JURISDICTION

EDUARDO M. COJUANGCO, JR.,

Petitioner,
-versus REPUBLIC OF THE PHILIPPINES,
Respondent.
G.R. No. 180705 | 2012-11-27
FACTS: Of the several coconut levy
appealed cases that stemmed from
certain issuances of the
Sandiganbayan in its Civil Case
No. 0033, the present . recourse
proves to be one of the most difficult.
In particular, the instant petition for
review under Rule 45 of the Rules of
Court assails and seeks to annul a
portion of the Partial
Summary Judgment dated July 11,
2003, as affirmed in a Resolution of
December 28, 2004, both rendered by
the Sandiganbayan in its Civil Case
("CC") No. 0033-A (the judgment shall
hereinafter be referred to as "PSJ-A"),
entitled"Republic of the Philippines,
Plaintiff, v. Eduardo M. Cojuangco, Jr.,
et al., Defendants, COCOFED, et al.,
BALLARES, et al., Class Action
Movants." CC No. 0033-A is the result
of the splitting into eight (8)
amended complaints of CC No. 0033
entitled, "Republic of the Philippines v.
Eduardo Cojuangco, Jr., et al.," a suit
for recovery of ill-gotten wealth
commenced by the Presidential
Commission on Good Government
("PCGG"), for the Republic of the
Philippines ("Republic"), against
Eduardo M. Cojuangco, Jr.
("Cojuangco") and several individuals,
among them, Ferdinand E.
Marcos, Maria Clara Lobregat
("Lobregat"), and Danilo S. Ursua
("Ursua"). Each of the eight (8)
subdivided complaints, CC No. 0033-A
to CC No. 0033-H, correspondingly
impleaded as defendants only the
alleged participants in
the transaction/s subject of the suit, or
who are averred as owner/s of the
assets involved.
Apart from this recourse, We clarify
right off that PSJ-A was challenged in
two other separate but consolidated
petitions for review, one commenced
by COCOFED et al., docketed as G.R.
Nos. 177857-58, and the other,
interposed by Danilo S. Ursua, and
docketed as G.R. No. 178193.
By Decision dated January 24, 2012, in
the aforesaid G.R. Nos. 177857-58
(COCOFED et al. v. Republic) and G.R.
No. 178193 (Ursua v. Republic)

consolidated cases1 (hereinafter

collectively referred to as "COCOFED
v. Republic"), the Court addressed and
resolved all key matters elevated to it
in relation to PSJ-A, except for the
issues raised in the instant petition
which have not yet been resolved
therein. In the same decision,
We made clear that: (1) PSJ-A is
subject of another petition for
review interposed by Eduardo
Cojuangco, Jr., in G.R. No. 180705,
entitled Eduardo M. Cojuangco, Jr. v.
Republic of the Philippines, which shall
be decided separately by the
Court,2 and (2) the issues raised in
the instant petition should not be
affected by the earlier decision "save
for determinatively legal issues
directly addressed [t]herein."3
For a better perspective, the instant
recourse seeks to reverse the Partial
Summary Judgment4 of the anti-graft
court dated July 11, 2003,
as reiterated in a Resolution5 of
December 28, 2004, denying
COCOFED's motion for
reconsideration, and the May 11,
2007 Resolution6 denying COCOFED's
motion to set case for trial and
declaring the partial
summary judgment final and
appealable, all issued in PSJ-A. In our
adverted January 24, 2012 Decision in
COCOFED v. Republic, we affirmed
with modification PSJ-A of the
Sandiganbayan, and its Partial
Summary Judgment in Civil Case No.
0033-F, dated May 7, 2004
(hereinafter referred to as "PSJ-F').7
More specifically, We upheld the
Sandiganbayan's ruling that
the coconut levy funds are special
public funds of the Government.
Consequently, We affirmed the
Sandiganbayan's declaration that
Sections 1 and 2 of Presidential
Decree ("P.D.") 755, Section 3, Article
III of P.D. 961 and Section 3, Article III
of P.D. 1468, as well as the pertinent
implementing regulations of the
Philippine Coconut Authority ("PCA"),
are unconstitutional for allowing the
use and/or the distribution of
properties acquired through the
coconut levy funds to private
individuals for their own direct benefit
and absolute ownership. The Decision
also affirmed the Government's
ownership of the six CIIF companies,
the fourteen holding companies, and
the CIIF block of San Miguel
Corporation shares of stock, for having
likewise been acquired using the
coconut levy funds. Accordingly, the
properties subject of the January 24,
2012 Decision were declared owned
by and ordered reconveyed to the

Government, to be used only for the

benefit of all coconut farmers and for
the development of the coconut
industry.
By Resolution of September 4,
2012,8 the Court affirmed the
abovestated Decision promulgated on
January 24, 2012.
It bears to stress at this juncture that
the only portion of the
appealed Partial Summary Judgment
dated July 11, 2003 ("PSJ-A") which
remains at issue revolves around the
following decretal holdings of that
court relating to the "compensation"
paid to petitioner for exercising his
personal and exclusive option to
acquire the FUB/UCPB shares.9 It will
be recalled that the Sandiganbayan
declared the Agreement between the
PCA and Cojuangco containing the
assailed "compensation" null and void
for not having the required valuable
consideration. Consequently, the
UCPB shares of stocks that are subject
of the Agreement were declared
conclusively owned by the
Government. It also held that the
Agreement did not have the effect of
law as it was not published as part of
P.D. 755, even if Section 1 thereof
made reference to the same.
ISSUE: Did the Sandiganbayan have
jurisdiction, in Civil Case No. 0033-A,
an ill-gotten wealth case brought
under [EO] Nos. 1 and 2, to declare
the [Cojuangco UCPB shares] acquired
by virtue of the Pedro Cojuangco, et
al. Agreement and/or the PCA
Agreement null and void because not
supported by valuable consideration
HELD: THE SANDIGANBAYAN HAS
JURISDICTION OVER THE SUBJECT
MATTER
OF THE
SUBDIVIDED
AMENDED
COMPLAINTS, INCLUDING
THE SHARES ALLEGEDLY ACQUIRED BY
COJUANGCOBY VIRTUE OF THE PCA
AGREEMENTS.
The issue of jurisdiction over the
subject
matter
of
the
subdivided amended complaints has
peremptorily been put to rest by the
Court in its January 24, 2012 Decision
in COCOFED v. Republic. There, the
Court, citing Regalado27 and settled
jurisprudence,
stressed
the
following interlocking
precepts:
Subject
matter
jurisdiction
is
conferred by law, not by the consent
or acquiescence of any or all of the
parties. In turn, the issue on whether a
suit comes within the penumbra of a

JURISDICTION

statutory conferment is determined by

the allegations in the complaint,
regardless of whether or not the suitor
will be entitled to recover upon all or
part of the claims asserted.
The Republic's material averments in
its complaint subdivided in CC No.
0033-A included the following:
CC No. 0033-A
12. Defendant Eduardo M. Cojuangco,
Jr. served as a public officer during the
Marcos administration. During the
period of his incumbency as a public
officer, he acquired assets, funds and
other property grossly and manifestly
disproportionate to his
salaries,
lawful income
and
income
from
legitimately acquired property.
13. Defendant Eduardo M. Cojuangco,
Jr., taking undue advantage of his
association, influence, connection,
and acting in unlawful concert with
Defendants Ferdinand E. Marcos and
Imelda
R.
Marcos,
AND
THE INDIVIDUAL
DEFENDANTS,
embarked upon devices, schemes
and stratagems, to unjustly enrich
themselves at the expense of Plaintiff
and the Filipino people, such as when
he a) manipulated, beginning the year
1975 with the active collaboration of
Defendants x x x
Maria Clara
Lobregat, Danilo Ursua [etc.], the
purchase by . . . (PCA) of 72.2% of the
outstanding capital stock of the x x x
(FUB)
which
was
subsequently
converted
into
a
universal bank
named x x x (UCPB) through the use
of
the
Coconut
Consumers Stabilization Fund (CCSF)
being initially in the amount of
P85,773,100.00 in a manner contrary
to law and to the specific purposes for
which said coconut levy funds were
imposed and collected under P.D. 276,
and with sinister designs and under
anomalous circumstances, to wit:
(i) Defendant Eduardo Cojuangco, Jr.
coveted the coconut levy funds as a
cheap, lucrative and risk-free source
of funds with which to exercise his
private
option
to
buy
the
controlling interest in FUB; thus,
claiming
that
the
72.2%
of
the outstanding capital stock of FUB
could
only
be
purchased
and transferred through the exercise
of his "personal and exclusive action
[option] to acquire the 144,000
shares"
of
the
bank, Defendant
Eduardo M. Cojuangco, Jr. and PCA, x x

x executed on May 26, 1975 a

purchase agreement which provides,
among others, for the payment to him
in fully paid shares as compensation
thereof
95,384
shares
worth
P1,444,000.00
with the
further
condition that he shall manage and
control the bank as Director and
President for a term of five (5) years
renewable for another five (5) years
and to designate three (3) persons
of his choice who shall be elected as
members of the Board of Directors of
the Bank;
(ii) to legitimize a posteriori his highly
anomalous and irregular use and
diversion of government funds to
advance
his
own private
and
commercial
interests,
Defendant
Eduardo Cojuangco, Jr. caused the
issuance by Defendant Ferdinand
E. Marcos of PD 755 (a) declaring that
the coconut levy funds shall not be
considered special and fiduciary and
trust funds and do not form part of the
general
funds
of
the
National Government,
conveniently
repealing for that purpose a series of
previous decrees, PDs 276 and 414,
establishing the character
of the
coconut levy funds as special,
fiduciary,
trust and
governmental
funds;
(b)
confirming
the
agreement between
Defendant
Eduardo Cojuangco, Jr. and PCA on
the purchase of FUB by incorporating
by reference said private commercial
agreement in PD 755;
(iii)To further consolidate his hold on
UCPB, Defendant Eduardo Cojuangco,
Jr. imposed as consideration and
conditions for the purchase that (a) he
gets one out of every nine shares
given to PCA, and (b) he gets to
manage
and
control
UCPB
as
president for a term of five (5) years
renewable for another five (5) years;
(iv)To perpetuate his opportunity to
deal with and make use of the coconut
levy funds x x x Cojuangco, Jr. caused
the issuance by Defendant Ferdinand
E. Marcos of an unconstitutional
decree (PD
1468)
requiring
the
deposit of all coconut levy funds
with UCPB, interest free to the
prejudice of the government.
(v) In gross violation of their fiduciary
positions and in contravention of the
goal to create a bank for the
coconut farmers of the country, the
capital stock of UCPB as of February
25, 1986 was actually held by the
defendants, their lawyers, factotum
and business associates, thereby
finally gaining control of the UCPB by

misusing the names and identities of

the so-called "more than one million
coconut farmers."
14. The acts of Defendants, singly or
collectively, and/or in unlawful concert
with one another, constitute gross
abuse
of
official position
and
authority, flagrant breach of public
trust and fiduciary obligations, brazen
abuse of right and power, and unjust
enrichment, violation
of
the
constitution and laws of the Republic
of the Philippines, to the grave and
irreparable damage of Plaintiff and the
Filipino people.28
In no uncertain terms, the Court has
upheld
the
Sandiganbayan's assumption
of
jurisdiction over the subject matter of
Civil Case Nos. 0033-A and 0033-F.29
The Court wrote:
Judging from the allegations of the
defendants' illegal acts thereat made,
it is fairly obvious that both CC Nos.
0033-A and CC 0033-F partake, in the
context of EO Nos. 1, 2 and 14, series
of 1986, the nature of ill-gotten wealth
suits. Both deal with the recovery of
sequestered
shares, property
or
business enterprises claimed, as
alleged in the corresponding basic
complaints, to be ill-gotten assets of
President Marcos, his cronies
and nominees and acquired by taking
undue advantage of relationships
or influence and/or through or as a
result of improper use, conversion
or diversion of government funds or
property. Recovery of these
assets--determined
as
shall
hereinafter be discussed as prima
facie
ill-gotten--falls
within
the
unquestionable jurisdiction of the
Sandiganbayan.30
P.D. No. 1606, as amended by R.A.
7975 and E.O. No. 14, Series of 1986,
vests the Sandiganbayan with, among
others, original jurisdiction over civil
and criminal cases instituted pursuant
to and in connection with E.O. Nos. 1,
2, 14 and 14-A. Correlatively, the
PCGG Rules and Regulations defines
the term "Ill-Gotten Wealth" as "any
asset, property, business enterprise or
material possession of persons within
the purview of [E.O.] Nos. 1 and 2,
acquired
by
them
directly,
or
indirectly thru dummies, nominees,
agents, subordinates and/or business
associates by any of the following
means or similar schemes":

JURISDICTION

(1)
Through
misappropriation,
conversion, misuse or malversation of
public funds or raids on the public
treasury;
(2) x x x x
(3) By the illegal or fraudulent
conveyance
or
disposition
of
assets belonging to the government or
any of its subdivisions, agencies
or instrumentalities or governmentowned or controlled corporations;
(4)
By
obtaining,
receiving
or
accepting
directly
or
indirectly
any shares of stock, equity or any
other form of interest or participation
in any
business
enterprise
or
undertaking;
(5) Through the establishment of
agricultural, industrial or commercial
monopolies or other combination
and/or by the issuance, promulgation
and/or implementation of decrees and
orders intended to benefit particular
persons or special interests; and
(6) By taking undue advantage of
official position, authority, relationship
or influence for personal gain or
benefit. (Emphasis supplied)
Section 2(a) of E.O. No. 1 charged the
PCGG with the task of assisting the
President in "[T]he recovery of all illgotten
wealth accumulated
by
former ... [President] Marcos, his
immediate
family, relatives,
subordinates and close associates ...
including
the
takeover
or sequestration
of
all
business
enterprises and entities owned or
controlled by
them,
during
his
administration, directly or through
nominees,
by taking
undue
advantage of their public office and/or
using
their
powers, authority,
influence,
connections
or
relationship."
Complementing
the aforesaid Section 2(a) is Section 1
of E.O. No. 2 decreeing the freezing
of all assets "in which the [Marcoses]
their
close
relatives,
subordinates, business
associates,
dummies, agents or nominees have
any interest or participation."
The Republic's averments in the
amended
complaints,
particularly those detailing the alleged
wrongful acts of the defendants,
sufficiently reveal that the subject
matter thereof comprises the recovery
by the Government of ill-gotten wealth
acquired by then President Marcos,
his cronies or their associates and
dummies
through
the
unlawful,

improper utilization or diversion of

coconut levy funds aided by P.D. No.
755
and other
sister
decrees.
President Marcos himself issued these
decrees in a brazen bid to legalize
what amounts to private taking of the
said public funds.
There was no actual need for
Republic, as plaintiff a quo, to adduce
evidence
to
show
that
the
Sandiganbayan has jurisdiction over
the subject
matter of the complaints as it leaned
on the averments in the initiatory
pleadings
to
make
visible
the
jurisdiction of the Sandiganbayan over
the
ill-gotten wealth complaints.
As
previously discussed, a perusal of the
allegations
sufficiency
matters

easily
of the

reveals
the
statement of

disclosing
the
claim
of
the
government against the coco levy
funds and the
assets acquired directly or indirectly
through said funds as ill-gotten
wealth. Moreover, the Court finds no
rule that directs the plaintiff to first
prove the subject matter jurisdiction
of the court before which the
complaint is filed.
Rather, such
burden falls on the shoulders of
defendant
in the hearing of a motion to dismiss
anchored on said ground or a
preliminary hearing thereon when
such ground is alleged in the answer.
Lest it be overlooked, this Court has
already decided that the sequestered
shares are prima facie ill-gotten
wealth rendering the issue of the
validity of their sequestration and of
the jurisdiction of the Sandiganbayan
over the case beyond doubt. In the
case of COCOFED v. PCGG, We stated
that:
It is of course not for this Court to
pass upon the factual issues thus
raised. That function pertains to the

Sandiganbayan in the first instance.

For purposes of this proceeding, all
that the Court needs to determine is
whether or not there is prima facie
justification
for
the sequestration
ordered by the PCGG. The Court is
satisfied that there is. The cited
incidents, given the public character
of the coconut levy funds, place
petitioners COCOFED and its leaders
and officials, at least prima facie,
squarely within the purview of
Executive Orders Nos. 1, 2 and 14, as
construed and applied in BASECO, to
wit:
"1. that ill-gotten properties (were)
amassed
by
the
leaders
and supporters
of
the
previous
regime;
"a. more particularly, that '(i) Ill-gotten
wealth was accumulated by x x x
Marcos,
his
immediate
family,
relatives, subordinates
and
close
associates, x x x (and) business
enterprises and entities (came to be)
owned or controlled by them, during x
x x (the Marcos) administration,
directly or through nominees, by
taking undue advantage of their
public office and using their powers,
authority, influence, connections or
relationships';
"b. otherwise stated, that 'there are
assets
and
properties purportedly
pertaining to [the Marcoses], their
close relatives, subordinates, business
associates,
dummies,
agents
or
nominees which had been or were
acquired by them directly or indirectly,
through or as a result of the improper
or illegal use of funds or properties
owned by the Government x x x or
any
of
its
branches,
instrumentalities, enterprises, banks
or financial institutions, or by taking
undue advantage of their office,
authority,
influence,
connections
or relationship, resulting in their
unjust enrichment
2. The petitioners' claim that the
assets acquired with the coconut levy
funds are privately owned by the
coconut farmers is founded on certain
provisions of law, to wit [Sec. 7, RA
6260 and Sec. 5, Art. III, PD 1468]...
(Words in bracket added; italics in the
original).
E.O. 1, 2, 14 and 14-A, it bears to
stress, were issued precisely to effect
the recovery of ill-gotten assets
amassed
by
the
Marcoses,
their associates, subordinates and
cronies, or through their nominees. Be
that as it may, it stands to reason that
persons listed as associated with

JURISDICTION

the Marcoses refer to those in

possession of such ill-gotten wealth
but holding the same in behalf of the
actual, albeit undisclosed owner, to
prevent discovery and consequently
recovery.
Certainly,
it
is
wellnigh inconceivable
that
ill-gotten
assets would be distributed to and left
in the hands of individuals or entities
with obvious traceable connections to
Mr. Marcos and his cronies. The Court
can take, as it has in fact taken,
judicial notice
of
schemes
and
machinations that have been put in
place to keep illgotten assets under
wraps. These would include the
setting up of layers after layers of
shell or dummy, but controlled,
corporations31 or manipulated
instruments calculated to confuse if
not
altogether
mislead would-be
investigators from recovering wealth
deceitfully amassed at the expense of
the people or simply the fruits thereof.
Transferring the illegal assets to third
parties not readily perceived as
Marcos cronies would be another. So it
was that in PCGG v. Pena, the Court,
describing the rule of Marcos as a
"well entrenched plundering regime of
twenty years," noted the magnitude of
the past regime's organized pillage
and the ingenuity of the plunderers
and pillagers with the assistance of
experts and the best legal minds in
the market.32
Prescinding
from
the
foregoing
premises, there can no longer be
any serious challenge as to the
Sandiganbayan's
subject
matter
jurisdiction.
And in
connection
therewith,
the Court
wrote
in
COCOFED v. Republic, that the instant
petition shall be decided separately
and should not be affected by the
January 24, 2012 Decision, "save for
determinatively legal issues directly
addressed" therein.33 Thus:
We clarify that PSJ-A is subject of
another petition for review interposed
by Eduardo Cojuangco, Jr., in G.R. No.
180705
entitled, Eduardo
M.
Cojuangco, Jr. v. Republic of the
Philippines, which shall be decided
separately by this Court. Said petition
should accordingly not be affected by
this Decision save for determinatively
legal
issues
directly addressed
herein.34 (Emphasis Ours.)
We, therefore, reiterate our holding in
COCOFED v. Republic respecting the
Sandiganbayan's jurisdiction over the
subject matter of Civil Case No. 0033A, including those matters whose
adjudication We shall resolve in the
present case.

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

BASES CONVERSION
DEVELOPMENT
AUTHORITY, Petitioner, v. ROSA
REYES, CENANDO, REYES AND
CARLOS REYES, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review
on certiorari1 are the May 7, 20102 and
October 15, 20103 Resolutions of the
Court of Appeals (CA) in CA-G.R. CV
No. 92181, dismissing petitioner
Bases Conversion Development
Authoritys appeal from the November
27, 2007 Order4 issued by the
Regional Trial Court of Dinalupihan,
Bataan, Branch 5 (RTC) in Civil Case
Nos. DH-1136-07, DH-1137-07 and
DH-1138-07 for lack of jurisdiction, as
only questions of law were raised on
the aforesaid appeal.
The Facts

On February 13, 2007, petitioner filed

a complaint5 before the RTC, docketed
as Civil Case No. DH-1136-07, seeking
to expropriate 308 square meters of a
parcel of land located in Barangay San
Ramon, Dinalupihan, Bataan,
registered in the name of respondent
Rosa Reyes (Rosa) under Transfer
Certificate of Title (TCT) No. CLOA10265, in view of the construction of
the Subic-Clark-Tarlac Expressway
(SCTEx). It claimed that the said
property is an irrigated riceland with a
zonal value of P20.00 per square
meter, based on the relevant zonal
valuation of the Bureau of Internal
Revenue (BIR). Consequently,
pursuant to Section 4(a)6 of Republic
Act No. 89747 (RA 8974), petitioner
deposited the amount of
P6,120.00,8 representing 100% of the
zonal value of the same.
Similar complaints for expropriation,
docketed as Civil Case Nos. DH-113707 and DH-1138-07, were also filed
over the 156 and 384 square meter
portions of certain parcels of land
owned by respondents Cenando
Reyes9 (Cenando) and Carlos
Reyes10 (Carlos), respectively, for
which petitioner deposited the sums
of P3,120.0011 and P7,680.0012 also in
accordance with Section 4(a) of RA
8974.
In their separate
Answers,13 respondents uniformly
alleged that while they had no
objection to petitioners right to

expropriate, they claimed that the

amount of just compensation which
petitioner offered was ridiculously low
considering that the subject properties
were already re-classified into
residential lots as early as October 6,
2003 and as such, their zonal value
ranged from P3,000.00 to P6,000.00
per square meter, as determined by
the BIR. Nevertheless, to expedite the
proceedings, respondents expressed
that they were amenable to be paid
the rate of P3,000.00 per square
meter, at the lowest, translating to
P924,000.00 for Rosa,14 P468,000.00
for Cenando15 and P1,152,000.00 for
Carlos.16
The three (3) cases were subsequently
consolidated as per the RTCs Order
dated May 23, 200717 and a writ of
possession was granted in petitioners
favor on December 12, 2007.18
Meanwhile, on April 27, 2007,
respondents filed a Motion for
Summary Judgment19 (motion for
summary judgment), contending that
there were no genuine issues left for
resolution, except for the amount of
damages to be paid as just
compensation.
In opposition,20 petitioner argued that
Rule 35 of the Rules of Court on
summary judgment applies only to
ordinary civil actions for recovery of
money claims and not to expropriation
cases. Moreover, it claimed that the
mandatory constitution of a panel of
commissioners for the purpose of
ascertaining the amount of just
compensation due under Section 5,
Rule 67 of the Rules of Court
precludes a summary judgment.
In turn, respondents filed a
Reply,21 asserting that Rule 35 of the
Rules of Court applies to both ordinary
and special civil actions.
The RTC Ruling

On November 27, 2007, the RTC

issued an Order,22 granting the motion
for summary judgment and thereby
ordered petitioner to pay respondents
just compensation at the rate of
P3,000.00 per square meter, for a
total of P924,000.00 for Rosa,
P1,152,000.00 for Carlos and
P468,000.00 for Cenando.
In ruling for respondents, the RTC
observed that the subject properties
were already re-classified from
agricultural to residential in 2004, or
long before the corresponding
expropriation complaints were filed in
February 2007. In this regard, it held

JURISDICTION

that the amount of just compensation

should be pegged anywhere between
the range of P3,000.00 to P6,000.00
per square meter, pursuant to the
relevant zonal valuation of the BIR as
published in the December 9, 2002
issue of the Official Gazette.23 Thus,
considering that respondents had
already signified their willingness to
accept the rate of P3,000.00 per
square meter as just compensation, it
ruled that there was nothing left for it
to do but to terminate the proceedings
through summary judgment. In view
of the foregoing, the RTC brushed
aside petitioners insistence for the
constitution of a panel of
commissioners under Section 5, Rule
67 of the Rules of Court, dismissing
the same as a futile exercise which
would only delay the proceedings.24
Dissatisfied, petitioner filed a motion
for reconsideration25 based on the
following grounds: (a) respondents
failed to prove that the properties
sought to be expropriated were
properly re-classified; (b) the RTC
erred in fixing the value thereof at the
rate of P3,000.00 per square meter
given that they are not located along
a national highway or road but are
inner lots which should be classified
as all other streets and hence,
accorded a lower zonal valuation; (c)
the non-appointment of the panel of
commissioners was fatal; and (d) the
issues surrounding the overlap of
Rosas and Cenandos properties with
that of the Philippine National
Bank26 must first be resolved so as not
to prejudice the rights of the parties.
In line with these factual issues,
petitioner maintained that a full-blown
trial should have been conducted by
the RTC.
Petitioners motion for reconsideration
was, however, denied in an
Order27 dated May 12, 2008,
prompting it to file a notice of
appeal.28
For their part, respondents filed a
Motion to Dismiss Appeal, 29 averring
that an appeal from a summary
judgment raises only questions of law;
hence, the proper recourse to assail
its propriety should be a petition for
review on certiorari under Rule 45 of
the Rules of Court and not an ordinary
appeal under Rule 41 as adopted by
petitioner.
In response, petitioner filed a
Comment,30 asserting that its appeal
raised both questions of fact and law
and thus, was properly lodged before
the CA.
The CA Ruling

On May 7, 2010, the CA rendered a

Resolution,31 dismissing petitioners
appeal for being the wrong mode to
assail the RTCs summary judgment.
It found that the errors raised in
petitioners appeal essentially
pertained to the propriety of the RTCs
grant of respondents motion for
summary judgment and thus, involved
only questions of law of which the CA
had no jurisdiction. Hence, considering
its dismissal of petitioners appeal, it
held that the assailed RTC Orders
fixing the amount of just
compensation had already become
final and executory.
Petitioner moved for reconsideration
which was, however, denied in a
Resolution dated October 15,
2010,32prompting it to file the instant
petition.
Issue Before The Court

The sole issue in this case is whether

or not the CA erred in dismissing
petitioners appeal.
The Courts Ruling

The petition is meritorious.

A. Propriety of the CAs dismissal
of petitioners appeal.
Under Section 2, Rule 4133 of the
Rules of Court, there are two (2)
modes of appealing a judgment or
final order of the RTC in the exercise of
its original
jurisdiction:cralavvonlinelawlibrary
(a) If the issues raised involve
questions of fact or mixed questions
of fact and law, the proper recourse is
an ordinary appeal to the CA in
accordance with Rule 41 in relation to
Rule 44 of the Rules of Court; and
(b) If the issues raised involve only
questions of law, the appeal shall be
to the Court by petition for review
on certiorari in accordance with Rule
45 of the Rules of Court.

Corollary thereto, should a party raise

only questions of law through an
ordinary appeal taken under Rule 41,
Section 2, Rule 50 of the Rules of
Court provides that the said appeal
shall be dismissed.34
Jurisprudence dictates that there is a

question of law when the doubt or

difference arises as to what the law is
on a certain set of facts or
circumstances; on the other hand,
there is a question of fact when the
issue raised on appeal pertains to the
truth or falsity of the alleged facts.
The test for determining whether the
supposed error was one of law or
fact is not the appellation given by
the parties raising the same; rather, it
is whether the reviewing court can
resolve the issues raised without
evaluating the evidence, in which
case, it is a question of law; otherwise,
it is one of fact.35 In other words,
where there is no dispute as to the
facts, the question of whether or not
the conclusions drawn from these
facts are correct is a question of
law.36 However, if the question posed
requires a re-evaluation of the
credibility of witnesses, or the
existence or relevance of surrounding
circumstances and their relationship
to each other, the issue is factual.37
Applying these principles, the Court
finds that the CA did not err in
dismissing petitioners appeal.
Records show that petitioner raised
four (4) issues 38 in its appeal before
the CA:cralavvonlinelawlibrary
First, whether or not summary
judgment was properly rendered by
the RTC;chanroblesvirtualawlibrary
Second, whether or not there is any
evidence on record to support the
conclusion that the subject lots had
already been re- classified from
agricultural to residential; and if in the
affirmative, whether or not the same
may be considered as interior lots
which would necessarily affect its
zonal
valuation;chanroblesvirtualawlibrary
Third, whether or not the
appointment of commissioners is
indispensable in an expropriation
case; and
Fourth, whether or not the properties
of Cenando and Rosa Reyes overlap
that of the Philippine National Bank.

At the outset, it bears to note that the

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

JURISDICTION

ventilated for the first time only in a

motion for reconsideration or on
appeal.41 Thus, while these issues may
be classified as questions of fact since
their resolution would require an
evaluation of the evidence on record,
the CA was precluded from
considering the same. Consequently,
only the first and third issues were left
for its determination.
Unlike the second and fourth issues,
the first and third issues can be
properly classified as questions of law
since their resolution would not
involve an examination of the
evidence but only an application of
the law on a particular set of facts.
To elucidate, the first issue regarding
the propriety of the RTCs
summary judgment involves only a
question of law since one need not
evaluate the evidence on record to
assess if the unresolved issues in this
case, i.e., the classification of the
properties expropriated, its location
and valuation, constitute genuine
issues.42 This is in line with the rule
that a summary judgment is not
warranted when there are genuine
issues which call for a full blown
trial.43 Similarly, the third
issue concerning the propriety of
the appointment of a panel of
commissioners only requires an
application of Section 5, Rule 67 of the
Rules of Court,44 without the need of
examining the evidence on record.
Thus, given that the issues to be
resolved on appeal only involve
questions of law, no reversible error
was committed by the CA in
dismissing petitioners appeal. The
proper recourse should have been to
file a petition for review
on certiorari under Rule 45 of the
Rules of Court.
B. Relaxation of procedural rules.
While the RTCs November 27, 2007
Order should as a matter of course
already be regarded as final and
executory due to petitioners
erroneous appeal, the Court,
nonetheless, deems it proper to relax
the rules of procedure and remand the
case to the RTC in order to reevaluate, on trial, the proper amount
of just compensation. Two (2) reasons
impel this course of
action:cralavvonlinelawlibrary
First, petitioners appeal at least as
to the first issue would have been
granted due to its merit were it not for
the foregoing procedural lapse.
As earlier discussed, genuine issues
remain to be threshed out in this case
which thereby negate the propriety of

a summary judgment. In this respect,

the RTC improperly issued the
November 27, 2007 Order which
granted respondents motion for
summary judgment.
Second, expropriation cases involve
the expenditure of public funds and
thus, are matters of public interest. In
this light, trial courts are required to
be more circumspect in their
evaluation of the just compensation to
be awarded to the owner of the
expropriated property,45 as in this
case.
Records, however, show that the
adjudged amount of just
compensation was not arrived at
judiciously since the RTC based the
same solely on respondents
intimation that they were willing to
settle for the rate of P3,000.00 per
square meter.46 It is settled that the
final conclusions on the proper
amount of just compensation can only
be made after due ascertainment of
the requirements set forth under RA
8974 and not merely based on the
declarations of the parties.47
Further, it is observed that the RTC
simply glossed over the issue
regarding the proper classification of
the subject properties as either
residential or agricultural lands when
the said matter should have been
circumspectly resolved considering
that land classification accounts for a
significant discrepancy in the
valuation of the property. Based on
the evidence on record, the residential
lots in Barangay San Ramon,
Dinalupihan, Bataan have a zonal
valuation ranging from P2,000.00 (for
all other streets) to P6,000.00 per
square meter (for those situated
within the vicinity of the national
highway and San Juan to Payumo
Streets).48 On the other hand,
petitioner claims . that agricultural
lands command a zonal valuation of
only P20.00.49 Moreover, a property's
zonal valuation cannot, by and of
itself, be considered as the sole basis
for "just compensation"; hence, the
RTC was duty bound to look at other
indices of fair market value.50
Unfortunately, records show that it did
not.
In fine, given the special and
compelling reasons as abovediscussed, the Court finds it
appropriate to relax the rules of
procedure in the interest of
substantial justice. In Twin Towers
Condominium Corp. v. CA,51 the Court
held that the merits of the case may
be regarded as a special or compelling
reason to relax procedural rules.
Likewise, in Apo Fruits Corporation v.

Land Bank of the Philippines,52 special

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

Accordingly the case is hereby

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

Republic
vs,
Roman
Archbishop of Manila

Catholic

G.R. No. 192975

FACTS: Republic filed a complaint

before the RTC of Malolos City,
Bulacan, for cancellation of titles and
reversion against respondent RCAM
and several others. The complaint
alleged, inter alia, that RCAM appears
as the registered owner of 8 parcels of
land covered by OCT No. 588
allegedly issued pursuant to a
decision by the Land Registration
Court in favor of RCAM. RCAM sold the
said eight (8) parcels of land to the
other named defendants. These
parcels of land, however, were
certified by the BFD as falling within

JURISDICTION

the unclassified lands of the public

domain and it was only later that they
were
declared
alienable
and
disposable. RCAM filed a motion to
dismiss assailing the jurisdiction of the
RTC over the complaint. It alleged that
the action for reversion of title was
essentially one for annulment of
judgment of the then Court of First
Instance acting as a Land Registration
Court, hence, beyond the competence
of the RTC to act upon.RTC denied
RCAM's motion to dismiss for being
premature. The CA reversed.
ISSUE:
Whether
the
RTC
has
jurisdiction over the case filed by the
Republic
HELD: Yes. It is axiomatic that the
nature of an action and whether the
tribunal has jurisdiction over such
action are to be determined from the
material allegations of the complaint,
the law in force at the time the
complaint is filed, and the character of
the relief sought irrespective of
whether the plaintiff is entitled to all
or some of the claims averred. In the
present case, the material averments,
as well as the character of the relief
prayed for by petitioners in the
complaint show that their action is
one for cancellation of titles and
reversion, not for annulment of
judgment of the RTC. The complaint
alleged the parcels of land subject
matter of the action were not the
subject of the CFIs judgment in the
relevant prior land registration case.
Hence, petitioners pray that the
certificates of title of RCAM be
cancelled which will not necessitate
the annulment of said judgment.
Clearly, Rule 47 of the Rules of Court
on annulment of judgment finds no
application in the instant case. The
RTC may properly take cognizance of
reversion suits which do not call for an
annulment of judgment of the RTC
acting as a Land Registration Court.
Actions for cancellation of title and
reversion, like the present case,
belong to the class of cases that
"involve the title to, or possession of,
real
property,
or
any
interest
therein" and where the assessed value
of
the
property
exceeds
P20,000.00 fall under the jurisdiction
of the RTC.

