335
an Entry of Judgment dated June 28, 2004. Moreover, by reason of the finality of the June 15, 2004 NLRC resolution, the Labor Arbiter issued on July 29, 2004 a Writ of Execution.15 Consequently, Leonis voluntarily paid Villamater’s widow, Sonia M. Villamater (Sonia), the amount of P3,649,800.00, with Rizal Commercial and Banking Corporation (RCBC) Manager’s Check No. 000000855016 dated August 12, 2004, as evidenced by the Acknowledgment Receipt17 dated August 13, 2004, and the Cheque Voucher18 dated August 12, 2004. Following the complete satisfaction of the judgment award, the Labor Arbiter issued an Order19 dated September 8, 2004 that reads— There being complete satisfaction of the judgment award as shown by the record upon receipt of the complainant of the amount of P3,649,800.00, voluntarily paid by the respondent, as full and final satisfaction of the Writ of Execution dated July 29, 2004; and finding the same to be not contrary to law, morals, good custom, and public policy, and pursuant to Section 14, Rule VII of the Rules of Procedure of the National Labor Relations Commission (NLRC), this case is hereby ordered DISMISSED with prejudice, and considered CLOSED and TERMINATED. SO ORDERED. Petitioners never moved for a reconsideration of this Order regarding the voluntariness of their payment to Sonia, as well as the dismissal with prejudice and the concomitant termination of the case. However, petitioners argued that the finality of the case did not render the petition for certiorari before the CA moot and academic. On this point, we agree with petitioners. In the landmark case of St. Martin Funeral Home v. NLRC,20 we ruled that judicial review of decisions of the NLRC is sought via a petition for certiorari under Rule 65 of the Rules of Court, and the petition should be filed before the CA, following the strict observance of the hierarchy of courts. Under Rule 65, Section 4,21 petitioners are allowed sixty (60) days from notice of the assailed order or resolution within which to file the petition. Thus, although the petition was not filed within the 10-day period, petitioners reasonably filed their petition for certiorari before the CA within the 60-day reglementary period under Rule 65. Further, a petition for certiorari does not normally include an inquiry into the correctness of its evaluation of the evidence. Errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil action for certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion. It is, thus, incumbent upon petitioners to satisfactorily establish that the NLRC acted capriciously and whimsically in order that the extraordinary writ of certiorari will lie. By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was exercised arbitrarily or despotically. The CA, therefore, could grant the petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence that is material to or decisive of the controversy; and it cannot make this determination without looking into the evidence of the parties. Necessarily, the appellate court can only evaluate the materiality or significance of the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record.22 Notably, if the CA grants the petition and nullifies the decision or resolution of the NLRC on the ground of grave abuse of discretion amounting to excess or lack of jurisdiction, the decision or resolution of the NLRC is, in contemplation of law, null and void ab initio; hence, the decision or resolution never became final and executory.23 In the recent case Bago v. National Labor Relations Commission,24 we had occasion to rule that although the CA may review the decisions or resolutions of the NLRC on jurisdictional and due process considerations, particularly when the decisions or resolutions have already been executed, this does not affect the statutory finality of the NLRC decisions or resolutions in view of Rule VIII, Section 6 of the 2002 New Rules of Procedure of the NLRC, viz.: RULE VIII xxx x SECTION 6. EFFECT OF FILING OF PETITION FOR CERTIORARI ON EXECUTION. – A petition for certiorari with the Court of Appeals or the Supreme Court shall not stay the execution of the assailed decision unless a temporary restraining order is issued by the Court of Appeals or the Supreme Court.25 Simply put, the execution of the final and executory decision or resolution of the NLRC shall proceed REMLAW Page 336
unless a temporary restraining order is issued by the Court of Appeals or the Supreme Court.25 Simply put, the execution of the final and executory decision or resolution of the NLRC shall proceed despite the pendency of a petition for certiorari, unless it is restrained by the proper court. In the present case, petitioners already paid Villamater’s widow, Sonia, the amount of P3,649,800.00, representing the total and permanent disability award plus attorney’s fees, pursuant to the Writ of Execution issued by the Labor Arbiter. Thereafter, an Order was issued declaring the case as "closed and terminated." However, although there was no motion for reconsideration of this last Order, Sonia was, nonetheless, estopped from claiming that the controversy had already reached its end with the issuance of the Order closing and terminating the case. This is because the Acknowledgment Receipt she signed when she received petitioners’ payment was without prejudice to the final outcome of the petition for certiorari pending before the CA. Second. We also agree with petitioners in their position that the CA erred in dismissing outright their petition for certiorari on the ground of non-joinder of indispensable parties. It should be noted that petitioners impleaded only the then deceased Villamater26 as respondent to the petition, excluding his heirs. Rule 3, Section 7 of the Rules of Court defines indispensable parties as those who are parties in interest without whom there can be no final determination of an action.27 They are those parties who possess such an interest in the controversy that a final decree would necessarily affect their rights, so that the courts cannot proceed without their presence.28 A party is indispensable if his interest in the subject matter of the suit and in the relief sought is inextricably intertwined with the other parties’ interest.29 Unquestionably, Villamater’s widow stands as an indispensable party to this case. Under Rule 3, Section 11 of the Rules of Court, neither misjoinder nor non-joinder of parties is a ground for the dismissal of an action, thus: Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. The proper remedy is to implead the indispensable party at any stage of the action. The court, either motu proprio or upon the motion of a party, may order the inclusion of the indispensable party or give the plaintiff an opportunity to amend his complaint in order to include indispensable parties. If the plaintiff ordered to include the indispensable party refuses to comply with the order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion. Only upon unjustified failure or refusal to obey the order to include or to amend is the action dismissed.30 On the merits of this case, the questions to be answered are: (1) Is Villamater entitled to total and permanent disability benefits by reason of his colon cancer? (2) If yes, would he also be entitled to attorney’s fees? As to Villamater’s entitlement to total and permanent disability benefits, petitioners argue, in essence, that colon cancer is not among the occupational diseases listed under Section 32-A of the POEA Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean Going Vessels (POEA Standard Contract), and that the risk of contracting the same was not increased by Villamater’s working conditions during his deployment. Petitioners posit that Villamater had familial history of colon cancer; and that, although dietary considerations may be taken, his diet -- which might have been high in fat and low in fiber and could have thus increased his predisposition to develop colon cancer -- might only be attributed to him, because it was he who chose what he ate on board the vessels he was assigned to. Petitioners also cited the supposed declaration of their company-designated physicians who attended to Villamater that his disease was not work-related. We disagree. It is true that under Section 32-A of the POEA Standard Contract, only two types of cancers are listed as occupational diseases – (1) Cancer of the epithelial lining of the bladder (papilloma of the bladder); and (2) cancer, epithellematous or ulceration of the skin or of the corneal surface of the eye due to tar, pitch, bitumen, mineral oil or paraffin, or compound products or residues of these substances. Section 20 of the same Contract also states that those illnesses not listed under Section 32 are disputably presumed as work-related. Section 20 should, however, be read together with Section 32-A on the conditions to be satisfied for an illness to be compensable,31 to wit: For an occupational disease and the resulting disability or death to be compensable, all the following conditions must be established: REMLAW Page 337
conditions must be established: 1. The seafarer’s work must involve the risk described herein; 2. The disease was contracted as a result of the seafarer’s exposure to the described risks; 3. The disease was contracted within a period of exposure and under such other factors necessary to contract it; 4. There was no notorious negligence on the part of the seafarer. Colon cancer, also known as colorectal cancer or large bowel cancer, includes cancerous growths in the colon, rectum and appendix. With 655,000 deaths worldwide per year, it is the fifth most common form of cancer in the United States of America and the third leading cause of cancer-related deaths in the Western World. Colorectal cancers arise from adenomatous polyps in the colon. These mushroomshaped growths are usually benign, but some develop into cancer over time. Localized colon cancer is usually diagnosed through colonoscopy.32 Tumors of the colon and rectum are growths arising from the inner wall of the large intestine. Benign tumors of the large intestine are called polyps. Malignant tumors of the large intestine are called cancers. Benign polyps can be easily removed during colonoscopy and are not life-threatening. If benign polyps are not removed from the large intestine, they can become malignant (cancerous) over time. Most of the cancers of the large intestine are believed to have developed as polyps. Colorectal cancer can invade and damage adjacent tissues and organs. Cancer cells can also break away and spread to other parts of the body (such as liver and lung) where new tumors form. The spread of colon cancer to distant organs is called metastasis of the colon cancer. Once metastasis has occurred in colorectal cancer, a complete cure of the cancer is unlikely.33 Globally, colorectal cancer is the third leading cause of cancer in males and the fourth leading cause of cancer in females. The frequency of colorectal cancer varies around the world. It is common in the Western world and is rare in Asia and in Africa. In countries where the people have adopted western diets, the incidence of colorectal cancer is increasing.34 Factors that increase a person’s risk of colorectal cancer include high fat intake, a family history of colorectal cancer and polyps, the presence of polyps in the large intestine, and chronic ulcerative colitis.35 Diets high in fat are believed to predispose humans to colorectal cancer. In countries with high colorectal cancer rates, the fat intake by the population is much higher than in countries with low cancer rates. It is believed that the breakdown products of fat metabolism lead to the formation of cancercausing chemicals (carcinogens). Diets high in vegetables and high-fiber foods may rid the bowel of these carcinogens and help reduce the risk of cancer.36 A person’s genetic background is an important factor in colon cancer risk. Among first-degree relatives of colon-cancer patients, the lifetime risk of developing colon cancer is 18%. Even though family history of colon cancer is an important risk factor, majority (80%) of colon cancers occur sporadically in patients with no family history of it. Approximately 20% of cancers are associated with a family history of colon cancer. And 5% of colon cancers are due to hereditary colon cancer syndromes. Hereditary colon cancer syndromes are disorders where affected family members have inherited cancer-causing genetic defects from one or both of the parents.37 In the case of Villamater, it is manifest that the interplay of age, hereditary, and dietary factors contributed to the development of colon cancer. By the time he signed his employment contract on June 4, 2002, he was already 58 years old, having been born on October 5, 1943,38 an age at which the incidence of colon cancer is more likely.39 He had a familial history of colon cancer, with a brother who succumbed to death and an uncle who underwent surgery for the same illness.40 Both the Labor Arbiter and the NLRC found his illness to be compensable for permanent and total disability, because they found that his dietary provisions while at sea increased his risk of contracting colon cancer because he had no choice of what to eat on board except those provided on the vessels and these consisted mainly of high-fat, high-cholesterol, and low-fiber foods. While findings of the Labor Arbiter, which were affirmed by the NLRC, are entitled to great weight and are binding upon the courts, nonetheless, we find it also worthy to note that even during the proceedings before the Labor Arbiter, Villamater cited that the foods provided on board the vessels were mostly meat, high in fat and high in cholesterol. On this matter, noticeably, petitioners were silent when they argued that Villamater’s affliction was brought about by diet and genetics. It was only after
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the Labor Arbiter issued his Decision, finding colon cancer to be compensable because the risk was increased by the victuals provided on board, that petitioners started claiming that the foods available on the vessels also consisted of fresh fruits and vegetables, not to mention fish and poultry. It is also worth mentioning that while Dr. Salvador declared that Villamater’s cancer "appears to be not work-related," she nevertheless suggested to petitioners Disability Grade 1, which, under the POEA Standard Contract, "shall be considered or shall constitute total and permanent disability."41 During his confinement in Hamburg, Germany, Villamater was diagnosed to have colon cancer and was advised to undergo chemotherapy and medical treatment, including blood transfusions. These findings were, in fact, confirmed by the findings of the company-designated physicians. The statement of Dr. Salvador that Villamater’s colon cancer "appears to be not work-related" remained at that, without any medical explanation to support the same. However, this statement, not definitive as it is, was negated by the same doctor’s suggestion of Disability Grade 1. Under Section 20-B of the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), it is the company-designated physician who must certify that the seafarer has suffered a permanent disability, whether total or partial, due to either injury or illness, during the term of his employment.42 On these points, we sustain the Labor Arbiter and the NLRC in granting total and permanent disability benefits in favor of Villamater, as it was sufficiently shown that his having contracted colon cancer was, at the very least, aggravated by his working conditions,43 taking into consideration his dietary provisions on board, his age, and his job as Chief Engineer, who was primarily in charge of the technical and mechanical operations of the vessels to ensure voyage safety. Jurisprudence provides that to establish compensability of a non-occupational disease, reasonable proof of work-connection and not direct causal relation is required. Probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings.44 The Labor Arbiter correctly awarded Villamater total and permanent disability benefits, computed on the basis of the schedule provided under the POEA Standard Contract, considering that the schedule of payment of benefits under the ITF-JSU/AMOSUP CBA refers only to permanent disability as a result of an accident or injury.45 By reason of Villamater’s entitlement to total and permanent disability benefits, he (or in this case his widow Sonia) is also entitled to the award of attorney’s fees, not under Article 2208(2) of the Civil Code, "*w+hen the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest," but under Article 2208(8) of the same Code, involving actions for indemnity under workmen’s compensation and employer’s liability laws. WHEREFORE, the petition is DENIED and the assailed May 3, 2007 Decision and the July 23, 2007 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioners. SO ORDERED. Pasted from
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Relucio v. Lopez 373 SCRA 578 Sunday, November 14, 2010 11:40 PM
IMELDA RELUCIO, petitioner, vs. ANGELINA MEJIA LOPEZ, respondent. PARDO, J.: The Case The case is a petition for review on certiorari 1 seeking to set aside the decision2 of the Court of Appeals that denied a petition for certiorari assailing the trial court's order denying petitioner's motion to dismiss the case against her inclusion as party defendant therein. The Facts The facts, as found by the Court of Appeals, are as follows: "On September 15, 1993, herein private respondent Angelina Mejia Lopez (plaintiff below) filed a petition for "APPOINTMENT AS SOLE ADMINISTRATIX OF CONJUGAL PARTNERSHIP OF PROPERTIES, FORFEITURE, ETC.," against defendant Alberto Lopez and petition Imelda Relucio, docketed as Spec. Proc. M-3630, in the Regional Trial Court of Makati, Branch 141. In the petition, private-respondent alleged that sometime in 1968, defendant Lopez, who is legally married to the private respondent, abandoned the latter and their four legitimate children; that he arrogated unto himself full and exclusive control and administration of the conjugal properties, spending and using the same for his sole gain and benefit to the total exclusion of the private respondent and their four children; that defendant Lopez, after abandoning his family, maintained an illicit relationship and cohabited with herein petitioner since 1976. "It was further alleged that defendant Lopez and petitioner Relucio, during their period of cohabitation since 1976, have amassed a fortune consisting mainly of stockholdings in Lopez-owned or controlled corporations, residential, agricultural, commercial lots, houses, apartments and buildings, cars and other motor vehicles, bank accounts and jewelry. These properties, which are in the names of defendant Lopez and petitioner Relucio singly or jointly or their dummies and proxies, have been acquired principally if not solely through the actual contribution of money, property and industry of defendant Lopez with minimal, if not nil, actual contribution from petitioner Relucio. "In order to avoid defendant Lopez obligations as a father and husband, he excluded the private respondent and their four children from sharing or benefiting from the conjugal properties and the income or fruits there from. As such, defendant Lopez either did not place them in his name or otherwise removed, transferred, stashed away or concealed them from the private-respondent. He placed substantial portions of these conjugal properties in the name of petitioner Relucio.1âwphi1.nêt "It was also averred that in the past twenty five years since defendant Lopez abandoned the privaterespondent, he has sold, disposed of, alienated, transferred, assigned, canceled, removed or stashed away properties, assets and income belonging to the conjugal partnership with the private-respondent and either spent the proceeds thereof for his sole benefit and that of petitioner Relucio and their two illegitimate children or permanently and fraudulently placed them beyond the reach of the privaterespondent and their four children. "On December 8, 1993, a Motion to Dismiss the Petition was filed by herein petitioner on the ground that private respondent has no cause of action against her. "An Order dated February 10, 1994 was issued by herein respondent Judge denying petitioner Relucio's Motion to Dismiss on the ground that she is impleaded as a necessary or indispensable party because some of the subject properties are registered in her name and defendant Lopez, or solely in her name. "Subsequently thereafter, petitioner Relucio filed a Motion for Reconsideration to the Order of the respondent Judge dated February 10, 1994 but the same was likewise denied in the Order dated May 31, 1994."3 On June 21, 1994, petitioner filed with the Court of Appeals a petition for certiorari assailing the trial court's denial of her motion to dismiss.4 On May 31, 1996, the Court of Appeals promulgated a decision denying the petition.5 On June 26, 1996, petitioner filed a motion for reconsideration.6 However, on April 6, 1996, the Court of Appeals denied petitioner's motion for reconsideration.7 REMLAW Page 340
petitioner's motion for reconsideration.7 Hence, this appeal.8 The Issues 1. Whether respondent's petition for appointment as sole administratrix of the conjugal property, accounting, etc. against her husband Alberto J. Lopez established a cause of action against petitioner. 2. Whether petitioner's inclusion as party defendant is essential in the proceedings for a complete adjudication of the controversy.9 The Court's Ruling We grant the petition. We resolve the issues in seriatim. First issue: whether a cause of action exists against petitioner in the proceedings below. "A cause of action is an act or omission of one party the defendant in violation of the legal right of the other."10 The elements of a cause of action are: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages.11 A cause of action is sufficient if a valid judgment may be rendered thereon if the alleged facts were admitted or proved.12 In order to sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been merely defectively stated or is ambiguous, indefinite or uncertain.13 Hence, to determine the sufficiency of the cause of action alleged in Special Proceedings M-3630, we assays its allegations. In Part Two on the "Nature of [the] Complaint," respondent Angelina Mejia Lopez summarized the causes of action alleged in the complaint below. The complaint is by an aggrieved wife against her husband. Nowhere in the allegations does it appear that relief is sought against petitioner. Respondent's causes of action were all against her husband. The first cause of action is for judicial appointment of respondent as administratrix of the conjugal partnership or absolute community property arising from her marriage to Alberto J. Lopez. Petitioner is a complete stranger to this cause of action. Article 128 of the Family Code refers only to spouses, to wit: "If a spouse without just cause abandons the other or fails to comply with his or her obligations to the family, the aggrieved spouse may petition the court for receivership, for judicial separation of property, or for authority to be the sole administrator of the conjugal partnership property xxx" The administration of the property of the marriage is entirely between them, to the exclusion of all other persons. Respondent alleges that Alberto J. Lopez is her husband. Therefore, her first cause of action is against Alberto J. Lopez. There is no right-duty relation between petitioner and respondent that can possibly support a cause of action. In fact, none of the three elements of a cause of action exists. The second cause of action is for an accounting "by respondent husband."14 The accounting of conjugal partnership arises from or is an incident of marriage. Petitioner has nothing to do with the marriage between respondent Alberto J. Lopez. Hence, no cause of action can exist against petitioner on this ground. Respondent's alternative cause of action is for forfeiture of Alberto J. Lopez' share in the co-owned property "acquired during his illicit relationship and cohabitation with [petitioner]"15 and for the "dissolution of the conjugal partnership of gains between him [Alberto J. Lopez] and the [respondent]." The third cause of action is essentially for forfeiture of Alberto J. Lopez' share in property co-owned by him and petitioner. It does not involve the issue of validity of the co-ownership between Alberto J. Lopez and petitioner. The issue is whether there is basis in law to forfeit Alberto J. Lopez' share, if any there be, in property co-owned by him with petitioner. Respondent's asserted right to forfeit extends to Alberto J. Lopez' share alone. Failure of Alberto J. Lopez to surrender such share, assuming the trial court finds in respondent's favor, results in a breach of an obligation to respondent and gives rise to a cause of action.16 Such cause of action, however, pertains to Alberto J. Lopez, not petitioner. The respondent also sought support. Support cannot be compelled from a stranger. REMLAW Page 341
Alberto J. Lopez, not petitioner. The respondent also sought support. Support cannot be compelled from a stranger. The action in Special Proceedings M-3630 is, to use respondent Angelina M. Lopez' own words, one by "an aggrieved wife against her husband."17 References to petitioner in the common and specific allegations of fact in the complaint are merely incidental, to set forth facts and circumstances that prove the causes of action alleged against Alberto J. Lopez. Finally, as to the moral damages, respondent's claim for moral damages is against Alberto J. Lopez, not petitioner. To sustain a cause of action for moral damages, the complaint must have the character of an action for interference with marital or family relations under the Civil Code. A real party in interest is one who stands "to be benefited or injured by the judgment of the suit."18 In this case, petitioner would not be affected by any judgment in Special Proceedings M-3630. If petitioner is not a real party in interest, she cannot be an indispensable party. An indispensable party is one without whom there can be no final determination of an action.19 Petitioner's participation in Special Proceedings M-36-30 is not indispensable. Certainly, the trial court can issue a judgment ordering Alberto J. Lopez to make an accounting of his conjugal partnership with respondent, and give support to respondent and their children, and dissolve Alberto J. Lopez' conjugal partnership with respondent, and forfeit Alberto J. Lopez' share in property co-owned by him and petitioner. Such judgment would be perfectly valid and enforceable against Alberto J. Lopez. Nor can petitioner be a necessary party in Special Proceedings M-3630. A necessary party as one who is not indispensable but who ought to be joined as party if complete relief is to be accorded those already parties, or for a complete determination or settlement of the claim subject of the action.20 In the context of her petition in the lower court, respondent would be accorded complete relief if Alberto J. Lopez were ordered to account for his alleged conjugal partnership property with respondent, give support to respondent and her children, turn over his share in the co-ownership with petitioner and dissolve his conjugal partnership or absolute community property with respondent. The Judgment WHEREFORE, the Court GRANTS the petition and REVERSES the decision of the Court of Appeals.21 The Court DISMISSES Special Proceedings M-3630 of the Regional Trial Court, Makati, Branch 141 as against petitioner.1âwphi1.nêt No costs. SO ORDERED. Pasted from
REMLAW Page 342
AutoCorp v. Intra Strata GR 166662 Jun 27, 2008 Sunday, November 14, 2010 11:40 PM
AUTOCORP GROUP and PETER Y. RODRIGUEZ, petitioner, vs. INTRA STRATA ASSURANCE CORPORATION and BUREAU OF CUSTOMS, respondents. DECIS ION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari from the Decision1 of the Court of Appeals dated 30 June 2004 in CA-G.R. CV No. 62564 which affirmed with modification the Decision2 of the Regional Trial Court (RTC) of Makati City, Branch 150 in Civil Case No. 95-1584 dated 16 September 1998. The factual and procedural antecedents of this case are as follows: On 19 August 1990, petitioner Autocorp Group, represented by its President, petitioner Peter Y. Rodriguez, secured an ordinary re-export bond, Instrata Bond No. 5770, from private respondent Intra Strata Assurance Corporation (ISAC) in favor of public respondent Bureau of Customs (BOC), in the amount of P327,040.00, to guarantee the re-export of one unit of Hyundai Excel 4-door 1.5 LS and/or to pay the taxes and duties thereon. On 21 December 1990, petitioners obtained another ordinary re-export bond, Instrata Bond No. 7154, from ISAC in favor of the BOC, in the amount of P447,671.00, which was eventually increased to P707,609.00 per Bond Endorsement No. BE-0912/91 dated 10 January 1991, to guarantee the re-export of one unit of Hyundai Sonata 2.4 GLS and/or to pay the taxes and duties thereon. Petitioners executed and signed two Indemnity Agreements with identical stipulations in favor of ISAC, agreeing to act as surety of the subject bonds. Petitioner Rodriguez signed the Indemnity Agreements both as President of the Autocorp Group and in his personal capacity. Petitioners thus agreed to the following provisions: INDEMNITY: - The undersigned agree at all times to jointly and severally indemnify the COMPANY and keep it indemnified and hold and save it harmless from and against any and all damages, losses, costs, stamps, taxes, penalties, charges and expenses of whatsoever kind and nature including counsel or attorney’s fee which the COMPANY shall or may at any time sustain or incur in consequence of having become surety upon the bond herein above referred to or any extension, renewal, substitution or alteration thereof, made at the instance of the undersigned or any of them, or any other bond executed on behalf of the undersigned or any of them, and to pay; reimburse and make good to the COMPANY, its successors and assigns, alls sums and amounts of money which it or its representatives shall pay or cause to be paid, or become liable to pay on accounts of the undersigned or any of them, of whatsoever kind and nature, including 25% of the amount involved in the litigation or other matters growing out of or connected therewith, for and as attorney’s fees, but in no case less than P300.00 and which shall be payable whether or not the case be extrajudicially settled, it being understood that demand made upon anyone of the undersigned herein is admitted as demand made on all of the signatories hereof. It is hereby further agreed that in case of any extension or renewal of the bond, we equally bind ourselves to the COMPANY under the same terms and conditions as therein provided without the necessity of executing another indemnity agreement for the purpose and that we may be granted under this indemnity agreement. MATURITY OF OUR OBLIGATIONS AS CONTRACTED HEREWITH AND ACCRUAL OF ACTION: Notwithstanding of (sic) the next preceding paragraph where the obligation involves a liquidated amount for the payment of which the COMPANY has become legally liable under the terms of the obligation and its suretyship undertaking, or by the demand of the obligee or otherwise and the latter has merely allowed the COMPANY’s aforesaid liability irrespective of whether or not payment has actually been made by the COMPANY, the COMPANY for the protection of its interest may forthwith proceed against the undersigned or either of them by court action or otherwise to enforce payment, even prior to making payment to the obligee which may hereafter be done by the COMPANY. INTEREST IN CASE OF DELAY: - In the event of delay in payment of the said sum or sums by the undersigned they will pay interest at the rate of 12% per annum or same, which interest, if not paid, will be liquidated and accumulated to the capital quarterly, and shall earn the same interest as the capital; all this without prejudice to the COMPANY’s right to demand judicially or extrajudicially the full payment REMLAW Page 343
all this without prejudice to the COMPANY’s right to demand judicially or extrajudicially the full payment of its claims. INCONTESTABILITY OF PAYMENT MADE BY THE COMPANY: - Any payment or disbursement made by the COMPANY on account of the above-mentioned Bond, its renewals, extensions or substitutions, replacement or novation in the belief either that the COMPANY was obligated to make such payment or that said payment was necessary in order to avoid greater losses or obligations for which the COMPANY might be liable by virtue of the terms of the above-mentioned Bond, its renewal, extensions or substitutions, shall be final and will not be disputed by the undersigned, who bind themselves to jointly and severally indemnify the COMPANY of any such payments, as stated in the preceding clauses: WAIVER OF VENUE OF ACTION: - We hereby agree that any question which may arise between the COMPANY and the undersigned by reason of this document and which has to be submitted for decision to a court of justice shall be brought before the court of competent jurisdiction in Makati, Rizal, waiving for this purpose any other venue. WAIVER: - The undersigned hereby waive all the rights[,] privileges and benefits that they have or may have under Articles 2077, 2078, 2079, 2080 and 2081, of the Civil Code of the Philippines. The undersigned, by this instrument, grant a special power of attorney in favor of all or any of the other undersigned so that any of the undersigned may represent all the others in all transactions related to this Bond, its renewals, extensions, or any other agreements in connection with this Counter-Guaranty, without the necessity of the knowledge or consent of the others who hereby promise to accept as valid each and every act done or executed by any of the attorney’s-in-fact by virtue of the special power of attorney. OUR LIABILITY HEREUNDER: - It shall not be necessary for the COMPANY to bring suit against the principal upon his default or to exhaust the property of the principal, but the liability hereunder of the undersigned indemnitors shall be jointly and severally, a primary one, the same as that of the principal, and shall be exigible immediately upon the occurrence of such default. CANCELLATION OF BOND BY THE COMPANY: - The COMPANY may at any time cancel the abovementioned Bond, its renewals, extensions or substitutions, subject to any liability which might have accrued prior to the date of cancellation refunding the proportionate amount of the premium unearned on the date of cancellation. RENEWALS, ALTERATIONS AND SUBSTITUTIONS: - The undersigned hereby empower and authorize the COMPANY to grant or consent to the granting of any extension, continuation, increase, modification, change, alteration and/or renewal of the original bond herein referred to, and to execute or consent to the execution of any substitution for said Bond with the same or different, conditions and parties, and the undersigned hereby hold themselves jointly and severally liable to the COMPANY for the original Bond herein above-mentioned or for any extension, continuation, increase, modification, change, alteration, renewal or substitution thereof without the necessary of any new indemnity agreement being executed until the full amount including principal, interest, premiums, costs, and other expenses due to the COMPANY thereunder is fully paid up. SEVERABILITY OF PROVISIONS: - It is hereby agreed that should any provision or provisions of this agreement be declared by competent public authority to be invalid or otherwise unenforceable, all remaining provisions herein contained shall remain in full force and effect. NOTIFICATION: - The undersigned hereby accept due notice of that the COMPANY has accepted this guaranty, executed by the undersigned in favor of the COMPANY.3 In sum, ISAC issued the subject bonds to guarantee compliance by petitioners with their undertaking with the BOC to re-export the imported vehicles within the given period and pay the taxes and/or duties due thereon. In turn, petitioners agreed, as surety, to indemnify ISAC for the liability the latter may incur on the said bonds. Petitioner Autocorp Group failed to re-export the items guaranteed by the bonds and/or liquidate the entries or cancel the bonds, and pay the taxes and duties pertaining to the said items despite repeated demands made by the BOC, as well as by ISAC. By reason thereof, the BOC considered the two bonds, with a total face value of P1,034,649.00, forfeited. Failing to secure from petitioners the payment of the face value of the two bonds, despite several demands sent to each of them as surety under the Indemnity Agreements, ISAC filed with the RTC on 24 October 1995 an action against petitioners to recover the sum of P1,034,649.00, plus 25% thereof or P258,662.25 as attorney’s fees. ISAC impleaded the BOC "as a necessary party plaintiff in order that the REMLAW Page 344
P258,662.25 as attorney’s fees. ISAC impleaded the BOC "as a necessary party plaintiff in order that the reward of money or judgment shall be adjudged unto the said necessary plaintiff."4 The case was docketed as Civil Case No. 95-1584. Petitioners filed a Motion to Dismiss on 11 December 1995 on the grounds that (1) the Complaint states no cause of action; and (2) the BOC is an improper party. The RTC, in an Order5 dated 27 February 1996, denied petitioners’ Motion to Dismiss. Petitioners thus filed their Answer to the Complaint, claiming that they sought permission from the BOC for an extension of time to re-export the items covered by the bonds; that the BOC has yet to issue an assessment for petitioners’ alleged default; and that the claim of ISAC for payment is premature as the subject bonds are not yet due and demandable. During the pre-trial conference, petitioners admitted the genuineness and due execution of Instrata Bonds No. 5770 and No. 7154, but specifically denied those of the corresponding Indemnity Agreements. The parties agreed to limit the issue to "whether or not these bonds are now due and demandable." On 16 September 1998, the RTC rendered its Decision ordering petitioners to pay ISAC and/or the BOC the face value of the subject bonds in the total amount of P1,034,649.00, and to pay ISAC P258,662.25 as attorney’s fees, thus: WHEREFORE, judgment is hereby rendered in favor of the [herein private respondent ISAC] and as against the [herein petitioners] who are ordered to pay the [private respondent] Intra Strata Assurance Corporation and/or the Bureau of Customs the amount of P1,034,649.00 which is the equivalent amount of the subject bonds as well as to pay the plaintiff corporation the sum of P258,662.25 as and for attorney’s fees.6 Petitioners’ Motion for Reconsideration was denied by the RTC in a Resolution dated 15 January 1999.7 Petitioners appealed to the Court of Appeals. On 30 June 2004, the Court of Appeals rendered its Decision affirming the RTC Decision, only modifying the amount of the attorney’s fees awarded: WHEREFORE, the appealed 16 September 1998 Decision is MODIFIED to reduce the award of attorney’s fees to One Hundred Three Thousand Four Hundred Sixty Four Pesos & Ninety Centavos (P103,464.90). The rest is affirmed in toto. Costs against [herein petitioners].8 In a Resolution dated 5 January 2005, the Court of Appeals refused to reconsider its Decision. Petitioners thus filed the instant Petition for Review on Certiorari, assigning the following errors allegedly committed by the Court of Appeals: I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RENDERING JUDGMENT AGAINST PETITIONERS BASED ON A PREMATURE ACTION AND/OR RULING IN FAVOR OF RESPONDENTS WHO HAVE NO CAUSE OF ACTION AGAINST PETITIONERS. II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF BRANCH 150, REGIONAL TRIAL COURT OF MAKATI CITY BASED ON MISAPPREHENSION OF FACTS, UNSUPPORTED BY EVIDENCE ON RECORD & CONTRARY TO LAW. III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT GIVING MERIT TO THE ISSUE RAISED BY PETITIONERS THAT THE BUREAU OF CUSTOMS IS IMPROPERLY IMPLEADED BY INTRA STRATA. IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED [IN] AFFIRMING THE PORTION OF THE DECISION HOLDING PETITIONER PETER Y. RODRIGUEZ AS JOINTLY LIABLE WHEN AMENDMENTS WERE INTRODUCED, WITHOUT HIS CONSENT AND APPROVAL.9 The present Petition is without merit. Absence of actual forfeiture of the subject bonds Petitioners contend that their obligation to ISAC is not yet due and demandable. They cannot be made liable by ISAC in the absence of an actual forfeiture of the subject bonds by the BOC and/or an explicit pronouncement by the same bureau that ISAC is already liable on the said bonds. In this case, there is yet no actual forfeiture of the bonds, but merely a recommendation of forfeiture, for no writ of execution has been issued against such bonds.10 Hence, Civil Case No. 95-1584 was prematurely filed by ISAC. Petitioners further argue that: Secondly, it bears emphasis that as borne by the records, not only is there no writ of forfeiture against Surety Bond No. 7154, there is likewise no evidence adduced on record to prove that respondent Intra Strata has made legal demand against Surety Bond No. 5770 neither is there a showing that respondent BOC initiated a demand or issued notice for its forfeiture and/or confiscation.11 The Court of Appeals, in its assailed Decision, already directly addressed petitioners’ arguments by ruling REMLAW Page 345
