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Transcript of Juris Cases
Sto. Tomas et al. vs Salac et al.
These consolidated cases pertain to the constitutionality of certain provisions of Republic Act 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995.DecisionG.R. Nos. 152642, 152710, 167590,
The Facts and the Case
On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 that, for among other purposes, sets the Government’s policies on overseas employment and establishes a higher standard of protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in distress.
G.R. 152642 and G.R. 152710
(Constitutionality of Sections 29 and 30, R.A. 8042)
Sections 29 and 30 of the Act1
commanded the Department of Labor and Employment (DOLE) to begin deregulating within one year of its passage the business of handling the recruitment and migration of
overseas Filipino workers and phase out within five years the regulatory functions of the Philippine Overseas Employment Administration (POEA).
On January 8, 2002 respondents Rey Salac, Willie D. Espiritu, Mario Montenegro, Dodgie Belonio, Lolit Salinel, and Buddy Bonnevie (Salac, et al.) filed a petition for certiorari, prohibition and mandamus with application for temporary restraining order (TRO) and preliminary injunction against petitioners, the DOLE Secretary, the POEA Administrator, and the Technical Education and Skills Development Authority (TESDA) Secretary-General before the Regional Trial Court (RTC) of Quezon City, Branch 96.2
1 SEC. 29. COMPREHENSIVE DEREGULATION PLAN ON RECRUITMENT ACTIVITIES. – Pursuant to a progressive policy of deregulation whereby the migration of workers becomes strictly a matter between the worker and his foreign employer, the DOLE within one (1) year from the effectivity of this Act, is hereby mandated to formulate a five-year comprehensive deregulation plan on recruitment activities taking into account labor market trends, economic conditions of the country and emerging circumstances which may affect the welfare of migrant workers.
SEC. 30. GRADUAL PHASE- OUT OF REGULATORY FUNCTIONS. – Within a period of five (5) years from the effectivity of this Act, the DOLE shall phase-out the regulatory functions of the POEA pursuant to the objectives of deregulation.
2 Docketed as Civil Case Q-02-45907.
Decision 5 G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
Salac, et al. sought to: 1) nullify DOLE Department Order 10 (DOLE DO 10) and POEA
Memorandum Circular 15 (POEA MC 15); 2) prohibit the DOLE, POEA, and TESDA from implementing the same and from further issuing rules and regulations that would regulate the recruitment and placement of overseas Filipino workers (OFWs); and 3) also enjoin them to comply with the policy of deregulation mandated under Sections 29 and 30 of Republic Act 8042.
On March 20, 2002 the Quezon City RTC granted Salac, et al.’s petition and ordered the government agencies mentioned to deregulate the recruitment and placement of OFWs.3 The RTC also annulled DOLE DO 10, POEA MC 15, and all other orders, circulars and issuances that are inconsistent with the policy of deregulation under R.A. 8042.
Prompted by the RTC’s above actions, the government officials concerned filed the present petition in G.R. 152642 seeking to annul the RTC’s decision and have the same enjoined pending action on the petition.
On April 17, 2002 the Philippine Association of Service Exporters, Inc. intervened in the case before the Court, claiming that the RTC March 20, 2002 Decision gravely affected them since it paralyzed the deployment abroad of OFWs and performing artists. The Confederated Association of Licensed Entertainment Agencies, Incorporated (CALEA) intervened for the same purpose.4
On May 23, 2002 the Court5 issued a TRO in the case, enjoining the Quezon City RTC, Branch 96, from enforcing its decision.
In a parallel case, on February 12, 2002 respondents Asian Recruitment Council Philippine Chapter, Inc. and others (Arcophil, et al.)
3.3 Rollo (G.R. 152642), pp. 70-82. 4.4 Id. at 210-297.
3.5 Id. at 845-849.
filed a petition for certiorari and prohibition with application for TRO and preliminary injunction against the DOLE Secretary, the POEA Administrator, and the TESDA Director-General,6 before the RTC of Quezon City, Branch 220, to enjoin the latter from implementing the 2002 Rules and Regulations Governing the Recruitment and Employment of Overseas Workers and to cease and desist from issuing other orders, circulars, and policies that tend to regulate the recruitment and placement of OFWs in violation of the policy of deregulation provided in Sections 29 and 30 of R.A. 8042.
On March 12, 2002 the Quezon City RTC rendered an Order, granting the petition and enjoining the government agencies involved from exercising regulatory functions over the recruitment and placement of OFWs. This prompted the DOLE Secretary, the POEA Administrator, and the TESDA Director-General to file the present action in G.R. 152710. As in G.R. 152642, the Court issued on May 23, 2002 a TRO enjoining the Quezon City RTC, Branch 220 from enforcing its decision.
On December 4, 2008, however, the Republic informed7 the Court that on April 10, 2007 former President Gloria Macapagal-Arroyo signed into law R.A. 94228 which expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the policy of close government regulation of the recruitment and deployment of OFWs. R.A. 9422 pertinently provides:
x x x x
SEC. 1. Section 23, paragraph (b.1) of Republic
Act No. 8042, otherwise known as the “Migrant Workers and Overseas Filipinos Act of 1995” is hereby amended to read as follows:
(b.1) Philippine Overseas Employment Administration – The Administration shall regulate private sector participation in the recruitment
6.6 Filed on February 12, 2002, docketed as Civil Case Q-02-46127 before RTC Branch 220 of Quezon City.
7.7 Manifestation and Motion, rollo (G.R. 152642), pp. 1338-1359.
6. 8 An Act to Strengthen the Regulatory Functions of the Philippine Overseas Employment Administration (POEA), Amending for this Purpose Republic Act 8042, otherwise known as the “Migrant Workers and Overseas Filipinos Act of 1995.”
Decision 7G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
and overseas placement of workers by setting up a licensing and registration system. It shall also formulate and implement, in coordination with appropriate entities concerned, when necessary, a system for promoting and monitoring the overseas employment of Filipino workers taking into consideration their welfare and the domestic manpower requirements.
In addition to its powers and functions, the administration shall inform
migrant workers not only of their rights as workers but also of their rights as human beings, instruct and guide the workers how to assert their rights and provide the available mechanism to redress violation of their rights.
In the recruitment and placement of workers to service the requirements for trained and competent Filipino workers of foreign governments and their instrumentalities, and such other employers as public interests may require, the administration shall deploy only to countries where the Philippines has concluded bilateral labor agreements or arrangements: Provided, That such countries shall guarantee to protect the rights of Filipino migrant workers; and: Provided, further, That such countries shall observe and/or comply with the international laws and standards for migrant workers.
SEC. 2. Section 29 of the same law is hereby repealed.
SEC. 3. Section 30 of the same law is also hereby repealed.
x x x x
On August 20, 2009 respondents Salac, et al. told the Court in G.R. 152642 that they agree9 with the Republic’s view that the repeal of Sections 29 and 30 of R.A. 8042 renders the issues they raised by their action moot and academic. The Court has no reason
to disagree. Consequently, the two cases, G.R. 152642 and 152710, should be dismissed for being moot and academic.
(Constitutionality of Sections 6, 7, and 9 of R.A. 8042)
On August 21, 1995 respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a petition for declaratory relief and prohibition with prayer for issuance of TRO and writ of preliminary injunction before the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for
9 Reply, rollo (G.R. 152642), pp. 1392-1395.
Decision 8G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
being unconstitutional. (PASEI also sought to annul a portion of Section 10 but the Court will take up this point later together with a related case.)
Section 6 defines the crime of “illegal recruitment” and enumerates the acts constituting the same. Section 7 provides the penalties for prohibited acts. Thus:
SEC. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and
includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-license or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That such non-license or non-holder, who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:
x x x x
SEC. 7. Penalties. –
a. (a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine not less than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos (P500,000.00).
a. (b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos (P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than eighteen (18) years
of age or committed by a non-licensee or non-holder of authority.10
Finally, Section 9 of R.A. 8042 allowed the filing of criminal actions arising from “illegal recruitment” before the RTC of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense.
10 Section 7 was subsequently amended to increase both the durations of imprisonment and the amounts of the fines.
Decision 9 G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
The RTC of Manila declared Section 6 unconstitutional after hearing on the ground that its definition of “illegal recruitment” is vague as it fails to distinguish between licensed and non-licensed recruiters11 and for that reason gives undue advantage to the non-licensed recruiters in violation of the right to equal protection of those that operate with government licenses or authorities.
But “illegal recruitment” as defined in Section 6 is clear and unambiguous and, contrary to the RTC’s finding, actually makes a distinction between licensed and non-licensed recruiters. By its terms, persons who engage in “canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers” without the appropriate government license or authority are guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that section. On the other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate government license or authority, are guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6.
The Manila RTC also declared Section 7 unconstitutional on the ground that its sweeping application of the penalties failed to make any distinction as to the seriousness of the act committed for the application of the penalty imposed on such violation. As an example, said the trial court, the mere failure to render a report under Section 6(h) or obstructing the inspection by the Labor Department under Section 6(g) are penalized by imprisonment for six years and one day and a minimum fine of P200,000.00 but which could unreasonably go even as high as life imprisonment if committed by at least three persons.
11 A non-licensee or non-holder of authority means any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary (People v. Engr. Diaz, 328 Phil. 794, 806 ).
Decision 10 G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
Apparently, the Manila RTC did not agree that the law can impose such grave penalties upon what it believed were specific acts that were not as condemnable as the others in the lists. But, in fixing uniform penalties for each of the enumerated acts under Section 6, Congress was within its prerogative to determine what individual acts are equally reprehensible, consistent with the State policy of according full protection to labor, and deserving of the same penalties. It is not within the power of the Court to question the wisdom of this kind of choice. Notably, this legislative policy has been further stressed in July 2010 with the enactment of R.A. 1002212
which increased even more the duration of the
penalties of imprisonment and the amounts of fine for the commission of the acts listed under Section 7.
Obviously, in fixing such tough penalties, the law considered the unsettling fact that OFWs must work outside the country’s borders and beyond its immediate protection. The law must, therefore, make an effort to somehow protect them from conscienceless individuals within its jurisdiction who, fueled by greed, are willing to ship them out without clear assurance that their contracted principals would treat such OFWs fairly and humanely.
As the Court held in People v. Ventura,13 the State under its police power “may prescribe such regulations as in its judgment will secure or tend to secure the general welfare of the people, to protect them against the consequence of ignorance and incapacity as well as of deception and fraud.” Police power is “that inherent and plenary power of the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society.”14
12. 12 An Act Amending Republic Act 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, as Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, their Families and Overseas Filipinos in Distress, and For Other Purposes.
13. 13 114 Phil. 162, 167 (1962).
12. 14 Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708 (1919).
Decision 11 G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
The Manila RTC also invalidated Section 9 of R.A. 8042 on the ground that allowing the offended parties to file the
criminal case in their place of residence would negate the general rule on venue of criminal cases which is the place where the crime or any of its essential elements were committed. Venue, said the RTC, is jurisdictional in penal laws and, allowing the filing of criminal actions at the place of residence of the offended parties violates their right to due process. Section 9 provides:
SEC. 9. Venue. – A criminal action arising from illegal recruitment as defined herein shall be filed with the Regional Trial Court of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense: Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts: Provided, however, That the aforestated provisions shall also apply to those criminal actions that have already been filed in court at the time of the effectivity of this Act.
But there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed, Section 15(a), Rule 110 of the latter Rules allows exceptions provided by laws. Thus:
SEC. 15. Place where action is to be instituted.— (a) Subject to existing laws, the criminal action shall be instituted and tried in the court of the
municipality or territory where the offense was committed or where any of its essential ingredients occurred. (Emphasis supplied)
x x x x
Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with that law’s declared policy15 of providing a criminal justice system that protects and serves the best interests of the victims of illegal recruitment.
15 Par. d and e.
G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
G.R. 167590, G.R. 182978-79,16 and G.R. 184298-9917
(Constitutionality of Section 10, last sentence of 2nd paragraph)
G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent spouses Simplicio and Mila Cuaresma (the Cuaresmas) filed a claim for death and insurance benefits and damages against petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services, Inc. (White Falcon) for the death of their daughter Jasmin Cuaresma while working as staff nurse in Riyadh, Saudi Arabia.
The Labor Arbiter (LA) dismissed the claim on the ground that the Cuaresmas had already received insurance benefits arising from their daughter’s death from the Overseas Workers Welfare Administration (OWWA). The
LA also gave due credence to the findings of the Saudi Arabian authorities that Jasmin committed suicide.
On appeal, however, the National Labor Relations Commission (NLRC) found Becmen and White Falcon jointly and severally liable for Jasmin’s death and ordered them to pay the Cuaresmas the amount of US$113,000.00 as actual damages. The NLRC relied on the Cabanatuan City Health Office’s autopsy finding that Jasmin died of criminal violence and rape.
Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals (CA).18 On June 28, 2006 the CA held Becmen and White Falcon jointly and severally liable with their Saudi Arabian employer for actual damages, with Becmen having a right of reimbursement from White Falcon. Becmen and White Falcon appealed the CA Decision to this Court.
16. 16 Entitled Becmen Service Exporter and Promotion, Inc. v. Spouses Simplicio and Mila Cuaresma, for and in behalf of their daughter Jasmin G. Cuaresma, et al.
16. 17 Entitled Spouses Simplicio and Mila Cuaresma, for and in behalf of their deceased daughter Jasmin G. Cuaresma v. White Falcon Services, Inc. and Becmen Services Exporter and Promotion, Inc.