BPI VS. HONG

FACTS:

This petition for review on

certiorari under Rule 45 assails the
Decision[1] dated September 27, 2002
and Resolution[2] dated January 12,
2004 of the Court of Appeals (CA) in
CA-G.R. SP No. 64166.
the EYCO Group of Companies
(EYCO)
filed
a
petition
for
suspension
of
payments
and
rehabilitation before the Securities
and Exchange Commission (SEC),
docketed as SEC Case No. 09-975764. A stay order was issued on
September 19, 1997 enjoining the
disposition in any manner except in
the ordinary course of business and
payment
outside
of
legitimate
business
expenses
during
the
pendency of the proceedings, and
suspending all actions, claims and
proceedings against EYCO until further
orders from the SEC.[3] On December
18, 1998, the hearing panel approved
the proposed rehabilitation plan
prepared by EYCO despite the
recommendation of the management
committee for the adoption of the
rehabilitation plan prepared and
submitted by the steering committee
of the Consortium of Creditor Banks
which appealed the order to the
Commission.[4] On
September
14,
1999, the SEC rendered its decision
disapproving
the
petition
for
suspension of payments, terminating
EYCOs proposed rehabilitation plan
and ordering the dissolution and
liquidation
of
the
petitioning
corporation. The case was remanded
to the hearing panel for liquidation
proceedings.[5] On appeal by EYCO,
(CA-G.R. SP No. 55208) the CA upheld
the SEC ruling. EYCO then filed a
petition for certiorari before this Court,
docketed as G.R. No. 145977,which
case was eventually dismissed under
Resolution dated May 3, 2005 upon
joint manifestation and motion to
dismiss filed by the parties.[6] Said
resolution had become final and
executory on June 16, 2005.[7]
Petitioner Bank of the Philippine
Islands (BPI), filed with the Office of
the Clerk of Court, Regional Trial Court
of Valenzuela City, a petition for extrajudicial foreclosure of real properties
mortgaged to it by Eyco Properties,
Inc.
and
Blue
Star
Mahogany,
Inc. Public auction of the mortgaged
properties
was
scheduled
on
December 19, 2000.[8]
Claiming that the foreclosure
proceedings initiated by petitioner
was illegal, respondent Eduardo Hong,
an unsecured creditor of Nikon
Industrial Corporation, one of the
companies of EYCO, filed an action for
injunction and damages against the

petitioner in the same court (RTC of

Valenzuela City).
After hearing, the trial court
issued a temporary restraining order
(TRO). Petitioner filed a motion to
dismiss[10] arguing that by plaintiffs
own allegations in the complaint,
jurisdiction over the reliefs prayed for
belongs to the SEC, and that plaintiff
is actually resorting to forum shopping
since he has filed a claim with the SEC
and the designated Liquidator in the
ongoing liquidation of the EYCO Group
of Companies. In his Opposition,
[11]
plaintiff (respondent) asserted that
the RTC has jurisdiction on the issue of
propriety
and
validity
of
the
foreclosure
by
petitioner,
in
accordance with Section 1, Rule 4 of
the 1997 Rules of Civil Procedure, as
amended, the suit being in the nature
of a real action.
On January 17, 2001, the trial
court denied the motion to dismiss.
[12]
Petitioners
motion
for
reconsideration was likewise denied.
[13]
Petitioner challenged the validity
of the trial courts ruling before the
CA via a
petition
for
certiorari
under Rule 65.
The CA affirmed the trial courts
denial of petitioners motion to
dismiss. It
held
that
questions
relating to the validity or legality of
the foreclosure proceedings, including
an action to enjoin the same, must
necessarily be cognizable by the RTC,
notwithstanding that the SEC likewise
possesses
the
power
to
issue
injunction in all cases in which it has
jurisdiction as provided in Sec. 6 (a) of
Presidential Decree (P.D.) No. 902A. Further, the CA stated that an
action for foreclosure of mortgage and
all incidents relative thereto including
its validity or invalidity is within the
jurisdiction of the RTC and is not
among those cases over which the
SEC exercises exclusive and original
jurisdiction under Sec. 5 of P.D. No.
902-A. Consequently, no grave abuse
of discretion was committed by the
trial court in issuing the assailed
orders.
ISSUE:
WON the RTC can take cognizance of
the injunction suit despite the
pendency of SEC Case No. 09-97-5764
HELD: The petition has no merit.
Jurisdiction is defined as the
power and authority of a court to hear
and
decide
a
case.[14] A

JURISDICTION

courts jurisdiction over the subject

matter of the action is conferred only
by the Constitution or by statute.
[15]
The nature of an action and the
subject matter thereof, as well as
which court or agency of the
government has jurisdiction over the
same, are determined by the material
allegations of the complaint in relation
to the law involved and the character
of the reliefs prayed for, whether or
not
the
complainant/plaintiff
is
entitled to any or all of such reliefs.
[16]
And jurisdiction being a matter of
substantive law, the established rule
is that the statute in force at the time
of the commencement of the action
determines the jurisdiction of the
court.[17]
Perusal of the complaint reveals
that respondent does not ask the trial
court to rule on its interest or claim -as an unsecured creditor of two
companies under EYCO -- against the
latters properties mortgaged to
petitioner. The complaint principally
seeks to enjoin the foreclosure
proceedings initiated by petitioner
over those properties on the ground
that such properties are held in trust
and placed under the jurisdiction of
the appointed Liquidator in SEC Case
No. 09-97-5764. Thus, Civil Case No.
349-V-00 is one for injunction with
prayer for damages.
An action for injunction is a suit
which has for its purpose the
enjoinment
of
the
defendant,
perpetually or for a particular time,
from the commission or continuance
of a specific act, or his compulsion to
continue performance of a particular
act. It has an independent existence,
and is distinct from the ancillary
remedy of preliminary injunction
which cannot exist except only as a
part or an incident of an independent
action or proceeding. In an action for
injunction, the auxiliary remedy of
preliminary injunction, prohibitory or
mandatory, may issue.[18]
As a rule, actions for injunction
and damages lie within the jurisdiction
of the RTC pursuant to Section 19
of Batas PambansaBlg. 129, otherwise
known
as
the
Judiciary
Reorganization Act of 1980, as
amended by Republic Act (R.A.) No.
7691.
Sec.
19. Jurisdiction
in
civil
cases.
Regional Trial Courts
shall
exercise
exclusive
original
jurisdiction:

(1) In
all
civil actions in which
the subject of the
litigations
is
incapable
of
pecuniary
estimation;
(6) In all
cases not within the
exclusive
jurisdiction of any
court,
tribunal,
person
or
body
exercising
x
xx
judicial or quasijudicial functions;
(8) In all
other cases in which
the
demand,
exclusive of interest,
damages
of
whatever
kind,
attorneys
fees,
litigation expenses,
and costs or the
value
of
the
property
in
controversy exceeds
Three
hundred
thousand
pesos
(P300,000.00) or, in
such other cases in
Metro Manila, where
the
demand
exclusive
of
the
above-mentioned
items exceeds Four
hundred
thousand
pesos
(P400,000.00). (Itali
cs supplied.)
On the other hand, Sec. 6 (a) of
P.D. No. 902-A empowered the SEC to
issue preliminary or permanent
injunctions, whether prohibitory or
mandatory, in all cases in which it has
jurisdiction. Such cases in which the
SEC exercises original and exclusive
jurisdiction are the following:
(a) Devices
or
schemes
employed by or any
acts, of the board of
directors, business
associates,
its
officers
or
partnership,
amounting to fraud
and
misrepresentation
which
may
be
detrimental to the
interest of the public
and/or
of
the
stockholder,
partners, members

of associations or
organizations
registered with the
Commission;
(b) Controv
ersies arising out of
intra-corporate
or
partnership
relations,
between
and
among
stockholders,
members
or
associates; between
any or all of them
and the corporation,
partnership
or
association of which
they
are
stockholders,
members
or
associates,
respectively;
and
between
such
corporation,
partnership
or
association and the
state insofar as it
concerns
their
individual franchise
or right to exist as
such entity; and
(c)
Controversies in the
election
or
appointments
of
directors, trustees,
officers or managers
of
such
corporations,
partnerships
or
associations.[19]
Previously, under the Rules of
Procedure on Corporate Recovery, the
SEC upon termination of cases
involving petitions for suspension of
payments
or
rehabilitation
may, motuproprio, or on motion by
any interested party, or on the basis
of the findings and recommendation
of the Management Committee that
the continuance in business of the
debtor is no longer feasible or
profitable, or no longer works to the
best interest of the stockholders,
parties-litigants, creditors, or the
general public, order the dissolution of
the debtor and the liquidation of its
remaining
assets
appointing
a
Liquidator for the purpose.[20] The
debtors properties are then deemed
to have been conveyed to the
Liquidator in trust for the benefit of
creditors, stockholders and other
persons
in
interest. This
notwithstanding,
any
lien
or
preference to any property shall be
recognized by the Liquidator in favor
of the security or lienholder, to the

JURISDICTION

extent allowed by law, in the

implementation of the liquidation
plan.[21]
The SEC finally disposed of said case
when it rendered on September 14,
1999 the decision disapproving the
petition for suspension of payments,
terminating
the
proposed
rehabilitation plan, and ordering the
dissolution and liquidation of the
petitioning corporation. With the
enactment of the new law, jurisdiction
over the liquidation proceedings
ordered in SEC Case No. 09-97-5764
was
transferred
to
the
RTC
branch designated by the Supreme
Court to exercise jurisdiction over
cases formerly cognizable by the
SEC.
There is no showing in the
records that SEC Case No. 09-97-5764
had
been
transferred
to
the
appropriate RTC designated as Special
Commercial Court at the time of the
commencement of the injunction suit
on December 18, 2000. Given the
urgency of the situation and the
proximity of the scheduled public
auction of the mortgaged properties
as per the Notice of Sheriffs Sale,
respondent was constrained to seek
relief from the same court having
jurisdiction
over
the
foreclosure
proceedings RTC of Valenzuela City.
Respondent thus filed Civil Case No.
349-V-00 in the RTC of Valenzuela City
on December 18, 2000 questioning
the validity of and enjoining the
extrajudicial foreclosure initiated by
petitioner. Pursuant to its original
jurisdiction over suits for injunction
and damages, the RTC of Valenzuela
City,
Branch
75
properly
took
cognizance of the injunction case filed
by the respondent. No reversible
error was therefore committed by the
CA when it ruled that the RTC of
Valenzuela City, Branch 75 had
jurisdiction to hear and decide
respondents complaint for injunction
and damages.
Lastly, it may be mentioned
that while the Consortium of Creditor
Banks had agreed to end their
opposition
to
the
liquidation
proceedings upon the execution of the
Agreement[24] dated
February
10,
2003, on the basis of which the
parties moved for the dismissal of G.R.
No. 145977, it is to be noted that
petitioner is not a party to the said
agreement. Thus, even assuming that
the SEC retained jurisdiction over SEC
Case No. 09-97-5764, petitioner was
not bound by the terms and conditions
of the Agreement relative to the
foreclosure
of
those
mortgaged

properties belonging to EYCO and/or

other accommodation mortgagors.
WHEREFORE, the
petition
for
review
on
certiorari
is DENIED. The
Decision
dated
September 27, 2002 and Resolution
dated January 12, 2004 of the Court of
Appeals in CA-G.R. SP No. 64166
are AFFIRMED.
HEIRS
OF
CANDIDO
ROSARIO VS DEL ROSARIO

DEL

For her part, Monica claimed

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

FACTS:
The PARADs Decision
This involves a parcel of land with an
area of 9,536 square meters situated
in Barangay Caingin,
Bocaue,
Bulacan. The
subject
land
was
formerly owned by Pedro G. Lazaro
and tenanted by the spouses Jose Del
Rosario and Florentina De Guzman
(Spouses Del Rosario).
Spouses Del Rosario had
three children: Monica Del Rosario
(Monica),
Candido
Del
Rosario
(Candido)
and
Gil
Del
Rosario
(Gil). The petitioners claimed that
when Spouses Del Rosario died, only
they continued to tenant and actually
till the subject land.
Monica and Gil agreed that
the
latter
would
facilitate
the
application for an Emancipation Patent
over the subject land in the name of
the former. In exchange, Monica
agreed to cede to Gil one-third of the
said land after the Emancipation
Patent had been issued to her.

Department
of
Agrarian
Reform (DAR) issued to Monica
Emancipation Patent No. 00733146
over the land. Subsequently, on
October 22, 1998, the Registry of
Deeds
for
the Province of Bulacan issued
Transfer Certificate of Title (TCT) No.
EP-257-M in the name of Monica.
The petitioners claimed that
Monica, despite repeated demands,
refused to cede to Gil the one-third
portion of the subject land pursuant to
their agreement. Thus, on April 17,
2000, the petitioners filed with the
Office of the Provincial Agrarian
Reform
Adjudicator
(PARAD)
in
Malolos, Bulacan a complaint against
Monica for amendment of TCT No. EP257-M and partition of the subject
land.

PARAD Provincial Adjudicator

Toribio E. Ilao, Jr. (PA Ilao) rendered a
Decision.
PA Ilao found that Monica
was not the bona fide tenant-farmer of
the subject land and that she had
continuously failed to cultivate or
develop the same.
Unperturbed,
Monica
appealed
from
the
foregoing
disposition of PA
Ilao to the
Department
of
Agrarian
Reform
Adjudication Board (DARAB).
The DARABs Decision
On January 8, 2004, the
DARAB rendered a Decision,[4] which
reversed and set aside the Decision
dated May 22, 2002 of PA Ilao.
Further, the DARAB ruled that
the agreement between Monica and
Gil that one-third of the subject land
would be ceded to the latter after the
same had been registered under
Monicas name is contrary to law as
P.D. No. 27 prohibits the transfer of
parcels of land given to qualified
farmer-beneficiaries other than by
hereditary succession or to the
government.
The petitioners sought a
reconsideration of the Decision dated
January 8, 2004, but it was denied by
the DARAB in its Resolution[6] dated
July 8, 2004.
Subsequently, the petitioners
filed a petition for review[7] with the CA
alleging that the DARAB erred in ruling
that they and Monica are not coowners of the subject land.
The CAs Decision

JURISDICTION

On January 21, 2008, the CA

rendered the herein assailed decision
denying the petition for review filed by
the petitioners. The CA held that the
PARAD and the DARAB had no
jurisdiction to take cognizance of the
petitioners complaint for amendment
of the Emancipation Patent and
partition of the subject land, there
being no agrarian dispute or tenancy
relations between the parties.
Nevertheless, the CA also
held that the petitioners are bound by
the decision of the DARAB declaring
Monica as the bona fide holder of TCT
No. EP-257-M since they participated
in the proceedings before the PARAD
and the DARAB without raising any
objection thereto.
ISUE: whether the PARAD and the
DARAB have jurisdiction to take
cognizance
of
the
petitioners
complaint
for amendment
and
partition; and second, if the PARAD
and the DARAB have no jurisdiction
over the complaint for amendment
and partition, whether the petitioners
are bound by their
respective
dispositions.
HELD:
The
meritorious.

petition

is

First Issue: Jurisdiction

PARAD and the DARAB

partly

of

the

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

On the other hand, Monica

asserts that the CA did not err in
declaring that the PARAD and the
DARAB have no jurisdiction over the
said complaint for amendment and
partition since there was simply no
tenancy relationship alleged therein.
The jurisdiction of the PARAD and the
DARAB is limited only to all agrarian
disputes and matters or incidents
involving the implementation of the
CARP.

In the process of reorganizing

the DAR, Executive Order (E.O.) No. 129A created the DARAB to assume the
powers and functions with respect to
the adjudication of agrarian reform
matter
At the time the complaint for
amendment and partition was filed by
the petitioners, the proceedings
before the PARAD and the DARAB
were governed by the DARAB New
Rules of Procedures, which were
adopted and promulgated on May 30,
1994, and came into effect on June
21, 1994 after publication (1994
DARAB Rules). The 1994 DARAB Rules
identified the cases over which the
DARAB shall have jurisdiction, to wit:
Specifically, the PARAD and
the
DARAB
have primary
and
exclusive jurisdiction, both original
and appellate, to determine and
adjudicate
all
agrarian
disputes
involving the implementation of the
Comprehensive
Agrarian
Reform
Program (CARP) under Republic Act
(R.A.) No. 6657, as amended by R.A.
No. 9700, E.O. Nos. 228, 229, and
129-A, R.A. No. 3844 as amended by
R.A. No. 6389, P.D. No. 27 and other
agrarian laws and their Implementing
Rules and Regulations.[11]
Thus, the jurisdiction of the
PARAD and the DARAB is only limited
to cases involving agrarian disputes,
including incidents arising from the
implementation of agrarian laws
The petitioners complaint for
amendment and partition is beyond
the jurisdiction of the PARAD and the
DARAB.
Where
a
question
of
jurisdiction between the DARAB and
the RTC is at the core of a dispute,
basic jurisprudential tenets come into
play. It is the rule that the jurisdiction
of a tribunal, including a quasi-judicial
office or government agency, over the
nature and subject matter of a petition
or complaint is determined by the
material allegations therein and the
character of the relief prayed for
irrespective of whether the petitioner
or complainant is entitled to any or all
such reliefs.[12]
7. The
respondent, after
receiving the EP
over the subject
agricultural land,
refused to give
the shares of her

brothers
(predecessors-ininterest of herein
petitioners)
and
subdivide equally
the subject land
among them, they
being
surviving
heirs of their late
parents who first
tilled the subject
agricultural land
despite persistent
demand;
10. An
agreement
was
likewise
entered
into
by
the
respondent
and
the other tenant
farmers
of
the
adjoining
lots,
with the late Gil
del Rosario dated
February
1991,
committing
themselves
that
after the issuance
of their EPs by the
DAR,
the
ONE
THIRD
(1/3)
portion of their
tillage
will
be
segregated
and
given
to
her
brother
Gil
del
Rosario
in
consideration
of
the assistance of
the latter, x x
12.
The
petitioners
are
seeking
the
assistance of this
Honorable
Board
to amend
and
partition the EP
issued
to
the
respondent
and
the
subject
agricultural land
be divided equally
among
the
respondent
and
the predecessorsin-interest
of
herein petitioners;
[13]
(Emphasis
supplied)
A perusal of the foregoing will
readily show that the complaint
essentially sought the following: first,
the enforcement of the agreement
entered into by and between Gil and
Monica wherein the latter promised to
cede to the former one-third portion of
the subject land upon the issuance of
the emancipation patent over the

JURISDICTION

same; and second, the recovery of

petitioners
purported
hereditary
share over the subject land, in
representation of Gil and Candido.
Indubitably,
the
said
complaint
for
amendment
and
partition does not involve any
agrarian dispute, nor does it involve
any
incident
arising
from
the
implementation of agrarian laws. The
petitioners and Monica have no
tenurial, leasehold, or any agrarian
relations whatsoever that will bring
this controversy within the jurisdiction
of the PARAD and the DARAB. Since
the PARAD and the DARAB have no
jurisdiction
over
the
present
controversy, they should not have
taken cognizance of the petitioners
complaint for amendment of the
Emancipation Patent and partition.
Further, the instant case does
not involve an incident arising from
the implementation of agrarian laws
as would place it within the
jurisdiction of the PARAD and the
DARAB. Admittedly, the petitioners
alleged that it was Gil and Candido
who continued the tillage of the
subject land after the death of
Spouses
Del
Rosario. While
the
foregoing allegation seems to raise a
challenge to Monicas qualification as
a farmer-beneficiary of the subject
land, we nevertheless find the same
insufficient to clothe the PARAD and
the DARAB with jurisdiction over the
complaint.
While ostensibly assailing
Monicas qualification as a farmerbeneficiary, the petitioners did not
seek
the
nullification
of
the
emancipation patent issued to Monica
and the issuance of a new one in their
names. Instead,
the
petitioners
merely sought that the subject land be
equally
partitioned
among
the
surviving heirs of Spouses Del Rosario,
including Monica. Verily, by merely
asking for the recovery of their
alleged hereditary share in the subject
land,
the
petitioners
implicitly
recognized the validity of the issuance
of the emancipation patent over the
subject land in favor of Monica.
Second Issue: Effect
DARABs Decision

of

the

Despite its finding that the

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

We do not agree with the

foregoing ratiocination of the CA. The
Decision dated January 8, 2004 of the
DARAB is null and void and, thus,
produced no effect whatsoever, the
DARAB having no jurisdiction to take
cognizance
of
the
petitioners
complaint
for
amendment
and
partition.
WHEREFORE, in consideration
of the foregoing disquisitions, the
Decision dated January 21, 2008 of
the Court of Appeals in CA-G.R. SP No.
85483 is hereby REVERSED and SET
ASIDE. The Provincial
Agrarian
Reform Adjudicators Decision dated
May 22, 2002, and the Department of
Agrarian Reform Adjudication Boards
Decision dated January 8, 2004 and
Resolution dated July 8, 2004, are
declared NULL and VOID for lack of
jurisdiction.

BANK
OF
COMMERCE
VS
PLANTERS DEVELOPMENT BANK
FACTS:
Before the Court are two consolidated
petitions for review on certiorari under
Rule 45,1 on pure questions of law,
filed by the petitioners Bank of
Commerce
(BOC)
and
the
BangkoSentralngPilipinas (BSP). They
assail the January 10, 2002 and July
23, 2002 Orders (assailed orders) of
the Regional Trial Court (RTC) of
Makati City, Branch 143, in Civil Case
Nos. 94-3233 and 94-3254. These
orders dismissed (i) the petition filed
by the Planters Development Bank
(PDB), (ii) the "counterclaim" filed by
the BOC, and (iii) the countercomplaint/cross-claim for interpleader
filed bythe BSP; and denied the BOCs
and
the
BSPs
motions
for
reconsideration.
The
Rizal
Commercial
Banking
Corporation (RCBC) was the registered
owner of seven Central Bank (CB) bills
with a total face value of P 70 million,
issued on January 2, 1994 and would
mature on January 2, 1995.2 As
evidenced
by
a
"Detached
Assignment" dated April 8, 1994,3 the
RCBC sold these CB bills to the
BOC.4 As
evidenced
by
another
"Detached Assignment"5 of even date,
the BOC, in turn, sold these CB bills to
the PDB.6The BOC delivered the
Detached Assignments to the PDB.7
On
April
15,
1994
(April
15
transaction), the PDB, in turn, sold to

the BOC Treasury Bills worth P 70

million, with maturity date of June 29,
1994, as evidenced by a Trading
Order8 and
a
Confirmation
of
Sale.9 However, instead of delivering
the Treasury Bills, the PDB delivered
the seven CB bills to the BOC, as
evidenced by a PDB Security Delivery
Receipt,
bearing
a
"note: ** substitution in lieu of 06-2994" referring to the Treasury
Bills.10Nevertheless, the PDB retained
possession
of
the
Detached
Assignments. It is basically the nature
of this April 15 transaction that the
PDB and the BOC cannot agree on.
As the registered owner of the
remaining three CB bills, the RCBC
sold them to IVI Capital and Insular
Savings Bank. Again, when the BSP
refused to release the amount of this
CB bill on maturity, the RCBC paid
back its transferees, reacquired these
three CB bills and sold them to the
BOC ultimately, the BOC acquired
these three CB bills.
On June 30, 1994, upon learning of the
transfers involving the CB bills, the
PDB informed20 the Officer-in-Charge
of the BSPs Government Securities
Department,21 LagrimasNuqui, of the
PDBs claim over these CB bills, based
on the Detached Assignments in its
possession. The PDB requested the
BSP22 to record its claim in the BSPs
books, explaining that its nonpossession of the CB bills is "on
account of imperfect negotiations
thereof and/or subsequent setoff or
transfer."23
Nuqui denied the request, invoking
Section 8 of CB Circular No. 28
(Regulations Governing Open Market
Operations,
Stabilization
of
the
Securities Market, Issue, Servicing and
Redemption
of
the
Public
Debt)24 which
requires
the
presentation of the bond before a
registered bond may be transferred on
the books of the BSP.25
In a July 25, 1994 letter, the PDB
clarified to Nuqui that it was not
"asking for the transfer of the CB
Bills. rather it intends to put the BSP
on formal notice that whoever is in
possession of said bills is not a holder
in due course," and, therefore the BSP
should not make payment upon the
presentation of the CB bills on
maturity.26 Nuqui responded that the
BSP was "not in a position at that
point in time to determine who is and
who is not the holder in due course
since it is not privy to all acts and time
involving the transfers or negotiation"
of the CB bills. Nuqui added that the

JURISDICTION

BSPs action shall be governed by CB

Circular No. 28, as amended.27
On November 17, 1994, the PDB also
asked BSP Deputy Governor Edgardo
Zialcita that (i) a notation in the BSPs
books be made against the transfer,
exchange, or payment of the bonds
and the payment of interest thereon;
and (ii) the presenter of the bonds
upon maturity be required to submit
proof as a holder in due course (of the
first set of CB bills). The PDB relied on
Section 10 (d) 4 of CB Circular No.
28.28 This provision reads:
(4) Assignments effected by fraud
Where the assignment of a registered
bond is secured by fraudulent
representations, the Central Bank can
grant no relief if the assignment has
been honored without notice of fraud.
Otherwise, the Central Bank, upon
receipt of notice that the assignment
is claimed to have been secured by
fraudulent
representations,
or
payment of the bond the payment of
interest thereon, and when the bond is
presented, will call upon the owner
and the person presenting the bond to
substantiate their respective claims.If
it then appears that the person
presenting the bond stands in the
position of bonafide holder for value,
the Central Bank, after giving the
owner an opportunity to assert his
claim, will pass the bond for transfer,
exchange or payments, as the case
may be, without further question.
In a December 29, 1994 letter, Nuqui
again denied the request, reiterating
the BSPs previous stand.
In light of these BSP responses and
the impending maturity of the CB bills,
the PDB filed29 with the RTC two
separate petitions for Mandamus,
Prohibition and Injunction with prayer
for
Preliminary
Injunction
and
Temporary
Restraining
Order,
docketed as Civil Case No. 94-3233
(covering the first set of CB bills) and
Civil Case 94-3254 (covering the
second set of CB bills) against Nuqui,
the BSP and the RCBC.30
The PDB essentially claims that in
both
the
April
15
transaction
(involving the first set of CB bills) and
the April 19 transaction (involving the
second set of CB bills), there was no
intent on its part to transfer title of the
CB bills, as shown by its non-issuance
of a detached assignment in favor of
the BOC and Bancap, respectively. The
PDB particularly alleges that it merely
"warehoused"31 the first set of CB bills
with the BOC, as security collateral.

On December 28, 1994, the RTC

temporarily enjoined Nuqui and the
BSP from paying the face value of the
CB bills on maturity. 32 On January 10,
1995, the PDB filed an Amended
Petition, additionally impleading the
BOC and All Asia.33 In a January 13,
1995
Order,
the
cases
were
consolidated.34 On January 17, 1995,
the RTC granted the PDBs application
for a writ of preliminary prohibitory
injunction.35 In both petitions, the PDB
identically prayed:
WHEREFORE, it is respectfully prayed
x xx that, after due notice and
hearing, the Writs of Mandamus,
Prohibition and Injunction, be issued;
(i) commanding the BSP and Nuqui, or
whoever may take her place (a) to record forthwith in the books of
BSP the claim of x xx PDB on the [two
sets of] CB Bills in accordance with
Section 10 (d) (4) of revised C.B.
Circular No. 28; and
(b) also pursuant thereto, when the
bills are presented on maturity date
for payment, to call (i) x xx PDB, (ii) x
xx RCBC x xx, (iii) x xx BOC x xx, and
(iv) x xx ALL-ASIA x xx; or whoever will
present the [first and second sets of]
CB Bills for payment, to submit proof
as to who stands as the holder in due
course of said bills, and, thereafter,
act accordingly;
and (ii) ordering the BSP and Nuqui to
pay jointly and severally to x xx PDB
the following:
(a) the sum of P 100,000.00,
as
and
for
exemplary
damages;
(b)
the
sum
of
at
least P 500,000.00, or such
amount as shall be proved at
the trial, as and for attorneys
fees;
(c) the legal rate of interest
from the filing of this Petition
until full payment of the
sums mentioned in this
Petition; and
(d) the costs of suit.36
After the petitions were filed, the BOC
acquired/reacquired all the nine CB
bills the first and second sets of CB
bills (collectively, subject CB bills).
Defenses of the BSP and of the BOC 37

The BOC filed its Answer, praying for

the dismissal of the petition. It argued
that the PDB has no cause of action
against it since the PDB is no longer
the owner of the CB bills. Contrary to
the PDBs "warehousing theory,"38 the
BOC asserted that the (i) April 15
transaction and the (ii) April 19
transaction covering both sets of CB
bills - were valid contracts of sale,
followed by a transfer of title (i) to the
BOC (in the April 15 transaction) upon
the PDBs delivery of the 1st set of CB
bills in substitution of the Treasury
Bills the PDB originally intended to
sell, and (ii) to Bancap (in the April 19
transaction) upon the PDBs delivery
of the 2nd set of CB bills to Bancap,
likewise by way of substitution.
The BOC adds that Section 10 (d) 4 of
CB Circular No. 28 cannot apply to the
PDBs case because (i) the PDB is not
in possession of the CB bills and (ii)
the BOC acquired these bills from the
PDB, as to the 1st set of CB bills, and
from Bancap, as to the 2nd set of CB
bills, in good faith and for value. The
BOC also asserted a compulsory
counterclaim
for
damages
and
attorneys fees.
On the other hand, the BSP countered
that the PDB cannot invoke Section 10
(d) 4 of CB Circular No. 28 because
this section applies only to an "owner"
and a "person presenting the bond,"
of which the PDB is neither. The PDB
has not presented to the BSP any
assignment of the subject CB bills,
duly recorded in the BSPs books, in its
favor to clothe it with the status of an
"owner."39 According to the BSP
Section 10 d. (4) applies only to a
registered bond which is assigned.
And the issuance of CB Bills x xx are
required to be recorded/registered in
BSPs books. In this regard, Section 4
a. (1) of CB Circular 28 provides that
registered bonds "may be transferred
only by an assignment thereon duly
executed by the registered owner or
his duly authorized representative x
xx and duly recorded on the books of
the Central Bank."
x xxx
The alleged assignment of subject CB
Bills
in
PDBs
favor
is
not
recorded/registered
in
BSPs
books.40(underscoring supplied)
Consequently, when Nuqui and the
BSP refused the PDBs request (to
record its claim), they were merely
performing their duties in accordance
with CB Circular No. 28.

JURISDICTION

Alternatively, the BSP asked that an

interpleader suit be allowed between
and among the claimants to the
subject CB bills on the position that
while it is able and willing to pay the
subject CB bills face value, it is duty
bound to ensure that payment is
made to the rightful owner. The BSP
prayed that judgment be rendered:
a. Ordering the dismissal of
the PDBs petition for lack of
merit;
b.
Determining
which
between/among [PDB] and
the other claimants is/are
lawfully
entitled
to
the
ownership of the subject CB
bills
and
the
proceeds
thereof;
c. x xx;
d. Ordering PDB to pay BSP
and
Nuqui
such
actual/compensatory
and
exemplary damages as the
RTC may deem warranted;
and
e. Ordering PDB to pay Nuqui
moral damages and to pay
the costs of the suit.41
Subsequent events
The PDB agreed with
alternative
response
interpleader

the BSPs
for
an

4. PDB agrees that the various

claimants should now interplead and
substantiate their respective claims on
the subject CB bills. However, the
total face value of the subject CB bills
should be deposited in escrow with a
private bank to be disposed of only
upon order of the RTC.42
Accordingly, on June 9, 199543 and
August 4, 1995,44 the BOC and the
PDB entered into two separate Escrow
Agreements.45 The first agreement
covered the first set of CB bills, while
the second agreement covered the
second set of CB bills. The parties
agreed to jointly collect from the BSP
the maturity proceeds of these CB
bills and to deposit said amount in
escrow, "pending final determination
by Court judgment, or amicable
settlement as to who shall be
eventually
entitled
thereto."46 The
BOC and the PDB filed a Joint
Motion,47 submitting
these
Escrow
Agreements for court approval. The
RTC gave its approval to the parties

Joint Motion.48 Accordingly, the BSP

released the maturity proceeds of the
CB bills by crediting the Demand
Deposit Account of the PDB and of the
BOC with 50% each of the maturity
proceeds of the amount in escrow.49

2. In the alternative, ordering

PDB to deliver the original
subject
of
the
sales
transactions or the value
thereof and whatever income
earned by way of interest at
prevailing rate.

In view of the BOCs acquisition of all

the CB bills, All Asia50 moved to be
dropped as a respondent (with the
PDBs conformity51), which the RTC
granted.52 The RCBC subsequently
followed suit.53

Without any opposition or objection

from the PDB, on February 23, 2001,
the
RTC
admitted60 the
BOCs
Amended Consolidated Answer with
Compulsory Counterclaims.

In light of the developments, on May

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

In May 2001, the PDB filed an

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

On September 28, 2000, the RTC

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

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

In the alternative, the BOC added that

even assuming that there was no
effective transfer of the nine CB bills
ultimately to the BOC, the PDB
remains obligated to deliver to the
BOC, as buyer in the April 15
transaction and ultimate successor-ininterest of the buyer (Bancap) in the
April 19 transaction, either the original
subjects of the sales or the value
thereof, plus whatever income that
may have been earned during the
pendency of the case.59
That BOC prayed:
1. To declare BOC as the
rightful owner of the nine (9)
CB bills and as the party
entitled to the proceeds
thereof as well as all income
earned pursuant to the two
(2)
Escrow
Agreements
entered into by BOC and
PDB.

In a January 10, 2002 Order, the RTC

dismissed the PDBs petition, the
BOCs counterclaim and the BSPs
counter-complaint/cross-claim
for
interpleader, holding that under CB
Circular No. 28, it has no jurisdiction
(i) over the BOCs "counterclaims" and
(ii) to resolve the issue of ownership of
the CB bills.64 With the denial of their
separate
motions
for
Reconsideration,65 the BOC and the
BSP separately filed the present
petitions for review on certiorari.66
THE BOCS and THE BSPS PETITIONS
The BOC argues that the present
cases do not fall within the limited
provision of Section 10 (d) 4 of CB
Circular No. 28, which contemplates
only of three situations: first, where
the fraudulent assignment is not
coupled with a notice to the BSP, it
can grant no relief; second, where the
fraudulent assignment is coupled with
a notice of fraud to the BSP, it will
make
a
notation
against
the
assignment and require the owner and
the holder to substantiate their
claims; and third, where the case does
not fall on either of the first two
situations, the BSP will have to await
action on the assignment pending
settlement of the case, whether by
agreement or by court order.

JURISDICTION

The PDBs case cannot fall under the

first two situations. With particular
regard to the second situation, CB
Circular No. 28 requires that the
conflict must be between an "owner"
and a "holder," for the BSP to exercise
its limited jurisdiction to resolve
conflicting claims; and the word
"owner" here refers to the registered
owner giving notice of the fraud to the
BSP. The PDB, however, is not the
registered owner nor is it in
possession
(holder)
of
the
CB
bills.67 Consequently, the PDBs case
can only falls under the third situation
which leaves the RTC, as a court of
general jurisdiction, with the authority
to resolve the issue of ownership of a
registered bond (the CB bills) not
falling in either of the first two
situations.
The BOC asserts that the policy
consideration
supportive
of
its
interpretation of CB Circular No. 28 is
to have a reliable system to protect
the registered owner; should he file a
notice with the BSP about a fraudulent
assignment of certain CB bills, the BSP
simply has to look at its books to
determine who is the owner of the CB
bills fraudulently assigned. Since it is
only the registered owner who
complied with the BSPs requirement
of recording an assignment in the
BSPs books, then "the protective
mantle of administrative proceedings"
should necessarily benefit him only,
without extending the same benefit to
those who chose to ignore the
Circulars requirement, like the PDB.68
Assuming arguendo that the PDBs
case falls under the second situation
i.e., the BSP has jurisdiction to resolve
the issue of ownership of the CB bills
the more recent CB Circular No. 76980 (Rules and Regulations Governing
Central
Bank
Certificates
of
Indebtedness) already superseded CB
Circular No. 28, and, in particular,
effectively amended Section 10 (d) 4
of CB Circular No. 28. The pertinent
provisions of CB Circular No. 769-80
read:
Assignment Affected by Fraud. Any
assignment for transfer of ownership
of registered certificate obtained
through fraudulent representation if
honored by the Central Bank or any of
its authorized service agencies shall
not make the Central Bank or agency
liable therefore unless it has previous
formal notice of the fraud. The Central
Bank, upon notice under oath that the
assignment was secured through
fraudulent means, shall immediately
issue and circularize a "stop order"
against
the
transfer,
exchange,
redemption of the Certificate including

the payment of interest coupons. The

Central Bank or service agency
concerned shall continue to withhold
action on the certificate until such
time that the conflicting claims have
been finally settled either by amicable
settlement between the parties or by
order of the Court.
Unlike CB Circular No. 28, CB Circular
No. 769-80 limited the BSPs authority
to
the
mere
issuance
and
circularization of a "stop order"
against the transfer, exchange and
redemption upon sworn notice of a
fraudulent assignment. Under this
Circular, the BSP shall only continue to
withhold action until the dispute is
ended by an amicable settlement or
by judicial determination. Given the
more passive stance of the BSP the
very agency tasked to enforce the
circulars involved - under CB Circular
No. 769-80, the RTCs dismissal of the
BOCs counterclaims is palpably
erroneous.

The PDB counters that the BOCs trifold interpretation of Section 10 (d) 4
of CB Circular No. 28 sanctions split
jurisdiction which is not favored;but
even this tri-fold interpretation which,
in the second situation, limits the
meaning of the "owner" to the
registered owner is flawed. Section 10
(d) 4 aims to protect not just the
registered owner but anyone who has
been deprived of his bond by
fraudulent representation in order to
deter fraud in the secondary trading
of government securities.
The PDB asserts that the existence of
CB Circular No. 769-80 or the abolition
of Nuquis office does not result in
depriving the BSP of its jurisdiction:
first, CB Circular No. 769-80 expressly
provides that CB Circular No. 28 shall
have suppletory application to CB
Circular No. 769-80; and second, the
BSP can always designate an office to
resolve the PDBs claim over the CB
bills.

