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September 24, 2012 154470-71
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 0629-94" – referring to the Treasury Bills.10 Nevertheless, 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. The transfer of the first set of seven CB bills i. CB bill nos. 45351-53 On April 20, 1994, according to the BOC, it "sold back"11 to the PDB three of the seven CB bills. In turn, the PDB transferred these three CB bills to Bancapital Development Corporation (Bancap). On April 25, 1994, the BOC bought the three CB bills from Bancap – so, ultimately, the BOC reacquired these three CB bills,12 particularly described as follows: Serial No.: 2BB XM 045351 2BB XM 045352 2BB XM 045353 Quantity: Three (3) Denomination: Php 10 million Total Face Value: Php 30 million ii. CB bill nos. 45347-50 On April 20, 1994, the BOC sold the remaining four (4) CB bills to Capital One Equities Corporation13 which transferred them to All-Asia Capital and Trust Corporation (All Asia). On September 30, 1994, All Asia further transferred the four CB bills back to the RCBC.14 On November 16, 1994, the RCBC sold back to All Asia one of these 4 CB bills. When the BSP refused to release the amount of this CB bill on maturity, the BOC purchased from All Asia this lone CB bill,15 particularly described as follows:16 Serial No.: 2BB XM 045348 Quantity: One (1) Denomination: Php 10 million Total Face Value: Php 10 million 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. All in all, the BOC acquired the first set of seven CB bills. II. Second set of CB bills On April 19, 1994, the RCBC, as registered owner, (i) sold two CB bills with a total face value of P 20 million to the PDB and (ii) delivered to the PDB the corresponding Detached Assignment.17 The two CB bills were particularly described as follows: Serial No.: BB XM 045373
BANK OF COMMERCE, Petitioner, vs. PLANTERS DEVELOPMENT BANK and BANGKO SENTRAL NG PILIPINAS, Respondent. x-----------------------x G.R. Nos. 154589-90 BANGKO SENTRAL NG PILIPINAS, Petitioner, vs. PLANTERS DEVELOPMENT BANK, Respondent.
DECISION BRION, J.: 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 Bangko Sentral ng Pilipinas (BSP). They assail the January 10, 2002 and July 23, 2002 Orders (assailed orders) of the Regional Trial Court (RTC) of Makati City, Branch 143, in Civil Case Nos. 94-3233 and 94-3254. These orders dismissed (i) the petition filed by the Planters Development Bank (PDB), (ii) the "counterclaim" filed by the BOC, and (iii) the counter-complaint/cross-claim for interpleader filed bythe BSP; and denied the BOC’s and the BSP’s motions for reconsideration. THE ANTECEDENTS The Central Bank bills I. First set of CB bills 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.6 The 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
BB XM 045374 Issue date: January 3, 1994 Maturity date: January 2, 1995 Denomination: Php 10 million Total Face value: Php 20 million On even date, the PDB delivered to Bancap the two CB bills18 (April 19 transaction). In turn, Bancap sold the CB bills to Al-Amanah Islamic Investment Bank of the Philippines, which in turn sold it to the BOC.19 PDB’s move against the transfer of the first and second sets of CB bills On June 30, 1994, upon learning of the transfers involving the CB bills, the PDB informed20 the Officer-in-Charge of the BSP’s Government Securities Department,21 Lagrimas Nuqui, of the PDB’s claim over these CB bills, based on the Detached Assignments in its possession. The PDB requested the BSP22 to record its claim in the BSP’s books, explaining that its non-possession of the CB bills is "on account of imperfect negotiations thereof and/or subsequent setoff or transfer."23 Nuqui denied the request, invoking Section 8 of CB Circular No. 28 (Regulations Governing Open Market Operations, Stabilization of the Securities Market, Issue, Servicing and Redemption of the Public Debt)24 which requires the presentation of the bond before a registered bond may be transferred on the books of the BSP.25 In a July 25, 1994 letter, the PDB clarified to Nuqui that it was not "asking for the transfer of the CB Bills…. rather it intends to put the BSP on formal notice that whoever is in possession of said bills is not a holder in due course," and, therefore the BSP should not make payment upon the presentation of the CB bills on maturity.26 Nuqui responded that the BSP was "not in a position at that point in time to determine who is and who is not the holder in due course since it is not privy to all acts and time involving the transfers or negotiation" of the CB bills. Nuqui added that the BSP’s action shall be governed by CB Circular No. 28, as amended.27 On November 17, 1994, the PDB also asked BSP Deputy Governor Edgardo Zialcita that (i) a notation in the BSP’s books be made against the transfer, exchange, or payment of the bonds and the payment of interest thereon; and (ii) the presenter of the bonds upon maturity be required to submit proof as a holder in due course (of the first set of CB bills). The PDB relied on Section 10 (d) 4 of CB Circular No. 28.28 This provision reads: (4) Assignments effected by fraud – Where the assignment of a registered bond is secured by fraudulent representations, the Central Bank can grant no relief if the assignment has been honored without notice of fraud. Otherwise, the Central Bank, upon receipt of notice that the assignment is claimed to have been secured by fraudulent representations, or payment of the bond the payment of interest thereon, and when the bond is presented, will call upon the owner and the person presenting the bond to substantiate their respective claims.If it then appears that the person presenting the bond stands in the position of bonafide holder for value, the
Central Bank, after giving the owner an opportunity to assert his claim, will pass the bond for transfer, exchange or payments, as the case may be, without further question. In a December 29, 1994 letter, Nuqui again denied the request, reiterating the BSP’s previous stand. In light of these BSP responses and the impending maturity of the CB bills, the PDB filed29 with the RTC two separate petitions for Mandamus, Prohibition and Injunction with prayer for Preliminary Injunction and Temporary Restraining Order, docketed as Civil Case No. 94-3233 (covering the first set of CB bills) and Civil Case 94-3254 (covering the second set of CB bills) against Nuqui, the BSP and the RCBC.30 The PDB essentially claims that in both the April 15 transaction (involving the first set of CB bills) and the April 19 transaction (involving the second set of CB bills), there was no intent on its part to transfer title of the CB bills, as shown by its non-issuance of a detached assignment in favor of the BOC and Bancap, respectively. The PDB particularly alleges that it merely "warehoused"31 the first set of CB bills with the BOC, as security collateral. On December 28, 1994, the RTC temporarily enjoined Nuqui and the BSP from paying the face value of the CB bills on maturity.32 On January 10, 1995, the PDB filed an Amended Petition, additionally impleading the BOC and All Asia.33 In a January 13, 1995 Order, the cases were consolidated.34 On January 17, 1995, the RTC granted the PDB’s application for a writ of preliminary prohibitory injunction.35 In both petitions, the PDB identically prayed: WHEREFORE, it is respectfully prayed x x x 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 x x 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 x x PDB, (ii) x x x RCBC x x x, (iii) x x x BOC x x x, and (iv) x x x ALL-ASIA x x x; 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 x x 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 attorney’s fees; (c) the legal rate of interest from the filing of this Petition until full payment of the sums mentioned in this Petition; and
(d) the costs of suit.36 After the petitions were filed, the BOC acquired/reacquired all the nine CB bills – the first and second sets of CB bills (collectively, subject CB bills). Defenses of the BSP and of the BOC37 The BOC filed its Answer, praying for the dismissal of the petition. It argued that the PDB has no cause of action against it since the PDB is no longer the owner of the CB bills. Contrary to the PDB’s "warehousing theory,"38 the BOC asserted that the (i) April 15 transaction and the (ii) April 19 transaction – covering both sets of CB bills - were valid contracts of sale, followed by a transfer of title (i) to the BOC (in the April 15 transaction) upon the PDB’s delivery of the 1st set of CB bills in substitution of the Treasury Bills the PDB originally intended to sell, and (ii) to Bancap (in the April 19 transaction) upon the PDB’s delivery of the 2nd set of CB bills to Bancap, likewise by way of substitution. The BOC adds that Section 10 (d) 4 of CB Circular No. 28 cannot apply to the PDB’s case because (i) the PDB is not in possession of the CB bills and (ii) the BOC acquired these bills from the PDB, as to the 1st set of CB bills, and from Bancap, as to the 2nd set of CB bills, in good faith and for value. The BOC also asserted a compulsory counterclaim for damages and attorney’s fees. On the other hand, the BSP countered that the PDB cannot invoke Section 10 (d) 4 of CB Circular No. 28 because this section applies only to an "owner" and a "person presenting the bond," of which the PDB is neither. The PDB has not presented to the BSP any assignment of the subject CB bills, duly recorded in the BSP’s books, in its favor to clothe it with the status of an "owner."39 According to the BSP – Section 10 d. (4) applies only to a registered bond which is assigned. And the issuance of CB Bills x x x are required to be recorded/registered in BSP’s books. In this regard, Section 4 a. (1) of CB Circular 28 provides that registered bonds "may be transferred only by an assignment thereon duly executed by the registered owner or his duly authorized representative x x x and duly recorded on the books of the Central Bank." xxxx The alleged assignment of subject CB Bills in PDB’s favor is not recorded/registered in BSP’s books.40 (underscoring supplied) Consequently, when Nuqui and the BSP refused the PDB’s request (to record its claim), they were merely performing their duties in accordance with CB Circular No. 28. Alternatively, the BSP asked that an interpleader suit be allowed between and among the claimants to the subject CB bills on the position that while it is able and willing to pay the subject CB bills’ face value, it is duty bound to ensure that payment is made to the
rightful owner. The BSP prayed that judgment be rendered: a. Ordering the dismissal of the PDB’s petition for lack of merit; b. Determining which between/among [PDB] and the other claimants is/are lawfully entitled to the ownership of the subject CB bills and the proceeds thereof; c. x x x; d. Ordering PDB to pay BSP and Nuqui such actual/compensatory and exemplary damages… as the RTC may deem warranted; and e. Ordering PDB to pay Nuqui moral damages… and to pay the costs of the suit.41 Subsequent events The PDB agreed with the BSP’s alternative response for an interpleader – 4. PDB agrees that the various claimants should now interplead and substantiate their respective claims on the subject CB bills. However, the total face value of the subject CB bills should be deposited in escrow with a private bank to be disposed of only upon order of the RTC.42 Accordingly, on June 9, 199543 and August 4, 1995,44 the BOC and the PDB entered into two separate Escrow Agreements.45 The first agreement covered the first set of CB bills, while the second agreement covered the second set of CB bills. The parties agreed to jointly collect from the BSP the maturity proceeds of these CB bills and to deposit said amount in escrow, "pending final determination by Court judgment, or amicable settlement as to who shall be eventually entitled thereto."46 The BOC and the PDB filed a Joint Motion,47 submitting these Escrow Agreements for court approval. The RTC gave its approval to the parties’ Joint Motion.48 Accordingly, the BSP released the maturity proceeds of the CB bills by crediting the Demand Deposit Account of the PDB and of the BOC with 50% each of the maturity proceeds of the amount in escrow.49 In view of the BOC’s acquisition of all the CB bills, All Asia50 moved to be dropped as a respondent (with the PDB’s conformity51), which the RTC granted.52 The RCBC subsequently followed suit.53 In light of the developments, on May 4, 1998, the RTC required the parties to manifest their intention regarding the case and to inform the court of any amicable settlement; "otherwise, th[e] case shall be dismissed for lack of interest."54 Complying with the RTC’s order, the BOC moved (i) that the case be set for pre-trial and (ii) for further proceeding to resolve the remaining issues between the BOC and the PDB, particularly on "who has a better right over the subject CB bills."55 The PDB joined the BOC in its motion.56 On September 28, 2000, the RTC granted the BSP’s motion to interplead and, accordingly, required the
BOC to amend its Answer and for the conflicting claimants to comment thereon.57 In October 2000, the BOC filed its Amended Consolidated Answer with Compulsory Counterclaim, reiterating its earlier arguments asserting ownership over the subject CB bills.58 In the alternative, the BOC added that even assuming that there was no effective transfer of the nine CB bills ultimately to the BOC, the PDB remains obligated to deliver to the BOC, as buyer in the April 15 transaction and ultimate successor-in-interest of the buyer (Bancap) in the April 19 transaction, either the original subjects of the sales or the value thereof, plus whatever income that may have been earned during the pendency of the case.59 That BOC prayed: 1. To declare BOC as the rightful owner of the nine (9) CB bills and as the party entitled to the proceeds thereof as well as all income earned pursuant to the two (2) Escrow Agreements entered into by BOC and PDB. 2. In the alternative, ordering PDB to deliver the original subject of the sales transactions or the value thereof and whatever income earned by way of interest at prevailing rate. Without any opposition or objection from the PDB, on February 23, 2001, the RTC admitted60 the BOC’s Amended Consolidated Answer with Compulsory Counterclaims. In May 2001, the PDB filed an Omnibus Motion,61 questioning the RTC’s jurisdiction over the BOC’s "additional counterclaims." The PDB argues that its petitions pray for the BSP (not the RTC) to determine who among the conflicting claimants to the CB bills stands in the position of the bona fide holder for value. The RTC cannot entertain the BOC’s counterclaim, regardless of its nature, because it is the BSP which has jurisdiction to determine who is entitled to receive the proceeds of the CB bills. The BOC opposed62 the PDB’s Omnibus Motion. The PDB filed its Reply.63 In a January 10, 2002 Order, the RTC dismissed the PDB’s petition, the BOC’s counterclaim and the BSP’s counter-complaint/cross-claim for interpleader, holding that under CB Circular No. 28, it has no jurisdiction (i) over the BOC’s "counterclaims" and (ii) to resolve the issue of ownership of the CB bills.64 With the denial of their separate motions for Reconsideration,65 the BOC and the BSP separately filed the present petitions for review on certiorari.66 THE BOC’S and THE BSP’S PETITIONS The BOC argues that the present cases do not fall within the limited provision of Section 10 (d) 4 of CB Circular No. 28, which contemplates only of three situations: first, where the fraudulent assignment is not coupled with a notice to the BSP, it can grant no relief; second, where the fraudulent assignment is coupled with a notice of fraud to the BSP, it will make a notation against the assignment and require the
owner and the holder to substantiate their claims; and third, where the case does not fall on either of the first two situations, the BSP will have to await action on the assignment pending settlement of the case, whether by agreement or by court order. The PDB’s case cannot fall under the first two situations. With particular regard to the second situation, CB Circular No. 28 requires that the conflict must be between an "owner" and a "holder," for the BSP to exercise its limited jurisdiction to resolve conflicting claims; and the word "owner" here refers to the registered owner giving notice of the fraud to the BSP. The PDB, however, is not the registered owner nor is it in possession (holder) of the CB bills.67 Consequently, the PDB’s case can only falls under the third situation which leaves the RTC, as a court of general jurisdiction, with the authority to resolve the issue of ownership of a registered bond (the CB bills) not falling in either of the first two situations. The BOC asserts that the policy consideration supportive of its interpretation of CB Circular No. 28 is to have a reliable system to protect the registered owner; should he file a notice with the BSP about a fraudulent assignment of certain CB bills, the BSP simply has to look at its books to determine who is the owner of the CB bills fraudulently assigned. Since it is only the registered owner who complied with the BSP’s requirement of recording an assignment in the BSP’s books, then "the protective mantle of administrative proceedings" should necessarily benefit him only, without extending the same benefit to those who chose to ignore the Circular’s requirement, like the PDB.68 Assuming arguendo that the PDB’s case falls under the second situation – i.e., the BSP has jurisdiction to resolve the issue of ownership of the CB bills – the more recent CB Circular No. 769-80 (Rules and Regulations Governing Central Bank Certificates of Indebtedness) already superseded CB Circular No. 28, and, in particular, effectively amended Section 10 (d) 4 of CB Circular No. 28. The pertinent provisions of CB Circular No. 769-80 read: Assignment Affected by Fraud. – Any assignment for transfer of ownership of registered certificate obtained through fraudulent representation if honored by the Central Bank or any of its authorized service agencies shall not make the Central Bank or agency liable therefore unless it has previous formal notice of the fraud. The Central Bank, upon notice under oath that the assignment was secured through fraudulent means, shall immediately issue and circularize a "stop order" against the transfer, exchange, redemption of the Certificate including the payment of interest coupons. The Central Bank or service agency concerned shall continue to withhold action on the certificate until such time that the conflicting claims have been finally settled either by amicable settlement between the parties or by order of the Court. Unlike CB Circular No. 28, CB Circular No. 769-80 limited the BSP’s authority to the mere issuance and circularization of a "stop order" against the transfer, exchange and redemption upon sworn notice of a
fraudulent assignment. Under this Circular, the BSP shall only continue to withhold action until the dispute is ended by an amicable settlement or by judicial determination. Given the more passive stance of the BSP – the very agency tasked to enforce the circulars involved - under CB Circular No. 769-80, the RTC’s dismissal of the BOC’s counterclaims is palpably erroneous. Lastly, since Nuqui’s office (Government Securities Department) had already been abolished,69 it can no longer adjudicate the dispute under the second situation covered by CB Circular No. 28. The abolition of Nuqui’s office is not only consistent with the BSP’s Charter but, more importantly, with CB Circular No. 769-80, which removed the BSP’s adjudicative authority over fraudulent assignments. THE PDB’S COMMENT The PDB claims that jurisdiction is determined by the allegations in the complaint/petition and not by the defenses set up in the answer.70 In filing the petition with the RTC, the PDB merely seeks to compel the BSP to determine, pursuant to CB Circular No. 28, the party legally entitled to the proceeds of the subject CB bills, which, as the PDB alleged, have been transferred through fraudulent representations – an allegation which properly recognized the BSP’s jurisdiction to resolve conflicting claims of ownership over the CB bills. The PDB adds that under the doctrine of primary jurisdiction, courts should refrain from determining a controversy involving a question whose resolution demands the exercise of sound administrative discretion. In the present case, the BSP’s special knowledge and experience in resolving disputes on securities, whose assignment and trading are governed by the BSP’s rules, should be upheld. The PDB counters that the BOC’s tri-fold interpretation of Section 10 (d) 4 of CB Circular No. 28 sanctions split jurisdiction which is not favored;but even this tri-fold interpretation which, in the second situation, limits the meaning of the "owner" to the registered owner is flawed. Section 10 (d) 4 aims to protect not just the registered owner but anyone who has been deprived of his bond by fraudulent representation in order to deter fraud in the secondary trading of government securities. The PDB asserts that the existence of CB Circular No. 769-80 or the abolition of Nuqui’s office does not result in depriving the BSP of its jurisdiction: first, CB Circular No. 769-80 expressly provides that CB Circular No. 28 shall have suppletory application to CB Circular No. 769-80; and second, the BSP can always designate an office to resolve the PDB’s claim over the CB bills. Lastly, the PDB argues that even assuming that the RTC has jurisdiction to resolve the issue of ownership of the CB bills, the RTC has not acquired jurisdiction over the BOC’s so-called "compulsory" counterclaims (which in truth is merely "permissive") because of the BOC’s failure to pay the appropriate docket fees. These counterclaims should, therefore, be dismissed and expunged from the record.
THE COURT’S RULING We grant the petitions. At the outset, we note that the parties have not raised the validity of either CB Circular No. 28 or CB Circular No. 769-80 as an issue. What the parties largely contest is the applicable circular in case of an allegedly fraudulently assigned CB bill. The applicable circular, in turn, is determinative of the proper remedy available to the PDB and/or the BOC as claimants to the proceeds of the subject CB bills. Indisputably, at the time the PDB supposedly invoked the jurisdiction of the BSP in 1994 (by requesting for the annotation of its claim over the subject CB bills in the BSP’s books), CB Circular No. 769-80 has long been in effect. Therefore, the parties’ respective interpretations of the provision of Section 10 (d) 4 of CB Circular No. 28 do not have any significance unless it is first established that that Circular governs the resolution of their conflicting claims of ownership. This conclusion is important, given the supposed repeal or modification of Section 10 (d) 4 of CB Circular No. 28 by the following provisions of CB Circular No. 769-80: ARTICLE XI SUPPLEMENTAL RULES Section 1. Central Bank Circular No. 28 – The provisions of Central Bank Circular No. 28 shall have suppletory application to matters not specially covered by these Rules. ARTICLE XII EFFECTIVITY Effectivity – The rules and regulations herein prescribed shall take effect upon approval by the Monetary Board, Central Bank of the Philippines, and all circulars, memoranda, or office orders inconsistent herewith are revoked or modified accordingly. (Emphases added) We agree with the PDB that in view of CB Circular No. 28’s suppletory application, an attempt to harmonize the apparently conflicting provisions is a prerequisite before one may possibly conclude that an amendment or a repeal exists.71 Interestingly, however, even the PDB itself failed to submit an interpretation based on its own position of harmonization. The repealing clause of CB Circular No. 769-80 obviously did not expressly repeal CB Circular No. 28; in fact, it even provided for the suppletory application of CB Circular No. 28 on "matters not specially covered by" CB Circular No. 769-80. While no express repeal exists, the intent of CB Circular No. 769-80 to operate as an implied repeal,72 or at least to amend earlier CB circulars, is supported by its text "revoking" or "modif[ying" "all circulars" which are inconsistent with its terms. At the outset, we stress that none of the parties disputes that the subject CB bills fall within the category of a certificate or evidence of indebtedness
80 In the exercise of judicial or quasi-judicial power. 7653 continued to recognize this role by the BSP. 769-80 now operate on the same subject – Central Bank-issued evidence of indebtedness. 769-80 impliedly repeals CB Circular No. 769-80 inescapably repealed Section 10 (d) 4 of CB Circular No. however. we find that CB Circular No. or unless it is convincingly and unambiguously demonstrated. payment and replacement of bonds and securities representing the public debt. procedural rules alone can confer no jurisdiction to courts or administrative agencies. In other words. Under CB Circular No. 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. 7653.the core question of law involved in these petitions . both CB Circular No. unless manifestly intended by the legislature. the BSP would have to "call upon the owner and the person presenting the bond to substantiate their respective claims" and. we hark back to the basic principles governing the question of jurisdiction over the subject matter.84 Second. the continued relevance and application of CB Circular No. to the extent of the conflict. 28 and CB Circular No..73 Repeal by implication is not favored. inscription.which the Court cannot just treat sub-silencio. the law required a phase-out of all fiscal agency functions by the BSP. the jurisdictional provision of CB Circular No. it has jurisdiction over cases whose subject matter does not fall within the exclusive original jurisdiction of any court. 769-80 itself. Servicing and Redemption of Public Debt. 28 would depend on the need to supplement any deficiency or silence in CB Circular No.75 A general reading of the two circulars shows that the second instance of implied repeal is present in this case. No. 769-80 on a particular matter. on the matter of fraudulent assignment. 769-80.and that these were issued by the Central Bank. tribunal or body exercising judicial or quasi-judicial functions. 769-80 provide the BSP with a course of action in case of an allegedly fraudulently assigned certificate of indebtedness. As the two circulars stand.76 On the other hand. 28. On the other hand. jurisdiction is the legal power or authority to hear and determine a cause. Article XI of CB Circular No. could wield only such powers that are specifically granted to it by the enabling statutes.74 There are two instances of implied repeal. The CB Monetary Board issued CB Circular No. an RTC is a court of general jurisdiction. redemption of the [registered] certificate" without any adjudicative function (which is the precise root of the present controversy).e. Issue. that reliance on CB Circular No. CB Circular No. Stabilization of Securities Market.81 In the context of these petitions. 28.A. First. jurisdiction over the subject matter is determined only by the Constitution and by law. even without resorting to statutory construction aids. An implied repeal transpires when a substantial conflict exists between the new and the prior laws. No. entitled "Rules and Regulations Governing Central Bank Certificate of Indebtedness. the BSP shall merely "issue and circularize a ‘stop order’ against the transfer. the later act. Even granting.86 irrespective of whether the plaintiff is entitled to favorable judgment on the basis of his assertions.82 As a matter of substantive law. pursuant to Section 124 (now Section 119 of Republic Act R. even if CB Circular No. that the laws or orders are clearly repugnant and patently inconsistent with one another so that they cannot coexist. In the present case. it refers to the authority of a court to hear and decide a case. now the BSP. 28.87 The reason is that the complaint is supposed to contain a concise statement of the 6 . i.A. Under Section 1." However. Thus. transfer. 28 applies broadly to both government-issued bonds and securities and Central Bank-issued evidence of indebtedness. 28 and CB Circular No. including Section 119 of R. In the absence of an express repeal. the legislature is presumed to know the existing law and would express a repeal if one is intended. 28. 7653) of the old Central Bank law79 which provides that "the servicing and redemption of the public debt shall also be effected through the Bangko Sentral. Section 5. the Court could have written finis to the present controversy by simply sustaining the BSP’s hands-off approach to the PDB’s problem under CB Circular No. in which case. 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.A. CB Circular No. in relation to CB Circular No." is a regulation governing the servicing and redemption of public debt. an administrative agency. 28. registration. 769-80. The issue of BSP’s jurisdiction. is a tribunal of limited jurisdiction and. given the present state of law.83 In fact. Article V of CB Circular No. has given rise to a question of jurisdiction . 769-80. even as R. The other occurs when the later act covers the whole subject of the earlier one and is clearly intended as a substitute. including the issue. it will operate to repeal the earlier law. 769-80. lay hidden On that note. from there. matters involving the subject CB bills should necessarily be governed by CB Circular No. thus. 28 to regulate the servicing and redemption of public debt. determine who has a better right over the registered bond. acting in its quasi-judicial capacity. as such." 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. One takes place when the provisions in the two acts on the same subject matter are irreconcilably contradictory. However. No. constitutes an implied repeal of the earlier one. entitled "Regulations Governing Open Market Operations. CB Circular No. under CB Circular No. 28. the patent irreconcilability of these two provisions does not require elaboration. exchange. In contrast. in case of fraudulent assignments. 769-80 alone is not enough. 769-80. Broadly speaking.