16. 18 Docketed as CA-G.R. SP 80619 and 81030.
On April 7, 2009 the Court found Jasmin’s death not work-related or work-
connected since her rape and death did not occur while she was on duty at the hospital or doing acts incidental to her employment. The Court deleted the award of actual damages but ruled that Becmen’s corporate directors and officers are solidarily liable with their company for its failure to investigate the true nature of her death. Becmen and White Falcon abandoned their legal, moral, and social duty to assist the Cuaresmas in obtaining justice for their daughter. Consequently, the Court held the foreign employer Rajab and Silsilah, White Falcon, Becmen, and the latter’s corporate directors and officers jointly and severally liable to the Cuaresmas for: 1) P2,500,000.00 as moral damages; 2) P2,500,000.00 as exemplary damages; 3) attorney’s fees of 10% of the total monetary award; and 4) cost of suit.
On July 16, 2009 the corporate directors and officers of Becmen, namely, Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio and Eddie De Guzman (Gumabay, et al.) filed a motion for leave to Intervene. They questioned the constitutionality of the last sentence of the second paragraph of Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and solidarily liable with their company for money claims filed by OFWs against their employers and the recruitment firms. On September 9, 2009 the Court allowed the intervention and admitted Gumabay, et al.’s motion for reconsideration.
The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10, R.A. 8042, which holds the corporate directors, officers, and partners of recruitment and placement agencies jointly and solidarily liable for money claims and damages that may be adjudged against the latter agencies, is unconstitutional.
In G.R. 167590 (the PASEI case), the Quezon City RTC held as unconstitutional the
last sentence of the 2nd paragraph of Section 10 of R.A.
Decision 14 G.R. Nos. 152642, 152710, 167590,
182978-79 & 184298-99
8042. It pointed out that, absent sufficient proof that the corporate officers and directors of the erring company had knowledge of and allowed the illegal recruitment, making them automatically liable would violate their right to due process of law.
The pertinent portion of Section 10 provides:
SEC. 10. Money Claims. – x x x
The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. (Emphasis supplied)
But the Court has already held, pending adjudication of this case, that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company, there must
be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities.19
In the case of Becmen and White Falcon,20
while there is evidence that these companies were at fault in not investigating the cause of Jasmin’s death, there is no mention of any evidence in the case against them that intervenors Gumabay, et al., Becmen’s corporate officers and directors, were personally involved in their company’s particular actions or omissions in Jasmin’s case.
As a final note, R.A. 8042 is a police power measure intended to regulate the recruitment and deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by numerous OFWs seeking to work abroad. The rule is settled that every statute has in its favor the
19. 19 MAM Realty Development Corp. v. National Labor Relations Commission, 314 Phil. 838, 845 (1995).
20. 20 G.R. 182978-79 and G.R. 184298-99. DecisionG.R. Nos. 152642, 152710, 167590,
presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws enacted by the Legislative Department. Hence, in the absence of a clear and unmistakable case that the statute is unconstitutional, the Court must uphold its validity.
WHEREFORE, in G.R. 152642 and 152710, the Court DISMISSES the petitions for having become moot and academic.
In G.R. 167590, the Court SETS ASIDE the Decision of the Regional Trial Court ofManila dated December 8, 2004 and DECLARES Sections 6, 7, and 9 of Republic Act 8042 valid and constitutional.
In G.R. 182978-79 and G.R. 184298-99 as well as in G.R. 167590, the Court HOLDS the last sentence of the second paragraph of Section 10 of Republic Act 8042 valid and constitutional. The Court, however, RECONSIDERS and SETS ASIDE the portion of its Decision in G.R. 182978-79 and G.R. 184298-99 that held intervenors Eufrocina Gumabay,
Elvira Taguiam, Lourdes Bonifacio, and Eddie De Guzman jointly and
'solidarily liable with respondent Becmen Services Exporter and Promotion, Inc. to spouses Simplicia and Mila Cuaresma for lack of a finding in those cases that such intervenors had a part in the act or omission imputed to their corporation.
Republic of the PhilippinesSupreme CourtManila SECOND DIVISION TEOFILO EVANGELISTA,
G.R. No. 163267
Petitioner,Present:CARPIO, J., Chairperson,
- versus- BRION,DEL CASTILLO,ABAD, andPEREZ, JJ.
THE PEOPLE OF THE PHILIPPINES,
Respondent. May 5, 2010x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
D E C I S I O N
DEL CASTILLO, J.:
To be guilty of the crime of illegal possession of firearms and ammunition, one does not have to be in actual physical possession thereof. The law does not punish physical possession alone but possession in general, which includes constructive possession or the subjection of the thing to the owner’s control.
This Petition for Review
on Certiorari assails the October 15, 2003 Decision of the Court of Appeals (CA) in CA-G.R. CR No. 21805 which affirmed the January 23, 1998 Decision of the Regional Trial Court (RTC) of Pasay City, Branch 109 convicting petitioner Teofilo Evangelista for violation of Section 1, Presidential Decree (PD) No. 1866, as amended, as well as the April 16, 2004 Resolution which denied petitioner’s Motion for Reconsideration.
Factual Antecedents In an Information dated January 31, 1996, petitioner was charged with violation of Section 1 of PD 1866 allegedly committed as follows:
That on or about the 30th day of January 1996, at the Ninoy Aquino International Airport, Pasay City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, did, then and there, wilfully, unlawfully and feloniously have in his possession, custody and control the following items:
1. One (1) Unit 9mm Jericho Pistol, Israel with SN F-36283 with one (1) magazine;
2. One (1) Unit Mini-Uzi 9mm Israel Submachine gun with SN 931864 with two (2) magazines;
3. Nineteen (19) 9mm bullets. without the corresponding permit or license from competent authority. CONTRARY TO LAW.
After posting his bail, petitioner filed on February 14, 1996 an Urgent Motion for (a) Suspension of Proceedings and (b) the Holding of A Preliminary Investigation. The RTC granted the motion and, accordingly, the State Prosecutor conducted the preliminary investigation. In a Resolution dated March 6, 1996, the State Prosecutor found no probable cause to indict petitioner and thus recommended the reversal of the resolution finding probable cause and the dismissal of the complaint. Thereafter, a Motion to Withdraw Information was filed but it was denied by the trial court in an Order dated March 26, 1996, viz:
Acting on the “Motion to Withdraw Information” filed by State Prosecutor Aida Macapagal on the ground that [there exists] no probable cause to indict the accused, the Information having been already filed in Court, the matter should be left to the discretion of the Court to assess the evidence, hence, for lack of merit, the same is hereby denied. Let the arraignment of the accused proceed.
When arraigned on March 26, 1996, petitioner pleaded not guilty to the charge. Thereafter, trial ensued. Version of the Prosecution In the morning of January 30, 1996, Maximo Acierto, Jr. (Acierto), a Customs Police assigned at the Ninoy Aquino International Airport (NAIA) District
Command, was informed by his superior that a certain passenger of Philippine Airlines (PAL) Flight No. 657 would be arriving fromDubai bringing with him firearms and ammunitions. Shortly after lunch, Acierto, together with Agents Cuymo and Fuentabella, proceeded to the tube area where they were met by a crewmember who introduced to them herein petitioner. Acierto asked petitioner if he brought firearms with him and the latter answered in the affirmative adding that the same were bought in Angola. Thereupon, Acierto was summoned to the cockpit by the pilot, Capt. Edwin Nadurata (Capt. Nadurata), where the firearms and ammunitions were turned over to him. Petitioner was then escorted to the arrival area to get his luggage and thereafter proceeded to the examination room where the luggage was examined and petitioner was investigated. In open court, Acierto identified the firearms and ammunitions. During the investigation, petitioner admitted before Special Agent Apolonio Bustos (Bustos) that he bought the subject items in Angola but the same were confiscated by the Dubai authorities, which turned over the same to a PAL personnel in Dubai. Upon inquiry, the Firearms and Explosive Office (FEO) in Camp Crame certified that petitioner is neither registered with said office nor licensed holder of aforesaid firearms and ammunitions. Bustos likewise verified from the Bureau of Customs, but his effort yielded no record to show that the firearms were legally purchased. Among the documents Bustos had gathered during his investigation were the Arrival Endorsement Form and Customs Declaration Form. A referral letter was prepared endorsing the matter to the Department of Justice. Bustos admitted that petitioner was not assisted by counsel when the latter admitted that he bought the firearms in Angola. SPO4 Federico Bondoc, Jr. (SPO4 Bondoc), a member of the Philippine National Police (PNP) and representative of the FEO, upon verification, found that petitioner is not a licensed/registered firearm holder. His office issued a certification to that effect which he identified in court as Exhibit “A”. After the prosecution rested its case, petitioner, with leave of court, filed his Demurrer to
Evidence, the resolution of which was deferred pending submission of petitioner’s evidence.
Version of the Defense The defense presented Capt. Nadurata whose brief but candid and straightforward narration of the event was synthesized by the CA as follows:
x x x On January 30, 1996, he was approached by the PAL Station Manager in Dubai, who informed him that a Filipino contract worker from Angola who is listed as a passenger of PAL flight from Dubai to Manila, was being detained as he was found in possession of firearms; that if said passenger will not be able to board the airplane, he would be imprisoned in Dubai; and that the Arabs will only release the passenger if the Captain of PAL would accept custody of the passenger [herein petitioner] and the firearms. Capt. Nadurata agreed to take custody of the firearms and the passenger, herein appellant, so that the latter could leave Dubai. The firearms were deposited by the Arabs in the cockpit of the airplane and allowed the appellant to board the airplane. Upon arrival inManila, Capt. Nadurata surrendered the firearms to the airport authorities.
Meanwhile, in view of the unavailability of the defense’s intended witness, Nilo Umayaw (Umayaw), the PAL Station Manager in Dubai, the prosecution and the defense agreed and stipulated on the following points:
1. That PAL Station Manager Mr. Nilo
Umayaw was told by a Dubai Police that firearms and ammunitions were found in the luggage of a Filipino passenger coming from Angola going to the Philippines;
2. That he was the one who turned over the subject firearms to Captain Edwin Nadurata, the Pilot in command of PAL Flight 657;
3. That the subject firearms [were] turned
over at Dubai;
4. That the said firearms and ammunitions were confiscated from the accused Teofilo Evangelista and the same [were] given to the PAL Station Manager who in turn submitted [them] to the PAL Pilot, Capt. Edwin Nadurata who has already testified;
5. That [these are] the same firearms involved in this case.
Ruling of the Regional Trial Court
On February 4, 1997, the RTC rendered its Decision, the dispositive portion of which reads:
In view of all the foregoing, the Court
finds accused TEOFILO E. EVANGELISTA guilty beyond reasonable doubt for violation of Sec. 1, P.D. 1866 as amended (Illegal Possession of Firearms and Ammunitions: (One (1) Unit Mini-Uzi 9mm Israel submachine gun with SN-931864 with two (2) magazines and nineteen (19) 9mm bullets) and hereby sentences him to imprisonment of Seventeen (17) Years and Four (4) Months to Twenty (20) Years.
The above-mentioned firearms are
hereby ordered forfeited in favor of the government and is ordered transmitted to the National Bureau of Investigation, Manila for proper disposition.
On April 4, 1997, petitioner filed a Motion for New Trial which the RTC granted. Forthwith, petitioner took the witness stand narrating his own version of the incident as follows:
On January 28, 1996, he was
at Dubai International Airport waiting for his flight to the Philippines. He came from Luwanda, Angola where he was employed as
a seaman at Oil International Limited. While at the airport in Dubai, Arab policemen suddenly accosted him and brought him to their headquarters where he saw guns on top of a table. The Arabs maltreated him and forced him to admit ownership of the guns. At this point, PAL Station Manager Umayaw came and talked to the policemen in Arabian dialect. Umayaw told him that he will only be released if he admits ownership of the guns. When he denied ownership of the same, Umayaw reiterated that he (petitioner) will be released only if he will bring the guns with him to the Philippines. He declined and insisted that the guns are not his. Upon the request of Umayaw, petitioner was brought to the Duty Free area for his flight going to the Philippines. When he was inside the plane, he saw the Arab policemen handing the guns to the pilot. Upon arrival at the NAIA, he was arrested by the Customs police and brought to the arrival area where his passport was stamped and he was made to sign a Customs Declaration Form without reading its contents. Thereafter, he was brought to a room at the ground floor of the NAIA where he was investigated. During the investigation, he was not represented by counsel and was forced to accept ownership of the guns. He denied ownership of the guns and the fact that he admitted having bought the same in Angola.
Ruling of the Regional Trial Court After new trial, the RTC still found petitioner liable for the offense charged but modified the penalty of imprisonment. The dispositive portion of the Decision dated January 23, 1998 reads:
In view of all the foregoing, the Court finds accused TEOFILO E. EVANGELISTA guilty beyond reasonable doubt for violation of Sec. 1, P.D. 1866 as amended (Illegal Possession of Firearms and Ammunitions: One (1) Unit 9mm Jerico Pistol, Israel with SN F-36283 with one (1) magazine; One (1) Unit Mini-Uzi 9mm Israel submachine gun with SN-931864 with two (2) magazines and nineteen (19) 9mm bullets and hereby sentences him to imprisonment of Six (6) Years and One (1) Day to Eight (8) Years and a fine of P30,000.00.
The above-mentioned firearms are hereby ordered forfeited in favor of the government and [are] ordered transmitted to the National Bureau of Investigation, Manila for proper disposition.