Lastly,
since
Nuquis
office
(Government Securities Department)
had already been abolished,69 it can
no longer adjudicate the dispute
under the second situation covered by
CB Circular No. 28. The abolition of
Nuquis office is not only consistent
with the BSPs Charter but, more
importantly, with CB Circular No. 76980,
which
removed
the
BSPs
adjudicative authority over fraudulent
assignments.

Lastly, the PDB argues that even

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

THE PDBS COMMENT

THE COURTS RULING

The PDB claims that jurisdiction is

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

We grant the petitions.

The PDB adds that under the doctrine

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

At the outset, we note that the parties

have not raised the validity of either
CB Circular No. 28 or CB Circular No.
769-80 as an issue. What the parties
largely contest is the applicable
circular in case of an allegedly
fraudulently assigned CB bill. The
applicable
circular,
in
turn,
is
determinative of the proper remedy
available to the PDB and/or the BOC
as claimants to the proceeds of the
subject CB bills.
Indisputably, at the time the PDB
supposedly invoked the jurisdiction of
the BSP in 1994 (by requesting for the
annotation of its claim over the
subject CB bills in the BSPs books),
CB Circular No. 769-80 has long been
in effect. Therefore, the parties
respective interpretations of the
provision of Section 10 (d) 4 of CB
Circular No. 28 do not have any
significance
unless
it
is
first
established that that Circular governs

JURISDICTION

the resolution of their conflicting

claims of ownership. This conclusion is
important, given the supposed repeal
or modification of Section 10 (d) 4 of
CB Circular No. 28 by the following
provisions of CB Circular No. 769-80:
ARTICLE
SUPPLEMENTAL RULES

XI

Section 1. Central Bank Circular No.

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

XII

Effectivity The rules and regulations

herein prescribed shall take effect
upon approval by the Monetary Board,
Central Bank of the Philippines, and all
circulars, memoranda, or office orders
inconsistent herewith are revoked or
modified
accordingly.
(Emphases
added)
We agree with the PDB that in view of
CB Circular No. 28s suppletory
application, an attempt to harmonize
the apparently conflicting provisions is
a prerequisite before one may
possibly conclude that an amendment
or a repeal exists.71 Interestingly,
however, even the PDB itself failed to
submit an interpretation based on its
own position of harmonization.

An implied repeal transpires when a

substantial conflict exists between the
new and the prior laws. In the absence
of an express repeal, a subsequent
law cannot be construed as repealing
a prior law unless an irreconcilable
inconsistency and repugnancy exist in
the terms of the new and the old
laws.73 Repeal by implication is not
favored, unless manifestly intended
by the legislature, or unless it is
convincingly
and
unambiguously
demonstrated, that the laws or orders
are clearly repugnant and patently
inconsistent with one another so that
they cannot co-exist; the legislature is
presumed to know the existing law
and would express a repeal if one is
intended.74
There are two instances of implied
repeal. One takes place when the
provisions in the two acts on the same
subject matter are irreconcilably
contradictory, in which case, the later
act, to the extent of the conflict,
constitutes an implied repeal of the
earlier one. The other occurs when the
later act covers the whole subject of
the earlier one and is clearly intended
as a substitute; thus, it will operate to
repeal the earlier law.75

The repealing clause of CB Circular

No. 769-80 obviously did not expressly
repeal CB Circular No. 28; in fact, it
even provided for the suppletory
application of CB Circular No. 28 on
"matters not specially covered by" CB
Circular No. 769-80. While no express
repeal exists, the intent of CB Circular
No. 769-80 to operate as an implied
repeal,72 or at least to amend earlier
CB circulars, is supported by its text
"revoking"
or
"modif[ying"
"all
circulars" which are inconsistent with
its terms.

A general reading of the two circulars

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

At the outset, we stress that none of

the parties disputes that the subject
CB bills fall within the category of a
certificate
or
evidence
of
indebtedness and that these were
issued by the Central Bank, now the
BSP. Thus, even without resorting to
statutory construction aids, matters
involving the subject CB bills should
necessarily be governed by CB
Circular No. 769-80. Even granting,
however, that reliance on CB Circular
No. 769-80 alone is not enough, we
find that CB Circular No. 769-80
impliedly repeals CB Circular No. 28.

The CB Monetary Board issued CB

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

In other words, even if CB Circular No.

28
applies
broadly
to
both
government-issued
bonds
and
securities and Central Bank-issued
evidence of indebtedness, given the
present state of law, CB Circular No.
28 and CB Circular No. 769-80 now
operate on the same subject Central
Bank-issued
evidence
of
indebtedness. Under Section 1, Article
XI of CB Circular No. 769-80, the
continued relevance and application
of CB Circular No. 28 would depend on
the
need
to
supplement
any
deficiency or silence in CB Circular No.
769-80 on a particular matter.
In the present case, both CB Circular
No. 28 and CB Circular No. 769-80
provide the BSP with a course of
action in case of an allegedly
fraudulently assigned certificate of
indebtedness. Under CB Circular No.
28, in case of fraudulent assignments,
the BSP would have to "call upon the
owner and the person presenting the
bond to substantiate their respective
claims" and, from there, determine
who has a better right over the
registered bond. On the other hand,
under CB Circular No. 769-80, the BSP
shall merely "issue and circularize a
stop order against the transfer,
exchange,
redemption
of
the
[registered] certificate" without any
adjudicative function (which is the
precise
root
of
the
present
controversy). As the two circulars
stand, the patent irreconcilability of
these two provisions does not require
elaboration. Section 5, Article V of CB
Circular
No. 769-80 inescapably
repealed Section 10 (d) 4 of CB
Circular No. 28.
The issue of BSPs jurisdiction, lay
hidden
On that note, the Court could have
written
finis
to
the
present
controversy by simply sustaining the
BSPs hands-off approach to the PDBs
problem under CB Circular No. 769-80.
However, the jurisdictional provision
of CB Circular No. 769-80 itself, in
relation to CB Circular No. 28, on the
matter of fraudulent assignment, has
given rise to a question of jurisdiction
- the core question of law involved in
these petitions - which the Court
cannot just treat sub-silencio.
Broadly speaking, jurisdiction is the
legal power or authority to hear and
determine a cause.80 In the exercise of
judicial or quasi-judicial power, it
refers to the authority of a court to
hear and decide a case. 81 In the
context of these petitions, we hark
back to the basic principles governing

JURISDICTION

the question of jurisdiction over the

subject matter.
First, jurisdiction over the subject
matter is determined only by the
Constitution and by law.82 As a matter
of substantive law, procedural rules
alone can confer no jurisdiction to
courts or administrative agencies.83 In
fact, an administrative agency, acting
in its quasi-judicial capacity, is a
tribunal of limited jurisdiction and, as
such, could wield only such powers
that are specifically granted to it by
the enabling statutes. In contrast, an
RTC is a court of general jurisdiction,
i.e., it has jurisdiction over cases
whose subject matter does not fall
within
the
exclusive
original
jurisdiction of any court, tribunal or
body exercising judicial or quasijudicial functions.84
Second, jurisdiction over the subject
matter is determined not by the pleas
set up by the defendant in his
answer85 but by the allegations in the
complaint,86 irrespective of whether
the plaintiff is entitled to favorable
judgment on the basis of his
assertions.87 The reason is that the
complaint is supposed to contain a
concise statement of the ultimate
facts constituting the plaintiff's causes
of action.88
Third, jurisdiction is determined by the
law in force at the time of the filing of
the complaint.89
Parenthetically, the Court observes
that none of the parties ever raised
the issue of whether the BSP can
simply
disown
its
jurisdiction,
assuming it has, by the simple
expedient of promulgating a new
circular (specially applicable to a
certificate of indebtedness issued by
the BSP itself), inconsistent with an
old circular, assertive of its limited
jurisdiction over ownership issues
arising from fraudulent assignments of
a certificate of indebtedness. The PDB,
in particular, relied solely and heavily
on CB Circular No. 28.
In light of the above principles
pointing to jurisdiction as a matter of
substantive law, the provisions of the
law itself that gave CB Circular 769-80
its life and jurisdiction must be
examined.
The Philippine Central Bank
On January 3, 1949, Congress created
the Central Bank of the Philippines
(Central Bank) as a corporate body
with the primary objective of (i)

maintaining the internal and external

monetary stability in the Philippines;
and (ii) preserving the international
value and the convertibility of the
peso.90 In line with these broad
objectives, the Central Bank was
empowered to issue rules and
regulations
"necessary
for
the
effective
discharge
of
the
responsibilities and exercise of the
powers assigned to the Monetary
Board
and
to
the
Central
Bank."91Specifically, the Central Bank
is authorized to organize (other)
departments for the efficient conduct
of its business and whose powers and
duties "shall be determined by the
Monetary Board, within the authority
granted to the Board and the Central
Bank"92 under its original charter.
With the 1973 Constitution, the then
Central Bank was constitutionally
made as the countrys central
monetary authority until such time
that Congress93 shall have established
a central bank. The 1987 Constitution
continued to recognize this function of
the then Central Bank until Congress,
pursuant to the Constitution, created
a new central monetary authority
which later came to be known as the
BangkoSentralngPilipinas.
Under the New Central Bank Act (R.A.
No. 7653),94 the BSP is given the
responsibility of providing policy
directions in the areas of money,
banking and credit; it is given, too, the
primary objective of maintaining price
stability, conducive to a balanced and
sustainable growth of the economy,
and of promoting and maintaining
monetary stability and convertibility of
the peso.95
The Constitution expressly grants the
BSP,
as
the
countrys
central
monetary authority, the power of
supervision over the operation of
banks, while leaving with Congress
the authority to define the BSPs
regulatory powers over the operations
of finance companies and other
institutions
performing
similar
functions. Under R.A. No. 7653, the
BSPs powers and functions include (i)
supervision over the operation of
banks; (ii) regulation of operations of
finance companies and non-bank
financial institutions performing quasi
banking functions; (iii) sole power and
authority to issue currency within the
Philippine territory; (iv) engaging in
foreign exchange transactions; (v)
making rediscounts, discounts, loans
and advances to banking and other
financial institutions to influence the
volume of credit consistent with the
objective of achieving price stability;
(vi)
engaging
in
open
market

operations; and (vii) acting as banker

and
financial
advisor
of
the
government.1wphi1
On the BSPs power of supervision
over the operation of banks, Section 4
of R.A. No. 8791 (The General Banking
Law of 2000) elaborates as follows:
CHAPTER
II
AUTHORITY OF THE BANGKO SENTRAL
SECTION 4.Supervisory Powers. The
operations and activities of banks
shall be subject to supervision of the
BangkoSentral. "Supervision" shall
include the following:
4.1. The issuance of rules of
conduct or the establishment
of standards of operation for
uniform application to all
institutions
or
functions
covered,
taking
into
consideration the distinctive
character of the operations of
institutions
and
the
substantive similarities of
specific functions to which
such
rules,
modes
or
standards are to be applied;
4.2.
The
conduct
of
examination to determine
compliance with laws and
regulations
if
the
circumstances so warrant as
determined by the Monetary
Board;
4.3. Overseeing to ascertain
that laws and regulations are
complied with;
4.4. Regular investigation
which shall not be oftener
than once a year from the
last date of examination to
determine
whether
an
institution is conducting its
business on a safe or sound
basis: Provided, That the
deficiencies/irregularities
found by or discovered by an
audit shall be immediately
addressed;
4.5.
Inquiring
into
the
solvency and liquidity of the
institution (2-D); or
4.6.
Enforcing
prompt
corrective action. (n)
The BangkoSentral shall also have
supervision over the operations of and
exercise regulatory powers over quasi-

JURISDICTION

banks, trust entities and other

financial institutions which under
special
laws
are
subject
to
BangkoSentral supervision. (2-Ca)
For the purposes of this Act, "quasibanks" shall refer to entities engaged
in the borrowing of funds through the
issuance, endorsement or assignment
with recourse or acceptance of deposit
substitutes as defined in Section 95 of
Republic Act No. 7653 (hereafter the
"New Central Bank Act") for purposes
of
relending
or
purchasing
of
receivables and other obligations.
[emphasis ours]
While this provision empowers the
BSP to oversee the operations and
activities of banks to "ascertain that
laws and regulations are complied
with," the existence of the BSPs
jurisdiction in the present dispute
cannot rely on this provision. The fact
remains that the BSP already made
known to the PDB its unfavorable
position on the latters claim of
fraudulent assignment due to the
latters own failure to comply96 with
existing regulations:
In this connection, Section 10 (b) 2
also requires that a "Detached
assignment will be recognized or
accepted only upon previous notice to
the Central Bank x xx." In fact, in a
memo dated September 23, 1991 xxx
then CB Governor Jose L. Cuisia
advised all banks (including PDB) xxx
as follows:
In view recurring incidents ostensibly
disregarding certain provisions of CB
circular No. 28 (as amended) covering
assignments of registered bonds, all
banks and all concerned are enjoined
to observe strictly the pertinent
provisions of said CB Circular as
hereunder quoted:
x xxx
Under Section 10.b. (2)
x xx Detached assignment will be
recognized or accepted only upon
previous notice to the Central Bank
and its use is authorized only under
the following circumstances:
(a) xxx
(b) xxx
(c) assignments of treasury
notes and certificates of
indebtedness in registered

form which are not provided

at the back thereof with
assignment form.
(d) Assignment of securities
which
have
changed
ownership several times.
(e) xxx
Non-compliance
herewith
will
constitute a basis for non-action or
withholding
of
action
on
redemption/payment
of
interest
coupons/transfer
transactions
or
denominational exchange that may be
directly affected thereby. [Boldfacing
supplied]
Again, the books of the BSP do not
show that the supposed assignment of
subject CB Bills was ever recorded in
the BSPs books. [Boldfacing supplied]
However, the PDB faults the BSP for
not recording the assignment of the
CB bills in the PDBs favor despite the
fact that the PDB already requested
the BSP to record its assignment in
the BSPs books as early as June 30,
1994.97
The PDBs claim is not accurate. What
the PDB requested the BSP on that
date was not the recording of the
assignment of the CB bills in its favor
but the annotation of its claim over
the CB bills at the time when (i) it was
no longer in possession of the CB bills,
having been transferred from one
entity to another and (ii) all it has are
the detached assignments, which the
PDB has not shown to be compliant
with Section 10 (b) 2 above-quoted.
Obviously, the PDB cannot insist that
the BSP take cognizance of its plaint
when the basis of the BSPs refusal
under existing regulation, which the
PDB is bound to observe, is the PDBs
own failure to comply therewith.
True, the BSP exercises supervisory
powers (and regulatory powers) over
banks (and quasi banks). The issue
presented before the Court, however,
does
not
concern
the
BSPs
supervisory power over banks as this
power is understood under the
General Banking Law. In fact, there is
nothing in the PDBs petition (even
including the letters it sent to the BSP)
that
would
support
the
BSPs
jurisdiction outside of CB Circular No.
28, under its power of supervision,
over conflicting claims to the proceeds
of the CB bills.

BSP has quasi-judicial powers over a

class of cases which does not include
the adjudication of ownership of the
CB bills in question
In United Coconut Planters Bank v. E.
Ganzon, Inc.,98 the Court considered
the
BSP
as
an
administrative
agency,99 exercising
quasi-judicial
functions through its Monetary Board.
It held:
A quasi-judicial agency or body is an
organ of government other than a
court and other than a legislature,
which affects the rights of private
parties through either adjudication or
rule-making. The very definition of an
administrative agency includes its
being
vested
with
quasi-judicial
powers. The ever increasing variety of
powers and functions given to
administrative agencies recognizes
the need for the active intervention of
administrative agencies in matters
calling for technical knowledge and
speed in countless controversies
which cannot possibly be handled by
regular
courts.
A
"quasi-judicial
function" is a term which applies to
the action, discretion, etc., of public
administrative officers or bodies, who
are required to investigate facts, or
ascertain the existence of facts, hold
hearings, and draw conclusions from
them, as a basis for their official
action and to exercise discretion of a
judicial nature.
Undoubtedly, the BSP Monetary Board
is a quasi-judicial agency exercising
quasi-judicial powers or functions. As
aptly observed by the Court of
Appeals, the BSP Monetary Board is an
independent
central
monetary
authority and a body corporate with
fiscal and administrative autonomy,
mandated to provide policy directions
in the areas of money, banking and
credit. It has power to issue subpoena,
to sue for contempt those refusing to
obey the subpoena without justifiable
reason, to administer oaths and
compel presentation of books, records
and others, needed in its examination,
to impose fines and other sanctions
and to issue cease and desist order.
Section 37 of Republic Act No. 7653, in
particular, explicitly provides that the
BSP Monetary Board shall exercise its
discretion in determining whether
administrative sanctions should be
imposed on banks and quasi-banks,
which necessarily implies that the BSP
Monetary Board must conduct some
form of investigation or hearing
regarding
the
same.
[citations
omitted]

JURISDICTION

The BSP is not simply a corporate

entity
but
qualifies
as
an
administrative
agency
created,
pursuant
to
constitutional
mandate,100 to carry out a particular
governmental function.101 To be able
to perform its role as central monetary
authority, the Constitution granted it
fiscal and administrative autonomy. In
general,
administrative
agencies
exercise powers and/or functions
which may be characterized as
administrative,
investigatory,
regulatory, quasi-legislative, or quasijudicial, or a mix of these five, as may
be conferred by the Constitution or by
statute.102
While the very nature of an
administrative agency and the raison
d'tre
for
its
creation103 and
proliferation dictate a grant of quasijudicial power to it, the matters over
which it may exercise this power must
find sufficient anchorage on its
enabling law, either by express
provision or by necessary implication.
Once found, the quasi-judicial power
partakes of the nature of a limited and
special jurisdiction, that is, to hear
and determine a class of cases within
its
peculiar
competence
and
expertise. In other
words, the
provisions of the enabling statute are
the yardsticks by which the Court
would measure the quantum of quasijudicial powers an administrative
agency may exercise, as defined in
the enabling act of such agency.104
Scattered provisions in R.A. No. 7653
and R.A. No. 8791, inter alia, exist,
conferring jurisdiction on the BSP on
certain matters.105 For instance, under
the situations contemplated under
Section 36, par. 2106 (where a bank or
quasi bank persists in carrying on its
business in an unlawful or unsafe
manner) and Section 37107 (where the
bank or its officers willfully violate the
banks charter or by-laws, or the rules
and regulations issued by the
Monetary Board) of R.A. No. 7653, the
BSP may place an entity under
receivership and/or liquidation or
impose administrative sanctions upon
the entity or its officers or directors.
Among its several functions under R.A.
No. 7653, the BSP is authorized to
engage in open market operations and
thereby "issue, place, buy and sell
freely
negotiable
evidences
of
indebtedness of the BangkoSentral" in
the following manner.
SEC. 90.Principles of Open Market
Operations. The open market
purchases and sales of securities by
the BangkoSentral shall be made

exclusively in accordance with its

primary objective of achieving price
stability.
x xxx
SEC. 92.Issue and Negotiation of
BangkoSentral Obligations. In order
to provide the BangkoSentral with
effective instruments for open market
operations, the BangkoSentral may,
subject to such rules and regulations
as the Monetary Board may prescribe
and in accordance with the principles
stated in Section 90 of this Act, issue,
place, buy and sell freely negotiable
evidences of indebtedness of the
BangkoSentral:
Provided,
That
issuance of such certificates of
indebtedness shall be made only in
cases of extraordinary movement in
price levels. Said evidences of
indebtedness may be issued directly
against the international reserve of
the BangkoSentral or against the
securities which it has acquired under
the provisions of Section 91 of this
Act, or may be issued without relation
to specific types of assets of the
BangkoSentral.
The Monetary Board shall determine
the interest rates, maturities and
other
characteristics
of
said
obligations of the BangkoSentral, and
may, if it deems it advisable,
denominate the obligations in gold or
foreign currencies.
Subject to the principles stated in
Section 90 of this Act, the evidences
of indebtedness of the BangkoSentral
to which this section refers may be
acquired by the BangkoSentral before
their
maturity,
either
through
purchases in the open market or
through redemptions at par and by lot
if the BangkoSentral has reserved the
right to make such redemptions. The
evidences of indebtedness acquired or
redeemed by the BangkoSentral shall
not be included among its assets, and
shall be immediately retired and
cancelled.108 (italics
supplied;
emphases ours)
The primary objective of the BSP is to
maintain price stability.109 The BSP has
a
number
of
monetary
policy
instruments at its disposal to promote
price stability. To increase or reduce
liquidity in the financial system, the
BSP uses open market operations,
among
others.110 Open
market
operation is a monetary tool where
the BSP publicly buys or sells
government securities111 from (or to)
banks and financial institutions in
order to expand or contract the supply
of money. By controlling the money

supply, the BSP is able to exert some

influence on the prices of goods and
services and achieve its inflation
objectives.112
Once the issue and/or sale of a
security is made, the BSP would
necessarily make a determination, in
accordance with its own rules, of the
entity entitled to receive the proceeds
of the security upon its maturity. This
determination by the BSP is an
exercise
of
its
administrative
powers113 under the law as an incident
to its power to prescribe rules and
regulations governing open market
operations to achieve the "primary
objective
of
achieving
price
stability."114 As a matter of necessity,
too, the same rules and regulations
facilitate transaction with the BSP by
providing for an orderly manner of,
among others, issuing, transferring,
exchanging and paying securities
representing public debt.
Significantly, when competing claims
of ownership over the proceeds of the
securities it has issued are brought
before it, the law has not given the
BSP the quasi-judicial power to resolve
these competing claims as part of its
power to engage in open market
operations. Nothing in the BSPs
charter confers on the BSP the
jurisdiction or authority to determine
this kind of claims, arising out of a
subsequent transfer or assignment of
evidence of indebtedness a matter
that appropriately falls within the
competence of courts of general
jurisdiction. That the statute withholds
this power from the BSP is only
consistent with the fundamental
reasons for the creation of a Philippine
central bank, that is, to lay down
stable monetary policy and exercise
bank supervisory functions. Thus, the
BSPs assumption of jurisdiction over
competing claims cannot find even a
stretched-out justification under its
corporate powers "to do and perform
any and all things that may be
necessary or proper to carry out the
purposes" of R.A. No. 7653. 115
To reiterate, open market operation is
a monetary policy instrument that the
BSP employs, among others, to
regulate the supply of money in the
economy to influence the timing, cost
and availability of money and credit,
as well as other financial factors, for
the purpose of stabilizing the price
level.116 What the law grants the BSP
is a continuing role to shape and carry
out the countrys monetary policy
not the authority to adjudicate
competing claims of ownership over
the securities it has issued since this

JURISDICTION

authority would not fall under the

BSPs purposes under its charter.
While R.A. No. 7653117 empowers the
BSP
to
conduct
administrative
hearings and render judgment for or
against an entity under its supervisory
and regulatory powers and even
authorizes the BSP Governor to
"render decisions, or rulings x xx on
matters regarding application or
enforcement of laws pertaining to
institutions supervised by the BSP and
laws pertaining to quasi-banks, as well
as regulations, policies or instructions
issued by the Monetary Board," it is
precisely the text of the BSPs own
regulation (whose validity is not here
raised as an issue) that points to the
BSPs limited role in case of an
allegedly fraudulent assignment to
simply (i) issuing and circularizing a
"stop order" against the transfer,
exchange,
redemption
of
the
certificate of indebtedness, including
the payment of interest coupons, and
(ii)
withholding
action
on
the
certificate.
A similar conclusion can be drawn
from
the
BSPs
administrative
adjudicatory power in cases of "willful
failure or refusal to comply with, or
violation of, any banking law or any
order, instruction or regulation issued
by the Monetary Board, or any order,
instruction
or
ruling
by
the
Governor."118 The non-compliance with
the pertinent requirements under CB
Circular No. 28, as amended, deprives
a party from any right to demand
payment from the BSP.
In other words, the grant of quasijudicial authority to the BSP cannot
possibly extend to situations which do
not call for the exercise by the BSP of
its supervisory or regulatory functions
over entities within its jurisdiction.119
The fact alone that the parties
involved are banking institutions does
not necessarily call for the exercise by
the BSP of its quasi-judicial powers
under the law.120
The doctrine of primary jurisdiction
argues
against
BSPs
purported
authority to adjudicate ownership
issues over the disputed CB bills
Given the preceding discussions, even
the PDBs invocation of the doctrine of
primary jurisdiction is misplaced.
In the exercise of its plenary
legislative power, Congress may
create
administrative
agencies
endowed with quasi-legislative and

quasi-judicial powers. Necessarily,

Congress likewise defines the limits of
an agencys jurisdiction in the same
manner as it defines the jurisdiction of
courts.121 As a result, it may happen
that
either
a
court
or
an
administrative agency has exclusive
jurisdiction over a specific matter or
both have concurrent jurisdiction on
the same. It may happen, too, that
courts and agencies may willingly
relinquish adjudicatory power that is
rightfully theirs in favor of the other.
One of the instances when a court
may properly defer to the adjudicatory
authority of an agency is the
applicability of the doctrine of primary
jurisdiction.122
As early as 1954, the Court applied
the doctrine of primary jurisdiction
under the following terms:
6. In the fifties, the Court taking
cognizance of the move to vest
jurisdiction
in
administrative
commissions and boards the power to
resolve specialized disputes xxx ruled
that Congress in requiring the
Industrial Court's intervention in the
resolution
of
labor-management
controversies
xxx
meant
such
jurisdiction to be exclusive, although it
did not so expressly state in the law.
The Court held that under the "sensemaking and expeditious doctrine of
primary jurisdiction ... the courts
cannot or will not determine a
controversy involving a question
which is within the jurisdiction of an
administrative tribunal, where the
question demands the exercise of
sound
administrative
discretion
requiring the special knowledge,
experience, and services of the
administrative tribunal to determine
technical and intricate matters of fact,
and a uniformity of ruling is essential
to comply with the purposes of the
regulatory
statute
administered."123 (emphasis ours)
In Industrial Enterprises, Inc. v. Court
of Appeals,124 the Court ruled that
while an action for rescission of a
contract between coal developers
appears to be an action cognizable by
regular courts, the trial court remains
to be without jurisdiction to entertain
the suit since the contract sought to
be rescinded is "inextricably tied up
with the right to develop coal-bearing
lands and the determination of
whether or not the reversion of the
coal operating contract over the
subject coal blocks to [the plaintiff]
would be in line with the countrys
national program and objective on
coal-development and over-all coalsupply-demand balance." It then

applied the
jurisdiction

doctrine

of

primary

In recent years, it has been the

jurisprudential trend to apply the
doctrine of primary jurisdiction in
many cases involving matters that
demand the special competence of
administrative agencies. It may occur
that the Court has jurisdiction to take
cognizance of a particular case, which
means that the matter involved is also
judicial in character. However, if the
case is such that its determination
requires the expertise, specialized
skills and knowledge of the proper
administrative
bodies
because
technical
matters
or
intricate
questions of facts are involved, then
relief must first be obtained in an
administrative proceeding before a
remedy will be supplied by the courts
even though the matter is within the
proper jurisdiction of a court. This is
the doctrine of primary jurisdiction. It
applies "where a claim is originally
cognizable in the courts, and comes
into play whenever enforcement of
the claim requires the resolution of
issues which, under a regulatory
scheme, have been placed within the
special
competence
of
an
administrative body."
Clearly, the doctrine of primary
jurisdiction finds application in this
case since the question of what coal
areas should be exploited and
developed and which entity should be
granted coal operating contracts over
said areas involves a technical
determination by the Bureau of
Energy
Development
as
the
administrative agency in possession of
the specialized expertise to act on the
matter. The Trial Court does not have
the competence to decide matters
concerning activities relative to the
exploration, exploitation, development
and extraction of mineral resources
like coal. These issues preclude an
initial
judicial
determination.
[emphases ours]
The absence of any express or implied
statutory
power
to
adjudicate
conflicting claims of ownership or
entitlement to the proceeds of its
certificates of indebtedness finds
complement in the similar absence of
any technical matter that would call
for the BSPs special expertise or
competence.125 In fact, what the PDBs
petitions bear out is essentially the
nature of the transaction it had with
the subsequent transferees of the
subject CB bills (BOC and Bancap) and
not any matter more appropriate for
special determination by the BSP or
any administrative agency.

JURISDICTION

In a similar vein, it is well-settled that

the interpretation given to a rule or
regulation by those charged with its
execution is entitled to the greatest
weight by the courts construing such
rule or regulation.126 While there are
exceptions127 to this rule, the PDB has
not convinced us that a departure is
warranted in this case. Given the nonapplicability of the doctrine of primary
jurisdiction, the BSPs own position, in
light of Circular No. 769-80, deserves
respect from the Court.
Ordinarily,
cases
involving
the
application of doctrine of primary
jurisdiction are initiated by an action
invoking the jurisdiction of a court or
administrative agency to resolve the
substantive legal conflict between the
parties. In this sense, the present case
is quite unique since the courts
jurisdiction was, originally, invoked to
compel an administrative agency (the
BSP) to resolve the legal conflict of
ownership over the CB bills - instead
of obtaining a judicial determination of
the same dispute.
The remedy of interpleader
Based on the unique factual premise
of the present case, the RTC acted
correctly
in
initially
assuming
jurisdiction over the PDBs petition for
mandamus,
prohibition
and
injunction.128 While the RTC agreed
(albeit erroneously) with the PDBs
view (that the BSP has jurisdiction), it,
however, dismissed not only the
BOCs/the BSPs counterclaims but the
PDBs petition itself as well, on the
ground that it lacks jurisdiction.
This is plain error.
Not only the parties themselves, but
more so the courts, are bound by the
rule
on
non-waiver
of
jurisdiction.129believes that jurisdiction
over the BOCs counterclaims and the
BSPs
counterclaim/crossclaim
for
interpleader calls for the application of
the doctrine of primary jurisdiction,
the allowance of the PDBs petition
even becomes imperative because
courts may raise the issue of primary
jurisdiction sua sponte.130
Of the three possible options available
to the RTC, the adoption of either of
these two would lead the trial court
into serious legal error: first, if it
granted the PDBs petition, its
decision would have to be set aside on
appeal because the BSP has no
jurisdiction as previously discussed;
and second when it dismissed the
PDBs petitions and the BOCs

counterclaims on the ground that it

lacks jurisdiction, the trial court
seriously erred because precisely, the
resolution of the conflicting claims
over the CB bills falls within its
general jurisdiction.
Without emasculating its jurisdiction,
the RTC could have properly dismissed
the PDBs petition but on the ground
that mandamus does not lie against
the BSP; but even this correct
alternative is no longer plausible since
the BSP, as a respondent below,
already properly brought before the
RTC the remaining conflicting claims
over the subject CB bills by way of a
counterclaim/crossclaim
for
interpleader. Section 1, Rule 62 of the
Rules of Court provides when an
interpleader is proper:
SECTION 1. When interpleader proper.
Whenever conflicting claims upon
the same subject matter are or may
be made against a person who claims
no interest whatever in the subject
matter, or an interest which in whole
or in part is not disputed by the
claimants, he may bring an action
against the conflicting claimants to
compel them to interplead and litigate
their
several
claims
among
themselves.
The
remedy
of
an
action
of
interpleader131 is designed to protect a
person against double vexation in
respect of a single liability.7 It requires,
as an indispensable requisite, that
conflicting claims upon the same
subject matter are or may be made
against the stakeholder (the possessor
of the subject matter) who claims no
interest whatever in the subject
matter or an interest which in whole
or in part is not disputed by the
claimants.132
Through this remedy, the stakeholder
can join all competing claimants in a
single
proceeding
to
determine
conflicting claims without exposing
the stakeholder to the possibility of
having to pay more than once on a
single liability.133
When the court orders that the
claimants litigate among themselves,
in reality a new action arises, 134 where
the claims of the interpleaders
themselves are brought to the fore,
the
stakeholder
as
plaintiff
is
relegated merely to the role of
initiating the suit. In short, the remedy
of interpleader, when proper, merely
provides an avenue for the conflicting
claims on the same subject matter to
be threshed out in an action. Section 2
of Rule 62 provides:

SEC. 2.Order. Upon the filing of the

complaint, the court shall issue an
order
requiring
the
conflicting
claimants to interplead with one
another. If the interests of justice so
require, the court may direct in such
order that the subject matter be paid
or delivered to the court.
This is precisely what the RTC did by
granting
the
BSPs
motion
to
interplead. The PDB itself "agreed that
the various claimants should now
interplead." Thus, the PDB and the
BOC subsequently entered into two
separate
escrow
agreements,
covering the CB bills, and submitted
them to the RTC for approval.
In granting the BSPs motion, the RTC
acted on the correct premise that it
has jurisdiction to resolve the parties
conflicting claims over the CB bills consistent with the rules and the
parties conduct - and accordingly
required the BOC to amend its answer
and for the PDB to comment thereon.
Suddenly, however, the PDB made an
about-face
and
questioned
the
jurisdiction of the RTC. Swayed by the
PDBs argument, the RTC dismissed
even the PDBs petition - which means
that it did not actually compel the BSP
to resolve the BOCs and the PDBs
claims.
Without the motion to interplead and
the order granting it, the RTC could
only dismiss the PDBs petition since it
is the RTC which has jurisdiction to
resolve the parties conflicting claims
not the BSP. Given that the motion to
interplead has been actually filed, the
RTC could not have really granted the
relief originally sought in the PDBs
petition since the RTCs order granting
the BSPs motion to interplead - to
which the PDB in fact acquiesced into
- effectively resulted in the dismissal
of the PDBs petition. This is not
altered by the fact that the PDB
additionally prayed in its petition for
damages, attorneys fees and costs of
suit "against the public respondents"
because the grant of the order to
interplead effectively sustained the
propriety of the BSPs resort to this
procedural device.
Interpleader
1. as a special civil action
What is quite unique in this case is
that the BSP did not initiate the
interpleader suit through an original
complaint but through its Answer. This
circumstance
becomes
understandable if it is considered that

JURISDICTION

insofar as the BSP is concerned, the

PDB does not possess any right to
have its claim recorded in the BSPs
books; consequently, the PDB cannot
properly be considered even as a
potential claimant to the proceeds of
the CB bills upon maturity. Thus, the
interpleader was only an alternative
position, made only in the BSPs
Answer.135

complaint-in-intervention."
In
an
interpleader suit, however, a claim is
not required to be contained in any of
these pleadings but in the answer-(of
the
conflicting
claimants)-ininterpleader. This claim is different
from the counter-claim (or cross-claim,
third
party-complaint)
which
is
separately allowed under Section 5,
par. 2 of Rule 62.

one where the presence of third

parties, of whom the court cannot
acquire jurisdiction, is not required. It
reasons out that since the RCBC and
All Asia (the intervening holders of the
CB bills) have already been dropped
from the case, then the BOCs
counterclaim must only be permissive
in nature and the BOC should have
paid the correct docket fees.