too. by the simple expedient of promulgating a new circular (specially applicable to a certificate of indebtedness issued by the BSP itself). banking and credit.5. 4.90 In line with these broad objectives. The issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions or functions covered. 4. assuming it has. The 1987 Constitution continued to recognize this function of the then Central Bank until Congress. the Court observes that none of the parties ever raised the issue of whether the BSP can simply disown its jurisdiction.A. No. and (vii) acting as banker and financial advisor of the government. Under R. as the country’s central monetary authority. 7653 (hereafter the "New Central Bank Act") for purposes of relending or purchasing of receivables and other obligations. endorsement or assignment with recourse or acceptance of deposit substitutes as defined in Section 95 of Republic Act No.2. taking into consideration the distinctive character of the operations of institutions and the substantive similarities of specific functions to which such rules. discounts. Enforcing prompt corrective action. trust entities and other financial institutions which under special laws are subject to Bangko Sentral supervision. that laws and 4. Section 4 of R. In light of the above principles pointing to jurisdiction as a matter of substantive law. (iv) engaging in foreign exchange transactions. [emphasis ours] 7 . modes or standards are to be applied. conducive to a balanced and sustainable growth of the economy. relied solely and heavily on CB Circular No. the then Central Bank was constitutionally made as the country’s central monetary authority until such time that Congress93 shall have established a central bank.4. inconsistent with an old circular.94 the BSP is given the responsibility of providing policy directions in the areas of money. or 4.95 The Constitution expressly grants the BSP. 7653). 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. 4. the power of supervision over the operation of banks.3. (v) making rediscounts. (iii) sole power and authority to issue currency within the Philippine territory. within the authority granted to the Board and the Central Bank"92 under its original charter. Supervisory Powers. The PDB. (ii) regulation of operations of finance companies and non-bank financial institutions performing quasi banking functions. 1949. That the deficiencies/irregularities found by or discovered by an audit shall be immediately addressed. while leaving with Congress the authority to define the BSP’s regulatory powers over the operations of finance companies and other institutions performing similar functions."91 Specifically.88 Third. created a new central monetary authority which later came to be known as the Bangko Sentral ng Pilipinas. "Supervision" shall include the following: 4. jurisdiction is determined by the law in force at the time of the filing of the complaint. No. the BSP’s powers and functions include (i) supervision over the operation of banks.A. The conduct of examination to determine compliance with laws and regulations if the circumstances so warrant as determined by the Monetary Board. 7653. Inquiring into the solvency and liquidity of the institution (2-D). 28. Overseeing to ascertain regulations are complied with.6. in particular. loans and advances to banking and other financial institutions to influence the volume of credit consistent with the objective of achieving price stability.ultimate facts constituting the plaintiff's causes of action. — The operations and activities of banks shall be subject to supervision of the Bangko Sentral. assertive of its limited jurisdiction over ownership issues arising from fraudulent assignments of a certificate of indebtedness. the provisions of the law itself that gave CB Circular 769-80 its life and jurisdiction must be examined. (2-Ca) For the purposes of this Act. "quasi-banks" shall refer to entities engaged in the borrowing of funds through the issuance. 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. The Philippine Central Bank On January 3. With the 1973 Constitution. No.1. pursuant to the Constitution. and of promoting and maintaining monetary stability and convertibility of the peso.89 Parenthetically. 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. the primary objective of maintaining price stability.A. it is given.1âwphi1 On the BSP’s power of supervision over the operation of banks. (vi) engaging in open market operations. 8791 (The General Banking Law of 2000) elaborates as follows: CHAPTER II AUTHORITY OF THE BANGKO SENTRAL SECTION 4. 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. Under the New Central Bank Act (R. and (ii) preserving the international value and the convertibility of the peso. (n) The Bangko Sentral shall also have supervision over the operations of and exercise regulatory powers over quasi-banks.
7653. discretion. the BSP Monetary Board is an independent central monetary authority and a body corporate with fiscal and administrative autonomy. It has power to issue subpoena. the BSP Monetary Board is a quasijudicial agency exercising quasi-judicial powers or functions. all banks and all concerned are enjoined to observe strictly the pertinent provisions of said CB Circular as hereunder quoted: xxxx Under Section 10. Undoubtedly. the BSP exercises supervisory powers (and regulatory powers) over banks (and quasi banks). In fact. 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. E. 1994. A "quasi-judicial function" is a term which applies to the action. records and others. 28 (as amended) covering assignments of registered bonds. (2) x x x 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) x x x (b) x x x (c) assignments of treasury notes and certificates of indebtedness in registered form which are not provided at the back thereof with assignment form. over conflicting claims to the proceeds of the CB bills. The issue presented before the Court. does not concern the BSP’s supervisory power over banks as this power is understood under the General Banking Law. the PDB faults the BSP for not recording the assignment of the CB bills in the PDB’s favor despite the fact that the PDB already requested the BSP to record its assignment in the BSP’s books as early as June 30. which the PDB has not shown to be compliant with Section 10 (b) 2 above-quoted. hold hearings. 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. to administer oaths and compel presentation of books. to sue for contempt those refusing to obey the subpoena without justifiable reason. of public administrative officers or bodies. to impose fines and other sanctions and to issue cease and desist order. True.97 The PDB’s claim is not accurate. It held: A quasi-judicial agency or body is an organ of government other than a court and other than a legislature. The fact remains that the BSP already made known to the PDB its unfavorable position on the latter’s claim of fraudulent assignment due to the latter’s own failure to comply96 with existing regulations: In this connection. or ascertain the existence of facts. explicitly provides that the BSP Monetary Board shall exercise its discretion in determining whether administrative sanctions should be imposed on banks and quasi-banks. having been transferred from one entity to another and (ii) all it has are the detached assignments. (d) Assignment of securities which have changed ownership several times. which the PDB is bound to observe. Section 37 of Republic Act No. in a memo dated September 23. the books of the BSP do not show that the supposed assignment of subject CB Bills was ever recorded in the BSP’s books. 28. (e) x x x 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. As aptly observed by the Court of Appeals. banking and credit.. etc.98 the Court considered the BSP as an administrative agency.. is the PDB’s own failure to comply therewith. who are required to investigate facts. which affects the rights of private parties through either adjudication or rule-making.99 exercising quasi-judicial functions through its Monetary Board." the existence of the BSP’s jurisdiction in the present dispute cannot rely on this provision. Cuisia advised all banks (including PDB) xxx as follows: In view recurring incidents ostensibly disregarding certain provisions of CB circular No. Obviously. mandated to provide policy directions in the areas of money. the PDB cannot insist that the BSP take cognizance of its plaint when the basis of the BSP’s refusal under existing regulation.While this provision empowers the BSP to oversee the operations and activities of banks to "ascertain that laws and regulations are complied with. under its power of supervision. there is nothing in the PDB’s petition (even including the letters it sent to the BSP) that would support the BSP’s jurisdiction outside of CB Circular No. The very definition of an administrative agency includes its being vested with quasi-judicial powers. 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. Inc. Ganzon. however. [Boldfacing supplied] Again. and draw conclusions from them.b. Section 10 (b) 2 also requires that a "Detached assignment will be recognized or accepted only upon previous notice to the Central Bank x x x. [Boldfacing supplied] However. needed in its examination. in particular. 1991 xxx then CB Governor Jose L." In fact. which necessarily implies that the BSP Monetary Board must conduct some form of 8 . as a basis for their official action and to exercise discretion of a judicial nature.
104 Scattered provisions in R. the Constitution granted it fiscal and administrative autonomy. Said evidences of indebtedness may be issued directly against the international reserve of the Bangko Sentral or against the securities which it has acquired under the provisions of Section 91 of this Act.101 To be able to perform its role as central monetary authority. place. That the statute withholds this power from the BSP is only consistent 9 .A. the Bangko Sentral may. or a mix of these five. Significantly.100 to carry out a particular governmental function. Subject to the principles stated in Section 90 of this Act. when competing claims of ownership over the proceeds of the securities it has issued are brought before it. – The open market purchases and sales of securities by the Bangko Sentral shall be made exclusively in accordance with its primary objective of achieving price stability. the BSP is authorized to engage in open market operations and thereby "issue.108 (italics supplied.112 Once the issue and/or sale of a security is made. The BSP is not simply a corporate entity but qualifies as an administrative agency created. or quasi-judicial. investigatory. In general. the matters over which it may exercise this power must find sufficient anchorage on its enabling law. No. either through purchases in the open market or through redemptions at par and by lot if the Bangko Sentral has reserved the right to make such redemptions. regulatory. denominate the obligations in gold or foreign currencies.investigation or hearing [citations omitted] regarding the same. to hear and determine a class of cases within its peculiar competence and expertise. Principles of Open Market Operations. quasilegislative. the BSP would necessarily make a determination.105 For instance. buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral: Provided. 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. No. the same rules and regulations facilitate transaction with the BSP by providing for an orderly manner of. either by express provision or by necessary implication. No. if it deems it advisable. the BSP uses open market operations. par. 92. Issue and Negotiation of Bangko Sentral Obligations. 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. and shall be immediately retired and cancelled. SEC. inter alia. the evidences of indebtedness of the Bangko Sentral to which this section refers may be acquired by the Bangko Sentral before their maturity. conferring jurisdiction on the BSP on certain matters. exchanging and paying securities representing public debt. 90. of the entity entitled to receive the proceeds of the security upon its maturity. too. maturities and other characteristics of said obligations of the Bangko Sentral. the BSP is able to exert some influence on the prices of goods and services and achieve its inflation objectives. or may be issued without relation to specific types of assets of the Bangko Sentral. emphases ours) The primary objective of the BSP is to maintain price stability. pursuant to constitutional mandate. under the situations contemplated under Section 36. 7653 and R. By controlling the money supply. 7653. 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.109 The BSP has a number of monetary policy instruments at its disposal to promote price stability. The Monetary Board shall determine the interest rates. transferring. or the rules and regulations issued by the Monetary Board) of R. and may. 8791. exist.102 While the very nature of an administrative agency and the raison d'être for its creation103 and proliferation dictate a grant of quasi-judicial power to it. 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. that is. Nothing in the BSP’s charter confers on the BSP the jurisdiction or authority to determine this kind of claims. the provisions of the enabling statute are the yardsticks by which the Court would measure the quantum of quasi-judicial powers an administrative agency may exercise. No. The evidences of indebtedness acquired or redeemed by the Bangko Sentral shall not be included among its assets. – In order to provide the Bangko Sentral with effective instruments for open market operations. Once found.A. Among its several functions under R. administrative agencies exercise powers and/or functions which may be characterized as administrative."114 As a matter of necessity.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. In other words. 2106 (where a bank or quasi bank persists in carrying on its business in an unlawful or unsafe manner) and Section 37107 (where the bank or its officers willfully violate the bank’s charter or by-laws. as may be conferred by the Constitution or by statute. among others. To increase or reduce liquidity in the financial system. 7653. the quasi-judicial power partakes of the nature of a limited and special jurisdiction. as defined in the enabling act of such agency. xxxx SEC. issue.A. buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral" in the following manner. place. issuing.A. That issuance of such certificates of indebtedness shall be made only in cases of extraordinary movement in price levels. the BSP may place an entity under receivership and/or liquidation or impose administrative sanctions upon the entity or its officers or directors. in accordance with its own rules. among others.
and (ii) withholding action on the certificate. 7653. Congress may create administrative agencies endowed with quasi-legislative and quasi-judicial powers. or any order. experience. among others. if the case is such that its determination requires the 10 . While R. 115 To reiterate. However. deprives a party from any right to demand payment from the BSP. Court of Appeals..with the fundamental reasons for the creation of a Philippine central bank. the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an administrative tribunal.122 As early as 1954. In the exercise of its plenary legislative power. for the purpose of stabilizing the price level. redemption of the certificate of indebtedness. A similar conclusion can be drawn from the BSP’s administrative adjudicatory power in cases of "willful failure or refusal to comply with. 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 violation of. although it did not so expressly state in the law. or rulings x x x on matters regarding application or enforcement of laws pertaining to institutions supervised by the BSP and laws pertaining to quasibanks. that courts and agencies may willingly relinquish adjudicatory power that is rightfully theirs in favor of the other. to regulate the supply of money in the economy to influence the timing. the Court applied the doctrine of primary jurisdiction under the following terms: 6.120 The doctrine of primary jurisdiction argues against BSP’s purported authority to adjudicate ownership issues over the disputed CB bills Given the preceding discussions. as well as regulations..121 As a result. to lay down stable monetary policy and exercise bank supervisory functions. 28. Necessarily. Thus. It may happen."123 (emphasis ours) In Industrial Enterprises. Inc. policies or instructions issued by the Monetary Board. the grant of quasi-judicial authority to the BSP cannot possibly extend to situations which do not call for the exercise by the BSP of its supervisory or regulatory functions over entities within its jurisdiction. v. 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.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. that is. and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered.A. including the payment of interest coupons. 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 coalbearing lands and the determination of whether or not the reversion of the coal operating contract over the subject coal blocks to [the plaintiff] would be in line with the country’s national program and objective on coal-development and over-all coalsupply-demand balance.116 What the law grants the BSP is a continuing role to shape and carry out the country’s monetary policy – not the authority to adjudicate competing claims of ownership over the securities it has issued – since this authority would not fall under the BSP’s purposes under its charter. exchange. as well as other financial factors. instruction or regulation issued by the Monetary Board. No. Congress likewise defines the limits of an agency’s jurisdiction in the same manner as it defines the jurisdiction of courts. cost and availability of money and credit. 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. No.A. which means that the matter involved is also judicial in character. the BSP’s assumption of jurisdiction over competing claims cannot find even a stretchedout 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."118 The noncompliance with the pertinent requirements under CB Circular No. 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. even the PDB’s invocation of the doctrine of primary jurisdiction is misplaced. and services of the administrative tribunal to determine technical and intricate matters of fact. 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.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. too. In other words. instruction or ruling by the Governor. The Court held that under the "sense-making and expeditious doctrine of primary jurisdiction ." it is precisely the text of the BSP’s own regulation (whose validity is not here raised as an issue) that points to the BSP’s limited role in case of an allegedly fraudulent assignment to simply (i) issuing and circularizing a ‘"stop order" against the transfer." It then applied the doctrine of primary jurisdiction – In recent years. In the fifties. as amended. open market operation is a monetary policy instrument that the BSP employs. any banking law or any order. where the question demands the exercise of sound administrative discretion requiring the special knowledge.
128 While the RTC agreed (albeit erroneously) with the PDB’s view (that the BSP has jurisdiction).7 It requires.130 Of the three possible options available to the RTC. It applies "where a claim is originally cognizable in the courts. the RTC acted correctly in initially assuming jurisdiction over the PDB’s petition for mandamus. are bound by the rule on non-waiver of jurisdiction. and second when it dismissed the PDB’s petitions and the BOC’s counterclaims on the ground that it lacks jurisdiction. as an indispensable requisite. already properly brought before the RTC the remaining conflicting claims over the subject CB bills by way of a counterclaim/crossclaim for interpleader. Without emasculating its jurisdiction. 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. deserves respect from the Court. as a respondent below.126 While there are exceptions127 to this rule. invoked to compel an administrative agency (the BSP) to resolve the legal conflict of ownership over the CB bills .125 In fact. The remedy of an action of interpleader131 is designed to protect a person against double vexation in respect of a single liability. originally. but more so the courts. dismissed not only the BOC’s/the BSP’s counterclaims but the PDB’s petition itself as well. Rule 62 of the Rules of Court provides when an interpleader is proper: SECTION 1. When interpleader proper. have been placed within the special competence of an administrative body. the resolution of the conflicting claims over the CB bills falls within its general jurisdiction. the PDB has not convinced us that a departure is warranted in this case.instead of obtaining a judicial determination of the same dispute. The remedy of interpleader Based on the unique factual premise of the present case. These issues preclude an initial judicial determination.134 11 . in light of Circular No. 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. – 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. 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. the trial court seriously erred because precisely. This is plain error.133 When the court orders that the claimants litigate among themselves. 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. Section 1. under a regulatory scheme.129 believes that jurisdiction over the BOC’s counterclaims and the BSP’s counterclaim/crossclaim for interpleader calls for the application of the doctrine of primary jurisdiction. the 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. it. its decision would have to be set aside on appeal because the BSP has no jurisdiction as previously discussed. 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. however. the RTC could have properly dismissed the PDB’s petition but on the ground that mandamus does not lie against the BSP.expertise. In this sense. Ordinarily. In a similar vein. The Trial Court does not have the competence to decide matters concerning activities relative to the exploration. the adoption of either of these two would lead the trial court into serious legal error: first. Not only the parties themselves. the present case is quite unique since the court’s jurisdiction was. specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved.132 Through this remedy." Clearly. 769-80. on the ground that it lacks jurisdiction. [emphases ours] The absence of any express or implied statutory power to adjudicate conflicting claims of ownership or entitlement to the proceeds of its certificates of indebtedness finds complement in the similar absence of any technical matter that would call for the BSP’s special expertise or competence. what the PDB’s petitions bear out is essentially the nature of the transaction it had with the subsequent transferees of the subject CB bills (BOC and Bancap) and not any matter more appropriate for special determination by the BSP or any administrative agency. the BSP’s own position. exploitation. This is the doctrine of primary jurisdiction. if it granted the PDB’s petition. but even this correct alternative is no longer plausible since the BSP. in reality a new action arises. and comes into play whenever enforcement of the claim requires the resolution of issues which. Given the non-applicability of the doctrine of primary jurisdiction. or an interest which in whole or in part is not disputed by the claimants. development and extraction of mineral resources like coal. the allowance of the PDB’s petition even becomes imperative because courts may raise the issue of primary jurisdiction sua sponte. prohibition and injunction. he may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves.
the answer. If the interests of justice so require.136 Indeed. a party’s claim is asserted "in a complaint. the RTC could only dismiss the PDB’s petition since it is the RTC which has jurisdiction to resolve the parties’ conflicting claims – not the BSP. however. Interpleader is a civil action made special by the existence of particular rules to govern the uniqueness of its application and operation. Given that the motion to interplead has been actually filed. Rule 62 does not expressly authorize the filing of a complaint-in-interpleader as part of. third (fourth. covering the CB bills. counterclaim. Rule 6.where the claims of the interpleaders themselves are brought to the fore. the BOC’s failure to pay the appropriate docket fees prevents the RTC from acquiring jurisdiction over the BOC’s "counterclaims. however." We disagree with the PDB. even assuming that the RTC has jurisdiction over the issue of ownership of the CB bills. Thus." Thus. 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. when proper. the remedy of interpleader. the RTC dismissed even the PDB’s petition . the PDB does not possess any right to have its claim recorded in the BSP’s books. Order. Swayed by the PDB’s argument.effectively resulted in the dismissal of the PDB’s petition." the RTC understood this as in the nature of a motion. Under Section 2. Without the motion to interplead and the order granting it. 2 of Rule 62. In granting the BSP’s motion. In short. attorney’s fees and costs of suit "against the public respondents" because the grant of the order to interplead effectively sustained the propriety of the BSP’s resort to this procedural device. that the BSP’s "counter-complaint/cross-claim for interpleader" runs counter to general procedures. the order granting the "PDB’s motion to interplead. or complaint-in-intervention.135 The remedy of interpleader.)-party complaint. Section 5. the PDB made an about-face and questioned the jurisdiction of the RTC. This is precisely what the RTC did by granting the BSP’s motion to interplead. that is. Section 2 of Rule 62 provides: SEC. governing ordinary civil actions. This does not mean. The rules define a "civil action" as "one by which a party sues another for the enforcement or protection of a right. cross-claim. the PDB and the BOC subsequently entered into two separate escrow agreements. made only in the BSP’s Answer. the interpleader was only an alternative position.140 the rules141 allow a party to seek an affirmative relief from the court through the procedural device of a motion. The same order required the BOC to amend its answer and for the conflicting claimants to comment." In an interpleader suit. Similarly. Apart from a pleading. by reason of the BOC’s denomination of its claim as a "compulsory counterclaim" and the PDB’s failure to fully appreciate the RTC’s order granting the "BSP’s motion for interpleader" (with the PDB’s 12 .to which the PDB in fact acquiesced into . the RTC could not have really granted the relief originally sought in the PDB’s petition since the RTC’s order granting the BSP’s motion to interplead .which means that it did not actually compel the BSP to resolve the BOC’s and the PDB’s claims. etc. or the prevention or redress of a wrong. a claim is not required to be contained in any of these pleadings but in the answer-(of the conflicting claimants)-ininterpleader. in relation to Section 1. although separate and independent from." Interpleader may be considered as a stakeholder’s remedy to prevent a wrong. 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. third party-complaint) which is separately allowed under Section 5. 2. and submitted them to the RTC for approval. 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 claim is different from the counterclaim (or cross-claim. – Upon the filing of the complaint." already resulted in the dismissal of the PDB’s petition. 2. as a special civil action. While captioned "Answer with counter complaint/cross-claim for interpleader. consequently. thereby rendering itself vulnerable to lawsuit/s from those legally entitled to payment. the PDB cannot properly be considered even as a potential claimant to the proceeds of the CB bills upon maturity. the court may direct in such order that the subject matter be paid or delivered to the court.139 or as an objection that a defendant may be allowed to put up in his answer or in a motion to dismiss. To reiterate and recall. Suddenly. Rule 9 of the Rules of Court137 does not include a complaint-in-interpleader as a claim. The PDB itself "agreed that the various claimants should now interplead.138 a form of defense. This is not altered by the fact that the PDB additionally prayed in its petition for damages. the stakeholder as plaintiff is relegated merely to the role of initiating the suit. Rule 6 of the Rules of Court. merely provides an avenue for the conflicting claims on the same subject matter to be threshed out in an action. from making payment to one not entitled to it. Perhaps. the payment of docket fees covering BOC’s counterclaim The PDB argues that. par. however. Interpleader 1. presumably to conform to the nature of an answer-in interpleader. This circumstance becomes understandable if it is considered that insofar as the BSP is concerned.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 court shall issue an order requiring the conflicting claimants to interplead with one another.
only pertain to the docket and lawful fees to be paid by the one who initiated the interpleader suit. must be assessed the payment of the correct docket fee arising from their respective claims. then the BOC’s counterclaim must only be permissive in nature and the BOC should have paid the correct docket fees. Ltd. Since the defendants-in-interpleader are actually the ones who make a claim . It is only the BOC’s alternative prayer (for the PDB to deliver to the BOC. and to the government as well. Consequently.conformity). under the Rules. the payment of docket fees cannot be made dependent on the 13 . It reasons out that since the RCBC and All Asia (the intervening holders of the CB bills) have already been dropped from the case. however. the non-payment of the docket fee at the time of filing does not automatically cause the dismissal of the case..i.147 However. 7. Docket and other lawful fees. is not required." By constituting a lien on the subject matter of the action.148 In the present case. both the BOC and the PDB. Bringing new parties. – The docket and other lawful fees paid by the party who filed a complaint under this Rule. costs and litigation expenses as liens. unless the court shall order otherwise. The same rule applies to permissive counterclaims. the court shall order them to be brought in as defendants. When an action is filed in court. the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.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. Rule 6 of the Rules of Court reads: SEC. the BOC correctly argues that a remedy is provided under the Rules.149 At any rate.then to them devolves the duty to pay the docket fees prescribed under Rule 141 of the Rules of Court. Section 12. the BOC’s "claim" .146 The PDB takes a contrary position through its insistence that a compulsory counterclaim should be one where the presence of third parties. so long as the fee is paid within the applicable prescriptive or reglementary period. x x x Where the filing of the initiatory pleading is not accompanied by payment of the docket fee. does not require payment of docket fees. of whom the court cannot acquire jurisdiction. if jurisdiction over them can be obtained. to wit: 1. for the faultless trouble it found itself into. which shall not be considered filed until and unless the filing fee prescribed therefor is paid. Rule 62 of which reads: SEC. the complaint must be accompanied by the payment of the requisite docket and filing fees by the party seeking affirmative relief from the court. Even then. accompanied by the payment of the prescribed docket fee. 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. its assertion of ownership over the CB bills – is in reality just that. that vests a trial court with jurisdiction over the claim or the nature of the action. v. therefore. who happens to be the stakeholder unfortunate enough to get caught in a legal crossfire between two or more conflicting claimants. as well as the costs and litigation expenses. and who. in its alternative prayer) an intention to defraud the government that would warrant the dismissal of its claim."144 whether compulsory145 or permissive. properly as defendants-in-interpleader." for purposes of payment of filing fees. [underscoring ours] This must be the rule considering that Section 7. regardless of the nature of the BOC’s "counterclaims. Section 7 in effect only aims to actually compensate the complainant-in-interpleader. as the buyer in the April 15 transaction and the ultimate successorin-interest of the buyer in the April 19 transaction. the PDB mistakenly treated the BOC’s claim as a "permissive counterclaim" which necessitates the payment of docket fees. especially when the claimant demonstrates a willingness to abide by the rules prescribing such payment. 2. third-party claims and similar pleadings. We see no reason to belabor this claim. compounded by the unusual manner in which the interpleader suit was initiated and the circumstances surrounding it. shall constitute a lien or charge upon the subject matter of the action. – 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 seminal case of Sun Insurance Office. we surely cannot deduce from the BOC’s mere failure to specify in its prayer the total amount of the CB bills it lays claim to (or the value of the subjects of the sales in the April 15 and April 19 transactions. It is the filing of the complaint or appropriate initiatory pleading. Judge Asuncion150 provides us guidance in the payment of docket fees. in order to avoid tremendous losses to the judiciary. As the preceding discussions would show.only that it was extraordinarily done through the procedural device of interpleader . actually "claims no interest whatever in the subject matter. considering the lack of a clear guideline on the payment of docket fee by the claimants in an interpleader suit. 12. These fees are necessary to defray court expenses in the handling of cases. a "claim" against the stakeholder and not as a "counterclaim. Even if we gloss over the PDB’s own conformity to the dropping of these entities as parties.e. the strict characterization of the BOC’s counterclaim is no longer material in disposing of the PDB’s argument based on non-payment of docket fees. as amended. 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.