The Court of Appeals, in its assailed Decision, already directly addressed petitioners’ arguments by ruling that an actual forfeiture of the subject bonds is not necessary for petitioners to be liable thereon to ISAC as surety under the Indemnity Agreements. According to the relevant provision of the Indemnity Agreements executed between petitioner and ISAC, which reads: [W]here the obligation involves a liquidated amount for the payment of which [ISAC] has become legally liable under the terms of the obligation and its suretyship undertaking or by the demand of the [BOC] or otherwise and the latter has merely allowed the *ISAC’s+ aforesaid liability, irrespective of whether or not payment has actually been made by the [ISAC], the [ISAC] for the protection of its interest may forthwith proceed against [petitioners Autocorp Group and Rodriguez] or either of them by court action or otherwise to enforce payment, even prior to making payment to the [BOC] which may hereafter be done by [ISAC][,] 12 petitioners’ obligation to indemnify ISAC became due and demandable the moment the bonds issued by ISAC became answerable for petitioners’ non-compliance with its undertaking with the BOC. Stated differently, petitioners became liable to indemnify ISAC at the same time the bonds issued by ISAC were placed at the risk of forfeiture by the BOC for non-compliance by petitioners with its undertaking. The subject bonds, Instrata Bonds No. 5770 and No. 7154, became due and demandable upon the failure of petitioner Autocorp Group to comply with a condition set forth in its undertaking with the BOC, specifically to re-export the imported vehicles within the period of six months from their date of entry. Since it issued the subject bonds, ISAC then also became liable to the BOC. At this point, the Indemnity Agreements already give ISAC the right to proceed against petitioners via court action or otherwise. The Indemnity Agreements, therefore, give ISAC the right to recover from petitioners the face value of the subject bonds plus attorney’s fees at the time ISAC becomes liable on the said bonds to the BOC, regardless of whether the BOC had actually forfeited the bonds, demanded payment thereof and/or received such payment. It must be pointed out that the Indemnity Agreements explicitly provide that petitioners shall be liable to indemnify ISAC "whether or not payment has actually been made by the [ISAC]" and ISAC may proceed against petitioners by court action or otherwise "even prior to making payment to the [BOC] which may hereafter be done by [ISAC]." Even when the BOC already admitted that it not only made a demand upon ISAC for the payment of the bond but even filed a complaint against ISAC for such payment,13 such demand and complaint are not necessary to hold petitioners liable to ISAC for the amount of such bonds. Petitioners’ attempts to prove that there was no actual forfeiture of the subject bonds are completely irrelevant to the case at bar. It is worthy to note that petitioners did not impugn the validity of the stipulation in the Indemnity Agreements allowing ISAC to proceed against petitioners the moment the subject bonds become due and demandable, even prior to actual forfeiture or payment thereof. Even if they did so, the Court would be constrained to uphold the validity of such a stipulation for it is but a slightly expanded contractual expression of Article 2071 of the Civil Code which provides, inter alia, that the guarantor may proceed against the principal debtor the moment the debt becomes due and demandable. Article 2071 of the Civil Code provides: Art. 2071. The guarantor, even before having paid, may proceed against the principal debtor: (1) When he is sued for the payment; (2) In case of insolvency of the principal debtor; (3) When the debtor has bound himself to relieve him from the guaranty within a specified period, and this period has expired; (4) When the debt has become demandable, by reason of the expiration of the period for payment; (5) After the lapse of ten years, when the principal obligation has no fixed period for its maturity, unless it be of such nature that it cannot be extinguished except within a period longer than ten years; (6) If there are reasonable grounds to fear that the principal debtor intends to abscond; (7) If the principal debtor is in imminent danger of becoming insolvent. In all these cases, the action of the guarantor is to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor. (Emphases ours.) Petitioners also invoke the alleged lack of demand on the part of ISAC on petitioners as regards Instrata Bond No. 5770 before it instituted Civil Case No. 95-1584. Even if proven true, such a fact does not carry REMLAW Page 346
Bond No. 5770 before it instituted Civil Case No. 95-1584. Even if proven true, such a fact does not carry much weight considering that demand, whether judicial or extrajudicial, is not required before an obligation becomes due and demandable. A demand is only necessary in order to put an obligor in a due and demandable obligation in delay,14 which in turn is for the purpose of making the obligor liable for interests or damages for the period of delay.15 Thus, unless stipulated otherwise, an extrajudicial demand is not required before a judicial demand, i.e., filing a civil case for collection, can be resorted to. Inclusion of the Bureau of Customs as a party to the case ISAC included the BOC "as a necessary party plaintiff in order that the reward of money or judgment shall be adjudged unto the said necessary plaintiff."16 Petitioners assail this inclusion of the BOC as a party in Civil Case No. 95-1584 on the ground that it was not properly represented by the Solicitor General. Petitioners also contend that the inclusion of the BOC as a party in Civil Case No. 95-1584 "is highly improper and should not be countenanced as the net result would be tantamount to collusion between Intra Strata and the Bureau of Customs which would deny and deprive petitioners their personal defenses against the BOC."17 In its assailed Decision, the Court of Appeals did not find merit in petitioners’ arguments on the matter, holding that when the BOC forfeited the subject bonds issued by ISAC, subrogation took place so that whatever right the BOC had against petitioners were eventually transferred to ISAC. As ISAC merely steps into the shoes of the BOC, whatever defenses petitioners may have against the BOC would still be available against ISAC. The Court likewise cannot sustain petitioners’ position. The misjoinder of parties does not warrant the dismissal of the action. Section 11, Rule 3 of the Rules of Court explicitly states: SEC. 11. Misjoinder and non-joinder of parties.—Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. Consequently, the purported misjoinder of the BOC as a party cannot result in the dismissal of Civil Case No. 95-1584. If indeed the BOC was improperly impleaded as a party in Civil Case No. 95-1584, at most, it may be dropped by order of the court, on motion of any party or on its own initiative, at any stage of the action and on such terms as are just. Should the BOC then be dropped as a party to Civil Case No. 95-1584? ISAC alleged in its Complaint18 that the BOC is being joined as a necessary party in Civil Case No. 95-1584. A necessary party is defined in Section 8, Rule 3 of the Rules of Court as follows: SEC. 8. Necessary party.—A necessary party is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action. The subject matter of Civil Case No. 95-1584 is the liability of Autocorp Group to the BOC, which ISAC is also bound to pay as the guarantor who issued the bonds therefor. Clearly, there would be no complete settlement of the subject matter of the case at bar – the liability of Autocorp Group to the BOC – should Autocorp Group be merely ordered to pay its obligations with the BOC to ISAC. BOC is, therefore, a necessary party in the case at bar, and should not be dropped as a party to the present case. It can only be conceded that there was an irregularity in the manner the BOC was joined as a necessary party in Civil Case No. 95-1584. As the BOC, through the Solicitor General, was not the one who initiated Civil Case No. 95-1584, and neither was its consent obtained for the filing of the same, it may be considered an unwilling co-plaintiff of ISAC in said action. The proper way to implead the BOC as a necessary party to Civil Case No. 95-1584 should have been in accordance with Section 10, Rule 3 of the Rules of Court, viz: SEC. 10. Unwilling co-plaintiff.— If the consent of any party who should be joined as plaintiff can not be obtained, he may be made a defendant and the reason therefor shall be stated in the complaint. Nonetheless, the irregularity in the inclusion of the BOC as a party to Civil Case No. 95-1584 would not in any way affect the disposition thereof. As the Court already found that the BOC is a necessary party to Civil Case No. 95-1584, it would be a graver injustice to drop it as a party. Petitioners’ argument that the inclusion of the BOC as a party to this case would deprive them of their personal defenses against the BOC is utterly baseless. REMLAW Page 347
personal defenses against the BOC is utterly baseless. First, as ruled by the Court of Appeals, petitioners’ defenses against the BOC are completely available against ISAC, since the right of the latter to seek indemnity from petitioner depends on the right of the BOC to proceed against the bonds. The Court, however, deems it essential to qualify that ISAC’s right to seek indemnity from petitioners does not constitute subrogation under the Civil Code, considering that there has been no payment yet by ISAC to the BOC. There are indeed cases in the aforementioned Article 2071 of the Civil Code wherein the guarantor or surety, even before having paid, may proceed against the principal debtor, but in all these cases, Article 2071 of the Civil Code merely grants the guarantor or surety an action "to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor." The benefit of subrogation, an extinctive subjective novation by a change of creditor, which "transfers to the person subrogated, the credit and all the rights thereto appertaining, either against the debtor or against third persons,"19 is granted by the Article 2067 of the Civil Code only to the "guarantor (or surety) who pays."20 ISAC cannot be said to have stepped into the shoes of the BOC, because the BOC still retains said rights until it is paid. ISAC’s right to file Civil Case No. 95-1584 is based on the express provision of the Indemnity Agreements making petitioners liable to ISAC at the very moment ISAC’s bonds become due and demandable for the liability of Autocorp Group to the BOC, without need for actual payment by ISAC to the BOC. But it is still correct to say that all the defenses available to petitioners against the BOC can likewise be invoked against ISAC because the latter’s contractual right to proceed against petitioners only arises when the Autocorp Group becomes liable to the BOC for non-compliance with its undertakings. Indeed, the arguments and evidence petitioners can present against the BOC to prove that Autocorp Group’s liability to the BOC is not yet due and demandable would also establish that petitioners’ liability to ISAC under the Indemnity Agreements has not yet arisen. Second, making the BOC a necessary party to Civil Case No. 95-1584 actually allows petitioners to simultaneously invoke its defenses against both the BOC and ISAC. Instead of depriving petitioners of their personal defenses against the BOC, Civil Case No. 95-1584 actually gave them the opportunity to kill two birds with one stone: to disprove its liability to the BOC and, thus, negate its liability to ISAC. Liability of petitioner Rodriguez Petitioner Rodriguez posits that he is merely a guarantor, and that his liability arises only when the person with whom he guarantees the credit, Autocorp Group in this case, fails to pay the obligation. Petitioner Rodriguez invokes Article 2079 of the Civil Code on Extinguishment of Guaranty, which states: Art. 2079. An extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the guaranty. The mere failure on the part of the creditor to demand payment after the debt has become due does not of itself constitute any extension of time referred to herein. Petitioner Rodriguez argues that there was an amendment as to the effectivity of the bonds, and this constitutes a modification of the agreement without his consent, thereby exonerating him from any liability. We must take note at this point that petitioners have not presented any evidence of this alleged amendment as to the effectivity of the bonds.21 Be that as it may, even if there was indeed such an amendment, such would not cause the exoneration of petitioner Rodriguez from liability on the bonds. The Court of Appeals, in its assailed Decision, held that the use of the term guarantee in a contract does not ipso facto mean that the contract is one of guaranty. It thus ruled that both petitioners assumed liability as a regular party and obligated themselves as original promissors, i.e., sureties, as shown in the following provisions of the Indemnity Agreement: INDEMNITY: - The undersigned [Autocorp Group and Rodriguez] agree at all times to jointly and severally indemnify the COMPANY [ISAC] and keep it indemnified and hold and save it harmless from and against any and all damages, losses, costs, stamps, taxes, penalties, charges and expenses of whatsoever kind and nature including counsel or attorney’s fee which the COMPANY *ISAC+ shall or may at any time sustain or incur in consequence of having become surety upon the bond herein above referred to x x x xxx x OUR LIABILITY HEREUNDER: - It shall not be necessary for the COMPANY [ISAC] to bring suit against the principal [Autocorp Group] upon his default or to exhaust the property of the principal [Autocorp Group], but the liability hereunder of the undersigned indemnitors [Rodriguez] shall be jointly and REMLAW Page 348
Group], but the liability hereunder of the undersigned indemnitors [Rodriguez] shall be jointly and severally, a primary one, the same as that of the principal [Autocorp Group], and shall be exigible immediately upon the occurrence of such default. (Emphases supplied.) The Court of Appeals concluded that since petitioner Rodriguez was a surety, Article 2079 of the Civil Code does not apply. The appellate court further noted that both petitioners authorized ISAC to consent to the granting of an extension of the subject bonds. The Court of Appeals committed a slight error on this point. The provisions of the Civil Code on Guarantee, other than the benefit of excussion, are applicable and available to the surety.22 The Court finds no reason why the provisions of Article 2079 would not apply to a surety. This, however, would not cause a reversal of the Decision of the Court of Appeals. The Court of Appeals was correct that even granting arguendo that there was a modification as to the effectivity of the bonds, petitioners would still not be absolved from liability since they had authorized ISAC to consent to the granting of any extension, modification, alteration and/or renewal of the subject bonds, as expressly set out in the Indemnity Agreements: RENEWALS, ALTERATIONS AND SUBSTITUTIONS: - The undersigned [Autocorp Group and Rodriguez] hereby empower and authorize the COMPANY [ISAC] to grant or consent to the granting of any extension, continuation, increase, modification, change, alteration and/or renewal of the original bond herein referred to, and to execute or consent to the execution of any substitution for said Bond with the same or different, conditions and parties, and the undersigned [Autocorp Group and Rodriguez] hereby hold themselves jointly and severally liable to the COMPANY [ISAC] for the original Bond herein above-mentioned or for any extension, continuation, increase, modification, change, alteration, renewal or substitution thereof without the necessary of any new indemnity agreement being executed until the full amount including principal, interest, premiums, costs, and other expenses due to the COMPANY [ISAC] thereunder is fully paid up.23 (Emphases supplied.) The foregoing provision in the Indemnity Agreements clearly authorized ISAC to consent to the granting of any extension, modification, alteration and/or renewal of the subject bonds. There is nothing illegal in such a provision. In Philippine American General Insurance Co., Inc. v. Mutuc,24 the Court held that an agreement whereby the sureties bound themselves to be liable in case of an extension or renewal of the bond, without the necessity of executing another indemnity agreement for the purpose and without the necessity of being notified of such extension or renewal, is valid; and that there is nothing in it that militates against the law, good customs, good morals, public order or public policy. WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated 30 June 2004 in CA-G.R. CV No. 62564 which affirmed with modification the Decision of the Regional Trial Court of Makati City, in Civil Case No. 95-1584 dated 16 September 1998 is AFFIRMED in toto. Costs against petitioners. SO ORDERED. Pasted from
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Van ZuiDen v. GTVL Manufacturing 523 SCRA 233 Sunday, November 14, 2010 11:40 PM
B. VAN ZUIDEN BROS., LTD., Petitioner, vs. GTVL MANUFACTURING INDUSTRIES, INC., Respondent. DE C I S I O N CARPIO, J.: The Case Before the Court is a petition for review 1 of the 18 April 2001 Decision2 of the Court of Appeals in CAG.R. CV No. 66236. The Court of Appeals affirmed the Order3 of the Regional Trial Court, Branch 258, Parañaque City (trial court) dismissing the complaint for sum of money filed by B. Van Zuiden Bros., Ltd. (petitioner) against GTVL Manufacturing Industries, Inc. (respondent). The Facts On 13 July 1999, petitioner filed a complaint for sum of money against respondent, docketed as Civil Case No. 99-0249. The pertinent portions of the complaint read: 1. Plaintiff, ZUIDEN, is a corporation, incorporated under the laws of Hong Kong. x x x ZUIDEN is not engaged in business in the Philippines, but is suing before the Philippine Courts, for the reasons hereinafter stated. xxx x 3. ZUIDEN is engaged in the importation and exportation of several products, including lace products. 4. On several occasions, GTVL purchased lace products from [ZUIDEN]. 5. The procedure for these purchases, as per the instructions of GTVL, was that ZUIDEN delivers the products purchased by GTVL, to a certain Hong Kong corporation, known as Kenzar Ltd. (KENZAR), x x x and the products are then considered as sold, upon receipt by KENZAR of the goods purchased by GTVL. KENZAR had the obligation to deliver the products to the Philippines and/or to follow whatever instructions GTVL had on the matter. Insofar as ZUIDEN is concerned, upon delivery of the goods to KENZAR in Hong Kong, the transaction is concluded; and GTVL became obligated to pay the agreed purchase price. xxx x 7. However, commencing October 31, 1994 up to the present, GTVL has failed and refused to pay the agreed purchase price for several deliveries ordered by it and delivered by ZUIDEN, as abovementioned. xxx x 9. In spite [sic] of said demands and in spite [sic] of promises to pay and/or admissions of liability, GTVL has failed and refused, and continues to fail and refuse, to pay the overdue amount of U.S.$32,088.02 [inclusive of interest].4 Instead of filing an answer, respondent filed a Motion to Dismiss5 on the ground that petitioner has no legal capacity to sue. Respondent alleged that petitioner is doing business in the Philippines without securing the required license. Accordingly, petitioner cannot sue before Philippine courts. After an exchange of several pleadings6 between the parties, the trial court issued an Order on 10 November 1999 dismissing the complaint. On appeal, the Court of Appeals sustained the trial court’s dismissal of the complaint. Hence, this petition. The Court of Appeals’ Ruling In affirming the dismissal of the complaint, the Court of Appeals relied on Eriks Pte., Ltd. v. Court of Appeals.7 In that case, Eriks, an unlicensed foreign corporation, sought to collect US$41,939.63 from a Filipino businessman for goods which he purchased and received on several occasions from January to May 1989. The transfers of goods took place in Singapore, for the Filipino’s account, F.O.B. Singapore, with a 90-day credit term. Since the transactions involved were not isolated, this Court found Eriks to be doing business in the Philippines. Hence, this Court upheld the dismissal of the complaint on the ground that Eriks has no capacity to sue. The Court of Appeals noted that in Eriks, while the deliveries of the goods were perfected in Singapore, REMLAW Page 350
that Eriks has no capacity to sue. The Court of Appeals noted that in Eriks, while the deliveries of the goods were perfected in Singapore, this Court still found Eriks to be engaged in business in the Philippines. Thus, the Court of Appeals concluded that the place of delivery of the goods (or the place where the transaction took place) is not material in determining whether a foreign corporation is doing business in the Philippines. The Court of Appeals held that what is material are the proponents to the transaction, as well as the parties to be benefited and obligated by the transaction. In this case, the Court of Appeals found that the parties entered into a contract of sale whereby petitioner sold lace products to respondent in a series of transactions. While petitioner delivered the goods in Hong Kong to Kenzar, Ltd. (Kenzar), another Hong Kong company, the party with whom petitioner transacted was actually respondent, a Philippine corporation, and not Kenzar. The Court of Appeals believed Kenzar is merely a shipping company. The Court of Appeals concluded that the delivery of the goods in Hong Kong did not exempt petitioner from being considered as doing business in the Philippines. The Issue The sole issue in this case is whether petitioner, an unlicensed foreign corporation, has legal capacity to sue before Philippine courts. The resolution of this issue depends on whether petitioner is doing business in the Philippines. The Ruling of the Court The petition is meritorious. Section 133 of the Corporation Code provides: Doing business without license. — No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. The law is clear. An unlicensed foreign corporation doing business in the Philippines cannot sue before Philippine courts. On the other hand, an unlicensed foreign corporation not doing business in the Philippines can sue before Philippine courts. In the present controversy, petitioner is a foreign corporation which claims that it is not doing business in the Philippines. As such, it needs no license to institute a collection suit against respondent before Philippine courts. Respondent argues otherwise. Respondent insists that petitioner is doing business in the Philippines without the required license. Hence, petitioner has no legal capacity to sue before Philippine courts. Under Section 3(d) of Republic Act No. 7042 (RA 7042) or "The Foreign Investments Act of 1991," the phrase "doing business" includes: x x x soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase "doing business" shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account. The series of transactions between petitioner and respondent cannot be classified as "doing business" in the Philippines under Section 3(d) of RA 7042. An essential condition to be considered as "doing business" in the Philippines is the actual performance of specific commercial acts within the territory of the Philippines for the plain reason that the Philippines has no jurisdiction over commercial acts performed in foreign territories. Here, there is no showing that petitioner performed within the Philippine territory the specific acts of doing business mentioned in Section 3(d) of RA 7042. Petitioner did not also open an office here in the Philippines, appoint a representative or distributor, or manage, supervise or control a local business. While petitioner and respondent entered into a series of REMLAW Page 351
supervise or control a local business. While petitioner and respondent entered into a series of transactions implying a continuity of commercial dealings, the perfection and consummation of these transactions were done outside the Philippines.8 In its complaint, petitioner alleged that it is engaged in the importation and exportation of several products, including lace products. Petitioner asserted that on several occasions, respondent purchased lace products from it. Petitioner also claimed that respondent instructed it to deliver the purchased goods to Kenzar, which is a Hong Kong company based in Hong Kong. Upon Kenzar’s receipt of the goods, the products were considered sold. Kenzar, in turn, had the obligation to deliver the lace products to the Philippines. In other words, the sale of lace products was consummated in Hong Kong. As earlier stated, the series of transactions between petitioner and respondent transpired and were consummated in Hong Kong.9 We also find no single activity which petitioner performed here in the Philippines pursuant to its purpose and object as a business organization.10 Moreover, petitioner’s desire to do business within the Philippines is not discernible from the allegations of the complaint or from its attachments. Therefore, there is no basis for ruling that petitioner is doing business in the Philippines. In Eriks, respondent therein alleged the existence of a distributorship agreement between him and the foreign corporation. If duly established, such distributorship agreement could support respondent’s claim that petitioner was indeed doing business in the Philippines. Here, there is no such or similar agreement between petitioner and respondent. We disagree with the Court of Appeals’ ruling that the proponents to the transaction determine whether a foreign corporation is doing business in the Philippines, regardless of the place of delivery or place where the transaction took place. To accede to such theory makes it possible to classify, for instance, a series of transactions between a Filipino in the United States and an American company based in the United States as "doing business in the Philippines," even when these transactions are negotiated and consummated only within the United States. An exporter in one country may export its products to many foreign importing countries without performing in the importing countries specific commercial acts that would constitute doing business in the importing countries. The mere act of exporting from one’s own country, without doing any specific commercial act within the territory of the importing country, cannot be deemed as doing business in the importing country. The importing country does not acquire jurisdiction over the foreign exporter who has not performed any specific commercial act within the territory of the importing country. Without jurisdiction over the foreign exporter, the importing country cannot compel the foreign exporter to secure a license to do business in the importing country. Otherwise, Philippine exporters, by the mere act alone of exporting their products, could be considered by the importing countries to be doing business in those countries. This will require Philippine exporters to secure a business license in every foreign country where they usually export their products, even if they do not perform any specific commercial act within the territory of such importing countries. Such a legal concept will have a deleterious effect not only on Philippine exports, but also on global trade. To be doing or "transacting business in the Philippines" for purposes of Section 133 of the Corporation Code, the foreign corporation must actually transact business in the Philippines, that is, perform specific business transactions within the Philippine territory on a continuing basis in its own name and for its own account. Actual transaction of business within the Philippine territory is an essential requisite for the Philippines to acquire jurisdiction over a foreign corporation and thus require the foreign corporation to secure a Philippine business license. If a foreign corporation does not transact such kind of business in the Philippines, even if it exports its products to the Philippines, the Philippines has no jurisdiction to require such foreign corporation to secure a Philippine business license. Considering that petitioner is not doing business in the Philippines, it does not need a license in order to initiate and maintain a collection suit against respondent for the unpaid balance of respondent’s purchases. WHEREFORE, we GRANT the petition. We REVERSE the Decision dated 18 April 2001 of the Court of Appeals in CA-G.R. CV No. 66236. No costs. SO ORDERED. Pasted from
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Deutsche v CA GR 152318 Apr 16, 2009 Sunday, November 14, 2010 11:40 PM
DEUTSCHE GESELLSCHAFT FÜR TECHNISCHE ZUSAMMENARBEIT, also known as GERMAN AGENCY FOR TECHNICAL COOPERATION, (GTZ) HANS PETER PAULENZ and ANNE NICOLAY, Petitioners, vs. HON. COURT OF APPEALS, HON. ARIEL CADIENTE SANTOS, Labor Arbiter of the Arbitration Branch, National Labor Relations Commission, and BERNADETTE CARMELLA MAGTAAS, CAROLINA DIONCO, CHRISTOPHER RAMOS, MELVIN DELA PAZ, RANDY TAMAYO and EDGARDO RAMILLO, Respondents. DE C I S I O N TINGA, J.: On 7 September 1971, the governments of the Federal Republic of Germany and the Republic of the Philippines ratified an Agreement concerning Technical Co-operation (Agreement) in Bonn, capital of what was then West Germany. The Agreement affirmed the countries’ "common interest in promoting the technical and economic development of their States, and recogni[zed] the benefits to be derived by both States from closer technical co-operation," and allowed for the conclusion of "arrangements concerning individual projects of technical co-operation."1 While the Agreement provided for a limited term of effectivity of five (5) years, it nonetheless was stated that "[t]he Agreement shall be tacitly extended for successive periods of one year unless either of the two Contracting Parties denounces it in writing three months prior to its expiry," and that even upon the Agreement’s expiry, its provisions would "continue to apply to any projects agreed upon x x x until their completion."2 On 10 December 1999, the Philippine government, through then Foreign Affairs Secretary Domingo Siazon, and the German government, agreed to an Arrangement in furtherance of the 1971 Agreement. This Arrangement affirmed the common commitment of both governments to promote jointly a project called, Social Health Insurance—Networking and Empowerment (SHINE), which was designed to "enable Philippine families–especially poor ones–to maintain their health and secure health care of sustainable quality."3 It appears that SHINE had already been in existence even prior to the effectivity of the Arrangement, though the record does not indicate when exactly SHINE was constituted. Nonetheless, the Arrangement stated the various obligations of the Filipino and German governments. The relevant provisions of the Arrangement are reproduced as follows: 3. The Government of the Federal Republic of Germany shall make the following contributions to the project. It shall (a) second - one expert in health economy, insurance and health systems for up to 48 expert/months, - one expert in system development for up to 10 expert/months - short-term experts to deal with special tasks for a total of up to 18 expert/months, - project assistants/guest students as required, who shall work on the project as part of their basic and further training and assume specific project tasks under the separately financed junior staff promotion programme of the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ); (b) provide in situ - short-term experts to deal with diverse special tasks for a total of up to 27 expert/months, - five local experts in health economy, health insurance, community health systems, information technology, information systems, training and community mobilization for a total of up to 240 expert/months, - local and auxiliary personnel for a total of up to 120 months; (c) supply inputs, in particular - two cross-country vehicles, - ten computers with accessories, - office furnishings and equipment up to a total value of DM 310,000 (three hundred and ten thousand Deutsche Mark); (c) meet REMLAW Page 354
up to a total value of DM 310,000 (three hundred and ten thousand Deutsche Mark); (c) meet - the cost of accommodation for the seconded experts and their families in so far as this cost is not met by the seconded experts themselves, - the cost of official travel by the experts referred to in sub-paragraph (a) above within and outside the Republic of the Philippines, - the cost of seminars and courses, - the cost of transport and insurance to the project site of inputs to be supplied pursuant to subparagraph (c) above, excluding the charges and storage fees referred to in paragraph 4(d) below, - a proportion of the operating and administrative costs; xxx 4. The Government of the Republic of the Philippines shall make the following contributions to the project: It shall (a) – provide the necessary Philippine experts for the project, in particular one project coordinator in the Philippine Health Insurance Corporation (Philhealth), at least three further experts and a sufficient number of administrative and auxiliary personnel, as well as health personnel in the pilot provinces and in the other project partners, in particular one responsible expert for each pilot province and for each association representing the various target groups, - release suitably qualified experts from their duties for attendance at the envisaged basic and further training activities; it shall only nominate such candidates as have given an undertaking to work on the project for at least five years after completing their training and shall ensure that these Philippine experts receive appropriate remuneration, - ensure that the project field offices have sufficient expendables, - make available the land and buildings required for the project; (b) assume an increasing proportion of the running and operating costs of the project; (c) afford the seconded experts any assistance they may require in carrying out the tasks assigned to them and place at their disposal all necessary records and documents; (d) guarantee that - the project is provided with an itemized budget of its own in order to ensure smooth continuation of the project. - the necessary legal and administrative framework is created for the project, - the project is coordinated in close cooperation with other national and international agencies relevant to implementation, - the inputs supplied for the project on behalf of the Government of the Federal Republic of Germany are exempted from the cost of licenses, harbour dues, import and export duties and other public charges and fees, as well as storage fees, or that any costs thereof are met, and that they are cleared by customs without delay. The aforementioned exemptions shall, at the request of the implementing agencies also apply to inputs procured in the Republic of the Philippines, - the tasks of the seconded experts are taken over as soon as possible by Philippine experts, - examinations passed by Philippine nationals pursuant to this Arrangement are recognized in accordance with their respective standards and that the persons concerned are afforded such opportunities with regard to careers, appointments and advancement as are commensurate with their training.4 In the arraignment, both governments likewise named their respective implementing organizations for SHINE. The Philippines designated the Department of Health (DOH) and the Philippine Health Insurance Corporation (Philhealth) with the implementation of SHINE. For their part, the German government "charge*d+ the Deustche Gesellschaft für Technische Zusammenarbeit*5 ] (GTZ[6 ]) GmbH, Eschborn, with the implementation of its contributions."7 Private respondents were engaged as contract employees hired by GTZ to work for SHINE on various dates between December of 1998 to September of 1999. Bernadette Carmela Magtaas was hired as an "information systems manager and project officer of SHINE;"8 Carolina Dionco as a "Project Assistant of SHINE;"9 Christopher Ramos as "a project assistant and liason personnel of NHI related SHINE activities by GTZ;"10 Melvin Dela Paz and Randy Tamayo as programmers;11 and Edgardo Ramilo as "driver, messenger and multipurpose service man."12 The employment contracts of all six private respondents all specified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the "employer." At the same time, all REMLAW Page 355
specified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the "employer." At the same time, all the contracts commonly provided that "[i]t is mutually agreed and understood that [Dr. Tollkotter, as employer] is a seconded GTZ expert who is hiring the Employee on behalf of GTZ and for a PhilippineGerman bilateral project named ‘Social Health Insurance—Networking and Empowerment (SHINE)’ which will end at a given time."13 In September of 1999, Anne Nicolay (Nicolay), a Belgian national, assumed the post of SHINE Project Manager. Disagreements eventually arose between Nicolay and private respondents in matters such as proposed salary adjustments, and the course Nicolay was taking in the implementation of SHINE different from her predecessors. The dispute culminated in a letter14 dated 8 June 2000, signed by the private respondents, addressed to Nicolay, and copies furnished officials of the DOH, Philheath, and the director of the Manila office of GTZ. The letter raised several issues which private respondents claim had been brought up several times in the past, but have not been given appropriate response. It was claimed that SHINE under Nicolay had veered away from its original purpose to facilitate the development of social health insurance by shoring up the national health insurance program and strengthening local initiatives, as Nicolay had refused to support local partners and new initiatives on the premise that community and local government unit schemes were not sustainable—a philosophy that supposedly betrayed Nicolay’s lack of understanding of the purpose of the project. Private respondents further alleged that as a result of Nicolay’s "new thrust, resources have been used inappropriately;" that the new management style was "not congruent with the original goals of the project;" that Nicolay herself suffered from "cultural insensitivity" that consequently failed to sustain healthy relations with SHINE’s partners and staff. The letter ended with these ominous words: The issues that we [the private respondents] have stated here are very crucial to us in working for the project. We could no longer find any reason to stay with the project unless ALL of these issues be addressed immediately and appropriately.15 In response, Nicolay wrote each of the private respondents a letter dated 21 June 2000, all similarly worded except for their respective addressees. She informed private respondents that the "project’s orientations and evolution" were decided in consensus with partner institutions, Philhealth and the DOH, and thus no longer subject to modifications. More pertinently, she stated: You have firmly and unequivocally stated in the last paragraph of your 8th June 2000 letter that you and the five other staff "could no longer find any reason to stay with the project unless ALL of these issues be addressed immediately and appropriately." Under the foregoing premises and circumstances, it is now imperative that I am to accept your resignation, which I expect to receive as soon as possible.16 Taken aback, private respondents replied with a common letter, clarifying that their earlier letter was not intended as a resignation letter, but one that merely intended to raise attention to what they perceived as vital issues.17 Negotiations ensued between private respondents and Nicolay, but for naught. Each of the private respondents received a letter from Nicolay dated 11 July 2000, informing them of the pre-termination of their contracts of employment on the grounds of "serious and gross insubordination, among others, resulting to loss of confidence and trust."18 On 21 August 2000, the private respondents filed a complaint for illegal dismissal with the NLRC. Named as respondents therein where GTZ, the Director of its Manila office Hans Peter Paulenz, its Assistant Project Manager Christian Jahn, and Nicolay. On 25 October 2005, GTZ, through counsel, filed a Motion to Dismiss, on the ground that the Labor Arbiter had no jurisdiction over the case, as its acts were undertaken in the discharge of the governmental functions and sovereign acts of the Government of the Federal Republic of Germany. This was opposed by private respondents with the arguments that GTZ had failed to secure a certification that it was immune from suit from the Department of Foreign Affairs, and that it was GTZ and not the German government which had implemented the SHINE Project and entered into the contracts of employment. On 27 November 2000, the Labor Arbiter issued an Order19 denying the Motion to Dismiss. The Order cited, among others, that GTZ was a private corporation which entered into an employment contract; and that GTZ had failed to secure from the DFA a certification as to its diplomatic status. On 7 February 2001, GTZ filed with the Labor Arbiter a "Reiterating Motion to Dismiss," again praying that the Motion to Dismiss be granted on the jurisdictional ground, and reprising the arguments for dismissal it had earlier raised.20 No action was taken by the Labor Arbiter on this new motion. Instead, REMLAW Page 356