Ruling of the Court of Appeals
On appeal, the CA affirmed the findings of the trial court in its Decision dated October 15, 2003. It ruled that the stipulations during the trial are binding on petitioner. As regards possession of subject firearms, the appellate court ruled that Capt. Nadurata’s custody during the flight fromDubai to Manila was for and on behalf of petitioner. Thus, there was constructive possession.
Petitioner moved for
reconsideration but it was denied by the appellate court in its April 16, 2004 Resolution.
Hence, this petition.
Issues Petitioner assigns the following errors:
a. The Court of Appeals gravely erred in not acquitting Evangelista from the charge of Presidential Decree No. 1866, Illegal Possession of Firearms.
b. The Court of Appeals gravely erred in not
holding that Evangelista was never in possession of any firearm or ammunition within Philippine jurisdiction and he therefore could not have committed the crime charged against him.
c. The Court of Appeals gravely erred in holding
that Evangelista committed a continuing crime.
d. The Court of Appeals gravely erred in
disregarding the results of the preliminary investigation.
We find the appeal devoid of merit.
At the outset, we emphasize that under Rule 45 of the Rules of Court, a petition for review on certiorari shall only raise questions of law considering that the findings of fact of the CA are, as a general rule, conclusive upon and binding on the Supreme Court. In this recourse, petitioner indulges us to calibrate once again the evidence adduced by the parties and to re-evaluate the credibility of their witnesses. On this ground alone, the instant petition deserves to be denied outright. However, as the liberty of petitioner is at stake and following the principle that an appeal in a criminal case throws the whole case wide open for review, we are inclined to delve into the merits of the present petition. In his bid for acquittal, petitioner argues that he could not have committed the crime imputed against him for he was never in custody and possession of any firearm or ammunition when he arrived in the Philippines. Thus, the conclusion of the appellate court that he was in constructive possession of the subject firearms and ammunitions is erroneous. We are not persuaded. As correctly found by the CA:
Appellant’s argument that he was never found in possession of the subject firearms and ammunitions within Philippine jurisdiction is specious. It is worthy to note that at the hearing of the case before the court a quo on October 8, 1996, the defense counsel stipulated that the subject firearms and ammunitions were confiscated from appellant and the same were given to PAL Station Manager Nilo Umayaw who, in turn, turned over the same to Capt. Edwin Nadurata. Such stipulation of fact is binding on appellant, for the acts of a lawyer in the defense of a case are the acts of his client. Granting that Nilo Umayaw
was merely told by the Dubai authorities that the firearms and ammunitions were found in the luggage of appellant and that Umayaw had no personal knowledge thereof, however, appellant’s signature on the Customs Declaration Form, which contains the entry “2 PISTOL guns SENT SURRENDER TO PHILIPPINE AIRLINE,” proves that he was the one who brought the guns to Manila. While appellant claims that he signed the Customs Declaration Form without reading it because of his excitement, however, he does not claim that he was coerced or persuaded in affixing his signature thereon. The preparation of the Customs Declaration Form is a requirement for all arriving passengers in an international flight. Moreover, it cannot be said that appellant had already been arrested when he signed the Customs Declaration Form. He was merely escorted by Special Agent Acierto to the arrival area of the NAIA. In fact, appellant admitted that it was only after he signed the Customs Declaration Form that he was brought to the ground floor of NAIA for investigation. Consequently, appellant was in constructive possession of the subject firearms. As held in People v. Dela Rosa, the kind of possession punishable under PD 1866 is one where the accused possessed a firearm either physically or constructively with animus possidendi or intention to possess the same. Animus possidendi is a state of mind. As such, what goes on into the mind of the accused, as his real intent, could be determined solely based on his prior and coetaneous acts and the surrounding circumstances explaining how the subject firearm came to his possession.
Appellant’s witness, Capt. Nadurata, the PAL pilot of Flight No. PR 657 from Dubai to Manila on January 30, 1996, testified that he accepted custody of the firearms and of appellant in order that the latter, who was being detained in Dubai for having been found in possession of firearms, would be released from custody. In other words, Capt. Nadurata’s possession of the firearm during the flight
from Dubai to Manila was for and on behalf of appellant.
We find no cogent reason to deviate from the above findings, especially considering petitioner’s admission during the clarificatory questioning by the trial court:
Court: So, it is clear now in the mind of the Court, that the firearms and ammunitions will also be with you on your flight to Manila, is that correct?A: Yes, your honor. Court: [You] made mention of that condition, that the Dubai police agreed to release you provided that you will bring the guns and ammunitions with you? Is that the condition of the Dubai Police?A: Yes, your honor. Court: The condition of his release was that he will have to bring the guns and ammunitions to the Philippines and this arrangement was made by the PAL Supervisor at Dubai and it was Mr. Umayaw the PAL Supervisor, who interceded in his behalf with the Dubai Police for his flight in the Philippines.
To us, this constitutes judicial admission of his possession of the subject firearms and ammunitions. This admission, the veracity of which requires no further proof, may be controverted only upon a clear showing that it was made through palpable mistake or that no admission was made. No such controversion is extant on record. Moreover, we cannot ignore the Customs Declaration Form wherein it appeared that petitioner brought the firearms with him upon his arrival in the Philippines. While there was no showing that he was forced to sign the form, petitioner can only come up with the excuse that he was excited. Hardly can we accept such pretension.
We are likewise not swayed by petitioner’s contention that the lower court erroneously relied on the Customs Declaration Form since it is not admissible in evidence because it was accomplished without the benefit of counsel while he was under police custody.
The accomplishment of the Customs Declaration Form was not elicited through custodial investigation. It is a customs requirement which petitioner had a clear obligation to comply. As correctly observed by the CA, the preparation of the Customs Declaration Form is a requirement for all arriving passengers in an international flight. Petitioner was among those passengers. Compliance with the constitutional procedure on custodial investigation is, therefore, not applicable in this case. Moreover, it is improbable that the customs police were the ones who filled out the declaration form. As will be noted, it provides details that only petitioner could have possibly known or supplied. Even assuming that there was prior accomplishment of the form which contains incriminating details, petitioner could have easily taken precautionary measures by not affixing his signature thereto. Or he could have registered his objection thereto especially when no life threatening acts were being employed against him upon his arrival in the country. Obviously, it was not only the Customs Declaration Form from which the courts below based their conclusion that petitioner was in constructive possession of subject firearms and ammunitions. Emphasis was also given on the stipulations and admissions made during the trial. These pieces of evidence are enough to show that he was the owner and possessor of these items. Petitioner contends that the trial court has no jurisdiction over the case filed against him. He claims that his alleged possession of the subject firearms transpired while he was at the Dubai Airport and his possession thereof has ceased when he left for the Philippines. He insists that sinceDubai is outside the territorial jurisdiction of the Philippines and his situation is not one of the exceptions provided in Article 2 of the Revised Penal Code, our criminal laws are not applicable. In short,
he had not committed a crime within the Philippines. Indeed it is fundamental that the place where the crime was committed determines not only the venue of the action but is an essential element of jurisdiction. In order for the courts to acquire jurisdiction in criminal cases, the offense should have been committed or any one of its essential ingredients should have taken place within the territorial jurisdiction of the court. If the evidence adduced during the trial shows that the offense was committed somewhere else, the court should dismiss the action for want of jurisdiction.
Contrary to the arguments put forward by petitioner, we entertain no doubt that the crime of illegal possession of firearms and ammunition for which he was charged was committed in the Philippines. The accomplishment by petitioner of the Customs Declaration Form upon his arrival at the NAIA is very clear evidence that he was already in possession of the subject firearms in the Philippines. And more than mere possession, the prosecution was able to ascertain that he has no license or authority to possess said firearms. It bears to stress that the essence of the crime penalized under PD 1866, as amended, is primarily the accused’s lack of license to possess the firearm. The fact of lack or absence of license constitutes an essential ingredient of the offense of illegal possession of firearm. Since it has been shown that petitioner was already in the Philippines when he was found in possession of the subject firearms and determined to be without any authority to possess them, an essential ingredient of the offense, it is beyond reasonable doubt that the crime was perpetrated and completed in no other place except thePhilippines. Moreover, the jurisdiction of a court over the criminal case is determined by the allegations in the complaint or information. In this case, the information specifically and categorically alleged that on or about January 30, 1996 petitioner was in possession, custody and control of the subject firearms at
the Ninoy Aquino International Airport, Pasay City, Philippines, certainly a territory within the jurisdiction of the trial court. In contrast, petitioner failed to establish by sufficient and competent evidence that the present charge happened in Dubai. It may be well to recall that while in Dubai, petitioner, even in a situation between life and death, firmly denied possession and ownership of the firearms. Furthermore, there is no record of any criminal case having been filed against petitioner in Dubai in connection with the discovered firearms. Since there is no pending criminal case when he left Dubai, it stands to reason that there was no crime committed in Dubai. The age-old but familiar rule that he who alleges must prove his allegation applies.
Petitioner finally laments the trial court’s denial of the Motion to Withdraw Information filed by the investigating prosecutor due to the latter’s finding of lack of probable cause to indict him. He argues that such denial effectively deprived him of his substantive right to a preliminary investigation. Still, petitioner’s argument fails to persuade. There is nothing procedurally improper on the part of the trial court in disregarding the result of the preliminary investigation it itself ordered. Judicial action on the motion rests in the sound exercise of judicial discretion. In denying the motion, the trial court just followed the jurisprudential rule laid down in Crespo v. Judge Mogul that once a complaint or information is filed in court, any disposition of the case as to its dismissal or the conviction or acquittal of the accused rests on the sound discretion of the court. The court is not dutifully bound by such finding of the investigating prosecutor. In Solar Team Entertainment, Inc v. Judge How we held:
It bears stressing that the court is however not bound to adopt the resolution of the Secretary of Justice since the court is mandated to independently evaluate or assess the merits of the case, and may either agree or disagree with the recommendation of the Secretary of Justice. Reliance alone on the resolution of the Secretary of Justice would be an abdication of the trial court’s
duty and jurisdiction to determine prima facie case.
Consequently, petitioner has no valid basis to insist on the trial court to respect the result of the preliminary investigation it ordered to be conducted. In fine, we find no reason not to uphold petitioner’s conviction. The records substantiate the RTC and CA’s finding that petitioner possessed, albeit constructively, the subject firearms and ammunition when he arrived in the Philippines on January 30, 1996. Moreover, no significant facts and circumstances were shown to have been overlooked or disregarded which if considered would have altered the outcome of the case. In the prosecution for the crime of illegal possession of firearm and ammunition, the Court has reiterated the essential elements in People v. Eling to wit: (1) the existence of subject firearm; and, (2) the fact that the accused who possessed or owned the same does not have the corresponding license for it. In the instant case, the prosecution proved beyond reasonable doubt the elements of the crime. The existence of the subject firearms and the ammunition were established through the testimony of Acierto. Their existence was likewise admitted by petitioner when he entered into stipulation and through his subsequent judicial admission. Concerning petitioner’s lack of authority to possess the firearms, SPO4 Bondoc, Jr. testified that upon verification, it was ascertained that the name of petitioner does not appear in the list of registered firearm holders or a registered owner thereof. As proof, he submitted a certification to that effect and identified the same in court. The testimony of SPO4 Bondoc, Jr. or the certification from the FEO would suffice to prove beyond reasonable doubt the second element.
A final point. Republic Act (RA) No. 8294 took effect on June 6, 1997 or after the commission of the crime on January 30, 1996. However, since it is advantageous to the petitioner, it should be given retrospective application insofar as the penalty is concerned.
Section 1 of PD 1866, as amended by RA 8294 provides:
Section 1. Unlawful Manufacture, Sale, Acquisition, Disposition or Possession of Firearms or Ammunition or Instruments Used or Intended to be Used in the Manufacture of Firearms or Ammunition. x x x The penalty of prision mayor in its minimum period and a fine of Thirty thousand pesos (P30,000.00) shall be imposed if the firearm is classified as high powered firearm which includes those with bores bigger in diameter than .38 caliber and 9 millimeter such as caliber .40, .41, .44, .45 and also lesser calibered firearms but considered powerful such as caliber .357 and caliber .22 center-fire magnum and other firearms with firing capability of full automatic and by burst of two or three: Provided, however, That no other crime was committed by the person arrested.
Prision mayor in its minimum period ranges from six years and one day to eight years. Hence, the penalty imposed by the RTC as affirmed by the CA is proper. WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA-G.R. CR No. 21805 affirming the January 23, 1998 Decision of the Regional Trial Court of Pasay City, Branch 109 dated January 23, 1998, convicting petitioner Teofilo Evangelista of violation of Section 1 of Presidential Decree No. 1866, as amended, and sentencing him to suffer the penalty of imprisonment of six years and one day to eight years and to pay a fine of P30,000.00 is AFFIRMED. SO ORDERED.
WONINA M. BONIFACIO, JOCELYN UPANO, VICENTE ORTUOSTE AND JOVENCIO PERECHE, SR.,
- versus -
REGIONAL TRIAL COURT OF MAKATI, BRANCH 149, and JESSIE JOHN P. GIMENEZ,
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N CARPIO MORALES, J.:
Via a petition for Certiorari and Prohibition, petitioners Wonina M. Bonifacio, et al. assail the issuances of Branch 149 of the Regional Trial Court (RTC) of Makati (public respondent) – Order of April 22, 2008 which denied their motion to quash the Amended Information indicting them for libel, and Joint Resolution of August 12, 2008 denying reconsideration of the first issuance.