81/P17. 1991 P5. Thereafter. The facts of the case.000. Manila. 37739 dismissing the petition filed by petitioners Josephine and Subhash Pasricha. despite repeated SUBHASH C.50/P14. 1993 to February 28. DON LUIS DISON REALTY.61 From March 1.00 with an increment of 10% every two years.000.6 For Rooms 36.5 For Rooms 33 and 34: Effective April 1.000. Petitioners.00/P13. 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 Bangko Sentral ng Pilipinas’ interpleader suit.7 Petitioners were. 24. 24. 1997 to February 28. T. as culled from the records.11 After that.9 While the contracts were in effect. 1998 – P9. are as follows: 14 . Inc. Bautista). as previously ordered by the Regional Trial Court.487. 33.00 From March 1.10 Petitioners religiously paid the monthly rentals until May 1992. 1998 and its Resolution2 dated December 10. in accordance with this decision.320. 34 and 35 as subjects of the lease contracts. 1997 – P8. 1996 to February 29.00/P10. agreed to lease to the latter Units 22.89 From March 1. 1992 – P5.00 with an increment of 10% every two years. 2000 – P11. DECISION NACHURA. Orosa cor.55/P16.R. as lessor. Respondent. Branch 143.Y.00 From March 1. SO ORDERED. likewise.500. Petitioners. premises considered the consolidated PETITIONS are GRANTED. and to resolve with DELIBERATE DISPATCH the parties’ conflicting claims of ownership over the proceeds of the Central Bank bills.000. 1995 – P7. vs. 1994 – P6. 1991 – From September 1.00/P12.00 with an increment of 10% every two years. except when the claimant is a pauper-litigant. 1992 – P10. is hereby ORDERED to assess the docket fees due from Planters Development Bank and Bank of Commerce and order their payment. 1995 to February 28. SP No.00 From March 1. Branch 143. and petitioners executed two Contracts of Lease3 whereby the former. 37 and 38: Effective when tenants vacate said premises – P10.743.000.10 From March 1. 136409 2008 March 14.857. 37 and 38 did not materialize leaving only Rooms 22. 1991 to February 29. however.100. The Planters Development Bank is hereby REQUIRED to file with the Regional Trial Court its comment or answer-in-interpleader to Bank of Commerce’s Amended Consolidated Answer with Compulsory Counterclaim.R. The Clerk of Court of the Regional Trial Court of Makati City.789. then General Manager of private respondent.59/P19. as follows: For Rooms 32/35: From March 1.outcome of the case. Kalaw Streets.435.00 From March 1. 1993 – P6. 1998 in CA-G. No. The Regional Trial Court of Makati City. petitioners dealt with Francis Pacheco (Pacheco). Ermita. 1996 – P8. 1998 to February 28. 34.655.641.579. in turn. 1994 to February 28. From March 1.484 For Rooms 22 and 24: Effective July 1. 32. 32.00 to August 31. required to pay for the cost of electric consumption. agreed to pay monthly rentals.050.052. 1992 to February 28.310. 1992 – P5.M.717. 33.000.17 Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. located at 1006 M.75/P23.715. water bills and the use of telephone cables. PASRICHA and JOSEPHINE A. J. 37 and 38 of the San Luis Building.00/P11.. 1999 – P10. 1999 to February 28. PASRICHA. Respondent Don Luis Dison Realty.95/P21. 35. 36.8 The lease of Rooms 36. INC. Pacheco was replaced by Roswinda Bautista (Ms.152 WHEREFORE.: This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 of the Court of Appeals (CA) dated May 26.105.
irrelevant and obviously dilatory.14 To further justify their nonpayment of rent. The appellate court considered said motions as repetitive of their previous arguments. the appealed decision is hereby reversed and set aside and another one is rendered ordering defendants-appellees and all persons claiming rights under them. Bautista’s authority to represent respondent notwithstanding the absence of a board resolution to that effect. Bautista’s uncle-in-law. as the appellate court justice stressed that the decision and the resolution were not affected by extraneous matters.80 representing the accrued rents in arrears as of November 1993.000. Instead. petitioners alleged that they were prevented from using the units (rooms) subject matter of the lease contract. with the exception of the award of attorney’s fees which the CA deleted.12 Because petitioners still refused to comply. the court did not give credence to petitioners’ claim that private respondent failed to turn over possession of the premises. 32. and to conduct hearings and ocular inspections or delegate the reception of evidence. 143058-CV. 37 and 38. Thereafter. On the matter of possession of the subject premises.demands.16 To show good faith and willingness to pay the rents. Bautista. It.585. Deciding the case on appeal. the MeTC rendered a Decision dismissing the complaint for ejectment. SO ORDERED. Whether this ejectment suit should be dismissed and whether petitioners are entitled to damages for the unauthorized and malicious filing by Rosario (sic) Bautista of this ejectment case.15 However.30 Lastly. except Room 35.17 Petitioners further averred in their Amended Answer18 that the complaint for ejectment was prematurely filed. since her authority was implied from her power as a general manager/treasurer of the company. made a final demand on petitioners for the payment of the accrued rentals amounting to P916. (2) to pay plaintiff-appellant the sum of P967. Without resolving the aforesaid motion. as follows: (1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant. the same was denied. they again withheld payment of rents starting January 1993 because of respondent’s refusal to turn over Rooms 36. Reyes to inhibit from further proceeding with the case allegedly because of his close association with Ms. faulted the MeTC in dismissing the case on the ground of lack of capacity to sue. a complaint for ejectment was filed by private respondent through its representative. but claimed that such refusal was justified because of the internal squabble in respondent company as to the person authorized to receive payment. however. they submitted their respective position papers.19 It considered petitioners’ non-payment of rentals as unjustified. petitioners alleged that they prepared the check vouchers for their monthly rentals from January 1993 to January 1994. it upheld Ms. and (3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorney’s fees plus the costs of this suit. however.22 On March 18. petitioners continuously refused to pay the stipulated rent. reversed and set aside the MeTC Decision in this wise: WHEREFORE. For failure of the parties to reach an amicable settlement. as the controversy was not referred to the barangay for conciliation. Consequently. petitioners should have deposited their payment in the name of respondent company. the CA denied the motions for lack of merit.58. Branch 1. petitioners filed an Omnibus Motion23 to cite Ms. On November 24.20 The court adopted the MeTC’s finding on petitioners’ unjustified refusal to pay the rent. Bautista for contempt. the CA affirmed24 the RTC Decision but deleted the award of attorney’s fees. they filed several motions asking the Honorable Justice Ruben T. in turn. and the rents on the leased premises for the succeeding months in the amounts stated in paragraph 5 of the complaint until fully paid. on May 26.00.25 Petitioners moved for the reconsideration of the aforesaid decision. 94-72515. the pre-trial conference was terminated.13 The case was raffled to Branch XIX and was docketed as Civil Case No.26 Thereafter. and claimed that respondent waived its right to collect the rents for the months of July to November 1992 since petitioners were prevented from using Rooms 22.21 Aggrieved. dismissed the complaint because of Ms. 1998. 1994. The court. The court held that mere willingness to pay the rent did not amount to payment of the obligation. 24. in Civil Case No. Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until November 1992. before the Metropolitan Trial Court (MeTC) of Manila. 1998. the Regional Trial Court (RTC) of Manila.31 Petitioners now come before this Court in this petition for review on certiorari raising the following issues: I. petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari. to strike down the MeTC and RTC Decisions as legal nullities. respondent was constrained to refer the matter to its lawyer who. it being clear that [Roswinda] – whether as general manager or by virtue of her subsequent designation by the Board of 15 .27 In a Resolution28 dated December 10. Bautista’s alleged lack of authority to sue on behalf of the corporation. Ms. the appellate court granted respondent’s motion for execution and directed the RTC to issue a new writ of execution of its decision. which is a valid ground for ejectment. and 34. Petitioners eventually paid their monthly rent for December 1992 in the amount of P30.915.29 As to the motion for inhibition of the Honorable Justice Reyes. 1998. 33.
Lastly. and a deviation from the rigid enforcement of the rules may be allowed to attain that prime objective. independently of whether Director Pacana’s Order setting aside the SEC revocation Order is a mere scrap of paper.39 In Novelty Phils. there should be evidence 16 . 2) they were deprived of possession of all the units subject of the lease contract except Room 35. that is. it is settled that mere suspicion that a judge is partial to one of the parties is not enough. In Pfizer.41 we upheld the sufficiency of a petition verified by an employment specialist despite the total absence of a board resolution authorizing her to act for and on behalf of the corporation. not suppress. We uphold the capacity of respondent company to institute the ejectment case. Bautista’s capacity to sue on behalf of the company despite lack of proof of authority to so represent it. the dispensation of justice is the core reason for the existence of courts. they fault the appellate court for not finding that: 1) their nonpayment of rentals was justified. any person suing on behalf of the corporation should present proof of such authority.44 As to the denial of the motion to inhibit Justice Reyes. petitioners insist that respondent company has no standing to sue as a juridical person in view of the suspension and eventual revocation of its certificate of registration. and 3) respondent violated the terms of the contract by its continued refusal to turn over possession of Rooms 36. the rationale being that "a litigant cannot be permitted to speculate on the action of the court x x x (only to) raise an objection of this sort after the decision has been rendered.33 They likewise question the factual findings of the court on the bases of their ejectment from the subject premises. 1993. rendering the issue moot and academic. despite his admission – by reason of his silence – of petitioners’ accusation that the said Justice enjoyed a $7.36 We likewise affirm Ms. Whether the RTC’s and the Honorable Court of Appeals’ failure and refusal to resolve the most fundamental factual issues in the instant ejectment case render said decisions void on their face by reason of the complete abdication by the RTC and the Honorable Justice Ruben Reyes of their constitutional duty not only to clearly and distinctly state the facts and the law on which a decision is based but also to resolve the decisive factual issues in any given case. Although the Securities and Exchange Commission (SEC) suspended and eventually revoked respondent’s certificate of registration on February 16. after all. Inc. While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice. Although Ms. 1999.35 Besides. worse. after Justice Reyes had already rendered his opinion on the merits of the case. First."45 Second.40 the Court faulted the appellate court for dismissing a petition solely on petitioner’s failure to timely submit proof of authority to sue on behalf of the corporation. records show that it instituted the action for ejectment on December 15. II.37 Thus. the cause of justice.42 we relaxed the rules of procedure because the corporation ratified the manager’s status as an authorized signatory. Bautista initially failed to show that she had the capacity to sign the verification and institute the ejectment case on behalf of the company. we should not insist on strict adherence to the rules at the expense of substantial justice. Court of Appeals. Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself. when the case was commenced. The petition lacks merit. Mondragon International Philippines. In all of the above cases.. Inc. Galan. There is ample jurisprudence holding that subsequent and substantial compliance may call for the relaxation of the rules of procedure in the interest of justice. the SEC later set aside its earlier orders of suspension and revocation of respondent’s certificate. v. like the signing of documents. This is not to say that we disregard the requirement of prior authority to act in the name of a corporation. this Court directed the parties to maintain the status quo effective immediately until further orders. 1995. we brushed aside technicalities in the interest of justice. The relaxation of the rules applies only to highly meritorious cases. A corporation has no powers except those expressly conferred on it by the Corporation Code and those that are implied from or are incidental to its existence.00 scholarship grant courtesy of the uncle-in-law of respondent "corporation’s" purported general manager and (2). in a Resolution34 dated January 18. its registration was not yet revoked. Accordingly. and when there is substantial compliance. in China Banking Corporation v. as correctly held by the appellate court. his act of ruling against the petitioners and in favor of the respondent "corporation" constitute an unconstitutional deprivation of petitioners’ property without due process of law. Inc. In turn. when confronted with such question. a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents.000. Thus. 37 and 38. It is settled that a motion to inhibit shall be denied if filed after a member of the court had already given an opinion on the merits of the case. we find the same to be in order. Petitioners further prayed that a Temporary Restraining Order (TRO) be issued enjoining the CA from enforcing its Resolution directing the issuance of a Writ of Execution.Directors as the corporation’s attorney-in-fact – had no legal capacity to institute the ejectment suit. Bautista’s lack of capacity to sue. 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. III.43 Technical and procedural rules are intended to help secure. v.32 In addition to Ms. Physical acts. for. Specifically. and while the swift unclogging of court dockets is a laudable objective. the motion to inhibit came after the appellate court rendered the assailed decision. she immediately presented the Secretary’s Certificate38 confirming her authority to represent the company.
and 3) respondent’s refusal to accept payment tendered by petitioners. 1993 letter that respondent failed to fulfill its part of the contract. the debtor shall be released from responsibility by the consignation of the thing or sum due.46 We would like to reiterate. What was. If we believe petitioners’ contention that they had been prevented from using the rooms for more than a year before the complaint for ejectment was filed. In such cases. they were placed in possession of the premises and they had the right to the use and enjoyment of the same. Article 1256 of the Civil Code provides: Article 1256.48 Specifically. clearly established by the evidence was petitioners’ non-payment of rentals because ostensibly they did not know to whom payment should be made. except room 35. the fact is that respondent turned over to petitioners the keys to the leased premises and petitioners. This issue involves questions of fact. petitioners only questioned the method of computing their electric billings without. Thus.53 In their July 26 and October 30. they were not without any remedy. the essential requisites of unlawful detainer are: 1) the fact of lease by virtue of a contract. The evidence of petitioners’ non-payment of the stipulated rent is overwhelming. As correctly held by the CA. Consignation alone shall produce the same effect in the following cases: 17 . Bautista or to Pacheco. the elements to be proved and resolved are the fact of lease and the expiration or violation of its terms. we deem it proper to assess the array of factual findings supporting the court’s conclusion. hostility. indeed. they should have demanded specific performance from the lessor and commenced an action in court. and cannot be reviewed on appeal by the Supreme Court. Bias and prejudice cannot be presumed. The MeTC. Petitioners’ justifications are belied by the evidence on record. If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of lease.52 What they pointed out in their letters is that they did not know to whom payment should be made. show that respondent repeatedly demanded that petitioners vacate the premises. whether to Ms. There must be a showing of bias and prejudice stemming from an extrajudicial source. and 5) the filing of the action within one year from the date of the last demand received by the defendant. raising a complaint about their failure to use the rooms. thus. they remained in possession of the premises. likewise. the resolution of which requires the evaluation of the evidence presented.47 We now come to the more substantive issue of whether or not the petitioners may be validly ejected from the leased premises.54 Although petitioners stated in their December 30. whether it prevented petitioners from occupying the leased premises except Room 35. however. we cannot understand why they did not specifically assert their right. 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and vacate the premises. 37 and 38. under a plea of bias. instead. likewise. 2) the expiration or termination of the possessor’s right to hold possession.56 As borne out by the records. because if such were the case. there was a violation of the contract by the lessor.49 It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9) rooms of the San Luis Building. they did not lift a finger to protect their right if.55 nowhere did they specifically refer to their inability to use the leased rooms.to substantiate the suspicion. prejudice or prejudgment. had the right to resist any act of intrusion into their peaceful possession of the property. They. are final and conclusive. especially when weighed against a judge’s sacred pledge under his oath of office to administer justice without regard for any person and to do right equally to the poor and the rich. the RTC and the CA all found that petitioners failed to perform their obligation to pay the stipulated rent. they were already in default on their rentals for more than a year. 3) withholding by the lessee of possession of the land or building after the expiration or termination of the right to possess. petitioners’ communications to respondent prior to the filing of the complaint never mentioned their alleged inability to use the rooms. Besides. whether they failed to pay the stipulated rent without justifiable cause. the policy of the Court not to tolerate acts of litigants who. Yet. even as against the lessor itself. but the latter refused to heed the demand. The only contentious issue is whether there was indeed a violation of the terms of the contract: on the part of petitioners. They should have availed of the provisions of the Civil Code of the Philippines on the consignation of payment and of the Rules of Court on interpleader. If the creditor to whom tender of payment has been made refuses without just cause to accept it.50 Albeit the rule admits of exceptions. not one of them obtains in this case. resulting in an opinion on the merits based on something other than what the judge learned from his participation in the case. at that time. this did not justify their failure to pay. petitioners were already in a position to exercise their right to the use and enjoyment of the property according to the terms of the lease contract. especially when affirmed by the Court of Appeals. 1993 letters. at this point. Petitioners. With the execution of the contract.51 To settle this issue once and for all. express or implied. seek to disqualify a judge (or justice) for their own purpose. However. It is settled doctrine that in a civil case. claim that such non-payment is justified by the following: 1) the refusal of respondent to allow petitioners to use the leased properties. Unlawful detainer cases are summary in nature. for just about any conceivable reason. however. 2) respondent’s refusal to turn over Rooms 36. the conclusions of fact of the trial court. renovated the rooms. while on the part of respondent. and considering that the rooms were intended for a business purpose. in fact. Records.
Thus. petitioners have no right to remain in the leased premises. But that was insufficient to constitute a valid tender of payment. Absent a clear showing that the previous tenants had vacated the premises. the terms of the contracts . petitioners opted to refrain from making payments. Article 167363 of the Civil Code gives the lessor the right to judicially eject the lessees in case of non-payment of the monthly rentals. and the announcement of the consignation in other cases. premises considered. he may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves.64 For failure to pay the rent. before whom the tender of payment shall be proved in a proper case.lavvphil There is nothing in the contract which would lead to the conclusion that the lease of one or more rooms was to be made dependent upon the lease of all the nine (9) rooms. the amount owing shall as penalty bear interest at the rate of FOUR percent (4%) per month. Although the two contracts embraced the lease of nine (9) rooms. SP No.R. 1999 is hereby LIFTED. petitioners. – 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.60 The remedy is afforded not to protect a person against double liability but to protect him against double vexation in respect of one liability.1avvphil In light of the foregoing disquisition. bilateral. It may also be mentioned that the contract specifically provides that the lease of Rooms 36. respondent had no obligation to deliver possession of the subject rooms to petitioners. 37 and 38 was to take effect only when the tenants thereof would vacate the premises. 1998 in CA-G. or an interest which in whole or in part is not disputed by the claimants. who undertakes to pay the rent therefor. Section 1. 1998 and its Resolution dated December 10. and/or eject the LESSEE as hereinafter set forth. Consignation shall be made by depositing the things due at the disposal of a judicial authority. respondent has every right to exercise his right to eject the erring lessees. WHEREFORE.62 Moreover. to be paid. 37739 are AFFIRMED. the use of each room by the lessee gave rise to the corresponding obligation to pay the monthly rental for the same.57 In the instant case. Neither can petitioners validly invoke the nondelivery of Rooms 36. onerous and commutative contract by which the owner temporarily grants the use of his property to another. Well-settled is the rule that tender of payment must be accompanied by consignation in order that the effects of payment may be produced.61 Notably. consignation alone would have produced the effect of payment of the rentals.59 Moreover. Rule 62 of the Rules of Court provides: Section 1. The parties’ contracts of lease contain identical provisions. The rationale for consignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes not imputable to him. an action for interpleader is proper when the lessee does not know to whom payment of rentals should be made due to conflicting claims on the property (or on the right to collect).with their particular reference to specific rooms and the monthly rental for each easily raise the inference that the parties intended the lease of each room separate from that of the others. 37 and 38 as an excuse for their failure to pay the rentals due on the other rooms they occupied. it would not constitute payment for want of consignation of the amount. The Decision of the Court of Appeals dated May 26. Notably. the petition is DENIED and the Status Quo Order dated January 18.58 Petitioners claim that they made a written tender of payment and actually prepared vouchers for their monthly rentals. still. petitioners cannot use the non-delivery of Rooms 36. Otherwise stated. Even assuming that it was valid tender. Accordingly. and used by. x x x x. without prejudice to the right of the LESSOR to terminate his contract.xxxx (4) When two or more persons claim the same right to collect. A contract of lease is a consensual. enter the premises. 18 . 37 and 38 as a justification for non-payment of rentals. SO ORDERED. to wit: In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each month. instead of availing of the above remedies. When interpleader proper. respondent demanded payment of rentals only for the rooms actually delivered to.