dismissal it had earlier raised.20 No action was taken by the Labor Arbiter on this new motion. Instead, on 15 October 2001, the Labor Arbiter rendered a Decision21 granting the complaint for illegal dismissal. The Decision concluded that respondents were dismissed without lawful cause, there being "a total lack of due process both substantive and procedural [sic]."22 GTZ was faulted for failing to observe the notice requirements in the labor law. The Decision likewise proceeded from the premise that GTZ had treated the letter dated 8 June 2000 as a resignation letter, and devoted some focus in debunking this theory. The Decision initially offered that it "need not discuss the jurisdictional aspect considering that the same had already been lengthily discussed in the Order de*n+ying respondents’ Motion to Dismiss."23 Nonetheless, it proceeded to discuss the jurisdictional aspect, in this wise: Under pain of being repetitious, the undersigned Labor Arbiter has jurisdiction to entertain the complaint on the following grounds: Firstly, under the employment contract entered into between complainants and respondents, specifically Section 10 thereof, it provides that "contract partners agree that his contract shall be subject to the LAWS of the jurisdiction of the locality in which the service is performed." Secondly, respondent having entered into contract, they can no longer invoke the sovereignty of the Federal Republic of Germany. Lastly, it is imperative to be immune from suit, respondents should have secured from the Department of Foreign Affairs a certification of respondents’ diplomatic status and entitlement to diplomatic privileges including immunity from suits. Having failed in this regard, respondents cannot escape liability from the shelter of sovereign immunity.[sic]24 Notably, GTZ did not file a motion for reconsideration to the Labor Arbiter’s Decision or elevate said decision for appeal to the NLRC. Instead, GTZ opted to assail the decision by way of a special civil action for certiorari filed with the Court of Appeals.25 On 10 December 2001, the Court of Appeals promulgated a Resolution26 dismissing GTZ’s petition, finding that "judicial recourse at this stage of the case is uncalled for[,] [t]he appropriate remedy of the petitioners [being] an appeal to the NLRC x x x."27 A motion for reconsideration to this Resolution proved fruitless for GTZ.28 Thus, the present petition for review under Rule 45, assailing the decision and resolutions of the Court of Appeals and of the Labor Arbiter. GTZ’s arguments center on whether the Court of Appeals could have entertained its petition for certiorari despite its not having undertaken an appeal before the NLRC; and whether the complaint for illegal dismissal should have been dismissed for lack of jurisdiction on account of GTZ’s insistence that it enjoys immunity from suit. No special arguments are directed with respect to petitioners Hans Peter Paulenz and Anne Nicolay, respectively the then Director and the then Project Manager of GTZ in the Philippines; so we have to presume that the arguments raised in behalf of GTZ’s alleged immunity from suit extend to them as well. The Court required the Office of the Solicitor General (OSG) to file a Comment on the petition. In its Comment dated 7 November 2005, the OSG took the side of GTZ, with the prayer that the petition be granted on the ground that GTZ was immune from suit, citing in particular its assigned functions in implementing the SHINE program—a joint undertaking of the Philippine and German governments which was neither proprietary nor commercial in nature. The Court of Appeals had premised the dismissal of GTZ’s petition on its procedural misstep in bypassing an appeal to NLRC and challenging the Labor Arbiter’s Decision directly with the appellate court by way of a Rule 65 petition. In dismissing the petition, the Court of Appeals relied on our ruling in Air Service Cooperative v. Court of Appeals.29 The central issue in that case was whether a decision of a Labor Arbiter rendered without jurisdiction over the subject matter may be annulled in a petition before a Regional Trial Court. That case may be differentiated from the present case, since the Regional Trial Court does not have original or appellate jurisdiction to review a decision rendered by a Labor Arbiter. In contrast, there is no doubt, as affirmed by jurisprudence, that the Court of Appeals has jurisdiction to review, by way of its original certiorari jurisdiction, decisions ruling on complaints for illegal dismissal. Nonetheless, the Court of Appeals is correct in pronouncing the general rule that the proper recourse from the decision of the Labor Arbiter is to first appeal the same to the NLRC. Air Services is in fact clearly detrimental to petitioner’s position in one regard. The Court therein noted that on account of the failure to correctly appeal the decision of the Labor Arbiter to the NLRC, such judgment consequently became final and executory.30 GTZ goes as far as to "request" that the Court re-examine Air Services, a
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suggestion that is needlessly improvident under the circumstances. Air Services affirms doctrines grounded in sound procedural rules that have allowed for the considered and orderly disposition of labor cases. The OSG points out, citing Heirs of Mayor Nemencio Galvez v. Court of Appeals,31 that even when appeal is available, the Court has nonetheless allowed a writ of certiorari when the orders of the lower court were issued either in excess of or without jurisdiction. Indeed, the Court has ruled before that the failure to employ available intermediate recourses, such as a motion for reconsideration, is not a fatal infirmity if the ruling assailed is a patent nullity. This approach suggested by the OSG allows the Court to inquire directly into what is the main issue–whether GTZ enjoys immunity from suit. The arguments raised by GTZ and the OSG are rooted in several indisputable facts. The SHINE project was implemented pursuant to the bilateral agreements between the Philippine and German governments. GTZ was tasked, under the 1991 agreement, with the implementation of the contributions of the German government. The activities performed by GTZ pertaining to the SHINE project are governmental in nature, related as they are to the promotion of health insurance in the Philippines. The fact that GTZ entered into employment contracts with the private respondents did not disqualify it from invoking immunity from suit, as held in cases such as Holy See v. Rosario, Jr.,32 which set forth what remains valid doctrine: Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit.33 Beyond dispute is the tenability of the comment points raised by GTZ and the OSG that GTZ was not performing proprietary functions notwithstanding its entry into the particular employment contracts. Yet there is an equally fundamental premise which GTZ and the OSG fail to address, namely: Is GTZ, by conception, able to enjoy the Federal Republic’s immunity from suit? The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section 9, Article XVI of the Constitution, which states that "the State may not be sued without its consent." Who or what consists of "the State"? For one, the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the local State,34 necessary as it is to avoid "unduly vexing the peace of nations." If the instant suit had been brought directly against the Federal Republic of Germany, there would be no doubt that it is a suit brought against a State, and the only necessary inquiry is whether said State had consented to be sued. However, the present suit was brought against GTZ. It is necessary for us to understand what precisely are the parameters of the legal personality of GTZ. Counsel for GTZ characterizes GTZ as "the implementing agency of the Government of the Federal Republic of Germany," a depiction similarly adopted by the OSG. Assuming that characterization is correct, it does not automatically invest GTZ with the ability to invoke State immunity from suit. The distinction lies in whether the agency is incorporated or unincorporated. The following lucid discussion from Justice Isagani Cruz is pertinent: Where suit is filed not against the government itself or its officials but against one of its entities, it must be ascertained whether or not the State, as the principal that may ultimately be held liable, has given its consent to be sued. This ascertainment will depend in the first instance on whether the government agency impleaded is incorporated or unincorporated. An incorporated agency has a charter of its own that invests it with a separate juridical personality, like the Social Security System, the University of the Philippines, and the City of Manila. By contrast, the unincorporated agency is so called because it has no separate juridical personality but is merged in the general machinery of the government, like the Department of Justice, the Bureau of Mines and the Government Printing Office. If the agency is incorporated, the test of its suability is found in its charter. The simple rule is that it is suable if its charter says so, and this is true regardless of the functions it is performing. Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provides that REMLAW Page 358
they are subject to suit even in the performance of such functions because their charter provides that they can sue and be sued.35 State immunity from suit may be waived by general or special law.36 The special law can take the form of the original charter of the incorporated government agency. Jurisprudence is replete with examples of incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting their consent to be sued. These include the National Irrigation Administration,37 the former Central Bank,38 and the National Power Corporation.39 In SSS v. Court of Appeals,40 the Court through Justice Melencio-Herrera explained that by virtue of an express provision in its charter allowing it to sue and be sued, the Social Security System did not enjoy immunity from suit: We come now to the amendability of the SSS to judicial action and legal responsibility for its acts. To our minds, there should be no question on this score considering that the SSS is a juridical entity with a personality of its own. It has corporate powers separate and distinct from the Government. SSS' own organic act specifically provides that it can sue and be sued in Court. These words "sue and be sued" embrace all civil process incident to a legal action. So that, even assuming that the SSS, as it claims, enjoys immunity from suit as an entity performing governmental functions, by virtue of the explicit provision of the aforecited enabling law, the Government must be deemed to have waived immunity in respect of the SSS, although it does not thereby concede its liability. That statutory law has given to the private citizen a remedy for the enforcement and protection of his rights. The SSS thereby has been required to submit to the jurisdiction of the Courts, subject to its right to interpose any lawful defense. Whether the SSS performs governmental or proprietary functions thus becomes unnecessary to belabor. For by that waiver, a private citizen may bring a suit against it for varied objectives, such as, in this case, to obtain compensation in damages arising from contract, and even for tort. A recent case squarely in point anent the principle, involving the National Power Corporation, is that of Rayo v. Court of First Instance of Bulacan, 110 SCRA 457 (1981), wherein this Court, speaking through Mr. Justice Vicente Abad Santos, ruled: "It is not necessary to write an extended dissertation on whether or not the NPC performs a governmental function with respect to the management and operation of the Angat Dam. It is sufficient to say that the government has organized a private corporation, put money in it and has allowed it to sue and be sued in any court under its charter. (R.A. No. 6395, Sec. 3[d]). As a government, owned and controlled corporation, it has a personality of its own, distinct and separate from that of the Government. Moreover, the charter provision that the NPC can 'sue and be sued in any court' is without qualification on the cause of action and accordingly it can include a tort claim such as the one instituted by the petitioners."41 It is useful to note that on the part of the Philippine government, it had designated two entities, the Department of Health and the Philippine Health Insurance Corporation (PHIC), as the implementing agencies in behalf of the Philippines. The PHIC was established under Republic Act No. 7875, Section 16(g) of which grants the corporation the power "to sue and be sued in court." Applying the previously cited jurisprudence, PHIC would not enjoy immunity from suit even in the performance of its functions connected with SHINE, however, governmental in nature as they may be. Is GTZ an incorporated agency of the German government? There is some mystery surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is "the implementing agency of the Government of the Federal Republic of Germany." On the other hand, private respondents asserted before the Labor Arbiter that GTZ was "a private corporation engaged in the implementation of development projects."42 The Labor Arbiter accepted that claim in his Order denying the Motion to Dismiss,43 though he was silent on that point in his Decision. Nevertheless, private respondents argue in their Comment that the finding that GTZ was a private corporation "was never controverted, and is therefore deemed admitted."44 In its Reply, GTZ controverts that finding, saying that it is a matter of public knowledge that the status of petitioner GTZ is that of the "implementing agency," and not that of a private corporation.45 In truth, private respondents were unable to adduce any evidence to substantiate their claim that GTZ was a "private corporation," and the Labor Arbiter acted rashly in accepting such claim without explanation. But neither has GTZ supplied any evidence defining its legal nature beyond that of the bare descriptive "implementing agency." There is no doubt that the 1991 Agreement designated GTZ as the "implementing agency" in behalf of the German government. Yet the catch is that such term has no REMLAW Page 359
"implementing agency" in behalf of the German government. Yet the catch is that such term has no precise definition that is responsive to our concerns. Inherently, an agent acts in behalf of a principal, and the GTZ can be said to act in behalf of the German state. But that is as far as "implementing agency" could take us. The term by itself does not supply whether GTZ is incorporated or unincorporated, whether it is owned by the German state or by private interests, whether it has juridical personality independent of the German government or none at all. GTZ itself provides a more helpful clue, inadvertently, through its own official Internet website.46 In the "Corporate Profile" section of the English language version of its site, GTZ describes itself as follows: As an international cooperation enterprise for sustainable development with worldwide operations, the federally owned Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH supports the German Government in achieving its development-policy objectives. It provides viable, forward-looking solutions for political, economic, ecological and social development in a globalised world. Working under difficult conditions, GTZ promotes complex reforms and change processes. Its corporate objective is to improve people’s living conditions on a sustainable basis. GTZ is a federal enterprise based in Eschborn near Frankfurt am Main. It was founded in 1975 as a company under private law. The German Federal Ministry for Economic Cooperation and Development (BMZ) is its major client. The company also operates on behalf of other German ministries, the governments of other countries and international clients, such as the European Commission, the United Nations and the World Bank, as well as on behalf of private enterprises. GTZ works on a public-benefit basis. All surpluses generated are channeled [sic] back into its own international cooperation projects for sustainable development.47 GTZ’s own website elicits that petitioner is "federally owned," a "federal enterprise," and "founded in 1975 as a company under private law." GTZ clearly has a very meaningful relationship with the Federal Republic of Germany, which apparently owns it. At the same time, it appears that GTZ was actually organized not through a legislative public charter, but under private law, in the same way that Philippine corporations can be organized under the Corporation Code even if fully owned by the Philippine government. This self-description of GTZ in its own official website gives further cause for pause in adopting petitioners’ argument that GTZ is entitled to immunity from suit because it is "an implementing agency." The above-quoted statement does not dispute the characterization of GTZ as an "implementing agency of the Federal Republic of Germany," yet it bolsters the notion that as a company organized under private law, it has a legal personality independent of that of the Federal Republic of Germany. The Federal Republic of Germany, in its own official website,48 also makes reference to GTZ and describes it in this manner: x x x Going by the principle of "sustainable development," the German Technical Cooperation (Deutsche Gesellschaft für Technische Zusammenarbeit GmbH, GTZ) takes on non-profit projects in international "technical cooperation." The GTZ is a private company owned by the Federal Republic of Germany.49 Again, we are uncertain of the corresponding legal implications under German law surrounding "a private company owned by the Federal Republic of Germany." Yet taking the description on face value, the apparent equivalent under Philippine law is that of a corporation organized under the Corporation Code but owned by the Philippine government, or a government-owned or controlled corporation without original charter. And it bears notice that Section 36 of the Corporate Code states that "[e]very corporation incorporated under this Code has the power and capacity x x x to sue and be sued in its corporate name."50 It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has not been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the proceedings below and before this Court, GTZ has failed to establish that under German law, it has not consented to be sued despite it being owned by the Federal Republic of Germany. We adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are presumed to be the same as those of the Philippines,51 and following the most intelligent assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without original charter which, by virtue of the Corporation Code, has expressly consented to be sued. At the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume that GTZ enjoys immunity from suit. This absence of basis in fact leads to another important point, alluded to by the Labor Arbiter in his REMLAW Page 360
no basis in fact to conclude or presume that GTZ enjoys immunity from suit. This absence of basis in fact leads to another important point, alluded to by the Labor Arbiter in his rulings. Our ruling in Holy See v. Del Rosario52 provided a template on how a foreign entity desiring to invoke State immunity from suit could duly prove such immunity before our local courts. The principles enunciated in that case were derived from public international law. We stated then: In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. In the United States, the procedure followed is the process of "suggestion," where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a "suggestion" that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]). In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae.53 It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for petitioners to secure from the Department of Foreign Affairs "a certification of respondents’ diplomatic status and entitlement to diplomatic privileges including immunity from suits."54 The requirement might not necessarily be imperative. However, had GTZ obtained such certification from the DFA, it would have provided factual basis for its claim of immunity that would, at the very least, establish a disputable evidentiary presumption that the foreign party is indeed immune which the opposing party will have to overcome with its own factual evidence. We do not see why GTZ could not have secured such certification or endorsement from the DFA for purposes of this case. Certainly, it would have been highly prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss. Still, even at this juncture, we do not see any evidence that the DFA, the office of the executive branch in charge of our diplomatic relations, has indeed endorsed GTZ’s claim of immunity. It may be possible that GTZ tried, but failed to secure such certification, due to the same concerns that we have discussed herein. Would the fact that the Solicitor General has endorsed GTZ’s claim of State’s immunity from suit before this Court sufficiently substitute for the DFA certification? Note that the rule in public international law quoted in Holy See referred to endorsement by the Foreign Office of the State where the suit is filed, such foreign office in the Philippines being the Department of Foreign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA has endorsed GTZ’s claim, or that the OSG had solicited the DFA’s views on the issue. The arguments raised by the OSG are virtually the same as the arguments raised by GTZ without any indication of any special and distinct perspective maintained by the Philippine government on the issue. The Comment filed by the OSG does not inspire the same degree of confidence as a certification from the DFA would have elicited.1avvphi1 Holy See made reference to Baer v. Tizon,55 and that in the said case, the United States Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make a "suggestion" to the trial court, accomplished by way of a Manifestation and Memorandum, that the petitioner therein enjoyed immunity as the Commander of the Subic Bay Naval Base. Such circumstance is actually not narrated in the text of Baer itself and was likely supplied in Holy See because its author, Justice Camilio Quiason, had appeared as the Solicitor in behalf of the OSG in Baer. Nonetheless, as narrated in Holy See, it was the Secretary of Foreign Affairs which directed the OSG to intervene in behalf of the United States REMLAW Page 361
the Secretary of Foreign Affairs which directed the OSG to intervene in behalf of the United States government in the Baer case, and such fact is manifest enough of the endorsement by the Foreign Office. We do not find a similar circumstance that bears here. The Court is thus holds and so rules that GTZ consistently has been unable to establish with satisfaction that it enjoys the immunity from suit generally enjoyed by its parent country, the Federal Republic of Germany. Consequently, both the Labor Arbiter and the Court of Appeals acted within proper bounds when they refused to acknowledge that GTZ is so immune by dismissing the complaint against it. Our finding has additional ramifications on the failure of GTZ to properly appeal the Labor Arbiter’s decision to the NLRC. As pointed out by the OSG, the direct recourse to the Court of Appeals while bypassing the NLRC could have been sanctioned had the Labor Arbiter’s decision been a "patent nullity." Since the Labor Arbiter acted properly in deciding the complaint, notwithstanding GTZ’s claim of immunity, we cannot see how the decision could have translated into a "patent nullity." As a result, there was no basis for petitioners in foregoing the appeal to the NLRC by filing directly with the Court of Appeals the petition for certiorari. It then follows that the Court of Appeals acted correctly in dismissing the petition on that ground. As a further consequence, since petitioners failed to perfect an appeal from the Labor Arbiter’s Decision, the same has long become final and executory. All other questions related to this case, such as whether or not private respondents were illegally dismissed, are no longer susceptible to review, respecting as we do the finality of the Labor Arbiter’s Decision. A final note. This decision should not be seen as deviation from the more common methodology employed in ascertaining whether a party enjoys State immunity from suit, one which focuses on the particular functions exercised by the party and determines whether these are proprietary or sovereign in nature. The nature of the acts performed by the entity invoking immunity remains the most important barometer for testing whether the privilege of State immunity from suit should apply. At the same time, our Constitution stipulates that a State immunity from suit is conditional on its withholding of consent; hence, the laws and circumstances pertaining to the creation and legal personality of an instrumentality or agency invoking immunity remain relevant. Consent to be sued, as exhibited in this decision, is often conferred by the very same statute or general law creating the instrumentality or agency. WHEREFORE, the petition is DENIED. No pronouncement as to costs. SO ORDERED. Pasted from
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Chua v. Torres GR 151900 Aug 30, 2005 Sunday, November 14, 2010 11:40 PM
SECOND DIVISION
CHRISTINE CHUA G.R. No. 151900 Petitioner, Present: PUNO, J. Chairman, - versus' - AUSTRIA-MARTINEZ, CALLEJO, TINGA, and CHICO-NAZARIO, JJ. JORGE TORRES and ANTONIO BELTRAN, Respondents.August 30, 2005 x---------------------------------------------------------------------x
DECIS ION
Tinga, J.: The Court settles an issue, heretofore undecided, on whether the absence of the signature in the required verification and certification against forum-shopping of a party misjoined as a plaintiff is a valid ground for the dismissal of the complaint. We rule in the negative. The relevant facts in this Petition for Review are culled from the records.
On 24 October 2001, a complaint for damages was lodged before the Regional Trial Court (RTC) of Caloocan City, Branch 126.[1] The complaint was filed by Christine Chua, herein petitioner, impleading her brother Jonathan Chua as a necessary co-plaintiff. Named as defendants in the suit were herein respondents Jorge Torres and Antonio Beltran. Torres was the owner of the 9th Avenue Caltex Service Center (Caltex Service Center), while Beltran was an employee of the said establishment as the head of its Sales and Collection Division.[2] The complaint alleged that on 3 April 2000, Jonathan Chua issued in favor of the Caltex Service Center his personal Rizal Commercial Banking Corporation (RCBC) Check No. 0412802 in the amount of Nine Thousand Eight Hundred Forty Nine Pesos and Twenty Centavos (P9,849.20) in payment for purchases of diesel oil. However, the check was dishonored by the drawee bank when presented for payment on the ground that the account was closed. Beltran then sent petitioner a demand letter informing her of the dishonor of the check and demanding the payment thereof. Petitioner ignored the demand letter on the ground that she was not the one who issued the said check.
Without bothering to ascertain who had actually issued the check, Beltran instituted against petitioner a criminal action for violation of Batas Pambansa Bilang 22 (B.P. 22). Subsequently, a criminal information was filed against petitioner with the Metropolitan Trial Court (MTC) of Caloocan City, Branch 50.[3] The MTC then issued a warrant of arrest against petitioner. The police officers tasked with serving the warrant looked for her in her residence, in the auto repair shop of her brother, and even at the Central University were she was enrolled as a medical student, all to the alleged embarrassment and 'social humiliation of petitioner.[4] REMLAW Page 363
humiliation of petitioner.[4]
Beltran's purported negligence amounted to either malicious prosecution or serious defamation in prosecuting petitioner resulting from the issuance of a check she herself did not draw, and served cause for a claim of moral damages. On the other hand, Torres, as employer of Beltran, was alleged to have failed to observe the diligence of a good father of the family to prevent the damage suffered by petitioner. Exemplary damages and attorney's fees were likewise sought, thus bringing the aggregate total of damages claimed to Two Million Pesos (P2,000,000.00), plus costs of suit.[5] Significantly, while Jonathan Chua was named as a plaintiff to the suit, it was explicitly qualified in the second paragraph of the complaint that he was being 'impleaded here-in as a necessary partyplaintiff.[6] There was no allegation in the complaint of any damage or injury sustained by Jonathan, and the prayer therein expressly named petitioner as the only party to whom respondents were sought to recompense.[7] Neither did Jonathan Chua sign any verification or certification against forumshopping, although petitioner did sign an attestation, wherein she identified herself as 'the principal plaintiff.[8] Upon motion of respondents, the RTC ordered the dismissal of the complaint[9] on the ground that Jonathan Chua had not executed a certification against forum-shopping. The RTC stressed that Section 5, Rule 7 of the Rules' of Civil Procedure, the rule requiring the certification, makes no distinction whether the plaintiff required to execute the certification is a principal party, a nominal party or a necessary party. Instead, the provision requires that a plaintiff or principal party who files a complaint or initiatory pleading execute such certification. Jonathan Chua, being a plaintiff in this case, was obliged to execute or sign such certification.[10] Hence, his failure to do so in violation of the mandatory rule requiring the certification against forum-shopping constituted valid cause for the dismissal of the petition.[11] After the RTC denied the motion for reconsideration[12] lodged by petitioner, the matter was elevated directly to this Court by way of petition for review under Rule 45, raising a purely legal question,[13] cast, if somewhat unwieldily, as 'whether or not a co-plaintiff impleaded only as a necessary party, who however has no claim for relief or is not asserting any claim for relief in the complaint, should also make a certification against forum shopping.[14]
Preliminarily, it bears noting that Jonathan Chua did not sign as well any verification to the complaint, ostensibly in violation of Section 7, Rule 4 of the Rules of Civil Procedure. The RTC failed to mention such fact, as does petitioner in her present petition. In their arguments before this Court, respondents do refer in passing to the verification requirement[15], but do not place any particular focus thereto. The verification requirement is separate from the certification requirement.[16] It is noted that as a matter of practice, the verification is usually accomplished at the same time as the certification against forumshopping; hence the customary nomenclature, 'Verification and Certification of Non Forum-Shopping or its variants. For this reason, it is quite possible that the RTC meant to assail as well the failure of Jonathan Chua to verify the complaint. The verification requirement is significant, as it is intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith.[17] The absence of a proper verification is cause to treat the pleading as unsigned and dismissible.[18] It would be as well that the Court discuss whether under the circumstances, Jonathan Chua is also required to execute a verification in respect to petitioner's complaint. Having established the proper parameters of the petition, we proceed to the core issues. We find the petition has merit, although we appreciate the situation differently from petitioner. Our decision proceeds from the fundamental premise that Jonathan Chua was misjoined as a party plaintiff in this REMLAW Page 364
proceeds from the fundamental premise that Jonathan Chua was misjoined as a party plaintiff in this case. It is elementary that it is only in the name of a real party in interest that a civil suit may be prosecuted.[19] Under Section 2, Rule 3 of the Rules of Civil Procedure, a real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. "Interest" within the meaning of the rule means material interest, an interest in issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest.[20] One having no right or interest to protect cannot invoke the jurisdiction of the court as a party plaintiff in an action.[21] To qualify a person to be a real party in interest in whose name an action must be prosecuted, he must appear to be the present real owner of the right sought to enforced.[22]
The subject complaint does not allege any rights of Jonathan Chua violated by respondents, present any rights of his to be enforced, or seek in his behalf any rights to the avails of suit. In short, Jonathan claims nothing, and for nothing, in the subject complaint. If he alone filed the complaint, it would have been dismissed on the ground that the complaint states no cause of action, instituted as it was by a person who was not a real party in interest. But was it proper for petitioner to have even impleaded Jonathan as a co-plaintiff in the first place? Petitioner alleged in her complaint that Jonathan was a necessary party, and remains consistent to that claim even before this Court. She however fails to demonstrate how Jonathan can be considered as a necessary party, other than by noting that he was 'the one who really issued the check in controversy.[23] Such fact, if proven, may establish the malice of respondents in filing the criminal case against petitioner for violation of B.P. 22, but does not create the need to require Jonathan's participation as a necessary party.
Section 8, Rule 7 of the Rules of Civil Procedure defines a necessary party as 'one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.[24] Necessary parties are those whose presence is necessary to adjudicate the whole controversy, but whose interests are so far separable that a final decree can be made in their absence without affecting them.[25] An example of a necessary party may be found in Seno v. Mangubat.[26] Petitioner therein sold her property through a deed of sale to three vendees. Two of the vendees then sold their shares to the third buyer, who then sold the property to another set of persons. Thereafter, petitioner, who claimed that the true intent of the first sale was an equitable mortgage, filed a complaint seeking the reformation of the deed of sale and the annulment of the second sale. The question arose whether the two vendees who had since disposed of their shares should be considered as indispensable parties or necessary parties. In concluding that they were only necessary parties, the Court reasoned: In the present case, there are no rights of defendants Andres Evangelista and Bienvenido Mangubat to be safeguarded if the sale should be held to be in fact an absolute sale nor if the sale is held to be an equitable mortgage. Defendant Marcos Mangubat became the absolute owner of the subject property by virtue of the sale to him of the shares of the aforementioned defendants in the property. Said defendants no longer have any interest in the subject property. However, being parties to the instrument sought to be reformed, their presence is necessary in order to settle all the possible issues of the controversy. Whether the disputed sale be declared an absolute sale or an equitable mortgage, the rights of all the defendants will have been amply protected. Defendants-spouses Luzame in any event may enforce their rights against defendant Marcos Mangubat.[27] In Seno, the persons deemed by the Court as necessary parties may have had already disposed of their interests in the property. However, should the lower court therein grant the prayer for the reformation REMLAW Page 365
interests in the property. However, should the lower court therein grant the prayer for the reformation of the deed of sale, the ruling will undoubtedly have an effect on such parties, on matters such as the purchase price which they may have received, and on whatever transmission of rights that may have occurred between them and the vendor. In contrast, Jonathan Chua does not stand to be affected should the RTC rule either favorably or unfavorably of the complaint. This is due to the nature of the cause of action of the complaint, which alleges an injury personal to petitioner, and the relief prayed for, which is to be adjudicated solely to petitioner. There is no allegation in the complaint alleging any violation or omission of any right of Jonathan, either arising from contract or from law. It may be so that Jonathan may be called to testify by his sister, in order to prove the essential allegation that she did not issue the check in question, and perhaps such testimony would be vital to petitioner's cause of action. But this does not mean that Jonathan should be deemed a necessary party, as such circumstance would merely place him in the same class as those witnesses whose testimony would be necessary to prove the allegations of the complaint. But the fact remains that Jonathan would stand unaffected by the final ruling on the complaint. The judicial confirmation or rejection of the allegations therein, or grant or denial of the reliefs prayed for will not infringe on or augment any of his rights under the law. If there would be any effect to Jonathan of the RTC's ultimate decision on the complaint, it would be merely emotional, arising from whatever ties of kinship he may retain towards his sister, and no different from whatever effects that may be similarly sustained on petitioner's immediate family. Since we are unconvinced by petitioner's basic premise that Jonathan was a necessary party, it is unnecessary to directly settle the issue as couched by petitioner of 'whether or not a co-plaintiff impleaded only as a necessary party, who however has no claim for relief or is not asserting any claim for relief in the complaint, should also make a certification against forum shopping.[28] We can note, as the RTC did, that Section 5, Rule 7 of the 1997 Rules of Civil Procedure makes no distinctions that would expressly exempt a necessary party from executing the certification against forum shopping. Nonetheless, there are dimensions to the matter, heretofore unraised, that may unsettle a strict application of the rule, such as if the necessary party is impleaded as a plaintiff or counterclaimant without his knowledge or against his will.[29] But these circumstances relevant to a necessary party are not present in this case, and thus require no further comment upon for now. Instead, what the Court may rule upon is whether the absence of the signature of the person misjoined as a party-plaintiff in either the verification page or certification against forum-shopping is ground for the dismissal of the action. We rule that it is not so, and that the RTC erred in dismissing the instant complaint. There is no judicial precedent affirming or rejecting such a view, but we are comfortable with making such a pronouncement. A misjoined party plaintiff has no business participating in the case as a plaintiff in the first place, and it would make little sense to require the misjoined party in complying with all the requirements expected of plaintiffs.