The remedy of interpleader, as a

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

2. the payment of docket

covering BOCs counterclaim

We see no reason to belabor this

claim. Even if we gloss over the PDBs
own conformity to the dropping of
these entities as parties, the BOC
correctly argues that a remedy is
provided under the Rules. Section 12,
Rule 6 of the Rules of Court reads:

Apart
from
a
pleading,140 the
rules141 allow a party to seek an
affirmative relief from the court
through the procedural device of a
motion. While captioned "Answer with
counter
complaint/cross-claim
for
interpleader," the RTC understood this
as
in
the
nature
of
a
motion,142 seeking
relief
which
essentially consists in an order for the
conflicting claimants to litigate with
each other so that "payment is made
to
the
rightful
or
legitimate
owner"143 of the subject CB bills.
The rules define a "civil action" as
"one by which a party sues another
for the enforcement or protection of a
right, or the prevention or redress of a
wrong."
Interpleader
may
be
considered as a stakeholders remedy
to prevent a wrong, that is, from
making payment to one not entitled to
it, thereby rendering itself vulnerable
to lawsuit/s from those legally entitled
to payment.
Interpleader is a civil action made
special by the existence of particular
rules to govern the uniqueness of its
application and operation. Under
Section 2, Rule 6 of the Rules of Court,
governing ordinary civil actions, a
partys claim is asserted "in a
complaint, counterclaim, cross-claim,
third (fourth, etc.)-party complaint, or

fees

The PDB argues that, even assuming

that the RTC has jurisdiction over the
issue of ownership of the CB bills, the
BOCs failure to pay the appropriate
docket fees prevents the RTC from
acquiring jurisdiction over the BOCs
"counterclaims."
We disagree with the PDB.
To reiterate and recall, the order
granting the "PDBs motion to
interplead," already resulted in the
dismissal of the PDBs petition. The
same order required the BOC to
amend its answer and for the
conflicting claimants to comment,
presumably to conform to the nature
of an answer-in interpleader. Perhaps,
by reason of the BOCs denomination
of its claim as a "compulsory
counterclaim" and the PDBs failure to
fully appreciate the RTCs order
granting the "BSPs motion for
interpleader"
(with
the
PDBs
conformity), the PDB mistakenly
treated the BOCs claim as a
"permissive
counterclaim"
which
necessitates the payment of docket
fees.
As the preceding discussions would
show, however, the BOCs "claim" i.e., its assertion of ownership over
the CB bills is in reality just that, a
"claim" against the stakeholder and
not as a "counterclaim,"144 whether
compulsory145 or permissive. It is only
the BOCs alternative prayer (for the
PDB to deliver to the BOC, as the
buyer in the April 15 transaction and
the ultimate successor-in-interest of
the buyer in the April 19 transaction,
either the original subjects of the
sales or the value thereof plus
whatever income that may have been
earned pendente lite) and its prayer
for damages that are obviously
compulsory counterclaims against the
PDB and, therefore, does not require
payment of docket fees.146
The PDB takes a contrary position
through
its
insistence
that
a
compulsory counterclaim should be

SEC. 12.Bringing new parties. When

the presence of parties other than
those to the original action is required
for the granting of complete relief in
the determination of a counterclaim or
cross-claim, the court shall order them
to be brought in as defendants, if
jurisdiction
over
them
can
be
obtained.
Even then, the strict characterization
of the BOCs counterclaim is no longer
material in disposing of the PDBs
argument based on non-payment of
docket fees.
When an action is filed in court, the
complaint must be accompanied by
the payment of the requisite docket
and filing fees by the party seeking
affirmative relief from the court. It is
the filing of the complaint or
appropriate
initiatory
pleading,
accompanied by the payment of the
prescribed docket fee, that vests a
trial court with jurisdiction over the
claim
or
the
nature
of
the
action.147 However, the non-payment
of the docket fee at the time of filing
does not automatically cause the
dismissal of the case, so long as the
fee is paid within the applicable
prescriptive or reglementary period,
especially
when
the
claimant
demonstrates a willingness to abide
by
the
rules
prescribing
such
payment.148
In the present case, considering the
lack of a clear guideline on the
payment of docket fee by the
claimants in an interpleader suit,
compounded by the unusual manner
in which the interpleader suit was
initiated
and
the
circumstances
surrounding it, we surely cannot
deduce from the BOCs mere failure to
specify in its prayer the total amount
of the CB bills it lays claim to (or the
value of the subjects of the sales in
the April 15 and April 19 transactions,

JURISDICTION

in its alternative prayer) an intention

to defraud the government that would
warrant the dismissal of its claim.149
At any rate, regardless of the nature
of the BOCs "counterclaims," for
purposes of payment of filing fees,
both the BOC and the PDB, properly as
defendants-in-interpleader, must be
assessed the payment of the correct
docket
fee
arising
from
their
respective claims. The seminal case of
Sun Insurance Office, Ltd. v. Judge
Asuncion150provides us guidance in the
payment of docket fees, to wit:
1. x xx Where the filing of the
initiatory pleading is not
accompanied by payment of
the docket fee, the court may
allow payment of the fee
within a reasonable time but
in no case beyond the
applicable prescriptive or
reglementary period.
2. The same rule applies to
permissive
counterclaims,
third-party claims and similar
pleadings, which shall not be
considered filed until and
unless
the
filing
fee
prescribed therefor is paid.
The court may also allow
payment of said fee within a
reasonable time but also in
no case beyond its applicable
prescriptive or reglementary
period. [underscoring ours]
This must be the rule considering that
Section 7, Rule 62 of which reads:
SEC. 7.Docket and other lawful fees,
costs and litigation expenses as liens.
The docket and other lawful fees
paid by the party who filed a
complaint under this Rule, as well as
the costs and litigation expenses, shall
constitute a lien or charge upon the
subject matter of the action, unless
the court shall order otherwise.
only pertain to the docket and lawful
fees to be paid by the one who
initiated the interpleader suit, and
who, under the Rules, actually "claims
no interest whatever in the subject
matter." By constituting a lien on the
subject matter of the action, Section 7
in effect only aims to actually
compensate
the
complainant-ininterpleader, who happens to be the
stakeholder unfortunate enough to get
caught in a legal crossfire between
two or more conflicting claimants, for
the faultless trouble it found itself into.
Since the defendants-in-interpleader
are actually the ones who make a

claim - only that it was extraordinarily

done through the procedural device of
interpleader - then to them devolves
the duty to pay the docket fees
prescribed under Rule 141 of the
Rules of Court, as amended.151
The importance of paying the correct
amount of docket fee cannot be
overemphasized:
The matter of payment of docket fees
is not a mere triviality. These fees are
necessary to defray court expenses in
the handling of cases. Consequently,
in order to avoid tremendous losses to
the judiciary, and to the government
as well, the payment of docket fees
cannot be made dependent on the
outcome of the case, except when the
claimant is a pauper-litigant.152
WHEREFORE, premises considered the
consolidated PETITIONS are GRANTED.
The Planters Development Bank is
hereby REQUIRED to file with the
Regional Trial Court its comment or
answer-in-interpleader to Bank of
Commerces Amended Consolidated
Answer
with
Compulsory
Counterclaim, as previously ordered
by the Regional Trial Court. The
Regional Trial Court of Makati City,
Branch 143, is hereby ORDERED to
assess the docket fees due from
Planters Development Bank and Bank
of
Commerce
and
order
their
payment,
and
to
resolve
with
DELIBERATE DISPATCH the parties
conflicting claims of ownership over
the proceeds of the Central Bank bills.
The Clerk of Court of the Regional Trial
Court of Makati City, Branch 143, or
his duly authorized representative is
hereby ORDERED to assess and
collect the appropriate amount of
docket fees separately due the Bank
of
Commerce
and
Planters
Development Bank as conflicting
claimants in BangkoSentralngPilipinas
interpleader suit, in accordance with
this decision.
SO ORDERED.
FACTS:
Before the Court are two consolidated
petitions for review on certiorari under
Rule 45,1 on pure questions of law,
filed by the petitioners Bank of
Commerce
(BOC)
and
the
BangkoSentralngPilipinas (BSP). They
assail the January 10, 2002 and July
23, 2002 Orders (assailed orders) of
the Regional Trial Court (RTC) of
Makati City, Branch 143, in Civil Case
Nos. 94-3233 and 94-3254. These

orders dismissed (i) the petition filed

by the Planters Development Bank
(PDB), (ii) the "counterclaim" filed by
the BOC, and (iii) the countercomplaint/cross-claim for interpleader
filed bythe BSP; and denied the BOCs
and
the
BSPs
motions
for
reconsideration.
The
Rizal
Commercial
Banking
Corporation (RCBC) was the registered
owner of seven Central Bank (CB) bills
with a total face value of P 70 million,
issued on January 2, 1994 and would
mature on January 2, 1995.2 As
evidenced
by
a
"Detached
Assignment" dated April 8, 1994,3 the
RCBC sold these CB bills to the
BOC.4 As
evidenced
by
another
"Detached Assignment"5 of even date,
the BOC, in turn, sold these CB bills to
the PDB.6The BOC delivered the
Detached Assignments to the PDB.7
On
April
15,
1994
(April
15
transaction), the PDB, in turn, sold to
the BOC Treasury Bills worth P 70
million, with maturity date of June 29,
1994, as evidenced by a Trading
Order8 and
a
Confirmation
of
Sale.9 However, instead of delivering
the Treasury Bills, the PDB delivered
the seven CB bills to the BOC, as
evidenced by a PDB Security Delivery
Receipt,
bearing
a
"note: ** substitution in lieu of 06-2994" referring to the Treasury
Bills.10Nevertheless, the PDB retained
possession
of
the
Detached
Assignments. It is basically the nature
of this April 15 transaction that the
PDB and the BOC cannot agree on.
As the registered owner of the
remaining three CB bills, the RCBC
sold them to IVI Capital and Insular
Savings Bank. Again, when the BSP
refused to release the amount of this
CB bill on maturity, the RCBC paid
back its transferees, reacquired these
three CB bills and sold them to the
BOC ultimately, the BOC acquired
these three CB bills.
On June 30, 1994, upon learning of the
transfers involving the CB bills, the
PDB informed20 the Officer-in-Charge
of the BSPs Government Securities
Department,21 LagrimasNuqui, of the
PDBs claim over these CB bills, based
on the Detached Assignments in its
possession. The PDB requested the
BSP22 to record its claim in the BSPs
books, explaining that its nonpossession of the CB bills is "on
account of imperfect negotiations
thereof and/or subsequent setoff or
transfer."23

JURISDICTION

Nuqui denied the request, invoking

Section 8 of CB Circular No. 28
(Regulations Governing Open Market
Operations,
Stabilization
of
the
Securities Market, Issue, Servicing and
Redemption
of
the
Public
Debt)24 which
requires
the
presentation of the bond before a
registered bond may be transferred on
the books of the BSP.25
In a July 25, 1994 letter, the PDB
clarified to Nuqui that it was not
"asking for the transfer of the CB
Bills. rather it intends to put the BSP
on formal notice that whoever is in
possession of said bills is not a holder
in due course," and, therefore the BSP
should not make payment upon the
presentation of the CB bills on
maturity.26 Nuqui responded that the
BSP was "not in a position at that
point in time to determine who is and
who is not the holder in due course
since it is not privy to all acts and time
involving the transfers or negotiation"
of the CB bills. Nuqui added that the
BSPs action shall be governed by CB
Circular No. 28, as amended.27
On November 17, 1994, the PDB also
asked BSP Deputy Governor Edgardo
Zialcita that (i) a notation in the BSPs
books be made against the transfer,
exchange, or payment of the bonds
and the payment of interest thereon;
and (ii) the presenter of the bonds
upon maturity be required to submit
proof as a holder in due course (of the
first set of CB bills). The PDB relied on
Section 10 (d) 4 of CB Circular No.
28.28
In a December 29, 1994 letter, Nuqui
again denied the request, reiterating
the BSPs previous stand.
In light of these BSP responses and
the impending maturity of the CB bills,
the PDB filed29 with the RTC two
separate petitions for Mandamus,
Prohibition and Injunction with prayer
for
Preliminary
Injunction
and
Temporary
Restraining
Order,
docketed as Civil Case No. 94-3233
(covering the first set of CB bills) and
Civil Case 94-3254 (covering the
second set of CB bills) against Nuqui,
the BSP and the RCBC.30
On December 28, 1994, the RTC
temporarily enjoined Nuqui and the
BSP from paying the face value of the
CB bills on maturity. 32 On January 10,
1995, the PDB filed an Amended
Petition, additionally impleading the
BOC and All Asia.33 In a January 13,
1995
Order,
the
cases
were
consolidated.34 On January 17, 1995,
the RTC granted the PDBs application

for a writ of preliminary prohibitory

injunction.35
After the petitions were filed, the BOC
acquired/reacquired all the nine CB
bills the first and second sets of CB
bills (collectively, subject CB bills).
The BOC filed its Answer, praying for
the dismissal of the petition. It argued
that the PDB has no cause of action
against it since the PDB is no longer
the owner of the CB bills. Contrary to
the PDBs "warehousing theory,"38 the
BOC asserted that the (i) April 15
transaction and the (ii) April 19
transaction covering both sets of CB
bills - were valid contracts of sale,
followed by a transfer of title (i) to the
BOC (in the April 15 transaction) upon
the PDBs delivery of the 1st set of CB
bills in substitution of the Treasury
Bills the PDB originally intended to
sell, and (ii) to Bancap (in the April 19
transaction) upon the PDBs delivery
of the 2nd set of CB bills to Bancap,
likewise by way of substitution.
The BOC adds that Section 10 (d) 4 of
CB Circular No. 28 cannot apply to the
PDBs case because (i) the PDB is not
in possession of the CB bills and (ii)
the BOC acquired these bills from the
PDB, as to the 1st set of CB bills, and
from Bancap, as to the 2nd set of CB
bills, in good faith and for value. The
BOC also asserted a compulsory
counterclaim
for
damages
and
attorneys fees.
RTC admitted60 the BOCs Amended
Consolidated Answer with Compulsory
Counterclaims.
In May 2001, the PDB filed an
Omnibus Motion,61 questioning the
RTCs jurisdiction over the BOCs
"additional counterclaims." The PDB
argues that its petitions pray for the
BSP (not the RTC) to determine who
among the conflicting claimants to the
CB bills stands in the position of the
bona fide holder for value. The RTC
cannot
entertain
the
BOCs
counterclaim, regardless of its nature,
because it is the BSP which has
jurisdiction to determine who is
entitled to receive the proceeds of the
CB bills.
The
BOC
opposed62 the
PDBs
Omnibus Motion. The PDB filed its
Reply.63
In a January 10, 2002 Order, the RTC
dismissed the PDBs petition, the
BOCs counterclaim and the BSPs
counter-complaint/cross-claim
for
interpleader, holding that under CB

Circular No. 28, it has no jurisdiction

(i) over the BOCs "counterclaims" and
(ii) to resolve the issue of ownership of
the CB bills.64 With the denial of their
separate
motions
for
Reconsideration,65 the BOC and the
BSP separately filed the present
petitions for review on certiorari.66
THE BOCS and THE BSPS PETITIONS
The BOC argues that the present
cases do not fall within the limited
provision of Section 10 (d) 4 of CB
Circular No. 28, which contemplates
only of three situations: first, where
the fraudulent assignment is not
coupled with a notice to the BSP, it
can grant no relief; second, where the
fraudulent assignment is coupled with
a notice of fraud to the BSP, it will
make
a
notation
against
the
assignment and require the owner and
the holder to substantiate their
claims; and third, where the case does
not fall on either of the first two
situations, the BSP will have to await
action on the assignment pending
settlement of the case, whether by
agreement or by court order.
The PDBs case cannot fall under the
first two situations. With particular
regard to the second situation, CB
Circular No. 28 requires that the
conflict must be between an "owner"
and a "holder," for the BSP to exercise
its limited jurisdiction to resolve
conflicting claims; and the word
"owner" here refers to the registered
owner giving notice of the fraud to the
BSP. The PDB, however, is not the
registered owner nor is it in
possession
(holder)
of
the
CB
bills.67 Consequently, the PDBs case
can only falls under the third situation
which leaves the RTC, as a court of
general jurisdiction, with the authority
to resolve the issue of ownership of a
registered bond (the CB bills) not
falling in either of the first two
situations.
The BOC asserts that the policy
consideration
supportive
of
its
interpretation of CB Circular No. 28 is
to have a reliable system to protect
the registered owner; should he file a
notice with the BSP about a fraudulent
assignment of certain CB bills, the BSP
simply has to look at its books to
determine who is the owner of the CB
bills fraudulently assigned. Since it is
only the registered owner who
complied with the BSPs requirement
of recording an assignment in the
BSPs books, then "the protective
mantle of administrative proceedings"
should necessarily benefit him only,
without extending the same benefit to

JURISDICTION

those who chose to ignore the

Circulars requirement, like the PDB.68

dismissed and expunged from the

record.

Assuming arguendo that the PDBs

case falls under the second situation
i.e., the BSP has jurisdiction to resolve
the issue of ownership of the CB bills
the more recent CB Circular No. 76980 (Rules and Regulations Governing
Central
Bank
Certificates
of
Indebtedness) already superseded CB
Circular No. 28, and, in particular,
effectively amended Section 10 (d) 4
of CB Circular No. 28.

HELD: We grant the petitions.

THE PDBS COMMENT

The PDB claims that jurisdiction is
determined by the allegations in the
complaint/petition and not by the
defenses set up in the answer. 70 In
filing the petition with the RTC, the
PDB merely seeks to compel the BSP
to determine, pursuant to CB Circular
No. 28, the party legally entitled to
the proceeds of the subject CB bills,
which, as the PDB alleged, have been
transferred
through
fraudulent
representations an allegation which
properly
recognized
the
BSPs
jurisdiction to resolve conflicting
claims of ownership over the CB bills.
The PDB adds that under the doctrine
of primary jurisdiction, courts should
refrain
from
determining
a
controversy involving a question
whose
resolution
demands
the
exercise of sound administrative
discretion. In the present case, the
BSPs
special
knowledge
and
experience in resolving disputes on
securities, whose assignment and
trading are governed by the BSPs
rules, should be upheld.
The PDB asserts that the existence of
CB Circular No. 769-80 or the abolition
of Nuquis office does not result in
depriving the BSP of its jurisdiction:
first, CB Circular No. 769-80 expressly
provides that CB Circular No. 28 shall
have suppletory application to CB
Circular No. 769-80; and second, the
BSP can always designate an office to
resolve the PDBs claim over the CB
bills.
Lastly, the PDB argues that even
assuming that the RTC has jurisdiction
to resolve the issue of ownership of
the CB bills, the RTC has not acquired
jurisdiction over the BOCs so-called
"compulsory" counterclaims (which in
truth is merely "permissive") because
of the BOCs failure to pay the
appropriate
docket
fees.
These
counterclaims should, therefore, be

The issue of BSPs jurisdiction, lay

hidden
On that note, the Court could have
written
finis
to
the
present
controversy by simply sustaining the
BSPs hands-off approach to the PDBs
problem under CB Circular No. 769-80.
However, the jurisdictional provision
of CB Circular No. 769-80 itself, in
relation to CB Circular No. 28, on the
matter of fraudulent assignment, has
given rise to a question of jurisdiction
- the core question of law involved in
these petitions - which the Court
cannot just treat sub-silencio.
Broadly speaking, jurisdiction is the
legal power or authority to hear and
determine a cause.80 In the exercise of
judicial or quasi-judicial power, it
refers to the authority of a court to
hear and decide a case. 81 In the
context of these petitions, we hark
back to the basic principles governing
the question of jurisdiction over the
subject matter.
First, jurisdiction over the subject
matter is determined only by the
Constitution and by law.82 As a matter
of substantive law, procedural rules
alone can confer no jurisdiction to
courts or administrative agencies.83 In
fact, an administrative agency, acting
in its quasi-judicial capacity, is a
tribunal of limited jurisdiction and, as
such, could wield only such powers
that are specifically granted to it by
the enabling statutes. In contrast, an
RTC is a court of general jurisdiction,
i.e., it has jurisdiction over cases
whose subject matter does not fall
within
the
exclusive
original
jurisdiction of any court, tribunal or
body exercising judicial or quasijudicial functions.84
Second, jurisdiction over the subject
matter is determined not by the pleas
set up by the defendant in his
answer85 but by the allegations in the
complaint,86 irrespective of whether
the plaintiff is entitled to favorable
judgment on the basis of his
assertions.87 The reason is that the
complaint is supposed to contain a
concise statement of the ultimate
facts constituting the plaintiff's causes
of action.88
Third, jurisdiction is determined by the
law in force at the time of the filing of
the complaint.89

Parenthetically, the Court observes

that none of the parties ever raised
the issue of whether the BSP can
simply
disown
its
jurisdiction,
assuming it has, by the simple
expedient of promulgating a new
circular (specially applicable to a
certificate of indebtedness issued by
the BSP itself), inconsistent with an
old circular, assertive of its limited
jurisdiction over ownership issues
arising from fraudulent assignments of
a certificate of indebtedness. The PDB,
in particular, relied solely and heavily
on CB Circular No. 28.
In light of the above principles
pointing to jurisdiction as a matter of
substantive law, the provisions of the
law itself that gave CB Circular 769-80
its life and jurisdiction must be
examined.
In the exercise of its plenary
legislative power, Congress may
create
administrative
agencies
endowed with quasi-legislative and
quasi-judicial powers. Necessarily,
Congress likewise defines the limits of
an agencys jurisdiction in the same
manner as it defines the jurisdiction of
courts.121 As a result, it may happen
that
either
a
court
or
an
administrative agency has exclusive
jurisdiction over a specific matter or
both have concurrent jurisdiction on
the same. It may happen, too, that
courts and agencies may willingly
relinquish adjudicatory power that is
rightfully theirs in favor of the other.
One of the instances when a court
may properly defer to the adjudicatory
authority of an agency is the
applicability of the doctrine of primary
jurisdiction.122
As early as 1954, the Court applied
the doctrine of primary jurisdiction
under the following terms:
6. In the fifties, the Court taking
cognizance of the move to vest
jurisdiction
in
administrative
commissions and boards the power to
resolve specialized disputes xxx ruled
that Congress in requiring the
Industrial Court's intervention in the
resolution
of
labor-management
controversies
xxx
meant
such
jurisdiction to be exclusive, although it
did not so expressly state in the law.
The Court held that under the "sensemaking and expeditious doctrine of
primary jurisdiction ... the courts
cannot or will not determine a
controversy involving a question
which is within the jurisdiction of an
administrative tribunal, where the
question demands the exercise of
sound
administrative
discretion

JURISDICTION

requiring the special knowledge,

experience, and services of the
administrative tribunal to determine
technical and intricate matters of fact,
and a uniformity of ruling is essential
to comply with the purposes of the
regulatory
statute
administered."123 (emphasis ours)
In Industrial Enterprises, Inc. v. Court
of Appeals,124 the Court ruled that
while an action for rescission of a
contract between coal developers
appears to be an action cognizable by
regular courts, the trial court remains
to be without jurisdiction to entertain
the suit since the contract sought to
be rescinded is "inextricably tied up
with the right to develop coal-bearing
lands and the determination of
whether or not the reversion of the
coal operating contract over the
subject coal blocks to [the plaintiff]
would be in line with the countrys
national program and objective on
coal-development and over-all coalsupply-demand balance." It then
applied the doctrine of primary
jurisdiction
In recent years, it has been the
jurisprudential trend to apply the
doctrine of primary jurisdiction in
many cases involving matters that
demand the special competence of
administrative agencies. It may occur
that the Court has jurisdiction to take
cognizance of a particular case, which
means that the matter involved is also
judicial in character. However, if the
case is such that its determination
requires the expertise, specialized
skills and knowledge of the proper
administrative
bodies
because
technical
matters
or
intricate
questions of facts are involved, then
relief must first be obtained in an
administrative proceeding before a
remedy will be supplied by the courts
even though the matter is within the
proper jurisdiction of a court. This is
the doctrine of primary jurisdiction. It
applies "where a claim is originally
cognizable in the courts, and comes
into play whenever enforcement of
the claim requires the resolution of
issues which, under a regulatory
scheme, have been placed within the
special
competence
of
an
administrative body."
Clearly, the doctrine of primary
jurisdiction finds application in this
case since the question of what coal
areas should be exploited and
developed and which entity should be
granted coal operating contracts over
said areas involves a technical
determination by the Bureau of
Energy
Development
as
the
administrative agency in possession of

the specialized expertise to act on the

matter. The Trial Court does not have
the competence to decide matters
concerning activities relative to the
exploration, exploitation, development
and extraction of mineral resources
like coal. These issues preclude an
initial
judicial
determination.
[emphases ours]
WHEREFORE, premises considered the
consolidated PETITIONS are GRANTED.
The Planters Development Bank is
hereby REQUIRED to file with the
Regional Trial Court its comment or
answer-in-interpleader to Bank of
Commerces Amended Consolidated
Answer
with
Compulsory
Counterclaim, as previously ordered
by the Regional Trial Court. The
Regional Trial Court of Makati City,
Branch 143, is hereby ORDERED to
assess the docket fees due from
Planters Development Bank and Bank
of
Commerce
and
order
their
payment,
and
to
resolve
with
DELIBERATE DISPATCH the parties
conflicting claims of ownership over
the proceeds of the Central Bank bills.
The Clerk of Court of the Regional Trial
Court of Makati City, Branch 143, or
his duly authorized representative is
hereby ORDERED to assess and
collect the appropriate amount of
docket fees separately due the Bank
of
Commerce
and
Planters
Development Bank as conflicting
claimants in BangkoSentralngPilipinas
interpleader suit, in accordance with
this decision

DECISION
CARPIO MORALES, J.:
FACTS:

The present

petition

for

Certiorari under Rule 64 of the Rules

of Court involves jurisdiction over an
election offense punishable under the
Omnibus

Election

Code

by

imprisonment of not less than one

year but not more than six years.
On the directive of the Commission on
Elections

(COMELEC) En

Banc,[1] its

Law Department filed an Information

against

respondent

LeonisaGenovia,

for

Ma.

violation

of

Section 261 (z) (3) of the Omnibus

Election Code which penalizes
Any person who votes in
substitution
for
another whether
with
or
without
the
latters
knowledge
and/or
consent. (Underscoring
supplied)
The

accusatory

portion

of

the

Information, dated July 26, 2005, which

was filed before the Regional Trial
Court (RTC) of Caloocan City where it
EN BANC
THE COMMISSION ON
ELECTIONS,Petitioner,
-versusHON. THELMA CANLAS TRINIDADPE AGUIRRE, Presiding Judge,
Regional Trial Court, Br. 129,
Caloocan City, and MA. LEONISA
GENOVIA,
Respondents.
G.R. No. 171208
Promulgated: September 7, 2007
x---------------------------------x

was docketed as Criminal Case No. C73774, reads:

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

JURISDICTION

Barangay 60, Caloocan City.

[2]

Municipal Circuit Trial Courts

shall exercise:

violation
offense

Election
of
is

any

Code,
election

punishable

as

follows:
SECTION
264. Penalties.
Any person found guilty
of
any election
offense under
this
Code shall be punished
with imprisonment of not
less than one year but
not
more
than
six
years and shall not be
subject to probation. In
addition, the guilty party
shall be sentenced to suffer
disqualification to hold public
office and deprivation of the
right of suffrage. If he is a
foreigner,
he
shall
be
sentenced to deportation
which shall be enforced after
the prison term has been
served. Any political party
found
guilty
shall
be
sentenced to pay a fine of
not less than ten thousand
pesos,
which
shall
be
imposed upon such party
after criminal action has
been instituted in which their
corresponding officials have
been found guilty. x xx
(Italics
in
the
original; emphasis
and
underscoring supplied)
RTC Ruling: By Order
of September 21, 2005,
[3]
Branch 129 of the
Caloocan RTC dismissed the
case for lack of jurisdiction,
it citing Section 32(2) of
Batas Pambansa (B.P.) Blg.
129 (The Judiciary
Reorganization Act of 1980)
reading:

The COMELEC argues that under the

(2) Exclusive
original
jurisdiction
over
all
offenses punishable with
imprisonment
not
exceeding
six
(6)
years irrespective of the
amount of fine regardless of
other imposable accessory
penalties, including the civil
liability arising from such
offenses
or
predicated
thereon, irrespective of kind,
nature, or value amount
thereof: Provided, however,
That in offenses involving
damage to property through
criminal negligence, they
shall have exclusive original
jurisdiction thereof. (Italics in
the original; emphasis and
underscoring supplied)

above-quoted provision of Section

268 of the Omnibus Election Code, all
criminal cases for violation of the
Code, except those relating to failure
to register or failure to vote which
shall

the
[4]

trial

courts

dismissal

be

under

jurisdiction

of

the

inferior

exclusive
courts,

fall

under the exclusive jurisdiction of

regional trial courts.[7]
ISSUE: Whether or not RTC erred in
denying

The COMELEC moved to reconsider

order,

inviting attention to Section 268 of

the

case

for

lack

of

jurisdiction?
Ruling

of

meritorious.

SC:

The

petition

is

From the above-quoted

the Omnibus Election Code which

provision of Section 32 of BP Blg. 129,

reads:

jurisdiction of first-level courts the

metropolitan trial courts, municipal trial

SECTION 268. Jurisdiction of

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

Sec. 32. Jurisdiction

of Metropolitan Trial Courts,
Municipal Trial Courts and
Municipal Circuit Trial Courts
in Criminal Cases. Except
in cases falling within the
exclusive
jurisdiction
of
Regional Trial Courts and of
the
Sandiganbayan,
the
Metropolitan Trial Courts,
Municipal Trial Courts and

268 of the Omnibus Election Code.

x xxx

Under Section 264 of the

Omnibus

dismissal order is contrary to Section

one

of November

courts and municipal circuit trial courts

does not cover criminal cases which,
by specific provision of law, fall within
the exclusive jurisdiction of regional
trial

the

Section 268 of the Omnibus Election

Code

specifically

provides,

regional

trial courts have exclusive jurisdiction

Order

2005,[5] the

trial

to try and decide any criminal action or

proceedings for violation of the Code
except those relating to the offense of
failure to register or failure to vote.

for lack of merit.

the

of

As correctly argued by the COMELEC,

court denied the COMELECs motion

Hence,

(and

Sandiganbayan).[8]

sentence

15,

courts

present

certiorari

under

COMELEC

contending

petition

Rule

for

64,[6] the
that

the

It bears emphasis that Congress has

the plenary power to define, prescribe
and

apportion

the

jurisdictions

of

JURISDICTION

various courts. Hence, it may, by law,

provide that a certain class of cases
should

be

exclusively

heard

and

determined by a specific court. Section

268 of Omnibus Election Code is one
such and must thus be construed as an
exception to BP Blg. 129, the general
law on jurisdiction of courts.[9]
In fine, while BP Blg. 129 lodges
in municipal trial courts, metropolitan

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

trial courts and municipal circuit trial

courts jurisdiction over criminal cases
carrying a penalty of imprisonment of
less than one year but not exceeding

action or proceeding which bears the

(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.

Respondents seasonably filed their

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

(c) Appeal by certiorari . - In all cases

where only questions of law are raised
or involved, the appeal shall be to the
Supreme Court by Petition for Review
on Certiorariin accordance with Rule
45.

RTC ruling: motuprioprio issued an

Order dismissing the case for lack of
jurisdiction over the subject matter of
the case.

In Macawiwili Gold Mining and

Development Co., Inc. v. Court of
Appeals,2 we summarized the rule on
appeals as follows:

Petitioners filed a motion for

reconsideration but it was denied by
the RTC in an Order dated May 18,
1999.

(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;

six years, following Section 268 of the

Omnibus Election Code, any criminal

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.

same penalty, with the exception of

the therein mentioned two cases, falls
within the exclusive original jurisdiction
of regional trial courts.
WHEREFORE,

the

petition

is GRANTED. The challenged orders of

respondent

Judge

Thelma

CanlasTrinided-Pe Aguirre, in Criminal

Case

No.

C-73774

are SET

ASIDE. Respondent

judge

is DIRECTED to reinstate the case to

the

court

docket

and

to

Ruling of CA:Petitioners interposed

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

conduct

appropriate proceedings thereon with

reasonable dispatch.
FIRST DIVISION

Section 2, Rule 41 of the same Rules

which governs appeals from
judgments and final orders of the RTC
to the Court of Appeals, provides:

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

2007]

SEC. 2. Modes of appeal. '

PAMELA S. SEVILLENO and PURITA

S. SEVILLENO, Petitioners, v. PACITA
CARILO and CAMELO
CARILO, Respondents.

(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

(2) In all cases decided by the RTC in

the exercise of its original jurisdiction
where the appellant raises only
questions of law, the appeal must be
taken to the Supreme Court on a
Petition for Review on Certiorari under
Rule 45.
(3) All appeals from judgments
rendered by the RTC in the exercise of
its appellate jurisdiction, regardless of
whether the appellant raises
questions of fact, questions of law, or
mixed questions of fact and law, shall
be brought to the Court of Appeals by
filing a Petition for Review under Rule
42.
ISSUE:Whether or not CA erred in
dismissing petitioners appeal.
HELD:It is not disputed that the issue
brought by petitioners to the Court of

JURISDICTION

Appeals involves the jurisdiction of the

RTC over the subject matter of the
case. We have a long standing rule
that a court's jurisdiction over the
subject matter of an action is
conferred only by the Constitution or
by statute.3Otherwise put, jurisdiction
of a court over the subject matter of
the action is a matter of
law.4Consequently, issues which deal
with the jurisdiction of a court over
the subject matter of a case are pure
questions of law. As petitioners'
appeal solely involves a question of
law, they should have directly taken
their appeal to this Court by filing a
Petition for Review on Certiorari under
Rule 45, not an ordinary appeal with
the Court of Appeals under Rule 41.
Clearly, the appellate court did not err
in holding that petitioners pursued the
wrong mode of appeal.
Indeed, the Court of Appeals did not
err in dismissing petitioners' appeal.
Section 2, Rule 50 of the same Rules
provides that an appeal from the RTC
to the Court of Appeals raising only
questions of law shall be dismissed;
and that an appeal erroneously taken
to the Court of Appeals shall be
dismissed outright, thus:
Sec. 2. Dismissal of improper appeal
to the Court of Appeals. - An appeal
under Rule 41 taken from the Regional
Trial Court to the Court of Appeals
raising only questions of law shall be
dismissed, issues of pure law not
being reviewable by said court.
Similarly, an appeal by notice of
appeal instead of by Petition for
Review from the appellate judgment
of a Regional Trial Court shall be
dismissed.
An appeal erroneously taken to the
Court of Appeals shall not be
transferred to the appropriate court
but shall be dismissed outright.
WHEREFORE, we DENY the petition.
The questioned Resolution of the
Court of Appeals (Third Division) in
CA-G.R. CV No. 63608
is AFFIRMED. Costs against
petitioners.

Republic of the Philippines

Supreme Court
Baguio City
THIRD DIVISION
COSCO PHILIPPINES SHIPPING,
INC.,Petitioner,
- versus KEMPER INSURANCE
COMPANY,Respondent.
G.R. No. 179488
April 23, 2012
x--------------------------- - -- - - - - - - - - - - - - - - - - - - x
PERALTA, J.:
FACTS:Respondent Kemper Insurance
Company is a foreign insurance
company based in Illinois, United
States of America (USA) with no
license to engage in business in the
Philippines, as it is not doing business
in the Philippines, except in isolated
transactions; while petitioner is a
domestic shipping company organized
in accordance with Philippine laws.
In 1998, respondent insured the
shipment of imported frozen boneless
beef (owned by Genosi, Inc.), which
was loaded at a port in Brisbane,
Australia, for shipment to Genosi, Inc.
(the importer-consignee) in the
Philippines. However, upon arrival at
the Manila port, a portion of the
shipment was rejected by Genosi, Inc.
by reason of spoilage arising from the
alleged temperature fluctuations of
petitioner's reefer containers.
Thus, Genosi, Inc. filed a claim against
both petitioner shipping company and
respondent Kemper Insurance
Company. The claim was referred to
McLarens Chartered for investigation,
evaluation, and adjustment of the
claim. After processing the claim
documents, McLarens Chartered
recommended a settlement of the
claim in the amount of $64,492.58,
which Genosi, Inc. (the consigneeinsured) accepted.
Thereafter, respondent paid the claim
of Genosi, Inc. (the insured) in the
amount of $64,492.58. Consequently,
Genosi, Inc., through its General
Manager, Avelino S. Mangahas, Jr.,

executed a Loss and Subrogation

Receipt[3] dated September 22, 1999,
stating that Genosi, Inc. received from
respondent the amount of $64,492.58
as the full and final satisfaction
compromise, and discharges
respondent of all claims for losses and
expenses sustained by the property
insured, under various policy
numbers, due to spoilage brought
about by machinery breakdown which
occurred on October 25, November 7
and 10, and December 5, 14, and 18,
1998; and, in consideration thereof,
subrogates respondent to the claims
of Genosi, Inc. to the extent of the
said amount. Respondent then made
demands upon petitioner, but the
latter failed and refused to pay the
said amount.
Hence, on October 28, 1999,
respondent filed a Complaint for
Insurance Loss and Damages[4]
against petitioner before the trial
court, docketed as Civil Case No. 9995561, entitled Kemper Insurance
Company v. Cosco Philippines
Shipping, Inc. Respondent alleged that
despite repeated demands to pay and
settle the total amount of
US$64,492.58, representing the value
of the loss, petitioner failed and
refused to pay the same, thereby
causing damage and prejudice to
respondent in the amount of
US$64,492.58; that the loss and
damage it sustained was due to the
fault and negligence of petitioner,
specifically, the fluctuations in the
temperature of the reefer container
beyond the required setting which was
caused by the breakdown in the
electronics controller assembly; that
due to the unjustified failure and
refusal to pay its just and valid claims,
petitioner should be held liable to pay
interest thereon at the legal rate from
the date of demand; and that due to
the unjustified refusal of the petitioner
to pay the said amount, it was
compelled to engage the services of a
counsel whom it agreed to pay 25% of
the whole amount due as attorney's
fees. Respondent prayed that after
due hearing, judgment be rendered in
its favor and that petitioner be

JURISDICTION

ordered to pay the amount of

US$64,492.58, or its equivalent in
Philippine currency at the prevailing
foreign exchange rate, or a total of
P2,594,513.00, with interest thereon
at the legal rate from date of demand,
25% of the whole amount due as
attorney's fees, and costs.
In its Answer[5] dated November 29,
1999, petitioner insisted, among
others, that respondent had no
capacity to sue since it was doing
business in the Philippines without the
required license; that the complaint
has prescribed and/or is barred by
laches; that no timely claim was filed;
that the loss or damage sustained by
the shipments, if any, was due to
causes beyond the carrier's control
and was due to the inherent nature or
insufficient packing of the shipments
and/or fault of the consignee or the
hired stevedores or arrastre operator
or the fault of persons whose acts or
omissions cannot be the basis of
liability of the carrier; and that the
subject shipment was discharged
under required temperature and was
complete, sealed, and in good order
condition.
During the pre-trial proceedings,
respondent's counsel proffered and
marked its exhibits, while petitioner's
counsel manifested that he would
mark his client's exhibits on the next
scheduled pre-trial. However, on
November 8, 2001, petitioner filed a
Motion to Dismiss,[6] contending that
the same was filed by one Atty.
Rodolfo A. Lat, who failed to show his
authority to sue and sign the
corresponding certification against
forum shopping. It argued that Atty.
Lat's act of signing the certification
against forum shopping was a clear
violation of Section 5, Rule 7 of the
1997 Rules of Court.
RTC Ruling: the trial court granted
petitioner's Motion to Dismiss and
dismissed the case without prejudice,
ruling that it is mandatory that the
certification must be executed by the
petitioner himself, and not by counsel.