ESCUDERO and REP. JUDICIAL AND BAR COUNCIL. and the nomination of former Solicitor General Francisco I. The issue has constantly been nagging legal minds. as his potential successor. As the matter is of extreme urgency considering the constitutional deadline in the process of selecting the nominees for the vacant seat of the Chief Justice. 2012. the Court cannot delay the resolution of the issue a day longer. No. SEN. FRANCISCO I. triggered the filing of this case. Respondents. vs. yet remained dormant for lack of constitutional challenge. Article VIII of the 1987 Constitution allow more than one (1) member of Congress to sit in the JBC? Is the practice 19 . Does the first paragraph of Section 8. Chavez (petitioner). Corona on May 29. Relegating it in the meantime to the back burner is not an option. NIEL C. FRANCIS JOSEPH G.R. TUPAS.. 202242 2012 July 17. Petitioner.Republic of the Philippines SUPREME COURT Manila EN BANC G. DECISION MENDOZA. CHAVEZ. J. JR.: The issue at hand has been in hibernation until the unexpected departure of Chief Justice Renato C.
a professor of law. Like their progenitor of American origins. an eighth (8th) member was added to the JBC as two (2) representatives from Congress began sitting in the JBC . In other words. term and functions are provided under Section 8. Article VIII of the Constitution.one from the House of Representatives and one from the Senate. III Had the framers of the Constitution intended that the JBC composed of the one member from the Senate and one member from the House of Representatives.3 Then. It may exercise such other functions and duties as the Supreme Court may assign to it. it conceived of a body representative of all the stakeholders in the judicial appointment process and called it the Judicial and Bar Council (JBC). Thus. Long before the naissance of the present Constitution. decided to allow the representatives from the Senate and the House of Representatives one full vote each.6 Perhaps in order to give equal opportunity to both houses to sit in the exclusive body. In compliance therewith. the JBC En Banc. (4) The regular Members of the Council shall receive such emoluments as may be determined by the Supreme Court.5 the members of the Constitutional Commission saw the need to create a separate.8 At present. contemplated and decided on a JBC composed of only seven (7) members. In 1994. except that the appointees must have all the qualifications and none of the disqualifications. the retired Justice for two years. V One of the two (2) members of the JBC from Congress has no right (not even ½ right) to sit in the said constitutional body and perform the duties and functions of a member thereof.9 setting forth the following GROUNDS FOR ALLOWANCE OF THE PETITION I Article VIII. (respondents) simultaneously sit in the JBC as representatives of the legislature. the professor of law for three years.4 the appointment of judges and justices was no longer subject to the scrutiny of another body. It is this practice that petitioner has questioned in this petition. Of the Members first appointed. The Supreme Court shall provide in its annual budget the appropriations for the Council. a retired Member of the Supreme Court. and a representative of the Congress as ex officio Members. subject to confirmation by the Commission on Appointments. Prompted by the clamor to rid the process of appointments to the Judiciary from political pressure and partisan activities. both the Malolos Constitution1 and the 1935 Constitution2 had vested the power to appoint the members of the Judiciary in the President. Congress. Paragraph 1 is clear. from the moment of the creation of the JBC. the composition of the JBC was substantially altered.of having two (2) representatives from each house of Congress with one (1) vote each sanctioned by the Constitution? These are the pivotal questions to be resolved in this original action for prohibition and injunction. Section 8. and a representative of the private sector. a representative of the Integrated Bar. Tupas. with the fusion of executive and legislative power under the 1973 Constitution. the House of Representatives and the Senate would send alternate representatives to the JBC. Senator Francis Joseph G. 20 . the Secretary of Justice. definite and needs no interpretation in that the JBC shall have only one representative from Congress. viz: Section 8. Instead of having only seven (7) members. the representative of the Integrated Bar shall serve for four years. Its composition. designated one representative to sit in the JBC to act as one of the ex officio members. It was during these times that the country became witness to the deplorable practice of aspirants seeking confirmation of their appointment in the Judiciary to ingratiate themselves with the members of the legislative body. Jr. Congress had only one (1) representative. II The framers of the Constitution clearly envisioned.7 Then. they could have easily said so as they did in the other provisions of the Constitution. competent and independent body to recommend nominees to the President. IV The composition of the JBC providing for three exofficio members is purposely designed for a balanced representation of each of the three branches of the government. in separate meetings held in 2000 and 2001. (2) The regular members of the Council shall be appointed by the President for a term of four years with the consent of the Commission on Appointments. It was absolute. (1) A Judicial and Bar Council is hereby created under the supervision of the Supreme Court composed of the Chief Justice as ex officio Chairman. (5) The Council shall have the principal function of recommending appointees to the Judiciary. (3) The Clerk of the Supreme Court shall be the Secretary ex officio of the Council and shall keep a record of its proceedings. and the representative of the private sector for one year. Escudero and Congressman Niel C. curiously. the annals of history bear witness to the fact that the exercise of appointing members of the Judiciary has always been the exclusive prerogative of the executive and legislative branches of the government. with each having one-half (1/2) of a vote.
the respondents claim that when the JBC was established. the Court deems it proper to first ascertain the nature of 21 .19 In other words. petitioner must exhibit that he has been denied. 1986. it is well-settled that for locus standi to lie.17 Tracing the subject provision’s history. thereby allocating "a representative of the National Assembly" to the JBC. the JBC filed its Comment. the respondents claim that there is no personal stake on the part of petitioner that would justify his outcry of unconstitutionality. 2012. when Section 8(1). as well as the myriad of counter-arguments proffered by the respondents. the crux of the controversy is the phrase "a representative of Congress. whose membership to certain political parties is irrelevant. they likewise cautioned the Court that this constitutional vision did not intend to entirely preclude political factor in said appointments. 2012. no evil should be perceived in the current set-up of the JBC because two (2) members coming from Congress. as the system of choice by the Framers. In the same vein. the mere allegation that this case is of transcendental importance does not excuse the waiver of the rule on locus standi. The Power of Judicial Review In its Comment. Moreover. two (2) of whom are members of Congress. the Senate and the House of Representatives." it should mean one representative each from both Houses which comprise the entire Congress. The phrase. According to respondents. the House of Representatives. Therefore. was not modified to aptly jive with the change to bicameralism. they would have made the corresponding adjustment in the representation of Congress in the JBC. Article VIII of the Constitution speaks of "a representative from Congress. in the first place.24 Being aware that the current composition of the JBC has been in practice since 1994. is not Congress. the legislative system finally adopted by the Constitutional Commission on July 21. In simplistic terms. Article VI of the Constitution15 to determine the meaning of the term "Congress. abstained from recommending on how this constitutional issue should be disposed in gracious deference to the wisdom of the Court.21 The Issues In resolving the procedural and substantive issues arising from the petition. Thus. the respondents urge the Court to look beyond the letter of the disputed provision because the literal adherence to its language would produce absurdity and incongruity to the bicameral nature of Congress. and (2) Whether or not the current practice of the JBC to perform its functions with eight (8) members.22 For the respondents. however." It is their theory that the two houses.11 It. respondents defended their position as members of the JBC in their Comment13 filed on July 12.18 The ambiguity having resulted from a plain case of inadvertence.23 As outlined in jurisprudence. the Court synthesized them into two: (1) Whether or not the conditions sine qua non for the exercise of the power of judicial review have been met in this case. the Framers originally envisioned a unicameral legislative body. however. According to them. While they admit that the purpose in creating the JBC was to insulate appointments to the Judiciary from political influence. the JBC was more than generous enough to offer the insights of various personalities previously connected with it. the case lacks the requisites therefor. if the Commissioners were made aware of the consequence of having a bicameral legislature instead of a unicameral one. without the Senate and viceversa. petitioner failed to manifest his acceptance of his recommendation to the position of Chief Justice. petitioner has no "real interest" in questioning the constitutionality of the JBC’s current composition. requires that both houses exercise their respective powers in the performance of its mandated duty which is to legislate. effectively diminishing the republican nature of the government. Before addressing the above issues in seriatim." such that the absence of either divests the term of its substantive meaning as expressed under the Constitution. Without his name in the official list of applicants for the post."14 Reverting to the basics. thereby divesting him of a substantial interest in the controversy. Here. the JBC submits that petitioner is clothed with locus standi to file the petition. are permanent and mandatory components of "Congress. or is about to be denied. of a personal right or privilege to which he is entitled. placing either of the respondents in the JBC will effectively deprive a house of Congress of its representation.16 Bicameralism.12 Through the Office of the Solicitor General (OSG).10 On July 9. petitioner’s silence for eighteen (18) years show that the constitutional issue being raised before the Court does not comply with the "earliest possible opportunity" requirement. runs counter to the letter and spirit of the 1987 Constitution. as a citizen and taxpayer. Nonetheless. however. The respondents also question petitioner’s belated filing of the petition. they cite Section 1.VI The JBC cannot conduct valid proceedings as its composition is illegal and unconstitutional. because. does not necessarily amplify political partisanship in the JBC. In fact. the electorate represented by Members of Congress will lose their only opportunity to participate in the nomination process for the members of the Judiciary.20 The respondents further argue that the allowance of two (2) representatives of Congress to be members of the JBC does not render the latter’s purpose nugatory. who has been nominated to the position of Chief Justice. the presence of two (2) members from Congress will most likely provide balance as against the other six (6) members who are undeniably presidential appointees.
the petition should properly be considered as that which would result in the adjudication of rights sans the execution process because the only relief to be granted is the very declaration of the rights under the document sought to be construed. asserts a "public right" in assailing an allegedly illegal official action. there must be a claim of illegal disbursement of public funds or that the tax measure is unconstitutional. like almost all other powers conferred by the Constitution. concerned citizens. representing the general public. The claim that the composition of the JBC is illegal and unconstitutional is an object of concern. and the validity and construction of Section 8 (1). (4) for concerned citizens. Albeit heavily publicized in this regard. a party will be allowed to litigate only when these conditions sine qua non are present. mistrust. lest a constitutional process be plagued by misgivings. the legality of the very process of nominations to the positions in the Judiciary is the nucleus of the controversy. not just for a nominee to a judicial post. and can be suing as a "stranger." or as a "citizen" or "taxpayer. (3) for voters. the plaintiff. As a taxpayer. It being so. The Courts’ power of judicial review. armed with issues of transcendental importance to society.27 Generally. petitioner has the legal standing to bring the present action because he has a personal stake in the outcome of this controversy. or that public funds are wasted through the enforcement of an invalid or unconstitutional law. According to petitioner. and legislators may be accorded standing to sue. due to its serious implications. petitioner seeks judicial intervention as a taxpayer. Article VIII of the Constitution. doubts and worse. (2) for taxpayers. petitioner takes pains in enumerating past actions that he had brought before the Court where his legal standing was sustained. the Court views the petition as essentially an action for declaratory relief under Rule 63 of the 1997 Rules of Civil Procedure. there must be a claim that the official action complained of infringes upon their prerogatives as legislators. direct injury as a result of its enforcement. A vast number of aspirants to judicial posts all over the country may be affected by the Court’s ruling. Of greater import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of an invalid statute. voters. is subject to several limitations. the Court recognizes the petitioner’s right to sue in this case.29 In this case. provided that the following requirements are met: (1) cases involve constitutional issues. 22 . Although this inventory is unnecessary to establish locus standi because obviously. a concerned citizen and a nominee to the position of Chief Justice of the Supreme Court. concrete and legal conflict of rights and duties from the issues presented before the Court? In David v. the original jurisdiction over the petition lies with the appropriate Regional Trial Court (RTC).the petition. (3) the question of constitutionality must be raised at the earliest possible opportunity. After all. it was held that taxpayers. Notwithstanding the fact that only questions of law are raised in the petition. Article VIII as the issue raised. While it is true that a "personal stake" on the case is imperative to have locus standi. there must be a showing that the issues raised are of transcendental importance which must be settled early. but for all citizens who have the right to seek judicial intervention for rectification of legal blunders. not every case before the Court exhibits similar issues and facts. Pursuant to the rule that the nature of an action is determined by the allegations therein and the character of the relief sought. the question to be answered is this: does the party possess a personal stake in the outcome of the controversy as to assure that there is real. namely: (1) there must be an actual case or controversy calling for the exercise of judicial power.28 the Court summarized the rules on locus standi as culled from jurisprudence. Anent locus standi. this is not to say that only official nominees for the post of Chief Justice can come to the Court and question the JBC composition for being unconstitutional.26 At any rate.25 The Constitution as the subject matter. There. Clearly. the JBC’s duty is not at all limited to the nominations for the highest magistrate in the land. and (4) the issue of constitutionality must be the very lis mota of the case. not only to government processes involved but also to the sanctity of the Constitution. there must be a showing of obvious interest in the validity of the election law in question. Macapagal-Arroyo. especially when the constitutionality of an act by a co-equal branch of government is put in issue. petitioner invokes his right to demand that the taxes he and the rest of the citizenry have been paying to the government are spent for lawful purposes. In public suits. The Court disagrees with the respondents’ contention that petitioner lost his standing to sue because he is not an official nominee for the post of Chief Justice. The plaintiff may be a person who is affected no differently from any other person. the petition is also for prohibition under Rule 65 seeking to enjoin Congress from sending two (2) representatives with one (1) full vote each to the JBC. clothed with legal standing and at the same time."30 Notably. the Court deems it more prudent to take cognizance of it. (2) the person challenging the act must have "standing" to challenge. taxpayers have been allowed to sue where there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper purpose. The JBC likewise screens and nominates other members of the Judiciary. petitioner possesses as taxpayer both right and legal standing to demand that the JBC’s proceedings are not tainted with illegality and that its composition and actions do not violate the Constitution. and (5) for legislators. "since the JBC derives financial support for its functions. The Court considers this a constitutional issue that must be passed upon. he must have a personal and substantial interest in the case. an action for declaratory relief is not among those within the original jurisdiction of this Court as provided in Section 5. operation and proceedings from taxes paid." Thus. More importantly. such that he has sustained or will sustain. a citizen has a right to bring this question to the Court. Hence.
it can readily be discerned that the provision is clear and unambiguous. and a representative of the Congress as ex officio Members.42 Not any of these instances." As petitioner correctly posits. clauses and phrases should not be studied as detached and isolated expressions. Had it been the intention that more than one (1) representative from the legislature would sit in the JBC. be modified or restricted by the latter. a retired member of the Court and a representative from the private sector. What it says according to the text of the provision to be construed compels acceptance and negates the power of the courts to alter it. Then it goes to its composition where the regular members are enumerated: a representative of the Integrated Bar.35 and second."41 Indeed.37 This is because a word or phrase in a statute is always used in association with other words or phrases.33 Verba legis non est recedendum – from the words of a statute there should be no departure. As much as possible. that is. and free from ambiguity. No particular allusion whatsoever is made on whether the Senate or the House of Representatives is being referred to. based on the postulate that the framers and the people mean what they say. under the maxim noscitur a sociis. thus.40 "from the enumeration of the membership of the JBC. deserve an evaluation from the Court. in no uncertain terms. The first paragraph calls for the creation of a JBC and places the same under the supervision of the Court. it is patent that each category of members pertained to a single individual only. It is indicative of what the members of the Constitutional Commission had in mind. or defeat the clear purpose of the lawmakers. it becomes apparent that the word "Congress" used in Article VIII. On the second part lies the crux of the present controversy.With respect to the question of transcendental importance. a representative of the Integrated Bar. only a singular representative may be allowed to sit in the JBC. therefore. From a simple reading of the above-quoted provision.39 In short. the spirit and reason of the statute may be passed upon where a literal meaning would lead to absurdity.34 The raison d’ être for the rule is essentially two-fold: First. since. The foregoing declaration is but sensible. the Secretary of Justice. there is no need to resort extrinsic aids such as records of the Constitutional Commission. where a particular word or phrase is ambiguous in itself or is equally susceptible of various meanings.31 The allegations of constitutional violations in this case are not empty attacks on the wisdom of the other branches of the government. Section 8(1) of the Constitution is used in its generic sense. (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government. a professor of law. every meaning to be given to each word or phrase must be ascertained from the context of the body of the statute since a word or phrase in a statute is always used in association with other words or phrases and its meaning may be modified or restricted by the latter. the Framers could have. but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. but that. the words of the Constitution should be understood in the sense they have in common use. One of the primary and basic rules in statutory construction is that where the words of a statute are clear. The Composition of the JBC Central to the resolution of the foregoing petition is an understanding of the composition of the JBC as stated in the first paragraph of Section 8. plain. and its meaning may. 23 . who shall be its Chairman. It reads: Section 8.38 The particular words. A statute must be so construed as to harmonize and give effect to all its provisions whenever possible. because it is assumed that the words in which constitutional provisions are couched express the objective sought to be attained. in whose consciousness it should ever be present as an important condition for the rule of law to prevail. the Secretary of Justice and "a representative of Congress. however. in either case. 36 Moreover. a retired Member of the Supreme Court. Article VIII of the Constitution. because the Constitution is not primarily a lawyer’s document but essentially that of the people. The Court need not elaborate on the legal and societal ramifications of the issues raised. and (3) the lack of any other party with a more direct and specific interest in the questions being raised. so provided. the use of the singular letter "a" preceding "representative of Congress" is unequivocal and leaves no room for any other construction. It cannot be gainsaid that the JBC is a constitutional innovation crucial in the selection of the magistrates in our judicial system. The allegations are substantiated by facts and. Considering that the language of the subject constitutional provision is plain and unambiguous. Applying the foregoing principle to this case. and a representative of the private sector. contradiction. it is not difficult to perceive from the opposing arguments of the parties that the determinants established in jurisprudence are attendant in this case: (1) the character of the funds or other assets involved in the case. a professor of law. as pointed out by an esteemed former member of the Court and consultant of the JBC in his memorandum. injustice. its correct construction may be made clear and specific by considering the company of words in which it is founded or with which it is associated. is present in the case at bench. (1) A Judicial and Bar Council is hereby created under the supervision of the Supreme Court composed of the Chief Justice as ex officio Chairman.32 It is a well-settled principle of constitutional construction that the language employed in the Constitution must be given their ordinary meaning except where technical terms are employed. it must be given its literal meaning and applied without attempted interpretation. It enumerates the ex officio or special members of the JBC composed of the Chief Justice. Congress may designate only one (1) representative to the JBC.
especially in the event a tie is reached.43 xxx xxx xxx MR. It will just besmirch the honor of our President 24 . So it is futile he will be influence anyway by the President. In this proposal. the Court cites the insightful analysis of another member of the Court and JBC consultant. there is a novel provision about the appointments of members of the Supreme Court and judges of the lower courts. Mr. If there is a Commission on Appointments. Section 8 of the Constitution. there will be no uniformity in our constitutional provisions on appointments.45 On this score. Mr. a sort of a board composed of seven members called the Judicial and Bar Council. when the Constitutional Commission eventually adopted a bicameral form of Congress.Nevertheless. the word "Congress" in Section 8(1). This underlying reason leads the Court to conclude that a single vote may not be divided into half (1/2). CONCEPCION. the Framers. an alter ego of the President. Article VIII. This unsanctioned practice can possibly cause disorder and eventually muddle the JBC’s voting process. The only purpose of Committee is to eliminate partisan politics. of the President of the Philippines elected by all the Filipino people. xxx xxx xxx the MR. it is worthy to note that the sevenmember composition of the JBC serves a practical purpose. RODRIGO: Let me go to another point then. And may I say. Even a municipal judge cannot be appointed by the President except upon recommendation or nomination of the three names by this Committee of seven people. commissioners of the Commission on Elections. that event the Chief Justice of the Supreme Court is an appointee of the President. defeating the precise mechanism which the Constitution itself created. A fifth member is the Minister of Justice. failed to amend Article VIII. The aforesaid purpose would then be rendered illusory. They theorize that it was so worded because at the time the said provision was being drafted. If my amendment is approved. RODRIGO. Then. The unmistakeable tenor of Article VIII. And while the President will still appoint the member of the judiciary. then the provision will be exactly the same as the provision in the 1935 Constitution. xxx xxx xxx without being effective at all because this Council will be under the influence of the President. On page 2. if this Council is created." xxx The ex-officio members of the Council consist of representatives from the three main branches of government while the regular members are composed of various stakeholders in the judiciary. The members of the Judiciary will be segregated from the rest of the government. or among any of the sitting members of the JBC for that matter. RODRIGO. At present it is the President who appoints them. to provide a solution should there be a stalemate in voting. they would be kowtow the President. therefore. the COA and the Commission on Civil Service…even ambassadors. xxx xxx xxx MR. xxx Thus. this will be a diminution of the appointing power of the highest magistrate of the land. the Framers initially intended a unicameral form of Congress. Article VIII of the Constitution should be read as including both the Senate and the House of Representatives. then it is the President with the confirmation of the Commission on Appointment. we would like to establish a new office. it is sensible to presume that they knew that an odd composition is the best means to break a voting deadlock. Of the seven members of the Judicial and Bar Council. that is. retired Justice Consuelo Ynares-Santiago. through oversight. the President appoints four of them who are regular members. the JBC was designed to have seven voting members with the three ex-officio members having equal say in the choice of judicial nominees. In all probability. even if the Court should proceed to look into the minds of the members of the Constitutional Commission. Section 8(1) was to treat each ex-officio member as representing one co-equal branch of government. Four out of seven are appointees of the President and they can be reappointed when their term ends. it is undeniable from the records thereof that it was intended that the JBC be composed of seven (7) members only. he will be limited to the recommendees of this Council. The appointing power will be limited by a group of seven people who are not elected by the people but only appointed. Thus: MR. the controlling part in the legislature belongs to the President and. Section 5. xxx xxx xxx If we do not remove the proposed amendment on the creation of the Judicial and Bar Council. Another member represents the Legislature.46 Thus: A perusal of the records of the Constitutional Commission reveals that the composition of the JBC reflects the Commission’s desire "to have in the Council a representation for the major elements of the community. generals of the Army will not come under this restriction. While it would be unreasonable to expect that the Framers provide for every possible scenario. between two representatives of Congress. Presiding Officer. this representative form the National Assembly is also under the influence of the President. Section 5.44 [Emphases supplied] At this juncture. Presiding Officer. The respondents insist that owing to the bicameral nature of Congress. Therefore. Why are we going to segregate the Judiciary from the rest of our government in the appointment of high-ranking officials? Another reason is that this Council will be ineffective.
A fortiori. the Framers of our Constitution intended to create a JBC as an innovative solution in response to the public clamor in favor of eliminating politics in the appointment of members of the Judiciary. the Constitution is explicit in the distinction of the role of each house in the process. as compared to the other members of the JBC. Sound reason and principle of equality among the three branches support this conclusion. to allow the Legislature to have more quantitative influence in the JBC by having more than one voice speak. Section 8(1). As to the effect of the Court’s finding that the current composition of the JBC is unconstitutional. therefore. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the whims and caprices of the government and the people who run it. they adopted a holistic approach and hoped that. it is inoperative as if it has not 25 . it creates no office. While the latter justifies and.55 Hence. the power of appropriation. that the Constitution mandates that the JBC be composed of seven (7) members only. the private sector and the three branches of government would have an active role and equal voice in the selection of the members of the Judiciary.. should be considered as one body. The Constitution is the basic and paramount law to which all other laws must conform and to which all persons. as one of the co-equal branches of government." in the context of JBC representation. and 2) in consonance with the principle of checks and balances. to insulate the appointments in the Judiciary against political influence. Article VIII of the Constitution.51 In the exercise of these powers. to the other branches of government. Constitutional doctrines must remain steadfast no matter what may be the tides of time. it confers no rights. the Court finds the above thesis as the paramount justification of the Court’s conclusion that "Congress. including the highest officials of the land. is accorded greater and unwarranted influence in the appointment of judges. the Constitution employs precise language in laying down the roles which a particular house plays. in fact. as one former congressman and member of the JBC put it. Thus. in creating a JBC."53 To quote one former Secretary of Justice: The present imbalance in voting power between the Legislative and the other sectors represented in the JBC must be corrected especially when considered vis-à-vis the avowed purpose for its creation. Verily. Congress. No mechanism is required between the Senate and the House of Representatives in the screening and nomination of judicial officers.50 and impeachment. it bears mentioning that as a general rule.49 canvassing of electoral returns for the President and Vice-President.47 In the passage of laws. any act of the government or of a public official or employee which is contrary to the Constitution is illegal. must defer. whether with one whole vote or half (1/2) of it. i. goes against that mandate. It is more in keeping with the co-equal nature of the three governmental branches to assign the same weight to considerations that any of its representatives may have regarding aspiring nominees to the judiciary. Any circumvention of the constitutional mandate should not be countenanced for the Constitution is the supreme law of the land. the term "Congress" must be taken to mean the entire legislative department. no such dichotomy need be made when Congress interacts with the other two co-equal branches of government. By allowing both houses of Congress to have a representative in the JBC and by giving each representative one (1) vote in the Council. that the JBC has a seat for a single representative of Congress. each house is constitutionally granted with powers and functions peculiar to its nature and with keen consideration to 1) its relationship with the other chamber.54 [Emphasis supplied] It is clear. [Emphases and underscoring supplied] More than the reasoning provided in the above discussed rules of constitutional construction. The same holds true in Congress’ non-legislative powers such as. Doubtless.52 To ensure judicial independence. An inter-play between the two houses is necessary in the realization of these powers causing a vivid dichotomy that the Court cannot simply discount. providing Congress with an equal voice with other members of the JBC in recommending appointees to the Judiciary is explicit. This. necessitates the separateness of the two houses of Congress as they relate inter se. "negate the principle of equality among the three branches of government which is enshrined in the Constitution. Hence. in relation to the executive and judicial branches of government. the exercise of legislative and constituent powers requires the Senate and House of Representatives to coordinate and act as distinct bodies in furtherance of Congress’ role under our constitutional scheme.to legislate. regardless of whether the two houses consummate an official act by voting jointly or separately.e. It is evident that the definition of "Congress" as a bicameral body refers to its primary function in government . an unconstitutional act is not a law. The representatives of the Senate and the House of Representatives act as such for one branch and should not have any more quantitative influence as the other branches in the exercise of prerogatives evenly bestowed upon the three. any inclusion of another member.No parallelism can be drawn between the representative of Congress in the JBC and the exercise by Congress of its legislative powers under Article VI and constituent powers under Article XVII of the Constitution. Congress. cannot be said in the case of JBC representation because no liaison between the two houses exists in the workings of the JBC. Therefore. a pretext of oversight cannot prevail over the more pragmatic scheme which the Constitution laid with firmness. it affords no protection. that is. however. would. is constitutionally treated as another co-equal branch of in the matter of its representative in the JBC. it imposes no duties. inter alia.48 the declaration of an existence of a state of war. On the other hand. whether with one full vote or onehalf (1/2) a vote each. null and void.