Private respondent Jessie John P.
Gimenez (Gimenez) filed on October 18, 2005, on behalf of the Yuchengco Family (“in particular,” former Ambassador Alfonso Yuchengco and Helen Y. Dee (Helen) and of the Malayan Insurance Co., Inc. (Malayan), a criminal complaint, before the Makati City Prosecutor’s Office, for thirteen (13) counts of libel under Article 355 in relation to Article 353 of the Revised Penal Code (RPC) against Philip Piccio, Mia Gatmaytan and Ma. Anabella Relova Santos, who are officers of Parents Enabling Parents Coalition, Inc. (PEPCI), John Joseph Gutierrez, Jeselyn Upano, Jose Dizon, Rolanda Pareja, Wonina Bonifacio, Elvira Cruz, Cornelio Zafra, Vicente Ortueste, Victoria Gomez Jacinto, Jurencio Pereche, Ricardo Loyares and Peter Suchianco, who are trustees of PEPCI, Trennie Monsod, a member of PEPCI (collectively, the accused), and a certain John
Doe, the administrator of the websitewww.pepcoalition.com.
PEPCI appears to have been formed
by a large group of disgruntled planholders of Pacific Plans, Inc. (PPI) - a wholly owned subsidiary of Great Pacific Life Assurance Corporation, also owned by the Yuchengco Group of Companies (YGC) - who had previously purchased traditional pre-need educational plans but were unable to collect thereon or avail of the benefits thereunder after PPI, due to liquidity concerns, filed for corporate rehabilitation with prayer for suspension of payments before the Makati RTC.
Decrying PPI’s refusal/inability to
honor its obligations under the educational pre-need plans, PEPCI sought to provide a forum by which the planholders could seek redress for their pecuniary loss under their policies by maintaining a website on the internet under the address of www.pepcoalition.com.
Gimenez alleged that PEPCI also
owned, controlled and moderated on the internet a blogspot under the website addresswww.pacificnoplan.blogspot.com, as well as a yahoo e-group at [email protected]. These websites are easily accessible to the public or by anyone logged on to the internet.
Gimenez further alleged that upon
accessing the above-stated websites in Makati on various dates from August 25 to October 2, 2005, he “was appalled to read numerous articles [numbering 13], maliciously and recklessly caused to be published by [the accused] containing highly derogatory statements and false accusations, relentlessly attacking the Yuchengco Family, YGC, and particularly, Malayan.” He cited an article which was posted/published on www.pepcoalition.com on August 25, 2005 which stated:
Talagang naisahan na naman tayo ng mga Yuchengcos. Nangyari na ang mga kinatatakutan kong pagbagsak ng
negotiation because it was done prematurely since we had not file any criminal aspect of our case. What is worse is that Yuchengcos benefited much from the nego. x x x . That is the fact na talagang hindi dapat pagtiwalaan ang mga Yuchengcos. LET’S MOVE TO THE BATTLEFIELD. FILE THE CRIMINAL CASES IN COURT, BSP AND AMLC AND WHEREVER. Pumunta tayong muli sa senado, congreso, RCBC Plaza, and other venues to air our grievances and call for boycott ng YGC. Let us start within ourselves. Alisin natin ang mga investments and deposits natin sa lahat ng YGC and I mean lahat and again convince friends to do the same. Yung mga nanonood lang noon ay dapat makisali na talaga ngayon specially those who joined only after knowing that there was a negotiation for amicable settlements.
FOR SURE MAY TACTICS PA SILANG NAKABASTA SA ATIN. LET US BE READY FOR IT BECAUSE THEY HAD SUCCESSFULLY LULL US AND THE NEXT TIME THEY WILL TRY TO KILL US NA. x x x  (emphasis in the original)
By Resolution of May 5, 2006, the
Makati City Prosecutor’s Office, finding probable cause to indict the accused, filed thirteen (13) separate Informations charging them with libel. The accusatory portion of one Information, docketed as Criminal Case No. 06-876, which was raffled off to public respondent reads:
That on or about the 25th day of August 2005 in Makati City, Metro Manila, Philippines, a place within the jurisdiction of the Honorable Court, the above-named accused, being then the trustees of Parents Enabling Parents Coalition and as such trustees they hold the legal title to the
website www.pepcoalition.com which is of general circulation, and publication to the public conspiring, confederating and mutually helping with one another together with John Does, did then and there willfully, unlawfully and feloniously and publicly and maliciously with intention of attacking the honesty, virtue, honor and integrity, character and reputation of complainant Malayan Insurance Co. Inc., Yuchengco Family particularly Ambassador Alfonso Yuchengco and Helen Dee and for further purpose exposing the complainant to public hatred and contempt published an article imputing a vice or defect to the complainant and caused to be composed, posted and published in the said websitewww.pepcoalition.com and injurious and defamatory article as follows:
Talagang naisahan na naman tayo ng mga Yuchengcos. Nangyari na ang mga kinatatakutan kong pagbagsak ng negotiation. x x x x x x x x x For sure may tactics pa silang nakabasta sa atin. Let us be ready for it because they had successfully lull us and the next time they will try to kill us na. x x x A copy of the full text of the foregoing article as published/posted in www.pepcoalition.com is attached as Annex “F” of the complaint.
That the keyword and password to be used in order to post and publish the above defamatory article are known to the accused as trustees holding legal title to the above-cited website and that the accused are the ones responsible for the posting and publication of the defamatory articles that the article in question was
posted and published with the object of the discrediting and ridiculing the complainant before the public. CONTRARY TO LAW.
Several of the accused appealed the
Makati City Prosecutor’s Resolution by a petition for review to the Secretary of Justice who, by Resolution of June 20, 2007, reversed the finding of probable cause and accordingly directed the withdrawal of the Informations for libel filed in court. The Justice Secretary opined that the crime of “internet libel” was non-existent, hence, the accused could not be charged with libel under Article 353 of the RPC.
Petitioners, as co-accused,
 thereupon filed on June 6, 2006, before the public respondent, a Motion to Quash the Information in Criminal Case No. 06-876 on the grounds that it failed to vest jurisdiction on the Makati RTC; the acts complained of in the Information are not punishable by law since internet libel is not covered by Article 353 of the RPC; and the Information is fatally defective for failure to designate the offense charged and the acts or omissions complained of as constituting the offense of libel.
Citing Macasaet v. People,
 petitioners maintained that the Information failed to allege a particular place within the trial court’s jurisdiction where the subject article was printed and first published or that the offended parties resided in Makati at the time the alleged defamatory material was printed and first published.
By Order of October 3, 2006, the
public respondent, albeit finding that probable cause existed, quashed the Information, citingAgustin v. Pamintuan. It found that the Information lacked any allegations that the offended parties were actually residing in Makati at the time of the commission of the offense as in fact they listed their address in the complaint-affidavit at Yuchengco Tower in
Binondo, Manila; or that the alleged libelous article was printed and first published in Makati.
The prosecution moved to reconsider
the quashal of the Information, insisting that the Information sufficiently conferred jurisdiction on the public respondent. It cited Banal III v. Panganiban which held that the Information need not allege verbatim that the libelous publication was “printed and first published” in the appropriate venue. And it pointed out that Malayan has an office inMakati of which Helen is a resident. Moreover, the prosecution alleged that even assuming that the Information was deficient, it merely needed a formal amendment.
Petitioners opposed the prosecution’s
motion for reconsideration, contending, inter alia, that since venue is jurisdictional in criminal cases, any defect in an information for libel pertaining to jurisdiction is not a mere matter of form that may be cured by amendment.
By Order of March 8, 2007, the
public respondent granted the prosecution’s motion for reconsideration and accordingly ordered the public prosecutor to “amend the Information to cure the defect of want of venue.”
The prosecution thereupon moved to
admit the Amended Information dated March 20, 2007, the accusatory portion of which reads:
That on or about the 25th day of August 2005 in Makati City, Metro Manila, Philippines, a place within the jurisdiction of the Honorable Court, the above-named accused, being then the trustees of Parents Enabling Parents Coalition and as such trustees they hold the legal title to the website www.pepcoalition.com which is of general circulation, and publication to the
public conspiring, confederating together with John Does,whose true names, identities and present whereabouts are still unknown and all of them mutually helping and aiding one another, did then and there willfully, unlawfully and feloniously and publicly and maliciously with intention of attacking the honesty, virtue, honor and integrity, character and reputation of complainant Malayan Insurance Co. Inc., Yuchengco Family particularly Ambassador Alfonso Yuchengco and Helen Dee and for further purpose exposing the complainant to public hatred and contempt published an article imputing a vice or defect to the complainant and caused to be composed, posted and published in the said website www.pepcoalition.com, a website accessible in Makati City, an injurious and defamatory article, which was first published and accessed by the private complainant in Makati City, as follows:
x x x
x (emphasis and underscoring in the original; italics supplied)
Petitioners moved to quash the
Amended Information which, they alleged, still failed to vest jurisdiction upon the public respondent because it failed to allege that the libelous articles were “printed and first published” by the accused in Makati; and the prosecution erroneously laid the venue of the case in the place where the offended party accessed the internet-published article .
By the assailed Order of April 22,
2008, the public respondent, applying Banal III, found the Amended Information to be sufficient in form.
Petitioners’ motion for
reconsideration having been denied by the public respondent by Joint Resolution of August 12, 2008, they filed the present petition for
Certiorari and Prohibition faulting the public respondent for:
1. … NOT FINDING THAT THE ACTS ALLEGED IN THE INFORMATION ARE NOT PUNISHABLE BY LAW; 2. … ADMITTING AN AMENDED INFORMATION WHOSE JURISDICTIONAL ALLEGATIONS CONTINUES TO BE DEFICIENT; and 3. …NOT RULING THAT AN AMENDMENT IN THE INFORMATION FOR THE PURPOSE OF CURING JURISDICTIONAL DEFECTS IS ILLEGAL.
With the filing of Gimenez’s
Comment to the petition, the issues are: (1) whether petitioners violated the rule on hierarchy of courts to thus render the petition dismissible; and (2) whether grave abuse of discretion attended the public respondent’s admission of the Amended Information.
The established policy of strict
observance of the judicial hierarchy of courts, as a rule, requires that recourse must first be made to the lower-ranked court exercising concurrent jurisdiction with a higher court. A regard for judicial hierarchy clearly indicates that petitions for the issuance of extraordinary writs against first level courts should be filed in the RTC and those against the latter should be filed in the Court of Appeals. The rule is not iron-clad, however, as it admits of certain exceptions.
Thus, a strict application of the rule is
unnecessary when cases brought before the appellate courts do not involve factual but purely legal questions.
In the present case, the substantive
issue calls for the Court’s exercise of its discretionary authority, by way of exception, in order to abbreviate the review process as petitioners raise a pure question of law involving jurisdiction in criminal complaints for
libel under Article 360 of the RPC –whether the Amended Information is sufficient to sustain a charge for written defamation in light of the requirements under Article 360 of the RPC, as amended by Republic Act (RA) No. 4363, reading:
Art. 360. Persons responsible.—Any person who shall publish, exhibit or cause the publication or exhibition of any defamation in writing or by similar means, shall be responsible for the same. The author or editor of a book or pamphlet, or the editor or business manager of a daily newspaper, magazine or serial publication, shall be responsible for the defamations contained therein to the same extent as if he were the author thereof. The criminal action and civil action for damages in cases of written defamations, as provided for in this chapter shall be filed simultaneously or separately with the Court of First Instance of the province or city where the libelous article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense: Provided, however, That where one of the offended parties is a public officer whose office is in the City of Manila at the time of the commission of the offense, the action shall be filed in the Court of First Instance of the City of Manila or of the city or province where the libelous article is printed and first published, and in case such public officer does not hold office in the City of Manila, the action shall be filed in the Court of First Instance of the province or city where he held office at the time of the commission of the offense or where the libelous article is printed and first published and in case one of the offended parties is a private individual, the action shall be filed in the Court of First Instance of the province or city where he actually
resides at the time of the commission of the offense or where the libelous matter is printed and first published x x x. (emphasis and underscoring supplied)
Venue is jurisdictional in criminal
actions such that the place where the crime was committed determines not only the venue of the action but constitutes an essential element of jurisdiction. This principle acquires even greater import in libel cases, given that Article 360, as amended, specifically provides for the possible venues for the institution of the criminal and civil aspects of such cases.
In Macasaet, the Court reiterated its
earlier pronouncements in Agbayani v. Sayo which laid out the rules on venue in libel cases, viz:
For the guidance, therefore, of both the bench and the bar, this Court finds it appropriate to reiterate our earlier pronouncement in the case ofAgbayani, to wit: In order to obviate controversies as to the venue of the criminal action for written defamation, the complaint or information should contain allegations as to whether, at the time the offense was committed, the offended party was a public officer or a private individual and where he was actually residing at that time. Whenever possible, the place where the written defamation was printed and first published should likewise be alleged. That allegation would be a sine qua non if the circumstance as to where the libel was printed and first published is used as the basis of the venue of the action. (emphasis and underscoring supplied)
It becomes clear that the venue of
libel cases where the complainant is a private individual is limited to only either of two places,
namely: 1) where the complainant actually resides at the time of the commission of the offense; or 2) where the alleged defamatory article was printed and first published. The Amended Information in the present case opted to lay the venue by availing of the second. Thus, it stated that the offending article “was first published and accessed by the private complainant in Makati City.” In other words, it considered the phrase to be equivalent to the requisite allegation of printing and first publication.