Since respondent's counsel did not

have a Special Power of Attorney (SPA)
to act on its behalf, hence, the
certification against forum shopping
executed by said counsel was fatally
defective and constituted a valid
cause for dismissal of the complaint.
Respondent's Motion for
Reconsideration[8] was denied by the
trial court in an Order[9] dated July 9,
2002.
CA Ruling:On appeal by respondent,
the CA, in its Decision[10] dated
March 23, 2007, reversed and set
aside the trial court's order. The CA
ruled that the required certificate of
non-forum shopping is mandatory and
that the same must be signed by the
plaintiff or principal party concerned
and not by counsel; and in case of
corporations, the physical act of
signing may be performed in behalf of
the corporate entity by specifically
authorized individuals. However, the
CA pointed out that the factual
circumstances of the case warranted
the liberal application of the rules and,
as such, ordered the remand of the
case to the trial court for further
proceedings.
Petitioner's Motion for
Reconsideration[11] was later denied
by the CA in the Resolution[12] dated
September 3, 2007.
Hence, petitioner elevated the case to
this Court via Petition for Review on
Certiorari under Rule 45 of the Rules
of Court, with the following issues:
ISSUE: Whether or not THE COURT
OF APPEALS SERIOUSLY ERRED IN
RULING THAT ATTY. RODOLFO LAT
WAS PROPERLY AUTHORIZED BY THE
RESPONDENT TO SIGN THE
CERTIFICATE AGAINST FORUM
SHOPPING DESPITE THE UNDISPUTED
FACTS THAT:
A) THE PERSON WHO EXECUTED THE
SPECIAL POWER OF ATTORNEY (SPA)
APPOINTING ATTY. LAT AS
RESPONDENT'S ATTORNEY-IN-FACT
WAS MERELY AN UNDERWRITER OF

THE RESPONDENT WHO HAS NOT

SHOWN PROOF THAT HE WAS
AUTHORIZED BY THE BOARD OF
DIRECTORS OF RESPONDENT TO DO
SO.
B) THE POWERS GRANTED TO ATTY.
LAT REFER TO [THE AUTHORITY TO
REPRESENT DURING THE] PRE-TRIAL
[STAGE] AND DO NOT COVER THE
SPECIFIC POWER TO SIGN THE
CERTIFICATE.[13]
Petitioner alleged that respondent
failed to submit any board resolution
or secretary's certificate authorizing
Atty. Lat to institute the complaint and
sign the certificate of non-forum
shopping on its behalf. Petitioner
submits that since respondent is a
juridical entity, the signatory in the
complaint must show proof of his or
her authority to sign on behalf of the
corporation. Further, the SPA[14]
dated May 11, 2000, submitted by
Atty. Lat, which was notarized before
the Consulate General of Chicago,
Illinois, USA, allegedly authorizing him
to represent respondent in the pretrial and other stages of the
proceedings was signed by one Brent
Healy (respondent's underwriter), who
lacks authorization from its board of
directors.
In its Comment, respondent admitted
that it failed to attach in the complaint
a concrete proof of Atty. Lat's
authority to execute the certificate of
non-forum shopping on its behalf.
However, there was subsequent
compliance as respondent submitted
an authenticated SPA empowering
Atty. Lat to represent it in the pre-trial
and all stages of the proceedings.
Further, it averred that petitioner is
barred by laches from questioning the
purported defect in respondent's
certificate of non-forum shopping.
The main issue in this case is whether
Atty. Lat was properly authorized by
respondent to sign the certification
against forum shopping on its behalf.
The petition is meritorious.
HELD:We have consistently held that
the certification against forum

JURISDICTION

shopping must be signed by the

principal parties.[15] If, for any
reason, the principal party cannot sign
the petition, the one signing on his
behalf must have been duly
authorized.[16] With respect to a
corporation, the certification against
forum shopping may be signed for and
on its behalf, by a specifically
authorized lawyer who has personal
knowledge of the facts required to be
disclosed in such document.[17] A
corporation has no power, except
those expressly conferred on it by the
Corporation Code and those that are
implied or incidental to its existence.
In turn, a corporation exercises said
powers through its board of directors
and/or its duly authorized officers and
agents. Thus, it has been observed
that the power of a corporation to sue
and be sued in any court is lodged
with the board of directors that
exercises its corporate powers. In
turn, physical acts of the corporation,
like the signing of documents, can be
performed only by natural persons
duly authorized for the purpose by
corporate by-laws or by a specific act
of the board of directors.[18]
In Philippine Airlines, Inc. v. Flight
Attendants and Stewards Association
of the Philippines (FASAP),[19] we
ruled that only individuals vested with
authority by a valid board resolution
may sign the certificate of non-forum
shopping on behalf of a corporation.
We also required proof of such
authority to be presented. The petition
is subject to dismissal if a certification
was submitted unaccompanied by
proof of the signatory's authority.
In the present case, since respondent
is a corporation, the certification must
be executed by an officer or member
of the board of directors or by one
who is duly authorized by a resolution
of the board of directors; otherwise,
the complaint will have to be
dismissed.[20] The lack of certification
against forum shopping is generally
not curable by mere amendment of
the complaint, but shall be a cause for
the dismissal of the case without
prejudice.[21] The same rule applies

to certifications against forum

shopping signed by a person on behalf
of a corporation which are
unaccompanied by proof that said
signatory is authorized to file the
complaint on behalf of the
corporation.[22]
There is no proof that respondent, a
private corporation, authorized Atty.
Lat, through a board resolution, to
sign the verification and certification
against forum shopping on its behalf.
Accordingly, the certification against
forum shopping appended to the
complaint is fatally defective, and
warrants the dismissal of respondent's
complaint for Insurance Loss and
Damages (Civil Case No. 99-95561)
against petitioner.
In Republic v. Coalbrine International
Philippines, Inc.,[23] the Court cited
instances wherein the lack of
authority of the person making the
certification of non-forum shopping
was remedied through subsequent
compliance by the parties therein.
Thus,
[w]hile there were instances where we
have allowed the filing of a
certification against non-forum
shopping by someone on behalf of a
corporation without the accompanying
proof of authority at the time of its
filing, we did so on the basis of a
special circumstance or compelling
reason. Moreover, there was a
subsequent compliance by the
submission of the proof of authority
attesting to the fact that the person
who signed the certification was duly
authorized.
Contrary to the CA's finding, the Court
finds that the circumstances of this
case do not necessitate the relaxation
of the rules. There was no proof of
authority submitted, even belatedly,
to show subsequent compliance with
the requirement of the law. Neither
was there a copy of the board
resolution or secretary's certificate
subsequently submitted to the trial
court that would attest to the fact that
Atty. Lat was indeed authorized to file

said complaint and sign the

verification and certification against
forum shopping, nor did respondent
satisfactorily explain why it failed to
comply with the rules. Thus, there
exists no cogent reason for the
relaxation of the rule on this matter.
Obedience to the requirements of
procedural rules is needed if we are to
expect fair results therefrom, and
utter disregard of the rules cannot
justly be rationalized by harking on
the policy of liberal construction.[25]
Moreover, the SPA dated May 11,
2000, submitted by respondent
allegedly authorizing Atty. Lat to
appear on behalf of the corporation, in
the pre-trial and all stages of the
proceedings, signed by Brent Healy,
was fatally defective and had no
evidentiary value. It failed to establish
Healy's authority to act in behalf of
respondent, in view of the absence of
a resolution from respondent's board
of directors or secretary's certificate
proving the same. Like any other
corporate act, the power of Healy to
name, constitute, and appoint Atty.
Lat as respondent's attorney-in-fact,
with full powers to represent
respondent in the proceedings, should
have been evidenced by a board
resolution or secretary's certificate.
Respondent's allegation that
petitioner is estopped by laches from
raising the defect in respondent's
certificate of non-forum shopping does
not hold water.
In Tamondong v. Court of Appeals,[26]
we held that if a complaint is filed for
and in behalf of the plaintiff who is not
authorized to do so, the complaint is
not deemed filed. An unauthorized
complaint does not produce any legal
effect. Hence, the court should
dismiss the complaint on the ground
that it has no jurisdiction over the
complaint and the plaintiff.[27]
Accordingly, since Atty. Lat was not
duly authorized by respondent to file
the complaint and sign the verification
and certification against forum
shopping, the complaint is considered
not filed and ineffectual, and, as a

JURISDICTION

necessary consequence, is
dismissable due to lack of jurisdiction.
Jurisdiction is the power with which
courts are invested for administering
justice; that is, for hearing and
deciding cases. In order for the court
to have authority to dispose of the
case on the merits, it must acquire
jurisdiction over the subject matter
and the parties. Courts acquire
jurisdiction over the plaintiffs upon the
filing of the complaint, and to be
bound by a decision, a party should
first be subjected to the court's
jurisdiction.[28] Clearly, since no valid
complaint was ever filed with the RTC,
Branch 8, Manila, the same did not
acquire jurisdiction over the person of
respondent.
Since the court has no jurisdiction
over the complaint and respondent,
petitioner is not estopped from
challenging the trial court's
jurisdiction, even at the pre-trial stage
of the proceedings. This is so because
the issue of jurisdiction may be raised
at any stage of the proceedings, even
on appeal, and is not lost by waiver or
by estoppel.[29]
In Regalado v. Go,[30] the Court held
that laches should be clearly present
for the Sibonghanoy[31] doctrine to
apply, thus:
Laches is defined as the "failure or
neglect for an unreasonable and
unexplained length of time, to do that
which, by exercising due diligence,
could or should have been done
earlier, it is negligence or omission to
assert a right within a reasonable
length of time, warranting a
presumption that the party entitled to
assert it either has abandoned it or
declined to assert it.
The ruling in People v. Regalario that
was based on the landmark doctrine
enunciated in Tijam v. Sibonghanoy on
the matter of jurisdiction by estoppel
is the exception rather than the rule.
Estoppel by laches may be invoked to
bar the issue of lack of jurisdiction
only in cases in which the factual

milieu is analogous to that in the cited

case. In such controversies, laches
should have been clearly present; that
is, lack of jurisdiction must have been
raised so belatedly as to warrant the
presumption that the party entitled to
assert it had abandoned or declined to
assert it.
In Sibonghanoy, the defense of lack of
jurisdiction was raised for the first
time in a motion to dismiss filed by
the Surety almost 15 years after the
questioned ruling had been rendered.
At several stages of the proceedings,
in the court a quo as well as in the
Court of Appeals, the Surety invoked
the jurisdiction of the said courts to
obtain affirmative relief and submitted
its case for final adjudication on the
merits. It was only when the adverse
decision was rendered by the Court of
Appeals that it finally woke up to raise
the question of jurisdiction.[32]
The factual setting attendant in
Sibonghanoy is not similar to that of
the present case so as to make it fall
under the doctrine of estoppel by
laches. Here, the trial court's
jurisdiction was questioned by the
petitioner during the pre-trial stage of
the proceedings, and it cannot be said
that considerable length of time had
elapsed for laches to attach.
WHEREFORE, the petition is GRANTED.
The Decision and the Resolution of the
Court of Appeals, dated March 23,
2007 and September 3, 2007,
respectively, in CA-G.R. CV No. 75895
are REVERSED and SET ASIDE. The
Orders of the Regional Trial Court,
dated March 22, 2002 and July 9,
2002, respectively, in Civil Case No.
99-95561, are REINSTATED.
Go vs Distinct Corporation
FACTS: Lim (petitioners) are
registered individual owners of
condominium units in Phoenix Heights
Condominium developed by the
respondent. In August 2008,
petitioners, as condominium unitowners, filed a complaint before the
HLURB against DPDCI for unsound
business practices and violation of the
MDDR, alleging that DPDCI committed
misrepresentation in their circulated

flyers and brochures as to the facilities

or amenities that would be available
in the condominium and failed to
perform its obligation to comply with
the MDDR. In defense, DPDCI alleged
that the brochure attached to the
complaint was a mere preparatory
draft. HLURB rendered its decision in
favor of petitioners. DPDCI filed with
the CA its Petition for Certiorari and
Prohibition on the ground that HLURB
acted without or beyond its
jurisdiction. The CA ruled that the
HLURB had no jurisdiction over the
complaint filed by petitioners as the
controversy did not fall within the
scope of the administrative agencys
authority.
ISSUE: 1. Whether the HLURB has
jurisdiction over the complaint filed by
the petitioners
2. Whether PHCC is an
indispensable party
RULING: 1. Jurisdiction over the
subject matter of a case is conferred
by law and determined by the
allegations in the complaint which
comprise a concise statement of the
ultimate facts constituting the
plaintiff's cause of action. The nature
of an action, as well as which court or
body has jurisdiction over it, is
determined based on the allegations
contained in the complaint of the
plaintiff, irrespective of whether or not
the plaintiff is entitled to recover upon
all or some of the claims asserted
therein. The averments in the
complaint and the character of the
relief sought are the ones to be
consulted. Once vested by the
allegations in the complaint,
jurisdiction also remains vested
irrespective of whether or not the
plaintiff is entitled to recover upon all
or some of the claims asserted
therein. Thus, it was ruled that the
jurisdiction of the HLURB to hear and
decide cases is determined by the
nature of the cause of action, the
subject matter or property involved
and the parties. In this case, the
complaint filed by petitioners alleged
causes of action that apparently are
not cognizable by the HLURB
considering the nature of the action
and the reliefs sought. 2. An
indispensable party is defined as one
who has such an interest in the
controversy or subject matter that a

JURISDICTION

final adjudication cannot be made, in

his absence, without injuring or
affecting that interest. It is "precisely
when an indispensable party is not
before the court (that) an action
should be dismissed. The absence of
an indispensable party renders all
subsequent actions of the court null
and void for want of authority to act,
not only as to the absent parties but
even to those present. The purpose of
the rules on joinder of
the cause of action rightfully pertains
to PHCC.indispensable parties is a
complete determination of all issues
not only between the parties
themselves. Evidently. . but also as
regards other persons who may be
affected by the judgment. as it would
be directly and adversely affected by
any determination therein. PHCC is an
indispensable party and should have
been impleaded.
POWERS OF HLURB:PD 957
WHICH GRANTED HLURB
EXCLUSIVE JURISDICTION TO
REGULATE THE REAL ESTATE
TRADE AND BUSINESS.

THIS POWER WAS EXPANDED BY

PD 1344 TO THE FOLLOWING
CASES:
(A) UNSOUND REAL ESTATE
BUSINESS PRACTICES;
(B) CLAIMS INVOLVING REFUND
AND ANY OTHER CLAIMS FILED BY
SUBDIVISION LOT OR
CONDOMINIUM UNIT BUYER
AGAINST THE PROJECT OWNER,
DEVELOPER, DEALER, BROKER OR
SALESMAN; AND
(C) CASES INVOLVING SPECIFIC
PERFORMANCE OF CONTRACTUAL
AND STATUTORY OBLIGATIONS
FILED BY BUYERS OF
SUBDIVISION LOT OR
CONDOMINIUM UNIT AGAINST
THE OWNER, DEVELOPER,
DEALER, BROKER OR SALESMAN.
Generally, the extent to which an
administrative agency may exercise
its powers depends largely, if not
wholly, on the provisions of the
statute creating or empowering such
agency.[3][19] With respect to the

HLURB, to determine if said agency

has jurisdiction over petitioners cause
of action, an examination of the laws
defining the HLURBs jurisdiction and
authority becomes imperative. P.D.
No. 957,[4][20] specifically Section 3,
granted the National Housing
Authority (NHA) the exclusive
jurisdiction to regulate the real estate
trade and business. Then came P.D.
No. 1344[5][21] expanding the
jurisdiction of the NHA (now HLURB),
as follows:
SECTION 1. In the exercise of its
functions to regulate the real estate
trade and business and in addition to
its powers provided for in Presidential
Decree No. 957, the National Housing
Authority shall have exclusive
jurisdiction to hear and decide cases
of the following nature:
(a) Unsound real estate business
practices;
(b) Claims involving refund and any
other claims filed by subdivision lot or
condominium unit buyer against the
project owner, developer, dealer,
broker or salesman; and
(c) Cases involving specific
performance of contractual and
statutory obligations filed by buyers of
subdivision lot or condominium unit
against the owner, developer, dealer,
broker or salesman.
This provision must be read in light of
the laws preamble, which explains
the reasons for enactment of the law
or the contextual basis for its
interpretation.[6][22] A statute
derives its vitality from the purpose
for which it is enacted, and to
construe it in a manner that
disregards or defeats such purpose is
to nullify or destroy the law.[7][23]
P.D. No. 957, as amended, aims to
protect innocent subdivision lot and
condominium unit buyers against
fraudulent real estate practices.[8]
[24]
The HLURB is given a wide latitude in
characterizing or categorizing acts
which may constitute unsound
business practice or breach of
contractual obligations in the real
estate trade. This grant of expansive
jurisdiction to the HLURB does not
mean, however, that all cases

involving subdivision lots or

condominium units automatically fall
under its jurisdiction. The CA aptly
quoted the case ofChristian General
Assembly, Inc. v. Ignacio,[9][25]
wherein the Court held that:
The mere relationship between the
parties, i.e., that of being subdivision
owner/developer and subdivision lot
buyer, does not automatically vest
jurisdiction in the HLURB. For an
action to fall within the exclusive
jurisdiction of the HLURB,
the decisive element is the nature
of the action as enumerated in
Section 1 of P.D. 1344. On this matter,
we have consistently held that the
concerned administrative agency, the
National Housing Authority (NHA)
before and now the HLURB, has
jurisdiction over complaints aimed at
compelling the subdivision developer
to comply with its contractual and
statutory obligations.

FASAP VS PAL
June 15, 1998 - Philippine Airlines
(PAL) retrenches 5,000 employees,
including 1,400 cabin crew personnel
as a cost-cutting measure. PAL said it
incurred P90-B in liabilities during the
1997 Asian financial crisis. The
retrenchment takes effect on July 15.
June 22, 1998 - The Flight
Attendants and Stewards Association
of the Philippines (FASAP) files a
complaint against PAL and Patria
Chiong, the Assistant Vice President
for Cabin Services of PAL, for illegal
retrenchment at the National Labor
Relations Commission.
July 23, 1998 - The labor arbiter
rules in favor of FASAP and issues a
preliminary injunction stopping PAL
from implementing retrenchment
program. He also orders the parties to
issue a position paper.
Sept. 4, 1998 - PAL chairman Lucio
Tan dangles shares of stock to
employees and 3 seats in its board of
directors, but, in exchange, the
collective bargaining agreement
would be suspended for 10 years. The
employees dismiss the offer.

JURISDICTION

Sept. 23, 1998 - PAL stops

operations and terminates employees.

Renato Corona, grants PAL's motion.

Corona inhibits from the case.

November 1998 - March 1999 - PAL

starts to recall the cabin crew
personnel it retrenched. PAL says it
recalled 820 personnel already. FASAP
says it only recalled 80.

June 3, 2010 - Chief Justice Renato

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

Sept. 28, 1999- FASAP files position

paper with the National Labor
Relations Commission (NLRC).
Nov. 8, 1999- PAL files position paper
July 21, 2000 - Labor arbiter Jovencio
Mayor rules in favor of FASAP and
orders PAL to reinstate retrenched
employees. PAL appeals the decision.
May 31, 2004 - NLRC reverses
decision due to lack of merit. FASAP
elevates case to the Court of Appeals.
Aug, 23, 2006 - The Court of Appeals
affirms NLRC's decision, saying PAL
doesn't have to consult FASAP for its
criteria on retrenchment program.
FASAP files motion for reconsideration.
May 29, 2007 - CA stands by its
earlier ruling. FASAP goes to the
Supreme Court.
July 22, 2008 - The SC special third
division, in a decision penned by
Justice Consuelo Ynares-Santiago,
rules in favor of FASAP and orders PAL
to reinstate retrenched employees.
Justices who concurred with this
decision are Justices Alicia AustriaMartinez, Minita Chico-Nazario,
Antonio Eduardo Nachura and Ruben
Reyes.
Aug. 20, 2008 - PAL files motion for
reconsideration.
(NOTE)Oct. 2, 2009 - SC special
third division affirms 2008 decision
with finality. Decision is penned by
Ynares-Santiago. Concurring are
Justices Nachura, Diosdado Peralta,
Nazario and Lucas Bersamin.
Nov. 3. 2009 - PAL files motion for
leave to file, and to admit motion for
reconsideration for 2009 decision and
second motion for reconsideration for
2008 decision.
Jan. 20, 2010 - The SC third division,
then chaired by Associate Justice

The FASAP case is raffled off to SC

second division because members of
the Special third division have retired.
Sept. 7, 2011 - The SC second
division dismisses PAL's second
motion for reconsideration
Sept. 13, 2011 - PAL lawyer Estelito
Mendoza writes the Clerk of Court and
asks for an update on the Court's
action regarding the case and asks
who is the ponente assigned to it.
Sept. 16, 2011 - Mendoza writes a
second letter, reiterating request for
update.
Sept. 20, 2011 - Mendoza writes
another letter, saying they received
copy of the Sept. 7 resolution on Sept.
19. He asks for voting pn the details
on the resolution. The Sept. 7
resolution dismissses PAL's
second motion for
reconsideration.
Sept. 22, 2011 - Mendoza writes a
fourth letter, asking the Clerk of Court
to direct queries to Justices Carpio,
Arturo Brion, Jose Perez, Diosdado
Peralta, Jose Mendoza, Bersamin, if
necessary.
Oct. 4, 2011 - The SC en banc orders
the recall of Sept. 7 resolution.
Oct. 16, 2011 - In an interview with
Move.ph on this day, Mendoza said
the SC erred because their motion for
reconsideration was decided by the
second division, when what the SC
should have done was to form a
special third division in light of the
retirement of certain members of the
the third division, which originally
handled the FASAP case.
Oct. 17, 2011 - FASAP files a motion
for reconsideration asking the Court to
set aside its Oct. 4, 2011 resolution.

(NOTE)March 13 2012- In sum, the

recall of the September 7, 2011
Resolution of the ruling Division was a
proper and legal move to make under
the applicable laws and rules, and the
indisputably unusual developments
and circumstances of the case.
Between Section 3, Article 8 and
Section 7, Rule 2, both of the IRSC, the
former is the general provision on a
Member-in-Charges inhibition, but it
should yield to the more specific
Section 7, Rule 2 in a situation where
the review of an issued decision or
signed resolution is called for and the
ponente or writer of these rulings is no
longer available to act. Section 7,
Rule 2 exactly contemplates this
situation.
WHEREFORE, premises considered, we
hereby confirm that the Court en banc
has assumed jurisdiction over the
resolution of the merits of the motions
for reconsideration of Philippine
Airlines, Inc., addressing our July 22,
2008 Decision and October 2, 2009
Resolution; and that the September 7,
2011 ruling of the Second Division has
been effectively recalled. This case
should now be raffled either to Justice
Lucas P. Bersamin or Justice Diosdado
M. Peralta (the remaining Members of
the Special Third Division that
originally ruled on the merits of the
case) as Member-in-Charge in
resolving the merits of these motions.
The Philippine Airlines, Inc.s Motion to
Vacate dated October 3, 2011, but
received by this Court after a recall
had been made, has thereby been
rendered moot and academic.

The Flight Attendants and Stewards

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

NOTE:

JURISDICTION

(ung October 2 2009 at March 13

2012, yung case naididiscuss,
nilagyankolng ng timeline ungfasap vs
pal na case para di kayo
maguluhansamganangyari, yannaung
key events ng kwento ng FASAP AT
PAL, added trivia- yang case ding
yanangginamitsaisasamga grounds for
impeachment ni CJ Corona sapagiging
partial nung justice pa siya,
kasisiyaung justice na nag grant ng
MR ng PAL bagosiyanaginhibitsakaso,..
tapossiya din ung chief justice nung
nag decide sa case ulet ng fasap at
pal ng March 2012, for 14yrs puro
FASAP halos nanalosa hierarchy ng
courts, peronung 2012 na reversed
ung favor for PAL, RE RAFFLED
ulitungkaso and pending ulet.
Angpagkakaintindikosa case na to in
connection ng subject kung san
nakaunder tong case na to (Allocation
of Power/jurisdiction) ay ungmga
nagging ponente ng 14yrsold na case
natoh, meronkasingnagretire,
naginhibit, my napunta ng ibang
division Yun unglaman ng mga letters
niattyestelito Mendoza, na binding
baungmga nagging decision ng
mgaponentenanagretire, napunta ng
ibang division, bagong head ng
division, reshuffle ng members ng
division. Yan ungmgatanongni
Mendoza kaya pinapaupdatenya kung
sinona may hawak ng kaso at kung
gumulongbayung M.R nila?
Ilangtanong din sa case natoh eh pwd
bang baliktarinnungpumalitnaponente
or division ungnaunanang decision ng
mga older ponente? Kung anung
proper jurisdiction dapatiaaplysa case
nila at kung sinobadapathumawak,
kasi my issue ng flippflopping tong
case na to, dahil for 14yrs, majority ng
M.R ng PAL binura ng FASAP,
peronung nag reshuffle na, nagkaroon
ng special division, bagong assigned
na justices at my naginhibitulet..
napuntaungpaborsa PAL
( Yanungpagkakaintindikosa case
peroim not limiting sa possibility
nakulang or mali ako, depende pa din
sapagkakabasaniyo)
October 2 2009- FASAP VS PAL
(CHIEFJUSTICE PUNO) (SPECIAL
DIVISION JUSTICE YNARES
SANTIAGO).
FACTS:

For resolution is respondent

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

WHEREFORE, the instant petition

is GRANTED. The assailed
Decision of the Court of Appeals
in CA-G.R. SP No. 87956 dated
August 23, 2006, which affirmed
the Decision of the NLRC setting
aside the Labor Arbiters findings
of illegal retrenchment and its
Resolution of May 29, 2007
denying the motion for
reconsideration, are REVERSED
and SET ASIDE and a new one is
rendered:
1.
FINDING respondent
Philippine Airlines, Inc. GUILTY of
illegal dismissal;
2.
ORDERING Philippine
Airlines, Inc. to reinstate the
cabin crew personnel who were
covered by the retrenchment and
demotion scheme of June 15,
1998 made effective on July 15,
1998, without loss of seniority
rights and other privileges, and to
pay them full backwages,
inclusive of allowances and other
monetary benefits computed from
the time of their separation up to
the time of their actual
reinstatement, provided that with
respect to those who had
received their respective
separation pay, the amounts of
payments shall be deducted from
their backwages. Where
reinstatement is no longer
feasible because the positions
previously held no longer exist,
respondent Corporation shall pay
backwages plus, in lieu of
reinstatement, separation pay
equal to one (1) month pay for
every year of service;
3.
ORDERING Philippine
Airlines, Inc. to pay attorneys
fees equivalent to ten percent
(10%) of the total monetary
award.
Costs against respondent PAL.

SO ORDERED.
In its Motion for Reconsideration,
PAL maintains that it was
suffering from financial distress
which justified the retrenchment
of more than 1,400 of its flight
attendants. This, it argued, was
an established fact. Furthermore,
FASAP never assailed the
economic basis for the
retrenchment, but only the
allegedly discriminatory and
baseless manner by which it was
carried out.
PAL asserts that it has presented
proof of its claimed losses by
attaching its petition for
suspension of payments, as well
as the June 23, 1998 Order of the
Securities and Exchange
Commission (SEC) approving the
said petition for suspension of
payments, in its Motion to
Dismiss and/or Consolidation of
Case filed with the Labor Arbiter
in NLRC-NCR Case No. 06-0510098, or the labor case subject of
the herein petition. Also attached
to the petition for suspension of
payments were its audited
financial statements for its fiscal
year ending March 1998, and
interim financial statements as of
the end of the month prior to the
filing of its petition for
suspension of payments,

ISSUE: Whether or not the PAL

TERMINATION of its thousands
employees is reasonable,
HELD:
NO. the retrenchment made is invalid
WHEREFORE, for lack of merit, the
Motion for Reconsideration is
hereby DENIED with FINALITY. The
assailed Decision dated July 22, 2008
is AFFIRMED with MODIFICATIONin
that the award of attorneys fees and
expenses of litigation is reduced to
P2,000,000.00. The case is
hereby REMANDED to the Labor
Arbiter solely for the purpose of
computing the exact amount of the
award pursuant to the guidelines
herein stated.

JURISDICTION

No further pleadings will be

entertained.
MARCH 13 2012 FASAP VS PAL
( CHIEF JUSTICERENATO CORONA)
FACTS:
before the Court is the administrative
matter that originated from the letters
dated September 13, 16, 20, and 22,
2011 of Atty. Estelito P. Mendoza
regarding G.R. No. 178083 Flight
Attendants and Stewards Association
of the Philippines v. Philippine Airlines,
Inc., et al.
1.

The July 22, 2008 Decision

On July 22, 2008, the Courts Third

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

1.

Justice Ynares-Santiago,

2.

Justice Alicia Austria-Martinez,

3.

Justice Minita Chico-Nazario,

4.
Justice Antonio Eduardo Nachura,
and
5.
Justice Teresita Leonardo-De
Castro (replacing Justice Ruben Reyes
who inhibited himself from the case).
Justice Leonardo-De Castro was
included to replace Justice Ruben
Reyes who had inhibited himself from
the case because he concurred in the
Court of Appeals (CA) decision
assailed by FASAP before the Court.
[2]
Then Associate Justice Renato
Corona was originally designated to
replace Justice Ruben Reyes, but he
likewise inhibited himself from
participation on June July 14, 2008 due
to his previous efforts in settling the
controversy when he was still in
Malacaan. Under Administrative
Circular (AC) No. 84-2007, one

additional Member needed be drawn

from the rest of the Court to replace
the inhibiting Member.[3] In this
manner, Justice Leonardo-De Castro
came to participate in the July 22,
2008 Decision.
PAL subsequently filed its motion for
reconsideration (MR) of the July 22,
2008 Decision. The motion was
handled by the Special Third
Division composed of:
1.

Justice Ynares-Santiago,

2.

Justice Chico-Nazario,

3.

Justice Nachura,

4.
Justice Diosdado Peralta
(replacing Justice Austria-Martinez
who retired on April 30, 2009), and
5.
Justice Lucas Bersamin (replacing
Justice Leonardo-De Castro who
inhibited at the MR stage for personal
reasons on July 28, 2009).
2.
The October 2, 2009
Resolution
Justice Ynares-Santiago, as
the ponente of the July 22, 2008
Decision, continued to act as
the ponente of the case.[4]
The Special Third Division[5] denied
the MR with finality on October 2,
2009.[6] The Court further declared
that [n]o further pleadings will be
entertained.[7] The other Members of
the Special Third Division unanimously
concurred with the denial of the
motion.
To fully explain the movements in the
membership of the division, the
Special Third Division missed Justice
Austria-Martinez (who was among
those who signed the July 22, 2008
Decision) due to her intervening
retirement on April 30, 2009. Justice
Leonardo-De Castro also did not
participate in resolving the 1st MR,
despite having voted on the July 22,
2008 Decision, because of her own
subsequent inhibition on July 28,
2009.[8]
3.

PALs 2

nd

MR

On November 3, 2009, PAL asked for

leave of court to file (a) an MR of the
October 2, 2009 Resolution, and (b) a

2nd MR of the July 22, 2008

Decision. Both rulings were anchored
on the validity of PALs retrenchment
program.
In view of the retirement of
the ponente, Justice Ynares-Santiago
(who retired on October 5, 2009), the
Courts Raffle Committee[9] had to
resolve the question of who would be
the newponente of the case.
Under A.M. No. 99-8-09-SC (Rules
on Who Shall Resolve Motions for
Reconsideration in Cases Assigned to
the Divisions of the Court, effective
April 1, 2000), if the ponente has
retired, he/she shall be replaced
by another Justice who shall be
chosen by raffle from among
the remaining Members of the
Division:
2. If the ponente is no longer a
member of the Court or is
disqualified or has inhibited himself
from acting on the motion, he shall
be replaced by another Justice
who shall be chosen by raffle from
among the remaining members of
the Division who participated and
concurred in the rendition of the
decision or resolution and who
concurred therein. If only one
member of the Court who participated
and concurred in the rendition of the
decision or resolution remains, he
shall be designated as the ponente.
However, on November 11, 2009, the
case was raffled, not to a Member of
the Third Division that issued the July
22, 2008 Decision or to a Member of
the Special Third Division that
rendered the October 2, 2009
Resolution, but to Justice Presbitero
Velasco, Jr. who was then a Member
of the newly-constituted regular Third
Division.[10]
In raffling the case to Justice Velasco,
the Raffle Committee considered the
above-quoted rule inapplicable
because of the express excepting
qualification provided under A.M. No.
99-8-09-SC that states:
[t]hese rules shall not
apply to motions for
reconsideration of decisions or
resolutions already denied with
finality. [underscoring ours]

JURISDICTION

Stated otherwise, when the

original ponente of a case retires,
motions filed after the case has been
denied with finality may be resolved
by any Member of the Court to whom
the case shall be raffled, not
necessarily by a Member of the same
Division that decided or resolved the
case. Presumably, the logic behind
the rule is that no further change can
be made involving the merits of the
case, as judgment has reached finality
and is thus irreversible, based on the
Rules of Court provision that [n]o
second MR of a judgment or final
resolution by the same party shall be
entertained.[11] (The October 2, 2009
Resolution denying PALs 1st MR
further stated that [n]o further
pleadings will be entertained.) Thus,
the resolution of post-decisional
matters in a case already declared
final may be resolved by other
Members of the Court to whom the
case may be raffled after the
retirement of the original ponente.
Given the denial of PALs 1st MR and
the declaration of finality of the
Courts July 22, 2008 Decision through
the October 2, 2009 Resolution, the
Raffle Committee found it
unnecessary to create a special
Third Division. Thus, it found
nothing irregular in raffling the case
to Justice Velasco (who did not take
part in the deliberation of the Decision
and the Resolution) of
thereorganized Third Division for
handling by a new regular division.
4.
The acceptance of PALs
2nd MR
On January 20, 2010 (or while A.M.
No. 99-8-09-SC was still in effect),
the new regular Third Division,
through Justice Velasco, granted
PALs Motion for Leave to File and
Admit Motion for Reconsideration of
the Resolution dated 2 October 2009
and 2nd Motion for Reconsideration of
Decision dated 22 July 2008. The
Courts Third Division further required
the respective parties to comment on
PALs motion and FASAPs Urgent
Appeal dated November 23,
2009. This grant, which opened both
the Decision and the Resolution
penned by Justice Ynares-Santiago for
review, effectively opened the whole
case for review on the merits.

The following were the Members of

the Third Division that issued the
January 20, 2010 Resolution:
1.
Justice Antonio Carpio
(vice Justice Corona who inhibited
himself as of July 14, 2008),
2.

Justice Velasco (ponente),

3.