26 . Inc. in accordance with Section 8( 1 ). Finally. the Court is not in a position to stamp its imprimatur on such a construction at the risk of expanding the meaning of the Constitution as currently worded. the Court finds the exception applicable in this case and holds that notwithstanding its finding of unconstitutionality in the current composition of the JBC. Needless to state. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. however. The past cannot always be erased by a new judicial declaration.been passed at all. Fertiphil Corporation. is not absolute. SO ORDERED.57 the Court explained: The doctrine of operative fact. Thus. In the interest of fair play under the doctrine of operative facts.56 This rule. actions previous to the declaration of unconstitutionality are legally recognized. the petition is GRANTED. The current numerical composition of the Judicial and Bar Council IS declared UNCONSTITUTIONAL. This disposition is immediately executory. while the Court finds wisdom in respondents' contention that both the Senate and the House of Representatives should be equally represented in the JBC. it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it. WHEREFORE. v. as an exception to the general rule. The solemn power and duty of the Court to interpret and apply the law does not include the power to correct. the Court takes the initiative to clarify that it is not in a position to determine as to who should remain as the sole representative of Congress in the JBC.1âwphi1 It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. At this point. only applies as a matter of equity and fair play. by reading into the law what is not written therein. This is a matter beyond the province of the Court and is best left to the determination of Congress. all its prior official actions are nonetheless valid. The Judicial and Bar Council is hereby enjoined to reconstitute itself so that only one ( 1) member of Congress will sit as a representative in its proceedings. The courts merely give effect to the lawgiver's intent. the remedy lies in the amendment of this constitutional provision. Article VIII of the 1987 Constitution. In Planters Products. Considering the circumstances. They are not nullified.
classification of wheat Commissioner of Customs. because respondent was asking for a judicial determination of the classification of wheat. because the Bureau of Customs (BOC) had yet to examine respondent’s products. issued by petitioner The antecedent facts are as follows: On 7 November 2003.R. forcing them to pay 133% more than was proper. for tariff purposes. Lastly.6 A month after the issuance of CMO 27-2003. It anticipated the implementation of the regulation on its imported and perishable Chinese milling wheat in transit from China.5 The regulation provided an exclusive list of corporations. Under this procedure. Furthermore. 27-20034 on the tariff 27 . on 19 December 2003. CMO 27-2003 further provided for the proper procedure for protest or Valuation and Classification Review Committee (VCRC) cases. and publication or registration with the University of the Philippines Law Center. despite having imported food grade wheat. thus. vs.: Before us is a Petition for Review under Rule 45. it would be subjected to the 7% tariff upon the arrival of the shipment. and (3) port of discharge. respondent filed a Petition for Declaratory Relief7 with the Regional Trial Court (RTC) of Las Piñas City. Respondent. They likewise opposed the application for a writ of preliminary Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.9 Petitioners thereafter filed a Motion to Dismiss. respondent claimed that the equal protection clause of the Constitution was violated when the regulation treated non-flour millers differently from flour millers for no reason at all.1 assailing the Decision2 and the Resolution3 of the Court of Appeals (CA). 179579 2012 February 1. Petitioners. HYPERMIX FEEDS CORPORATION. COMMISSIONER OF CUSTOMS and the DISTRICT COLLECTOR OF THE PORT OF SUBIC. the RTC issued a Temporary Restraining Order (TRO) effective for twenty (20) days from notice.10 They alleged that: (1) the RTC did not have jurisdiction over the subject matter of the case. DECISION SERENO. prior notice. Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier without the benefit of prior assessment and examination. for feed grade. (3) CMO 27-2003 was an internal administrative rule and not legislative in nature. wheat was classified according to the following: (1) importer or consignee. and (4) the claims of respondent were speculative and premature. On 19 January 2004. petitioner Commissioner of Customs issued CMO 27-2003.8 Respondent contended that CMO 27-2003 was issued without following the mandate of the Revised Administrative Code on public participation. (2) an action for declaratory relief was improper. J. No. Under the Memorandum. ports of discharge. (2) country of origin. which nullified the Customs Memorandum Order (CMO) No. the release of the articles that were the subject of protest required the importer to post a cash bond to cover the tariff differential. respondent asserted that the retroactive application of the regulation was confiscatory in nature. 7%. The corresponding tariff for food grade wheat was 3%. wheat would be classified either as food grade or feed grade. commodity descriptions and countries of origin. Depending on these factors.
the Constitution vests the power of judicial review or the power to declare a law. before breach or violation thereof. in view of the foregoing. We shall first discuss the propriety of an action for declaratory relief. ordinance. in Misamis Oriental Association of Coco Traders. It held that. and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. This is within the scope of judicial power. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE TRIAL COURT HAS JURISDICTION OVER THE CASE. and that the action would be contrary to the rule that administrative issuances are assumed valid until declared otherwise. the parties agreed that the matters raised in the application for preliminary injunction and the Motion to Dismiss would just be resolved together in the main case. raising the same allegations in defense of CMO 27-2003. It likewise stated that a petition for declaratory relief was the proper remedy. international or executive agreement. Department of Finance Secretary. dismissed the appeal. however. and (4) the issue involved must be ripe for judicial determination. With regard to the validity of the regulation. which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. hearing and publication. (Emphasis supplied) Meanwhile. Hence. and for a declaration of his rights or duties. Rule 63. SO ORDERED. the subject of the controversy is the constitutionality of CMO 27-2003 issued by petitioner Commissioner of Customs. given that the issue raised by respondent concerned the quasi-legislative powers of petitioners. or whose rights are affected by a statute. the RTC rendered its Decision11 without having to resolve the application for preliminary injunction and the Motion to Dismiss. in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is I. petitioners should have observed the requirements of notice. THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS NOT IN ACCORD WITH THE LAW AND PREVAILING JURISPRUDENCE. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable. The court considered that respondent was a regular importer. In Smart Communications v. Indeed. the District Collector of Subic or anyone acting in their behalf are to immediately cease and desist from enforcing the said Customs Memorandum Order 27-2003. on 10 March 2005. On 28 February 2005. contract or other written instrument. and that respondent was the proper party to file it. Petitioners raise the following consideration of this Court: issues for the The Petition has no merit. to wit: WHEREFORE. Accordingly.14 The appellate court. executive order or regulation.16 we held: The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. xxx In addition such rule must be published. bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising. or regulation in the courts."13 The lower court pointed out that a classification based on importers and ports of discharge were violative of the due process rights of respondent. including the regional trial courts. First.12 The RTC held that it had jurisdiction over the subject matter. this Petition. interpretative rules are designed to provide guidelines to the law which the administrative agency is in charge of enforcing. presidential decree. II. since the regulation affected substantial rights of petitioners and other importers. the Petition is GRANTED and the subject Customs Memorandum Order 27-2003 is declared INVALID and OF NO FORCE AND EFFECT. Respondents Commissioner of Customs. Thus. (2) the controversy must be between persons whose interests are adverse.15 We find that the Petition filed by respondent before the lower court meets these requirements. The trial court ruled in favor of respondent. 28 . The requirements of an action for declaratory relief are as follows: (1) there must be a justiciable controversy. Inc. – Any person interested under a deed. NTC. and that the latter would be subjected to the application of the regulation in future transactions. (3) the party seeking declaratory relief must have a legal interest in the controversy.17 we said: xxx [A] legislative rule is in the nature of subordinate legislation. Section 1 provides: Who may file petition. It likewise held that petitioners had "substituted the quasi-judicial determination of the commodity by a quasilegislative predetermination. Dissatisfied with the Decision of the lower court. ordinance. v. thereunder. or any other governmental regulation may. On the other hand. will. instruction.injunction on the ground that they had not inflicted any injury through the issuance of the regulation. the trial court found that petitioners had not followed the basic requirements of hearing and publication in the issuance of CMO 27-2003. petitioners appealed to the CA. order. designed to implement a primary legislation by providing the details thereof. treaty.
We believe and so find that Petitioner has presented such a stake in the outcome of this controversy as to vest it with standing to file this petition. Thus. Respondent has adequately shown that. not even a constructive one. respondent would have to go through the procedure under CMO 272003. When. or (iii) give some intermediate degree of authoritative weight to the interpretative rule." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever. Thus. by its delegation of administrative judgment. Tuvera. Upon its arrival. Third. it would be subjected to the conditions of CMO 27-2003. it has actually made shipments of wheat from China to Subic. the fact that petitioner is precisely into the business of importing wheat. the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially increases the burden of those governed. is free to (i) give the force of law to the rule. each and every importation will be subjected to constant disputes which will result into (sic) delays in the delivery. It may be that the petitioner can later on get a refund but such has been foreclosed because the Collector of Customs and the Commissioner of Customs are bound by their own CMO. Filing. (ii) whether it is reasonable. in Tañada v. Chapter 2 of the Revised Administrative Code. for it gives no real consequence more than what the law itself has already prescribed. Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely by the legislature. setting aside of funds as cash bond required in the CMO as well as the resulting expenses thereof. it would have to file a protest case each time it imports food grade wheat and be subjected to the 7% tariff. the controversy is between two parties that have adverse interests. (2) In the fixing of rates. its applicability needs nothing further than its bare issuance.(1) If not otherwise required by law. (Emphasis supplied) Second. the issue raised by respondent is ripe for judicial determination. the rules on contested cases shall be observed. and thereafter to be duly informed. (3) In case of opposition. it is clear that respondent has a legal and substantive interest in the implementation of CMO 27-2003. respondent alleged that it would be made to pay the 7% tariff applied to feed grade wheat. That the sums involved are not minimal is shown by the discussions during the hearings conducted as well as in the pleadings filed. In the case of an interpretative rule. In addition. xxx xxx xxx Section 9. because litigation is inevitable19 for the simple and uncontroverted reason that respondent is not included in the enumeration of flour millers classified as food grade wheat importers. to wit: Section 3. depending on the factors enumerated therein. The lower court correctly pointed out as follows: xxx As noted above. . Petitioners are summarily imposing a tariff rate that respondent is refusing to pay.21 we held: The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens.within the delegated authority of the administrative agency. and (iii) whether it was issued pursuant to proper procedure. has committed those questions to administrative judgments and not to judicial judgments. As a matter of power a court. It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of the case. instead of the 3% tariff on food grade wheat.18 (Emphasis supplied) Finally. on 14 August 2003. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from that date shall not thereafter be the bases of any sanction against any party of persons. as a regular importer of wheat. as the trial court stated. But the court is not free to substitute its judgment as to the desirability or wisdom of the rule for the legislative body. The regulation calls for the imposition of different tariff rates. on the other hand. The shipment was set to arrive in December 2003. the inquiry is not into the validity but into the correctness or propriety of the rule. an agency shall. no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon. Petitioner cannot get its refund with the said agency. While the people are kept abreast by the mass media of the debates and deliberations in the Batasan 29 . when confronted with an interpretative rule. Considering that the questioned regulation would affect the substantive rights of respondent as explained above.20 Likewise. which would undoubtedly toll its time and resources. – (1) Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it. (ii) go to the opposite extreme and substitute its judgment. there would be no basis for the application of the maxim "ignorantia legis non excusat. as far as practicable. It is easy to see that business uncertainty will be a constant occurrence for petitioner. Without such notice and publication. When an administrative rule is merely interpretative in nature. before that new issuance is given the force and effect of law. it behooves the agency to accord at least to those directly affected a chance to be heard. it therefore follows that petitioners should have applied the pertinent provisions of Book VII. publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule. Public Participation.
(Emphasis supplied) Because petitioners failed to follow the requirements enumerated by the Revised Administrative Code. For a classification to be reasonable. should be within the scope of the statutory authority granted by the legislature to the administrative agency. as amended. but results in the opposite. it must be shown that (1) it rests on substantial distinctions. measurement. appraisal. – Duties of Customs Officer Tasked to Examine. petitioners violated respondent’s right to due process in the issuance of CMO 27-2003 when they failed to observe the requirements under the Revised Administrative Code. invoice and other pertinent documents and shall make return in such a manner as to indicate whether the articles have been truly and correctly declared in the entry as regard their quantity. even if the importers listed under CMO 27-2003 have imported feed grade wheat. the state carries that burden. Failure on the part of the customs officer to comply with his duties shall subject him to the penalties prescribed under Section 3604 of this Code. it creates an assumption that those who meet the criteria do not import feed grade wheat. which are the product of a delegated power to create new and additional legal provisions that have the effect of law. and tariff classification and not imported contrary to law. the assailed regulation must be struck down. Thus." A careful study of CMO 27-2003 shows that it not only fails to achieve this end. ready access to the legislative records – no such publicity accompanies the law-making process of the President. therefore. in view of the foregoing. where it is discharged.Pambansa – and for the diligent ones. It is also not clear how the regulation intends to "monitor more closely wheat importations and thus prevent their misclassification. Finally. CMO 27-2003 does not meet these requirements. without publication. the Petition is DENIED. Thus. Classify.22 Unfortunately. Going now to the content of CMO 27-3003. The law provides: Section 1403. importers are unnecessarily burdened to prove the classification of their wheat imports. In effect. the guarantee of the equal protection of laws is not violated if there is a reasonable classification. the standards prescribed by law. a classification subjecting them to 7% tariff. It is required that the regulation be germane to the objects and purposes of the law. and (4) it applies equally to all members of the same class. does not become disadvantageous to respondent only. but even to the state. Unfortunately. Thus. the product would still be declared as feed grade wheat. (3) it is not limited to existing conditions only. Petitioner Commissioner of Customs also went beyond his powers when the regulation limited the customs officer’s duties mandated by Section 1403 of the Tariff and Customs Law. we likewise hold that it is unconstitutional for being violative of the equal protection clause of the Constitution. weight. The regulation. On the other hand. The equal protection clause means that no person or class of persons shall be deprived of the same protection of laws enjoyed by other persons or other classes in the same place in like circumstances. and appraise imported articles shall determine whether the packages designated for examination and their contents are in accordance with the declaration in the entry. Likewise. while in the second. In the first case. the people have no means of knowing what presidential decrees have actually been promulgated. and Appraise Imported Articles. (2) it is germane to the purpose of the law. and appraise the imported articles in accordance with Section 201 of this Code.23 In summary. but in conformity with. and that it be not in contradiction to. CMO 23-2007 has already classified the article even before the customs officer had the chance to examine it. The application of the regulation forecloses the possibility that other corporations that are excluded from the list import food grade wheat. We do not see how the quality of wheat is affected by who imports it. classify. much less a definite way of informing themselves of the specific contents and texts of such decrees.1âwphi1 The provision mandates that the customs officer must first assess and determine the classification of the imported article before tariff may be imposed. 30 . or which country it came from. on the one hand. SO ORDERED. thus depriving the state of the taxes due. the customs officer shall determine the unit of quantity in which they are usually bought and sold. Petitioners likewise violated respondent’s right to equal protection of laws when they provided for an unreasonable classification in the application of the regulation. WHEREFORE. at the same time. It is well-settled that rules and regulations. He shall submit samples to the laboratory for analysis when feasible to do so and when such analysis is necessary for the proper classification. – The customs officer tasked to examine. even if other millers excluded from CMO 27-2003 have imported food grade wheat. petitioner Commissioner of Customs diminished the powers granted by the Tariff and Customs Code with regard to wheat importation when it no longer required the customs officer’s prior examination and assessment of the proper classification of the wheat. they would only be made to pay 3% tariff. and/or admission into the Philippines of imported articles. petitioner Commissioner of Customs went beyond his powers of delegated authority when the regulation limited the powers of the customs officer to examine and assess imported articles.
ANTONIO A. Petitioners. Patria R. In their Answer. Serrano.5 the City of Manila alleged that it passed Ordinance No. Paz B. represented by DR. vs. Branch 49. 7949 authorizing the City Mayor to acquire "by expropriation. De Caronongan. No. Manuel A. The City of Manila offered to purchase the property at P1. Sison.1 assails the Order of 6 January 20112 of the Regional Trial Court of Manila. Barrozo (defendants). Reyes. MANUEL A. Teofila B. negotiation or by any other legal means" the parcel of land co-owned by defendants. 2011 December ORLANDO A.20 square meters. FE A. Respondent.000. RAYOS. 227512 and with an area of 1. Rayos Dela Paz.Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. 03108154. Leticia R.182. Rayos. 31 . captioned as a petition for review on certiorari and declaratory relief. but at the price of P50. RAYOS. and Engr. RESOLUTION CARPIO. docketed as Civil Case No. Rosalinda R. 196063 14.: The Case This petition. RAYOSDELA PAZ. RAYOS.6 defendants conveyed their willingness to sell the property to the City of Manila. THE CITY OF MANILA. denying reconsideration of the trial court’s Order of 11 March 20103 which denied the motion to dismiss filed by petitioners Orlando A.4 The Facts The present case originated from a complaint for eminent domain filed by respondent City of Manila against Remedios V. and ENGR. Rayos. Laureano M.000. In its Complaint. Ventanilla.00 per square meter which they claimed was the fair market value of the land at the time. which is covered by TCT No. Fe A.00 per square meter.R. J. Sison.
That hierarchy is determinative of the venue of appeals. The Ruling of the Court We deny the petition. allows the case to proceed until the final adjudication thereof by the court.In the course of the proceedings. 7949 is unconstitutional. Rayos. namely. Manuel A. and not a petition for review on certiorari under Rule 45 of the Rules of Court. Metro Manila11 apply squarely to this case. the trial court denied the motion for reconsideration. the Court of Appeals and the Regional Trial Courts exercise concurrent jurisdiction to issue writs of certiorari. Rule 41 of the Rules of Court provides: SECTION 1. 7949 is unconstitutional and (2) the cases of Lagcao v. quo warranto. It is a policy necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction. since the trial court’s order denying the motion to dismiss is not appealable. Indeed.16 citing People v. Subject of appeal. Labra10 and Jesus Is Lord Christian School Foundation. the same must be dismissed for violation of the principle of hierarchy of courts.13 Section 1(c). the Motion to Dismiss cannot be granted. SO ORDERED. Labra7 and Jesus Is Lord Christian School Foundation. Petitioners failed to demonstrate how or why the facts in this case are similar with the cited cases in order that the issue in this case be resolved in the same manner. No appeal may be taken from: xxx (c) An interlocutory order. Rayos Dela Paz. to be taken as according to parties seeking any of the writs an absolute. In this case. with the Court of Appeals. Cuaresma. under Rule 45 of the Rules of Court. In order to prevent further delay to the prejudice of all the proper parties in this case. died on 1 December 2003 and was substituted by his son petitioner Manuel A. Fe A. Rayos. For being a wrong remedy. An order denying a motion to dismiss is interlocutory and not appealable. In case of denial of an interlocutory order. . A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court. This concurrence of jurisdiction is not. this Court. petitioners Orlando A. Rayos intervened while petitioner Fe A. Rayos Dela Paz was added as a defendant. and Engr.9 On 6 January 2011. the aggrieved party may file an appropriate special civil action under Rule 65. Inc. which is the proper remedy to challenge the order denying the motion to dismiss. Melicor. As such. continue with the trial for the determination of just compensation on July 7. This well-settled principle dictates that petitioners should file the petition for certiorari with the Court of Appeals. 2010 at one o’clock in the afternoon. Laureano. clearly and specifically set out in the petition. no appeal. Municipality (now City) of Pasig. and (2) the cases of Lacgao v. There is after all a hierarchy of courts. and not directly with this Court. and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs.An appeal may be taken from a judgment or final order that completely disposes of the case. Metro Manila8 apply squarely to the present case. On 11 March 2010. the immediate remedy available to the aggrieved party is to file a special civil action for certiorari under Rule 65 of the Rules of Court. and after intense evaluation of the records on hand. one of the defendants. Municipality (now City) of Pasig. mandamus. unrestrained freedom of choice of the court to which application therefor will be directed.14 However.15 In Heirs of Bertuldo Hinog v. may be taken from an interlocutory order. Inc. petitioner Orlando A. It is shared by this Court with Regional Trial Courts and with the Court of Appeals. v. the present petition deserves outright dismissal. however. it is merely interlocutory in nature and thus. and those against the latter. (1) Ordinance No. and to prevent 32 . the trial court denied the motion to dismiss. v. On 7 December 2009. Even if the Court treats the present petition as a petition for certiorari under Rule 65. petitioners should have filed a petition for certiorari under Rule 65 to assail such order. not appealable. Clearly.17 the Court held: This Court’s original jurisdiction to issue writs of certiorari is not exclusive. xxx In all the above instances where the judgment or final order is not appealable. The trial court disposed of the motion to dismiss in this wise: In view of the foregoing. and in effect. The trial court ruled that the motion to dismiss did not show any compelling reason to convince the court that the doctrine of stare decisis applies. Rayos filed a Motion to Dismiss on the grounds that (1) Ordinance No. prohibition. such concurrence in jurisdiction does not give petitioners unbridled freedom of choice of court forum. or of a particular matter therein when declared by these Rules to be appealable. Petitioners filed with this Court the present petition reiterating the arguments in their motion to dismiss. Meanwhile. A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor.12 An order denying a motion to dismiss does not finally dispose of the case. This is [an] established policy. habeas corpus and injunction.
we DENY the petition. and CINCHONA CRUZ-GONZALES. and TERESITA F. COMMISSION ON ELECTIONS (COMELEC). 7949 without. LUISK. TUGNA. 33 . Respondents. SO ORDERED.further over-crowding (Emphasis supplied. WHEREFORE. Neither did petitioners explain why Ordinance No. In short. On 5 July 2010. vs. which consist mainly of unsubstantiated allegations. While this Court may treat a petition for declaratory relief as one for prohibition22 or mandamus. This petitioners failed to do. CITIZENS’ BATTLE AGAINST CORRUPTION PARTY LIST represented by VIRGINIA S. there is absolutely nothing which shows that it has far-reaching implications and involves transcendental questions deserving of this Court’s treatment of the petition as one for prohibition or mandamus.: The present petition having been flied beyond the reglementary period.R.20 Likewise. LOKIN. JOSE SHERWIN N.24 In the present case. Rule 64 of the Rules of Court compels a dismissal on this basis alone. 7949 is repugnant to the Constitution. The COMELEC en banc affirmed the said Resolution. however. J. Petitioners. Inc. Republic of the Philippines SUPREME COURT Manila EN BANC G. not original. Despite petitioner's inexplicable disregard of basic concepts. the COMELEC First Division issued a Resolution1 expunging the Certificate of Nomination which included herein petitioners as representatives of the party-list group known as Citizens’ Battle Against Corruption (CIBAC).21 as can be gleaned from the caption of the petition. PLANAS. Petitioners invoke the cases of Lagcao v. petitioners must show exceptional and compelling reasons therefor. showing clearly the applicability and similarity of those cases to the present controversy. prompting Luis Lokin. Municipality (now City) of Pasig. assuming the present petition is one for declaratory relief. Labra18 and Jesus Is Lord Christian School Foundation. Jr. clearly and specifically set out in the petition. Petitioners merely rehashed the arguments in their motion to dismiss. this Court deems it appropriate to reiterate the specific procedure for the review of judgments made by the Commission on Elections (COMELEC) as laid down in Rule 64. No. jurisdiction over such a petition. to warrant a direct recourse to this Court. Nor did petitioners specifically and sufficiently set forth any extraordinary and important reason to justify direct recourse to this Court. Metro Manila19 in challenging the constitutionality of Ordinance No.) of the Court’s docket. this Court has only appellate. JR. 193808 2012 June 26. v. and how it is differentiated from the more general remedy afforded by Rule 65. DECISION SERENO.23 it must be stressed that this special treatment is undertaken only in cases with far reaching implications and transcendental issues that need to be resolved. over which this Court exercises original jurisdiction.