The insufficiency of the allegations in
the Amended Information to vest jurisdiction in Makati becomes pronounced upon an examination of the rationale for the amendment to Article 360 by RA No. 4363. Chavez v. Court of Appeals explained the nature of these changes:
Agbayani supplies a comprehensive restatement of the rules of venue in actions for criminal libel, following the amendment by Rep. Act No. 4363 of the Revised Penal Code:
“Article 360 in its original form provided that the venue of the criminal and civil actions for written defamations is the province wherein the libel was published, displayed or exhibited, regardless of the place where the same was written, printed or composed. Article 360 originally did not specify the public officers and the courts that may conduct the preliminary investigation of complaints for libel. Before article 360 was amended, the rule was that a criminal action for libel may be instituted in any jurisdiction where the libelous article was published or circulated, irrespective of where it was written or printed ( People v. Borja, 43 Phil. 618). Under that rule, the criminal action is transitory and the injured party has a choice of venue.
Experience had shown that under that old rule the offended party could harass the accused in a libel case by laying the venue of the criminal action in a remote or distant place.
Thus, in connection with an article published in the Daily Mirror and the Philippine Free Press, Pio Pedrosa, Manuel V. Villareal and Joaquin Roces were charged with libel in the justice of the peace court of San Fabian, Pangasinan (Amansec v. De Guzman, 93 Phil. 933). To forestall such harassment, Republic Act No. 4363 was enacted. It lays down specific rules as to the venue of the criminal action so as to prevent the offended party in written defamation cases from inconveniencing the accused by means of out-of-town libel suits, meaning complaints filed in remote municipal courts (Explanatory Note for the bill which became Republic Act No. 4363, Congressional Record of May 20, 1965, pp. 424-5; Time, Inc. v. Reyes, L-28882, May 31, 1971, 39 SCRA 303, 311).
x x x x (emphasis and underscoring supplied) Clearly, the evil sought to be
prevented by the amendment to Article 360 was the indiscriminate or arbitrary laying of the venue in libel cases in distant, isolated or far-flung areas, meant to accomplish nothing more than harass or intimidate an accused. The disparity or unevenness of the situation becomes even more acute where the offended party is a person of sufficient means or possesses influence, and is motivated by spite or the need for revenge.
If the circumstances as to where the
libel was printed and first published are used by the offended party as basis for the venue in the criminal action, the Information must allege
with particularity where the defamatory article was printed and first published, as evidenced or supported by, for instance, the address of their editorial or business offices in the case of newspapers, magazines or serial publications. This pre-condition becomes necessary in order to forestall any inclination to harass.
The same measure cannot be
reasonably expected when it pertains to defamatory material appearing on a website on the internet as there would be no way of determining the situs of its printing and first publication. To credit Gimenez’s premise of equating his first accessto the defamatory article on petitioners’ website in Makati with “printing and first publication” would spawn the very ills that the amendment to Article 360 of the RPC sought to discourage and prevent. It hardly requires much imagination to see the chaos that would ensue in situations where the website’s author or writer, a blogger or anyone who posts messages therein could be sued for libel anywhere in the Philippines that the private complainant may have allegedly accessed the offending website.
For the Court to hold that the
Amended Information sufficiently vested jurisdiction in the courts of Makati simply because the defamatory article was accessed therein would open the floodgates to the libel suit being filed in all other locations where the pepcoalitionwebsite is likewise accessed or capable of being accessed.
Respecting the contention that the
venue requirements imposed by Article 360, as amended, are unduly oppressive, the Court’s pronouncements in Chavez are instructive:
For us to grant the present petition, it would be necessary to abandon the Agbayani rule providing that a private person must file the complaint for libel either in the place of printing and first publication, or at the complainant’s place of residence. We would also have to abandon the subsequent cases that
reiterate this rule in Agbayani, such as Soriano, Agustin, and Macasaet. There is no convincing reason to resort to such a radical action. These limitations imposed on libel actions filed by private persons are hardly onerous, especially as they still allow such persons to file the civil or criminal complaint in their respective places of residence, in which situation there is no need to embark on a quest to determine with precision where the libelous matter was printed and first published.
(Emphasis and underscoring supplied.)
IN FINE, the public respondent
committed grave abuse of discretion in denying petitioners’ motion to quash the Amended Information.
WHEREFORE, the petition
is GRANTED. The assailed Order of April 22, 2008 and the Joint Resolution of August 12, 2008 are hereby SET ASIDE. The Regional Trial Court of Makati City, Br. 149 is hereby DIRECTED TO QUASH the Amended Information in Criminal Case No. 06-876 and DISMISS the case.
Republic of the PhilippinesSupreme CourtManila EN BANC UNION BANK OF THE, G.R. No. 192565PHILIPPINES and DESITOMAS, Present: Petitioners,
CORONA, C.J., CARPIO,
VELASCO, JR., LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO,*
- versus - ABAD, VILLARAMA, JR., PEREZ, MENDOZA, SERENO,**
REYES, and PERLAS-BERNABE, JJ.
PEOPLE OF THE PHILIPPINES, Respondent. Promulgated:
February 28, 2012x-----------------------------------------------------------------------------------------x D E C I S I O N BRION, J.:
We review in this Rule 45 petition, the decision of the Regional Trial Court, Branch 65, Makati City (RTC-Makati City) in Civil Case No. 09-1038. The petition seeks to reverse and set aside the RTC-Makati City decision dismissing the petition for certiorari of petitioners Union Bank of the Philippines (Union Bank) and Desi Tomas (collectively, the petitioners). The RTC found that the Metropolitan Trial Court, Branch 63, Makati City (MeTC-Makati City) did not commit any grave abuse of discretion in denying the motion to quash the information for perjury filed by Tomas.
Tomas was charged in court for perjury under Article 183 of the Revised Penal Code (RPC) for making a false narration in a Certificate against Forum Shopping. The Information against her reads:
That on or about the 13th day of March 2000 in the City of Makati, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, did then and there willfully, unlawfully and feloniously make untruthful statements under oath upon a material matter before a competent person authorized to administer oath which the law requires to wit: said accused stated in the Verification/Certification/Affidavit of merit of a complaint for sum of money with prayer for a writ of replevin docketed as [Civil] Case No. 342-00 of the Metropolitan Trial Court[,] Pasay City, that the Union Bank of the Philippines has not commenced any other action or proceeding involving the same issues in another tribunal or agency, accused knowing well that said material statement was false thereby making a willful and deliberate assertion of falsehood.
The accusation stemmed from petitioner Union Bank’s two (2) complaints for sum of money with prayer for a writ of replevin against the spouses Eddie and Eliza Tamondong and a John Doe. The first complaint, docketed as Civil Case No. 98-0717, was filed before the RTC, Branch 109, Pasay City on April 13, 1998. The second complaint, docketed as Civil Case No. 342-000, was filed onMarch 15, 2000 and raffled to the MeTC, Branch 47, Pasay City. Both complaints showed that Tomas executed and signed the Certification against Forum Shopping. Accordingly, she was charged of deliberately violating Article 183 of the RPC by falsely declaring under oath in the Certificate against Forum Shopping in the second complaint that she did not commence any other action or proceeding involving the same issue in another tribunal or agency.
Tomas filed a Motion to Quash, citing two grounds. First, she argued that the venue was improperly laid since it is the Pasay Citycourt (where the Certificate against Forum Shopping was submitted and used) and not the MeTC-Makati City (where the Certificate against Forum Shopping was subscribed) that has jurisdiction over the perjury case. Second, she argued that the facts charged do not constitute an offense because: (a) the third element of perjury – the willful and deliberate assertion of falsehood – was not alleged with particularity without specifying what the other action or proceeding commenced involving the same issues in another tribunal or agency; (b) there was no other action or proceeding pending in another court when the second complaint was filed; and (c) she was charged with perjury by giving false testimony while the allegations in the Information make out perjury by making a false affidavit.
The MeTC-Makati City denied the
Motion to Quash, ruling that it has jurisdiction over the case since the Certificate against Forum Shopping was notarized in Makati City. The MeTC-Makati City also ruled that the allegations in the Information sufficiently charged Tomas with perjury. The MeTC-Makati City subsequently denied Tomas’ motion for reconsideration.
The petitioners filed a petition
for certiorari before the RTC-Makati City to annul and set aside the MeTC-Makati City orders on the ground of grave abuse of discretion. The petitioners anchored their petition on the rulings in United States v. Canet and Ilusorio v. Bildner which ruled that venue and jurisdiction should be in the place where the false document was presented. The Assailed RTC Decision
In dismissing the petition for certiorari, the RTC-Makati City held:
[I]nsofar as the petitioner’s stance is concerned[,] the more recent case of [Sy Tiong Shiou v. Sy] (GR Nos. 174168 & 179438, March 30, 2009) however, reaffirms what has been the long standing view on the venue with respect to perjury cases. In this particular case[,] the high court reiterated the rule that the criminal action shall be instituted and tried in the court of the municipality or territory where the offense was committed, or where any of its essential ingredients occurred. It went on to declare that since the subject document[,] the execution of which was the subject of the charge[,] was subscribed and sworn to in Manila[,] then the court of the said territorial jurisdiction was the proper venue of the criminal action[.] x x x x x x x Given the present state of jurisprudence on the matter, it is not amiss to state that the city court of Makati City has jurisdiction to try and decide the case for perjury inasmuch as the gist of the complaint itself which constitute[s] the charge against the petitioner dwells solely on the act of subscribing to a false certification. On the other hand, the charge against the accused in the case of Ilusorio v. Bildner, et al., based on the complaint-affidavits therein[,] was not simply the execution of the questioned documents but rather the introduction of the false evidence through the subject documents before the court of Makati City. (emphasis ours)
The RTC-Makati City ruled that the MeTC-Makati City did not commit grave abuse of discretion since the order denying the Motion to Quash was based on jurisprudence later than Ilusorio. The RTC-Makati City also
observed that the facts in Ilusorio are different from the facts of the present case. Lastly, the RTC-Makati City ruled that the Rule 65 petition was improper since the petitioners can later appeal the decision in the principal case. The RTC-Makati City subsequently denied the petitioner’s motion for reconsideration.
The Petition The petitioners pray that we reverse the RTC-Makati City decision and quash the Information for perjury against Tomas. The petitioners contend that the Ilusorio ruling is more applicable to the present facts than our ruling in Sy Tiong Shiou v. Sy Chim. They argued that the facts in Ilusorio showed that the filing of the petitions in court containing the false statements was the essential ingredient that consummated the perjury. In Sy Tiong, the perjurious statements were made in a General Information Sheet (GIS) that was submitted to the Securities and Exchange Commission (SEC). Interestingly, Solicitor General Jose Anselmo I. Cadiz shared the petitioners’ view. In his Manifestation and Motion in lieu of Comment (which we hereby treat as the Comment to the petition), the Solicitor General also relied on Ilusorio and opined that the lis motain the crime of perjury is the deliberate or intentional giving of false evidence in the court where the evidence is material. The Solicitor General observed that the criminal intent to assert a falsehood under oath only became manifest before the MeTC-Pasay City. The Issue The case presents to us the issue of what the proper venue of perjury under Article 183 of the RPC should be – Makati City, where the Certificate against Forum Shopping was notarized, or Pasay City, where the Certification was presented to the trial court. The Court’s Ruling
We deny the petition and hold that the MeTC-Makati City is the proper venue and the proper court to take cognizance of the perjury case against the petitioners. Venue of Action and Criminal Jurisdiction
Venue is an essential element of jurisdiction in criminal cases. It determines not only the place where the criminal action is to be instituted, but also the court that has the jurisdiction to try and hear the case. The reason for this rule is two-fold. First, the jurisdiction of trial courts is limited to well-defined territories such that a trial court can only hear and try cases involving crimes committed within its territorial jurisdiction. Second, laying the venue in the locus criminis is grounded on the necessity and justice of having an accused on trial in the municipality of province where witnesses and other facilities for his defense are available.
Unlike in civil cases, a finding of
improper venue in criminal cases carries jurisdictional consequences. In determining the venue where the criminal action is to be instituted and the court which has jurisdiction over it, Section 15(a), Rule 110 of the 2000 Revised Rules of Criminal Procedure provides:
(a) Subject to existing laws,
the criminal action shall be instituted and tried in the court or municipality or territory where the offense was committed or where any of its essential ingredients occurred. [emphasis ours]
The above provision should be read in
light of Section 10, Rule 110 of the 2000 Revised Rules of Criminal Procedure which states:
Place of commission of the offense. – The complaint or information is sufficient if it can be understood from its allegations that the offense was committed or some of its essential ingredients occurred at some place within the jurisdiction of the court, unless the particular place where it was committed constitutes an essential element of the offense charged or is necessary for its identification. Both provisions categorically place the
venue and jurisdiction over criminal cases not only in the court where the offense was committed, but also where any of its essential ingredients took place. In other words, the venue of action and of jurisdiction are deemed sufficiently alleged where the Information states that the offense was committed or some of its essential ingredients occurred at a place within the territorial jurisdiction of the court. Information Charging Perjury
Section 5, Rule 7 of the 1997 Rules of
Civil Procedure, as amended, contains the requirement for a Certificate against Forum Shopping. The Certificate against Forum Shopping can be made either by a statement under oath in the complaint or initiatory pleading asserting a claim or relief; it may also be in a sworn certification annexed to the complaint or initiatory pleading. In both instances, the affiant is required to execute a statement under oath before a duly commissioned notary public or any competent person authorized to administer oath that: (a) he or she has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his or her
knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he or she should thereafter learn that the same or similar action or claim has been filed or is pending, he or she shall report that fact within five days therefrom to the court wherein his or her aforesaid complaint or initiatory pleading has been filed. In relation to the crime of perjury, the material matter in a Certificate against Forum Shopping is the truth of the required declarations which is designed to guard against litigants pursuing simultaneous remedies in different fora.