At the same time, Section 11, Rule 3 of the 1997 Rules of Civil Procedure states: Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. [30]
Clearly, misjoinder of parties is not fatal to the complaint. The rule prohibits dismissal of a suit on the ground of non-joinder or misjoinder of parties.[31] Moreover, the dropping of misjoined parties from the complaint may be done motu proprio by the court, at any stage, without need for a motion to such effect from the adverse party.[32] Section 11, Rule 3 indicates that the misjoinder of parties, while erroneous, may be corrected with ease through amendment, without further hindrance to the REMLAW Page 366
erroneous, may be corrected with ease through amendment, without further hindrance to the prosecution of the suit. It should then follow that any act or omission committed by a misjoined party plaintiff should not be cause for impediment to the prosecution of the case, much less for the dismissal of the suit. After all, such party should not have been included in the first place, and no efficacy should be accorded to whatever act or omission of the party.[33] Since the misjoined party plaintiff receives no recognition from the court as either an indispensable or necessary party-plaintiff, it then follows that whatever action or inaction the misjoined party may take on the verification or certification against forum-shopping is inconsequential. Hence, it should not have mattered to the RTC that Jonathan Chua had failed to sign the certification against forum-shopping, since he was misjoined as a plaintiff in the first place. The fact that Jonathan was misjoined is clear on the face of the complaint itself, and the error of the RTC in dismissing the complaint is not obviated by the fact that the adverse party failed to raise this point. After all, the RTC could have motu proprio dropped Jonathan as a plaintiff, for the reasons above-stated which should have been evident to it upon examination of the complaint. There may be a school of thought that would nonetheless find some satisfaction in petitioner's woes before the RTC, as it was her error in the first place of wrongfully impleading her brother as a party plaintiff which ultimately served as cause for the dismissal of the complaint. The blame may in the final analysis lie with petitioner, yet we should not construe the rules of procedure to quench an unnecessary thirst to punish at the expense of the intellectual integrity of the rules. For our Rules of Court do not regard the misjoinder of parties as an error of fatal consequence, and the logical extension of this principle is to consider those procedural acts or omissions of misjoined parties as of similar import. WHEREFORE, the Petition is GRANTED. The Orders dated 3 December 2001 and 15 January 2002 of the Regional Trial Court of Caloocan City, Branch 126, in Civil Case No. C-19863 are SET ASIDE, and the Complaint in the aforementioned case is REINSTATED. The lower court is enjoined to hear and decide the case with deliberate dispatch. No pronouncement as to costs.
SO ORDERED. Pasted from
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Anicia Valdez Tallorin v Heirs of Juanito Tarona GR 177429 Nov 24, 2009 Sunday, November 14, 2010 11:40 PM
ANICIA VALDEZ-TALLORIN, Petitioner, vs. HEIRS OF JUANITO TARONA, Represented by CARLOS TARONA, ROGELIO TARONA and LOURDES TARONA, Respondents. DE C I S I O N ABAD, J.: This case is about a court’s annulment of a tax declaration in the names of three persons, two of whom had not been impleaded in the case, for the reason that the document was illegally issued to them. The Facts and the Case On February 9, 1998 respondents Carlos, Rogelio, and Lourdes Tarona (the Taronas) filed an action before the Regional Trial Court (RTC) of Balanga, Bataan,1 against petitioner Anicia Valdez-Tallorin (Tallorin) for the cancellation of her and two other women’s tax declaration over a parcel of land. The Taronas alleged in their complaint that, unknown to them, in 1981, the Assessor’s Office of Morong in Bataan cancelled Tax Declaration 463 in the name of their father, Juanito Tarona (Juanito), covering 6,186 square meters of land in Morong, Bataan. The cancellation was said to be based on an unsigned though notarized affidavit that Juanito allegedly executed in favor of petitioner Tallorin and two others, namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez, who were not impleaded in the action. In place of the cancelled one, the Assessor’s Office issued Tax Declaration 6164 in the names of the latter three persons. The old man Tarona’s affidavit had been missing and no copy could be found among the records of the Assessor’s Office.2 The Taronas further alleged that, without their father’s affidavit on file, it followed that his tax declaration had been illegally cancelled and a new one illegally issued in favor of Tallorin and the others with her. The unexplained disappearance of the affidavit from official files, the Taronas concluded, covered-up the falsification or forgery that caused the substitution.3 The Taronas asked the RTC to annul Tax Declaration 6164, reinstate Tax Declaration 463, and issue a new one in the name of Juanito’s heirs. On March 6, 1998 the Taronas filed a motion to declare petitioner Tallorin in default for failing to answer their complaint within the allowed time.4 But, before the RTC could act on the motion, Tallorin filed a belated answer, alleging among others that she held a copy of the supposedly missing affidavit of Juanito who was merely an agricultural tenant of the land covered by Tax Declaration 463. He surrendered and waived in that affidavit his occupation and tenancy rights to Tallorin and the others in consideration of P29,240.00. Tallorin also put up the affirmative defenses of non-compliance with the requirement of conciliation proceedings and prescription. On March 12, 1998 the RTC set Tallorin’s affirmative defenses for hearing5 but the Taronas sought reconsideration, pointing out that the trial court should have instead declared Tallorin in default based on their earlier motion.6 On June 2, 1998 the RTC denied the Taronas’ motion for reconsideration7 for the reasons that it received Tallorin’s answer before it could issue a default order and that the Taronas failed to show proof that Tallorin was notified of the motion three days before the scheduled hearing. Although the presiding judge inhibited himself from the case on motion of the Taronas, the new judge to whom the case was re-raffled stood by his predecessor’s previous orders. By a special civil action for certiorari before the Court of Appeals (CA),8 however, the Taronas succeeded in getting the latter court to annul the RTC’s March 12 and June 2, 1998 orders.9 The CA ruled that the RTC gravely abused its discretion in admitting Tallorin’s late answer in the absence of a motion to admit it. Even if petitioner Tallorin had already filed her late answer, said the CA, the RTC should have heard the Taronas’ motion to declare Tallorin in default. Upon remand of the case, the RTC heard the Taronas’ motion to declare Tallorin in default,10 granted the same, and directed the Taronas to present evidence ex parte.11 On January 30, 2002 the RTC rendered judgment, a) annulling the tax declaration in the names of Tallorin, Margarita Pastelero Vda. de Valdez, and Dolores Valdez; b) reinstating the tax declaration in the REMLAW Page 368
Tallorin, Margarita Pastelero Vda. de Valdez, and Dolores Valdez; b) reinstating the tax declaration in the name of Juanito; and c) ordering the issuance in its place of a new tax declaration in the names of Juanito’s heirs. The trial court also ruled that Juanito’s affidavit authorizing the transfer of the tax declaration had no binding force since he did not sign it.1avvphi1 Tallorin appealed the above decision to the CA,12 pointing out 1) that the land covered by the tax declaration in question was titled in her name and in those of her two co-owners; 2) that Juanito’s affidavit only dealt with the surrender of his tenancy rights and did not serve as basis for canceling Tax Declaration 463 in his name; 3) that, although Juanito did not sign the affidavit, he thumbmarked and acknowledged the same before a notary public; and 4) that the trial court erred in not dismissing the complaint for failure to implead Margarita Pastelero Vda. de Valdez and Dolores Valdez who were indispensable parties in the action to annul Juanito’s affidavit and the tax declaration in their favor.13 On May 22, 2006 the CA rendered judgment, affirming the trial court’s decision.14 The CA rejected all of Tallorin’s arguments. Since she did not assign as error the order declaring her in default and since she took no part at the trial, the CA pointed out that her claims were in effect mere conjectures, not based on evidence of record.15 Notably, the CA did not address the issue Tallorin raised regarding the Taronas’ failure to implead Margarita Pastelero Vda. de Valdez and Dolores Valdez as indispensable partydefendants, their interest in the cancelled tax declarations having been affected by the RTC judgment. Questions Presented The petition presents the following questions for resolution by this Court: 1. Whether or not the CA erred in failing to dismiss the Taronas’ complaint for not impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose names, like their co-owner Tallorin, the annulled tax declaration had been issued; 2. Whether or not the CA erred in not ruling that the Taronas’ complaint was barred by prescription; and 3. Whether or not the CA erred in affirming the RTC’s finding that Juanito’s affidavit had no legal effect because it was unsigned; when at the hearing of the motion to declare Tallorin in default, it was shown that the affidavit bore Juanito’s thumbmark. The Court’s Rulings The first question, whether or not the CA erred in failing to dismiss the Taronas’ complaint for not impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose names, like their co-owner Tallorin, the annulled tax declaration had been issued, is a telling question. The rules mandate the joinder of indispensable parties. Thus: Sec. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs and defendants.16 Indispensable parties are those with such an interest in the controversy that a final decree would necessarily affect their rights, so that the courts cannot proceed without their presence.17 Joining indispensable parties into an action is mandatory, being a requirement of due process. Without their presence, the judgment of the court cannot attain real finality. Judgments do not bind strangers to the suit. The absence of an indispensable party renders all subsequent actions of the court null and void. Indeed, it would have no authority to act, not only as to the absent party, but as to those present as well. And where does the responsibility for impleading all indispensable parties lie? It lies in the plaintiff.18 Here, the Taronas sought the annulment of the tax declaration in the names of defendant Tallorin and two others, namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez and, in its place, the reinstatement of the previous declaration in their father Juanito’s name. Further, the Taronas sought to strike down as void the affidavit in which Juanito renounced his tenancy right in favor of the same three persons. It is inevitable that any decision granting what the Taronas wanted would necessarily affect the rights of such persons to the property covered by the tax declaration. The Court cannot discount the importance of tax declarations to the persons in whose names they are issued. Their cancellation adversely affects the rights and interests of such persons over the properties that the documents cover. The reason is simple: a tax declaration is a primary evidence, if not the source, of the right to claim title of ownership over real property, a right enforceable against another person. The Court held in Uriarte v. People 19 that, although not conclusive, a tax declaration is a telling evidence of the declarant’s possession which could ripen into ownership. In Director of Lands v. Court of Appeals,20 the Court said that no one in his right mind would pay taxes for a property that he did not have in his possession. This honest sense of obligation proves that the REMLAW Page 369
for a property that he did not have in his possession. This honest sense of obligation proves that the holder claims title over the property against the State and other persons, putting them on notice that he would eventually seek the issuance of a certificate of title in his name. Further, the tax declaration expresses his intent to contribute needed revenues to the Government, a circumstance that strengthens his bona fide claim to ownership.21 Here, the RTC and the CA annulled Tax Declaration 6164 that belonged not only to defendant Tallorin but also to Margarita Pastelero Vda. de Valdez and Dolores Valdez, which two persons had no opportunity to be heard as they were never impleaded. The RTC and the CA had no authority to annul that tax declaration without seeing to it that all three persons were impleaded in the case. But the Taronas’ action cannot be dismissed outright. As the Court held in Plasabas v. Court of Appeals,22 the non-joinder of indispensable parties is not a ground for dismissal. Section 11, Rule 3 of the 1997 Rules of Civil Procedure prohibits the dismissal of a suit on the ground of non-joinder or misjoinder of parties and allows the amendment of the complaint at any stage of the proceedings, through motion or on order of the court on its own initiative. Only if plaintiff refuses to implead an indispensable party, despite the order of the court, may it dismiss the action. There is a need, therefore, to remand the case to the RTC with an order to implead Margarita Pastelero Vda. de Valdez and Dolores Valdez as defendants so they may, if they so desire, be heard. In view of the Court’s resolution of the first question, it would serve no purpose to consider the other questions that the petition presents. The resolution of those questions seems to depend on the complete evidence in the case. This will not yet happen until all the indispensable party-defendants are impleaded and heard on their evidence. WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision of the Regional Trial Court of Balanga, Bataan in Civil Case 6739 dated January 30, 2002 and the decision of the Court of Appeals in CA-G.R. CV 74762 dated May 22, 2006. The Court REMANDS the case to the Regional Trial Court of Balanga, Bataan which is DIRECTED to have Margarita Pastelero Vda. de Valdez and Dolores Valdez impleaded by the plaintiffs as party-defendants and, afterwards, to hear the case in the manner prescribed by the rules. SO ORDERED. Pasted from
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Littie Sarah Agdeppa v Heirs of Ignacio Bonete GR 164436 Jan 15 2010 Sunday, November 14, 2010 11:40 PM
LITTIE SARAH A. AGDEPPA, LYNN SARAH A. AGDEPPA, LOUELLA JEANNE A. AGDEPPA, and LALAINE LILIBETH A. AGDEPPA, Petitioners, vs. HEIRS OF IGNACIO BONETE, represented by DOROTEA BONETE, HIPOLITO BONETE, MILAGROS BONETE, MAURICIO BONETE, FERNANDO BONETE, and OPHELIA BONETE, Respondents. DE C I S I O N NACHURA, J.: Before this Court is a Petition for Review on Certiorari,1 seeking the reversal of the Court of Appeals (CA) Decision,2 dated December 27, 2002, which reversed and set aside the Order,3 dated May 21, 1990, issued by the Regional Trial Court (RTC), Branch 18, of Midsayap, Cotabato. The factual and procedural antecedents of the case are as follows: In 1979, respondent Dorotea Bonete (Dorotea), widow of the late Ignacio Bonete and mother of respondents Hipolito Bonete, Milagros Bonete, Mauricio Bonete, Fernando Bonete, and Ophelia Bonete (respondents), obtained a loan in the amount of P55,000.00 from Development Bank of the Philippines (DBP), Cotabato City Branch, in order to buy farm implements. A parcel of agricultural land, known as Lot No. (1144) H-207865 with an area of 18.00 hectares, covered by Transfer Certificate of Title (TCT) No. T-56923,4 issued in the name of Dorotea and situated in Demapaco, Libungan, Cotabato (subject property), was used as collateral to secure the said loan. In 1982, respondents, through Dorotea, received a notice of collection from DBP. Respondents alleged that herein petitioner and counsel, Atty. Littie Sarah A. Agdeppa (Littie Sarah), expressed deep concern and sympathy for them. Consequently, Littie Sarah accompanied Dorotea to DBP and obligated herself to pay the loan. Thereafter, Dorotea was allegedly made to sign a document as Littie Sarah’s security for the amount which the latter paid to DBP in connection with the said loan. Further, respondents alleged that, since 1982, Littie Sarah and her representatives had been gradually easing them out of the subject property and that they were ordered to stop the cultivation of their respective ricefields. Eventually, respondents were forcibly ejected from the subject property. Further, Littie Sarah planted corn and put up duck-raising projects on the subject property. On this account, respondents inquired from the Register of Deeds and found that the title to the subject property, which was in the name of respondents' predecessor-in-interest, the late Ignacio Bonete, had already been canceled and transferred to Littie Sarah under TCT No. T-75454 by virtue of a purported deed of sale. According to Dorotea, Littie Sarah took advantage of her by letting her sign a contract, ostensibly as security for the loan from DBP, which later turned out to be a deed of sale. Thus, respondents filed a Complaint5 for Recovery of Ownership and Possession and/or Annulment of Deed of Sale of the Subject Property with Damages, docketed as Civil Case No. 484 before the RTC. Littie Sarah filed a Motion to Dismiss6 the Complaint based on the following grounds: 1) that respondents had no legal capacity to sue; 2) that respondents were not the real parties in interest; 3) that the Complaint stated no cause of action; and 4) that the claim or demand set forth in the Complaint had already been waived and extinguished. Later, the Complaint was amended, impleading herein petitioners Lynn Sarah Agdeppa, Louella Jeanne Agdeppa, and Lalaine Lilibeth Agdeppa, together with Littie Sarah, as defendants (petitioners).7 Respondents also filed an Opposition to the Motion to Dismiss. 8 On May 21, 1990, the RTC issued an Order dismissing the Amended Complaint with costs against respondents. It held that the Amended Complaint did not show the character and representation that respondents claimed to have. TCT No. T-56923, covering the subject property, was not in the name of the late Ignacio Bonete but in Dorotea's name. Thus, the RTC held that respondents were not real parties in interest. Respondents filed a Motion for Reconsideration9 which the RTC denied in its Order10 dated January 12, 1991. Therein, the RTC held that respondents lacked the personality to sue; thus, a REMLAW Page 371
dated January 12, 1991. Therein, the RTC held that respondents lacked the personality to sue; thus, a valid basis to grant the motion to dismiss on the ground that the complaint did not state a cause of action. Aggrieved, respondents went to the CA.11 On December 27, 2002, the CA reversed and set aside the RTC Order, and remanded the case to the RTC for further proceedings because Dorotea, being the former owner of the subject property, was a real party in interest. Petitioners filed their Motion for Reconsideration,12 which the CA denied in its Resolution13 dated April 28, 2004. Hence, this Petition assigning the following errors: THE HONORABLE COURT OF APPEALS IN REVERSING THE ORDER OF DISMISSAL ISSUED BY THE REGIONAL TRIAL COURT, ACTED CONTRARY TO LAW AND JURISPRUDENCE; DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS; GRAVELY ERRED AND GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OF JURISDICTION; AND LAID DOWN A VERY BAD PRECEDENT, AS FOLLOWS: A. BY VIOLATING SPECIFICALLY THE PROVISIONS OF THE RULES OF COURT, PARTICULARLY SECS. 2 AND 3 OF RULE 3 OF THE RULES OF COURT, ON PARTIES-PLAINTIFFS TO CIVIL ACTIONS AND REAL PARTIES IN INTEREST; B. BY UPHOLDING THE LEGAL CAPACITY OF THE PLAINTIFFS HEIRS OF IGNACIO BONETE TO SUE AND TO FILE THIS CASE WHEN THE HONORABLE COURT OF APPEALS ITSELF EVEN RIGHTFULLY FOUND THAT TCT NO. T-56923 WAS ALREADY REGISTERED IN THE NAME OF DOROTEA BONETE, WHEN IT WAS SOLD TO HEREIN DEFENDANTS, SUCH THAT IGNACIO BONETE OR THE HEIRS OF IGNACIO BONETE [HAD] NOTHING TO DO WITH THE SAID PROPERTY- THUS[,] NOT THE REAL PARTY IN INTEREST AND [HAD] NO LEGAL PERSONALITY TO SUE AND LIKEWISE [HAD] NO CAUSE OF ACTION AGAINST DEFENDANTS (PETITIONERS HEREIN); C. THAT THE DECISION OF THIS HONORABLE COURT OF APPEALS WAS ISSUED CONTRARY TO LAW AND JURISPRUDENCE AND CONTRARY TO THE TRUE, ACTUAL AND EXISTING FACTS OF THIS CASE AND EVEN TO THE VERY FINDINGS OF THE HONORABLE COURT OF APPEALS ITSELF, BECAUSE WHILE THE HONORABLE COURT OF APPEALS RULED THAT DOROTEA BONETE AS REGISTERED OWNER IS A PARTY IN INTEREST, THIS CASE IS NOT PROSECUTED IN THE NAME OF DOROTEA BONETE, BUT IN THE NAME OF THE HEIRS OF IGNACIO BONETE, AND IF EVER THE NAME OF DOROTEA BONETE IS MENTIONED IT WAS MERELY [AND] ALLEGEDLY IN REPRESENTATION OF THE HEIRS OF IGNACIO BONETE AND NOT IN HER OWN PERSONAL CAPACITY; BUT WHICH REPRESENTATION IS NOT EVEN ALLEGED IN THE COMPLAINT, THUS STILL A VIOLATION OF THE RULES OF COURT; D. THAT THE REMANDING OF THIS CASE TO THE REGIONAL TRIAL COURT FOR FURTHER PROCEEDINGS WITH THE PARTY PLAINTIFF "HEIRS OF IGNACIO BONETE" NOT BEING A REAL PARTY IN INTEREST VIOLATES THE WELL ESTABLISHED "GENERAL RULE [THAT] ONE HAVING NO RIGHT OR INTEREST TO PROTECT CANNOT INVOKE THE JURISDICTION OF THE COURT AS A PARTY PLAINTIFF IN AN ACTION. (Ralla v. Ralla, 199 SCRA 495 [1991])" AND "THE GENERAL RULE OF x x x COMMON LAW x x x THAT EVERY ACTION MUST BE BROUGHT IN THE NAME OF THE PARTY WHOSE LEGAL RIGHT HAS BEEN INVADED OR INFRINGED"; E. IT WILL CREATE A VERY BAD AND IMPROPER PRECEDENT NOT WARRANTED UNDER THE PROVISIONS OF THE RULES OF COURT; [AND] F. WILL UNNECESSARILY CAUSE THE PARTIES UNDUE DELAY AND EXPENSES FOR AFTER ALL THE PARTIES-PLAINTIFFS THEREIN ARE NOT THE REAL PARTIES IN INTEREST[.] 14 The instant Petition is bereft of merit. While it is true that respondents committed a procedural infraction before the RTC, such infraction does not justify the dismissal of the case. Misjoinder of parties does not warrant the dismissal of the action.15 Rule 3, Section 11 of the Rules of Court clearly provides: Sec. 11. Misjoinder and non-joinder of parties. — Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. It bears stressing that TCT No. T-56923, covering the subject property, was issued in the name of REMLAW Page 372
misjoined party may be severed and proceeded with separately. It bears stressing that TCT No. T-56923, covering the subject property, was issued in the name of Dorotea. This is established by the record, and petitioners themselves admit this fact. However, because TCT No. T-75454, allegedly issued in favor of Littie Sarah, and the purported deed of sale, allegedly executed by Dorotea in favor of Littie Sarah, are not on record. Considering the allegations in the pleadings, it is best that a trial on the merits be conducted.1avvphi1 We fully agree with the apt and judicious ruling of the CA, when it said: As the former owner of the subject property, the same having been titled in her name under TCT No. T-56923, Dorotea Cariaga Bonete, being the real party [in] interest, has the legal capacity to file the instant case for reconveyance and annulment of deed of sale. The complaint was filed by the [respondents] precisely to question the issuance of TCT No. T-75454 in the name of Littie Sarah Agdeppa as the transaction allegedly contemplated was only to secure Dorotea’s loan. Why the property became the subject of the deed of sale which is being disputed by Dorotea should be threshed out in a full-blown trial on the merits in order to afford the contending parties their respective days in court. As held in Del Bros. Hotel Corporation vs. Court of Appeals, 210 SCRA 33, the complaint is not supposed to contain evidentiary matters as this will have to be done at the trial on the merits of the case. A final note. A liberal construction of the Rules is apt in situations involving excusable formal errors in a pleading, as long as the same do not subvert the essence of the proceeding, and they connote at least a reasonable attempt at compliance with the Rules.16 The Court is not precluded from rectifying errors of judgment, if blind and stubborn adherence to procedure would result in the sacrifice of substantial justice for technicality. To deprive respondents, particularly Dorotea, of their claims over the subject property on the strength of sheer technicality would be a travesty of justice and equity. WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals Decision is AFFIRMED. The Regional Trial Court, Branch 18 of Midsayap, Cotabato, is hereby directed to resolve this case on the merits with deliberate dispatch. Costs against petitioners. SO ORDERED. Pasted from
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Sui Man Hui Chan v. CA, GR 147999, Feb 27, 2004 Sunday, November 14, 2010 11:40 PM
SUI MAN HUI CHAN and GONZALO CO, petitioners vs. HON. COURT OF APPEALS and OSCAR D. MEDALLA, respondents. DE C I S I O N QUISUMBING, J.: For review on certiorari is the Decision1 dated May 3, 2001, of the Court of Appeals in CA-G.R. SP No. 61889, affirming the Order2 dated January 11, 2000, of the Regional Trial Court (RTC) of Mandaluyong City, Branch 213, in Civil Case No. MC99-666, which had denied petitioners’ Motion to Dismiss the complaint filed by private respondent. The facts, as culled from records, are as follows: On March 30, 1999, private respondent Oscar Medalla filed a complaint before the RTC of Mandaluyong City, docketed as Civil Case No. MC99-666, for collection of a sum of money arising from breach of a contract of lease and damages, against petitioners Sui Man Hui Chan and Gonzalo Co. The complaint alleged that on November 14, 1988, Napoleon C. Medalla as lessor and Ramon Chan as lessee entered into a Lease Contract3 over a hotel building located at No. 29 Abanao Street, Baguio City. Chan would use the leased premises as a restaurant named "Cypress Inn". Pertinently, the parties agreed on the following: 1. The period of lease shall be for ten (10) years or from 15 July 1988 to 15 July 1998. 2. The payment of the realty taxes due to the government on the leased premises shall be for the account of the Lessee. 3. The agreement is binding upon the heirs and/or successors-in-interest of the Lessor and the Lessee. Petitioner Gonzalo Co was employed by Ramon Chan as the general manager of "Cypress Inn" and acted as his agent in all his dealings with Napoleon Medalla. On August 5, 1989, Ramon Chan died. He was survived by his wife, petitioner Sui Man Hui Chan, who continued to operate the restaurant. On July 17, 1996, Napoleon Medalla died. Among his heirs is private respondent Oscar Medalla, who succeeded him as owner and lessor of the leased premises. The contract was neither amended nor terminated after the death of the original parties but was continued by their respective successors-ininterest pursuant to the terms thereof. Petitioners Chan and Co, the latter, in his capacity as agent and general manager, continued to deal with private respondent Medalla in all transactions pertaining to the contract. On various occasions, petitioners failed to pay the monthly rentals due on the leased premises. Despite several Statements of Accounts sent by Medalla, petitioners failed to pay the rentals due but, nonetheless, continued to use and occupy the leased premises. On February 26, 1997, Medalla sent a letter addressed to Ramon Chan, indicating that (1) the contract of lease would expire on July 15, 1998, and (2) he was not amenable to a renewal of said contract after its expiration. Medalla then sent demand letters to petitioners, but the latter still failed to pay the unpaid rentals. He also found out that petitioners had not paid the realty taxes due on the leased premises since 1991, amounting to P610,019.11. Medalla then asked petitioners to settle the unpaid rentals, pay the unpaid real estate taxes, and vacate the leased premises. On January 1999, petitioners vacated the premises but without paying their unpaid rentals and realty taxes. Aggrieved by petitioners’ refusal to pay the amounts owing, which had reached P4,147,901.80 by March 1999, private respondent Medalla instituted Civil Case No. MC99-666. In their Answer to the Complaint, petitioners denied owing private respondent the amounts claimed by the latter. They alleged that the late Ramon Chan had paid all the rentals due up to March 15, 1998. Moreover, they need not pay any balance owing on the rentals as they were required to pay two (2) months advance rentals upon signing of the contract and make a guarantee deposit amounting to P220,000. On the matter of unpaid realty taxes, petitioners alleged that private respondent was responsible therefor as the owner of the leased premises, notwithstanding any contrary stipulations in the contract. REMLAW Page 374
the contract. On July 19, 1999, petitioners filed a Supplemental Answer with Motion to Dismiss alleging that they were neither parties nor privies to the Contract of Lease, hence they are not the real parties-in-interest. Private respondent filed a Reply and Opposition to petitioners’ Supplemental Answer with Motion to Dismiss dated August 2, 1999, praying for the denial of the Motion to Dismiss for having been belatedly filed in direct contravention of Section 1, Rule 16, of the 1997 Rules of Civil Procedure.4 He further alleged that petitioner Chan, as the owner of the business and petitioner Co as the agent of petitioner Chan, are clearly real parties-in-interest in the case. Private respondent pointed to their continuous dealings with him in all transactions relating to the contract after the death of Ramon Chan and even after the expiration of the Contract of Lease. On January 11, 2000, the RTC denied petitioners’ Motion to Dismiss, thus: WHEREFORE, in view of the foregoing, the motion to dismiss dated July 19, 1999 filed by defendant through counsel against plaintiff is hereby DENIED for lack of merit. SO ORDERED.5 The trial court pointed out that petitioners continued to transact business with private respondent after the death of Ramon Chan as shown by the communications between the parties. It also declared that private respondent’s acquiescence to petitioners’ continued occupation and enjoyment of the leased premises and the latter’s recognition of the former’s ownership of said premises reflected an oral agreement between the parties to continue the Lease Contract. Petitioners moved for reconsideration on the ground that any claim should be filed against the estate of Ramon Chan in an estate proceeding pursuant to Section 5, Rule 86, of the Revised Rules of Court6 since Ramon Chan’s estate is the real party-in-interest. The court denied said motion and declared that Section 5, Rule 86 is inapplicable in the case. It pointed out that the unpaid rentals being claimed were those for the period April 1993 to December 1998. These were incurred by petitioners and not by the late Ramon Chan, who died on August 5, 1989. Dissatisfied, petitioners elevated the matter to the Court of Appeals through a special civil action of certiorari, docketed as CA-G.R. SP No. 61889. The Court of Appeals, however, affirmed the RTC Orders, as follows: WHEREFORE, foregoing premises considered, the petition having no merit in fact and in law is hereby DENIED DUE COURSE and ACCORDINGLY ORDERED DISMISSED. The assailed Orders are resultantly AFFIRMED WITH COSTS TO PETITIONERS. SO ORDERED.7 Hence, the instant petition submitting as sole issue for our resolution: whether or not respondent Court of Appeals committed serious error in law in affirming the RTC Orders denying petitioners’ motion to dismiss and the subsequent motion for reconsideration.8 Petitioners argue that the Court of Appeals erred in affirming the RTC’s Orders because they are not the real parties-in-interest and hence, were improperly impleaded in the complaint as defendants. Petitioners insist that they were neither parties nor were they privy to the Contract of Lease between the late Ramon Chan and Napoleon Medalla. They vigorously assert that any claim for unpaid rentals should be made against the estate of Ramon Chan pursuant to Section 5, Rule 86 of the Revised Rules of Court. We find for private respondent. Prefatorily, it bears stressing that petitioners’ Motion to Dismiss was filed after an Answer had already been filed. This alone warranted an outright dismissal of the motion for having been filed in contravention of the clear and explicit mandate of Section 1, Rule 16, of the Revised Rules of Civil Procedure. Under this section, a motion to dismiss shall be filed within the time for but before filing the answer to the complaint or pleading asserting a claim.9 Here, petitioners filed their Supplemental Answer with Motion to Dismiss almost two months after filing their Answer, in clear contravention of the aforecited rule. The Court of Appeals stated that the grant or denial of a Motion to Dismiss is an interlocutory order, and it cannot be the proper subject of a special civil action for certiorari. The proper remedy in such a case is to appeal after a decision has been rendered, the CA said. A writ of certiorari is not intended to correct every controversial interlocutory ruling; it is resorted to only to correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack or excess of jurisdiction. The function of a petition for certiorari is limited to keeping an inferior court within the bounds of its jurisdiction and to relieve persons from arbitrary acts, acts which courts or judges have no power or authority in law to perform. REMLAW Page 375
persons from arbitrary acts, acts which courts or judges have no power or authority in law to perform. Certiorari is not designed to correct erroneous findings and conclusions made by the court.10 On this score, we are in agreement with the appellate court. At any rate, we find no merit to petitioners’ contention that they are not real parties-in-interest since they are not parties nor signatories to the contract and hence should not have been impleaded as defendants. It is undeniable that petitioner Chan is an heir of Ramon Chan and, together with petitioner Co, was a successor-in-interest to the restaurant business of the late Ramon Chan. Both continued to operate the business after the death of Ramon. Thus, they are real parties-in-interest in the case filed by private respondent, notwithstanding that they are not signatories to the Contract of Lease. A lease contract is not essentially personal in character. Thus, the rights and obligations therein are transmissible to the heirs.11 The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-interest except when the rights and obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of law.12 In the subject Contract of Lease, not only were there no stipulations prohibiting any transmission of rights, but its very terms and conditions explicitly provided for the transmission of the rights of the lessor and of the lessee to their respective heirs and successors. The contract is the law between the parties. The death of a party does not excuse nonperformance of a contract, which involves a property right, and the rights and obligations thereunder pass to the successors or representatives of the deceased. Similarly, nonperformance is not excused by the death of the party when the other party has a property interest in the subject matter of the contract.13 Finally, as to petitioners’ contention that any claim should have been filed before the estate proceeding of Ramon Chan pursuant to Section 5 of Rule 86, the trial court found that the unpaid rentals sought to be claimed were for the period April 1993 to December 1998. Note that Ramon Chan, the original lessee, died on August 5, 1989. In other words, as the unpaid rentals did not accrue during the lifetime of Ramon Chan, but well after his death, his estate might not be held liable for them. Hence, there is no indubitable basis to apply Section 5, Rule 86, of the Revised Rules of Court as petitioners urge respondents to do. WHEREFORE, the instant petition is DENIED and the Decision of the Court of Appeals in CA-G.R. SP. No. 61889 is AFFIRMED. Costs against petitioners. SO ORDERED. Pasted from
REMLAW Page 376
Carandang vs. Heirs of De Guzman GR 160347 Nov. 29, 2006 Sunday, November 14, 2010 11:40 PM
ARCADIO and MARIA LUISA CARANDANG, Petitioners, vs. HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., Respondents. DE C I S I O N CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari assailing the Court of Appeals Decision 1 and Resolution affirming the Regional Trial Court (RTC) Decision rendering herein petitioners Arcadio and Luisa Carandang [hereinafter referred to as spouses Carandang] jointly and severally liable for their loan to Quirino A. de Guzman. The Court of Appeals summarized the facts as follows: [Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and forty six percent (46%) respectively. On November 26, 1983, the capital stock of MBS was increased, from P500,000 to P1.5 million and P345,000 of this increase was subscribed by [the spouses Carandang]. Thereafter, on March 3, 1989, MBS again increased its capital stock, from P1.5 million to P3 million, [the spouses Carandang] yet again subscribed to the increase. They subscribed to P93,750 worth of newly issued capital stock. [De Guzman] claims that, part of the payment for these subscriptions were paid by him, P293,250 for the November 26, 1983 capital stock increase and P43,125 for the March 3, 1989 Capital Stock increase or a total of P336,375. Thus, on March 31, 1992, [de Guzman] sent a demand letter to [the spouses Carandang] for the payment of said total amount. [The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement was executed between [Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for the stock subscriptions of the former without cost, in consideration for *Arcadio Carandang’s+ technical expertise, his newly purchased equipment, and his skill in repairing and upgrading radio/communication equipment therefore, there is no indebtedness on their part [sic]. On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the P336,375 together with damages. After trial on the merits, the trial court disposed of the case in this wise: "WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Guzman]. Accordingly, [the spouses Carandang] are ordered to jointly and severally pay [de Guzman], to wit: (1) P336,375.00 representing *the spouses Carandang’s+ loan to de Guzman; (2) interest on the preceding amount at the rate of twelve percent (12%) per annum from June 5, 1992 when this complaint was filed until the principal amount shall have been fully paid; (3) P20,000.00 as attorney’s fees; (4) Costs of suit. The spouses Carandang appealed the RTC Decision to the Court of Appeals, which affirmed the same in the 22 April 2003 assailed Decision: WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No costs. [2] The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of Appeals in the 6 October 2003 assailed Resolution: WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April 22, 2003, which is based on applicable law and jurisprudence on the matter is hereby AFFIRMED and REITERATED. [3] The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari, bringing forth the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. II. REMLAW Page 377
STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THERE IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS. III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE REVISED RULES ON EVIDENCE. IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PURPORTED LIABILITY OF PETITIONERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE. [4] Whether or not the RTC Decision is void for failing to comply with Section 16, Rule 3 of the Rules of Court The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of Quirino de Guzman, is void for failing to comply with Section 16, Rule 3 of the Rules of Court, which provides: SEC. 16. Death of party; duty of counsel. –Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order the legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The spouses Carandang posits that such failure to comply with the above rule renders void the decision of the RTC, in adherence to the following pronouncements in Vda. de Haberer v. Court of Appeals 5 and Ferreria v. Vda. de Gonzales [6]: Thus, it has been held that when a party dies in an action that survives and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no substitution has ever been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and judgment would be binding. [7] In the present case, there had been no court order for the legal representative of the deceased to appear, nor had any such legal representative appeared in court to be substituted for the deceased; neither had the complainant ever procured the appointment of such legal representative of the deceased, including appellant, ever asked to be substituted for the deceased. As a result, no valid substitution was effected, consequently, the court never acquired jurisdiction over appellant for the purpose of making her a party to the case and making the decision binding upon her, either personally or as a representative of the estate of her deceased mother. [8] However, unlike jurisdiction over the subject matter which is conferred by law and is not subject to the discretion of the parties, 9 jurisdiction over the person of the parties to the case may be waived either expressly or impliedly. 10 Implied waiver comes in the form of either voluntary appearance or a failure to object. [11] In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the REMLAW Page 378
In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the heirs of the deceased party, and therefore the judgment cannot be made binding upon them. In the case at bar, not only do the heirs of de Guzman interpose no objection to the jurisdiction of the court over their persons; they are actually claiming and embracing such jurisdiction. In doing so, their waiver is not even merely implied (by their participation in the appeal of said Decision), but express (by their explicit espousal of such view in both the Court of Appeals and in this Court). The heirs of de Guzman had no objection to being bound by the Decision of the RTC. Thus, lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence. It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs. The underlying principle therefor is not really because substitution of heirs is a jurisdictional requirement, but because non-compliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein. [12] Such violation of due process can only be asserted by the persons whose rights are claimed to have been violated, namely the heirs to whom the adverse judgment is sought to be enforced. Care should, however, be taken in applying the foregoing conclusions. In People v. Florendo, [13] where we likewise held that the proceedings that took place after the death of the party are void, we gave another reason for such nullity: "the attorneys for the offended party ceased to be the attorneys for the deceased upon the death of the latter, the principal x x x." Nevertheless, the case at bar had already been submitted for decision before the RTC on 4 June 1998, several months before the passing away of de Guzman on 19 February 1999. Hence, no further proceedings requiring the appearance of de Guzman’s counsel were conducted before the promulgation of the RTC Decision. Consequently, de Guzman’s counsel cannot be said to have no authority to appear in trial, as trial had already ceased upon the death of de Guzman. In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the Rules of Court, because of the express waiver of the heirs to the jurisdiction over their persons, and because there had been, before the promulgation of the RTC Decision, no further proceedings requiring the appearance of de Guzman’s counsel. Before proceeding with the substantive aspects of the case, however, there is still one more procedural issue to tackle, the fourth issue presented by the spouses Carandang on the non-inclusion in the complaint of an indispensable party. Whether or not the RTC should have dismissed the case for failure to state a cause of action, considering that Milagros de Guzman, allegedly an indispensable party, was not included as a party-plaintiff The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions were issued in the name of Milagros de Guzman, the latter should be considered an indispensable party. Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-plaintiff should cause the dismissal of the action because "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action." [14] The Court of Appeals held: We disagree. The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which the four (4) checks were drawn is part of their conjugal property and under both the Civil Code and the Family Code the husband alone may institute an action for the recovery or protection of the spouses’ conjugal property. Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that "x x x Under the New Civil Code, the husband is the administrator of the conjugal partnership. In fact, he is the sole administrator, and the wife is not entitled as a matter of right to join him in this endeavor. The husband may defend the conjugal partnership in a suit or action without being joined by the wife. x x x Under the Family Code, the administration of the conjugal property belongs to the husband and the wife jointly. However, unlike an act of alienation or encumbrance where the consent of both spouses is required, joint management or administration does not require that the husband and wife always act together. Each spouse may validly exercise full power of management alone, subject to the intervention of the court in proper cases as provided under Article 124 of the Family Code. x x x." The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest" REMLAW Page 379
The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest" and "indispensable party." A real party in interest is the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit. [15] On the other hand, an indispensable party is a party in interest without whom no final determination can be had of an action, [16] in contrast to a necessary party, which is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action. [17] The spouses Carandang are indeed correct that "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action." [18] However, what dismissal on this ground entails is an examination of whether the parties presently pleaded are interested in the outcome of the litigation, and not whether all persons interested in such outcome are actually pleaded. The latter query is relevant in discussions concerning indispensable and necessary parties, but not in discussions concerning real parties in interest. Both indispensable and necessary parties are considered as real parties in interest, since both classes of parties stand to be benefited or injured by the judgment of the suit. Quirino and Milagros de Guzman were married before the effectivity of the Family Code on 3 August 1988. As they did not execute any marriage settlement, the regime of conjugal partnership of gains govern their property relations. [19] All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. [20] Credits are personal properties, [21] acquired during the time the loan or other credit transaction was executed. Therefore, credits loaned during the time of the marriage are presumed to be conjugal property. Consequently, assuming that the four checks created a debt for which the spouses Carandang are liable, such credits are presumed to be conjugal property. There being no evidence to the contrary, such presumption subsists. As such, Quirino de Guzman, being a co-owner of specific partnership property, [22] is certainly a real party in interest. Dismissal on the ground of failure to state a cause of action, by reason that the suit was allegedly not brought by a real party in interest, is therefore unwarranted. So now we come to the discussion concerning indispensable and necessary parties. When an indispensable party is not before the court, the action should likewise be dismissed. [23] The absence of an indispensable party renders all subsequent actuations of the court void, for want of authority to act, not only as to the absent parties but even as to those present. [24] On the other hand, the non-joinder of necessary parties do not result in the dismissal of the case. Instead, Section 9, Rule 3 of the Rules of Court provides for the consequences of such non-joinder: Sec. 9. Non-joinder of necessary parties to be pleaded. – Whenever in any pleading in which a claim is asserted a necessary party is not joined, the pleader shall set forth his name, if known, and shall state why he is omitted. Should the court find the reason for the omission unmeritorious, it may order the inclusion of the omitted necessary party if jurisdiction over his person may be obtained. The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver of the claim against such party. The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Non-compliance with the order for the inclusion of a necessary party would not warrant the dismissal of the complaint. This is an exception to Section 3, Rule 17 which allows the dismissal of the complaint for failure to comply with an order of the court, as Section 9, Rule 3 specifically provides for the effect of such non-inclusion: it shall not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Section 11, Rule 3 likewise provides that the non-joinder of parties is not a ground for the dismissal of the action. Other than the indispensable and necessary parties, there is a third set of parties: the pro-forma parties, which are those who are required to be joined as co-parties in suits by or against another party as may be provided by the applicable substantive law or procedural rule. [25] An example is provided by Section 4, Rule 3 of the Rules of Court: Sec. 4. Spouses as parties. – Husband and wife shall sue or be sued jointly, except as provided by law. Pro-forma parties can either be indispensable, necessary or neither indispensable nor necessary. The third case occurs if, for example, a husband files an action to recover a property which he claims to be REMLAW Page 380
third case occurs if, for example, a husband files an action to recover a property which he claims to be part of his exclusive property. The wife may have no legal interest in such property, but the rules nevertheless require that she be joined as a party. In cases of pro-forma parties who are neither indispensable nor necessary, the general rule under Section 11, Rule 3 must be followed: such non-joinder is not a ground for dismissal. Hence, in a case concerning an action to recover a sum of money, we held that the failure to join the spouse in that case was not a jurisdictional defect. [26] The non-joinder of a spouse does not warrant dismissal as it is merely a formal requirement which may be cured by amendment. [27] Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the rules concerning indispensable or necessary parties, as the case may be, should be applied. Thus, dismissal is warranted only if the pro-forma party not joined in the complaint is an indispensable party. Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3. Article 108 of the Family Code provides: Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. This provision is practically the same as the Civil Code provision it superceded: Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter. In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners’ stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular [28] and Adlawan v. Adlawan, [29] we held that, in a co-ownership, co-owners may bring actions for the recovery of co-owned property without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals, [30] we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds of action for the recovery of possession. [31] In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the coowner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners. [32] We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery of the allegedly loaned money to the spouses Carandang. As such, she need not have been impleaded in said suit, and dismissal of the suit is not warranted by her not being a party thereto. Whether or not respondents were able to prove the loan sought to be collected from petitioners In the second and third issues presented by the spouses Carandang, they claim that the de Guzmans failed to prove the alleged loan for which the spouses Carandang were held liable. As previously stated, spouses Quirino and Milagros de Guzman paid for the stock subscriptions of the spouses Carandang, amounting to P336,375.00. The de Guzmans claim that these payments were in the form of loans and/or advances and it was agreed upon between the late Quirino de Guzman, Sr. and the spouses Carandang that the latter would repay him. Petitioners, on the other hand, argue that there was an oral preincorporation agreement wherein it was agreed that Arcardio Carandang would always maintain his 46% equity participation in the corporation even if the capital structures were increased, and that Quirino de Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang with no cost to the latter. REMLAW Page 381
to the latter. On this main issue, the Court of Appeals held: [The spouses Carandang] aver in its ninth assigned error that [the de Guzmans] failed to prove by preponderance of evidence, either the existence of the purported loan or the non-payment thereof. Simply put, preponderance of evidence means that the evidence as a whole adduced by one side is superior to that of the other. The concept of preponderance of evidence refers to evidence that is of greater weight, or more convincing, than that which is offered in opposition to it; it means probability of truth. [The spouses Carandang] admitted that it was indeed [the de Guzmans] who paid their stock subscriptions and their reason for not reimbursing the latter is the alleged pre-incorporation agreement, to which they offer no clear proof as to its existence. It is a basic rule in evidence that each party must prove his affirmative allegation. Thus, the plaintiff or complainant has to prove his affirmative allegations in the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaims. [33] The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having presented evidence only of the payment in favor of the Carandangs. They claim: It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr. "A" decides to pay for Mr. "B’s" obligation, that payment by Mr. "A" cannot, by any stretch of imagination, possibly mean that there is now a loan by Mr. "B" to Mr. "A". There is a possibility that such payment by Mr. "A" is purely out of generosity or that there is a mutual agreement between them. As applied to the instant case, that mutual agreement is the pre-incorporation agreement (supra) existing between Mr. de Guzman and the petitioners --- to the effect that the former shall be responsible for paying stock subscriptions of the latter. Thus, when Mr. de Guzman paid for the stock subscriptions of the petitioners, there was no loan to speak of, but only a compliance with the pre-incorporation agreement. [34] The spouses Carandang are mistaken. If indeed a Mr. "A" decides to pay for a Mr. "B’s" obligation, the presumption is that Mr. "B" is indebted to Mr. "A" for such amount that has been paid. This is pursuant to Articles 1236 and 1237 of the Civil Code, which provide: Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guarantee, or penalty. Articles 1236 and 1237 are clear that, even in cases where the debtor has no knowledge of payment by a third person, and even in cases where the third person paid against the will of the debtor, such payment would produce a debt in favor of the paying third person. In fact, the only consequences for the failure to inform or get the consent of the debtor are the following: (1) the third person can recover only insofar as the payment has been beneficial to the debtor; and (2) the third person is not subrogated to the rights of the creditor, such as those arising from a mortgage, guarantee or penalty. [35] We say, however, that this is merely a presumption. By virtue of the parties’ freedom to contract, the parties could stipulate otherwise and thus, as suggested by the spouses Carandang, there is indeed a possibility that such payment by Mr. "A" was purely out of generosity or that there was a mutual agreement between them. But such mutual agreement, being an exception to presumed course of events as laid down by Articles 1236 and 1237, must be adequately proven. The de Guzmans have successfully proven their payment of the spouses Carandang’s stock subscriptions. These payments were, in fact, admitted by the spouses Carandang. Consequently, it is now up to the spouses Carandang to prove the existence of the pre-incorporation agreement that was their defense to the purported loan. Unfortunately for the spouses Carandang, the only testimony which touched on the existence and substance of the pre-incorporation agreement, that of petitioner Arcardio Carandang, was stricken off the record because he did not submit himself to a cross-examination of the opposing party. On the other hand, the testimonies of Romeo Saavedra, [36] Roberto S. Carandang, [37] Gertrudes Z. Esteban, REMLAW Page 382
other hand, the testimonies of Romeo Saavedra, [36] Roberto S. Carandang, [37] Gertrudes Z. Esteban, [38] Ceferino Basilio, [39] and Ma. Luisa Carandang [40] touched on matters other than the existence and substance of the pre-incorporation agreement. So aside from the fact that these witnesses had no personal knowledge as to the alleged existence of the pre-incorporation agreement, the testimonies of these witnesses did not even mention the existence of a pre-incorporation agreement. Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted the existence of a pre-incorporation agreement because when they were asked by their counsel regarding the matter of the check payments made by the late Quirino A. de Guzman, Sr. in their behalf, they said that they had already paid for it thereby negating their own defense that there was a preincorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or loaned to them. This basic and irrefutable fact can be gleaned from their testimonies which the private respondents are quoting for easy reference: a. With respect to the testimony of Ma. Luisa Carandang Q: Now, can you tell this Honorable Court how do you feel with respect to the Complaint of the plaintiff in this case charging you that you paid for this year and asking enough to paid (sic) your tax? A: We have paid already, so, we are not liable for anything payment (sic). [41] b. With respect to the testimony of Arcadio Carandang "Q: How much? A: P40,000.00 to P50,000.00 per month. Q: The plaintiff also claimed thru witness Edgar Ragasa, that there were receipts issued for the payment of your shares; which receipts were marked as Exhibits "G" to "L" (Plaintiff). I’m showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the name of Ma. Luisa Carandang, your wife; and also, Arcadio M. Carandang. Will you please go over this Official Receipt and state for the records, who made for the payment stated in these receipts in your name? A: I paid for those shares." [42] There being no testimony or documentary evidence proving the existence of the pre-incorporation agreement, the spouses Carandang are forced to rely upon an alleged admission by the original plaintiff of the existence of the pre-incorporation agreement. Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted the existence of the preincorporation agreement by virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of private respondents’ Reply. Paragraphs 13 and 14 of petitioners’ Answer dated 7 July 1992 state in full: 13. Sometime in November, 1973 or thereabout, herein plaintiff invited defendant Arcadio M. Carandang to a joint venture by pooling together their technical expertise, equipments, financial resources and franchise. Plaintiff proposed to defendant and mutually agreed on the following: 1. That they would organize a corporation known as Mabuhay Broadcasting Systems, Inc. 2. Considering the technical expertise and talent of defendant Arcadio M. Carandang and his new equipments he bought, and his skill in repairing and modifying radio/communication equipments into high proficiency, said defendant would have an equity participation in the corporation of 46%, and plaintiff 54% because of his financial resources and franchise. 3. That defendant would always maintain his 46% equity participation in the corporation even if the capital structures are increased, and that plaintiff would personally pay the equity shares/stock subscriptions of defendant with no cost to the latter. 4. That because of defendant’s expertise in the trade including the marketing aspects, he would be the President and General Manager, and plaintiff the Chairman of the Board. 5. That considering their past and trustworthy relations, they would maintain such relations in the joint venture without any mental reservation for their common benefit and success of the business. 14. Having mutually agreed on the above arrangements, the single proprietorship of plaintiff was immediately spun-off into a corporation now known as Mabuhay Broadcasting System, Inc. The incorporators are plaintiff and his family members/nominees controlling jointly 54% of the stocks and defendant Arcadio M. Carandang controlling singly 46% as previously agreed. [43] Meanwhile, paragraphs 3 and 4 of private respondents’ Reply dated 29 July 1992 state in full: 3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems, REMLAW Page 383
defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems, Inc. Plaintiff specifically denies the other allegations in paragraph 13 of the Answer, the same being devoid of any legal or factual bases. The truth of the matter is that defendant Arcadio M. Carandang was not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to terminate lease. Additionally, the records would show that it was the defendant Arcadio M. Carandang who proposed a joint venture with the plaintiff. It appears that plaintiff agreed to the formation of the corporation principally because of a directive of then President Marcos indicating the need to broaden the ownership of radio broadcasting stations. The plaintiff owned the franchise, the radio transmitter, the antenna tower, the building containing the radio transmitter and other equipment. Verily, he would be placed in a great disadvantage if he would still have to personally pay for the shares of defendant Arcadio M. Carandang. 4. Plaintiff admits the allegations in paragraph 14 of the Answer. [44] In effect, the spouses Carandang are relying on the fact that Quirino de Guzman stated that he admitted paragraph 14 of the Answer, which incidentally contained the opening clause "(h)aving mutually agreed on the above arrangements, x x x." Admissions, however, should be clear and unambiguous. This purported admission by Quirino de Guzman reeks of ambiguity, as the clause "(h)aving mutually agreed on the above arrangements," seems to be a mere introduction to the statement that the single proprietorship of Quirino de Guzman had been converted into a corporation. If Quirino de Guzman had meant to admit paragraph 13.3, he could have easily said so, as he did the other paragraphs he categorically admitted. Instead, Quirino de Guzman expressly stated the opposite: that "(p)laintiff specifically denies the other allegations of paragraph 13 of the Answer." [45] The Reply furthermore states that the only portion of paragraph 13 which Quirino de Guzman had admitted is paragraph 13.1, and only insofar as it said that Quirino de Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc. [46] All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged preincorporation agreement. As there was no admission, and as the testimony of Arcardio Carandang was stricken off the record, we are constrained to rule that there was no pre-incorporation agreement rendering Quirino de Guzman liable for the spouses Carandang’s stock subscription. The payment by the spouses de Guzman of the stock subscriptions of the spouses Carandang are therefore by way of loan which the spouses Carandang are liable to pay. Whether or not the liability of the spouses Carandang is joint and solidary Finally, the Court of Appeals also upheld the RTC Decision insofar as it decreed a solidary liability. According to the Court of Appeals: With regards (sic) the tenth assigned error, [the spouses Carandang] contend that: "There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of [the spouses Carandang] is joint and solidary. x x x "Furthermore, the purported obligation of [the spouses Carandang] does not at all qualify as one of the obligations required by law to be solidary x x x." It is apparent from the facts of the case that [the spouses Carandang] were married way before the effectivity of the Family Code hence; their property regime is conjugal partnership under the Civil Code. It must be noted that for marriages governed by the rules of conjugal partnership of gains, an obligation entered into by the husband and wife is chargeable against their conjugal partnership and it is the partnership, which is primarily bound for its repayment. Thus, when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors, such that the concept of joint and solidary liability, as between them, does not apply. [47] The Court of Appeals is correct insofar as it held that when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors. Hence, either of them may be sued for the whole amount, similar to that of a solidary liability, although the amount is chargeable against their conjugal partnership property. Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals, [48] the two sets of defendant-spouses therein were held liable for P25,300.00 each, chargeable to their respective conjugal partnerships. WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Carandang are REMLAW Page 384
Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Carandang are ORDERED to pay the following amounts from their conjugal partnership properties: (1) P336,375.00 representing the spouses Carandang’s loan to Quirino de Guzman; and (2) Interest on the preceding amount at the rate of twelve percent (12%) per annum from 5 June 1992 when the complaint was filed until the principal amount can be fully paid; and (3) P20,000.00 as attorney’s fees. No costs. SO ORDERED. Pasted from
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Judge Sumaljag v. Literato GR 149787 Jun 18, 2008 Sunday, November 14, 2010 11:40 PM
JUDGE ANTONIO C. SUMALJAG, petitioner, vs. SPOUSES DIOSDIDIT and MENENDEZ M. LITERATO; and MICHAELES MAGLASANG RODRIGO, respondents. DECIS ION CARPIO MORALES, J.: Before this Court is the Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 of the Court of Appeals ("CA") dated June 26, 2001 and its related Resolution2 dated September 4, 2001 in CA-G.R. SP No. 59712. The assailed Decision dismissed the petition for certiorari filed by petitioner Judge Antonio C. Sumaljag (the "petitioner") in the interlocutory matter outlined below in Civil Cases B-1239 and B-1281 before the trial court. The challenged Resolution denied the petitioner's motion for reconsideration. ANTECEDENT FACTS On November 16, 1993, Josefa D. Maglasang ("Josefa") filed with the Regional Trial Court ("RTC"), Branch 14, Baybay, Leyte a complaint3 (docketed as Civil Case No. B-1239) for the nullity of the deed of sale of real property purportedly executed between her as vendor and the spouses Diosdidit and Menendez Literato (the "respondent spouses") as vendees. The complaint alleged that this deed of sale dated October 15, 1971 of Lot 1220-D is spurious. Josefa was the sister of Menendez Maglasang Literato ("Menendez"). They were two (2) of the six (6) heirs who inherited equal parts of a 6.3906-hectare property (Lot 1220) passed on to them by their parents Cristito and Inecita Diano Maglasang.4 Lot 1220D was partitioned to Josefa, while Lot 1220-E was given to Menendez. The respondent spouses' response to the complaint was an amended answer with counterclaim5 denying that the deed of sale was falsified. They impleaded the petitioner with Josefa as counterclaim defendant on the allegation that the petitioner, at the instance of Josefa, occupied Lot 1220-D and Lot 1220-E without their (the respondent spouses') authority; Lot 1220-E is theirs by inheritance while 1220D had been sold to them by Josefa. They also alleged that the petitioner acted in bad faith in acquiring the two (2) lots because he prepared and notarized on September 26, 1986 the contract of lease over the whole of Lot 1220 between all the Maglasang heirs (but excluding Josefa) and Vicente Tolo, with the lease running from 1986 to 1991; thus, the petitioner then knew that Josefa no longer owned Lot 1220D. Civil Case No. 12816 is a complaint that Menendez filed on April 4, 1996 with the RTC for the declaration of the inexistence of lease contract, recovery of possession of land, and damages against the petitioner and Josefa after the RTC dismissed the respondent spouses' counterclaim in Civil Case No. 1239. The complaint alleged that Josefa, who had previously sold Lot 1220-D to Menendez, leased it, together with Lot 1220-E, to the petitioner. Menendez further averred that the petitioner and Josefa were in bad faith in entering their contract of lease as they both knew that Josefa did not own the leased lots. Menendez prayed, among others, that this lease contract between Josefa and the petitioner be declared null and void. Josefa died on May 3, 1999 during the pendency of Civil Case Nos. B-1239 and B-1281. On August 13, 1999, Atty. Zenen A. Puray ("Atty. Puray") - the petitioner's and Josefa's common counsel - asked the RTC in Civil Case No. 1239 that he be given an extended period or up to September 10, 1999 within which to file a formal notice of death and substitution of party. The RTC granted the motion in an order dated August 13, 1999.7 On August 26, 1999, Atty. Puray filed with the RTC a notice of death and substitution of party,8 praying that Josefa - in his capacity as plaintiff and third party counterclaim defendant - be substituted by the petitioner. The submission alleged that prior to Josefa's death, she executed a Quitclaim Deed9 over Lot 1220-D in favor of Remismundo D. Maglasang10 who in turn sold this property to the petitioner. Menendez, through counsel, objected to the proposed substitution, alleging that Atty. Puray filed the notice of death and substitution of party beyond the thirty-day period provided under Section 16, Rule 3 of the 1997 Rules of Civil Procedure, as amended. She recommended instead that Josefa be substituted by the latter's full-blood sister, Michaeles Maglasang Rodrigo ("Michaeles"). REMLAW Page 386
by the latter's full-blood sister, Michaeles Maglasang Rodrigo ("Michaeles"). The RTC denied Atty. Puray's motion for substitution and instead ordered the appearance of Michaeles as representative of the deceased Josefa. This Order provides: WHEREFORE, in view of the foregoing, the motion is hereby DENIED for lack of merit and instead order the appearance of Mrs. Mechailes Maglasang-Rodrigo of Brgy. Binulho, Albuera, Leyte, as representative of the deceased Josefa Maglasang. SO ORDERED.11 The RTC subsequently denied the petitioner's motion for reconsideration in an order12 dated May 25, 2000. The petitioner went to the CA on a petition for certiorari (docketed as CA-G.R. SP No. 59712) to question the above interlocutory orders. In a Decision13 dated June 26, 2001, the CA dismissed the petition for lack of merit. The appellate court similarly denied the petitioner's motion for reconsideration in its Resolution14 dated September 4, 2001. The present petition essentially claims that the CA erred in dismissing CA-G.R. No. SP 59712 since: (a) the property under litigation was no longer part of Josefa's estate since she was no longer its owner at the time of her death; (b) the petitioner had effectively been subrogated to the rights of Josefa over the property under litigation at the time she died; (c) without an estate, the heir who was appointed by the lower court no longer had any interest to represent; (d) the notice of death was seasonably submitted by the counsel of Josefa to the RTC within the extended period granted; and (e) the petitioner is a transferee pendente lite who the courts should recognize pursuant to Rule 3, Section 20 of the Rules of Court. THE COURT'S RULING We resolve to deny the petition for lack of merit. The Governing Rule. The rule on substitution in case of death of a party is governed by Section 16, Rule 3 of the 1997 Rules of Civil Procedure, as amended, which provides: Section 16. Death of a party; duty of counsel. -Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased, and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. (Emphasis ours) The purpose behind this rule is the protection of the right to due process of every party to the litigation who may be affected by the intervening death. The deceased litigant is herself or himself protected as he/she continues to be properly represented in the suit through the duly appointed legal representative of his estate.15 Application of the Governing Rule. a. Survival of the pending action A question preliminary to the application of the above provision is whether Civil Case Nos. B-1239 and B-1281 are actions that survive the death of Josefa. We said in Gonzalez v. Pagcor:16 "The criteria for determining whether an action survives the death of a plaintiff or petitioner was elucidated upon in Bonilla v. Barcena (71 SCRA 491 (1976). as follows: . . . The question as to whether an action survives or not depends on the nature of the action and the damage sued for. In the causes of action which survive, the wrong complained [of] affects primarily and principally property and property rights, the injuries to the person being merely incidental, while in the causes of action which do not survive, the injury complained of is to the person, the property and rights of property affected being incidental. . . . REMLAW Page 387
of property affected being incidental. . . . Since the question involved in these cases relate to property and property rights, then we are dealing with actions that survive so that Section 16, Rule 3 must necessarily apply. b. Duty of Counsel under the Rule. The duty of counsel under the aforecited provision is to inform the court within thirty (30) days after the death of his client of the fact of death, and to give the name and address of the deceased's legal representative or representatives. Incidentally, this is the only representation that counsel can undertake after the death of a client as the fact of death terminated any further lawyer-client relationship.17 In the present case, it is undisputed that the counsel for Josefa did in fact notify the lower court, although belatedly, of the fact of her death.18 However, he did as well inform the lower court that "2. That before she died she executed a QUITCLAIM DEED in favor of REMISMUNDO D. MAGLASANG over the land in question (Lot No. 1220-D of Benolho, Albuera, Leyte), evidenced by a QUITCLAIM DEED, copy of which is hereto attached as Annex "B" who in turn sold it in favor of JUDGE ANTONIO SUMALJAG, evidenced by a DEED OF ABSOLUTE SALE, copy of which is hereto attached as Annex "C"." Further, counsel asked that "the deceased Josefa Maglasang in her capacity as plaintiff and as Third Party Counterclaim Defendant be substituted in the case at bar by JUDGE ANTONIO SUMALJAG whose address is 38 Osmena Street, Ormoc City" pursuant to "Section 16, Rule 3 of the 1997 Rules of Civil Procedure". This notification, although filed late, effectively informed the lower court of the death of litigant Josefa Maglasang so as to free her counsel of any liability for failure to make a report of death under Section 16, Rule 3 of the Rules of Court. In our view, counsel satisfactorily explained to the lower court the circumstances of the late reporting, and the latter in fact granted counsel an extended period. The timeliness of the report is therefore a non-issue. The reporting issue that goes into the core of this case is whether counsel properly gave the court the name and address of the legal representative of the deceased that Section 16, Rule 3 specifies. We rule that he did not. The "legal representatives" that the provision speaks of, refer to those authorized by law - the administrator, executor or guardian19 who, under the rule on settlement of estate of deceased persons,20 is constituted to take over the estate of the deceased. Section 16, Rule 3 likewise expressly provides that "the heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator . . .". Significantly, the person - now the present petitioner - that counsel gave as substitute was not one of those mentioned under Section 16, Rule 3. Rather, he is a counterclaim co-defendant of the deceased whose proferred justification for the requested substitution is the transfer to him of the interests of the deceased in the litigation prior to her death. Under the circumstances, both the lower court and the CA were legally correct in not giving effect to counsel's suggested substitute. First, the petitioner is not one of those allowed by the Rules to be a substitute. Section 16, Rule 3 speaks for itself in this respect. Second, as already mentioned above, the reason for the Rule is to protect all concerned who may be affected by the intervening death, particularly the deceased and her estate. We note in this respect that the Notice that counsel filed in fact reflects a claim against the interest of the deceased through the transfer of her remaining interest in the litigation to another party. Interestingly, the transfer is in favor of the very same person who is suggested to the court as the substitute. To state the obvious, the suggested substitution effectively brings to naught the protection that the Rules intend; plain common sense tells us that the transferee who has his own interest to protect, cannot at the same time represent and fully protect the interest of the deceased transferor. Third, counsel has every authority to manifest to the court changes in interest that transpire in the course of litigation. Thus, counsel could have validly manifested to the court the transfer of Josefa's interests in the subject matter of litigation pursuant to Section 19, Rule 3.21 But this can happen only while the client-transferor was alive and while the manifesting counsel was still the effective and authorized counsel for the client-transferor, not after the death of the client when the lawyer-client relationship has terminated. The fact that the alleged transfer may have actually taken place is immaterial to this conclusion, if only for the reason that it is not for counsel, after the death of his client, to make such manifestation because he then has lost the authority to speak for and bind his client. Thus, REMLAW Page 388
to make such manifestation because he then has lost the authority to speak for and bind his client. Thus, at most, the petitioner can be said to be a transferee pendente lite whose status is pending with the lower court. Lastly, a close examination of the documents attached to the records disclose that the subject matter of the Quitclaim allegedly executed by Josefa in favor of Remismundo is Lot 1220-E, while the subject matter of the deed of sale executed by Remismundo in the petitioner's favor is Lot 1220-D. This circumstance alone raises the possibility that there is more than meets the eye in the transactions related to this case. c. The Heirs as Legal Representatives. The CA correctly harked back to the plain terms of Section 16, Rule 3 in determining who the appropriate legal representative/s should be in the absence of an executor or administrator. The second paragraph of the Section 16, Rule 3 of the 1997 Rules of Court, as amended, is clear - the heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator. Our decisions on this matter have been clear and unequivocal. In San Juan, Jr. v. Cruz, this Court held: The pronouncement of this Court in Lawas v. Court of Appeals x x x that priority is given to the legal representative of the deceased (the executor or administrator) and that it is only in case of unreasonable delay in the appointment of an executor or administrator, or in cases where the heirs resort to an extra-judicial settlement of the estate that the court may adopt the alternative of allowing the heirs of the deceased to be substituted for the deceased, is no longer true.22 (Emphasis ours) We likewise said in Gochan v. Young: 23 For the protection of the interests of the decedent, this Court has in previous instances recognized the heirs as proper representatives of the decedent, even when there is already an administrator appointed by the court. When no administrator has been appointed, as in this case, there is all the more reason to recognize the heirs as the proper representatives of the deceased. Josefa's death certificate24 shows that she was single at the time of her death. The records do not show that she left a will. Therefore, as correctly held by the CA, in applying Section 16, Rule 3, her heirs are her surviving sisters (Michaelis, Maria, Zosima, and Consolacion) and the children of her deceased sister, Lourdes (Manuel, Cesar, Huros and Regulo) who should be her legal representatives. Menendez, although also a sister, should be excluded for being one of the adverse parties in the cases before the RTC. WHEREFORE, premises considered, we DENY the petition for lack of merit. We AFFIRM the Court of Appeals decision that the surviving heirs of the deceased Josefa - namely Michaelis M. Rodrigo; Maria M. Cecilio; Zosima D. Maglasang; Consolacion M. Bag-aw; and the children of Lourdes M. Lumapas, namely Manuel Lumapas, Cesar Lumapas, Huros Lumapas and Regulo Maquilan - should be her substitutes and are hereby so ordered to be substituted for her in Civil Case Nos. B-1239 and B-1281. Costs against the petitioner. SO ORDERED. Pasted from