3 Under the leadership of the National Council. the COMELEC issued Resolution No. 2. praying that they be recognized as the legitimate nominees of CIBAC party-list. The review by this Court of judgments and final orders of the COMELEC is governed specifically by Rule 64 of the Rules of Court. As stated in its constitution and bylaws. Derla affixed to the certification her signature as "acting secretary-general" of CIBAC. while Rule 64 refers to the same remedy of certiorari as the general rule in Rule 65. Planas to file the present Petition for Certiorari. the aggrieved party may file the petition within the remaining period. respondents. This rule shall govern the review of judgments and final orders or resolutions of the Commission on Elections and the Commission on Audit. which states: Sec. Derla. 3. and 2007 elections. otherwise known as the Party. both purporting to represent CIBAC. (R. and declared respondents’ faction as the true nominees of CIBAC. they cannot be equated. Pia Derla submitted a second Certificate of Nomination. respectively. Mode of review.) 7941. raising these issues: I) Whether the authority of Secretary General Virginia Jose to file the party’s Certificate of Nomination is an intra-corporate matter. On 15 January 2010. If the motion is denied. and Planas was unauthorized. On 26 March 2010. ordered the Certificate filed by Derla to be expunged from the records. Jose. and over which the COMELEC has no jurisdiction. submitted to the COMELEC a "Manifestation of Intent to Participate in the Party-List System of Representation in the May 10. that the Certificate of Nomination and other documents she submitted were unauthorized by the party and therefore invalid.11 In the Resolution dated 5 July 2010. Respondents contended that Derla had misrepresented herself as "acting secretary-general.—The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed.13 the Commission reiterated that Pia Derla was unable to prove her authority to file the said Certificate. another Manifestation6 was submitted by herein respondents Cinchona Cruz-Gonzales and Virginia Jose as the party’s vice-president and secretary-general. as they provide for different reglementary periods. reckoned from notice of denial. 1. Jr. "WITHOUT PREJUDICE …TO the determination which of the two factions of the registered party-list/coalitions/sectoral organizations which filed two (2) manifestations of intent to participate is the official representative of said partylist/coalitions/sectoral organizations xxx. 87447giving due course to CIBAC’s Manifestation.10 which included petitioners Luis Lokin. Sec. Scope. submitted the Certificate of Nomination9 of CIBAC to the COMELEC Law Department. and that it was Villanueva who was duly authorized to file the Certificate of Nomination on its behalf. Jr. As earlier stated.and Teresita F. In a per curiam Resolution dated 31 August 2010. except as hereinafter provided. this Court denies the petition for being filed outside the requisite period. the party participated in the 2001. Claiming that the nomination of petitioners Lokin. whereas respondents presented overwhelming evidence that Villanueva deputized CIBAC Secretary General Virginia Jose to submit the Certificate of Nomination pursuant to CIBAC’s Constitution and bylaws. and Teresita Planas as party-list nominees. the COMELEC First Division granted the Petition. Section 3 thereof. the COMELEC en banc affirmed the Division’s findings. the COMELEC en banc issued the second assailed 34 . Jr. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution. be proclaimed as the CIBAC party-list representative to the House of Representatives. Petitioners allege grave abuse of discretion on the part of the COMELEC in issuing both Resolutions. and II) Whether the COMELEC erred in granting the Petition for Disqualification and recognizing respondents as the properly authorized nominees of CIBAC party-list. the platform of CIBAC is to fight graft and corruption and to promote ethical conduct in the country’s public service.m. who claimed to be the party’s acting secretary-general. Petitioner received a copy of the first assailed Resolution on 12 July 2010. At 1:30 p. led by President and Chairperson Emmanuel Joel J. viz: SEC. of the same day. Villanueva.4 On 20 November 2009. if allowed under the procedural rules of the Commission concerned."8 On 19 January 2010. its highest policymaking and governing body. shall interrupt the period herein fixed." when she was not even a member of CIBAC. but which shall not be less than five (5) days in any event. Respondent CIBAC party-list is a multi-sectoral party registered2 under Republic Act No.12 Upon Motion for Reconsideration separately filed by the adverse parties.15 Rule 65 provides for a period of 60 days from notice of judgment sought to be assailed in the Supreme Court. exclusively cognizable by special commercial courts. Upon the Motion for Reconsideration filed by petitioners on 15 July 2010." seeking to nullify the Certificate filed by Derla. 2004.List System Act.A. Thus. and that petitioner Lokin. Petitioners now seek recourse with this Court in accordance with Rules 64 and 65 of the Rules of Court. Time to file petition. 2010 Elections." The first Manifestation5 was signed by a certain Pia B. two different entities. The exception referred to in Section 2 of this Rule refers precisely to the immediately succeeding provision. while Section 3 expressly provides for only 30 days. A judgment or final order or resolution of the Commission on Elections and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65. respondents filed with the COMELEC a "Petition to Expunge From The Records And/Or For Disqualification. The nomination was certified by Villanueva and Virginia S.14 which provides for the allowable period within which to file petitions for certiorari from judgments of both the COMELEC and the Commission on Audit.
In Pates. Section 3. must present their platform or program of government. initiative. This singular power to rule upon questions of party identity and leadership is exercised by the COMELEC as an incident to its enforcement powers."25 In any case. political parties. Every plea for a liberal construction of the Rules must at least be accompanied by an explanation of why the party-litigant failed to comply with the rules and by a justification for the requested liberal construction. The reason.Resolution on 31 August 2010. Inc.24 More specifically. Commission on Elections. Based on these considerations. as made clear above. clearly outside the required period. or coalitions which. reasoning thus: x x x. (Emphasis supplied. The COMELEC has jurisdiction over cases pertaining to party leadership and the nomination of party-list representatives.17 we have established that the fresh-period rule used in Rule 65 does not similarly apply to the timeliness of petitions under Rule 64. petitioners filed the present Petition only on 1 October 2010. after sufficient publication. This per curiam Resolution was received by petitioners on 1 September 2010. but this flexibility was "never intended to forge a bastion for erring litigants to violate the rules with impunity. the party-list itself. they had a remaining period of 27 days or until 28 September 2010 within which to file the Petition for Certiorari with this Court. they are aware of the applicable period for filing. Article IX-C of the Constitution expressly requires that the COMELEC’s rules of procedure should expedite the disposition of election cases. pursuant to Section 3 above. Petitioners contend that the COMELEC never should have taken cognizance of respondents’ Petition to Expunge and/or for Disqualification. petitioners do not even attempt to explain why the Petition was filed out of time. However. Precisely. a party asking for the suspension of the Rules of Court comes to us with the heavy burden of proving that he deserves to be accorded exceptional treatment. deducting the three days it took petitioners to file the Motion for Reconsideration." the nonstock entity that is registered with the Securities and Exchange Commission (SEC).) In this case. xxx xxx xxx x x x. In Laban ng Demokratikong Pilipino v. which had allegedly become defunct since 2003. Commission on Elections. This Court labors under the same command. in addition to other requirements. That was the year when CIBAC Foundation. But even if this Court were to apply liberality and take cognizance of the late Petition. plebiscite. they submitted their Certificate of Nomination and Manifestation of Intent to participate in the party-list elections. as provided by the party’s Constitution and bylaws.20 Thus. the arguments therein are flawed. thus. Inc. Commission on Elections and Domingo v..22 Even as petitioners insisted on the purely intracorporate nature of the conflict between "CIBAC Foundation" and the CIBAC Sectoral Party. and not the National Council. this Court dismissed the Petition for Certiorari on the sole ground that it was belatedly filed. Hence. or oust CIBAC. cognizable only by special commercial courts. footnotes omitted. Clearly. respondents counter that the foundation was established solely for the purpose of acting as CIBAC’s legal and financial arm. referendum.23 Contrary to their stance that the present dispute stemmed from an intra-corporate matter. petitioners insist that the group that participated in the party-list system in the 2004 and 2007 elections was the SEC-registered entity. is constitutionally-based and is no less than the importance our Constitution accords to the prompt determination of election results. While the petitioner is correct in his historical data about the Court’s treatment of the periods for the filing of the different modes of review.18 x x x. was established and registered with the SEC. it is equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. he misses out on the reason why the period under Section 3. we do not find convenience and uniformity to be reasons sufficiently compelling to modify the required period for the filing of petitions for certiorari under Rule 64. the COMELEC’s jurisdiction to settle the struggle for leadership within the party is well established.21 On the other hand. While it is true that a litigation is not a game of technicalities. as they themselves invoke the remedy under 35 .16 Thus. as our proceedings are in fact the constitutional extension of cases that start with the COMELEC. They have reached this conclusion by characterizing the present matter as an intra-corporate dispute and." xxx xxx xxx Rule 64 in conjunction with Rule 65. and recall. In Pates v. Corollary to the right of a political party "to identify the people who constitute the association Under this unique nature of the exceptions. petitioners were seeking the COMELEC’s approval of their eligibility to participate in the upcoming party-list elections. particularly the designated commercial court in this case. Rule 64 has been retained. the COMELEC is also tasked to "register. organizations. as one of its constitutional functions.19 Pia Derla purportedly filed the Certificate of Nomination pursuant to the authority granted by the Board of Trustees of the "CIBAC Foundation. they invoke its authority under the Party-List System Act.26 the Court held: x x x. It was never intended to substitute for. In effect. there is no acceptable reason for their failure to comply with the proper procedure. their submissions even recognize the COMELEC’s constitutional power to enforce and administer all laws relative to the conduct of an election. There have been some instances wherein this Court allowed a relaxation in the application of the rules. the Regional Trial Court in Pasig City.
A candidate’s political party affiliation is also printed followed by his or her name in the certified list of candidates. A certificate of candidacy makes known to the COMELEC that the person therein mentioned has been nominated by a duly authorized political group empowered to act and that it reflects accurately the sentiment of the nominating body. which may include but not limited to the following: a. Article IX-C of the Constitution. 7941 and other laws to duly prove that the nominees truly belong to the marginalized and underrepresented sector/s. Commission on Elections that the COMELEC’s powers and functions under Section 2. Track record of the party-list group/organization showing active participation of the nominee/s in the undertakings of the party-list group/organization for the advancement of the marginalized and underrepresented sector/s. R.30 Furthermore. not less than five (5). Incumbent sectoral representatives in the House of Representatives who are nominated in the party-list system shall not be considered resigned. Only persons who have given their consent in writing may be named in the list. A person may be nominated in one (1) list only.27 (Emphasis supplied. No person shall be nominated as party-list representative unless he is a natural-born citizen of the Philippines. the COMELEC may resolve an intra-party leadership dispute. not only misappropriates the party’s name and prestige but foists a deception upon the electorate.) Similar to the present case. able to read and write. organization. a bona fide member of the party or organization which he seeks to represent for at least ninety (90) days preceding the day of the election. Sections 8 and 9 thereof state: Sec. the COMELEC has the power and the duty to step in and enforce the law not only to protect the party but. therefore. to wit: The only issue in this case. and is at least twenty-five (25) years of age on the day of the election. political party or coalition they seek to represent. as well as their individual qualifications.A. as an incident of its power to register political parties. and no other. Thus.and to select a standard bearer who best represents the party’s ideologies and preference" is the right to exclude persons in its association and to not lend its name and prestige to those which it deems undeserving to represent its ideals. 8. the electorate. in a proper case brought before it. Each registered party. as defined by the COMELEC itself. To prevent this occurrence. which uniformly upheld the COMELEC’s jurisdiction over intra-party disputes: The COMELEC’s jurisdiction over intra-party leadership disputes has already been settled by the Court. is who as between the Party Chairman and the Secretary General has the authority to sign certificates of candidacy of the official candidates of the party. The Court ruled in Kalaw v. organization or coalition shall submit to the COMELEC not later than forty-five (45) days before the election a list of names. No change of names or alteration of the order of nominees shall be allowed after the same shall have been submitted to the COMELEC except in cases where the nominee dies. By virtue of the aforesaid mandate of the Party-List Law vesting the COMELEC with jurisdiction over the nomination of party-list representatives and prescribing the qualifications of each nominee. Commission on Elections." The Court also declared in another case that the COMELEC’s power to register political parties necessarily involved the determination of the persons who must act on its behalf. 9. are outlined in the Party-List System Law. Indeed. the COMELEC promulgated its "Rules on Disqualification Cases Against Nominees of Party-List Groups/ Organizations Participating in the 10 May 2010 Automated National and Local Elections. 36 ."31 Adopting the same qualifications of party-list nominees listed above. in line with the Commission’s broad constitutional mandate to ensure orderly elections. The list shall not include any candidate for any elective office or a person who has lost his bid for an elective office in the immediately preceding election. Sec. organization. A candidate misrepresenting himself or herself to be a party’s candidate. Nomination of Party-List Representatives. The Court therein cited Kalaw v. Qualifications of Party-List Nominees. Angara or his authorized representative. Commission on Elections and Palmares v. the petitioners’ Manifestation and Petition before the COMELEC merely asked the Commission to recognize only those certificates of candidacy signed by petitioner Sen. more importantly. or withdraws in writing his nomination. "include the ascertainment of the identity of the political party and its legitimate officers responsible for its acts. who may unwittingly cast its ballot for him or her on the mistaken belief that he or she stands for the party’s principles. a registered voter. the sectoral party.28 In the 2010 case Atienza v. from which party-list representatives shall be chosen in case it obtains the required number of votes. becomes incapacitated in which case the name of the substitute nominee shall be placed last in the list. a resident of the Philippines for a period of not less than one (1)year immediately preceding the day of the election. Laban delved into the issue of leadership for the purpose of determining which officer or member was the duly authorized representative tasked with filing the Certificate of Nomination.29 it was expressly settled that the COMELEC possessed the authority to resolve intraparty disputes as a necessary tributary of its constitutionally mandated power to enforce election laws and register political parties. matters regarding the nomination of party-list representatives. Commission on Elections. pursuant to its Constitution and bylaws. the sectoral party. Section 6 of these Rules also required that: The party-list group and the nominees must submit documentary evidence in consonance with the Constitution. political party or coalition they seek to represent.
and Virginia S. and to issue decisions and resolutions binding on party members and officers. in accordance with the Party’s Constitution and by-laws. and clearly not qualified to attest to petitioners as CIBAC nominees. and d. The Joint Affidavit of Resolutions of the CIBAC National Council and the National Electoral Congress of CIBAC dated 12 November 2009. the Party’s New Electoral Congress. which had not been belied by concrete contrary evidence. the instant Petition is DISMISSED. the highest policymaking and governing body of the Party. which included Mr. Derla. and programs of the Party. the COMELEC en banc also enumerated the documentary evidence that further bolstered respondents’ claim that it is Chairman Villanueva and Secretary General Virginia Jose who were duly authorized to submit the Certificate of Nomination to the COMELEC. as the Party President and Chairman. and d.36 These include: a. is thus a virtual stranger to the party-list. c.1âwphi1 The tribunal correctly found that Pia Derla’s alleged authority as "acting secretary-general" was an unsubstantiated allegation devoid of any supporting evidence. let alone the representative authorized by the party to submit its Certificate of Nomination. proof that the nominee/s is not only an advocate of the party-list/organization but is/are also a bona fide member/s of said marginalized and underrepresented sector. as the governing body of CIBAC. which as per the CIBAC’s Constitution and By-Laws. Jose by the CIBAC President.37 WHEREFORE . Petitioners Planas and Lokin. Proofs that the nominee/s truly adheres to the advocacies of the party-list group/organizations (prior declarations.34 Contrary to petitioners’ allegations. We are at a loss as to the manner by which Ms. This Court AFFIRMS the judgment of the COMELEC expunging from its records the Certificate of Nomination filed on 26 March 2010 by Pia B. to submit the list of nominees for the Party. the National Council of CIBAC has not become defunct. Petitioners cannot draw authority from the Board of Trustees of the SEC-registered entity. no grave abuse of discretion is attributable to the COMELEC First Division and the COMELEC en banc. Jose providing the official list of officers of CIBAC. In case of a party-list group/organization seeking representation of the marginalized and underrepresented sector/s.32 The COMELEC ruled: A careful perusal of the records readily shows that Pia B. Derla. speeches. Surely. who is not even a member of CIBAC. met on 12 November 2009 and there being a quorum. finding no grave abuse of discretion on the part of the COMELEC in issuing the assailed Resolutions. who has signed and submitted. which respondents attached to their Memorandum. at least for the 10 May 2010 Elections. Certification that the nominee/s is/are a bona fide member of the party-list group/ organization for at least ninety (90) days prior to the election. Constitution and By-Laws of CIBAC as annexed to its Petition for Registration as Sectoral Organization Under the Party-List System filed by CIBAC on 13 November 2000. was also composed of the National Council Members and had the task of choosing the nominees for the Party in the Party-List Elections. Derla herself that point to that alleged fact. The Law Department shall require party-list group and nominees to submit the foregoing documentary evidence if not complied with prior to the effectivity of this resolution not later than three (3) days from the last day of filing of the list of nominees. Derla is a member and officer of CIBAC. The COMELEC carefully perused the documents of the organization and outlined the process followed by the National Council before it complied with its task of choosing the party’s nominees. as the purported Acting Secretary General of CIBAC. Contrary to petitioners’ stance. written articles. including Derla. Derla has assumed the post. b. Villanueva as both Party President and Party Chairman. unanimously ruled to delegate to the Party President such latter function. then proceeded to elect its new set of officers. and We see nothing but Respondents’ claims and writings/certifications by Ms. that has the power to formulate the policies.b. who had been given the sole authority. On the other hand…We cannot help but be convinced that it was Emmanuel Joel J. Petitioners did not submit any documentary evidence that Derla was a member of CIBAC. has no authority to do so. Certificate of Deputization and Delegation of Authority issued to CIBAC Secretary-General Virginia S. and such other positive actions on the part of the nominee/s showing his/her adherence to the advocacies of the party-list group/organizations). c. Jose as Party Secretary General. Villanueva.35 For its part. have not even presented evidence proving the affiliation of the socalled Board of Trustees to the CIBAC Sectoral Party that is registered with COMELEC. as listed in the Certificate of 37 . because the Constitution of CIBAC expressly mandates that it is the National Council. the Certificates of Nomination of Respondents. are bona fide members of the party. We cannot rely on these submissions.This was based on the "Minutes of Meeting of CIBAC Party-List National Council" held on 12 November 2009. they have not presented any proof in support of the same. Jr. The records would show that. This set of facts. or certify their nomination to the COMELEC. its National Council. Petitioners cannot use their registration with the SEC as a substitute for the evidentiary requirement to show that the nominees. During the same meeting.33 Pia Derla. Despite Respondents’ repeated claim that Ms. weighed heavily against Respondents and favorably for Petitioner. and has certainly not been replaced by the Board of Trustees of the SEC-registered entity. plans. as they are the very definition of selfserving declarations. Manifestation dated 8 January 2010 by CIBAC’s Secretary General Virginia S. The nominees.
188818 2011 May 31. OSMEÑA.00 to DCDC.PERALTA. 2009 Resolution3 of the respondent Commission on Audit (COA).. VELASCO. the extra work completed by WTCI and DCDC was not covered by the necessary appropriation to effect payment. attorney’s fees and litigation expenses awarded in favor of two construction companies in the collection cases filed against the City of Cebu. JJ. SO ORDERED.: Before the Court is the Petition for Certiorari1 filed by Tomas R. . In preparation for the games. CARPIO-MORALES. WTCI and DCDC demanded payment for the extra work they performed in the construction and renovation of the sports complex.514.525. in his personal capacity and in his capacity as City Mayor of Cebu City. LEONARDO-DE CASTRO. BRION. *DEL CASTILLO. NACHURA. 2008 Decision2 and the June 8. the Sanggunian finally passed the required appropriation ordinances. Thereafter. Present: CORONA.418. J.8 The decisions in favor of WTCI and DCDC were affirmed on appeal. MENDOZA. C. The RTC likewise awarded damages. While the construction was being undertaken. Osmeña. sponsored a resolution authorizing Osmeña to execute the supplemental agreements with WTCI and DCDC to cover the extra work performed. vs.255."4 The Palaro was successfully held at the Cebu City Sports Complex during the first six months of 1994. 38 . was authorized by the Sangguniang Panlungsod (Sanggunian) of Cebu to represent the City and to execute the construction contracts. Councilor Augustus Young. The RTC found the claims meritorious.. subject to certain modifications as to the amounts due. ABAD. then city mayor. prompting them to file two separate collection cases before the Regional Trial Court (RTC) of Cebu City (Civil Case Nos. VILLARAMA. Osmeña. amounting to P15..40 to WTCI7 and P102.142. TOMAS R. are recognized as the legitimate nominees of the said party. the City engaged the services of WT Construction.Nomination filed on 19 January 2010 by Emmanuel Joel J.42 (about 83% of the original contract price). JR. A Sanggunian member. former mayor of the City of Cebu. and to DCDC. Osmeña issued a total of 20 Change/Extra Work Orders to WTCI. Inc. BERSAMIN. Thus. PEREZ. Respondent. and SERENO. and have become final. Villanueva. Petitioner. BACKGROUND FACTS The City of Cebu was to play host to the 1994 Palarong Pambansa (Palaro). To satisfy the judgment debts. President and Chairman of Citizens’ Battle Against Corruption (CIBAC) Party List.versus . litigation expenses and attorney’s fees in the amount of P2. THE COMMISSION ON AUDIT. Nevertheless. which disallowed the damages. but the other Sanggunian members refused to pass the resolution. amounting to P35. JR.24 (about 31% of the original contract price). Republic of the Philippines SUPREME COURT Manila EN BANC G. CEB-170045 and CEB171556 ). No. under Rule 64 of the Rules of Court. The petition seeks the reversal of the May 6. Promulgated: DECISION BRION. and made these charges the personal liability of Osmeña for his failure to comply with the legal requirements for the disbursement of public funds. nor was there a prior authorization from the Sanggunian. the work proceeded on account of the "extreme urgency and need to have a suitable venue for the Palaro.744. CARPIO. (WTCI) and Dakay Construction and Development Company (DCDC) to construct and renovate the Cebu City Sports Complex.R. These Change/Extra Work Orders were not covered by any Supplemental Agreement.015. and ordered the City to pay for the extra work performed.J.