In this case, Tomas is charged with
the crime of perjury under Article 183 of the RPC for making a false Certificate against Forum Shopping. The elements of perjury under Article 183 are:
(a) That the accused made a statement under oath or executed an affidavit upon a material matter. (b) That the statement or affidavit was made before a competent officer, authorized to receive and administer oath. (c) That in the statement or affidavit, the accused made a willful and deliberate assertion of a falsehood. (d) That the sworn statement or affidavit containing the falsity is required by law or made for a legal purpose. (emphasis ours)
Where the jurisdiction of the court is being assailed in a criminal case on the ground of improper venue, the allegations in the complaint and information must be examined together with Section 15(a), Rule 110 of the 2000 Revised Rules of Criminal Procedure. On this basis, we find that the allegations in the Information sufficiently support a finding that the crime of perjury was committed by Tomas
within the territorial jurisdiction of the MeTC-Makati City.
The first element of the crime of perjury, the execution of the subject Certificate against Forum Shopping was alleged in the Information to have been committed in Makati City. Likewise, the second and fourth elements, requiring the Certificate against Forum Shopping to be under oath before a notary public, were also sufficiently alleged in the Information to have been made in Makati City:
That on or about the
13th day of March 2000 in the City of Makati, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, did then and there willfully, unlawfully and feloniously make untruthful statements under oath upon a material matter before a competent person authorized to administer oath which the law requires to wit: said accused stated in the Verification/Certification/Affidavit x x x.
We also find that the third element of willful and deliberate falsehood was also sufficiently alleged to have been committed inMakati City, not Pasay City, as indicated in the last portion of the Information:
[S]aid accused stated in the Verification/Certification/Affidavit of merit of a complaint for sum of money with prayer for a writ of replevin docketed as [Civil] Case No. 342-00 of the Metropolitan Trial Court[,] Pasay City, that the Union Bank of the Philippines has not commenced any other action
or proceeding involving the same issues in another tribunal or agency, accused knowing well that said material statement was falsethereby making a willful and deliberate assertion of falsehood. (underscoring ours) Tomas’ deliberate and intentional
assertion of falsehood was allegedly shown when she made the false declarations in the Certificate against Forum Shopping before a notary public in Makati City, despite her knowledge that the material statements she subscribed and swore to were not true. Thus, Makati City is the proper venue and MeTC-Makati City is the proper court to try the perjury case against Tomas, pursuant to Section 15(a), Rule 110 of the 2000 Revised Rules of Criminal Procedure as all the essential elements constituting the crime of perjury were committed within the territorial jurisdiction of Makati City, not Pasay City. Referral to the En Banc The present case was referred to the En Banc primarily to address the seeming conflict between the division rulings of the Court in the Ilusorio case that is cited as basis of this petition, and the Sy Tiong case that was the basis of the assailed RTC-Makati City ruling.
The Cited Ilusorio and Sy Tiong Cases
The subject matter of the perjury
charge in Ilusorio involved false statements contained in verified petitions filed with the court for the issuance of a new owner’s duplicate copies of certificates of title. The verified petitions containing the false statements were subscribed and sworn to in Pasig City, but were filed in Makati City and Tagaytay City. The question posed was: which court (Pasig City, Makati Cityand/or Tagaytay City)
had jurisdiction to try and hear the perjury cases?
We ruled that the venues of the action
were in Makati City and Tagaytay City, the places where the verified petitions were filed. The Court reasoned out that it was only upon filing that the intent to assert an alleged falsehood became manifest and where the alleged untruthful statement found relevance or materiality. We cited as jurisprudential authority the case of United States. v. Cañet which ruled:
It is immaterial where the affidavit was subscribed and sworn, so long as it appears from the information that the defendant, by means of such affidavit, "swore to" and knowingly submitted false evidence, material to a point at issue in a judicial proceeding pending in the Court of First Instance of Iloilo Province. The gist of the offense charged is not the making of the affidavit in Manila, but the intentional giving of false evidencein the Court of First Instance of Iloilo Province by means of such affidavit. [emphasis and underscoring deleted] In Sy Tiong, the perjured statements
were made in a GIS which was subscribed and sworn to in Manila. We ruled that the proper venue for the perjury charges was in Manila where the GIS was subscribed and sworn to. We held that the perjury was consummated inManila where the false statement was made. As supporting jurisprudence, we cited the case of Villanueva v. Secretary of Justice that, in turn, cited an American case entitled U.S. v. Norris. We ruled in Villanueva that –
Perjury is an obstruction of justice; its perpetration well may affect the dearest concerns of the parties before a tribunal. Deliberate material falsification under oath constitutes the crime of perjury, and the crime is complete when a witness' statement has once been made.
The Crime of Perjury: A Background
To have a better appreciation of the issue facing the Court, a look at the historical background of how the crime of perjury (specifically, Article 183 of the RPC) evolved in our jurisdiction. The RPC penalizes three forms of false testimonies. The first is false testimony for and against the defendant in a criminal case (Articles 180 and 181, RPC); the second is false testimony in a civil case (Article 182, RPC); and the third is false testimony in other cases (Article 183, RPC). Based on the Information filed, the present case involves the making of an untruthful statement in an affidavit on a material matter.
These RPC provisions, however, are not really the bases of the rulings cited by the parties in their respective arguments. The citedIlusorio ruling, although issued by this Court in 2008, harked back to the case of Cañet which was decided in 1915, i.e., before the present RPC took effect. Sy Tiong, on the other hand, is a 2009 ruling that cited Villanueva, a 2005 case that in turn cited United States v. Norris, a 1937 American case. Significantly, unlike Canet, Sy Tiong is entirely based on rulings rendered after the present RPC took effect.
The perjurious act in Cañet consisted
of an information charging perjury through the presentation in court of a motion
accompanied by a false sworn affidavit. At the time the Cañet ruling was rendered, the prevailing law on perjury and the rules on prosecution of criminal offenses were found in Section 3, Act No. 1697 of the Philippine Commission, and in Subsection 4, Section 6 of General Order No. 58 for the procedural aspect. Section 3 of Act No. 1697 reads: Sec. 3. Any person who, having taken oath before a competent tribunal, officer, or person, in any case in which a law of the Philippine Islands authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, disposition, or certificate by him subscribed is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true, is guilty of perjury, and shall be punished by a fine of not more than two thousand pesos and by imprisonment for not more than five years; and shall moreover, thereafter be incapable of holding any public office or of giving testimony in any court of the Philippine Islands until such time as the judgment against him is reversed.
This law was copied, with the necessary changes, from Sections 5392 and 5393 of the Revised Statutes of the United States. Act No. 1697 was intended to make the mere execution of a false affidavit punishable in our jurisdiction.
In turn, Subsection 4, Section 6 of
General Order No. 58 provided that the venue shall be the court of the place where the crime was committed.
As applied and interpreted by the
Court in Cañet, perjury was committed by the act of representing a false document in a judicial proceeding. The venue of action was
held by the Court to be at the place where the false document was presented since the presentation was the act that consummated the crime.
The annotation of Justices Aquino and
Griño-Aquino in their textbook on the RPC interestingly explains the history of the perjury provisions of the present RPC and traces as well the linkage between Act No. 1697 and the present Code. To quote these authors:
Art. 180 was taken from art. 318 of the Old Penal Code and art. 154 of Del Pan’s Proposed Correctional Code, while art. 181 was taken from art. 319 of the old Penal Code and Art. 157 of Del Pan’s Proposed Correctional Code. Said arts. 318 and 319, together with art. 321 of the old Penal Code, were impliedly repealed by Act 1697, the Perjury Law, passed on August 23, 1907, which in turn was expressly repealed by the Administrative Code of 1916, Act 2657. In view of the express repeal of Act 1697, arts. 318 and 321 of the old Penal Code were deemed revived. However, Act 2718 expressly revived secs. 3 and 4 of the Perjury Law. Art. 367 of the Revised Penal Code repealed Act Nos. 1697 and 2718. It should be noted that perjury under Acts 1697 and 2718 includes false testimony, whereas, under the Revised Penal Code, false testimony includes perjury. Our law on false testimony is of Spanish origin, but our law on perjury (art. 183 taken from sec. 3 of Act 1697) is derived from American statutes. The provisions of the old Penal Code on false testimony embrace perjury committed in court or in some contentious proceeding, while perjury as defined in Act 1697 includes the making of a false affidavit. The provisions of the Revised Penal Code on false testimony “are more severe and
strict than those of Act 1697” on perjury. [italics ours]
With this background, it can be
appreciated that Article 183 of the RPC which provides:
The penalty of arresto mayor in its maximum period to prision correccional in its minimum period shall be imposed upon any person, who knowingly makes untruthful statements and not being included in the provisions of the next preceding articles, shall testify under oath, or make an affidavit, upon any material matter before a competent person authorized to administer an oath in cases in which the law so requires. [emphasis supplied; emphases ours]
in fact refers to either of two punishable acts – (1) falsely testifying under oath in a proceeding other than a criminal or civil case; and (2) making a false affidavit before a person authorized to administer an oath on any material matter where the law requires an oath.
As above discussed, Sy Tiong –
decided under Article 183 of the RPC – essentially involved perjured statements made in a GIS that was subscribed and sworn to in Manila and submitted to the SEC in Mandaluyong City. Thus, the case involved the making of an affidavit, not an actual testimony in a proceeding that is neither criminal nor civil. From this perspective, the situs of the oath, i.e., the place where the oath was taken, is the place where the offense was committed. By implication, the proper venue would have been the City ofMandaluyong – the site of the SEC – had the charge involved an actual testimony made before the SEC.
In contrast, Cañet involved
the presentation in court of a motion supported
and accompanied by an affidavit that contained a falsity. With Section 3 of Act No. 1697 as basis, the issue related to the submission of the affidavit in a judicial proceeding. This came at a time when Act No. 1697 was the perjury law, and made no distinction between judicial and other proceedings, and at the same time separately penalized the making of false statements under oath (unlike the present RPC which separately deals with false testimony in criminal, civil and other proceedings, while at the same time also penalizing the making of false affidavits). Understandably, the venue should be the place where the submission was made to the court or the situs of the court; it could not have been the place where the affidavit was sworn to simply because this was not the offense charged in the Information.
The case of Ilusorio cited
the Cañet case as its authority, in a situation where the sworn petitions filed in court for the issuance of duplicate certificates of title (that were allegedly lost) were the cited sworn statements to support the charge of perjury for the falsities stated in the sworn petitions. The Court ruled that the proper venue should be the Cities of Makati and Tagaytay because it was in the courts of these cities “where the intent to assert an alleged falsehood became manifest and where the alleged untruthful statement finds relevance or materiality in deciding the issue of whether new owner’s duplicate copies of the [Certificate of Condominium Title] and [Transfer Certificates of Title] may issue.” To the Court, “whether the perjurious statements contained in the four petitions were subscribed and sworn in Pasig is immaterial, the gist of the offense of perjury being the intentional giving of false statement,” citingCañet as authority for its statement.
The statement in Ilusorio may have
partly led to the present confusion on venue because of its very categorical tenor in pointing to the considerations to be made in the determination of venue; it leaves the impression that the place where the oath was taken is not at all a material consideration,
forgetting that Article 183 of the RPC clearly speaks of two situations while Article 182 of the RPC likewise applies to false testimony in civil cases.
The Ilusorio statement would have
made perfect sense had the basis for the charge been Article 182 of the RPC, on the assumption that the petition itself constitutes a false testimony in a civil case. The Cañet ruling would then have been completely applicable as the sworn statement is used in a civil case, although no such distinction was made under Cañet because the applicable law at the time (Act No. 1697) did not make any distinction.
If Article 183 of the RPC were to be
used, as what in fact appears in the Ilusorio ruling, then only that portion of the article, referring to the making of an affidavit, would have been applicable as the other portion refers to false testimony in other proceedings which a judicial petition for the issuance of a new owner’s duplicate copy of a Certificate of Condominium Title is not because it is a civil proceeding in court. As a perjury based on the making of a false affidavit, what assumes materiality is the site where the oath was taken as this is the place where the oath was made, in this case, Pasig City.
Procedurally, the rule on venue of
criminal cases has been subject to various changes from the time General Order No. 58 was replaced by Rules 106 to 122 of the Rules of Court on July 1, 1940. Section 14, Rule 106 of the Rules of Court provided for the rule on venue of criminal actions and it expressly included, as proper venue, the place where any one of the essential ingredients of the crime took place. This change was followed by the passage of the 1964 Rules of Criminal Procedure, the 1985 Rules of Criminal Procedure,and the 2000 Revised Rules of Criminal Procedure which all adopted the 1940 Rules of Criminal Procedure’s expanded venue of criminal actions. Thus, the venue of criminal cases is not only in the place where the offense
was committed, but also where any of its essential ingredients took place.