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?Domingo v Landicho GR 170015 Aug 29, 2007 Sunday, November 14, 2010 11:41 PM
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Napere v. Barbarona GR 160426 Jan 31, 2008 Sunday, November 14, 2010 11:41 PM
CAPITOLINA VIVERO NAPERE, petitioner, vs. AMANDO BARBARONA and GERVACIA MONJAS BARBARONA, respondents. RESOL UTI ON NACHURA, J.: Petitioner Capitolina Vivero Napere interposes this petition for review to assail the Court of Appeals’ Decision1 dated October 9, 2003, which upheld the validity of the Regional Trial Court’s decision despite failure to formally order the substitution of the heirs of the deceased defendant, petitioner’s husband. The case stems from the following antecedents: Respondent Amando Barbarona is the registered owner of Lot No. 3177, situated in Barangay San Sotero (formerly Tambis), Javier, Leyte and covered by Original Certificate of Title (OCT) No. P-7350. Lot No. 3176, covered by OCT No. 1110 in the name of Anacleto Napere, adjoins said lot on the northeastern side. After Anacleto died, his son, Juan Napere, and the latter’s wife, herein petitioner, planted coconut trees on certain portions of the property with the consent of his co-heirs. In their complaint, respondents alleged that in April 1980, the spouses Napere, their relatives and hired laborers, by means of stealth and strategy, encroached upon and occupied the northeastern portion of Lot No. 3177; that the Naperes harvested the coconut fruits thereon, appropriated the proceeds thereof, and, despite demands, refused to turn over possession of the area; that in April 1992, a relocation survey was conducted which confirmed that the respondents’ property was encroached upon by the Naperes; that on the basis of the relocation survey, the respondents took possession of this encroached portion of the lot and harvested the fruits thereon from April 1993 to December 1993; but that in January 1994, the Naperes repeated their acts by encroaching again on the respondents’ property, harvesting the coconuts and appropriating the proceeds thereof, and refusing to vacate the property on demand. On November 10, 1995, while the case was pending, Juan Napere died. Their counsel informed the court of Juan Napere’s death, and submitted the names and addresses of Napere’s heirs. At the pre-trial, the RTC noted that the Naperes were not contesting the respondents’ right of possession over the disputed portion of the property but were demanding the rights of a planter in good faith under Articles 445 and 455 of the Civil Code. On October 17, 1996, the RTC rendered a Decision against the estate of Juan Napere, thus: WHEREFORE, this Court finds in favor of the plaintiff and against the defendant, hereby declaring the following: a) The estate of Juan Napere is liable to pay the amount of ONE HUNDRED SEVENTY-NINE THOUSAND TWO HUNDRED (P179,200.00) PESOS in actual damages; b) The estate of Juan Napere shall be liable to pay FIVE THOUSAND (P5,000.00) PESOS in litigation expenses, and the c) Cost[s] of suit. SO ORDERED.2 Petitioner appealed the case to the Court of Appeals (CA), arguing, inter alia, that the judgment of the trial court was void for lack of jurisdiction over the heirs who were not ordered substituted as partydefendants for the deceased. On October 9, 2003, the CA rendered a Decision affirming the RTC Decision.3 The appellate court held that failure to substitute the heirs for the deceased defendant will not invalidate the proceedings and the judgment in a case which survives the death of such party. Thus, this petition for review where the only issue is whether or not the RTC decision is void for lack of jurisdiction over the heirs of Juan Napere. Petitioner alleges that the trial court did not acquire jurisdiction over the persons of the heirs because of its failure to order their substitution pursuant to Section 17,4 Rule 3 of the Rule of Court; hence, the proceedings conducted and the decision rendered by the trial court are null and void. The petition must fail. REMLAW Page 391
the trial court are null and void. The petition must fail. When a party to a pending case dies and the claim is not extinguished by such death, the Rules require the substitution of the deceased party by his legal representative or heirs. In such case, counsel is obliged to inform the court of the death of his client and give the name and address of the latter’s legal representative. The complaint for recovery of possession, quieting of title and damages is an action that survives the death of the defendant. Notably, the counsel of Juan Napere complied with his duty to inform the court of his client’s death and the names and addresses of the heirs. The trial court, however, failed to order the substitution of the heirs. Nonetheless, despite this oversight, we hold that the proceedings conducted and the judgment rendered by the trial court are valid. The Court has repeatedly declared that failure of the counsel to comply with his duty to inform the court of the death of his client, such that no substitution is effected, will not invalidate the proceedings and the judgment rendered thereon if the action survives the death of such party.5 The trial court’s jurisdiction over the case subsists despite the death of the party. Mere failure to substitute a deceased party is not sufficient ground to nullify a trial court’s decision. The party alleging nullity must prove that there was an undeniable violation of due process.6 Strictly speaking, the rule on substitution by heirs is not a matter of jurisdiction, but a requirement of due process.7 The rule on substitution was crafted to protect every party’s right to due process.8 It was designed to ensure that the deceased party would continue to be properly represented in the suit through his heirs or the duly appointed legal representative of his estate.9 Moreover, non-compliance with the Rules results in the denial of the right to due process for the heirs who, though not duly notified of the proceedings, would be substantially affected by the decision rendered therein.10 Thus, it is only when there is a denial of due process, as when the deceased is not represented by any legal representative or heir, that the court nullifies the trial proceedings and the resulting judgment therein.11 Formal substitution by heirs is not necessary when they themselves voluntarily appear, participate in the case, and present evidence in defense of the deceased.12 In such case, there is really no violation of the right to due process. The essence of due process is the reasonable opportunity to be heard and to submit any evidence available in support of one’s defense.13 When due process is not violated, as when the right of the representative or heir is recognized and protected, noncompliance or belated formal compliance with the Rules cannot affect the validity of a promulgated decision.14 In light of these pronouncements, we cannot nullify the proceedings before the trial court and the judgment rendered therein because the petitioner, who was, in fact, a co-defendant of the deceased, actively participated in the case. The records show that the counsel of Juan Napere and petitioner continued to represent them even after Juan’s death. Hence, through counsel, petitioner was able to adequately defend herself and the deceased in the proceedings below. Due process simply demands an opportunity to be heard and this opportunity was not denied petitioner. Finally, the alleged denial of due process as would nullify the proceedings and the judgment thereon can be invoked only by the heirs whose rights have been violated. Violation of due process is a personal defense that can only be asserted by the persons whose rights have been allegedly violated.15 Petitioner, who had every opportunity and who took advantage of such opportunity, through counsel, to participate in the trial court proceedings, cannot claim denial of due process. WHEREFORE, premises considered, the petition is DENIED DUE COURSE. The Decision of the Court of Appeals, dated October 9, 2003, in CA-G.R. CV No. 56457, is AFFIRMED. SO ORDERED. Pasted from
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Sps Algura v. LGU GR 150135 Oct 30, 2006 Sunday, November 14, 2010 11:41 PM
SPOUSES ANTONIO F. ALGURA and LORENCITA S.J. ALGURA, petitioners, vs. THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY. MANUEL TEOXON, ENGR. LEON PALMIANO, NATHAN SERGIO and BENJAMIN NAVARRO, SR., respondents. DECIS ION VELASCO, JR., J.: Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor. –– James Baldwin The Constitution affords litigants—moneyed or poor—equal access to the courts; moreover, it specifically provides that poverty shall not bar any person from having access to the courts.1 Accordingly, laws and rules must be formulated, interpreted, and implemented pursuant to the intent and spirit of this constitutional provision. As such, filing fees, though one of the essential elements in court procedures, should not be an obstacle to poor litigants' opportunity to seek redress for their grievances before the courts. The Case This Petition for Review on Certiorari seeks the annulment of the September 11, 2001 Order of the Regional Trial Court (RTC) of Naga City, Branch 27, in Civil Case No. 99-4403 entitled Spouses Antonio F. Algura and Lorencita S.J. Algura v. The Local Government Unit of the City of Naga, et al., dismissing the case for failure of petitioners Algura spouses to pay the required filing fees.2 Since the instant petition involves only a question of law based on facts established from the pleadings and documents submitted by the parties,3 the Court gives due course to the instant petition sanctioned under Section 2(c) of Rule 41 on Appeal from the RTCs, and governed by Rule 45 of the 1997 Rules of Civil Procedure. The Facts On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura filed a Verified Complaint dated August 30, 19994 for damages against the Naga City Government and its officers, arising from the alleged illegal demolition of their residence and boarding house and for payment of lost income derived from fees paid by their boarders amounting to PhP 7,000.00 monthly. Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants,5 to which petitioner Antonio Algura's Pay Slip No. 2457360 (Annex "A" of motion) was appended, showing a gross monthly income of Ten Thousand Four Hundred Seventy Four Pesos (PhP 10,474.00) and a net pay of Three Thousand Six Hundred Sixteen Pesos and Ninety Nine Centavos (PhP 3,616.99) for [the month of] July 1999.6 Also attached as Annex "B" to the motion was a July 14, 1999 Certification7 issued by the Office of the City Assessor of Naga City, which stated that petitioners had no property declared in their name for taxation purposes. Finding that petitioners' motion to litigate as indigent litigants was meritorious, Executive Judge Jose T. Atienza of the Naga City RTC, in the September 1, 1999 Order,8 granted petitioners' plea for exemption from filing fees. Meanwhile, as a result of respondent Naga City Government's demolition of a portion of petitioners' house, the Alguras allegedly lost a monthly income of PhP 7,000.00 from their boarders' rentals. With the loss of the rentals, the meager income from Lorencita Algura's sari-sari store and Antonio Algura's small take home pay became insufficient for the expenses of the Algura spouses and their six (6) children for their basic needs including food, bills, clothes, and schooling, among others. On October 13, 1999, respondents filed an Answer with Counterclaim dated October 10, 1999,9 arguing that the defenses of the petitioners in the complaint had no cause of action, the spouses' boarding house blocked the road right of way, and said structure was a nuisance per se. Praying that the counterclaim of defendants (respondents) be dismissed, petitioners then filed their Reply with Ex-Parte Request for a Pre-Trial Setting10 before the Naga City RTC on October 19, 1999. On February 3, 2000, a pre-trial was held wherein respondents asked for five (5) days within which to file a REMLAW Page 393
February 3, 2000, a pre-trial was held wherein respondents asked for five (5) days within which to file a Motion to Disqualify Petitioners as Indigent Litigants. On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs for Non-Payment of Filing Fees dated March 10, 2000.11 They asserted that in addition to the more than PhP 3,000.00 net income of petitioner Antonio Algura, who is a member of the Philippine National Police, spouse Lorencita Algura also had a mini-store and a computer shop on the ground floor of their residence along Bayawas St., Sta. Cruz, Naga City. Also, respondents claimed that petitioners' second floor was used as their residence and as a boarding house, from which they earned more than PhP 3,000.00 a month. In addition, it was claimed that petitioners derived additional income from their computer shop patronized by students and from several boarders who paid rentals to them. Hence, respondents concluded that petitioners were not indigent litigants. On March 28, 2000, petitioners subsequently interposed their Opposition to the Motion12 to respondents' motion to disqualify them for non-payment of filing fees. On April 14, 2000, the Naga City RTC issued an Order disqualifying petitioners as indigent litigants on the ground that they failed to substantiate their claim for exemption from payment of legal fees and to comply with the third paragraph of Rule 141, Section 18 of the Revised Rules of Court—directing them to pay the requisite filing fees.13 On April 28, 2000, petitioners filed a Motion for Reconsideration of the April 14, 2000 Order. On May 8, 2000, respondents then filed their Comment/Objections to petitioner's Motion for Reconsideration. On May 5, 2000, the trial court issued an Order14 giving petitioners the opportunity to comply with the requisites laid down in Section 18, Rule 141, for them to qualify as indigent litigants. On May 13, 2000, petitioners submitted their Compliance15 attaching the affidavits of petitioner Lorencita Algura16 and Erlinda Bangate,17 to comply with the requirements of then Rule 141, Section 18 of the Rules of Court and in support of their claim to be declared as indigent litigants. In her May 13, 2000 Affidavit, petitioner Lorencita Algura claimed that the demolition of their small dwelling deprived her of a monthly income amounting to PhP 7,000.00. She, her husband, and their six (6) minor children had to rely mainly on her husband's salary as a policeman which provided them a monthly amount of PhP 3,500.00, more or less. Also, they did not own any real property as certified by the assessor's office of Naga City. More so, according to her, the meager net income from her small sarisari store and the rentals of some boarders, plus the salary of her husband, were not enough to pay the family's basic necessities. To buttress their position as qualified indigent litigants, petitioners also submitted the affidavit of Erlinda Bangate, who attested under oath, that she personally knew spouses Antonio Algura and Lorencita Algura, who were her neighbors; that they derived substantial income from their boarders; that they lost said income from their boarders' rentals when the Local Government Unit of the City of Naga, through its officers, demolished part of their house because from that time, only a few boarders could be accommodated; that the income from the small store, the boarders, and the meager salary of Antonio Algura were insufficient for their basic necessities like food and clothing, considering that the Algura spouses had six (6) children; and that she knew that petitioners did not own any real property. Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr. issued his July 17, 200018 Order denying the petitioners' Motion for Reconsideration. Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura showed that the "GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was] ₧10,474.00 which amount [was] over and above the amount mentioned in the first paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro Manila."19 Said rule provides that the gross income of the litigant should not exceed PhP 3,000.00 a month and shall not own real estate with an assessed value of PhP 50,000.00. The trial court found that, in Lorencita S.J. Algura's May 13, 2000 Affidavit, nowhere was it stated that she and her immediate family did not earn a gross income of PhP 3,000.00. The Issue Unconvinced of the said ruling, the Alguras instituted the instant petition raising a solitary issue for the consideration of the Court: whether petitioners should be considered as indigent litigants who qualify for exemption from paying filing fees. The Ruling of the Court The petition is meritorious. A review of the history of the Rules of Court on suits in forma pauperis (pauper litigant) is necessary before the Court rules on the issue of the Algura spouses' claim to exemption from paying filing fees. REMLAW Page 394
before the Court rules on the issue of the Algura spouses' claim to exemption from paying filing fees. When the Rules of Court took effect on January 1, 1964, the rule on pauper litigants was found in Rule 3, Section 22 which provided that: Section 22. Pauper litigant.—Any court may authorize a litigant to prosecute his action or defense as a pauper upon a proper showing that he has no means to that effect by affidavits, certificate of the corresponding provincial, city or municipal treasurer, or otherwise. Such authority[,] once given[,] shall include an exemption from payment of legal fees and from filing appeal bond, printed record and printed brief. The legal fees shall be a lien to any judgment rendered in the case [favorable] to the pauper, unless the court otherwise provides. From the same Rules of Court, Rule 141 on Legal Fees, on the other hand, did not contain any provision on pauper litigants. On July 19, 1984, the Court, in Administrative Matter No. 83-6-389-0 (formerly G.R. No. 64274), approved the recommendation of the Committee on the Revision of Rates and Charges of Court Fees, through its Chairman, then Justice Felix V. Makasiar, to revise the fees in Rule 141 of the Rules of Court to generate funds to effectively cover administrative costs for services rendered by the courts.20 A provision on pauper litigants was inserted which reads: Section 16. Pauper-litigants exempt from payment of court fees.—Pauper-litigants include wage earners whose gross income do not exceed P2,000.00 a month or P24,000.00 a year for those residing in Metro Manila, and P1,500.00 a month or P18,000.00 a year for those residing outside Metro Manila, or those who do not own real property with an assessed value of not more than P24,000.00, or not more than P18,000.00 as the case may be. Such exemption shall include exemption from payment of fees for filing appeal bond, printed record and printed brief. The legal fees shall be a lien on the monetary or property judgment rendered in favor of the pauperlitigant. To be entitled to the exemption herein provided, the pauper-litigant shall execute an affidavit that he does not earn the gross income abovementioned, nor own any real property with the assessed value afore-mentioned [sic], supported by a certification to that effect by the provincial, city or town assessor or treasurer. When the Rules of Court on Civil Procedure were amended by the 1997 Rules of Civil Procedure (inclusive of Rules 1 to 71) in Supreme Court Resolution in Bar Matter No. 803 dated April 8, 1997, which became effective on July 1, 1997, Rule 3, Section 22 of the Revised Rules of Court was superseded by Rule 3, Section 21 of said 1997 Rules of Civil Procedure, as follows: Section 21. Indigent party.—A party may be authorized to litigate his action, claim or defense as an indigent if the court, upon an ex parte application and hearing, is satisfied that the party is one who has no money or property sufficient and available for food, shelter and basic necessities for himself and his family. Such authority shall include an exemption from payment of docket and other lawful fees, and of transcripts of stenographic notes which the court may order to be furnished him. The amount of the docket and other lawful fees which the indigent was exempted from paying shall be a lien on any judgment rendered in the case favorable to the indigent, unless the court otherwise provides. Any adverse party may contest the grant of such authority at any time before judgment is rendered by the trial court. If the court should determine after hearing that the party declared as an indigent is in fact a person with sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the clerk of court. If payment is not made within the time fixed by the court, execution shall issue for the payment thereof, without prejudice to such other sanctions as the court may impose. At the time the Rules on Civil Procedure were amended by the Court in Bar Matter No. 803, however, there was no amendment made on Rule 141, Section 16 on pauper litigants. On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in A.M. No. 00-2-01-SC, whereby certain fees were increased or adjusted. In this Resolution, the Court amended Section 16 of Rule 141, making it Section 18, which now reads: Section 18. Pauper-litigants exempt from payment of legal fees.—Pauper litigants (a) whose gross income and that of their immediate family do not exceed four thousand (P4,000.00) pesos a month if residing in Metro Manila, and three thousand (P3,000.00) pesos a month if residing outside Metro REMLAW Page 395
residing in Metro Manila, and three thousand (P3,000.00) pesos a month if residing outside Metro Manila, and (b) who do not own real property with an assessed value of more than fifty thousand (P50,000.00) pesos shall be exempt from the payment of legal fees. The legal fees shall be a lien on any judgment rendered in the case favorably to the pauper litigant, unless the court otherwise provides. To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his immediate family do not earn the gross income abovementioned, nor do they own any real property with the assessed value aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the litigant's affidavit. Any falsity in the affidavit of a litigant or disinterested person shall be sufficient cause to strike out the pleading of that party, without prejudice to whatever criminal liability may have been incurred. It can be readily seen that the rule on pauper litigants was inserted in Rule 141 without revoking or amending Section 21 of Rule 3, which provides for the exemption of pauper litigants from payment of filing fees. Thus, on March 1, 2000, there were two existing rules on pauper litigants; namely, Rule 3, Section 21 and Rule 141, Section 18. On August 16, 2004, Section 18 of Rule 141 was further amended in Administrative Matter No. 04-2-04SC, which became effective on the same date. It then became Section 19 of Rule 141, to wit: Sec. 19. Indigent litigants exempt from payment of legal fees.– INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT OF THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT DOUBLE THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX DECLARATION OF MORE THAN THREE HUNDRED THOUSAND (P300,000.00) PESOS SHALL BE EXEMPT FROM PAYMENT OF LEGAL FEES. The legal fees shall be a lien on any judgment rendered in the case favorable to the indigent litigant unless the court otherwise provides. To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his immediate family do not earn a gross income abovementioned, and they do not own any real property with the fair value aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the litigant's affidavit. The current tax declaration, if any, shall be attached to the litigant's affidavit. Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause to dismiss the complaint or action or to strike out the pleading of that party, without prejudice to whatever criminal liability may have been incurred. (Emphasis supplied.) Amendments to Rule 141 (including the amendment to Rule 141, Section 18) were made to implement RA 9227 which brought about new increases in filing fees. Specifically, in the August 16, 2004 amendment, the ceiling for the gross income of litigants applying for exemption and that of their immediate family was increased from PhP 4,000.00 a month in Metro Manila and PhP 3,000.00 a month outside Metro Manila, to double the monthly minimum wage of an employee; and the maximum value of the property owned by the applicant was increased from an assessed value of PhP 50,000.00 to a maximum market value of PhP 300,000.00, to be able to accommodate more indigent litigants and promote easier access to justice by the poor and the marginalized in the wake of these new increases in filing fees. Even if there was an amendment to Rule 141 on August 16, 2004, there was still no amendment or recall of Rule 3, Section 21 on indigent litigants. With this historical backdrop, let us now move on to the sole issue—whether petitioners are exempt from the payment of filing fees. It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on September 1, 1999. However, the Naga City RTC, in its April 14, 2000 and July 17, 2000 Orders, incorrectly applied Rule 141, Section 18 on Legal Fees when the applicable rules at that time were Rule 3, Section 21 on Indigent Party which took effect on July 1, 1997 and Rule 141, Section 16 on Pauper Litigants which became effective on July 19, 1984 up to February 28, 2000. The old Section 16, Rule 141 requires applicants to file an ex-parte motion to litigate as a pauper litigant by submitting an affidavit that they do not have a gross income of PhP 2,000.00 a month or PhP 24,000.00 a year for those residing in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year for those residing outside Metro Manila or those who do not own real property with an assessed value of not more than PhP 24,000.00 or not more than PhP 18,000.00 as the case may be. Thus, there are REMLAW Page 396
of not more than PhP 24,000.00 or not more than PhP 18,000.00 as the case may be. Thus, there are two requirements: a) income requirement—the applicants should not have a gross monthly income of more than PhP 1,500.00, and b) property requirement––they should not own property with an assessed value of not more than PhP 18,000.00. In the case at bar, petitioners Alguras submitted the Affidavits of petitioner Lorencita Algura and neighbor Erlinda Bangate, the pay slip of petitioner Antonio F. Algura showing a gross monthly income of PhP 10,474.00,21 and a Certification of the Naga City assessor stating that petitioners do not have property declared in their names for taxation.22 Undoubtedly, petitioners do not own real property as shown by the Certification of the Naga City assessor and so the property requirement is met. However with respect to the income requirement, it is clear that the gross monthly income of PhP 10,474.00 of petitioner Antonio F. Algura and the PhP 3,000.00 income of Lorencita Algura when combined, were above the PhP 1,500.00 monthly income threshold prescribed by then Rule 141, Section 16 and therefore, the income requirement was not satisfied. The trial court was therefore correct in disqualifying petitioners Alguras as indigent litigants although the court should have applied Rule 141, Section 16 which was in effect at the time of the filing of the application on September 1, 1999. Even if Rule 141, Section 18 (which superseded Rule 141, Section 16 on March 1, 2000) were applied, still the application could not have been granted as the combined PhP 13,474.00 income of petitioners was beyond the PhP 3,000.00 monthly income threshold. Unrelenting, petitioners however argue in their Motion for Reconsideration of the April 14, 2000 Order disqualifying them as indigent litigants23 that the rules have been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of Civil procedure which authorizes parties to litigate their action as indigents if the court is satisfied that the party is "one who has no money or property sufficient and available for food, shelter and basic necessities for himself and his family." The trial court did not give credence to this view of petitioners and simply applied Rule 141 but ignored Rule 3, Section 21 on Indigent Party. The position of petitioners on the need to use Rule 3, Section 21 on their application to litigate as indigent litigants brings to the fore the issue on whether a trial court has to apply both Rule 141, Section 16 and Rule 3, Section 21 on such applications or should the court apply only Rule 141, Section 16 and discard Rule 3, Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees. The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended as Rule 141, Section 18 on March 1, 2000 and subsequently amended by Rule 141, Section 19 on August 16, 2003, which is now the present rule) are still valid and enforceable rules on indigent litigants. For one, the history of the two seemingly conflicting rules readily reveals that it was not the intent of the Court to consider the old Section 22 of Rule 3, which took effect on January 1, 1994 to have been amended and superseded by Rule 141, Section 16, which took effect on July 19, 1984 through A.M. No. 83-6-389-0. If that is the case, then the Supreme Court, upon the recommendation of the Committee on the Revision on Rules, could have already deleted Section 22 from Rule 3 when it amended Rules 1 to 71 and approved the 1997 Rules of Civil Procedure, which took effect on July 1, 1997. The fact that Section 22 which became Rule 3, Section 21 on indigent litigant was retained in the rules of procedure, even elaborating on the meaning of an indigent party, and was also strengthened by the addition of a third paragraph on the right to contest the grant of authority to litigate only goes to show that there was no intent at all to consider said rule as expunged from the 1997 Rules of Civil Procedure. Furthermore, Rule 141 on indigent litigants was amended twice: first on March 1, 2000 and the second on August 16, 2004; and yet, despite these two amendments, there was no attempt to delete Section 21 from said Rule 3. This clearly evinces the desire of the Court to maintain the two (2) rules on indigent litigants to cover applications to litigate as an indigent litigant. It may be argued that Rule 3, Section 21 has been impliedly repealed by the recent 2000 and 2004 amendments to Rule 141 on legal fees. This position is bereft of merit. Implied repeals are frowned upon unless the intent of the framers of the rules is unequivocal. It has been consistently ruled that: (r)epeals by implication are not favored, and will not be decreed, unless it is manifest that the legislature so intended. As laws are presumed to be passed with deliberation and with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing a statute[,] it was not intended to interfere with or abrogate any former law relating to same matter, unless the repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for the earlier act is beyond peradventure removed. Hence, every effort must be used to make all acts stand REMLAW Page 397
earlier act is beyond peradventure removed. Hence, every effort must be used to make all acts stand and if, by any reasonable construction they can be reconciled, the later act will not operate as a repeal of the earlier.24 (Emphasis supplied). Instead of declaring that Rule 3, Section 21 has been superseded and impliedly amended by Section 18 and later Section 19 of Rule 141, the Court finds that the two rules can and should be harmonized. The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is a settled principle that when conflicts are seen between two provisions, all efforts must be made to harmonize them. Hence, "every statute [or rule] must be so construed and harmonized with other statutes [or rules] as to form a uniform system of jurisprudence."25 In Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in the interpretation of seemingly conflicting laws, efforts must be made to first harmonize them. This Court thus ruled: Consequently, every statute should be construed in such a way that will harmonize it with existing laws. This principle is expressed in the legal maxim 'interpretare et concordare leges legibus est optimus interpretandi,' that is, to interpret and to do it in such a way as to harmonize laws with laws is the best method of interpretation.26 In the light of the foregoing considerations, therefore, the two (2) rules can stand together and are compatible with each other. When an application to litigate as an indigent litigant is filed, the court shall scrutinize the affidavits and supporting documents submitted by the applicant to determine if the applicant complies with the income and property standards prescribed in the present Section 19 of Rule 141—that is, the applicant's gross income and that of the applicant's immediate family do not exceed an amount double the monthly minimum wage of an employee; and the applicant does not own real property with a fair market value of more than Three Hundred Thousand Pesos (PhP 300,000.00). If the trial court finds that the applicant meets the income and property requirements, the authority to litigate as indigent litigant is automatically granted and the grant is a matter of right. However, if the trial court finds that one or both requirements have not been met, then it would set a hearing to enable the applicant to prove that the applicant has "no money or property sufficient and available for food, shelter and basic necessities for himself and his family." In that hearing, the adverse party may adduce countervailing evidence to disprove the evidence presented by the applicant; after which the trial court will rule on the application depending on the evidence adduced. In addition, Section 21 of Rule 3 also provides that the adverse party may later still contest the grant of such authority at any time before judgment is rendered by the trial court, possibly based on newly discovered evidence not obtained at the time the application was heard. If the court determines after hearing, that the party declared as an indigent is in fact a person with sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the clerk of court. If payment is not made within the time fixed by the court, execution shall issue or the payment of prescribed fees shall be made, without prejudice to such other sanctions as the court may impose. The Court concedes that Rule 141, Section 19 provides specific standards while Rule 3, Section 21 does not clearly draw the limits of the entitlement to the exemption. Knowing that the litigants may abuse the grant of authority, the trial court must use sound discretion and scrutinize evidence strictly in granting exemptions, aware that the applicant has not hurdled the precise standards under Rule 141. The trial court must also guard against abuse and misuse of the privilege to litigate as an indigent litigant to prevent the filing of exorbitant claims which would otherwise be regulated by a legal fee requirement. Thus, the trial court should have applied Rule 3, Section 21 to the application of the Alguras after their affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on gross monthly income and ownership of real property under Rule 141. Instead of disqualifying the Alguras as indigent litigants, the trial court should have called a hearing as required by Rule 3, Section 21 to enable the petitioners to adduce evidence to show that they didn't have property and money sufficient and available for food, shelter, and basic necessities for them and their family.27 In that hearing, the respondents would have had the right to also present evidence to refute the allegations and evidence in support of the application of the petitioners to litigate as indigent litigants. Since this Court is not a trier of facts, it will have to remand the case to the trial court to determine whether petitioners can be considered as indigent litigants using the standards set in Rule 3, Section 21. Recapitulating the rules on indigent litigants, therefore, if the applicant for exemption meets the salary and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. REMLAW Page 398
and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. On the other hand, when the application does not satisfy one or both requirements, then the application should not be denied outright; instead, the court should apply the "indigency test" under Section 21 of Rule 3 and use its sound discretion in determining the merits of the prayer for exemption. Access to justice by the impoverished is held sacrosanct under Article III, Section 11 of the 1987 Constitution. The Action Program for Judicial Reforms (APJR) itself, initiated by former Chief Justice Hilario G. Davide, Jr., placed prime importance on 'easy access to justice by the poor' as one of its six major components. Likewise, the judicial philosophy of Liberty and Prosperity of Chief Justice Artemio V. Panganiban makes it imperative that the courts shall not only safeguard but also enhance the rights of individuals—which are considered sacred under the 1987 Constitution. Without doubt, one of the most precious rights which must be shielded and secured is the unhampered access to the justice system by the poor, the underprivileged, and the marginalized. WHEREFORE, the petition is GRANTED and the April 14, 2000 Order granting the disqualification of petitioners, the July 17, 2000 Order denying petitioners' Motion for Reconsideration, and the September 11, 2001 Order dismissing the case in Civil Case No. RTC-99-4403 before the Naga City RTC, Branch 27 are ANNULLED and SET ASIDE. Furthermore, the Naga City RTC is ordered to set the "Ex-Parte Motion to Litigate as Indigent Litigants" for hearing and apply Rule 3, Section 21 of the 1997 Rules of Civil Procedure to determine whether petitioners can qualify as indigent litigants. No costs. SO ORDERED. Pasted from
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Uniwide v. Cruz GR 171456 Aug 9, 2007 Sunday, November 14, 2010 11:41 PM