Osmeña pleads that his petition be given due course for the resolution of the important issues he raised. after his trip abroad. Rule 64 of the Rules of Court states: SEC. he needed time to hire a private counsel who would review his case and prepare the petition. The Rule further states that the filing of a motion for reconsideration of the said judgment or final order or resolution interrupts the 30-day period.255. or the prior authorization from the Sanggunian. Time to file petition. 2008. 3. we emphasized that procedural rules should be treated with utmost respect and due regard.—The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed.13 The Office of the Mayor of Cebu City received the June 8. Section 3 of the same Rule provides for a 30day period. he reasons that the remaining period should be counted from his actual knowledge of the denial of his motion for reconsideration. 18 days from his receipt thereof. attorney’s fees. since they are designed to 39 . 2003. Thus. 2009. For these reasons. 2009 that Osmeña filed the present petition for certiorari under Rule 64 to assail the COA’s Decision of May 6.12 Osmeña received a copy of the Decision on May 23. were unnecessary expenses for which the public officers should be held liable in their personal capacities pursuant to the law. damages. through a 2nd Indorsement dated April 30. the members of the Sanggunian. Since he is being made liable in his personal capacity. 2004. THE COURT’S RULING Relaxation of procedural rules to give effect to a party’s right to appeal Section 3. 2008. 2008 COA Decision. including the payment of damages and interest charges. the aggrieved party may file the petition within the remaining period. [Emphasis ours. to file the petition for certiorari. 2009 Resolution of the COA on June 29. The COA Regional Office’s Decision was sustained by the COA’s National Director for Legal and Adjudication (Local Sector) in a Decision dated January 16. Osmeña left for the United States of America for his check-up after his cancer surgery in April 2009 and returned to his office only on July 15. The Sanggunian members cannot be held liable for refusing to enact the necessary ordinance appropriating funds for the judgment award because they are supposed to exercise their own judgment and discretion in the performance of their functions. Osmeña filed his motion for reconsideration. 2009. proceeded to perform the extra work even without the supplemental agreement. 2009. and interest charges.9 The City Auditor held Osmeña. counted from the notice of the judgment or final order or resolution sought to be reviewed. 2009.00 awarded to WTCI and DCDC.514. These amounts. thus.] Several times in the past. of the COA’s May 6. THE PETITION Rule 64 of the Rules of Court governs the procedure for the review of judgments and final orders or resolutions of the Commission on Elections and the COA. however. He claims that the contractors themselves did not want to embarrass the City and. he justifies the immediate execution of the extra work he ordered (notwithstanding the lack of the supplemental agreement) on the basis of the extreme urgency to have the construction and repairs on the sports complex completed in time for the holding of the Palaro.10 modified the City Auditor’s Decision by absolving the members of the sanggunian from any liability. but which shall not be less than five (5) days in any event. he claims that all consequences of the liability imposed. they cannot be mere "rubber stamps" of the city mayor. 2008 Decision. and the City Administrator liable for the P2. which delay Osmeña attributes to the refusal of the Sanggunian to appropriate the necessary amounts. 2009.015. On May 6.11 Osmeña filed an appeal against this Decision. Although Osmeña acknowledges the legal necessity for a supplemental agreement for any extra work exceeding 25% of the original contract price. He argues that the remaining period should be counted not from the receipt of the COA’s June 8. The COA denied Osmeña’s motion via a Resolution dated June 8. the City Auditor issued two notices disallowing the payment of litigation expenses. should also be shouldered by the City and not by him. leaving him with 12 days to file a Rule 64 petition against the COA ruling.During post-audit. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution. Osmeña filed a motion for reconsideration of the May 6. Eighteen days after or on June 10. it was only on July 27. It declared that the payment of the amounts awarded as damages and attorney’s fees should solely be Osmeña’s liability. Osmeña and the members of the Sanggunian sought reconsideration of the disallowance with the COA Regional Office. the City Auditor concluded. 2008 and Resolution of June 8. If the motion is denied. shall interrupt the period herein fixed. if allowed under the procedural rules of the Commission concerned. 2009. 2008. reckoned from notice of denial. respectively. which. and attorney’s fees to WTCI and DCDC. as it was him who ordered the change or extra work orders without the supplemental agreement required by law. 2009 Resolution by the Office of the Mayor of Cebu City on June 29.40 and P102. but from the time he officially reported back to his office on July 15. the COA issued the assailed Decision which affirmed the notices of disallowance. A day before. as damages. The damages and interest charges were awarded on account of the delay in the payment of the extra work done by WTCI and DCDC. Corollary. Osmeña also points out that the City was already adjudged liable for the principal sum due for the extra work orders and had already benefitted from the extra work orders by accepting and using the sports complex for the Palaro.
we have recognized exceptions to the Rules but only for the most compelling reasons where stubborn obedience to the Rules would defeat rather than serve the ends of justice. Montecillo to the Sanggunian explained in detail the reasons for each change and extra work order. pursuant to Section 103 of Presidential Decree No. C1 of the Implementing Rules and Regulations of Presidential Decree No. social and economic conditions. this was an alternative not available to Osmeña. 2009. but also in other events and activities that may later be held in the sports complex. would influence any such determination. He could not require his office to attend to the case as he was being charged in his personal capacity. etc. v. 2009 Resolution of the COA was validly made on June 29. the damages were paid to WTCI and DCDC pursuant to final judgments rendered against the City for its unreasonable delay in paying its obligations. the reckoning date to count the remaining 12 days to file his Rule 64 petition should be counted from July 15. Texas after his cancer surgery in April 2009 as reason for the delay in filing his petition for certiorari. Guillermo N." when used in reference to expenditure of funds or uses of property.22 which states that: 5.14 Where strong considerations of substantive justice are manifest in the petition. 1445 (PD 1445). 2009.. a certiorari petition filed under Rule 64 of the Rules of Court must be verified. in the first place. Personal liability for expenditures of government fund when made in violation of law The Court’s decision to adopt a liberal application of the rules stems not only from humanitarian considerations discussed earlier. (b) were without the Sanggunian’s approval. The COA. In Dr. If we were to rule otherwise. 6. Comparing this with the COA’s general and unsubstantiated declarations that the expenses were "not essential"20 and not "dictated by the demands of good government. this Court may relax the strict application of the rules of procedure in the exercise of its legal jurisdiction. he claims that he could not very well be expected to be bothered by the affairs of his office and had to focus only on his medical treatment. x x x [T]ransactions under audit are to be judged on the basis of not only the standards of legality but also those of regularity. behavioural and ecological factors.17 The COA pins liability for the amount of damages paid to WTCI and DCDC on Osmeña in his personal capacity. The term "unnecessary. the public official’s personal liability arises only if the expenditure of government funds was made in violation of law. we would be denying Osmeña of his right to appeal the Decision of the COA.. was filed within the reglementary period. Moreover. Change Orders or Extra Work Orders may be issued on a contract upon the approval of competent authorities provided that the cumulative amount of such Change Orders or Extra Work Orders does not exceed the limits of the former's authority to approve original contracts.19 we ruled that "[c]ircumstances of time and place. would not be rendered against the City had it not been for the change and extra work orders that Osmeña made which (a) it considered as unnecessary. 2009 through the notice sent to the Office of the Mayor of Cebu City. All change orders/extra work orders beyond 100% of the escalated original contract cost shall be subject to public bidding except where the works involved are 40 .16 we consider July 15. most of which were made to address security and safety concerns that may arise not only during the holding of the Palaro.facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution of rival claims and in the administration of justice. Osmeña could not avail of the services of the City Attorney. Due to his weakened state of health. A separate Supplemental Agreement may be entered into for all Change Orders and Extra Work Orders if the aggregate amount exceeds 25% of the escalated original contract price. as he had yet to secure his own counsel. is relative. despite the merits of his case. etc. the date Osmeña had actual knowledge of the denial of his motion for reconsideration of the Decision of the COA and given the opportunity to competently file an appeal thereto before the Court. et al. filed on July 27. Given that Osmeña was out of the country to attend to his medical needs. We find Osmeña’s reasons sufficient to justify a relaxation of the Rules. as well as political. however. The present petition. Every plea for a liberal construction of the Rules must at least be accompanied by an explanation of why the partylitigant failed to comply with the Rules and by a justification for the requested liberal construction. While the Court has accepted verifications executed by a petitioner’s counsel who personally knows the truth of the facts alleged in the pleading."21 we find that the expenses incurred for change and extra work orders were necessary and justified. 2009 – the date he reported back to office – as the effective date when he was actually notified of the resolution. Salva. reasonableness and moderation.18 Thus." The 10-page letter of City Administrator Juan Saul F. Although the service of the June 8. he could not comply with the requirements to perfect his appeal of the Decision of the COA. In this case. as these failed to comply with Section III. and a verification requires the petitioner to state under oath before an authorized officer that he has read the petition and that the allegations therein are true and correct of his personal knowledge. The COA considers the change and extra work orders illegal. necessity. however. Carague. declared that the judgments. as the latter is authorized to represent city officials only in their official capacity. Section 103 of PD 1445 declares that "[e]xpenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor. and the reckoning date of the period to appeal. but also on our finding of merit in the petition. Teresita L. From time to time.15 Osmeña cites the mandatory medical check-ups he had to undergo in Houston." Notably. 1594. and (c) were not covered by a supplemental agreement.
The RTC Decision in fact mentioned that the Project Post Completion Report and Acceptance was approved by an authorized representative of the City of Cebu on September 21. more than enough to cover the damages awarded to WTCI (P2.. Rose Marie AlonzoLegasto.25 a supplemental agreement to cover change or extra work orders is not always mandatory. or that [the petitioner] had personally profited or sought to profit from the transactions.. A COA representative was also present during the deliberations of the PBAC. COA.514. etc. SO ORDERED. 1994. It bears pointing out that two members of the PBAC were members of the Sanggunian as well – Rodolfo Cabrera (Chairman. without prior approval from the NPC’s Board of Directors. we find that the prevailing circumstances at the time the change and extra work orders were executed and completed indicate that the City of Cebu tacitly approved these orders. constitutes as sufficient compliance with the requirements of the law.23 "[a]s the projects had been completed.] Reviewing the facts of the case. the circumstances showed that Osmeña issued the change and extra work orders for the City’s successful hosting of the Palaro."29 WHEREFORE. Hon.00). Bids and Awards Committee (PBAC). approved the change and extra work orders. subject to approval by the appropriate authorities.15."28 All in all.40) and the DCDC (P102." especially considering that the City incurred no substantial loss in paying for the additional work and the damages awarded."24 Indeed. or that the disbursements have been made for personal or selfish ends. [Emphases ours. the City placed in a time deposit the entire funds allotted for the construction and renovation of the sports complex. Belated as it may be. In National Power Corporation (NPC) v.255. It serves as a confirmatory act signifying the Sanggunian’s ratification of all the change and extra work orders issued by Osmeña.683. The respondent’s Decision of May 6. Committee on Finance) and Ronald Cuenco (Minority Floor Leader). since the law adopts the permissive word "may.835.inseparable from the original scope of the project in which case negotiation with the incumbent contractor may be allowed.27 we find it "unjust to order the petitioner to shoulder the expenditure when the government had already received and accepted benefits from the utilization of the [sports complex]. et al. Melchor v. in light of the foregoing. and not for any other "nefarious endeavour. The Pre-Qualification. we hereby GRANT the petitioner’s Petition for Certiorari filed under Rule 64 of the Rules of Court. upon the recommendation of the Technical Committee and after a careful deliberation." Despite its initial refusal. 2008 and Resolution of June 8. As in Melchor. the Sanggunian was eventually compelled to enact the appropriation ordinance in order to satisfy the RTC judgments. Apparently. There was "no showing that [the] petitioner was ill-motivated. the enactment of the appropriation ordinance. nonetheless. rendering a supplemental agreement or authorization from the Sanggunian unnecessary.015. as we declared in Mario R. None of these officials voiced any objection to the lack of a prior authorization from the Sanggunian or a supplemental agreement. accepted and used by the [City of Cebu]. The interest that the deposits earned amounted to P12." the RTC ruled that there is "no necessity of [executing] a supplemental agreement. 2009 are SET ASIDE.26 the Court considered the compromise agreement between the NPC and the construction company as a ratification of the extra work performed. 41 .
The antecedent facts are as follows: Private respondents.D. vs. Under the said decree. Lubert V. Gamboa. Bello C. Teresita Q. Villanueva . RHODERICK V. PHILSUCOM Consultant. ORLIDO. LUZANA. In the same year. SUGAR REGULATORY ADMINISTRATION. Doble. Luzana. Toquillo. BELLO C.2010 of the Commission on Audit (COA). JONATHAN CORDERO. namely: Encarnacion B. PHILSUGIN and SQA were abolished and private respondents were separated from the service. you are therefore directed to make the necessary refund of the above-mentioned amount to our Local Accounting Department and to inform the Personnel Department. Orlido. they were paid their retirement/gratuity and incentive benefits. Lim. Severino A. when refund is made. Alipoon. Edgardo B. Lourdes M.2 Republic of the Philippines SUPREME COURT Manila EN BANC G.DEANNA M. Medelyn P. TORMON. dated December 5. is Decision No. thus. DOBLE. Edmundo R. DOBLE. LIM. Henry G. BISCOCHO. LOURDES M. 2010-1461 dated December 30. xxxx In connection herewith. 42 . were former employees of Philippine Sugar Institute (PHILSUGIN) and the Sugar Quota Administration (SQA). in relation to Rule 65 of the Rules of Court. LUBERT V. 1974. JANCE. liabilities and records shall be transferred to the latter and the personnel of the abolished agencies who may not be retained shall be entitled to retirement/gratuity and incentive benefits. TOQUILLO. SEVERINO A.) No. EDGARDO B. REYNALDO D. No. ENCARNACION B. Jonathan Cordero.R. wrote: We have received orders from the Main Office to require you to refund in full the unexpired portion of the money value of the retirement or lay-off gratuity you received as called for in Office Memorandum No. JIMMY C. Reynaldo D. represented by its Administrator. LUCASAN. 4. DECISION PERALTA. Tive. series of 1977. On February 2. HENRY G. Biscocho. ALISAJE. EDMUNDO R. Danilo B. Failure on your part to make the necessary refund will constrain us to recommend corrective measures. PHILSUGIN and SQA shall be abolished upon the organization of PHILSUCOM and all the former's assets. Presidential Decree (P. and the COMMISSION ON AUDIT.: Assailed in this petition for certiorari under Rule 64. Rhoderick V. In September 1977. J. Doble. Respondents. DANILO B. Petitioner. Lucasan. Jimmy C. Tormon. 388 was issued creating the Philippine Sugar Commission (PHILSUCOM). VILLANUEVA . MEDELYN P. Jornadal. TIVE. in view of your reinstatement in the service. TERESITA Q. Deanna M. private respondents were reinstated by PHILSUCOM subject to the condition that the former would refund in full the retirement/gratuity and incentive benefits they received from PHILSUGIN or SQA. Eduardo F. 195640 2012 December 4. 1977. Alisaje. JORNADAL. Jance. ALIPOON.
premises considered. James C. 2010-146 granting private respondents' motion for reconsideration. The computation was then submitted to the Department of Budget and Management (DBM) for approval and request of funds. the COA found that since private respondents alleged payment.9 with the following dispositive portion. Administrative Division. private respondents submitted the affidavits of Messrs. petitioner denied private respondents' requests for the latter's failure to submit proofs of refund of gratuity received from PHILSUGIN or SQA. asking the COA to order petitioner to pay the balance representing the 25% of their retirement and incentive benefits withheld by petitioner. petitioner considered private respondents' length of service as having been interrupted which commenced only at the time they were re-employed by PHILSUCOM in 1977. On January 4. Accordingly.O. petitioner found out that there was no showing that private respondents had refunded their gratuity benefits received from PHILSUGIN or SQA. Under the SRA Rationalization Program. COA Decision No. The SRA is directed to release to movants the amount representing the 25% balance of their incentive and terminal leave benefits. that an affidavit was made without notice to the adverse party or opportunity to cross examine. 2009. Hence. 339 was issued. they were duty-bound to present evidence substantiating the said refund. Administrative and Finance Department. private respondents wrote a letter5 addressed to then Commission on Audit (COA) Chairman. 18. 2007.On May 28. and that the contents of these affidavits were too general and did not state private respondents’ respective final payments. this Commission rules that the affidavits presented by claimants are insufficient proofs that they have refunded to PHILSUCOM the gratuity/incentive benefits they received from PHILSUGIN/SQA. incentive and retirement they received upon their separation from PHILSUGIN or SQA must be accounted for and refunded to SRA before the requested incentive benefit is computed based on their length of government service reckoned from the time they were employed with PHILSUGIN or SQA. series of 1986 was issued wherein the Sugar Regulatory Administration (petitioner SRA) replaced PHILSUCOM. in the course of the implementation of its rationalization plan. the COA rendered Decision No. The DBM approved the same and released the disbursement vouchers for processing of the incentive benefits. 2007. Private respondents filed their motion for reconsideration which was opposed by petitioner. Hilario T. then petitioner's Administrator. Guillermo N. Among those separated from the service were private respondents. attesting to the fact of refund.O. that no records of payments existed to clearly establish their claim. Private respondents requested petitioner to compute their incentive benefits based on their length of service to include their years of service with PHILSUGIN or SQA taking into consideration their refund of gratuity benefits to PHILSUCOM at the time of their re-employment in 1977. the instant Motion for Reconsideration is hereby GRANTED.11 In its decision. both executed in March 2007. 2007. all the benefits. On October 14. Ledesma. Evidence other than the affidavits must be presented to substantially prove their claims. otherwise known as Mandating the Rationalization of the Operations and Organization of the SRA. and Manager. issued a memorandum3 declaring the services of its employees affected by the Rationalization Program. which included private respondents. Jr. they had the burden of proving the same by clear and positive evidence.7 petitioner's Chief. Cordova6 and Nicolas L. 2007. the dispositive portion of which reads: WHEREFORE. that the affidavits of Messrs. They claimed that they had already refunded the full amount of the incentive benefits through salary deductions and since petitioner could no longer find the PHILSUCOM payrolls reflecting those deductions. respectively. No. to wit: WHEREFORE.10 In so ruling. Meneses Jr. It 43 . for the purpose of strengthening its vital services and refocusing its resources to priority programs and activities. petitioner computed its employees' incentives and terminal leave benefits based on their creditable years of service contained in their respective service records on file with petitioner and validated by the Government Service and Insurance System (GSIS). 2004. stating that private respondents had refunded to PHILSUCOM the benefits they received from PHILSUGIN/SQA were not the best evidence of such refunds. PHILSUCOM's assets and records were all transferred to petitioner SRA which also retained some of the former's personnel which included the private respondents. foregoing premises considered. and reducing its personnel with the payment of retirement gratuity and incentives for those who opted to retire from the service. Cordova and Meneses. gratuity. On September 6. the COA rendered Decision No. Also. Executive Order (E. 2007-0554 dated June 14. 2010.. E.) No. Petitioner then recomputed private respondents' retirement and incentive benefits and paid only the 75% equivalent of the originally computed benefits and withheld the remaining 25% in view of the latter's inability to prove the refund. their resort to secondary evidence which were the sworn affidavits of petitioner's former officials were insufficient to prove the fact of the alleged payment. Carague. Under Board Resolution No. On December 30. However. the COA observed that private respondents had filed a separate but related complaint with the Civil Service Commission (CSC). 2009 -100. 1986. On July 29. 2009-100 is hereby REVERSED and [SET] ASIDE. terminated effective on January 15. thus. Petitioner filed its Answer8 thereto contending among others that since private respondents alleged payment.
although not exclusive. established that indeed private respondents had refunded the incentives in question. it was incumbent on petitioner to discharge the burden of evidence that respondents had not paid the said incentives. and that the CSC had issued a Resolution granting private respondents' motion for execution of the CSC resolution. could not present any receipt since they alleged that their payments were made through salary deductions and the payrolls which supposedly contained such deductions were in petitioner's possession which had not been produced. 2009. that had been tasked with the official custody of all the records and books of their predecessors. SRA. to wit: Mr.. that it was the PHILSUCOM. Cordova and Meneses. That their status as reinstated employees are officially marked in their individual service records 44 . We find no merit in the petition.14 Even where the creditor alleges non-payment.15 The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. the general rule is that the onus rests on the debtor to prove payment. then Chief. Cordova states: That I was the Administrative Officer II of the defunct Philippine Sugar Institute when it was abolished in 1977.13 The issue for resolution is whether the COA committed grave abuse of discretion amounting to lack of jurisdiction in directing petitioner to pay the 25% balance of private respondents' incentive and terminal leave benefits withheld from the submitted computation of petitioner and duly funded by the DBM. Whether or not public respondent Commission on Audit erred and gravely abused its discretion in finding substantial evidence that private respondents refunded the gratuity incentives in question. upon return to service with PHILSUCOM. however. then petitioner. however. That during my incumbency in said positions. that I hold the same position when the Philippine Sugar Commission took over the functions of PHILSUGIN from that year up to 1986. Petitioner withheld 25% of private respondents' incentive and terminal leave benefits because of their failure to present evidence of refund of the amounts of retirement and incentive benefits earlier received from PHILSUGIN/SQA. Meneses. as mandated under Section 10 of Presidential Decree No. Aguinaldo. 388. Petitioner is now before us raising the following issues. the COA found that it did not lose jurisdiction over the present case and went on to decide the claim on the merits and disregarded the CSC Resolution. then Manager. they are entitled to the payment of the amounts withheld by petitioner. were deemed to be the best evidence. the main thrust of their complaint was to compel the payment of the 25% balance of their total incentives and terminal leave benefits withheld by petitioner. Nicolas L. which was the same demand made in their letter to Chairman Carague whose decision is the subject of the motion for reconsideration. refunded the amount of the gratuities they received from PHILSUGIN in the months following/succeeding upon their appointment as reinstated employees of PHILSUCOM. Cordova. private respondents submitted the affidavits of Messrs. Notwithstanding. In order to prove their allegations of refund. Hilario T. Private respondents. private respondents claim that they had already refunded these benefits through salary deduction. The COA ruled that the affidavits submitted were not secondary evidence within the context of Section 5. thus. Since private respondents had discharged their burden of proof.. I have personal knowledge of the paymen/refund of exPHILSUGIN employees separated from service but reinstated in PHILSUCOM by way of salary deduction through payroll. et al. Administrative Division. private respondents mentioned the ruling of the CSC12 in their favor and they now disputed the COA’s jurisdiction to rule on their demand contending that it is the CSC which has jurisdiction over cases involving government reorganization. Encarnacion Tormon. Jr.18 the receipts of payment. That I continued to be the head of Personnel Division when Sugar Regulatory Administration replaced PHILSUCOM in 1986 and retired as Division Chief II of the Administrative Division on July 31. One who pleads payment has the burden of proving it. to wit: 1. being the successor of PHILSUGIN and SQA.found that while their complaint with the CSC was denominated as illegal termination/backwages and entitlements.. 3. That Ms.17 In Monfort v. 2. 2003. forum shopping existed. On the other hand.16 Well settled also is the rule that a receipt of payment is the best evidence of the fact of payment. admissible in evidence. therefore. Whether or not respondent Commission erred and gravely abused its discretion when it gave credence to the affidavits of Mr. hence. Whether or not public respondent Commission on Audit erred and gravely abused its discretion in making assumptions or suppositions out of certain circumstances which were not even alleged by private respondents and in arriving at a conclusion out of the same in favor of private respondents. which we successively quote in part. since technical rules of procedure and evidence are not strictly applied in administrative proceedings. rather than on the creditor to prove non-payment. Administrative and Finance Department plainly alleging that the gratuity/incentives have been refunded by the private respondents. The COA found in the records certain significant circumstances which. Rule 130 of the Rules of Court. The COA also noted that in their Supplement to Motion for Reconsideration/Manifestation filed on November 24. and Mr. Jr. The burden of proof is on private respondents to prove such refund. it is never an excuse to shift the burden to the employees. when taken together with the affidavits. that if petitioner's Accounting Division cannot issue a certification because it has no records.