In the present case, the Certification against Forum Shopping was made integral parts of two complaints for sum of money with prayer for a writ of replevin against the respondent spouses Eddie Tamondong and Eliza B. Tamondong, who, in turn, filed a complaint-affidavit against Tomas for violation of Article 183 of the RPC. As alleged in the Information that followed, the criminal act charged was for the execution by Tomas of an affidavit that contained a falsity.
Under the circumstances, Article 183
of the RPC is indeed the applicable provision; thus, jurisdiction and venue should be determined on the basis of this article which penalizes one who “make[s] an affidavit, upon any material matter before a competent person authorized to administer an oath in cases in which the law so requires.” The constitutive act of the offense is the making of an affidavit; thus, the criminal act is consummated when the statement containing a falsity is subscribed and sworn before a duly authorized person.
Based on these considerations, we
hold that our ruling in Sy Tiong is more in accord with Article 183 of the RPC and Section 15(a), Rule 110 of the 2000 Revised Rules of Criminal Procedure. To reiterate for the guidance of the Bar and the Bench, the crime of perjury committed through the making of a false affidavit under Article 183 of the RPC is committed at the time the affiant subscribes and swears to his or her affidavit since it is at that time that all the elements of the crime of perjury are executed. When the crime is committed through false testimony under oath in a proceeding that is neither criminal nor civil, venue is at the place where the testimony under oath is given. If in lieu of or as supplement to the actual testimony made in a proceeding that is neither criminal nor civil, a written sworn statement is submitted, venue may either be at the place where the sworn statement is submitted or where the oath was
taken as the taking of the oath and the submission are both material ingredients of the crime committed. In all cases, determination of venue shall be based on the acts alleged in the Information to be constitutive of the crime committed.
WHEREFORE, premises considered,
we hereby DENY the petition for lack of merit. Costs against the petitioners.
CLASSIFICATION OF JURISDICTION
Republic of the PhilippinesSUPREME COURTManila
G.R. Nos. 159104-05 October 5, 2007
RODOLFO M. CUENCA and CUENCA INVESTMENT CORP., petitioners, vs.THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, INDEPENDENT REALTY CORP., and UNIVERSAL HOLDINGS CORP., respondents.
D E C I S I O N
VELASCO, JR., J.:
In this Petition for Review on Certiorari under Rule 45, petitioners assail the January 6, 2003 Decision1 of the Court of Appeals (CA) in consolidated cases CA-G.R. CV No. 603382 and CA-G.R. SP No. 496863 which upheld the jurisdiction of Sandiganbayan over a dispute involving the transfer of stocks and subscription rights of respondent Universal Holdings Corporation (UHC), a sequestered company, in favor of petitioners Rodolfo M. Cuenca and Cuenca Investment Corporation (CIC); and its July 15, 2003 Resolution4 denying petitioners’ Motion for Reconsideration.5 The consolidated cases originated from Civil Case No. 91-2721 entitled Rodolfo M. Cuenca, et al. v. Independent Realty Corp., et al. filed before the Makati City Regional Trial Court (RTC), Branch 61––CA-G.R. CV No. 60338 being an appeal from the April 23, 1998 Decision rendered by the Makati City RTC, and CA-G.R. SP No. 49686 being a special civil action formerly filed as a petition for certiorari before the Supreme Court, but was remanded to the CA for a review of the denial of the motion for intervention filed by respondent Presidential Commission on Good Government (PCGG).
Respondent UHC is a wholly owned subsidiary of Independent Realty Corporation (IRC). UHC had an authorized capital stock of PhP 200,000,000 of which 401,995 shares worth PhP 40,199,500 were subscribed and PhP 10,050,000 was paid up by IRC. Five stockholders of IRC held qualifying shares in UHC and served in its Board of Directors. UHC became an inactive holding company until the later months of 1978.
In 1978, petitioner Rodolfo M. Cuenca and his family’s holding company, petitioner CIC, negotiated and reached an agreement with respondents IRC and UHC, whereby petitioners Cuenca and CIC would purchase all the shares of stock and subscription rights of IRC in UHC for PhP 10,000,000 and assume IRC’s unpaid subscription of PhP 30,000,000. Petitioners
Cuenca and CIC were then the controlling stockholders of the Construction and Development Corporation of the Philippines (CDCP), now the Philippine National Construction Corporation (PNCC), Sta. Ines Melale Forest Products Corporation (Sta. Ines), and Resort Hotels Corporation (Resort Hotels). In order to build up UHC as his flagship company, petitioner Cuenca transferred to UHC the shares of stocks in CDCP, Sta. Ines, and Resort Hotels worth PhP 67,233,405, with UHC assuming Cuenca’s various bank obligations, some or all of which were secured by pledges or liens on the stocks.
On October 21, 1978, petitioner Cuenca was elected Chairperson and President of UHC at a special stockholders’ meeting in accordance with the acquisition plan, and through UHC, Cuenca continued to control and manage CDCP, Sta. Ines, and Resort Hotels. Pursuant to the acquisition plan and agreement with IRC, Cuenca and CIC transferred their shares of stock in CDCP, Sta. Ines, and Resort Hotels to UHC, which in turn paid PhP 10,000,000 to IRC. In addition, petitioners assumed IRC’s unpaid subscription of PhP 30,000,000 in UHC. The only remaining matter to be accomplished was the transfer of the stocks and subscription rights of IRC in UHC to petitioners, but despite demand, IRC did not comply.
In 1986, the instant controversy between petitioners and respondent IRC was overtaken by dramatic political events. President Marcos was ousted in a bloodless revolution and left behind an unbelievably large amount of funds and assets that were sequestered by the new government of President Aquino through PCGG. In July 1987, because of Marcos nominee Jose Yao Campos’ sworn statement, respondent PCGG directed Santos Luis Diego, President of IRC, to dissolve all the boards of directors of IRC’s fully-owned subsidiaries. A year later, it turned over IRC and its subsidiary, UHC, to the Asset Privatization Trust (APT) for rehabilitation, conservation, or disposition, enabling APT to assign one share of stock in
IRC and in each of its 25 subsidiaries, including UHC, to Paterno Bacani, Jr.
Amidst this state of affairs, petitioners filed the October 2, 1991 Complaint6 against IRC, UHC, APT, and Bacani before the Makati City RTC, which was docketed as Civil Case No. 91-2721, to compel IRC to transfer all its stock and subscription rights in UHC to them or order IRC and UHC to return and re-convey to them all the assets and shares of stock in CDCP, Sta. Ines, and Resort Hotels that they had transferred to UHC.
The Ruling of the Regional Trial Court
On November 29, 1991, respondents IRC and UHC filed a Joint Motion to Dismiss7 on the ground of lack of jurisdiction, claiming that the exclusive jurisdiction was lodged in the Sandiganbayan and not in the RTC. Meanwhile, on December 9, 1991, respondents IRC and UHC, represented by respondent PCGG, filed another Motion to Dismiss8 on the ground of litis pendentia as petitioner Cuenca had a pending case filed by respondent PCGG before the Sandiganbayan and docketed as Civil Case No. 0016 entitled Republic of the Philippines v. Rodolfo M. Cuenca, et al., which involved respondent UHC and several other corporations beneficially owned or controlled by petitioner Cuenca for and in behalf of the Marcoses. Meanwhile, in the May 14, 1992 Order, the trial court dismissed the Complaint against APT and Bacani, and dropped them as defendants on October 16, 1992.9 On March 25, 1993, the trial court, however, denied both motions to dismiss on the ground that respondent PCGG was not impleaded in the instant case and that the transaction involved specific performance of a contract entered into in 1978 before the PCGG came into existence.
Consequently, on August 19, 1993, respondents IRC and UHC filed their Answer with Counterclaim.10 Before pre-trial, petitioners sent their Interrogatories11 to IRC and UHC, which were answered by IRC on July
25, 1994.12 After considerable time had elapsed without UHC filing its answer to the interrogatories, and unsatisfied with IRC’s answer not accomplished, duly signed, and sworn to by a competent and responsible IRC officer as only IRC’s counsel signed it, petitioners filed on August 30, 1994 a Motion to Compel UHC to Answer Interrogatories13 to which the trial court issued two related Orders, the first dated January 17, 1995 directing IRC to submit proper and complete answers and UHC to answer the interrogatories,14 and the second dated February 10, 1995 granting respondents IRC and UHC an extension of 15 days to file their answers to the interrogatories.15
On September 29, 1995, petitioners filed a Motion to Declare Defendants in Default16 for non-compliance with Section 5 of Rule 29,17 Revised Rules of Civil Procedure. Respondents IRC and UHC filed their respective Answers to Interrogatories18 on October 17, 1995 or only after the motion to declare them in default was filed and served. Consequently, the trial court issued its February 7, 1996 Order of default, which also granted petitioners the right to adduce their evidence ex-parte.19 On September 9, 1996, the trial court likewise denied20 the Motion for Reconsideration and/or Lift Order of Default21 filed by respondents IRC and UHC.
Subsequently, respondent PCGG filed its Motion for Leave to Intervene with Motion to Dismiss on December 18, 1996, which was denied by the trial court only on April 20, 1998.22
Parenthetically, on October 22, 1996, petitioners filed an Urgent Ex-Parte Application for Receivership which was granted through an October 28, 1996 Order, appointing Jaime C. Laya as UHC’s receiver. After posting the requisite bond, the trial court issued on November 5, 1996 an Order approving the bond, and receiver Laya submitted his November 13, 1996 Oath of Office.
Petitioners adduced their evidence and presented the testimonies of petitioner Rodolfo Cuenca and Lourdes G. Labao, a supervisor of Caval Securities Registry, Inc., who testified on the transfers of shares of stock of CDCP, Sta. Ines, and Resort Hotels from Cuenca and CIC to UHC. On March 20, 1998, petitioners filed their Formal Offer of Exhibits.23
On April 23, 1998, the trial court rendered a Decision in favor of petitioners. The fallo reads:
Accordingly, JUDGMENT is hereby rendered in favor of plaintiffs and as against defendants IRC and UHC, who are hereby ordered to immediately return and reconvey to plaintiffs all of the shares of stocks and stock subscriptions in Philippine National Construction Corporation (formerly known as Construction and Development [Corporation] of the Philippines), Resort Hotels Corporation and Sta. Ines Melale Forest Products Corporation, including those transferred by plaintiffs to UHC such as the 24,780,746 shares in CDCP/PNCC, the 468,062 shares in Resort Hotels Corporation and the 23,748,932 shares in Sta. Ines Melale Forest Products Corporation plus all fruits thereof such as stock and cash dividends and stock splits.
The plaintiffs’ prayer for damages and attorney’s fees are hereby DENIED.
The counterclaim of defendants UHC and IRC for damages and attorney’s fees is hereby DENIED for lack of evidence.
The appointment of JAIME C. LAYA as Receiver of defendant UHC is hereby MAINTAINED until finality of this Decision and full execution of this Decision or full compliance herewith by defendants.24
From the adverse Decision, respondents IRC and UHC appealed to the CA, which was docketed as CA-G.R. CV No. 60338. On the other hand, after the trial court denied
respondent PCGG’s Motion for Reconsideration25 through its July 22, 1998 Order,26 PCGG brought the instant case before this Court in G.R. No. 13516. Said PCGG special civil action was remanded to the CA and docketed as CA-G.R. SP No. 49686 entitled Presidential Commission on Good Government (PCGG) v. Hon. Fernando V. Gorospe, as Presiding Judge RTC of Makati City, Branch 61, et al. In the petition before the CA, PCGG also assailed the April 20, 1998 Order of the trial court denying its motion for intervention in Civil Case No. 91-2721. Thus, the petition for certiorari (CA-G.R. SP No. 49686) and the appeal (CA-G.R. CV No. 60338) were consolidated.
The Ruling of the Court of Appeals
Through its assailed Decision, the appellate court reversed the Makati City RTC’s Decision, granted the petition filed by PCGG, and dismissed the instant case for lack of jurisdiction. The appellate court ratiocinated that the Sandiganbayan had exclusive jurisdiction to hear the instant case involving petitioners and the sequestered respondents corporations. It held that the recourse of parties, petitioners in the instant case, who wish to challenge respondent PCGG’s acts or orders, would be to the Sandiganbayan pursuant to Executive Order No. (EO) 14 issued on May, 7, 1986,27 which ordained that this body alone had the original jurisdiction over all of respondent PCGG’s cases, civil or criminal, citing PCGG v. Peña28 as authority. The appellate court applied Republic v. Sandiganbayan29 on the issue of sequestration by respondent PCGG of UHC, CIC, and CDCP (now PNCC) against petitioner Cuenca, the Marcos spouses, their relatives, friends, and colleagues.
The CA applied the doctrine of conclusiveness of judgment that any rule which had already been authoritatively established in a previous litigation should be deemed the law of the case between the same parties. As such, the
appellate court adopted the ruling in Republic on the continuing force of the order of sequestration and concluded that, indeed, respondent UHC is a sequestered company. The CA did not find merit in petitioners’ contention that sequestration did not affect their transaction with respondents as it arose before PCGG was created.
Even if petitioners had initially a cause of action, the CA ruled that the complaint was certainly affected by the passage of the law charging respondent PCGG with the performance of certain tasks over the subject matter of the action; and that the same subject matter had become subject to the new exclusive jurisdiction vested in the Sandiganbayan at the time petitioners filed the instant case.
Aggrieved, petitioners filed their Motion for Reconsideration30 which was denied by the assailed July 15, 2003 CA Resolution.31 Hence, they filed this petition for review.