UNIWIDE HOLDINGS, INC., petitioner, vs. ALEXANDER M. CRUZ, respondent. DECIS ION CARPIO MORALES, J.: Petitioner, Uniwide Holdings, Inc. (UHI), whose principal office is located in Parañaque City, entered into a Franchise Agreement1 (the agreement) granting respondent, Alexander M. Cruz (Cruz), a five-year franchise to adopt and use the "Uniwide Family Store System" for the establishment and operation of a "Uniwide Family Store" along Marcos Highway, Sta. Cruz, Cogeo, Marikina City. Article 10.22 of the agreement called for Cruz as franchisee to pay UHI a monthly service fee of P50,000 or three percent of gross monthly purchases, whichever is higher, payable within five days after the end of each month without need of formal billing or demand from UHI. In case of any delay in the payment of the monthly service fee, Cruz would, under Article 10.33 of the agreement, be liable to pay an interest charge of three percent per month. It appears that Cruz had purchased goods from UHI’s affiliated companies First Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI). In August 2002, FPC and USWCI executed Deeds of Assignment4 in favor of UHI assigning all their rights and interests over Cruz’s accounts payable to them. As of August 13, 2002, Cruz had outstanding obligations with UHI, FPC, and USWCI in the total amount of P1,358,531.89, drawing UHI to send him a letter of even date for the settlement thereof in five days. His receipt of the letter notwithstanding, Cruz’s accounts remained unsettled. Thus UHI filed a complaint5 for collection of sum of money before the Regional Trial Court (RTC) of Parañaque docketed as Civil Case No. 04-0278 against Cruz on the following causes of action: First Cause of Action 10. Being entitled to the payment of monthly service fee pursuant to the FA, which defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: One Million Three Hundred Twenty Seven Thousand Six Hundred Sixty Nine & 83/100 (P1,327,669.83), computed as of 05 April 2004, for which defendant should be held liable together with legal interest thereon from the date of filing of this Complaint, until fully paid. Second Cause of Action 11. Being the assignee of the receivable of FPC, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: Sixty Four Thousand One Hundred Sixty Five & 96/100 (P64,165.96) for which defendant should be held liable together with the legal interest thereon computed from date of receipt of plaintiff’s demand letter, or on August 16, 2002 to be exact, until fully paid. Third Cause of Action 12. Being the assignee of the receivable of USWCI, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the total amount of Phil. Peso: One Million Five Hundred Seventy Nine Thousand Sixty One & 36/100 (P1,579,061.36), computed as of 05 April 2004, inclusive of the two and a half percent (2.5%) monthly interest, as and by way of penalty, and the three (3%) annual interest on the unpaid amount, for which defendant should be held liable, with legal interest thereon from the date of filing of this Complaint, until fully paid. Fourth Cause of Action 13. By reason of defendant’s obstinate refusal or failure to pay his indebtedness, plaintiff was constrained to file this Complaint and in the process incur expenses by way of attorney’s fees, which could be reasonably estimated to reach at least Phil. Peso: Two Hundred Fifty Thousand (P250,000.00) and for which defendant should be held answerable for.6 (Emphasis and underscoring supplied) To the complaint Cruz filed a motion to dismiss7 on the ground of improper venue, he invoking Article 27.5 of the agreement which reads: 27.5 Venue Stipulation – The Franchisee consents to the exclusive jurisdiction of the courts of Quezon REMLAW Page 400
27.5 of the agreement which reads: 27.5 Venue Stipulation – The Franchisee consents to the exclusive jurisdiction of the courts of Quezon City, the Franchisee waiving any other venue.8 (Emphasis supplied) Branch 258 of the Parañaque RTC, by Order9 of December 12, 2005, granted Cruz’s motion to dismiss. Hence, the present petition before this Court, raising the sole legal issue of: WHETHER A CASE BASED ON SEVERAL CAUSES OF ACTION IS DISMISSIBLE ON THE GROUND OF IMPROPER VENUE WHERE ONLY ONE OF THE CAUSES OF ACTION ARISES FROM A CONTRACT WITH EXCLUSIVE VENUE STIPULATION.10 (Underscoring supplied) Petitioner contends that nowhere in the agreement is there a mention of FPC and USWCI, and neither are the two parties thereto, hence, they cannot be bound to the stipulation on "exclusive venue." The petition is impressed with merit. The general rule on venue of personal actions, as in petitioner’s complaint for collection of sum of money, is embodied in Section 2, Rule 4 of the Rules of Court which provides: Sec. 2. Venue of personal actions. – All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a nonresident defendant, where he may be found, at the election of the plaintiff. (Emphasis and underscoring supplied) The afore-quoted provision is, however, qualified by Section 4 of the same rule which allows parties, before the filing of the action, to validly agree in writing on an exclusive venue.11 The forging of a written agreement on an exclusive venue of an action does not, however, preclude parties from bringing a case to other venues. Where there is a joinder of causes of action between the same parties one of which does not arise out of the contract where the exclusive venue was stipulated upon, the complaint, as in the one at bar, may be brought before other venues provided that such other cause of action falls within the jurisdiction of the court and the venue lies therein.12 Based on the allegations in petitioner’s complaint, the second and third causes of action are based on the deeds of assignment executed in its favor by FPC and USWCI. The deeds bear no exclusive venue stipulation with respect to the causes of action thereunder. Hence, the general rule on venue applies – that the complaint may be filed in the place where the plaintiff or defendant resides.13 It bears emphasis that the causes of action on the assigned accounts are not based on a breach of the agreement between UHI and Cruz. They are based on separate, distinct and independent contractsdeeds of assignment in which UHI is the assignee of Cruz’s obligations to the assignors FPC and USWCI. Thus, any action arising from the deeds of assignment cannot be subjected to the exclusive venue stipulation embodied in the agreement. So San Miguel Corporation v. Monasterio14 enlightens: Exclusive venue stipulation embodied in a contract restricts or confines parties thereto when the suit relates to breach of said contract. But where the exclusivity clause does not make it necessarily encompassing, such that even those not related to the enforcement of the contract should be subject to the exclusive venue, the stipulation designating exclusive venues should be strictly confined to the specific undertaking or agreement. Otherwise, the basic principles of freedom to contract might work to the great disadvantage of a weak party-suitor who ought to be allowed free access to courts of justice.15 (Emphasis and underscoring supplied) In fine, since the other causes of action in petitioner’s complaint do not relate to a breach of the agreement it forged with Cruz embodying the exclusive venue stipulation, they should not be subjected thereto. As San Miguel further enlightens: Restrictive stipulations are in derogation of the general policy of making it more convenient for the parties to institute actions arising from or in relation to their agreements. Thus, the restriction should be strictly construed as relating solely to the agreement for which the exclusive venue stipulation is embodied. Expanding the scope of such limitation on a contracting party will create unwarranted restrictions which the parties might find unintended or worse, arbitrary and oppressive.16 (Underscoring supplied) WHEREFORE, the petition is GRANTED. The December 12, 2005 Order of Regional Trial Court of Parañaque City, Branch 258 in Civil Case No. 04-0278 is SET ASIDE. The case is REMANDED to said court which is directed to reinstate the case to its docket and conduct further proceedings thereon with dispatch. SO ORDERED. Quisumbing, Chairperson, Carpio, Tinga, Velasco, Jr., JJ., concur. REMLAW Page 401
Quisumbing, Chairperson, Carpio, Tinga, Velasco, Jr., JJ., concur. Footnotes 1 Records, pp. 10-26. 2 Id. at 14. 3 Ibid. 4 Id. at 27-32. 5 Id. at 1-9. 6 Id. at 4-6. 7 Id. at 199-207. 8 Id. at 25. 9 Id. at 272. 10 Rollo, p. 20. 11 Capati v. Dr. Ocampo, 199 Phil. 230, 233 (1982). 12 Rule 2, Section 5 of the Rules of Court provides: SECTION 5. Joinder of causes of action. – A party may in one pleading assert, in the alternative or otherwise, as many causes of action as may have against an opposing party, subject to the following conditions: xxx x (c) Where the causes of action are between the same parties but pertain to different venues or jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction of said court and the venue lies therein; x x x (Underscoring supplied) 13 Polytrade Corporation v. Blanco, 140 Phil. 604, 607 (1969). 14 G.R. No. 151037, June 23, 2005, 461 SCRA 89. 15 Id. at 94-95. 16 Id. at 95. Pasted from
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?Infante v. Aran Builders, GR 156594 Aug 24, 2007 Sunday, November 14, 2010 11:41 PM
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HiYield v. CA GR 168863 Jun 23, 2009 Sunday, November 14, 2010 11:41 PM
HI-YIELD REALTY, INCORPORATED, Petitioner, vs. HON. COURT OF APPEALS, HON. CESAR O. UNTALAN, in his capacity as PRESIDING JUDGE OF RTCMAKATI, BRANCH 142, HONORIO TORRES & SONS, INC., and ROBERTO H. TORRES, Respondents. DE C I S I O N QUISUMBING, J.: This is a special civil action for certiorari seeking to nullify and set aside the Decision1 dated March 10, 2005 and Resolution2 dated May 26, 2005 of the Court of Appeals in CA-G.R. SP. No. 83919. The appellate court had dismissed the petition for certiorari and prohibition filed by petitioner and denied its reconsideration. The antecedent facts of the case are undisputed. On July 31, 2003, Roberto H. Torres (Roberto), for and on behalf of Honorio Torres & Sons, Inc. (HTSI), filed a Petition for Annulment of Real Estate Mortgage and Foreclosure Sale 3 over two parcels of land located in Marikina and Quezon City. The suit was filed against Leonora, Ma. Theresa, Glenn and Stephanie, all surnamed Torres, the Register of Deeds of Marikina and Quezon City, and petitioner HiYield Realty, Inc. (Hi-Yield). It was docketed as Civil Case No. 03-892 with Branch 148 of the Regional Trial Court (RTC) of Makati City. On September 15, 2003, petitioner moved to dismiss the petition on grounds of improper venue and payment of insufficient docket fees. The RTC denied said motion in an Order4 dated January 22, 2004. The trial court held that the case was, in nature, a real action in the form of a derivative suit cognizable by a special commercial court pursuant to Administrative Matter No. 00-11-03-SC.5 Petitioner sought reconsideration, but its motion was denied in an Order6 dated April 27, 2004. Thereafter, petitioner filed a petition for certiorari and prohibition before the Court of Appeals. In a Decision dated March 10, 2005, the appellate court agreed with the RTC that the case was a derivative suit. It further ruled that the prayer for annulment of mortgage and foreclosure proceedings was merely incidental to the main action. The dispositive portion of said decision reads: WHEREFORE, premises considered, this Petition is hereby DISMISSED. However, public respondent is hereby DIRECTED to instruct his Clerk of Court to compute the proper docket fees and thereafter, to order the private respondent to pay the same IMMEDIATELY. SO ORDERED.7 Petitioner’s motion for reconsideration8 was denied in a Resolution dated May 26, 2005. Hence, this petition which raises the following issues: I. WHETHER THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN NOT DISMISSING THE CASE AGAINST HI-YIELD FOR IMPROPER VENUE DESPITE FINDINGS BY THE TRIAL COURT THAT THE ACTION IS A REAL ACTION. II. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING THE COMPLAINT AS AGAINST HI-YIELD EVEN IF THE JOINDER OF PARTIES IN THE COMPLAINT VIOLATED THE RULES ON VENUE. III. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE ANNULMENT OF REAL ESTATE MORTGAGE AND FORECLOSURE SALE IN THE COMPLAINT IS MERELY INCIDENTAL [TO] THE DERIVATIVE SUIT. 9 The pivotal issues for resolution are as follows: (1) whether venue was properly laid; (2) whether there was proper joinder of parties; and (3) whether the action to annul the real estate mortgage and foreclosure sale is a mere incident of the derivative suit. Petitioner imputes grave abuse of discretion on the Court of Appeals for not dismissing the case against it even as the trial court found the same to be a real action. It explains that the rule on venue under the Rules of Court prevails over the rule prescribing the venue for intra-corporate controversies; hence, HTSI erred when it filed its suit only in Makati when the lands subjects of the case are in Marikina and REMLAW Page 404
erred when it filed its suit only in Makati when the lands subjects of the case are in Marikina and Quezon City. Further, petitioner argues that the appellate court erred in ruling that the action is mainly a derivative suit and the annulment of real estate mortgage and foreclosure sale is merely incidental thereto. It points out that the caption of the case, substance of the allegations, and relief prayed for revealed that the main thrust of the action is to recover the lands. Lastly, petitioner asserts that it should be dropped as a party to the case for it has been wrongly impleaded as a non-stockholder defendant in the intra-corporate dispute. On the other hand, respondents maintain that the action is primarily a derivative suit to redress the alleged unauthorized acts of its corporate officers and major stockholders in connection with the lands. They postulate that the nullification of the mortgage and foreclosure sale would just be a logical consequence of a decision adverse to said officers and stockholders. After careful consideration, we are in agreement that the petition must be dismissed. A petition for certiorari is proper if a tribunal, board or officer exercising judicial or quasi-judicial functions acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, or any plain, speedy and adequate remedy in the ordinary course of law.10 Petitioner sought a review of the trial court’s Orders dated January 22, 2004 and April 27, 2004 via a petition for certiorari before the Court of Appeals. In rendering the assailed decision and resolution, the Court of Appeals was acting under its concurrent jurisdiction to entertain petitions for certiorari under paragraph 2,11 Section 4 of Rule 65 of the Rules of Court. Thus, if erroneous, the decision and resolution of the appellate court should properly be assailed by means of a petition for review on certiorari under Rule 45 of the Rules of Court. The distinction is clear: a petition for certiorari seeks to correct errors of jurisdiction while a petition for review on certiorari seeks to correct errors of judgment committed by the court a quo.12 Indeed, this Court has often reminded members of the bench and bar that a special civil action for certiorari under Rule 65 lies only when there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law.13 In the case at hand, petitioner impetuously filed a petition for certiorari before us when a petition for review was available as a speedy and adequate remedy. Notably, petitioner filed the present petition 5814 days after it received a copy of the assailed resolution dated May 26, 2005. To our mind, this belated action evidences petitioner’s effort to substitute for a lost appeal this petition for certiorari. For the extraordinary remedy of certiorari to lie by reason of grave abuse of discretion, the abuse of discretion must be so patent and gross as to amount to an evasion of positive duty, or a virtual refusal to perform the duty enjoined or to act in contemplation of law, or where the power is exercised in an arbitrary and despotic manner by reason of passion and personal hostility.15 We find no grave abuse of discretion on the part of the appellate court in this case. Simply, the resolution of the issues posed by petitioner rests on a determination of the nature of the petition filed by respondents in the RTC. Both the RTC and Court of Appeals ruled that the action is in the form of a derivative suit although captioned as a petition for annulment of real estate mortgage and foreclosure sale. A derivative action is a suit by a shareholder to enforce a corporate cause of action.16 Under the Corporation Code, where a corporation is an injured party, its power to sue is lodged with its board of directors or trustees. But an individual stockholder may be permitted to institute a derivative suit on behalf of the corporation in order to protect or vindicate corporate rights whenever the officials of the corporation refuse to sue, or are the ones to be sued, or hold control of the corporation. In such actions, the corporation is the real party-in-interest while the suing stockholder, on behalf of the corporation, is only a nominal party.17 In the case of Filipinas Port Services, Inc. v. Go,18 we enumerated the foregoing requisites before a stockholder can file a derivative suit: a) the party bringing suit should be a shareholder as of the time of the act or transaction complained of, the number of his shares not being material; b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief but the latter has failed or refused to heed his plea; and c) the cause of action actually devolves on the corporation, the wrongdoing or harm having been, or being caused to the corporation and not to the particular stockholder bringing the suit.19 Even then, not every suit filed on behalf of the corporation is a derivative suit. For a derivative suit to REMLAW Page 405
being caused to the corporation and not to the particular stockholder bringing the suit.19 Even then, not every suit filed on behalf of the corporation is a derivative suit. For a derivative suit to prosper, the minority stockholder suing for and on behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all other stockholders similarly situated who may wish to join him in the suit.20 The Court finds that Roberto had satisfied this requirement in paragraph five (5) of his petition which reads: 5. Individual petitioner, being a minority stockholder, is instituting the instant proceeding by way of a derivative suit to redress wrongs done to petitioner corporation and vindicate corporate rights due to the mismanagement and abuses committed against it by its officers and controlling stockholders, especially by respondent Leonora H. Torres (Leonora, for brevity) who, without authority from the Board of Directors, arrogated upon herself the power to bind petitioner corporation from incurring loan obligations and later allow company properties to be foreclosed as hereinafter set forth;21 Further, while it is true that the complaining stockholder must satisfactorily show that he has exhausted all means to redress his grievances within the corporation; such remedy is no longer necessary where the corporation itself is under the complete control of the person against whom the suit is being filed. The reason is obvious: a demand upon the board to institute an action and prosecute the same effectively would have been useless and an exercise in futility.221avvphi1 Here, Roberto alleged in his petition that earnest efforts were made to reach a compromise among family members/stockholders before he filed the case. He also maintained that Leonora Torres held 55% of the outstanding shares while Ma. Theresa, Glenn and Stephanie excluded him from the affairs of the corporation. Even more glaring was the fact that from June 10, 1992, when the first mortgage deed was executed until July 23, 2002, when the properties mortgaged were foreclosed, the Board of Directors of HTSI did nothing to rectify the alleged unauthorized transactions of Leonora. Clearly, Roberto could not expect relief from the board. Derivative suits are governed by a special set of rules under A.M. No. 01-2-04-SC23 otherwise known as the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799.24 Section 1,25 Rule 1 thereof expressly lists derivative suits among the cases covered by it. As regards the venue of derivative suits, Section 5, Rule 1 of A.M. No. 01-2-04-SC states: SEC. 5. Venue. - All actions covered by these Rules shall be commenced and tried in the Regional Trial Court which has jurisdiction over the principal office of the corporation, partnership, or association concerned. Where the principal office of the corporation, partnership or association is registered in the Securities and Exchange Commission as Metro Manila, the action must be filed in the city or municipality where the head office is located. Thus, the Court of Appeals did not commit grave abuse of discretion when it found that respondents correctly filed the derivative suit before the Makati RTC where HTSI had its principal office. There being no showing of any grave abuse of discretion on the part of the Court of Appeals the other alleged errors will no longer be passed upon as mere errors of judgment are not proper subjects of a petition for certiorari. WHEREFORE, the instant petition is hereby DISMISSED. The Decision dated March 10, 2005 and the Resolution dated May 26, 2005 of the Court of Appeals in CA-G.R. SP. No. 83919 are AFFIRMED. No pronouncement as to costs. SO ORDERED. LEONARDO A. QUISUMBING Associate Justice WE CONCUR: CONSUELO YNARES-SANTIAGO* Associate Justice MINITA V. CHICO-NAZARIO** TERESITA J. LEONARDO-DE CASTRO*** Associate Justice Associate Justice ARTURO D. BRION Associate Justice ATT ES T AT I O N I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division. LEONARDO A. QUISUMBING REMLAW Page 406
assigned to the writer of the opinion of the Court’s Division. LEONARDO A. QUISUMBING Associate Justice Chairperson CE RT I F I C A T I O N Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division. REYNATO S. PUNO Chief Justice Footnotes * Designated member of the Second Division per Special Order No. 645 in place of Associate Justice Conchita Carpio Morales who is on official leave. ** Designated member of the Second Division per Special Order No. 658. *** Designated member of the Second Division per Special Order No. 635 in view of the retirement of Associate Dante O. Tinga. 1 Rollo, pp. 20-31. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Lucas P. Bersamin (now a member of this Court) and Celia C. Librea-Leagogo concurring. 2 Id. at 33. 3 Records, pp. 1-6. 4 Id. at 47-51. 5 Resolution Designating Certain Branches of Regional Trial Courts to Try and Decide Cases Formerly Cognizable by the Securities and Exchange Commission, took effect on December 15, 2000. 6 Records, p. 77. 7 Rollo, p. 31. 8 Id. at 92-102. 9 Id. at 141-142. 10 Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R No. 132703, June 23, 2000, 334 SCRA 305, 315. 11 SEC. 4. When and where petition filed. - The petition may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals. 12 Banco Filipino Savings and Mortgage Bank v. Court of Appeals, supra at 316. 13 Id. 14 Petitioner received a copy of the assailed Resolution dated May 26, 2005 on May 31, 2005. 15 Banco Filipino Savings and Mortgage Bank v. Court of Appeals, supra at 315. 16 R.N. Symaco Trading Corporation v. Santos, G.R. No. 142474, August 18, 2005, 467 SCRA 312, 329. 17 Filipinas Port Services, Inc. v. Go, G.R. No. 161886, March 16, 2007, 518 SCRA 453, 471. 18 Id. 19 Id. at 472. 20 Chua v. Court of Appeals, G.R. No. 150793, November 19, 2004, 443 SCRA 259, 268. 21 Rollo, p. 35. 22 Filipinas Port Services, Inc., v. Go, supra at 472. 23 Took effect on April 1, 2001. 24 The Securities Regulation Code, approved on July 19, 2000. 25 SECTION 1. (a) Cases covered. – These Rules shall govern the procedure to be observed in civil cases involving the following: xxx x (4) Derivative suits; and xxx x
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Irene Marcos-Araneta v. CA GR 154096 Aug 22, 2008 Sunday, November 14, 2010 11:41 PM
IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, AND JOSE G. RESLIN, PETITIONERS, VS. COURT OF APPEALS, JULITA C. BENEDICTO, AND FRANCISCA BENEDICTO-PAULINO, RESPONDENTS. DECIS ION VELASCO JR., J.: The Case This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision[1] dated October 17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resolution[2] of June 20, 2002 denying petitioners' motion for reconsideration. The assailed CA decision annulled and set aside the Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte which admitted petitioners' amended complaint in Civil Case Nos. 3341-17 and 3342-17. The Facts Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As petitioner Irene Marcos-Araneta would later allege, both corporations were organized pursuant to a contract or arrangement whereby Benedicto, as trustor, placed in his name and in the name of his associates, as trustees, the shares of stocks of FEMII and UEC with the obligation to hold those shares and their fruits in trust and for the benefit of Irene to the extent of 65% of such shares. Several years after, Irene, through her trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65% stockholdings, but the Benedicto Group refused to oblige. In March 2000, Irene thereupon instituted before the RTC two similar complaints for conveyance of shares of stock, accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary restraining order (TRO). The first, docketed as Civil Case No. 3341-17, covered the UEC shares and named Benedicto, his daughter, and at least 20 other individuals as defendants. The second, docketed as Civil Case No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held by Benedicto and the other defendants named therein. Respondent Francisca Benedicto-Paulino,[3] Benedicto's daughter, filed a Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to dismiss[4] Civil Case No. 3342-17, adopting in toto the five (5) grounds raised by Francisca in her amended motion to dismiss. Among these were: (1) the cases involved an intra-corporate dispute over which the Securities and Exchange Commission, not the RTC, has jurisdiction; (2) venue was improperly laid; and (3) the complaint failed to state a cause of action, as there was no allegation therein that plaintiff, as beneficiary of the purported trust, has accepted the trust created in her favor.
To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto and Francisca countered with a Joint Reply to Opposition. Upon Benedicto's motion, both cases were consolidated. During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of bolstering their contentions on improper venue, presented the Joint Affidavit[5] of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who all attested being employed as household staff at the Marcos' Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene did not maintain residence in said REMLAW Page 409
place as she in fact only visited the mansion twice in 1999; that she did not vote in Batac in the 1998 national elections; and that she was staying at her husband's house in Makati City. Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5 community tax certificate [6] (CTC) issued on "11/07/99" in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte. In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto, and Francisca. On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted "real action," and that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal order,[7] the court also declared "all the other issues raised in the different Motions to Dismiss x x x moot and academic." From the above order, Irene interposed a Motion for Reconsideration[8] which Julita and Francisca duly opposed. Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit Amended Complaint),[9] attaching therewith a copy of the Amended Complaint[10] dated July 14, 2000 in which the names of Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the amended complaint, the added plaintiffs, all from Ilocos Norte, were Irene's new trustees. Parenthetically, the amended complaint stated practically the same cause of action but, as couched, sought the reconveyance of the FEMII shares only. During the August 25, 2000 hearing, the RTC dictated in open court an order denying Irene's motion for reconsideration aforementioned, but deferred action on her motion to admit amended complaint and the opposition thereto.[11] On October 9, 2000, the RTC issued an Order[12] entertaining the amended complaint, dispositively stating: WHEREFORE, the admission of the Amended Complaint being tenable and legal, the same is GRANTED.
Let copies of the Amended Complaint be served to the defendants who are ordered to answer within the reglementary period provided by the rules. The RTC predicated its order on the following premises: (1) Pursuant to Section 2, Rule 10 of the Rules of Court,[13] Irene may opt to file, as a matter of right, an amended complaint.
(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the amended complaint setting out the same cause of action cured the defect of improper venue. (3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the amended complaint in question in the place of residence of any of Irene's co-plaintiffs. In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, by Order[14] dated December 18, 2000, denied the motion and reiterated its directive for the two to answer the amended complaint.
In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. And scoffing at the argument about there being no complaint to amend in the first place as of October 9, 2000 (when the RTC granted the motion to amend) as the original complaints were dismissed with finality earlier, i.e., on August 25, 2000 when the court denied Irene's motion for reconsideration of the June 29, 2000 REMLAW Page 410
i.e., on August 25, 2000 when the court denied Irene's motion for reconsideration of the June 29, 2000 order dismissing the original complaints, the court stated thusly: there was actually no need to act on Irene's motion to admit, it being her right as plaintiff to amend her complaints absent any responsive pleading thereto. Pushing its point, the RTC added the observation that the filing of the amended complaint on July 17, 2000 ipso facto superseded the original complaints, the dismissal of which, per the June 29, 2000 Order, had not yet become final at the time of the filing of the amended complaint. Following the denial on March 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order aforestated, Julita and Francisca, in a bid to evade being declared in default, filed on April 10, 2001 their Answer to the amended complaint.[15] But on the same day, they went to the CA via a petition for certiorari, docketed as CA-G.R. SP No. 64246, seeking to nullify the following RTC orders: the first, admitting the amended complaint; the second, denying their motion to dismiss the amended complaint; and the third, denying their motion for reconsideration of the second issuance. Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only Francisca's signature, the CA required the joint petitioners "to submit x x x either the written authority of Julita C. Benedicto to Francisca B. Paulino authorizing the latter to represent her in these proceedings, or a supplemental verification and certification duly signed by x x x Julita C. Benedicto."[16] Records show the submission of the corresponding authorizing Affidavit[17] executed by Julita in favor of Francisca. Later developments saw the CA issuing a TRO[18] and then a writ of preliminary injunction[19] enjoining the RTC from conducting further proceedings on the subject civil cases. On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC orders and dismissing the amended complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads: WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED. The assailed Orders admitting the amended complaints are SET ASIDE for being null and void, and the amended complaints a quo are, accordingly, DISMISSED. [20] Irene and her new trustees' motion for reconsideration of the assailed decision was denied through the equally assailed June 20, 2002 CA Resolution. Hence, this petition for review is before us. The Issues
Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following submissions that the appellate court erred in: (1) allowing the submission of an affidavit by Julita as sufficient compliance with the requirement on verification and certification of non-forum shopping; (2) ruling on the merits of the trust issue which involves factual and evidentiary determination, processes not proper in a petition for certiorari under Rule 65 of the Rules of Court; (3) ruling that the amended complaints in the lower court should be dismissed because, at the time it was filed, there was no more original complaint to amend; (4) ruling that the respondents did not waive improper venue; and (5) ruling that petitioner Irene was not a resident of Batac, Ilocos Norte and that none of the principal parties are residents of Ilocos Norte.[21] The Court's Ruling We affirm, but not for all the reasons set out in, the CA's decision.
First Issue: Substantial Compliance with the Rule on Verification and Certification of Non-Forum Shopping Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as defective for non-compliance with the requirements of Secs. 4[22] and 5[23] of Rule 7 of the Rules of Court at least with regard to Julita, who failed to sign the verification and certification of non-forum shopping. Petitioners thus fault the appellate court for directing Julita's counsel to submit a written authority for Francisca to represent REMLAW Page 411
appellate court for directing Julita's counsel to submit a written authority for Francisca to represent Julita in the certiorari proceedings. We are not persuaded. Verification not Jurisdictional; May be Corrected Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court may motu proprio direct a party to comply with or correct, as the case may be. As the Court articulated in Kimberly Independent Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and Agriculture (OLALIA) v. Court of Appeals: [V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an assurance that the allegations therein made are done in good faith or are true and correct and not mere speculation. The Court may order the correction of the pleading, if not verified, or act on the unverified pleading if the attending circumstances are such that a strict compliance with the rule may be dispensed with in order that the ends of justice may be served. [24] Given this consideration, the CA acted within its sound discretion in ordering the submission of proof of Francisca's authority to sign on Julita's behalf and represent her in the proceedings before the appellate court.
Signature by Any of the Principal Petitioners is Substantial Compliance Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a case should sign it.[25] However, the Court has time and again stressed that the rules on forum shopping, which were designed to promote the orderly administration of justice, do not interdict substantial compliance with its provisions under justifiable circumstances.[26] As has been ruled by the Court, the signature of any of the principal petitioners[27] or principal parties,[28] as Francisca is in this case, would constitute a substantial compliance with the rule on verification and certification of nonforum shopping. It cannot be overemphasized that Francisca herself was a principal party in Civil Case No. 3341-17 before the RTC and in the certiorari proceedings before the CA. Besides being an heir of Benedicto, Francisca, with her mother, Julita, was substituted for Benedicto in the instant case after his demise. And should there exist a commonality of interest among the parties, or where the parties filed the case as a "collective," raising only one common cause of action or presenting a common defense, then the signature of one of the petitioners or complainants, acting as representative, is sufficient compliance. We said so in Cavile v. Heirs of Clarita Cavile.[29] Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and Julita, as petitioners before the CA, had filed their petition as a collective, sharing a common interest and having a common single defense to protect their rights over the shares of stocks in question.
Second Issue: Merits of the Case cannot be Resolved on Certiorari under Rule 65 Petitioners' posture on the second issue is correct. As they aptly pointed out, the CA, in the exercise of its certiorari jurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot validly delve into the issue of trust which, under the premises, cannot be judiciously resolved without first establishing certain facts based on evidence. Whether a determinative question is one of law or of fact depends on the nature of the dispute. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain given set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact obtains when the doubt or difference arises as to the truth or falsehood of facts or when the query
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invites the calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.[30] Clearly then, the CA overstepped its boundaries when, in disposing of private respondents' petition for certiorari, it did not confine itself to determining whether or not lack of jurisdiction or grave abuse of discretion tainted the issuance of the assailed RTC orders, but proceeded to pass on the factual issue of the existence and enforceability of the asserted trust. In the process, the CA virtually resolved petitioner Irene's case for reconveyance on its substantive merits even before evidence on the matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To stress, the nature of the trust allegedly constituted in Irene's favor and its enforceability, being evidentiary in nature, are best determined by the trial court. The original complaints and the amended complaint certainly do not even clearly indicate whether the asserted trust is implied or express. To be sure, an express trust differs from the implied variety in terms of the manner of proving its existence.[31] Surely, the onus of factually determining whether the trust allegedly established in favor of Irene, if one was indeed established, was implied or express properly pertains, at the first instance, to the trial court and not to the appellate court in a special civil action for certiorari, as here. In the absence of evidence to prove or disprove the constitution and necessarily the existence of the trust agreement between Irene, on one hand, and the Benedicto Group, on the other, the appellate court cannot intelligently pass upon the issue of trust. A pronouncement on said issue of trust rooted on speculation and conjecture, if properly challenged, must be struck down. So it must be here. Third Issue: Admission of Amended Complaint Proper As may be recalled, the CA veritably declared as reversibly erroneous the admission of the amended complaint. The flaw in the RTC's act of admitting the amended complaint lies, so the CA held, in the fact that the filing of the amended complaint on July 17, 2000 came after the RTC had ordered with finality the dismissal of the original complaints. According to petitioners, scoring the CA for its declaration adverted to and debunking its posture on the finality of the said RTC order, the CA failed to take stock of their motion for reconsideration of the said dismissal order. We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides: SEC. 2. Amendments as a matter of right. -- A party may amend his pleading once as a matter of right at any time before a responsive pleading is served or in the case of a reply, at any time within ten (10) days after it is served. As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a matter of right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive pleadings are those which seek affirmative relief and/or set up defenses,[32] like an answer. A motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule 10.[33] Assayed against the foregoing perspective, the RTC did not err in admitting petitioners' amended complaint, Julita and Francisca not having yet answered the original complaints when the amended complaint was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the option of amending her underlying reconveyance complaints. As aptly observed by the RTC, Irene's motion to admit amended complaint was not even necessary. The Court notes though that the RTC has not offered an explanation why it saw fit to grant the motion to admit in the first place. In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended complaint before a responsive pleading is filed, wrote: [W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following this Court's ruling in Breslin v. Luzon Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative duty of
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the trial court to accept the amended complaint; otherwise, mandamus would lie against it. In other words, the trial court's duty to admit the amended complaint was purely ministerial. In fact, respondent should not have filed a motion to admit her amended complaint. [34] It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It should be pointed out, however, that the finality of such dismissal order had not set in when Irene filed the amended complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration thereof. Irene's motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 2000, the order of dismissal was not yet final, implying that there was strictly no legal impediment to her amending her original complaints.[35] Fourth Issue: Private Respondents did not Waive Improper Venue Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together, signify a waiver of private respondents' initial objection to improper venue.