In his 16 March 1978 letter. were petitioner's former officials who held key positions in the two divisions. Third. and gave weight to them in the light of the other circumstances established by the records which will be shown later in the decision. refunded the amount of the gratuities they received from PHILSUGIN. not through voluntary direct payment since the latter option does not carry with it the mandatory character of an automatic salary deduction. to senior machine cutting operator with permanent status. Tormon to refund the amount and to inform the Personnel Department when the refund was made.21 Here. we find no grave abuse of discretion committed by the COA when it admitted the affidavits of Messrs. Eduardo F. Meneses Jr. depending on its trustworthiness. It can choose to give weight or disregard such evidence. 2003. Fourth. Jr. Thus. Jr. were in the best positions to attest to the fact of private respondents' refund through salary deductions of the amounts of retirement and incentive benefits previously received. indubitably having the higher authority. Jr. from 1977 to 2007. That I later became Division Chief I of [the] Budget Division in the Sugar Regulatory Administration in 1988 and retired as Manager of the Administrative and Finance Department on July 31. where private respondents were directed by then petitioner's Consultant Gamboa to make the necessary refunds for their retirement and incentive pay. these officials could have reported the same to Gamboa. that it may not even be entirely correct that all 16 respondents refunded the gratuity incentives in question by salary deduction. the affected employees' incentive and terminal leave benefits were computed based on their creditable 45 . COA Directors Rosemarie L. while the COA admitted the affidavits. That during my incumbency in said positions. one of the movants. even in passing. especially since these officials were in those departments since PHILSUCOM took over in 1977 and later with petitioner until their retirement in 2003. Jr. was promoted from Emergency Employee. Mr.. Alagon. it was more reasonable to suppose that SRA would not have promoted him. Cordova and Meneses. upon return to service with PHILSUCOM. Messrs. that each of the private respondents held different positions with salaries different from each other and the dates when they respectively re- assumed service in the government differed from each other. Cordova and Meneses. Cordova and Meneses. The matter of refund was proven by several circumstances which the COA found extant in the records of the case. Petitioner claims that the affiants attested on a matter which happened 30 years ago. of any audit finding in the Annual Audit Reports (AARS) regarding the unrefunded incentives received by claimants The silence of the AARs for 30 years would only lend credence that theses refunds were made. There was nothing on record to show that Messrs. to whom the case was coursed through for comments.duly authenticated by myself as Chief of Personnel Division and validated by the Government Service Insurance System as proven by GSIS computation of their creditable years. just slept on its right to enforce the refund and did nothing about it. states: That I was the Chief Internal Auditor of the defunct Philippine Sugar Institute when it was abolished in 1977. a temporary status. did not mention. Tormon to make the refund or they will be constrained to recommend corrective measures.19 On the other hand. that I hold a key position in the Budget and Accounting Division when the Philippine Sugar Commission took over the functions of PHILSUGIN from that year up to 1986. We are not persuaded. I have personal knowledge of the payment/refund of exPHILSUGIN employees separated from service and reinstated in PHILSUCOM. Personnel and Accounting Divisions. We find apropos to quote the COA findings in this wise: First. the enforced salary deduction which claimants said was the mode of refund undertaken is a point in favor of claimants. the SRA management. It would be unbelievable that in all these years. as we said. movants were reemployed by PHILSUCOM with the condition that they must return the benefits they had already received. Malit. under the SRA Rationalization program.. were actuated with any ill motive in the execution of their affidavits attesting to the fact of refund. Mr. namely. Gamboa.20 Messrs. The general rule is that administrative agencies are not bound by the technical rules of evidence. Henry Doble. Cordova. The fact was that claimants were reinstated. That Ms. how could they recall that each of the 16 employees had actually refunded the gratuity/incentives way back in 1977. it did not rely solely on those affidavits to conclude that refunds were already made by private respondents. directed Ms. and later Manager of the Administrative and Finance Department. That management did not take any corrective measures to compel the refund – except perhaps.. who would have taken corrective measures as he threatened to do so if private respondents failed to make the necessary refunds. a certain Mr. That their status as reinstated employees are officially marked in their individual service records duly authenticated by the Chief of Personnel Division and validated by GSIS. being petitioner's head of the Personnel Department. Encarnacion Tormon et al. He warned Ms. The natural and expected action that SRA ought to have taken was to enforce the refund through salary deduction. if no refunds were made. as petitioner's Chief of Budget Division. Lerio and Divina M. Significantly. CGS and SRA ATL22 Antonio M. Doble had not refunded his gratuity. thus. If Mr. and Meneses. there is no showing that corrective measures had been taken. Notably. Moreover. It can accept documents which cannot be admitted in a judicial proceeding where the Rules of Court are strictly observed. Second.
Decision No.23 Factual findings of administrative bodies charged with their specific field of expertise. Also. whim and despotism. 90926.. Papasin. But then all the SRA could say was there is no record of such payment. Amelita A. thus.as distinct from the general burden of proof. Antonio M. Bacolod. we find no grave abuse of discretion amounting to lack or excess of jurisdiction committed by the COA in rendering its assailed decision. This only showed that even the SRA was convinced that movants had no more financial accountability with the SRA at the time. vs. WHEREFORE.mentioned circumstances to support their claim that refunds had already been made.. Petitioner. Absence of record is different from saying there was no payment. 2010-146 dated December 30. Factual Antecedents 46 .24 Petitioner's claim that the COA made its own assumptions which were not even based on the allegations made by private respondents in any of their pleadings is devoid of merit. Accordingly. or any accounting records covering the 32-year period which would have shown whether movants paid or did not pay the required refund. Ledesma informed movants that not one of the records of the payments they claimed was available at the office. Tormon.shifts to the petitioner.: A writ of preliminary mandatory injunction will not be set aside unless it was issued with grave abused of discretion. the petition is DISMISSED. H. Ms. stated that they could not find any record showing payments made as claimed by Ms. SRA computed movants' incentive and terminal leave benefits as of December 31. SRA. This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the Decision2 dated September 21. SO ORDERED. All told. 2010 of the Commission on Audit is hereby AFFIRMED.years of services as contained in their respective service records with the agency as validated by the GSIS. There is grave abuse of discretion when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice. Malit. We also find that the records of the case support the abovequoted circumstances enumerated by the COA. the SRA could not comply with the request of Mr.26 which is wanting in this case. Audit Team leader (ATL). In their Reply to petitioner's Supplemental Comment/Opposition to private respondents' motion for reconsideration. These payrolls and other records would have conclusively established the fact of payment or non-payment. SRA. Respondent.1âwphi1 Fifth. private respondents had alleged some of these above. then SRA Administrator James C. but petitioner failed to present the same due to the considerable lapse of time. Accountant IV. should not be disturbed. the burden of going forward with the evidence. SP No. 2006 and the Resolution3 dated March 6. are afforded great weight by the courts. 1977.R. et al. to refund the severance gratuities paid to them during their termination on September 30. Considering that private respondents had introduced evidence that they had refunded their retirement and incentive benefits through salary deduction. SY. and in the absence of substantial showing that such findings were made from an erroneous estimation of the evidence presented. to produce copies of payroll or index of payments. 2006 which was approved by the Department of Budget and Management (DBM) Secretary Rolando Andaya. AUTOBUS TRANSPORT SYSTEMS INC. doing business under the name and style of OPM INTERNATIONAL CORPORATION. they are conclusive. J. 2007 of the Court of Appeals (CA) in CA-G. and in the interest of stability of the governmental structure. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. the payroll to establish whether or not deductions had been made from the salary of private respondents were in petitioner's custody. DECISION DEL CASTILLO. GEORGE S.R. Indeed. who is then under a duty of producing some evidence to show non-payment. 176898 2012 December 3. Accounting Unit.25 However. No. the SRA could not be definite as to the actual payments made by them and the equivalent periods corresponding thereto.
27 On the scheduled pre-trial. respondent would deliver to petitioner titles to five properties in Caloocan City registered under the name of Gregorio Araneta III. in favor of petitioner. 1999 to settle respondent’s obligations with CMC.23 In his Answer.25 Petitioner also alleged that he failed to settle respondent’s obligations with CMC because respondent stopped paying its amortizations.12 The 22 bus units were delivered to respondent by CMC in three batches: 10 in November 1996. 99-93127 and raffled to Branch 45 of the Regional Trial Court (RTC) of Manila. and that respondent would pay petitioner the acquisition cost of the 22 units of bus engines and chassis in 36 monthly installments.31 Thus.10 Once petitioner has fully paid the amortizations to CMC. prompting the RTC to declare petitioner in default.18 On January 28. judgment is hereby rendered for the [respondent]. forcing the latter to demand payment from respondent. 292202 and 292203. 2000. 292201. 292200.00. respondent.22 The case was docketed as Civil Case No. starting on the fifteenth (15th) month from the time of the first delivery of the bus engines and chassis.14 Petitioner. petitioner was declared in default and respondent was allowed to present its evidence ex-parte. contending that respondent has no right to institute the present action because the controversy is between petitioner and CMC. 292201.28 Upon petitioner’s motion. petitioner and his counsel failed to appear. 292199. petitioner prayed that respondent be ordered to pay the amount of P56. 1998. due to the failure of petitioner to settle the obligations with CMC. issued a letter to petitioner demanding that he settle the obligations with CMC or return the five titles to respondent. Respondent prayed that a decision be rendered: 1. thru a letter.00 plus P2. 2) ordering [petitioner] to return to [respondent] the five (5) Transfer Certificates of Title Nos. 292199. the chairman of respondent. 1998.000. 1999.00 per hearing attended and pleadings submitted in Court. which is engaged in the sale and installation of bus air conditioning units.00. as security for petitioner’s advances to CMC. 292201.5 a public utility bus company plying the northern Luzon routes from Manila.19 On the same date.7 The parties agreed that respondent would amortize the payments for the Konvecta air conditioning units and the bus units separately. respondent filed a complaint for Specific Performance21 against petitioner.32 On May 16. respondent would execute new Chattel Mortgages over the buses. petitioner entered into a verbal agreement with respondent Autobus Transport Systems. the RTC rendered a Decision33 in favor of respondent.15 Consequently. through counsel. in a letter. and 292203.30 On the next scheduled pre-trial.000. 292202.20 On March 12. and as prayed for by [respondent].34 Feeling aggrieved. SO ORDERED. respondent was compelled to pay some of the obligations directly to CMC.H. respondent delivered to petitioner Transfer Certificates of Title (TCT) Nos. representing respondent’s alleged unpaid balance for the entire transaction.16 On November 26. through counsel. defaulted in paying the amortizations to CMC. asked respondent for another extension of 10 days or until February 10.11 In the meantime. apologized for the delay and requested for an extension until January 31. again sent a letter to petitioner reminding him of his promise to settle the obligations by January 31.6 Under their agreement. 292199. five in March 1997 and seven in October 1997.. 3. The counterclaim of the [petitioner] is dismissed for lack of bases and merit.000. Sy is doing business under the name and style of OPM International Corporation (OPM).4 Sometime in July 1996. petitioner filed a Petition for Relief from Judgment35 citing the death of his counsel as 47 . Ordering [petitioner] to return to [respondent] the mortgaged five (5) Transfer Certificates of Title Nos. respondent. however. respondent would purchase Konvecta air conditioning units from petitioner and petitioner would finance respondent’s acquisition of twenty-two (22) units of bus engine and chassis from Commercial Motors Corporation (CMC) and twenty-two (22) bus deluxe bodies to be built by Almazora Motors Corporation (AMC). Ordering [petitioner] to pay [respondent] attorney’s fees amounting to P50. Ordering [petitioner] to perform all his obligations under the verbal agreement by way of paying the balance of [respondent’s] loan to CMC. 1999.8 that petitioner would settle respondent’s account with CMC starting on the fourteenth (14th) month from the time of the first delivery of the bus engines and chassis. as follows: 1) ordering the [petitioner] to perform all his obligations under the verbal agreement by way of paying the balance of [respondent’s] loan to CMC. Inc. 3) ordering [petitioner] to pay [respondent] reasonable attorney’s fees in the reduced amount of P20.29 the RTC reconsidered the order of default. and 29203.9 As security. 292200. petitioner.17 On December 5. petitioner. 292202.000.26 Thus.24 petitioner interposed the defense of lack of cause of action. 1999. this time. 1999. 2. to wit: WHEREFORE. petitioner and his counsel again failed to appear.000. plus the costs of suit. respondent would execute Chattel Mortgages over the buses in favor of CMC.13 After the delivery of the first batch. 292200.Petitioner George S.
2004.55 Summed up.61 Lastly.37 On September 16. On January 11. the RTC set aside its Decision and set the case for trial. RULE 58 OF THE 1997 RULES OF COURT. the issues boil down to whether the RTC committed grave abuse of discretion amounting to lack or in excess of jurisdiction in issuing a writ of preliminary mandatory injunction commanding petitioner to return to respondent TCT Nos. the dispositive portion of the Decision51 dated September 21. Petitioner’s Arguments Petitioner claims that respondent is not entitled to a writ of preliminary mandatory injunction because it failed to show that it has a clear legal right56 and that it would suffer grave and irreparable damage if a writ were not issued.62 Respondent’s Arguments Respondent. respondent is not entitled to a writ of preliminary mandatory injunction. i.59 Considering that respondent’s obligation to OPM is not yet fully paid. Issues Hence. the RTC issued an Order42 granting respondent’s Motion. 292202. 2005. 2005. inclusive of interest. 292201. II.00) PESOS to be approved by this Court. and upon the posting by [respondent] of a bond in the amount of TWO MILLION (P2. found no grave abuse of discretion on the part of the RTC. inclusive of interest. the RTC took into consideration respondent’s fear that petitioner might use these titles to obtain a loan from Metrobank given that petitioner already admitted that he turned over the possession of the five titles to the said bank.000. let a writ of preliminary mandatory injunction be issued commanding the [petitioner] to return to the [respondent] the five (5) Transfer Certificates of Title Nos. however. 2007. WHETHER THE FINDINGS OF FACT OF THE [CA] COMMITTED WITH GRAVE ABUSE OF DISCRETION MAY BE REVIEWED BY THE SUPREME COURT ON APPEAL BY CERTIORARI. the petition is DENIED. Branch 45. dated 11 April 2005 and 26 July 2005.49 The CA agreed with the RTC that respondent delivered the five titles to petitioner as security for petitioner’s advances to CMC. the two (2) assailed Orders of the Regional Trial Court. and in denying petitioner’s offer to post a counter bond. SO ORDERED.50 Hence. The RTC ordered petitioner to return the five titles to respondent since he failed to comply with the agreement he made with respondent. this petition raising the following issues: I.44 Thus: Wherefore. 292202 and 292203. CONSEQUENTLY.52 Petitioner moved for reconsideration53 but the CA denied his motion in a Resolution54 dated March 6. 2004.43 In granting the Motion. to finance respondent’s obligations with CMC. Ruling of the Court of Appeals The CA. III. maintains that the RTC validly issued the writ of preliminary mandatory 48 .60 Petitioner likewise claims that the P2 million bond posted by respondent is insufficient to protect the interest of OPM in the event that judgment is rendered in its favor.45 Petitioner filed a Motion for Reconsideration with Motion to Post Counter bond46 but the RTC denied the same in its Order 47 dated July 26. and 292203. 292199. WHETHER XXX THE HONORABLE [CA] COMMITTED A GRAVE AND SERIOUS ERROR WHEN IT FOUND THE ISSUANCE OF THE WRIT OF PRELIMINARY MANDATORY INJUNCTION TO BE IN ORDER. are hereby AFFIRMED. respondent filed a Motion for the Issuance of a Writ of Preliminary Mandatory Injunction. premises considered.57 Petitioner alleges that respondent delivered the titles to him as security for respondent’s entire obligation to OPM in the total amount of more than P81 million. 2005. This prompted petitioner to elevate the case to the CA via a Petition for Certiorari.40 praying for the issuance of a Writ of Preliminary Mandatory Injunction commanding petitioner to return to respondent the five titles.48 imputing grave abuse of discretion on the part of the RTC in issuing the Writ of Preliminary Mandatory Injunction.36 Finding the petition meritorious. SO ORDERED.000.e. on the other hand. petitioner imputes grave abuse of discretion on the part of the CA in not allowing OPM to post a counter bond. if the Court will finally decide that the [respondent] was not entitled thereto.38 The RTC denied the motion in an Order39 dated December 9. to answer all the damages and costs which the [petitioner] may suffer by reason of the injunction. DECLARING THAT OPM NO LONGER HAD ANY REASON TO HOLD ON TO THE FIVE (5) TITLES. 292199.excusable negligence. WHETHER XXX THE HONORABLE [CA] COMMITTED A GRAVE AND SERIOUS ERROR WHEN IT DID NOT FIND JUSTIFIABLE GROUNDS TO WARRANT THE WRIT’S DISSOLUTION BY OPM’S OFFER TO POST A COUNTER BOND UNDER SECTION 6. 292200. respondent filed a Motion to Order [Petitioner] to Return the Five (5) Transfer Certificates of Title to [Respondent]. 2006 reads: WHEREFORE. 292201. 292200.58 He insists that respondent still owes OPM the amount of P30 million. AND.41 Ruling of the Regional Trial Court On April 11.
Since the condition for the delivery of the land titles which is the payment by the [petitioner] of the obligations of the [respondent] to CMC has not been complied with by the [petitioner]. there is no denying that the titles to the subject five (5) properties belonged to and were in fact registered under the name of Mr. AUTOBUS in its Comment and Memorandum asserts that it has paid all its obligations to CMC which is not denied by OPM. there is nothing else to show the terms and conditions under which [petitioner] is to possess the same.72 In this case. Hence. The only document on record is the acknowledgement receipt dated March 18."66 Since the titles are in the possession of Metrobank.71 Accordingly.[73 (Emphasis supplied) The CA affirmed the Order74 since it found no grave abuse of discretion amounting to lack or in excess of jurisdiction on the part of the RTC. or a mandatory injunction.70 A writ of preliminary mandatory injunction. Araneta III of AUTOBUS. continuance or nonperformance of the act or acts complained of during the litigation would probably work injustice to the applicant. this cannot be denied for a chattel mortgage was executed by AUTOBUS over the buses in favor of CMC which shall be transferred to OPM once CMC is paid by OPM. These letters were not denied by the [petitioner]. 1997 signed by the [petitioner] x x x but other than the acknowledgment of the receipt of the titles. it is clear that the five (5) land titles registered in the name of Gregorio Araneta III were delivered by the [respondent] to the [petitioner] to secure the latter’s advances to CMC for the financing of the twenty two (22) bus chassis which [respondent] purchased from CMC. in granting respondent’s Motion for the Issuance of a Writ of Preliminary Mandatory Injunction. threatening. In this connection. Again. [petitioner] defaulted in his obligations to CMC which compelled the [respondent] to directly pay CMC some of the obligations of the [petitioner]. it was admitted by him in his Answer x x x. which requires a party to refrain from doing a particular act. therefore. agency or a person is doing. it must be issued only upon a clear showing that the following requisites are established: (1) the applicant has a clear and unmistakable right that must be protected. He cannot foreclose.injunction. (b) That the commission. or is attempting to do. as stated in AUTOBUS’ complaint and admitted in OPM’s answer. and tending to render the judgment ineffectual. exposing respondent to damages and financial burden. is more cautiously regarded because it commands the performance of an act. and (3) there is an urgent need for the writ to prevent irreparable injury to the applicant. the [petitioner] is merely a depository of the said titles. NEXT. AUTOBUS’ rights over the twenty-two (22) buses were materially and substantially compromised by a threatened foreclosure of the chattel mortgage. or in requiring the performance of an act or acts.65 Respondent also contends that it was able to show the possibility of an "irreparable injury.64 It claims that it had to pay interest and penalty charges to CMC because of petitioner’s delay in paying the amortizations. assign or otherwise deal with the same. and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of.68 Our Ruling Section 3. court. the RTC.63 Respondent insists that it has a legal right to recover the five titles since petitioner defaulted in his obligation. although claimed by OPM as additional collateral. At best. however. in fact. respondent emphasizes that the fixing of the amount of bond and the granting of a motion for filing a counter bond are discretionary upon the trial court. which commands a party to perform a positive act to correct a wrong in the past. It said: x x x we find the issuance of the writ to be in order. or (c) That a party. There is no Deed of Mortgage over the properties covered by the said titles. It must be noted that the land titles are in the name of Gregorio Araneta III who is not a party to the transaction between the [respondent] and the [petitioner] and that there is no document between the parties concerning the terms and conditions behind the possession of the said titles by the [petitioner]. FIRST.69 It may be a prohibitory injunction. Thus. some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding. as they cannot exercise their proprietary rights to the properties covered by the titles. there is no further justification for the [petitioner] to hold on to the possession of the land titles. there is a possibility that petitioner would use these titles to obtain a loan with Metrobank. (2) there is a material and substantial invasion of such right. 49 . explained that: From the verified complaint filed in this case as well as the [respondent’s] verified Motion for the Issuance of a Writ of Preliminary Mandatory Injunction. Grounds for issuance of preliminary injunction. the damages that he may suffer if the land titles are returned to the [respondent] is practically inexistent compared to the damages which [respondent] and the owners of the land titles have suffered due to the continuous possession of the [petitioner] of the said titles. Rule 58 of the Rules of Court reads: SEC. either for a limited period or perpetually. Gregorio Ma. However. A preliminary injunction may be issued at any time before judgment or final order. 3. extant in the records of this case are the two (2) letters of the [petitioner] to the lawyers of the [respondent] wherein he expressly admitted his failure to comply with his obligations to CMC on behalf of the [respondent] x x x. or is procuring or suffering to be done. – A preliminary injunction may be granted when it is established: (a) That the applicant is entitled to the relief demanded. dispose of. when OPM failed to meet its obligations with CMC. the purpose in handing over the five (5) titles to OPM was to secure the advances to be made by the latter to CMC.67 As to the bond and counter bond.
As we have said. Finally. SP. 1999. the petition is hereby DENIED. he admitted his failure and asked for a final extension. which shall not be disturbed in the absence of grave abuse of discretion on the part of the trial court. respondent’s counsel again reminded petitioner to settle the obligations with CMC or return the titles. As regards OPM’s offer to post a counter bond. the urgency of the situation necessitating the issuance of the mandatory writ was sufficiently established by AUTOBUS before the trial court. WHEREFORE."77 Thus. We x x x agree with the trial court for it is very unlikely that the purpose for handing over the titles to the bank was merely for safekeeping when the bank itself conducted inspections and appraisals on the subject five (5) properties of Mr. Considering this admission. it is only for safekeeping. Araneta. petitioner did not refute the statement of respondent’s counsel. No. the grant or the denial of a writ of preliminary injunction shall not be disturbed unless it was issued with grave abuse of discretion amounting to lack or in excess of jurisdiction. Considering that respondent has paid most. or to act at all in contemplation of law. 1998. there is no reason for petitioner to hold on to the titles.83 The communication between the parties clearly proves that the respondent delivered the five titles to petitioner solely as security for the refinancing of the buses purchased by respondent from CMC. SO ORDERED. in his letter82 dated January 28. THIRDLY. respondent’s counsel reminded petitioner that "the sole purpose of the mortgage on the properties was to secure the refinancing of [respondent’s] buses with CMC. The contentions of petitioner regarding the fixing of the bond and the denial of his offer to post a counter bond likewise have no merit. all these depend on the sound discretion of the trial court. [Petitioner] has admitted that Metrobank has possession of the titles. but for the entire obligation deserves scant consideration. Petitioner’s allegation that respondent delivered the five titles to him as security. The assailed Decision dated September 21. as to whether respondent still owes OPM the amount of P30 million.75 Based on the foregoing disquisition. 1998. we believe that this is a factual issue best left to the determination of the RTC where the main case is pending. prejudice or personal aversion amounting to an evasion of positive duty or to a virtual refusal to perform the duty enjoined. 90926 are hereby AFFIRMED. It bears stressing that respondent was compelled to directly pay CMC to avoid the foreclosure of the chattel mortgages. OPM no longer had any reason to hold on to the five (5) titles for its failure to pay CMC."84 For this reason.R. of its obligations to CMC. 50 . In his letter-reply78 dated December 5.79 In respondent’s demand letter80 dated January 28. but according to him. which respondent executed in favor of CMC. Instead. Once more."81 Again. the same on its own does not however warrant the [writ’s] dissolution. which serves "as security for [petitioner’s] refinancing of buses. if not all."86 No grave abuse of discretion exists in this case. or where the power is exercised in an arbitrary or despotic manner by reason of passion. petitioner did not deny that respondent delivered the titles to him solely as security for the refinancing of the buses. 2006 and the Resolution dated March 6. we need not belabor that the issuance of a writ of preliminary injunction is discretionary upon the trial court because "the assessment and evaluation of evidence towards that end involve findings of facts left to the said court for its conclusive determination. this Court gives credence to the [respondent’s] fear.Consequently. thus: [Respondent] has expressed fear that the [petitioner] (OPM) has turned over the possession of the said titles to Metrobank in order to obtain a loan from the bank or to secure an existing loan from the said bank.85 Grave abuse of discretion is defined as "capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction. respondent’s counsel demanded petitioner to settle his obligations with CMC or return the titles to respondent. 2007 of the Court of Appeals in CA-G. not only for the refinancing of the 22 bus chassis from CMC. he admitted his failure to settle his obligations with CMC and asked that he be given additional time to settle the same. In respondent’s demand letter76 dated November 26. 1999. We agree with the RTC that respondent has a right to recover the five titles because petitioner failed to comply with his obligation to respondent. we find that the RTC had sufficient bases to issue the writ of preliminary mandatory injunction as all the requisites for the issuance of such writ were established.1âwphi1 In addition.
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