Justice Nachura,

4.

Justice Peralta, and

5.

Justice Bersamin.

Significantly, at the time leave of

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

With the acceptance of PALs

2nd MR, the question that could
have arisen (but was not asked
then) was whether the general rule
under A.M. No. 99-8-09-SC (which was
then still in effect) should have
applied so that the case should have
been transferred to the remaining
Members of the Division that ruled on
the merits of the case. In other
words, with the re-opening of the case
for review on the merits, the
application of the excepting
qualification under A.M. No. 99-8-09SC that the Raffle Committee cited
lost its efficacy, as the rulings of the
Court were no longer final for having
been opened for further review.

A necessary implication is that

either the Clerk of Court or the Raffle
Committee should have advised
Justice Velasco that his Division should
refer the case back to raffle for
referral of the case to the original
Justices who participated in the
assailed Decision and Resolution
under the terms of the general rule

under A.M. No. 99-8-09-SC; the

Justices who participated in the
assailed Decision and Resolution were
the best ones to consider the motion
and to review their own rulings. This
was the first major error that
transpired in the case and one
that the Clerk of Court failed to
see.
Parenthetically, when PALs 2nd MR
was filed and when it was
subsequently accepted, Justices
Nachura, Peralta, and Bersamin were
the only remaining Members of the
Special Third Division that rendered
the October 2, 2009 Resolution. Of
these three Justices, only Justice
Nachura was a Member of the original
Third Division that issued the main
decision on July 22, 2008. The case
should have gone to Justice Nachura
or, at the very least, to the two other
remaining Justices. The re-raffle of the
FASAP case to Justice Nachura (or to
Justices Peralta and Bersamin) would
have been consistent with the
constitutional rule that [c]ases or
matters heard by a division shall
be decided or resolved with the
concurrence of a majority of the
Members who actually took part
in the deliberations on the issues
in the case and voted
thereon[.][16]
5.
The Reorganization of the
Court
In May 2010, three
developments critical to the FASAP
case transpired.
The first was the approval of the IRSC
by the Court on May 4, 2010. The
IRSC codified the procedural rules of
the Court, heretofore existing under
various separate and scattered
resolutions. Its relevant terms took the
place of A.M. No. 99-8-09-SC.
The second was the retirement of
then Chief Justice Reynato Puno and
the appointment as Chief Justice of
then Associate Justice Corona.
The third was the reorganization of
the divisions of the Court under
Special Order No. 838 dated May 17,
2010. Justice Velasco was
transferred from the Third Division to
the First Division. Pursuant to the new
IRSC, Justice Velasco brought with him

JURISDICTION

the FASAP case so that the case went

from the Third Division to the First
Division:
RULE 2. THE OPERATING STRUCTURES
Section 9. Effect of
reorganization of Divisions on
assigned cases. In the reorganization
of the membership of Divisions, cases
already assigned to a Member-inCharge shall be transferred to the
Division to which the Member-inCharge moves, subject to the rule on
the resolution of motions for
reconsideration under Section 7 of this
Rule. The Member-in-Charge is the
Member given the responsibility of
overseeing the progress and
disposition of a case assigned by
raffle.
Another significant
development in the case came on
January 17, 2011 (or under the new
regime of the IRSC) when Justice
Velasco, after acting on the FASAP
case for almost one whole year,
inhibited himself from participation
due to a close relationship to a
party, despite his previous action on
the case. The pertinent provisions of
the IRSC on the matter
of inhibition state:
RULE 2.
THE OPERATING STRUCTURES
Section 7. Resolutions of motions for
reconsideration or clarification of
decisions or signed resolutions and all
other motions and incidents
subsequently filed; creation of a
Special Division. Motions for
reconsideration or clarification of a
decision or of a signed resolution and
all other motions and incidents
subsequently filed in the case shall be
acted upon by the ponente and the
other Members of the Division who
participated in the rendition of the
decision or signed resolution.
If the ponente has retired, is no
longer a Member of the Court, is
disqualified, or has inhibited
himself or herself from acting on the
motion for reconsideration or
clarification, he or she shall be
replaced through raffle by a
new ponente who shall be chosen
[from] among the new Members

of the Division who participated

in the rendition of the decision or
signed resolution remains, he or
she shall be designated as the
new ponente.
If a Member (not the ponente) of the
Division which rendered the decision
or signed resolution has retired, is no
longer a Member of the Court, is
disqualified, or has inhibited himself or
herself from acting on the motion for
reconsideration or clarification, he or
she shall be replaced through raffle by
a replacement Member who shall be
chosen from the other Divisions until a
new Justice is appointed as
replacement for the retired
Justice. Upon the appointment of a
new Justice, he or she shall replace
the designated Justice as replacement
Member of the Special Division.
Any vacancy or vacancies in the
Special Division shall be filled by raffle
from among the other Members of the
Court to constitute a Special Division
of five (5) Members.
If the ponente and all the Members of
the Division that rendered the
Decision or signed Resolution are no
longer members of the Court, the case
shall be raffled to any Member of the
Court and the motion shall be acted
upon by him or her with the
participation of the other Members of
the Division to which he or she
belongs.
If there are pleadings, motions or
incidents subsequent to the denial of
the motion for reconsideration [or]
clarification, the case shall be acted
upon by the ponente on record with
the participation of the other Members
of the Division to which he or she
belongs at the time said pleading,
motion or incident is to be taken up by
the Court.
RULE 8.
INHIBITION AND SUBSTITUTION
OF MEMBERS OF THE COURT
SEC. 3. Effects of Inhibition. The
consequences of an inhibition of a
Member of the Court shall be
governed by these rules:
(a)
Whenever a Memberin-Charge of a case in a Division

inhibits himself for a just and

valid reason, the case shall be
returned to the Raffle Committee
for re-raffling among the Members
of theother two Divisions of the
Court. (IRSC, as amended by A.M. No.
10-4-20-SC dated August 3, 2010) [All
emphasis supplied.]
The case was then referred to the
Raffle Committee pursuant to
Administrative Circular (AC) No. 842007, as stated in the Division Raffle
Sheet. The pertinent provision of AC
No. 84-2007 states:
2. Whenever the ponente, in the
exercise of sound discretion, inhibits
herself or himself from the case
for just and valid reasons other
than those mentioned in paragraph 1,
a to f above, the case shall be
returned to the Raffle
Committee for re-raffling among
the other Members of
the same Division with one
additional Member from the other
two Divisions. [underscoring and
italics ours]
Reference to AC No. 84-2007,
however, was erroneous. For one, the
IRSC was already in effect when
Justice Velasco inhibited himself from
participation, and the IRSC had
already superseded AC No. 842007. The prevailing IRSC, though,
has an almost similar rule, with the
difference that the IRSC speaks of the
inhibition of a Member-in-Charge or of
a Member of the Division other than
the Member-in-Charge in its rule on
inhibition, and did not use
the ponente as its reference
point. This seemingly trivial point
carries a lot of significance,
particularly in the context of the
FASAP case.
Under the rule on inhibition found in
Section 3, Rule 8 of the governing
IRSC (as Justice Ma. Lourdes Sereno
found in her dissenting opinion), the
inhibition called for the raffle to a
Member of the two other divisions of
the Court. Thus, Justice Sereno found
the subsequent January 26, 2011
raffle of the case to Justice Brion to be
legally correct. As discussed by the
Division that issued the September 7,
2011 Resolution (the ruling Division),
however, the application of the IRSC is
not as simple as Justice Sereno views

JURISDICTION

it to be. This matter is discussed at

length below
On June 21, 2011 (after the retirement
of Justice Nachura on June 13, 2011),
Chief Justice Corona issued Special
Order No. 1025, again reorganizing
the divisions of the Court. Justice
Brion was transferred from the Third
Division to the Second
Division. Accordingly, the Third
Division composed of Justice
Velasco, Justice Peralta, Justice
Bersamin, Justice Jose Mendoza, and
Justice Sereno (who was included as
additional Member) referred the
FASAP case to the Second Division
where Justice Brion belonged,
pursuant to Section 9, Rule 2 of the
IRSC.[17]
Justice Carpio (the Chair of the Second
Division), after voting for the January
20, 2010 Resolution granting leave to
PAL to file its 2nd MR, inhibited himself
from the case on August 15, 2011. As
stated in the Division Raffle Sheet of
August 15, 2011, Justice Carpio
recused himself from the case per
advice of the office of the Member-inCharge. Justice Peralta became the
replacement for Justice Carpio,
pursuant to Rule 8, Section 3 of the
IRSC.
6.
The September 7, 2011
Resolution and Atty. Estelito
Mendozas letters
On September 7, 2011, the Court
through its Second Division as
then constituted resolved to
deny with finality PALs 2nd MR
through an unsigned
resolution. The Second Division, as
then constituted, was composed of:
1.
Justice Brion (as Member-inCharge and as Acting Chair, being the
most senior Member),
2.
Justice Peralta (replacing Justice
Carpio who inhibited),
3.

Justice Jose Perez,

4.
Justice Bersamin (replacing
Justice Sereno who was on leave[18]),
and
5.
Justice Mendoza (replacing
Justice Bienvenido Reyes who was on
leave[19]).

On September 13, 2011, the

counsel for PAL, Atty. Mendoza, sent
the first of a series of
letters[20] addressed to the Clerk of
Court of the Supreme Court. This
letter noted that, of the Members of
the Court who acted on the MR dated
August 20, 2008 and who issued the
Resolution of October 2, 2009, Justices
Ynares-Santiago (ponente), ChicoNazario, and Nachura had already
retired from the Court, and the Third
Division had issued a Resolution on
the case dated January 20, 2010,
acted upon by Justices Carpio,
Velasco, Nachura, Peralta, and
Bersamin. The letter then asked
whether the Court had acted on the
2nd MR and, if so, which division
whether regular or special acted and
who were the chairperson and
members. It asked, too, for the
identity of the current ponente or
justice-in-charge, and when and for
what reason he or she was designated
as ponente. It further asked for a
copy of the Resolution rendered on
the 2nd MR, if an action had already
been taken thereon.
On September 16, 2011, Atty.
Mendoza sent his second letter,
again addressed to the Clerk of Court
requesting that copies of any Special
Orders or similar issuances
transferring the case to another
division, and/or designating Members
of the division which resolved its
2nd MR, in case a resolution had
already been rendered by the Court
and in the event that such resolution
was issued by a different division.
The Court received Atty.
Mendozas third letter, again
addressed to the Clerk of Court, on
September 20, 2011.[21] Atty. Mendoza
stated that he received a copy of the
September 7, 2011 Resolution issued
by the Second Division,
notwithstanding that all prior Court
Resolutions he received regarding the
case had been issued by the Third
Division.[22] He reiterated his request
in his two earlier letters to the Court,
asking for the date and time when the
Resolution was deliberated upon and a
vote taken thereon, as well as the
names of the Members of the Court
who had participated in the
deliberation and voted on the
September 7, 2011 Resolution.

Atty. Mendoza sent his fourth and

last letter dated September 22,
2011, also addressed to the Clerk of
Court, suggesting that if some facts
subject of my inquiries are not evident
from the records of the case or are not
within your knowledge, that you refer
the inquiries to the Members of the
Court who appear to have participated
in the issuance of the Resolution of
September 7, 2011, namely: Hon.
Arturo D. Brion, Hon. Jose P. Perez,
Hon. Diosdado M. Peralta, Hon. Lucas
P. Bersamin, and Hon. Jose C.
Mendoza.
On September 26, 2011, the Clerk
of Court issued the VidalAnama[23] Memorandum to the
Members of the Second Division in
relation to the inquiries contained in
the first and second letters of Atty.
Mendoza dated September 13 and 20,
2011. Justice Brion also furnished the
Members of the ruling Division a copy
of the Vidal-Anama Memorandum.
The Vidal-Anama Memorandum
explained the events that transpired
and the actions taken, which resulted
in the transfer of the case from its
original ponente, Justice YnaresSantiago, to Justice Velasco, and
eventually to Justice Brion. Attached
to the Memorandum were the legal
and documentary bases for all the
actions of the various raffle
committees.[24] These included the
decisions of the two raffle committees
on the transfer of the ponencia from
Justice Ynares-Santiago to Justice
Velasco and finally to Justice Brion as
a regular Second Division case.
On September 28, 2011, the
Letters dated September 13 and 20,
2011 of Atty. Mendoza to Atty. Vidal
(asking that his inquiry be referred to
the relevant Division Members who
took part on the September 7, 2011
Resolution) were NOTED by the
regular Second Division. The
Members of the ruling Division also
met to consider the queries posed by
Atty. Mendoza. Justice Brion met with
the Members of the ruling
Division (composed of Justices Brion,
Peralta, Perez, Bersamin, and
Mendoza), rather than with
the regular Second
Division (composed of Justices
Carpio, Brion, Perez, and Sereno[25]),
as the former were the active

JURISDICTION

participants in the September 7, 2011

Resolution.

RULE 2
THE OPERATING STRUCTURES

In these meetings, some of the

Members of the ruling Division saw
the problems pointed out above, some
of which indicated that the ruling
Division might have had no authority
to rule on the case. Specifically,
their discussions centered on the
application of A.M. No. 99-8-09-SC for
the incidents that transpired prior to
the effectivity of the IRSC, and on the
conflicting rules under the IRSC
Section 3, Rule 8 on the effects of
inhibition and Section 7, Rule 2 on the
resolution of MRs.
A.M. No. 99-8-09-SC indicated the
general rule that the re-raffle shall be
made among the other Members of
the same Division who participated in
rendering the decision or resolution
and who concurred therein, which
should now apply because the ruling
on the case is no longer final after the
case had been opened for review on
the merits. In other words, after
acceptance by the Third Division,
through Justice Velasco, of the 2nd MR,
there should have been a referral to
raffle because the excepting
qualification that the Clerk of Court
cited no longer applied; what was
being reviewed were the merits of the
case and the review should be by the
same Justices who had originally
issued the original Decision and the
subsequent Resolution, or by whoever
of these Justices are still left in the
Court, pursuant to the same A.M. No.
99-8-09-SC.
On the other hand, the raffle to Justice
Brion was made by applying AC No.
84-2007 that had been superseded by
Section 3, Rule 8 of the IRSC. Even the
use of this IRSC provision, however,
would not solve the problem, as its
use still raised the question of the
provision that should really apply in
the resolution of the MR: should it be
Section 3, Rule 8 on the inhibition of a
Member-in-Charge, or Section 7, Rule
2 of the IRSC on the inhibition of
the ponente when an MR of a decision
and a signed resolution was
filed. These two provisions are placed
side-by-side in the table below for
easier and clearer comparison, with
emphasis on the more important
words:

generally refers to his or

her inhibition, without reference
to the stage of the proceeding
when the inhibition is made.

Under Section 7, Rule 2, the case

SEC. 7. Resolutions of motions for reconsideration
or have been re-raffled and
should
clarification of decisions or signed resolutions and
all
assigned
to anyone of Justices
other motions and incidents subsequently filed;
Nachura (who did not retire until June
creation of a Special Division. - Motions for 13, 2011), Peralta, or Bersamin, either
reconsideration or clarification of a decision
or the acceptance of the 2nd MR
(1) after
of a signed resolution and all other motions
(because the original rulings were no
and incidents subsequently filed in the longer final); or (2) after Justice
case shall be acted upon by the ponente and the
Velascos inhibition because the same
other Members of the Division who participated
in
condition
existed, i.e., the need for a
the rendition of the decision or signed resolution.
review by the same Justices who
rendered the decision or
resolution. As previously mentioned,
Justice Nachura participated in both
If the ponente has retired, is no longer a the original Decision and the
Member of the Court, is disqualified, or has subsequent Resolution, and all three
inhibited himself or herself from acting on
the were the remaining Members
Justices
motion for reconsideration or clarification,
hevoted on the October 2, 2009
who
or she shall be replaced through raffle byResolution. On the other hand, if
new ponente who shall be chosen among Section
the
3, Rule 8 were to be solely
new Members of the Division who participated
applied after Justice Velascos
in the rendition of the decision or signed inhibition, the Clerk of Court would be
resolution and who concurred therein
correct in her assessment and the
one Member of the Court who participated andraffle to Justice Brion, as a Member
concurred in the rendition of the decision or signed
outside of Justice Velascos Division,
resolution remains, he or she shall be designated
wasas
correct.
the new ponente.

A comparison of these two

provisions shows the semantic
sources of the seeming conflict:
Section 7, Rule 2 refers to a situation
where the ponente has retired, is no
longer a Member of the Court, is
disqualified, or has inhibited himself
from acting on the case; while Section
3, Rule 8 generally refers to the
inhibition of a Member-inCharge who does not need to be the
writer of the decision or resolution
under review.
Significantly, Section 7, Rule
2 expressly uses the
word ponente (not Member-inCharge) and refers to a specific
situation where the ponente (or the
writer of the Decision or the
Resolution) is no longer with the
Court or is otherwise unavailable to
review the decision or resolution he or
she wrote. Section 3, Rule 8, on the
other hand, expressly uses the
term Member-in-Charge and

These were the legal

considerations that largely confronted
the ruling Division in late September
2011 when it deliberated on what to
do with Atty. Mendozas letters.

The propriety of and grounds for

the recall of the September 7,
2011 Resolution
Most unfortunately, the above
unresolved questions were even
further compounded in the course of
the deliberations of the Members of
the ruling Division when they were
informed that the parties received
the ruling on September 19, 2011,
and this ruling would lapse to
finality after the 15th day, or after
October 4, 2011.
Thus, on September 30, 2011 (a
Friday), the Members went to Chief
Justice Corona and recommended, as
a prudent move, that the September
7, 2011 Resolution be recalled at the
very latest on October 4, 2011, and

JURISDICTION

that the case be referred to the

Court en banc for a ruling on the
questions Atty. Mendoza asked. The
consequence, of course, of a
failure to recall their ruling was
for that Resolution to lapse to
finality. After finality, any recall
for lack of jurisdiction of the
ruling Division might not be
understood by the parties and
could lead to a charge of flipflopping against the Court. The
basis for the referral is Section 3(n),
Rule 2 of the IRSC, which provides:
RULE 2.
OPERATING STRUCTURES
Section 3. Court en banc
matters and cases. The Court en
banc shall act on the following
matters and cases:
(n) cases that the Court en
banc deems of sufficient importance
to merit its attention[.]

Ruling positively, the Court en

banc duly issued its disputed October
4, 2011 Resolution recalling the
September 7, 2011 Resolution and
ordering the re-raffle of the case to a
new Member-in-Charge. Later in the
day, the Court received PALs Motion
to Vacate (the September 7, 2011
ruling) dated October 3, 2011. This
was followed by FASAPs MR dated
October 17, 2011 addressing the
Court Resolution of October 4,
2011. The FASAP MR mainly invoked
the violation of its right to due process
as the recall arose from the Courts ex
parte consideration of mere letters
from one of the counsels of the
parties.
As the narration in this Resolution
shows, the Court acted on its own
pursuant to its power to recall its own
orders and resolutions before their
finality. The October 4, 2011
Resolution was issued to
determine the propriety of the
September 7, 2011 Resolution
given the facts that came to light
after the ruling Divisions
examination of the records. To
point out the obvious, the recall
was not a ruling on the merits and
did not constitute the reversal of

the substantive issues already

decided upon by the Court in the
FASAP case in its previously
issued Decision (of July 22, 2008)
and Resolution (of October 2,
2009). In short, the October 4, 2011
Resolution was not meant and was
never intended to favor either party,
but to simply remove any doubt about
the validity of the ruling Divisions
action on the case. The case, in the
ruling Divisions view, could be
brought to the Court en banc since it
is one of sufficient importance; at
the very least, it involves the
interpretation of conflicting provisions
of the IRSC with potential jurisdictional
implications.
At the time the Members of the
ruling Division went to the Chief
Justice to recommend a recall, there
was no clear indication of how they
would definitively settle the
unresolved legal questions among
themselves. The only matter legally
certain was the looming finality of the
September 7, 2011 Resolution if it
would not be immediately recalled by
the Court en banc by October 4,
2011. No unanimity among the
Members of the ruling Division could
be gathered on the unresolved legal
questions; thus, they concluded
that the matter is best determined
by the Court en banc as it
potentially involved questions of
jurisdiction and interpretation of
conflicting provisions of the IRSC. To
the extent of the recommended recall,
the ruling Division was unanimous and
the Members communicated this
intent to the Chief Justice in clear and
unequivocal terms.
Given this background, the
Clerk of Court cannot and should not
be faulted for her recommended
position, as indeed there was a ruling
in the 1st MR that declared the original
ruling on the case final. Perhaps, she
did not fully realize that the ruling on
the 1st MR varied the terms of the
original Decision of July 22, 2008; she
could not have considered, too, that a
subsequent 2nd MR would be accepted
for the Courts further consideration of
the case on the merits.
Upon acceptance of the 2nd MR by the
Third Division through Justice Velasco,
the Clerk of Court and the Raffle
Committee, however, should have

realized that Justice Velasco was not

the proper Member-in-Charge of the
case and another raffle should have
been held to assign the case to a
Justice who participated in the original
Decision of July 22, 2008 or in the
Resolution of October 2, 2009. This
realization, unfortunately, did not
dawn on the Clerk of Court.
For practically the same reasons, the
Third (or Velasco) Division, with Justice
Velasco as Member-in-Charge, cannot
and should not be faulted for
accepting the 2nd MR; the variance
introduced by the ruling on the 1st MR
and the higher interest of justice (in
light alone of the gigantic amount
involved) appeared to justify further
consideration of the case. Recall that
at that time, the IRSC was not yet in
existence and a specific rule under the
IRSC on the handling of 2nd MRs was
yet to be formulated, separately from
the existing jurisprudential
rulings. Justice Velasco, though, could
not have held on to the case after its
merits were opened for new
consideration, as he was not the
writer of the assailed Decision and
Resolution, nor was he a Member of
the Division that acted on the
case. Under A.M. No. 99-8-09-SC, the
rightful ponente should be a
remaining Member of the Division that
rendered the decision or resolution.
With Justice Velascos
subsequent inhibition, a legal reason
that the involved officials and Justices
should have again recognized is the
rationale of the rule on replacements
when an inhibition or retirement
intervenes. Since the inhibiting
Justice was only the Member-inCharge and was technically merely
a nominal ponente[26] in so far as the
case is concerned (because he was
not the writer of the Decision and
Resolution under consideration), the
raffle should have been confined
among the Members who actually
participated in ruling on the
merits of the original Decision or of
the subsequent Resolution. At that
point, only Justices Peralta and
Bersamin were left because all the
other Members of the original ruling
groups had retired. Since under the
IRSC[27] and Section 4(3), Article VIII of
the Constitution, the case should have
been decided by the Members who
actually took part in the deliberations,

JURISDICTION

the ruling on the merits made by the

ruling Division on September 7, 2011
was effectively void and should
appropriately be recalled.

To summarize all the

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

(a)
the confluence of
the successive retirement of
three Justices (in a Division of five
Justices) who actually
participated in the assailed
Decision and Resolution;
(b)
the change in the
governing rules from the A.M.s
to the IRSC regime which
transpired during the pendency of
the case;
(c)
the occurrence of
a series of inhibitions in the
course of the case (Justices Ruben
Reyes, Leonardo-De Castro,
Corona, Velasco, and Carpio), and
the absences of Justices Sereno
and Reyes at the critical time,
requiring their replacement;
notably, Justices Corona, Carpio,
Velasco and Leonardo-De Castro
are the four most senior Members
of the Court;

September 7, 2011, but before

the parties received their copies
of the said Resolution; and

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

All these developments, in no

small measure, contributed in
their own peculiar way to the
confusing situations that
attended the September 7, 2011
Resolution, resulting in the recall
of this Resolution by the Court en
banc.
On deeper consideration,
the majority now firmly holds the view
that Section 7, Rule 2 of the IRSC
should have prevailed in considering
the raffle and assignment of cases
after the 2nd MR was accepted, as
advocated by some Members within
the ruling Division, as against the
general rule on inhibition under
Section 3, Rule 8. The underlying
constitutional reason, of course, is the
requirement of Section 4(3), Article
VIII of the Constitution already
referred to above.[28]

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

The general rule on statutory

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

(e)
the unusual timing of
Atty. Mendozas letters, made
after the ruling Division had
issued its Resolution of

Applying these rules by

reconciling the two provisions under
consideration, Section 3, Rule 8 of
the IRSC should be read as the
general rule applicable to the
inhibition of a Member-in-

Charge. This general rule should,

however, yield where the
inhibition occurs at the late stage
of the case when a decision or
signed resolution is assailed
through an MR. At that point, when
the situation calls for the review of
the merits of the decision or the
signed resolution made by
a ponente (or writer of the assailed
ruling), Section 3, Rule 8 no longer
applies and must yield toSection 7,
Rule 2 of the IRSC which
contemplates a situation when
the ponente is no longer
available, and calls for the
referral of the case for raffle
among the remaining Members of
the Division who acted on the
decision or on the signed
resolution. This latter provision
should rightly apply as it gives those
who intimately know the facts and
merits of the case, through their
previous participation and
deliberations, the chance to take a
look at the decision or resolution
produced with their participation.
To reiterate, Section 3, Rule 8 of the
IRSC is the general rule on inhibition,
but it must yield to the more specific
Section 7, Rule 2 of the IRSC where
the obtaining situation is for the
reviewon the merits of an already
issued decision or resolution and
the ponente or writer is no longer
available to act on the matter. On this
basis, the ponente, on the merits of
the case on review, should be chosen
from the remaining participating
Justices, namely, Justices Peralta and
Bersamin.
A final point that needs to be
fully clarified at this juncture, in light
of the allegations of the Dissent is the
role of the Chief Justice in the recall
of the September 7, 2011
Resolution. As can be seen from the
above narration, the Chief Justice
acted only on the recommendation of
the ruling Division, since he had
inhibited himself from participation in
the case long before. The confusion
on this matter could have been
brought about by the Chief Justices
role as the Presiding Officer of the
Court en banc (particularly in
its meeting of October 4, 2011), and
the fact that the four most senior
Justices of the Court (namely, Justices
Corona, Carpio, Velasco and Leonardo-

JURISDICTION

De Castro) inhibited from participating

in the case. In the absence of any
clear personal malicious participation,
it is neither correct nor proper to hold
the Chief Justice personally
accountable for the collegial ruling of
the Court en banc.
Another disturbing allegation in
the Dissent is the implication of
the alleged silence of, or lack of
objection from, the Members of
the ruling Division during the
October 4, 2011 deliberations, citing
for this purpose the internal en
banc deliberations. The lack of a very
active role in the arguments can only
be attributable to the Members of the
ruling Divisions unanimous
agreement to recall their ruling
immediately; to their desire to have
the intricate issues ventilated before
the Court en banc; to the looming
finality of their Divisions ruling if this
ruling would not be recalled; and to
their firm resolve to avoid any
occasion for future flip-flopping by the
Court. To be sure, it was not due to
any conspiracy to reverse their ruling
to affirm the previous Court rulings
already made in favor of FASAP; the
Divisions response was simply
dictated by the legal uncertainties
that existed and the deep division
among them on the proper reaction to
Atty. Mendozas letters.
Of the above-cited reasons, a major
influencing factor, of course, was
the time constraint the Members of
the ruling Division met with the Chief
Justice on September 30, 2011, the
Friday before October 4, 2011 (the
date of the closest Court en
banc meeting, as well as
the deadline for the finality of the
September 7, 2011
Resolution). They impressed upon
the Chief Justice the urgent need to
recall their September 7, 2011
Resolution under the risk of being
accused of a flip-flop if the Court en
banc would later decide to override its
ruling.
As a final word, if no detailed
reference to internal Court
deliberations is made in this
Resolution, the omission is
intentional in view of the prohibition
against the public disclosure of the
internal proceedings of the Court
during its deliberations. The present

administrative matter, despite its

pendency, is being ventilated in the
impeachment of Chief Justice Corona
before the Senate acting as an
Impeachment Court, and any
disclosure in this Resolution could
mean the disclosure of the Courts
internal deliberations to outside
parties, contrary to the clear terms of
the Court en banc Resolution of
February 14, 2012 on the attendance
of witnesses from this Court and the
production of Court records.
CONCLUSION
In sum, the recall of the
September 7, 2011 Resolution of
the ruling Division was a proper
and legal move to make under the
applicable laws and rules, and the
indisputably unusual
developments and circumstances
of the case.
Between Section 3, Article 8 and
Section 7, Rule 2, both of the
IRSC, the former is the general
provision on a Member-inCharges inhibition, but it should
yield to the more specific Section
7, Rule 2 in a situation where the
review of an issued decision or
signed resolution is called for and
the ponente or writer of these
rulings is no longer available to
act. Section 7, Rule 2 exactly
contemplates this situation.
WHEREFORE, premises
considered, we hereby confirm
that the Court en banc has
assumed jurisdiction over the
resolution of the merits of the
motions for reconsideration of
Philippine Airlines, Inc.,
addressing our July 22, 2008
Decision and October 2, 2009
Resolution; and that the
September 7, 2011 ruling of the
Second Division has been
effectively recalled. This case
should now be raffled either to
Justice Lucas P. Bersamin or
Justice Diosdado M. Peralta (the
remaining Members of the Special
Third Division that originally ruled
on the merits of the case) as
Member-in-Charge in resolving
the merits of these motions.
The Philippine Airlines, Inc.s
Motion to Vacate dated October 3,

2011, but received by this Court

after a recall had been made, has
thereby been rendered moot and
academic.
The Flight Attendants and
Stewards Association of the
Philippines Motion for
Reconsideration of October 17,
2011 is hereby denied; the recall
of the September 7, 2011
Resolution was made by the Court
on its own before the rulings
finality pursuant to the Courts
power of control over its orders
and resolutions. Thus, no due
process issue ever arose.
SO ORDERED.

PEOPLE VS SANDIGANBAYAN
FACTS:
Before us is a petition
for certiorari filed by the People of the
Philippines (petitioner) assailing the
decision dated March 22, 2002 of the
Sandiganbayan[1] in Criminal Case
Nos. 20345 and 20346 which granted
the demurrers to evidence filed by
Imelda R. Marcos, Jose Conrado
Benitez (respondents) and Rafael
Zagala.
The petition stemmed from two
criminal informations filed before the
Sandiganbayan, charging the
respondents with the crime of
malversation of public funds, defined
and penalized under Article 217,
paragraph 4 of the Revised Penal
Code, as amended. The charges arose
from the transactions that the
respondents participated in, in their
official capacities as Minister and
Deputy Minister of the Ministry of
Human Settlements (MHS) under the
MHS Kabisig Program.
In Criminal Case No. 20345,
respondents, together with Gilbert C.
Dulay, were charged with
malversation of public funds,
committed as follows:
That on or about April 6, 1984
or sometime and/or [subsequent]
thereto, in Pasig, Metro Manila,
Philippines, and within the jurisdiction
of this Honorable Court, the abovenamed accused, all public officers
charged with the administration of

JURISDICTION

public funds and as such, accountable

officers, Imelda R. Marcos being then
the Minister of Human Settlements,
Jose Conrado Benitez being then the
Deputy Minister of Human
Settlements and Gilbert C. Dulay
being then [the] Assistant Manager for
Finance, Ministry of Human
Settlements, while in the performance
of their official functions, taking
advantage of their positions, acting in
concert and mutually helping one
another thru manifest partiality and
evident bad faith did then and there,
willfully, unlawfully and criminally, in a
series of anomalous transactions,
abstract the total amount of P57.954
Million Pesos (sic), Philippine Currency
from the funds of the Ministry of
Human Settlements in the following
manner: accused Conrado Benitez
approved the series of cash advances
made and received by Gilbert C.
Dulay, and made it appear that the
funds were transferred to the
University of Life, a private foundation
represented likewise by Gilbert C.
Dulay when in truth and in fact no
such funds were transferred while
Imelda R. Marcos concurred in the
series of such cash advances
approved by Jose Conrado Benitez and
received by Gilbert C. Dulay and in
furtherance of the conspiracy, in order
to camouflage the aforesaid
anomalous and irregular cash
advances and withdrawals, Imelda R.
Marcos requested that the funds of
the KSS Program be treated as
Confidential Funds; and as such be
considered as Classified Information;
and that the above-named accused,
once in possession of the said
aggregate amount of P57.954 Million
Pesos (sic), misappropriated and
converted the same to their own use
and benefit to the damage and
prejudice of the government in the
said amount.
CONTRARY TO LAW. [Emphasis
ours][2
In Criminal Case No. 20346,
respondents together with Zagala
were charged with malversation of
public funds under these allegations:
That on or about April 6 to April
16, 1984[3] and/or sometime or
subsequent thereto, in Pasig, Metro
Manila, Philippines, and within the
jurisdiction of this Honorable Court,

the above-named accused, all public

officers charged with the
administration of public funds and as
such, accountable officers, Imelda R.
Marcos being then the Minister of
Human Settlements, Jose Conrado
Benitez being then the Deputy
Minister of Human Settlements[,] and
Rafael Zagala being then [the]
Assistant Manager for Regional
Operations and at the same time
Presidential Action Officer, while in the
performance of their official functions,
taking advantage of their positions,
acting in concert and mutually helping
one another thru manifest partiality
and evident bad faith[,] did then and
there, willfully, unlawfully and
criminally, in a series of anomalous
transactions, abstract from the funds
of the Ministry of Human Settlements
the total amount of P40 Million Pesos
(sic), Philippine Currency, in the
following manner: Jose Conrado
Benitez approved the cash advances
made by Rafael Zagala and Imelda R.
Marcos concurred in the series of cash
advances approved by Jose Conrado
Benitez in favor of Rafael G. Zagala;
and in furtherance of the conspiracy,
Imelda R. Marcos in order to
camouflage the aforesaid anomalous
and irregular cash advances,
requested that funds of the KSS
Program be treated as Confidential
Funds; and as such be considered as
Classified Information; and the
above-named accused, once in
possession of the total amount of P40
Million Pesos (sic), misappropriated
and converted the same to their own
use and benefit to the damage and
prejudice of the government in the
said amount

ISSUE: Whether or not Sandiganbayan

gravely abused their discretion?
RULING: III.
discretion

Grave abuse of

Under the Rules on Criminal

Procedure, the Sandiganbayan is
under no obligation to require the
parties to present additional evidence
when a demurrer to evidence is
filed. In a criminal proceeding, the
burden lies with the prosecution to
prove that the accused committed the
crime charged beyond reasonable
doubt, as the constitutional

presumption of innocence ordinarily

stands in favor of the accused.
Whether the Sandiganbayan will
intervene in the course of the
prosecution of the case is within
its exclusive jurisdiction, competence
and discretion, provided that its
actions do not result in the
impairment of the substantial rights of
the accused, or of the right of the
State and of the offended party to due
process of law.[72]
A discussion of the violation of the
States right to due process in the
present case, however, is intimately
linked with the gross negligence or the
fraudulent action of the States agent.
The absence of this circumstance in
the present case cannot but have a
negative impact on how the petitioner
would want the Court to view the
Sandiganbayans actuation and
exercise of discretion.
The court, in the exercise of its sound
discretion, may require or allow the
prosecution to present additional
evidence (at its own initiative or upon
a motion) after a demurrer to
evidence is filed. This exercise,
however, must be for good reasons
and in the paramount interest of
justice.[73] As mentioned, the court
may require the presentation of
further evidence if its action on the
demurrer to evidence would patently
result in the denial of due process; it
may also allow the presentation of
additional evidence if it is newly
discovered, if it was omitted through
inadvertence or mistake, or if it is
intended to correct the evidence
previously offered.[74]
In this case, we cannot attribute grave
abuse of discretion to the
Sandiganbayan when it exercised
restraint and did not require the
presentation of additional evidence,
given the clear weakness of the case
at that point. We note that under the
obtaining circumstances, the
petitioner failed to show what and
how additional available evidence
could have helped and the paramount
interest of justice sought to be
achieved. It does not appear that
pieces of evidence had been omitted
through inadvertence or mistake, or
that these pieces of evidence are
intended
to correct evidencepreviously offered.