This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which, in personal actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The ground of improperly laid venue must be raised seasonably, else it is deemed waived. Where the defendant failed to either file a motion to dismiss on the ground of improper venue or include the same as an affirmative defense, he is deemed to have waived his right to object to improper venue.[36] In the case at bench, Benedicto and Francisca raised at the earliest time possible, meaning "within the time for but before filing the answer to the complaint,"[37] the matter of improper venue. They would thereafter reiterate and pursue their objection on venue, first, in their answer to the amended complaints and then in their petition for certiorari before the CA. Any suggestion, therefore, that Francisca and Benedicto or his substitutes abandoned along the way improper venue as ground to defeat Irene's claim before the RTC has to be rejected. Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper Venue Subject Civil Cases are Personal Actions It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in question partakes of a real action involving real properties located outside the territorial jurisdiction of the RTC in Batac.
This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages.[38] Real actions, on the other hand, are those affecting title to or possession of real property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper court which has territorial jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. The venue of personal actions is the court where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.[39] In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to acknowledge holding in trust Irene's purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irene's favor the necessary conveying deed over the said 65% shareholdings. In other words, Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group. The fact that FEMII's assets include real properties does not materially change the nature of the action, for the ownership interest of a stockholder over corporate assets is only inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon the liquidation of the corporation that the stockholders, depending on the type and nature of their stockownership, may have a real inchoate right over the corporate assets, but then only to the extent of their stockownership. REMLAW Page 414
a real inchoate right over the corporate assets, but then only to the extent of their stockownership.
The amended complaint is an action in personam, it being a suit against Francisca and the late Benedicto (now represented by Julita and Francisca), on the basis of their alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or 1972. They are not actions in rem where the actions are against the real properties instead of against persons.[40] We particularly note that possession or title to the real properties of FEMII and UEC is not being disputed, albeit part of the assets of the corporation happens to be real properties. Given the foregoing perspective, we now tackle the determinative question of venue in the light of the inclusion of additional plaintiffs in the amended complaint. Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4 We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in the confines of this case, the factual determination of the trial court and the premises holding it together. Accordingly, Irene cannot, in a personal action, contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place "where the plaintiff or any of the principal plaintiffs resides" at the time she filed her amended complaint. That Irene holds CTC No. 17019451[41] issued sometime in June 2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let alone the fact that one can easily secure a basic residence certificate practically anytime in any Bureau of Internal Revenue or treasurer's office and dictate whatever relevant data one desires entered, Irene procured CTC No. 17019451 and appended the same to her motion for reconsideration following the RTC's pronouncement against her being a resident of Batac.
Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court venue, asseverate that Batac, Ilocos Norte is where the principal parties reside. Pivotal to the resolution of the venue issue is a determination of the status of Irene's co-plaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows: Rule 3 PARTIES TO CIVIL ACTIONS SEC. 2. Parties in interest. -- A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. SEC. 3. Representatives as parties. -- Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal.
Rule 4 VENUE OF ACTIONS SEC. 2. Venue of personal actions. -- All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. REMLAW Page 415
election of the plaintiff. Venue is Improperly Laid There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary of the disputed trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs in the amended complaint as Irene's new designated trustees. As trustees, they can only serve as mere representatives of Irene.
Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly been laid should not be difficult. Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the residences of the principal parties should be the basis for determining proper venue. According to the late Justice Jose Y. Feria, "the word `principal' has been added [in the uniform procedure rule] in order to prevent the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue."[42] Eliminate the qualifying term "principal" and the purpose of the Rule would, to borrow from Justice Regalado, "be defeated where a nominal or formal party is impleaded in the action since the latter would not have the degree of interest in the subject of the action which would warrant and entail the desirably active participation expected of litigants in a case."[43] Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted at the place where Irene resides. Principal Plaintiff not a Resident in Venue of Action
As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte. Withal, that court was an improper venue for her conveyance action. The Court can concede that Irene's three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to be stressed in this regard that not one of the three can be considered as principal partyplaintiffs in Civil Case Nos. 3341-17 and 3342-17, included as they were in the amended complaint as trustees of the principal plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the beneficiary who must be included in the title of the case and shall be deemed to be the real party-in-interest. In the final analysis, the residences of Irene's co-plaintiffs cannot be made the basis in determining the venue of the subject suit. This conclusion becomes all the more forceful considering that Irene herself initiated and was actively prosecuting her claim against Benedicto, his heirs, assigns, or associates, virtually rendering the impleading of the trustees unnecessary.
And this brings us to the final point. Irene was a resident during the period material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence[44] has it that one can have several residences, if such were the established fact. The Court will not speculate on the reason why petitioner Irene, for all the inconvenience and expenses she and her adversaries would have to endure by a Batac trial, preferred that her case be heard and decided by the RTC in Batac. On the heels of the dismissal of the original complaints on the ground of improper venue, three new personalities were added to the complaint doubtless to insure, but in vain as it turned out, that the case stays with the RTC in Batac. Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the persuasiveness of arguments to secure a favorable verdict. It is high time that courts, judges, and those who come to court for redress keep this ideal in mind. WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17, REMLAW Page 416
WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are accordingly ANNULLEDand SET ASIDE and said civil cases are DISMISSED. Costs against petitioners.
SO ORDERED Quisumbing, (Chairperson), Carpio Morales, Tinga, and Brion, JJ., concur.
[1]
Rollo, pp. 306-317. Penned by Associate Justice Elvi John S. Asuncion and concurred in by Associate Justices Perlita J. Tria Tirona and Amelita G. Tolentino. [2] Id.
at 341-341A.
[3] She admitted in the motion to be defendant Franscisca De Leon referred to in the first complaint. [4]
Rollo, pp. 98-99.
[5] Id.
at 143.
[6]
Id. at 128, CTC No. 12308513.
[7]
Id. at 152.
[8] Id.
at 153-157.
[9] Id.
at 345-346.
[10] Id.
at 347-357.
[11] Id.
at 165-166.
[12] Id.
at 167-171.
[13] Sec. 2.
Amendments as a matter of right. - A party may amend his pleading once as a matter of right at any time before a responsive pleading is served x x x. [14] Rollo,
pp. 358-365A.
[15] Id.
at 238-245 & 246-253, for Civil Case Nos. 3341-17 and 3342-17, respectively.
[16] Id.
at 261.
[17] Id.
at 258.
[18]
Id. at 262, CA Resolution.
[19] Id.
at 300-301.
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[19]
Id. at 300-301.
[20]
Supra note 1, at 316.
[21]
Rollo, p. 677.
[22]
SEC. 4. Verification. -- x x x A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records. x x x [23] SEC.
5. Certification against forum shopping. -- The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, [or] tribunal x x x and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact x x x to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. [24]
G.R. Nos. 149158-59, July 24, 2007, 528 SCRA 45, 60.
[25]
Enopia v. Court of Appeals, G.R. No. 147396, July 31, 2006, 497 SCRA 211, 219.
[26]
Heirs of Venancio Bajenting v. Ibanez, G.R. No. 166190, September 20, 2006, 502 SCRA 531, 547-548; citing Cavile v. Heirs of Clarita Cavile, G.R. No. 148635, April 1, 2003, 400 SCRA 255. [27]
Calo v. Villanueva, G.R. No. 153756, January 30, 2006, 480 SCRA 561, 567.
[28] Condo Suite Travel, [29] Supra note 26,
Inc. v. NLRC, G.R. No. 125671, January 28, 2000, 323 SCRA 679, 687.
at 262.
[30] Estate of the Late Encarnacion Vda. de Panlilio v.
Dizon, G.R. No. 148777, October 18, 2007, 536 SCRA 565, 587; citing Heirs of Cipriano Reyes v. Calumpang, G.R. No. 138463, October 30, 2006, 506 SCRA 56, 70. [31] Art.
1443 of the Civil Code provides that no express trust concerning an immovable property may be proved by parol evidence, while Art. 1446 of the Code requires that the beneficiary of an express trust must accept the trust if it imposes onerous conditions. [32] Fernandez v. International Corporate Bank, G.R. No. 131283,
October 7, 1999, 316 SCRA 326, 335; citing Diaz v. Adiong, G.R. No. 106847, March 5, 1993, 219 SCRA 631, 637. [33] Alpine Lending Investors v. Corpuz, November 24, 2006, [34] Id.
508 SCRA 45, 48; citations omitted.
at 48-49.
[35] See Bautista v. Maya-Maya Cottages, Inc., G.R. No. 148361,
November 29, 2005, 476 SCRA 416, 419; citing Salazar v. Bartolome, G.R. No. 43364, September 30, 1976, 73 SCRA 247, 250. [36] Davao Light &
Power Co., Inc. v. Court of Appeals, G.R. No. 111685, August 20, 2001, 363 SCRA 396,
400. REMLAW Page 418
400. [37] RULES
OF COURT, Rule 16, Sec. 1.
[38]
Regner v. Logarta, G.R. No. 168747, October 19, 2007, 537 SCRA 277, 293; citing Hernandez v. Rural Bank of Lucena, Inc., No. L-29791, January 10, 1978, 81 SCRA 75, 84. [39]
RULES OF COURT, Rule 4, Sec. 2.
[40] Asiavest Limited [41]
v. Court of Appeals, G.R. No. 128803, September 25, 1998, 296 SCRA 539, 552.
Rollo, p. 157.
[42] 1
CIVIL PROCEDURE ANNOTATED 261 (2001).
[43] 1
REMEDIAL LAW COMPENDIUM 108 (8th ed., 2002).
[44] Romualdez-Marcos v. Commission on Elections, G.R. No. 119976,
September 18, 1995, 248 SCRA 300,
324. Pasted from
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Philbanking v. Tensuan, 230 SCRA 413 Sunday, November 14, 2010 11:41 PM
PHILIPPINE BANKING CORPORATION, petitioner, vs. HON. SALVADOR S. TENSUAN, Judge of the Regional Trial Court, National Capital Region, Branch 146, Makati; BRINELL METAL WORKS CORP.; SPS. JOSE & NALLY ANG, respondents. Abelardo G. Luzano for petitioner. Samson Law Offices for private respondents. NOCON, J.: On the strength of the provision in the promissory notes sued upon that Manila shall be the venue of any action which may arise out of the promissory notes, the Regional Trial Court of Makati, Metro Manila granted the motion to dismiss the complaint in Civil Case No. 91-3366 entitled "Philippine Banking Corporation v. Brinell Metal Works Corp., et al." for improper venue. Supported by a plethora of decisions evincing a view contrary to that of the trial court, petitioner comes to us on a petition for review on certiorari. Briefly, the facts show that petitioner, Philippine Banking Corporation, filed a complaint with prayer for preliminary attachment on December 5, 1991 against private respondents herein, Brinell Metal Works Corporation and Spouses Jose and Nally Ang, for collection of a loan evidenced by two (2) promissory notes. On December 16, 1991, respondent Court issued an order granting the petitioner's prayer for the issuance of writ of preliminary attachment. On January 28, 1992, private respondents filed with the respondent court a motion to dismiss on the grounds of (a) lack of jurisdiction over the persons of the defendants; and (b) improper venue. They claim that summons was served on defendant corporation's customer who was not authorized to receive the same for and in behalf of the corporation. They likewise object to the venue claiming that the plaintiffs complaint is based on two promissory notes which commonly declare, among others: I/WE HEREBY EXPRESSLY SUBMIT TO THE JURISDICTION OF THE COURTS OF MANILA, ANY LEGAL ACTION WHICH MAY ARISE OUT OF THIS PROMISSORY NOTE. 1
On February 28, 1992 respondent Court issued the following questioned order, to wit:
Acting on defendants' Motion to Dismiss dated January 28, 1992, on grounds of a) lack of jurisdiction over the corporate defendant insofar as service of summons upon it was effected on a person not authorized in law to receive the same; and b) improper venue; and plaintiff having failed to appear for today's hearing and/or to formally oppose the same notwithstanding a showing of receipt of the subject motion as early as January 31, 1992. Finding the motion to be studiously well-taken particularly in connection with the dismissal of this action on grounds of improper venue consistent with the provisions of Sec. 13, Rule 14 of the Rules of Court, it appearing on the face of the actionable document sued upon that venue had been by agreement of the parties laid in Manila. WHEREFORE, said motion to dismiss is hereby granted forthwith on grounds of impropriety of venue. The above-entitled case is accordingly dismissed without pronouncement as to costs. SO ORDERED. 2
On March 2, 1992, petitioner moved for reconsideration of the aforesaid order granting the motion to dismiss anchored on the ground that in view of the absence of qualifying or restrictive words in the agreement which would indicate that Manila alone is the venue agreed upon by the parties, the plaintiffs still has the choice to file the action in the place of his residence citing the case of Polytrade Corporation v. Blanco. 3 On March 11, 1992, respondent court denied petitioner's motion for reconsideration and remained steadfast in its position explaining that its dismissal order is predicated on the doctrinal rule enunciated in Bautista v. Hon. Juan de Borja, et al. 4 that the proper court of Manila is the venue for an action upon a document stipulating such "in case of any litigation herefrom, or in connection herewith," on a rationale that neither party reserved the right to choose venue as provided for in Section 2(b), Rule 4 of the Rules of Court, as would have been REMLAW Page 420
choose venue as provided for in Section 2(b), Rule 4 of the Rules of Court, as would have been done had the parties intended to retain such right of election. Respondent court brushed aside Polytrade v. Blanco 5 stating that Bautista and Polytrade appear not to square with each other and that perhaps, the clear parameters on the rule vis-avis proper venue should be defined. Thus, the sole issue to be resolved in this petition is whether or not the respondent court erred in holding that the venue of the action was improperly laid. Under Section 1(c), Rule of the Revised Rules of Court, a motion to dismiss an action may be made within the time for pleading on the ground that venue is improperly laid. Venue relates to the place of trial or geographical location in which an action or proceeding should be brought and not to the jurisdiction of the court. The matter of venue is regulated by the Rules of Court, so that the choice of venue is not left to the caprices of plaintiff. 6 As a general rule, all personal actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. 7 However, by written agreement of the parties, the venue of an action may be changed or transferred from one province to another. 8 Besides when improper venue is not objected to in a motion to dismiss it is deemed waived. 9 In other words, venue is waivable. It is procedural, not a jurisdictional matter. It is intended to provide convenience to the parties, rather than restrict their access to the courts. The rules on venue simply arrange for the convenient and effective transaction of business in the courts and do not relate to their power, authority or jurisdiction over the subject matter of the action. As early as the case of Central Azucarera de Tarlac v. De Leon, 10 this Court ruled that an agreement in a contract fixing the venue of actions arising therefrom is a valid waiver of the venue as fixed by law. Interpreting a stipulation in the written contracts sued upon that "in case of any litigation arising (t)herefrom or in connection (t)herewith, the venue of action shall be in the City of Manila, Philippines," this Court held in Bautista v. De Borja, 11 that the parties must reserve their right of election if they want to file in a place other than the venue agreed upon, thus:
. . . We note that neither party to the contracts reserved the right to choose the venue of action as fixed by law (i.e., where the plaintiff or defendant resides, at the election of the plaintiff (par. [b], Section 2, Rule 4, Revised Rules of Court), as is usually done if the parties to retain that right of election granted by the Rules. Such being the case, it can reasonably be inferred that the parties intended to definitely fix the venue of action, in connection with the written contracts sued upon in the proper courts of the City of Manila only, notwithstanding that neither party is a resident of Manila. . . .
Subsequently, in Polytrade Corporation v. Blanco, 12 this Court expostulated a contrary doctrine that as long as the stipulation does not set forth qualifying or restrictive words to indicate that the agreed place alone and none other is the venue of the action, the parties do not lose the option of choosing the venue, to wit:
. . . An accurate reading, however, of the stipulation. "The parties agree to sue and be sued in the Courts of Manila," does not preclude the filing of suits in the residence of plaintiff of defendant. The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two transactions in question only or exclusively in Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur.
The latter case made reference to Engel v. Shubert Theatrical Co. 13 where an analogous stipulation which read: "In case of dispute, both contracting parties agree to submit to the jurisdiction of the Vienna courts" was interpreted as follows: "By the clause in question the parties do not agree to submit their dispute to the jurisdiction of the Viennese court, and to those courts only. There is nothing exclusive in the language used. They do agree to submit to the Viennese jurisdiction, but they say not a word in restriction of the jurisdiction of courts elsewhere; and whatever may be said on the subject of the legality of contracts to submit controversies to courts of certain jurisdiction exclusively, it is entirely plain that such agreements should be strictly construed, and should not be extended by implication." The doctrine in Polytrade was reiterated in Nicolas v. Reparations Commission 14 where the issue posed was also whether the stipulation on venue is restrictive or merely permissive. The Court therein held: . . . venue in personal is fixed for the convenience of the plaintiff and his witnesses and to promote the ends of justice. We cannot conceive how the interests of justice may be served by confining the situs of
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the action to Manila, considering that the residences or offices of all the parties, including the situs of the acts sought to be restrained or required to be done, are all within the territorial jurisdiction of Rizal. While the parties have agreed to submit their dispute to the jurisdiction of the Manila courts, there is nothing in the language used in the aforecited stipulation which clearly shows that the intention of the parties was to limit the venue of the action to the City of Manila only. Such agreements should be construed reasonably and should not be applied in such a manner that it would work more to the inconvenience of the parties without promoting the ends of justice.
Without reference to Polytrade nor to Nicolas cases, this Court enunciated the same doctrine in Tantoco v. Court of Appeals, 15 to wit:
It is elementary that venue is waivable, since it is a procedural, not a jurisdictional, matter. The record shows that the parties agreed that the courts of Manila shall have jurisdiction to try this case. The agreement is evidenced by sales contracts duly presented at the ex parte hearing of March 25, 1966, whereby the parties submitted themselves to the jurisdiction of the courts of Manila for any legal action arising out of their transaction. In short, the parties agreed to add the courts of Manila as tribunals to which they may resort in the event of suit, and not only to the courts either of Rizal, of which private respondent is a resident, or of Bulacan, where petitioner resides, pursuant to Section 2(b) of Rule 4 of the Revised Rules of Court.
On the other hand, private respondent cite the case of Hoechst Philippines, Inc. v. Torres, 16 in support of the trial court's decision. The stipulation: "In case of litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of Rizal" was interpreted therein that any action by either of the parties would have to be filed only in the competent courts of Rizal province exclusively. Noteworthy, however, is the fact that on May 19, 1978, or the day following the promulgation of the Hoechst case in May 18, 1978, this Court interpreted a similar stipulation on venue as unenforceable in Sweet Lines, Inc. v. Teves. 17 Condition 14 of the shipping ticket issued by Sweet Lines, Inc. which provides "that any and all actions arising out of the condition and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu" was held subversive of public policy on transfers of venue of actions. The Court therein explained that the philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the end of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all, the Court said. The later cases of Lamis Ents. v. Lagamon; 18 Capati v. Ocampo; 19 Western Minolco v. Court of Appeals; 20 Moles v. Intermediate Appellate Court; 21 Hongkong and Shanghai Banking Corporation v. Sherman; 22 Nasser v. Court of Appeals; 23 and just recently, Surigao Century Sawmill Co. v. Court of Appeals, 24 all treaded the path blazed by Polytrade. The conclusion to be drawn from all these is that the more recent jurisprudence shall properly be deemed modificatory of the old ones. Restating the rule, venue stipulations in a contract, while considered valid and enforceable, do not as rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court. In the absence of qualifying or restrictive words, they should be considered merely as an agreement on additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. For, to restrict venue only to that place stipulated in the agreement is a construction purely based on technicality which, on the contrary, should be liberally construed. Thus, we hold that the petitioner in this case is not barred nor proscribed from filing its case against private respondents in Makati where petitioner holds its residence, pursuant to Section 2(b) of Rule 4 of the Revised Rules of Court. WHEREFORE, the petition in this case is GRANTED and the orders of respondent Presiding Judge of the Regional Trial Court Branch 146, at Makati, dated February 28, 1992 and March 11, 1992 dismissing the complaint and denying the motion for reconsideration are hereby REVERSED and the complaint in the captioned civil case is REINSTATED. SO ORDERED. Narvasa, C.J., Regalado and Puno, JJ., concur.
Separate Opinions PADILLA, J., dissenting: Section 3, Rule 4 of the Rules of Court allows the parties to agree on the change or transfer of venue. REMLAW Page 422
venue. The doctrine in Polytrade Corporation vs. Blanco, 30 SCRA 187 (1969) which is upheld by the majority in this case, that the general rules on venue remain applicable in the absence of qualifying or restrictive words in the agreement which indicate that the place specified is the only venue agreed upon, was laid down to prevent undue hardship or inconvenience to the parties. In my view, the issue of whether or not an agreement fixing the venue of actions prevents the application of the general rule on venue under Sections 1 and 2 of Rule 4, Rules of Court, should be settled by keeping the purpose of the doctrine in mind. There is hardly any question that a stipulation in contracts of adhesion, fixing venue to a specified place only, is void for, in such cases, there would appear to be no valid and free waiver of the venue fixed by the Rules of Court. However, in cases where both parties freely and voluntarily agree on a specified place to be the venue of actions, if any, between them, then the only considerations should be whether the waiver (of the venue fixed by the Rules of Court) is against public policy and whether the parties would suffer, by reason of such waiver, undue hardship and inconvenience; otherwise, such waiver of venue should be upheld as binding on the parties. The waiver of venue in such cases is sanctioned by the Rules of Court and would still be subject to and limited by the rules on jurisdiction. In the case at bench, there us no showing that any party would, in any way, be unduly inconvenienced in adhering to their agreed venue; besides, the two (2) venues involved, namely Makati and Manila, are so geographically close to each other, such that there is no perceivable reason why there would be any substantial difference between the said two (2) venues. In such a case, the venue agreed by the parties should control. I therefore vote to DENY the petition and uphold the decision of the court a quo. Separate Opinions PADILLA, J., dissenting: Section 3, Rule 4 of the Rules of Court allows the parties to agree on the change or transfer of venue. The doctrine in Polytrade Corporation vs. Blanco, 30 SCRA 187 (1969) which is upheld by the majority in this case, that the general rules on venue remain applicable in the absence of qualifying or restrictive words in the agreement which indicate that the place specified is the only venue agreed upon, was laid down to prevent undue hardship or inconvenience to the parties. In my view, the issue of whether or not an agreement fixing the venue of actions prevents the application of the general rule on venue under Sections 1 and 2 of Rule 4, Rules of Court, should be settled by keeping the purpose of the doctrine in mind. There is hardly any question that a stipulation in contracts of adhesion, fixing venue to a specified place only, is void for, in such cases, there would appear to be no valid and free waiver of the venue fixed by the Rules of Court. However, in cases where both parties freely and voluntarily agree on a specified place to be the venue of actions, if any, between them, then the only considerations should be whether the waiver (of the venue fixed by the Rules of Court) is against public policy and whether the parties would suffer, by reason of such waiver, undue hardship and inconvenience; otherwise, such waiver of venue should be upheld as binding on the parties. The waiver of venue in such cases is sanctioned by the Rules of Court and would still be subject to and limited by the rules on jurisdiction. In the case at bench, there us no showing that any party would, in any way, be unduly inconvenienced in adhering to their agreed venue; besides, the two (2) venues involved, namely Makati and Manila, are so geographically close to each other, such that there is no perceivable reason why there would be any substantial difference between the said two (2) venues. In such a case, the venue agreed by the parties should control. I therefore vote to DENY the petition and uphold the decision of the court a quo. # Footnotes #
1 Rollo, pp. 21 and 28. 2 Rollo, p. 39. 3 G.R. No. 27033, 30 SCRA 187 (1969). 4 G.R. No. L-20600, 18 SCRA (1966). 5 Supra. 6 Clavecilla Radio System v. Antillon, G.R. No. L-22238, 19 SCRA 379 (1967). 7 Sec. 2(b), Rule 4 of the Revised Rules of Court. 8 Sec. 3, Rule 4 of the Revised Rules of Court. 9 Sec. 4, Rule 4 of the Revised Rules of Court.
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9 Sec. 4, Rule 4 of the Revised Rules of Court. 10 56 Phil. 169. 11 Supra. 12 Supra. 13 151 N.Y.S. 593, 594. 14 G.R. No. L-28649, 64 SCRA 110. 15 G.R. No. L-29345, 77 SCRA 225 (1977). 16 G.R. No. L-44351, 83 SCRA 297. 17 G.R. No. L-37750, 83 SCRA 361 (1978). 18 G.R. No. L-57250, 108 SCRA 740 (1981). 19 G.R. No. L-28742, 113 SCRA 794 (1982). 20 G.R. No. L-51996, 167 SCRA 592 (1988). 21 G.R. No. L-73913, 169 SCRA 777 (1989). 22 G.R. No. L-72494, 176 SCRA 331 (1989). 23 G.R. No. L-32945-46, 191 SCRA 783 (1990). 24 G.R. No. L-83889, 218 SCRA 619 (1993). Pasted from
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Spouses Lantin v. Judge Lantion, GR No. 160053, Aug 28, 2006 Sunday, November 14, 2010 11:41 PM
G.R. No. 160053 August 28, 2006 SPS. RENATO & ANGELINA LANTIN, Petitioners, vs. HON. JANE AURORA C. LANTION, Presiding Judge of the Regional Trial Court of Lipa City, Fourth Judicial Region, Branch 13, PLANTERS DEVELOPMENT BANK, ELIZABETH C. UMALI, ALICE PERCE, JELEN MOSCA, REGISTER OF DEEDS FOR LIPA CITY, BATANGAS, THE CLERK OF COURT and EX-OFFICIO SHERIFF OF THE REGIONAL TRIAL COURT OF BATANGAS, Respondents. DE C I S I O N QUISUMBING, J.: This is a petition for certiorari assailing the orders dated May 15, 2003[1] and September 15, 2003[2] in Civil Case No. 2002-0555 issued by public respondent, Presiding Judge Jane Aurora C. Lantion, of the Regional Trial Court (RTC) of Lipa City, Batangas. The facts of the case are as follows: Petitioners Renato and Angelina Lantin took several peso and dollar loans from respondent Planters Development Bank and executed several real estate mortgages and promissory notes to cover the loans. They defaulted on the payments so respondent bank foreclosed the mortgaged lots. The foreclosed properties, in partial satisfaction of petitioners’ debt, were sold at a public auction where the respondent bank was the winning bidder. On November 8, 2003, petitioners filed against Planters Development Bank and its officers Elizabeth Umali, Alice Perce and Jelen Mosca (private respondents), a Complaint for Declaration of Nullity and/or Annulment of Sale and/or Mortgage, Reconveyance, Discharge of Mortgage, Accounting, Permanent Injunction, and Damages with the RTC of Lipa City, Batangas. Petitioners alleged that only their peso loans were covered by the mortgages and that these had already been fully paid, hence, the mortgages should have been discharged. They challenged the validity of the foreclosure on the alleged non-payment of their dollar loans as the mortgages did not cover those loans. Private respondents moved to dismiss the complaint on the ground of improper venue since the loan agreements restricted the venue of any suit in Metro Manila. On May 15, 2003, the respondent judge dismissed the case for improper venue. Petitioners sought reconsideration. They argued that the trial court in effect prejudged the validity of the loan documents because the trial court based its dismissal on a venue stipulation provided in the agreement. The motion for reconsideration was denied and the lower court held that the previous order did not touch upon the validity of the loan documents but merely ruled on the procedural issue of venue. Petitioners now come before us alleging that: I THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT THE VENUE STIPULATIONS IN THE "REAL ESTATE MORTGAGE" AND "PROMISSORY NOTES" FALL WITHIN THE PURVIEW OF SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE IN THAT IT LIMITED THE VENUE OF ACTIONS TO A DEFINITE PLACE. II THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT FINDING THAT THE MERE USE OF THE WORD "EXCLUSIVELY" DOES NOT, BY ITSELF, MEAN THAT SUCH STIPULATIONS AUTOMATICALLY PROVIDE FOR AN "EXCLUSIVE VENUE", AS CONTEMPLATED BY SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE, SPECIALLY WHEN THE TENOR OR LANGUAGE OF THE ENTIRE VENUE STIPULATION CLEARLY PROVIDES OTHERWISE. III THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISREGARDING THE FACT THAT HEREIN PETITIONERS’ COMPLAINT INVOLVES SEVERAL CAUSES OF ACTION WHICH DO NOT ARISE SOLELY FROM THE "REAL ESTATE MORTGAGE" AND "PROMISSORY NOTES" AND WHICH OTHER CAUSES OF ACTION MAY BE FILED IN OTHER VENUES UNDER REMLAW Page 425
SECTIONS 1 AND 2 OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE. IV THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF ACTIONS IS ESTABLISHED FOR THE CONVENIENCE OF THE PLAINTIFFS.[3] The main issue in the present petition is whether respondent judge committed grave abuse of discretion when she dismissed the case for improper venue. Petitioners contend that, since the validity of the loan documents were squarely put in issue, necessarily this meant also that the validity of the venue stipulation also was at issue. Moreover, according to the petitioners, the venue stipulation in the loan documents is not an exclusive venue stipulation under Section 4(b) of Rule 4 of the 1997 Rules of Civil Procedure.[4] The venue in the loan agreement was not specified with particularity. Besides, petitioners posit, the rule on venue of action was established for the convenience of the plaintiff, herein petitioners. Further, petitioners also contend that since the complaint involves several causes of action which did not arise solely from or connected with the loan documents, the cited venue stipulation should not be made to apply. Private respondents counter that, in their complaint, petitioners did not assail the loan documents, and the issue of validity was merely petitioners’ afterthought to avoid being bound by the venue stipulation. They also aver that the venue stipulation was not contrary to the doctrine in Unimasters,[5] which requires that a venue stipulation employ categorical and suitably limiting language to the effect that the parties agree that the venue of actions between them should be laid only and exclusively at a definite place. According to private respondents, the language of the stipulation is clearly exclusive. At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil Procedure, the general rules on venue of actions shall not apply where the parties, before the filing of the action, have validly agreed in writing on an exclusive venue. The mere stipulation on the venue of an action, however, is not enough to preclude parties from bringing a case in other venues. The parties must be able to show that such stipulation is exclusive.[6] In the absence of qualifying or restrictive words, the stipulation should be deemed as merely an agreement on an additional forum, not as limiting venue to the specified place.[7] The pertinent provisions of the several real estate mortgages and promissory notes executed by the petitioner respectively read as follows: 18. In the event of suit arising out of or in connection with this mortgage and/or the promissory note/s secured by this mortgage, the parties hereto agree to bring their causes of auction (sic) exclusively in the proper court of Makati, Metro Manila or at such other venue chosen by the Mortgagee, the Mortgagor waiving for this purpose any other venue.[8] (Emphasis supplied.) I/We further submit that the venue of any legal action arising out of this note shall exclusively be at the proper court of Metropolitan Manila, Philippines or any other venue chosen by the BANK, waiving for this purpose any other venue provided by the Rules of Court.[9] (Emphasis supplied.) Clearly, the words "exclusively" and "waiving for this purpose any other venue" are restrictive and used advisedly to meet the requirements. Petitioners claim that effecting the exclusive venue stipulation would be tantamount to a prejudgment on the validity of the loan documents. We note however that in their complaint, petitioners never assailed the validity of the mortgage contracts securing their peso loans. They only assailed the terms and coverage of the mortgage contracts. What petitioners claimed is that their peso loans had already been paid thus the mortgages should be discharged, and that the mortgage contracts did not include their dollar loans. In our view, since the issues of whether the mortgages should be properly discharged and whether these also cover the dollar loans, arose out of the said loan documents, the stipulation on venue is also applicable thereto. Considering all the circumstances in this controversy, we find that the respondent judge did not commit grave abuse of discretion, as the questioned orders were evidently in accord with law and jurisprudence. WHEREFORE, the petition is DISMISSED. The assailed orders dated May 15, 2003 and September 15, 2003 of the Regional Trial Court of Lipa City, Batangas, in Civil Case No. 2002-0555 are AFFIRMED. Costs against petitioners. SO ORDERED. Pasted from
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