JURISDICTION

More importantly, it does not appear

that these contemplated additional
pieces of evidence (which the special
prosecutor allegedly should have
presented) were ever present and
available. For instance, at no point in
the records did the petitioner
unequivocally state that it could
present the three UL officers, Cueto,
Jiao and Sison. The petitioner also
failed to demonstrate its possession of
or access to these documents (such
as the final audit report) to support
the prosecutions charges the proof
that the State had been deprived of
due process due to the special
prosecutors alleged inaction
IIIa. Grave abuse of discretion
and the demurrers to evidence
In Criminal Case No. 20345 that
charged conspiracy for
abstracting P57.59 Million out of
the P100 Million KSS fund, the
prosecutions evidence showed
that P60 Million of this fund was
disbursed by respondent Benitez, as
approving officer, in the nature of
cash advances to Zagala (who
received a total amount of P40 Million)
and Dulay (who received P20 Million).
To prove the misappropriation,
the prosecution tried to establish that
there was an irregularity in the
procedure of liquidating these
amounts on the basis of COA Auditor
Cortez testimony that the liquidation
should have been made before the
COA Chairman (not to the resident
auditor of the MHS) because these
funds were confidential.[75]
Quite evident from the prosecutions
position is that it did not dispute
whether a liquidation had been made
of the whole amount of P60 Million;
rather, what it disputed was the
identity of the person before whom
the liquidation should have been
made. Before the directive of former
President Marcos was made which
declared the KSS funds (of which
the P60 Million formed part) to be
confidential, the liquidation of this
amount must be made before the
resident auditor of the MHS. With the
issuance of the directive, liquidation
should have been made to the COA
Chairman who should have then
issued a credit memo to prove proper
liquidation.[76]

To justify conviction for malversation

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

The records reveal that the amounts

of P50 Million and P10 Million were
liquidated by Zagala and Dulay,
respectively.[78] On Zagalas part, the
liquidation of P50 Million (P10 Million
of which was the cash advance given
to Dulay) was made to resident
auditor Flerida V. Creencia on
September 25, 1984 or before the
directive of former President Marcos
(declaring the said funds confidential)
was issued on November 7, 1984.
[79]
Hence, at the time the liquidation
of the amount was made, the
liquidation report submitted to the
resident auditor was the proper
procedure of liquidation. Respondent
Benitez, for his part, submitted Journal
Voucher No. 4350208 dated
November 27, 1984 stating, among
others, that as early as June 22, 1984,
the supporting papers for the
liquidation of the P50 Million had
already been submitted to the COA.[80]
Moreover, even if the liquidation
should have been made in compliance
with the former Presidents directive,
the prosecutions evidence did not
sufficiently establish the nonexistence of a credit memo. As
admitted by COA Auditor Cortez,
certain documents they were looking
for during the audit examination
(including the credit memo) could no
longer be located after the (EDSA)
revolution.[81] She further declared
that she did not know if COA Chairman
Alfredo Tantingco complied with the
required audit examination of the
liquidated P60 Million.[82]
In Criminal Case No. 20346,
respondents are sought to be held
liable under the criminal information

for converting P40 Million (subdivided

to P21.6 Million, P3.8 Million and P17
Million or a total of P42.4 Million) to
their own use given that these funds
were never allegedly transferred to
UL, the intended beneficiary.

Records show that the disputed

amount allegedly malversed was
actually P37,757,364.57 Million
because of evidence that an amount
of P4.5 Million was returned by
respondent Benitez.[83] As previously
mentioned, the documentary evidence
adduced reveals the existence of
treasury warrants and disbursement
vouchers issued in the name of UL
bearing the amounts of P21.6
Million, P3.8 Million and P17 Million.
[84]
Documentary evidence also exists
showing that these amounts were
deposited in the UCPB and drawn
afterwards by means of checks issued
for purchases intended for
the Kabisig Program of the MHS.
Except for the appropriated P17
Million, the petitioners evidence does
not sufficiently show how the amounts
of P21.6 Million and P3.8 Million were
converted to the personal use by the
respondents. The testimony of COA
Auditor Cortez revealed that
documents showing the
disbursements of the subject funds
were in possession of one Flordeliz
Gomez as the Records Custodian and
Secretary of UL. For undisclosed
reasons, however, COA Auditor Cortez
failed to communicate with Gomez but
merely relied on the documents and
checks, which the audit team already
had in its possession.[85]
This omission, in our view, raises
doubts on the completeness and
accuracy of the audit examination
pertaining to the P21.6 Million
and P3.8 Million funds. Such doubt
was further strengthened by COA
Auditor Cortez testimony showing
that P3.8 Million was listed in the
books of the MHS as a direct expense
account to which UL is not required to
render an accounting or liquidation.
[86]
Also, she admitted that the
amount of P21.6 Million was contained
in a liquidation voucher submitted by
Dulay, which was included in the
transmittal letter signed by the
respondents to the COA and

JURISDICTION

accompanied by a performance report

on the Kabisig Program. This
performance report showed that the
total amount of P21.6 Million was
exhausted in the KabisigProgram.[87]
With respect to the P17 Million,
evidence adduced showed that 270
units of the motorcycles have already
been transferred in the name of MHS
by UL.[88] There is also evidence that
the audit team initially found nothing
irregular in the documentation of the
500 motorcycles during the audit
examination conducted in April 1986;
the same goes for the eight cars
purchased.
Under the circumstances, we agree
with the Sandiganbayan that
registration of these vehicles in ULs
name alone did not constitute
malversation in the absence of proof,
based on the available evidence, to
establish that the respondents
benefited from the registration of
these motor vehicles in ULs name, or
that these motor vehicles were
converted by the respondents to their
own personal use.[89] In the end, the
prosecutions evidence tended to
prove that the subject funds were
actually used for their intended
purpose.
IV.

Conclusion

In dismissing this petition, we observe

that the criminal cases might have
been prompted by reasons other than
injury to government interest as
the primary concern.[90] These other
reasons might have triggered the
hastiness that attended the conduct of
audit examinations which resulted in
evidentiary gaps in the prosecutions
case to hold the respondents liable for
the crime of malversation.[91] As
matters now stand, no sufficient
evidence exists to support the charges
of malversation against the
respondents. Hence, the
Sandiganbayan did not commit any
grave abuse of discretion amounting
to lack or excess of jurisdiction when it
granted the demurrers to
evidence and, consequently,
dismissed the criminal cases against
the respondents.
We take this opportunity to remind the
prosecution that this Court is as much
a judge in behalf of an accused-

defendant whose liberty is in

jeopardy, as it is the judge in behalf of
the State, for the purpose of
safeguarding the interests of society.
[92]
Therefore, unless the petitioner
demonstrates, through evidence and
records, that its case falls within the
narrow exceptions from the criminal
protection of double jeopardy, the
Court has no recourse but to apply the
finality-of-acquittal rule.

ESTRELLA TAGLAY, PETITIONER,

VS. JUDGE MARIVIC TRABAJO
DARAY AND LOVERIE PALACAY,
RESPONDENTS.
G.R. No. 164258, August 22, 2012

Facts:
Before the Court is a special civil
action for certiorari under Rule 65 of
the Rules of Court seeking to reverse
and set aside the Orders of the
Regional Trial Court (RTC) of Digos City
wherein petitioners motion to dismiss
and motion for reconsideration were
denied. The instant petition arose
from a Criminal Complaint for
Qualified Trespass to Dwelling filed by
private respondent against herein
petitioner.
That on June 2, 2001 at about 2:30
o'clock in the afternoon at Tibangao,
Malita, Davao del Sur, Philippines, and
within the jurisdiction of this
Honorable Court, the aforesaid
accused, a private person and without
any justifiable reason and by means of
violence, did then and there willfully,
unlawfully and feloniously enter into
the dwelling of LoveriePalacay without
her consent and against her will and
once inside maltreated, boxed and
choked her, to her damage and
prejudice.
Petitioner pleaded not guilty.
Subsequently, the case was
transferred to the RTC of Digos City
where petitioner was brought to trial.
Witnesses were then presented by the
prosecution. Petitioner filed a Motion
to Dismiss on the ground of lack of
jurisdiction. Petitioner contended that
the RTC did not acquire jurisdiction

over the case, because the MCTC

erroneously transferred the case to
the RTC instead of dismissing it.
Petitioner also argued that the RTC's
lack of jurisdiction was further
aggravated when she was not
arraigned before the RTC. On March 9,
2004, the RTC issued its assailed
Order ruling that it acquired
jurisdiction over the case when it
received the records of the case as a
consequence of the transfer effected
by the MCTC; that the transfer of the
case from the MCTC is authorized
under Administrative Matter No. 99- 113-SC and Circular No. 11-99; that
there is no doubt that the offended
party is a minor and, thus, the case
falls within the original jurisdiction of
Family Courts pursuant to Republic Act
(R.A.) No. 8369. The RTC also held that
even granting that there was defect or
irregularity in the procedure because
petitioner was not arraigned before
the RTC, such defect was fully cured
when petitioner's counsel entered into
trial without objecting that his client
had not yet been arraigned.
Furthermore, the RTC noted that
petitioner's counsel has crossexamined the witnesses for the
prosecution. Consequently, the RTC
denied petitioner's Motion to Dismiss.
Petitioner filed a Motion for
Reconsideration, but the same was
denied by the RTC via its Order.
Hence, the instant petition for
certiorari.
Petitioner raises two main grounds.
First, petitioner contends that the RTC
did not acquire jurisdiction over the
case because Circular No. 11-99,
which authorizes the transfer of
Family Courts cases filed with firstlevel courts to the RTCs, is applicable
only to cases which were filed prior to
the effectivity of the said Circular on
March 1, 1999. Petitioner argues that
all Family Courts cases filed with firstlevel courts after the effectivity of the
said Circular can no longer be
transferred to Page 3 of 11 the RTC;
instead they should be dismissed.
Considering that the Information in
the instant case was filed with the
MCTC on November 19, 2001,
petitioner avers that the MCTC should
have dismissed the case instead of
ordering its transfer to the RTC.
Second, petitioner insists that she
should have been arraigned anew
before the RTC and that her

JURISDICTION

arraignment before the MCTC does not

count because the proceedings
conducted therein were void.
Issue:
Whether or not MCTC has jurisdiction
over the petitioner.
Held:
The petition is meritorious.
It is true that petitioner was arraigned
by the MCTC. However, the MCTC
Page 6 of 11 has no jurisdiction over
the subject matter of the present
case. It is settled that the proceedings
before a court or tribunal without
jurisdiction, including its decision, are
null and void.[24] Considering that the
MCTC has no jurisdiction, all the
proceedings conducted therein,
including petitioner's arraignment, are
null and void. Thus, the need for
petitioner's arraignment on the basis
of a valid Information filed with the
RTC.
MCTC has no jurisdiction over this
case but this case falls under the
original and exclusive jurisdiction of
Family Courts because R.A. 8369
clearly provides that Family Courts
have exclusive original jurisdiction
over criminal cases where one or
more of the accused is below eighteen
(18) years of age but not less than
nine (9) years of age, or where one or
more of the victims is a minor at the
time of the commission of the offense.
In the present case, there is no
dispute that at the time of the
commission of the alleged offense on
June 2, 2001, private respondent, who
is also the private complainant, was a
minor.

ALLEN A. MACASAET, NICOLAS V.

QUIJANO, JR., ISAIAS ALBANO, LILY
REYES, JANET BAY, JESUS R.
GALANG, AND RANDY
HAGOS, Petitioners vs.RANCISCO R.
CO, JR., Respondent.
G.R. No. 156759, June 5, 2013
Facts:
On July 3, 2000, respondent, a retired
police officer assigned at the Western
Police District in Manila, sued

AbanteTonite, a daily tabloid of

general circulation; its Publisher Allen
A. Macasaet; its Managing Director
Nicolas V. Quijano; its Circulation
Manager Isaias Albano; its Editors
Janet Bay, Jesus R. Galang and Randy
Hagos; and its Columnist/Reporter Lily
Reyes (petitioners), claiming damages
because of an allegedly libelous
article petitioners published in the
June 6, 2000 issue of AbanteTonite.
In the morning of September 18,
2000, RTC Sheriff Raul Medina
proceeded to the stated address to
effect the personal service of the
summons on the defendants. But his
efforts to personally serve each
defendant in the address were futile
because the defendants were then out
of the office and unavailable. He
returned in the afternoon of that day
to make a second attempt at serving
the summons, but he was informed
that petitioners were still out of the
office. He decided to resort to
substituted service of the summons.
On October 3, 2000, petitioners
moved for the dismissal of the
complaint through counsels special
appearance in their behalf, alleging
lack of jurisdiction over their persons
because of the invalid and ineffectual
substituted service of summons. They
contended that the sheriff had made
no prior attempt to serve the
summons personally on each of them
in accordance with Section 6 and
Section 7, Rule 14 of the Rules of
Court. They further moved to drop
AbanteTonite as a defendant by virtue
of its being neither a natural nor a
juridical person that could be
impleaded as a party in a civil action.
RTC denied petitioners motion to
dismiss and motion for
reconsideration. Hence this petition
contending that the trial court has not
acquired jurisdiction over the
petitioners.

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

Held:
The petition for review lacks merit.
Jurisdiction over the person, or
jurisdiction in personam the power of
the court to render a personal
judgment or to subject the parties in a
particular action to the judgment and
other rulings rendered in the action
is an element of due process that is
essential in all actions, civil as well as
criminal, except in actions in rem or
quasi in rem. Jurisdiction over the
defendantin an action in rem or quasi
in rem is not required, and the court
acquires jurisdiction over an actionas
long as it acquires jurisdiction over the
resthat is thesubject matter of the
action. The purpose of summons in
such action is not the acquisition of
jurisdiction over the defendant but
mainly to satisfy the constitutional
requirement of due process.
The distinctions that need to be
perceived between an action in
personam, on the one hand, and an
action inrem or quasi in rem, on the
other hand, are aptly delineated in
Domagas v. Jensen,13 thusly:
The settled rule is that the aim and
object of an action determine its
character. Whether a proceeding is in
rem, or in personam, or quasi in rem
for that matter, is determined by its
nature and purpose, and by these
only. A proceeding in personam is a
proceeding to enforce personal rights
and obligations brought against the
person and is based on the jurisdiction
of the person, although it may involve
his right to, or the exercise of
ownership of, specific property, or
seek to compel him to control or
dispose of it in accordance with the
mandate of the court. The purpose of
a proceeding in personam is to
impose, through the judgment of a
court, some responsibility or liability
directly upon the person of the
defendant. Of this character are suits
to compel a defendant to specifically
perform some act or actions to fasten
a pecuniary liability on him. An action
in personam is said to be one which
has for its object a judgment against
the person, as distinguished from a
judgment against the property to
determine its state. It has been held
that an action in personam is a
proceeding to enforce personal rights

JURISDICTION

or obligations; such action is brought

against the person. As far as suits for
injunctive relief are concerned, it is
well-settled that it is an injunctive act
in personam. In Combs v. Combs, the
appellate court held that proceedings
to enforce personal rights and
obligations and in which personal
judgments are rendered adjusting the
rights and obligations between the
affected parties is in personam.
Actions for recovery of real property
are in personam.
On the other hand, a proceeding quasi
in rem is one brought against persons
seeking to subject the property of
such persons to the discharge of the
claims assailed. In an action quasi in
rem, an individual is named as
defendant and the purpose of the
proceeding is to subject his interests
therein to the obligation or loan
burdening the property. Actions quasi
in rem deal with the status, ownership
or liability of a particular property but
which are intended to operate on
these questions only as between the
particular parties to the proceedings
and not to ascertain or cut off the
rights or interests of all possible
claimants. The judgments therein are
binding only upon the parties who
joined in the action.
As the initiating party, the plaintiff in a
civil action voluntarily submits himself
to the jurisdiction of the court by the
act of filing the initiatory pleading. As
to the defendant, the court acquires
jurisdiction over his person either by
the proper service of the summons, or
by a voluntary appearance in the
action.
The significance of the proper service
of the summons on the defendant in
an action in personam cannot be
overemphasized. The service of the
summons fulfills two fundamental
objectives, namely: (a) to vest in the
court jurisdiction over the person of
the defendant; and (b) to afford to the
defendant the opportunity to be heard
on the claim brought against him.19 As
to the former, when jurisdiction in
personam is not acquired in a civil
action through the proper service of
the summons or upon a valid waiver
of such proper service, the ensuing
trial and judgment are void.20 If the
defendant knowingly does an act
inconsistent with the right to object to

the lack of personal jurisdiction as to

him, like voluntarily appearing in the
action, he is deemed to have
submitted himself to the jurisdiction of
the court.21 As to the latter, the
essence of due process lies in the
reasonable opportunity to be heard
and to submit any evidence the
defendant may have in support of his
defense. With the proper service of
the summons being intended to afford
to him the opportunity to be heard on
the claim against him, he may also
waive the process.21 In other words,
compliance with the rules regarding
the service of the summons is as
much an issue of due process as it is
of jurisdiction.23
Under the Rules of Court, the service
of the summons should firstly be
effected on the defendant himself
whenever practicable. Such personal
service consists either in handing a
copy of the summons to the
defendant in person, or, if the
defendant refuses to receive and sign
for it, in tendering it to him.24 The rule
on personal service is to be rigidly
enforced in order to ensure the
realization of the two fundamental
objectives earlier mentioned. If, for
justifiable reasons, the defendant
cannot be served in person within a
reasonable time, the service of the
summons may then be effected either
(a) by leaving a copy of the summons
at his residence with some person of
suitable age and discretion then
residing therein, or (b) by leaving the
copy at his office or regular place of
business with some competent person
in charge thereof.25 The latter mode of
service is known as substituted
service because the service of the
summons on the defendant is made
through his substitute.
It is no longer debatable that the
statutory requirements of substituted
service must be followed strictly,
faithfully and fully, and any
substituted service other than that
authorized by statute is considered
ineffective.26 This is because
substituted service, being in
derogation of the usual method of
service, is extraordinary in character
and may be used only as prescribed
and in the circumstances authorized
by statute.27 Only when the defendant
cannot be served personally within a
reasonable time may substituted

service be resorted to. Hence, the

impossibility of prompt personal
service should be shown by stating
the efforts made to find the defendant
himself and the fact that such efforts
failed, which statement should be
found in the proof of service or
sheriffs return.28Nonetheless, the
requisite showing of the impossibility
of prompt personal service as basis for
resorting to substituted service may
be waived by the defendant either
expressly or impliedly.29

ATTY. FE SALVADOR PALMIANOPetitioner, vs. CONSTANTINO

ANGELES, substituted by LUZ G.
ANGELES, Respondent.
G.R. No. 171219, September 3, 2012

Facts:
This resolves the Petition for Review
on Certiorari under Rule 45 of the
Rules of Court, praying that the
Decision1 of the Court of Appeals (CA)
promulgated on September 16, 2005
dismissing the petition before it, and
its Resolution2 dated January 13,
2006, denying petitioner's Motion for
Reconsideration, be reversed and set
aside. Hence this petition.
Respondent-appellee ANGELES is one
of the registered owners of a parcel of
land located at 1287 Castanos Street,
Sampaloc, Manila, evidenced by
Transfer Certificate of Title No.
150872. The subject parcel of land
was occupied by one Jelly Galiga
(GALIGA) from 1979 up to 1993, as a
lessee with a lease contract.
Subsequently, Fe Salvador
(SALVADOR) alleged that she bought
on September 7, 1993 the subject
parcel of land from GALIGA who
represented that he was the owner,
being one in possession. Petitionerappellant SALVADOR remained in
possession of said subject property
from November 1993 up to the
present. On November 18, 1993, the
registered owner, the
respondentappellee ANGELES, sent a
letter to petitioner-appellant
SALVADOR demanding that the latter
vacate the subject property, which
was not heeded by petitioner-

JURISDICTION

appellant SALVADOR. Respondentappellee ANGELES, thru one Rosauro

Diaz, Jr. (DIAZ), filed a complaint for
ejectment on October 12, 1994 with
the Metropolitan Trial Court [MeTC] of
Manila, Branch 16, docketed as Civil
Case No. 146190-CV. The court ruled
in favor of the herein respondent.
Petitioner then filed an appeal
contending that DIAZ, who filed the
complaint for ejectment, had no
authority whatsoever from
respondent-appellee ANGELES at the
time of filing of the suit. But her
appeal was denied.
Petitioner elevated the case to the CA
via a petition for review, but in a
Decision dated September 16, 2005,
said petition was dismissed for lack of
merit. The CA affirmed the factual
findings of the lower courts that
Galiga, the person who supposedly
sold the subject premises to
petitioner, was a mere lessee of
respondent, the registered owner of
the land in question. Such being the
case, the lower court ruled that Galiga
could not have validly transferred
ownership of subject property to
herein petitioner. It was ruled by the
CA that there were no significant facts
or circumstances that the trial court
overlooked or misinterpreted, thus, it
found no reason to overturn the
factual findings of the MeTC and the
RTC. A motion for reconsideration of
said Decision was denied in a
Resolution dated January 13, 2006.
Issue:
Whether or not the respondents
representative has authority to file the
complaint.
Held:
No, respondent representative has no
authority to file the case due to his
failure to present proof which the
MeTC, RTC and CA failed to address
despite petitioner's insistence on it
from the very beginning.
The complaint before the MeTC was
filed in the name of respondent, but it
was one Rosauro Diaz who executed
the verification and certification dated
October 12, 1994, alleging therein
that he was respondent's attorney-infact. There was, however, no copy of

any document attached to the

complaint to prove Diaz's allegation
regarding the authority supposedly
granted to him. A Special Power of
Attorney executed by respondent in
favor of Rosauro Diaz but the said SPA
was executed only on November 16,
1994, or more than a month after the
complaint was filed, appearing to
have been notarized by one Robert F.
McGuire of Santa Clara County. Thus,
there is nothing on record to show
that Diaz had been authorized by
respondent to initiate the action
against petitioner.
What then, is the effect of a complaint
filed by one who has not proven his
authority to represent a plaintiff in
filing an action? In Tamondong v.
Court of Appeals, 6 the Court
categorically stated that if a
complaint is filed for and in behalf of
the plaintiff [by one] who is not
authorized to do so, the complaint is
not deemed filed. An unauthorized
complaint does not produce any legal
effect. Hence, the court should
dismiss the complaint on the ground
that it has no jurisdiction over the
complaint and the plaintiff.7 This
ruling was reiterated in Cosco
Philippines Shipping, Inc. v. Kemper
Insurance Company, 8 where the
Court went on to say that [i]n order
for the court to have authority to
dispose of the case on the merits, it
must acquire jurisdiction over the
subject matter and the parties. Courts
acquire jurisdiction over the plaintiffs
upon the filing of the complaint, and
to be bound by a decision, a party
should first be subjected to the court's
jurisdiction. Clearly, since no valid
complaint was ever filed with the
MeTC, the same did not acquire
jurisdiction over the person of
respondent [plaintiff before the lower
court]."9 Pursuant to the foregoing
rulings, therefore, the MeTC never
acquired jurisdiction over this case
and all proceedings before it were null
and void. The courts could not have
delved into the very merits of the
case, because legally, there was no
complaint to speak of. The court's
jurisdiction cannot be deemed to have
been invoked at all.
Optima Realty Corporation vs
Hertz Phil. Exclusive Cars Inc GR
No. 183035 Jan 9, 2013

Facts: Optima Corporation, a

company engaged in leasing
commercial spaces and buildings to its
tenants, entered into a Contract of
Lease with Hertz Phil Exclusive Cars
Inc. over an office unit and a parking
slot in the Optima Building for two
years and five months, starting from
October 1 2003 up to February 28
2006.During the lease period, Hertz
alleged that it experienced a 50%
drop in monthly sales and a significant
decrease in its personnels
productivity due to the renovations
made in the building. It then
requested a 50% discount on its rent
for four months in 2005. Optima
granted the request; however,
respondent still failed to pay for 7
months and utility bills for 4 months.
Petitioner then wrote another letter to
Hertz on December 8 2005, reminding
the latter that the contract could be
renewed subject to a new negotiation
and upon written notice by the lessee
to the lessor at least 90 days prior to
the termination of the lease period.
Since no letter was received from
Hertz within the 90-day period,
Optima informed it that the lease
would expire on February 28 2006 and
would not be renewed. In its answer,
Hertz wrote a letter on December 21
2005 advising Optima of the formers
desire to negotiate and extend the
lease.
However, petitioner no longer
entertained the notice. Optima
thereby ordered Hertz to surrender
and vacate the leased premises.
Respondent, however, refused to
vacate the leased premises which
resulted to Optima filing a Complaint
for Unlawful Detainer and Damages
with Prayer for the Issuance of a TRO
and/or Preliminary Mandatory
Injunction in the MeTC against Hertz.
MeTC rendered a Decision, ruling that
petitioner Optima had established its
right to evict Hertz from the subject
premises due to nonpayment of
rentals and the expiration of the
period of lease.
Hertz appealed the MeTCs Decision to
the RTC. The RTC affirmed its decision
by dismissing the appeal.
Hertz thereafter filed a verified Rule
42 Petition for Review on Certiorari
with the CA
CA reversed RTCs decision because
of the MeTCs failure to acquire
jurisdiction due to improper service of
summons, hence, this appeal.
Petitioners MFR was denied.

JURISDICTION

Petitioner then filed the instant Rule

45 Petition for Review on Certiorari
with the SC.
Issue: Whether the MeTC properly
acquired jurisdiction over the person
of respondent Hertz
Held: The MeTC acquired jurisdiction
over the person of respondent Hertz.
In civil cases, jurisdiction over the
person of the defendant may be
acquired either by service of
summons or by the defendants
voluntary appearance in court and
submission to its authority.35
In this case, the MeTC acquired
jurisdiction over the person of
respondent Hertz by reason of the
latters voluntary appearance in court.
In Philippine Commercial International
Bank v. Spouses Dy, we had occasion
to state:
Preliminarily, jurisdiction over the
defendant in a civil case is acquired
either by the coercive power of legal
processes exerted over his person, or
his voluntary appearance in court. As
a general proposition, one who seeks
an affirmative relief is deemed to have
submitted to the jurisdiction of the
court. It is by reason of this rule that
we have had occasion to declare that
the filing of motions to admit answer,
for additional time to file answer, for
reconsideration of a default judgment,
and to lift order of default with motion
for reconsideration, is considered
voluntary submission to the court's
jurisdiction. This, however, is
tempered by the concept of
conditional appearance, such that a
party who makes a special
appearance to challenge, among
others, the court's jurisdiction over his
person cannot be considered to have
submitted to its authority.

Ellice Agro-Industrial Corp

represented by Raul Gala. vs RODEL
T. YOUNG, GUIA G. DOMINGO
Facts:
On July 24, 1995, Rodel T. Young,
Delfin Chan and Jim Wee
(respondents) and Ellice AgroIndustrial Corporation (EAIC),
represented by its alleged corporate
secretary and attorney-in-fact, Guia G.
Domingo, entered into a Contract to
Sell, under certain terms and
conditions, wherein EAIC agreed to

sell to the respondents a 30,000

square-meter portion of a parcel of
land located in Lutucan, Sariaya,
Quezon and registered under EAICs
name in consideration of
P1,050,000.00.
Pursuant to the Contract to Sell,
respondents paid EAIC, through
Domingo, the aggregate amount of
P545,000.00 as partial payment for
the acquisition of the subject property.
Despite such payment, EAIC failed to
deliver to respondents the owners
duplicate certificate of title of the
subject property and the
corresponding deed of sale as
required under the Contract to Sell.
Respondents filed a Complaint for
specific performance against EAIC and
Domingo before the RTC.
Respondents caused the annotation of
a Notice of Lis Pendens (formal notice)
The initial attempt to serve the
summons on EAIC, through Domingo,
on Rizal Street, Sariaya, Quezon, was
unsuccessful.
Another attempt was made to serve
summons on EAIC at 996 Maligaya
Street, Singalong, Manila, the
residence of Domingo. This time,
summons was served successfuly.
EAIC, represented by Domingo, filed
its Answer with Counterclaim.
In response, the Robles Ricafrente
Aguirre Sanvicente & Cacho Law Firm,
introducing itself to be the counsel of
EAIC, sent Wee a letter informing him
of Domingos lack of authority to
represent EAIC.
As a result of EAICs failure to appear
in the pre-trial conference,
respondents were allowed to present
their evidence.
Following the presentation of
evidence, the RTC rendered its
Decision ordering EAIC to deliver the
owners duplicate copy of TCT and to
execute a final deed of sale in favor of
respondents.
No MFR or notice of appeal was filed
by EAIC, hence, the said RTC decision
became final and executory.
EAIC, represented by Gala, initiated
the Petition for Annulment of
Judgment under Rule 47 of the Rules
of Court of the RTC Decision before

the CA. The petition was grounded on

the RTCs lack of jurisdiction over EAIC
and the extrinsic fraud committed by
Domingo. EAIC discarded any
knowledge of the said sale and the
suit filed by respondents against it.
According to EAIC, it could not be
bound by the assailed RTC Decision
saying Domingo was not its President,
Manager, Secretary, Cashier, Agent or
Director, thus, she did not possess the
requisite authorization to represent
EAIC in the subject transaction.
Furthermore, her misrepresentation
that she was EAICs corporate
secretary who was properly authorized
to sell and receive payment for the
subject property, defrauded EAIC of
the potential gains it should have
realized from the proceeds of the sale.
In their Answer with Counterclaim filed
before the CA, respondents countered
that considering EAICs petition for
relief from judgment under Rule 38
grounded on extrinsic fraud, had
already been rejected with finality,
EAIC could not be permitted to invoke
the same ground in a petition for
annulment of judgment under Rule 47.
In its Reply filed before the CA, EAIC
explained that the RTC did not touch
upon the issue of fraud in the petition
for relief from judgment as it was
dismissed for being filed out of time.
In addition, EAIC claimed that the
exchange of letters between Wee and
EAIC never stated anything
whatsoever of any pending suit
between them.
CA dismissed the petition for
annulment of judgment. EAICs motion
for reconsideration was denied by the
CA
ISSUE: WON RTC validly acquired
jurisdiction over the person of EAIC
HELD: It is a settled rule that
jurisdiction over the defendant is
acquired either upon a valid service of
summons or the defendants
voluntary appearance in court. When
the defendant does not voluntarily
submit to the courts jurisdiction or
when there is no valid service of
summons, any judgment of the court
which has no jurisdiction over the
person of the defendant is null and
void. The purpose of summons is not
only to acquire jurisdiction over the
person of the defendant, but also to
give notice to the defendant that an
action has been commenced against it
and to afford it an opportunity to be
heard on the claim made against it.
The requirements of the rule on
summons must be strictly followed,

JURISDICTION

otherwise, the trial court will not

acquire jurisdiction over the
defendant.
Section 13, Rule 14 of the 1964 Rules
of Civil Procedure, the applicable rule
on service of summons upon a private
domestic corporation then, provides:
Sec. 13. Service upon private
domestic corporation or partnership.
If the defendant is a corporation
organized under the laws of the
Philippines or a partnership duly
registered, service may be made on
the president, manager, secretary,
cashier, agent, or any of its directors.
[Underscoring supplied]
Based on the above-quoted provision,
for service of summons upon a private
domestic corporation, to be effective
and valid, should be made on the
persons enumerated in the rule.
Conversely, service of summons on
anyone other than the president,
manager, secretary, cashier, agent, or
director, is not valid. The purpose is to
render it reasonably certain that the
corporation will receive prompt and
proper notice in an action against it or
to insure that the summons be served
on a representative so integrated with
the corporation that such person will
know what to do with the legal papers
served on him.
In the present case, the pertinent
document showing EAICs composition
at the time the summons was served
upon it, through Domingo, will readily
reveal that she was not its president,
manager, secretary, cashier, agent or
director. Due to this fact, the Court is
of the view that her honest belief that
she was the authorized corporate
secretary was clearly mistaken
because she was evidently not the
corporate secretary she claimed to be.
In view of Domingos lack of authority
to properly represent EAIC, the Court
is constrained to rule that there was
no valid service of summons binding
on it.
Granting arguendo that EAIC had
actual knowledge of the existence of
Civil Case No. 96-177 lodged against
it, the RTC still failed to validly acquire
jurisdiction over EAIC. In Cesar v.
Ricafort-Bautista, it was held that
"xjurisdiction of the court over the
person of the defendant or respondent
cannot be acquired notwithstanding
his knowledge of the pendency of a
case against him unless he was validly
served with summons. Such is the
important role a valid service of
summons plays in court actions."

In this case, at the time she filed the

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

because the petition should have

been filed before the MTC in
accordance with Section 1 of Rule 38
of the Rules of Court which provides
that a petition for relief should be filed
"in such court and in the same case
praying that the judgment, order or
proceeding be set aside.

In view of the fact that EAIC was not

validly served with summons and did
not voluntarily appear in Civil Case
No. 96-177, the RTC did not validly
acquire jurisdiction over the person of
EAIC. Consequently, the proceedings
had before the RTC and ultimately its
Decision were null and void.

In the present case, petitioners cannot

file the petition for relief with the MTC
because it is a prohibited pleading in
an unlawful detainer case. Petitioners
cannot also file the petition for relief
with the RTC because the RTC has no
jurisdiction to entertain petitions for
relief from judgments of the
MTC. Therefore, the RTC did not err in
dismissing the petition for relief from
judgment of the MTC. The remedy is
to file a petition for certiorari under
Rule 01 on the ground of lack
of jurisdiction of the MTC over the
person of petitioners in view of the
absence of summons to petitioners.
An action for unlawful detainer or
forcible entry is a real action and in
personam. In an action in personam,
jurisdiction over the person of the
defendant is necessary for the court
to validly try and decide the case. Any
judgment of the court which has no
jurisdiction over the person of the
defendant is null and void. Service of
summons upon the defendant shall be
by personal service first and only
when the defendant cannot be
promptly served in person will
substituted service be availed of. In
this case, the indorsements failed to
state that prompt and personal
service on petitioners was rendered
impossible. These requirements are
indispensable because substituted
service is in derogation of the usual
method of service. Likewise, nowhere
in the return of summons or in
the records of the case was it shown
that Gary Acob, the person on
whom substituted service of
summons was effected, was a person
of suitable age and discretion residing
in petitioners- residence. The process
server failed to specify Gary Acobs
age, his relationship to petitioners and
to ascertain whether he comprehends
the significance of the receipt of the
summons and his duty to deliver it to
petitioners or at least notify them of
said receipt of summons. In sum,
petitioners were not validly served
with summons by substituted service.
Hence, the MTC failed to acquire
jurisdiction over the person of the

Afdal vs Carlos
Facts:
Respondent Romeo Carlos filed a
complaint for unlawful detainer and
damages against petitioners Zenaida
Guijabar, et al.
Respondent alleged that petitioners
were occupying, by mere tolerance.
Respondent claimed that petitioner
Abubakar Afdal sold the property to
him but that he allowed petitioners
to stay in the property. Respondent
claimed that he demanded return of
the property because he needed its
use but that they refused to heed the
demand.
According to the records, there were
three attempts to serve the summons
and complaint on petitioners which
were returned with the following
annotations:
Given address cannot be located; Duly
served as evidenced by a signature of
one Gary Acob (relative); duly served
but refused to sign without
specifying to whom it was served.
Petitioner failed to file an answer. the
MTC ruled in favor of respondent.
Petitioner filed a motion for relief in
the MTC which they withdrew. They
filed the same motion in the RTC.
The RTC dismissed the petition
holding that it didnt have jurisdiction

Issue: Whether or not the RTC had

jurisdiction over the petition for relief
from judgement.
No jurisdiction.

JURISDICTION

petitioners and, thus, the MTCs

decision is void
Sharuf vs bubia
FACTS:
ssThis is a verified petition
for certiorari, with a prayer for a
preliminary injunction filed by Samuel
S. Sharruf against Frank Bubla and the
Hon. Arsenio Solidum, Judge of the
Court of First Instance of Manila,
Branch XVII, to set aside the latter's
orders of March 14 and April 11, 1960
in Civil Case No. 33461 denying
petitioner's motion for new trial, for
lack of merit, and his motion for
reconsideration thereof, respectively,
and his order of June 3, 1960
disallowing petitioner's appeal from
the order of denial of March 14, 1960
on the ground that the order aforesaid
was already final and executory, and
ordering its execution.
On August 15, 1957 respondent Bubla,
a non-resident alien, through his
counsel and legal representative,
William Quasha& Associates, filed a
complaint with the respondent court
to compel petitioner to render an
accounting in connection with a
written contract entered into between
them (Civil Case No. 33461).
Petitioner filed an answer denying the
material allegations of the complaint
and setting forth therein a
counterclaim for damages, but on
September 17, 1958 his counsel filed
a motion to withdraw his appearance
for the reason that he had been
unable to get in touch with him. The
court granted the motion.
When the case called for pre-trial on
September 27, 1958, petitioner failed
to appear, and the court set the case
for trial on the judgments an
December 1, 1958. Notice thereof was
sent to petitioner at his address of
record. After several postponements,
the hearing of the case was reset for
March 6, 1959, but petitioner again
failed to appear either personally or
thru counsel, despite notice sent to
him at his address of record. Instead
of proceeding with the trial of the case
as His Honor could have done he
directed respondent Bubla's counsel
to exert efforts to notify petitioner of
the trial of the case on April 23, 1959.
Upon petitioner's failure to appear

when the case was finally called for

trial on that date, the court received
Bubla's evidence which consisted of
Bubla's deposition taken before the
Philippine Consul, Philippine Embassy
at Sydney, Australia, and
documentary evidence relative to
their contract, management and
operation of the theatrical venture
and stipulation as to accounting. On
the basis thereof, the respondent
court found that the following facts
had been established:
From the evidence in the record, it
appears that the plaintiff, Frank Bubla,
is a resident of 11 Shipley Street,
South Yarra Melbourne, State of
Victoria, Commonwealth of Australia,
and was an entrepreneur managing a
theatrical troupe under the name of
"Bubla Continental Revue" in 1954,
while the defendant, Samuel S.
Sharruf was then the operator and
manager of the "Riviera Night Club" at
Dewey Boulevard, Manila. Exhibits "A"
to "K" of plaintiff's deposition show
that plaintiff and defendant entered
into a series of agreement by
correspondence whereby the former
undertook to provide the latter with
the so-called "Bubla Continental
Revue" for the purpose of presenting
two nightly floor shows in said night
club for a consideration of P2,500.00
monthly, "net and free income tax", as
well as three daily stage shows at the
Manila Grand Opera House (Exhibits
"E", "A-3", and "A-46"), for another
P2,500.00 a month. Subsequently,
plaintiff and defendant reduced the
terms of their agreement to a formal
contract (Exhibit "P").
The "Bubla Continental Revue",
comprising of six members excluding
the plaintiff, who was unable to enter
this country because his visa was not
approved, arrived in Manila sometime
in September, 1954, and from
September 29, 1954 to January 15,
1955, it performed floor shows at the
"Riviera Night Club" twice nightly, and
three or four stage shows daily at the
Manila Grand Opera House under the
management and sponsorship of
herein defendant (Exhibits "A-28", "A36", "A-42", "A-43" and "A-46"). In the
meantime plaintiff authorized
defendant to pay the salaries of the
members of said theatrical troupe and
requested an accounting of the
expenditures incurred as well as

payment of whatever amount was due

plaintiff by virtue of their contract
(Exhibit "P"). However, despite such
demands (Annex "A", Exhibits "II",
"III", "IV" and "V"), defendant failed to
render any accounting and to pay to
plaintiff such amount as was due him,
thereby compelling the latter to
engage the services of his lawyers for
P5,000.00 for the purpose of
instituting this action.
ISSUE: Whether or not the petition for
certiorari should be granted
RULING:The granting or denial of a
motion for new trial is a matter
addressed to the sound discretion of
the trial court. In this case where
petitioner's motion was based on
mistake and/or excusable negligence,
the lower court found that the same
was not supported by any affidavit of
merit. Even if we were to agree with
petitioner that, in this connection, his
answer to the complaint may be taken
into account, the allegations made
therein do not appear to satisfy the
rule as to proof of mistake or
excusable negligence. Consequently,
the respondent court committed no
error in denying said motion.
Petitioner insists that the respondent
court acquired no jurisdiction over the
person of respondent Bubla. We find
this to be without merit. It is settled
law in this jurisdiction that a court
may acquire jurisdiction over the
person of a party either by his
voluntary appearance in court
demanding affirmative relief or by
having him served. With summons
within the territorial jurisdiction of the
Philippines.Bubla was the plaintiff in
Civil Case No. 33461 filed against the
herein petitioner. By filing his
complaint, therefore, Bubla submitted
voluntarily to the jurisdiction of the
respondent court and the latter
acquired such jurisdiction even if, as a
matter of fact, Bubla had never been
able to enter the Philippines.
Petitioner's claim that the decision of
the respondent court in Civil Case No.
33461 is void because of lack of
notice of trial served on him is
likewise untenable. The record shows
that petitioner had a registered
address in the record of said case at
which repeated notices of trial were
addressed to him. Aside from this, it

JURISDICTION

also appears that the respondent

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

Nullification and Cancellation of

Subdivision Plan LRC- Psd 37270 on
Lot No. 427 Cad. 84, Butuan City, TCTRT 1584, TCT-RT 1585 and Various
Documents and for Damages with
Injunction (pp. 12- 17, rec.).

WHEREFORE, the petition

for certiorari under consideration is
dismissed, with costs.

Andres Aban, as a defendant in the

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

ABAN VS ENAGE
FACTS:
This is a petition for certiorari and
prohibition with preliminary injunction
filed by petitioners against private
respondents and Honorable Judge
Manuel L. Enage, District Judge of the
Court of First Instance of Agusan, to
declare null and void the order of the
court dated July 29, 1968, issued in
Civil Case No. 1005, ordering the
cancellation of TCT No. RT 1693 in the
names of herein petitioners covering
Lot No. 427 C-I (Subdivision Plan LRCPsd-40107), on the ground that the
same was issued without or in excess
of jurisdiction.
The antecedent facts are as follows:
On August 21, 1964, a complaint was
filed in the Court of First Instance of
Agusan, Branch 11, then presided by
the late Judge Montano Ortiz,
docketed as Civil Case No. 1005,
entitled "Maria BalagaSeveroMalvar,
Ariston Blanco, Domingo Macuno
plaintiffs, versus Pedro Cuenca, Moises
Burdeos, Nestor Burdeos,
DeodoroBurdeos, LeonilaBurdeos,
RemediosBurdeos, Leonardo
Campana, AproditoCampana,
CleofeCampana, Lilia Campana,
Alberto Banjao, for himself and on
behalf of the Minors- Luzminda,
Clemencia, and Isabel, all surnamed
Banjao, Felix Arriola Sr., Leonardo
Villafuerte, Lope C. Jonco, Butuan City
Rural Bank, Register of Deeds of
Butuan City, Land Registration
Commissioner, Sixto Martinez, Aurora
C. Martinez, CelestinoUdarbe and
Andres Aban, defendants," for

The complaint states that

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

On September 17, 1964, the CFI of

Butuan City issued an order (p. 59,
rec.) dropping Andres Aban as partydefendant and dismissing the
complaint against him.
On May 26, 1965, an amended
complaint was filed wherein the
names of SeveroMalvar as plaintiff
and petitioner herein Andres Aban and
CelestinoUdarbe as defendants in Civil
Case No. 1005 were dropped as
parties therein.
Meanwhile, the heirs of Eleuterio
Cuenca filed a petition for correction,
etc. dated November 1, 1965 and
docketed as Civil Case No. 1126, this
time before the CFI of Agusan, Branch
1, presided by Judge Simeon Ferrer,
praying, inter alia, for the cancellation
of TCT No. RT- 1693 issued to herein
petitioner Andre Aban. This case,
however, was dismissed at the
instance of the heirs in an order of the
court dated June 4, 1968 (pp. 68-69,
rec.).
On April 15, 1968, defendants-heirs of
Eleuterio Cuenca in Civil Case No.
1005, through Atty. Timoteo D.
Naldoza, counsel and attorney-in-fact
of the Cuenca heirs, filed a motion in
the aforesaid case for the cancellation
of TCT No. RT-1693 issued in the name
of Andres Aban, as well as all the
annotations at the back thereof,
alleging that herein petitioner Aban's
claim over a portion of Lot No. 427,
particularly Lot No. 427-C-1 is "now

abandoned, waived or relinquished"

(pp. 12-17, rec.).
Subsequently, herein petitioner
Andres Aban filed an opposition to the
motion to cancel TCT No. RT-1693 filed
by the heirs of Eleuterio Cuenca.
On August 20, 1968, herein petitioner
Andres Aban filed a motion for
reconsideration, but the same was
denied in an order (p. 26, rec.) of the
court dated January 11, 1969.
A second motion for reconsideration
dated January 22, 1969 was filed but
was denied in an order (pp. 27-30,
rec.) dated May 10,1969.
A third motion for reconsideration
dated May 15, 1969 was filed but was
again denied in an order (p. 31, rec.)
dated June 6, 1969.
Hence, the instant appeal.
Acting on the petition for certiorari,
this Court, on July 9, 1969, issued a
resolution requiring the respondents
herein to file an answer to the petition
for certiorari and, at the same time,
issued a temporary restraining order
restraining the enforcement of the
Order "cancelling Title TCT-RT-1693 of
petitioners herein, and from taking
further proceedings or action in Civil
Case No. 1005 of the Court of First
Instance of Agusan, entitled 'Maria
Balaga et al. vs. Pedro Cuenca, et al.
While the instant case was pending
before this Court, a certain Antonio K.
Caon came into the picture by
entering his appearance (p. 327, rec.)
on May 29, 1973 as counsel for the
respondents and, at the same time,
filing a motion for resolution (pp. 328329, rec.).
In his motion for resolution, counsel
Antonio K. Caon stated that he is
appearing in collaboration with 'the
original counsel of record, Atty.
Timoteo D. Naldoza. "
In a resolution dated June 5, 1973 (p.
333, rec.), this Court "resolved to
require the respondents themselves to
COMMENT on the said appearance,
and in conformity therewith, to
INFORM this Court, who between
Attys. Timoteo D. Naldoza and Antonio
K. Caon shall be exclusively served

JURISDICTION

with copies of all pleadings and court

processes in this case, both within ten
(10) days from notice hereof. This
Court resolved further to NOTE the
motion of respondents heirs of the
late Eleuterio Cuenca praying that this
case be resolved and dismissed,"
On June 19, 1973, the petitioners, thru
counsel, filed a manifestation to
motion for resolution (pp. 334-335,
rec.) filed by Atty. Antonio K. Caon in
behalf of herein respondents, joining
said Atty. Caon in his prayer for the
resolution of the instant case.
On July 6, 1973, the respondent heirs
of Eleuterio Cuenca filed their
comment in compliance with the
resolution of this Court dated June 5,
1973.
ISSUE: Whether or not there is
excess of jurisdiction
RULING:
Going back to the main case, herein
petitioners alleged that the order of
the court a quo dated July 29, 1968,
issued in Civil Case No. 1005, ordering
the cancellation of TCT No. RT-1693
issued in the name of herein petitioner
Andres Aban over lot No. 127-C-1
(Subdivision Plan LRC-Psd-40107' ),
was issued with grave abuse of
discretion amounting to lack of
jurisdiction and/or without jurisdiction
because:
(a) The motion [Annex 'A'] filed in the
lower Court is improperly filed
because the Court below had no
jurisdiction over the subject matter,
the same being a separate, distinct,
and independent action by itself;
(b) Your petitioners are not parties in
Civil Case No. 1005 [Annex 'F'] and
therefore, the Court below was
without jurisdiction over them;
(c) There is patently no basis for
respondent Judge Enage to give due
course to a mere motion to cancel the
title of petitioners there being no
proper proceedings conducted,
petitioners not being parties in Civil
Case No. 1005 as amended, and
therefore respondent judge had no
power, jurisdiction or authority to
order the cancellation of said title No.
RT 1693 of petitioners herein;

(d) According to records of Civil Case

No. 1005 the respondent heirs of
Eleuterio Cuenca are represented by
their counsel, Atty. Tranquilino O. Calo,
Jr., and not respondent Atty.
TimoteoNaldoza; said case is still
pending before respondent Judge
Enage; consequently, respondent,
Atty. Naldoza had no authority or
power to file the motion to cancel Title
No. RT-1693; such act of respondent
Atty. Naldoza constitutes malpractice
and a ground for disbarment before
this Court;
(e) Respondent Judge Enage acted
without jurisdiction and/or with grave
abuse of discretion amounting to lack
of jurisdiction in issuing the order of
cancellation of TCT-R,T-1693 of Andres
Aban by an unlawful and improper
motion of respondent Atty. Naldoza,
Attorney-in-fact for heirs of Eleuterio
Cuenca, filed in Civil Case No. 1005 as
amended, wherein, petitioners herein
are not parties [attached Annex 'F',
amended complaint 1005];
(f) Petitioners are without any remedy
of appeal nor is there any plain,
speedy and adequate remedy under
the ordinary course of law against the
patently unlawful order of the lower
court to cancel Title No. RT 1693 of
herein petitioners;
(g) Respondent Judge Enage has set
the execution of his order after the
lapse of the reglementaryperiod,
which order are clearly illegal and
unwarranted and will result in
irreparable damage and injury to the
petitioners herein;
(h) There is therefore an imperative
need for the issuance of an ex
parte Writ of Preliminary Injunction
restraining and prohibiting the
respondents, their agents, attorneys,
representatives, deputies, servants, or
any other persons acting in their
behalf from enforcing the Order of
which purposes petitioners are ready
and willing to put up the necessary
bond in the minimum amount which
the Honorable Court will require" (pp.
8-10, rec.).
In fine, herein petitioners assert that
the court a quo could not have
acquired jurisdiction over the subject
matter of the motion to cancel TCT-RT1693 filed by the heirs of Eleuterio

Cuenca, private respondents herein,

because the aforesaid motion to
cancel partakes of a separate, distinct,
and independent action by itself; that
since herein petitioners are not parties
in Civil Case No. 1005, the Court a
quo was without jurisdiction over their
persons.
It may be well to state at this point
that jurisdiction of the court over the
subject or nature of an action, is
conferred by law. Jurisdiction over the
persons of the parties may be
acquired by the voluntary appearance
of the plaintiff, and, with respect to
the defendant, by the service of
summons upon him or by his
voluntary appearance in court.
It may be recalled that when the
motion to cancel dated April 15, 1968
was filed by the heirs of Eleuterio
Cuenca in the Court of First Instance
of Agusan in Civil Case No. 1005, the
court served summons to the
petitioners herein who subsequently
filed their opposition thereto (pp. 1819, rec.). When the motion to cancel
was set for hearing (pp. 149-167, rec.)
on June 17, 1968, Atty. Jose L. Lachica,
counsel of herein petitioners,
appeared in court. During said
hearing, the parties were given ample
opportunity to argue their respective
stand, present evidence and exhibits,
after which the court a quo required
the parties to submit their respective
memoranda, which the parties did.
Against the foregoing backdrop, this
Court is not inclined to sustain herein
petitioners' contention that the lower
court was without jurisdiction or
gravely abused its discretion when
it ,acted on the motion to cancel filed
by private respondents herein by
issuing an order dated July 29,1968
cancelling TCT-RT-1693 in the name of
Andres Aban, petitioner herein.
For even assuming that the motion to
cancel filed by private respondents in
the court below is a separate, distinct,
and independent action by itself, as
argued by the petitioners,
nevertheless, by the service of
summons upon herein petitioners, and
by their act of filing an opposition to
the motion as well as their voluntary
appearance in court when the motion
was set for hearing, together with the
submission of their memorandum (pp.

JURISDICTION

168-177, rec.), the petitioners are

deemed to have submitted
themselves to the jurisdiction of the
court, and, consequently, they are
bound by the legal implications of the
order of the court a quo.
Moreover, the filing of petitioners'
three motions for reconsideration is a
further submission on their part to the
jurisdiction of the court, and the denial
of such motions was binding on
petitioners herein (Soriano vs. Palacio,
et al., 12 SCRA 447, 449).
It cannot be said that the petitioners
were denied their day in court. Neither
can it be said that the petitioners'
substantial rights were prejudiced
thereby. The petitioners have had the
fullest opportunity to lay before the
court the merits of their claim when
they, as stated heretofore, voluntarily
submitted themselves to the
jurisdiction of the court a quo.
To assert that the court had no
jurisdiction because petitioner Andres
Aban was not a party in Civil Case No.
1005 would appear therefore to be a
mere technicality that would not serve
the interest of the administration of
justice (Torres vs. Caluag, et al., 17
SCRA 808, 811). Besides, petitioner
Andres Aban's not being a party in
Civil Case No. 1005 was of his own
making. By not joining as partyplaintiff in Civil Case No. 1005, and, at
the same time, asking the court to
drop him as party-defendant (he was
sued as one of the parties-defendants
when his consent to have him joined
as one of the parties-plaintiffs could
not be secured) in the same case'
which the court a quogranted in an
order dated September 17, 1964,
petitioner Andres Aban virtually toyed
with his right to enforce and protect
his claim over a portion of Lot No. 427
of ButuanCadastre. There is no
plausible reason for petitioner Andres
Aban to assume that the lot he claims
(Lot No. 427-C-1) is not involved in
Civil Case No. 1005 because what is
precisely under litigation in said case
is ' Lot No. 427 as a whole, of which
Lot No. 427-C-1 is part and parcel.
Under the circumstances, petitioner
spouses Andres Aban and Dolores
Galope are deemed impleaded as
party respondents in Civil Case No.
1005.

II
With respect to the petition filed by
Atty. Timoteo D. Naldoza to record his
attorney's lien and to consider him as
the principal counsel of record of
herein private respondents, suffice it
to state that this Court finds the
petition meritorious.
While concededly, private
respondents herein have the right to
dismiss their attorney with or without
cause, however, any change or
substitution of attorney must have to
follow the procedure prescribed by
Rule 138, Section 26 of the Revised
Rules of Court.
Unless the formalities required by the
Rules of -Court on valid substitution of
attorneys are complied with, no
substitution will be permitted and the
attorney who appeared last in the
cause before such application for
substitution will be regarded as the
attorney of record and entitled to be
notified of all notices and pleadings
and responsible for the conduct of the
case (Olivares vs. Leola 97 Phil. 352).
Specifically, We have ruled in several
cases that "no substitution of
attorneys will be allowed unless the
following requisites concur: (1) there
must be filed a written application for
substitution; (2) there must be filed
the written consent of the client to the
substitution; (3) there must be filed
the written consent of the attorney to
be substituted, if such consent can be
obtained; (4) in case such written
consent cannot be procured, there
must be filed with the application for
substitution, proof of the service of
notice of such motion in the manner
required by the rules, on the attorney
to be substituted".
In the case at bar, it is clear that there
was no valid substitution of counsel.
The records show that from the time
this case was filed in the CFI of
Agusan until the same reaches this
Court, it was Atty. Timoteo D. Naldoza
who appeared and filed all the
necessary pleadings and motions in
court as counsel of record for private
respondents herein. The subsequent
appearance of Attys. Antonio K. Caon
Cesar T. Palana, and Francisco T.
Concon bears no significance because
there was practically nothing to be
done in the case any more as the

same was already submitted to this

Court for decision.
MACASAET VS CO
FACTS:
To warrant the substituted service of
the summons and copy of the
complaint, the serving officer must
first attempt to effect the same upon
the defendant in person. Only after
the attempt at personal service has
become futile or impossible within a
reasonable time may the officer resort
to substituted service.
The Case
Petitioners defendants in a suit for
libel brought by respondent appeal
the decision promulgated on March 8,
20021 and the resolution promulgated
on January 13, 2003,2 whereby the
Court of Appeals (CA) respectively
dismissed their petition for certiorari,
prohibition and mandamus and denied
their motion for reconsideration.
Thereby, the CA upheld the order the
Regional Trial Court (RTC), Branch 51,
in Manila had issued on March 12,
2001 denying their motion to dismiss
because the substituted service of the
summons and copies of the complaint
on each of them had been valid and
effective.3
Antecedents
On July 3, 2000, respondent, a retired
police officer assigned at the Western
Police District in Manila, sued
AbanteTonite, a daily tabloid of
general circulation; its Publisher Allen
A. Macasaet; its Managing Director
Nicolas V. Quijano; its Circulation
Manager Isaias Albano; its Editors
Janet Bay, Jesus R. Galang and Randy
Hagos; and its Columnist/Reporter Lily
Reyes (petitioners), claiming damages
because of an allegedly libelous
article petitioners published in the
June 6, 2000 issue of AbanteTonite.
The suit, docketed as Civil Case No.
00-97907, was raffled to Branch 51 of
the RTC, which in due course issued
summons to be served on each
defendant, including AbanteTonite, at
their business address at Monica
Publishing Corporation, 301-305 3rd
Floor, BF Condominium Building,
Solana Street corner A. Soriano Street,
Intramuros, Manila.4

JURISDICTION

In the morning of September 18,

2000, RTC Sheriff Raul Medina
proceeded to the stated address to
effect the personal service of the
summons on the defendants. But his
efforts to personally serve each
defendant in the address were futile
because the defendants were then out
of the office and unavailable. He
returned in the afternoon of that day
to make a second attempt at serving
the summons, but he was informed
that petitioners were still out of the
office. He decided to resort to
substituted service of the summons,
and explained why in his sheriffs
return dated September 22, 2005
On October 3, 2000, petitioners
moved for the dismissal of the
complaint through counsels special
appearance in their behalf, alleging
lack of jurisdiction over their persons
because of the invalid and ineffectual
substituted service of summons. They
contended that the sheriff had made
no prior attempt to serve the
summons personally on each of them
in accordance with Section 6 and
Section 7, Rule 14 of the Rules of
Court. They further moved to drop
AbanteTonite as a defendant by virtue
of its being neither a natural nor a
juridical person that could be
impleaded as a party in a civil action.
At the hearing of petitioners motion
to dismiss, Medina testified that he
had gone to the office address of
petitioners in the morning of
September 18, 2000 to personally
serve the summons on each
defendant; that petitioners were out of
the office at the time; that he had
returned in the afternoon of the same
day to again attempt to serve on each
defendant personally but his attempt
had still proved futile because all of
petitioners were still out of the office;
that some competent persons working
in petitioners office had informed him
that Macasaet and Quijano were
always out and unavailable, and that
Albano, Bay, Galang, Hagos and Reyes
were always out roving to gather
news; and that he had then resorted
to substituted service upon realizing
the impossibility of his finding
petitioners in person within a
reasonable time.
On March 12, 2001, the RTC denied
the motion to dismiss, and directed

petitioners to file their answers to the

complaint within the remaining period
allowed by the Rules of
Court,6 relevantly stating:

reconsideration.7 It stated in respect

of the service of summons, as follows:

Considering that summonses cannot

be served within a reasonable time to
the persons of all the defendants,
hence substituted service of
summonses was validly applied.
Secretary of the President who is duly
authorized to receive such document,
the wife of the defendant and the
Editorial Assistant of the defendant,
were considered competent persons
with sufficient discretion to realize the
importance of the legal papers served
upon them and to relay the same to
the defendants named therein (Sec. 7,
Rule 14, 1997 Rules of Civil
Procedure).

The allegations of the defendants that

the Sheriff immediately resorted to
substituted service of summons upon
them when he was informed that they
were not around to personally receive
the same is untenable. During the
hearing of the herein motion, Sheriff
Raul Medina of this Branch of the
Court testified that on September 18,
2000 in the morning, he went to the
office address of the defendants to
personally serve summons upon them
but they were out. So he went back to
serve said summons upon the
defendants in the afternoon of the
same day, but then again he was
informed that the defendants were out
and unavailable, and that they were
always out because they were roving
around to gather news. Because of
that information and because of the
nature of the work of the defendants
that they are always on field, so the
sheriff resorted to substituted service
of summons. There was substantial
compliance with the rules, considering
the difficulty to serve the summons
personally to them because of the
nature of their job which compels
them to be always out and
unavailable. Additional matters
regarding the service of summons
upon defendants were sufficiently
discussed in the Order of this Court
dated March 12, 2001.

WHEREFORE, in view of the foregoing,

the Motion to Dismiss is hereby
DENIED for lack of merit..

Regarding the impleading of

AbanteTonite as defendant, the RTC
held, viz:

Accordingly, defendants are directed

to file their Answers to the complaint
within the period still open to them,
pursuant to the rules.

"AbanteTonite" is a daily tabloid of

general circulation. People all over the
country could buy a copy of
"AbanteTonite" and read it, hence, it is
for public consumption. The persons
who organized said publication
obviously derived profit from it. The
information written on the said
newspaper will affect the person,
natural as well as juridical, who was
stated or implicated in the news. All of
these facts imply that "AbanteTonite"
falls within the provision of Art. 44 (2
or 3), New Civil Code. Assuming
arguendo that "AbanteTonite" is not
registered with the Securities and
Exchange Commission, it is deemed a
corporation by estoppels considering
that it possesses attributes of a
juridical person, otherwise it cannot

Records show that the summonses

were served upon Allen A. Macasaet,
President/Publisher of defendant
AbanteTonite, through LuAnn Quijano;
upon defendants Isaias Albano, Janet
Bay, Jesus R. Galang, Randy Hagos
and Lily Reyes, through Rene Esleta,
Editorial Assistant of defendant
AbanteTonite (p. 12, records). It is
apparent in the Sheriffs Return that
on several occasions, efforts to served
(sic) the summons personally upon all
the defendants were ineffectual as
they were always out and unavailable,
so the Sheriff served the summons by
substituted service.

SO ORDERED.
Petitioners filed a motion for
reconsideration, asserting that the
sheriff had immediately resorted to
substituted service of the summons
upon being informed that they were
not around to personally receive the
summons, and that AbanteTonite,
being neither a natural nor a juridical
person, could not be made a party in
the action.
On June 29, 2001, the RTC denied
petitioners motion for

JURISDICTION

be held liable for damages and

injuries it may inflict to other persons.
Undaunted, petitioners brought a
petition for certiorari, prohibition,
mandamusin the CA to nullify the
orders of the RTC dated March 12,
2001 and June 29, 2001.
ISSUE: Whether or not jurisdiction is
acquired over the defendant through
summons
RULING: Ruling of the CA
On March 8, 2002, the CA
promulgated its questioned
decision,8 dismissing the petition for
certiorari, prohibition, mandamus, to
wit:
We find petitioners argument without
merit. The rule is that certiorari will
prosper only if there is a showing of
grave abuse of discretion or an act
without or in excess of jurisdiction
committed by the respondent Judge. A
judicious reading of the questioned
orders of respondent Judge would
show that the same were not issued in
a capricious or whimsical exercise of
judgment. There are factual bases and
legal justification for the assailed
orders. From the Return, the sheriff
certified that "effort to serve the
summons personally xxx were made,
but the same were ineffectual and
unavailing xxx.
and upholding the trial courts finding
that there was a substantial
compliance with the rules that allowed
the substituted service.
Furthermore, the CA ruled:
Anent the issue raised by petitioners
that "AbanteTonite is neither a natural
or juridical person who may be a party
in a civil case," and therefore the case
against it must be dismissed and/or
dropped, is untenable.
The respondent Judge, in denying
petitioners motion for
reconsideration, held that:
xxxx
AbanteTonites newspapers are
circulated nationwide, showing
ostensibly its being a corporate entity,
thus the doctrine of corporation by
estoppel may appropriately apply.

An unincorporated association, which

represents itself to be a corporation,
will be estopped from denying its
corporate capacity in a suit against it
by a third person who relies in good
faith on such representation.

The distinctions that need to be

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

There being no grave abuse of

discretion committed by the
respondent Judge in the exercise of his
jurisdiction, the relief of prohibition is
also unavailable.

The settled rule is that the aim and

object of an action determine its
character. Whether a proceeding is in
rem, or in personam, or quasi in rem
for that matter, is determined by its
nature and purpose, and by these
only. A proceeding in personam is a
proceeding to enforce personal rights
and obligations brought against the
person and is based on the jurisdiction
of the person, although it may involve
his right to, or the exercise of
ownership of, specific property, or
seek to compel him to control or
dispose of it in accordance with the
mandate of the court. The purpose of
a proceeding in personam is to
impose, through the judgment of a
court, some responsibility or liability
directly upon the person of the
defendant. Of this character are suits
to compel a defendant to specifically
perform some act or actions to fasten
a pecuniary liability on him. An action
in personam is said to be one which
has for its object a judgment against
the person, as distinguished from a
judgment against the property to
determine its state. It has been held
that an action in personam is a
proceeding to enforce personal rights
or obligations; such action is brought
against the person. As far as suits for
injunctive relief are concerned, it is
well-settled that it is an injunctive act
in personam. In Combs v. Combs, the
appellate court held that proceedings
to enforce personal rights and
obligations and in which personal
judgments are rendered adjusting the
rights and obligations between the
affected parties is in personam.
Actions for recovery of real property
are in personam.

WHEREFORE, the instant petition is

DENIED. The assailed Orders of
respondent Judge are AFFIRMED.
SO ORDERED.9
On January 13, 2003, the CA denied
petitioners motion for
reconsideration.10
Issues
Petitioners hereby submit that:
1. THE COURT OF APPEALS
COMMITTED AN ERROR OF LAW IN
HOLDING THAT THE TRIAL COURT
ACQUIRED JURISDICTION OVER
HEREIN PETITIONERS.
2. THE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR BY
SUSTAINING THE INCLUSION OF
ABANTE TONITE AS PARTY IN THE
INSTANT CASE.11
Ruling
The petition for review lacks merit.
Jurisdiction over the person, or
jurisdiction in personam the power of
the court to render a personal
judgment or to subject the parties in a
particular action to the judgment and
other rulings rendered in the action
is an element of due process that is
essential in all actions, civil as well as
criminal, except in actions in rem or
quasi in rem. Jurisdiction over the
defendantin an action in rem or quasi
in rem is not required, and the court
acquires jurisdiction over an actionas
long as it acquires jurisdiction over the
resthat is thesubject matter of the
action. The purpose of summons in
such action is not the acquisition of
jurisdiction over the defendant but
mainly to satisfy the constitutional
requirement of due process.12

On the other hand, a proceeding quasi

in rem is one brought against persons
seeking to subject the property of
such persons to the discharge of the
claims assailed. In an action quasi in
rem, an individual is named as
defendant and the purpose of the
proceeding is to subject his interests
therein to the obligation or loan
burdening the property. Actions quasi
in rem deal with the status, ownership

JURISDICTION

or liability of a particular property but

which are intended to operate on
these questions only as between the
particular parties to the proceedings
and not to ascertain or cut off the
rights or interests of all possible
claimants. The judgments therein are
binding only upon the parties who
joined in the action.
As a rule, Philippine courts cannot try
any case against a defendant who
does not reside and is not found in the
Philippines because of the
impossibility of acquiring jurisdiction
over his person unless he voluntarily
appears in court; but when the case is
an action in rem or quasi in rem
enumerated in Section 15, Rule 14 of
the Rules of Court, Philippine courts
have jurisdiction to hear and decide
the case because they have
jurisdiction over the res, and
jurisdiction over the person of the
non-resident defendant is not
essential. In the latter instance,
extraterritorial service of summons
can be made upon the defendant, and
such extraterritorial service of
summons is not for the purpose of
vesting the court with jurisdiction, but
for the purpose of complying with the
requirements of fair play or due
process, so that the defendant will be
informed of the pendency of the
action against him and the possibility
that property in the Philippines
belonging to him or in which he has an
interest may be subjected to a
judgment in favor of the plaintiff, and
he can thereby take steps to protect
his interest if he is so minded. On the
other hand, when the defendant in an
action in personam does not reside
and is not found in the Philippines, our
courts cannot try the case against him
because of the impossibility of
acquiring jurisdiction over his person
unless he voluntarily appears in
court.14
As the initiating party, the plaintiff in a
civil action voluntarily submits himself
to the jurisdiction of the court by the
act of filing the initiatory pleading. As
to the defendant, the court acquires
jurisdiction over his person either by
the proper service of the summons, or
by a voluntary appearance in the
action.15
Upon the filing of the complaint and
the payment of the requisite legal

fees, the clerk of court forthwith

issues the corresponding summons to
the defendant.16 The summons is
directed to the defendant and signed
by the clerk of court under seal. It
contains the name of the court and
the names of the parties to the action;
a direction that the defendant
answers within the time fixed by the
Rules of Court; and a notice that
unless the defendant so answers, the
plaintiff will take judgment by default
and may be granted the relief applied
for.17 To be attached to the original
copy of the summons and all copies
thereof is a copy of the complaint (and
its attachments, if any) and the order,
if any, for the appointment of a
guardian ad litem.18
The significance of the proper service
of the summons on the defendant in
an action in personam cannot be
overemphasized. The service of the
summons fulfills two fundamental
objectives, namely: (a) to vest in the
court jurisdiction over the person of
the defendant; and (b) to afford to the
defendant the opportunity to be heard
on the claim brought against him.19 As
to the former, when jurisdiction in
personam is not acquired in a civil
action through the proper service of
the summons or upon a valid waiver
of such proper service, the ensuing
trial and judgment are void.20 If the
defendant knowingly does an act
inconsistent with the right to object to
the lack of personal jurisdiction as to
him, like voluntarily appearing in the
action, he is deemed to have
submitted himself to the jurisdiction of
the court.21 As to the latter, the
essence of due process lies in the
reasonable opportunity to be heard
and to submit any evidence the
defendant may have in support of his
defense. With the proper service of
the summons being intended to afford
to him the opportunity to be heard on
the claim against him, he may also
waive the process.21 In other words,
compliance with the rules regarding
the service of the summons is as
much an issue of due process as it is
of jurisdiction.23
Under the Rules of Court, the service
of the summons should firstly be
effected on the defendant himself
whenever practicable. Such personal
service consists either in handing a
copy of the summons to the

defendant in person, or, if the

defendant refuses to receive and sign
for it, in tendering it to him.24 The rule
on personal service is to be rigidly
enforced in order to ensure the
realization of the two fundamental
objectives earlier mentioned. If, for
justifiable reasons, the defendant
cannot be served in person within a
reasonable time, the service of the
summons may then be effected either
(a) by leaving a copy of the summons
at his residence with some person of
suitable age and discretion then
residing therein, or (b) by leaving the
copy at his office or regular place of
business with some competent person
in charge thereof.25 The latter mode of
service is known as substituted
service because the service of the
summons on the defendant is made
through his substitute.
It is no longer debatable that the
statutory requirements of substituted
service must be followed strictly,
faithfully and fully, and any
substituted service other than that
authorized by statute is considered
ineffective.26 This is because
substituted service, being in
derogation of the usual method of
service, is extraordinary in character
and may be used only as prescribed
and in the circumstances authorized
by statute.27 Only when the defendant
cannot be served personally within a
reasonable time may substituted
service be resorted to. Hence, the
impossibility of prompt personal
service should be shown by stating
the efforts made to find the defendant
himself and the fact that such efforts
failed, which statement should be
found in the proof of service or
sheriffs return.28Nonetheless, the
requisite showing of the impossibility
of prompt personal service as basis for
resorting to substituted service may
be waived by the defendant either
expressly or impliedly.29
There is no question that Sheriff
Medina twice attempted to serve the
summons upon each of petitioners in
person at their office address, the first
in the morning of September 18, 2000
and the second in the afternoon of the
same date. Each attempt failed
because Macasaet and Quijano were
"always out and not available" and the
other petitioners were "always roving
outside and gathering news." After

JURISDICTION

Medina learned from those present in

the office address on his second
attempt that there was no likelihood
of any of petitioners going to the
office during the business hours of
that or any other day, he concluded
that further attempts to serve them in
person within a reasonable time would
be futile. The circumstances fully
warranted his conclusion. He was not
expected or required as the serving
officer to effect personal service by all
means and at all times, considering
that he was expressly authorized to
resort to substituted service should he
be unable to effect the personal
service within a reasonable time. In
that regard, what was a reasonable
time was dependent on the
circumstances obtaining. While we are
strict in insisting on personal service
on the defendant, we do not cling to
such strictness should the
circumstances already justify

substituted service instead. It is the

spirit of the procedural rules, not their
letter, that governs.30
In reality, petitioners insistence on
personal service by the serving officer
was demonstrably superfluous. They
had actually received the summonses
served through their substitutes, as
borne out by their filing of several
pleadings in the RTC, including an
answer with compulsory counterclaim
ad cautelam and a pre-trial brief ad
cautelam. They had also availed
themselves of the modes of discovery
available under the Rules of Court.
Such acts evinced their voluntary
appearance in the action.
Nor can we sustain petitioners
contention that AbanteTonite could
not be sued as a defendant due to its
not being either a natural or a juridical
person. In rejecting their contention,
the CA categorized AbanteTonite as a

corporation by estoppel as the result

of its having represented itself to the
reading public as a corporation
despite its not being incorporated.
Thereby, the CA concluded that the
RTC did not gravely abuse its
discretion in holding that the nonincorporation of AbanteTonite with the
Securities and Exchange Commission
was of no consequence, for,
otherwise, whoever of the public who
would suffer any damage from the
publication of articles in the pages of
its tabloids would be left without
recourse. We cannot disagree with the
CA, considering that the editorial box
of the daily tabloid disclosed that
basis, nothing in the box indicated
that Monica Publishing Corporation
had owned AbanteTonite.