Petitioners raise the following grounds for our consideration:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DISMISSING CIVIL CASE NO. 91-2721 BELOW ON THE GROUND THAT THE SANDIGANBAYAN HAS EXCLUSIVE JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.
THE FACT ALONE THAT RESPONDENT UHC MAY HAVE BEEN SEQUESTERED DID NOT DIVEST THE REGIONAL TRIAL COURT OF ITS JURISDICTION OVER THE SUBJECT MATTER OF PETITIONERS’ COMPLAINT IN CIVIL CASE NO. 91-2721 BELOW.
THE COURT OF APPEALS’ RELIANCE ON THE CASE OF REPUBLIC VS. SANDIGANBAYAN, 240 SCRA 376 (1995), IS MISPLACED.
THE COURT OF APPEALS’ APPLICATION OF THE DOCTRINE OF CONCLUSIVENESS OF JUDGMENT IS ERRONEOUS.32
The Court’s Ruling
The petition must fail.
The core issue before us is that of jurisdiction. In gist, petitioners argue that UHC was not sequestered, and even if it was sequestered, the trial court still has the jurisdiction to hear the case for rescission of contract or specific performance, and conclude that the doctrine of conclusiveness of judgment does not apply in the instant case.
Issue of Jurisdiction
Jurisdiction is defined as the power and authority of a court to hear, try, and decide a case.33 Jurisdiction over the subject matter is conferred by the Constitution or by law while jurisdiction over the person is acquired by his/her voluntary submission to the authority of the court or through the exercise of its coercive processes. Jurisdiction over the res is obtained by actual or constructive seizure placing the property under the orders of the court.34
We are primarily concerned here with the first kind of jurisdiction, that is, jurisdiction over the subject matter.
Petitioners contend that even if UHC was indeed sequestered, jurisdiction over the subject matter of petitioners’ Complaint for
enforcement or rescission of contract between petitioners and respondents belonged to the RTC and not the Sandiganbayan. Petitioners cited Philippine Amusement and Gaming Corporation v. Court of Appeals,35involving Philippine Casino Operators Corporation (PCOC) which was sequestered on March 19, 1986. In said case, this Court held that the fact of sequestration alone did not automatically oust the RTC of jurisdiction to decide upon the question of ownership of the disputed gaming and office equipment as PCGG must be a party to the suit in order that the Sandiganbayan’s exclusive jurisdiction may be correctly invoked, and as Section 236 of EO 14 was duly applied in PCGG v. Peña37 and PCGG v. Nepomuceno,38 which ineluctably spoke of respondent PCGG as a party-litigant.
Likewise, petitioners cited Holiday Inn (Phils.), Inc. v. Sandiganbayan,39 which also involved a sequestered company, New Riviera Hotel and Development Co., Inc. (NRHDCI), where this Court held that there is a distinction between an action for the recovery of ill-gotten wealth, as well as all incidents arising from, incidental to, or related to such cases, and cases filed by those who wish to question or challenge respondent PCGG’s acts or orders in such cases vis-à-vis ordinary civil cases that do not pertain to the Sandiganbayan. As such, petitioners contend that the instant ordinary civil case for the enforcement or rescission of the 1978 contract between petitioners and respondents UHC and IRC is distinct from and has absolutely no bearing with the unrelated issue of the sequestration of respondents UHC and IRC. Thus, petitioners strongly contend that the trial court indeed had jurisdiction over the instant case. Besides, petitioners point out that PCGG was not impleaded as a defendant in Civil Case No. 91-2721, and that the Complaint "does not question the PCGG’s alleged sequestration of respondent UHC x x x or any other act or order of the PCGG."40
Sandiganbayan has exclusive jurisdiction over the instant case
A rigorous examination of the antecedent facts and existing records at hand shows that Sandiganbayan has exclusive jurisdiction over the instant case.
Thus, the petition must fail for the following reasons:
First, it is a fact that the shares of stock of UHC and CDCP, the subject matter of Civil Case No. 91-2721 before the Makati City RTC, were also the subject matter of an ill-gotten wealth case, specifically Civil Case No. 0016 before the Sandiganbayan. In Civil Case No. 91-2721 of the Makati City RTC, petitioners prayed for a judgment either transferring the UHC shares or restoring and reconveying the PNCC shares to them. In the event a final judgment is rendered in said Makati City RTC case in favor of petitioners, then such adjudication tends to render moot and academic the judgment to be rendered in Sandiganbayan Civil Case No. 0016 considering that the legal ownership of either the UHC or PNCC shares would now be transferred to petitioners Rodolfo Cuenca and CIC. Such adverse judgment would run counter to the rights of ownership of the government over the UHC and PNCC shares in question. It must be remembered that on March 21, 1986, a Sworn Statement41 executed by Mr. Jose Y. Campos in Vancouver, Canada, whereby Mr. Campos, a crony and close business associate of the deposed President Marcos, named and identified IRC and UHC (a wholly-owned subsidiary of IRC) as among the several corporations organized, established, and managed by him and other business associates for and in behalf of the former President Marcos. Subsequently, the UHC and IRC shares were surrendered and turned over by Mr. Campos to PCGG, transferring, in effect, the ownership of the shares to the Government.
Moreover, inasmuch as UHC was impleaded in Civil Case No. 0016 as a defendant and was listed among the corporations beneficially owned or controlled by petitioner Cuenca, the issue of the latter’s right to acquire ownership
of UHC shares is inexorably intertwined with the right of the Republic of the Philippines, through PCGG, to retain ownership of said UHC shares.
It must be borne in mind that the Sandiganbayan was created in 1978 pursuant to Presidential Decree No. (PD) 1606.42 Said law has been amended during the interim period after the Edsa Revolution of 1986 and before the 1987 Constitution was drafted, passed, and ratified. Thus, the executive issuances during such period before the ratification of the 1987 Constitution had the force and effect of laws. Specifically, then President Corazon C. Aquino issued the following Executive Orders which amended PD 1606 in so far as the jurisdiction of the Sandiganbayan over civil and criminal cases instituted and prosecuted by the PCGG is concerned, viz:
a) EO 1, entitled "Creating the Presidential Commission on Good Government," dated February 28, 1986;
b) EO 2, entitled "Regarding the Funds, Moneys, Assets, and Properties Illegally Acquired or Misappropriated by Former President Ferdinand E. Marcos, Mrs. Imelda Romualdez Marcos, Their Close Relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees," dated March 12, 1986;
c) EO 14, entitled "Defining the Jurisdiction over Cases Involving the Ill-gotten Wealth of Former President Ferdinand E. Marcos, Mrs. Imelda R. Marcos, Members of their Immediate Family, Close Relatives, Subordinates, Close and/or Business Associates, Dummies, Agents and Nominees," dated May 7, 1986; and
d) EO 14-A, entitled "Amending Executive Order No. 14," dated August 18, 1986.
Bearing on the jurisdiction of the Sandiganbayan over cases of ill-gotten wealth, EO 14, Secs. 1 and 2 provide:
SECTION 1. Any provision of the law to the contrary notwithstanding, the Presidential Commission on Good Government with the assistance of the Office of the Solicitor General and other government agencies, is hereby empowered to file and prosecute all cases investigated by it under Executive Order No. 1, dated February 28, 1986 and Executive Order No. 2, dated March 12, 1986, as may be warranted by its findings.
SECTION 2. The Presidential Commission on Good Government shall file all such cases, whether civil or criminal, with the Sandiganbayan, which shall have exclusive and original jurisdiction thereof. (Emphasis supplied.)
Notably, these amendments had been duly recognized and reflected in subsequent amendments to PD 1606, specifically Republic Act Nos. 797543 and 8249.44
In the light of the foregoing provisions, it is clear that it is the Sandiganbayan and not the Makati City RTC that has jurisdiction over the disputed UHC and PNCC shares, being the alleged "ill-gotten wealth" of former President Ferdinand E. Marcos and petitioner Cuenca. The fact that the Makati City RTC civil case involved the performance of contractual obligations relative to the UHC shares is of no importance. The benchmark is whether said UHC shares are alleged to be ill-gotten wealth of the Marcoses and their perceived cronies. More importantly, the interests of orderly administration of justice dictate that all incidents affecting the UHC shares and PCGG’s right of supervision or control over the UHC must be addressed to and resolved by the Sandiganbayan. Indeed, the law and courts frown upon split jurisdiction and the resultant multiplicity of suits, which result in much lost
time, wasted effort, more expenses, and irreparable injury to the public interest.
Second, the UHC shares in dispute were sequestered by respondent PCGG. Sequestration is a provisional remedy or freeze order issued by the PCGG designed to prevent the disposal and dissipation of ill-gotten wealth.45 The power to sequester property means to
place or cause to be placed under [PCGG’s] possession or control said property, or any building or office wherein any such property or any records pertaining thereto may be found, including business enterprises and entities, for the purpose of preventing the destruction of, and otherwise conserving and preserving the same, until it can be determined, through appropriate judicial proceedings, whether the property was in truth ill-gotten. (Silverio v. PCGG, 155 SCRA 60 ).46
Considering that the UHC shares were already sequestered, enabling the PCGG to exercise the power of supervision, possession, and control over said shares, then such power would collide with the legal custody of the Makati City RTC over the UHC shares subject of Civil Case No. 91-2721. Whatever the outcome of Civil Case No. 91-2721, whether from enforcement or rescission of the contract, would directly militate on PCGG’s control and management of IRC and UHC, and consequently hamper or interfere with its mandate to recover ill-gotten wealth. As aptly pointed out by respondents, petitioners’ action is inexorably entwined with the Government’s action for the recovery of ill-gotten wealth––the subject of the pending case before the Sandiganbayan. Verily, the transfer of shares of stock of UHC to petitioners or the return of the shares of stock of CDCP (now PNCC) will wreak havoc on the sequestration case as both UHC and CDCP are subject of sequestration by PCGG.
Third, Philippine Amusement and Gaming Corporation and Holiday Inn (Phils.), Inc.47 are not analogous to the case at bar. The first dealt with ownership of gaming and office equipment, which is distinct from and will not impact on the sequestration issue of PCOC. The second dealt with an ordinary civil case for performance of a contractual obligation which did not in any way affect the sequestration proceeding of NRHDCI; thus, the complaint-in-intervention of Holiday Inn (Phils.), Inc. was properly denied for lack of jurisdiction over the subject matter.
In both cases cited by petitioners, there was a substantial distinction between the sequestration proceedings and the subject matter of the actions. This does not prevail in the instant case, as the ownership of the shares of stock of the sequestered companies, UHC and CDCP, is the subject matter of a pending case and thus addressed to the exclusive jurisdiction of the Sandiganbayan.
Sec. 2 of EO 14 pertinently provides: "The Presidential Commission on Good Government shall file all such cases, whether civil or criminal, with the Sandiganbayan, which shall have exclusive and original jurisdiction thereof."
The above proviso has been squarely applied in Peña,48 where this Court held that the exclusive jurisdiction conferred on the Sandiganbayan would evidently extend not only to the principal causes of action, that is, recovery of alleged ill-gotten wealth, but also to all incidents arising from, incidental to, or related to such cases, including a dispute over the sale of the shares, the propriety of the issuance of ancillary writs of relative provisional remedies, and the sequestration of the shares, which may not be made the subject of separate actions or proceedings in another forum. Indeed, the issue of the ownership of the sequestered companies, UHC and PNCC, as well as IRC’s ownership of them, is undeniably related to the recovery of the alleged ill-gotten
wealth and can be squarely addressed via the exclusive jurisdiction of the Sandiganbayan.
Fourth, while it is clear that the exclusive jurisdiction of the Sandiganbayan only encompasses cases where PCGG is impleaded, such requirement is satisfied in the instant case. The appellate court clearly granted PCGG’s petition for certiorari in CA-G.R. SP No. 49686, assailing the trial court’s denial of its Motion for Leave to Intervene with Motion to Dismiss. Thus, the trial court’s April 20, 1998 Order was reversed and set aside by the appellate court through its assailed Decision. Consequently, PCGG was granted the right to intervene and thus became properly impleaded in the instant case. Without doubt, the trial court has no jurisdiction to hear and decide Civil Case No. 91-2721.
Respondent UHC duly sequestered by PCGG
The trial court ruled that respondent PCGG could not stop the transfer of the shares of respondent UHC in CDCP to petitioners as there was no proof of sequestration except a writ of sequestration of Cuenca’s stocks in CDCP. On the other hand, petitioners contend that the appellate court’s reliance on Republic49 is misplaced. They point out that neither PCGG nor respondent corporations relied on said case. Besides, petitioners contend that the Court’s statements in said case did not constitute a ruling but mere references to unproven allegations by PCGG in its complaint against Cuenca in Sandiganbayan Civil Case No. 0016; and as such, it cannot be relied upon to hold that UHC was a sequestered corporation. As it is, petitioners conclude that it was a mere obiter dictum which was not essential to the disposition of the aforecited case and thus, it is not binding upon the parties for purposes of res judicata or conclusiveness of judgment.
We are not moved by petitioners’ submission.
While it may be true that in Republic, our statement on Civil Case No. 0016, as cited by PCGG, refers to the allegations in the complaint filed by PCGG against petitioner Cuenca,50 we nonetheless stated in said case the fact of the sequestration of the assets and records of Rodolfo Cuenca, UHC, CIC, CDCP, San Mariano Mining Corp., etc. on May 23, 1986 and July 23, 1987. We took factual notice of the sequestration of various companies and properties in said case, thus:a
III. Orders of Sequestration issued by PCGG
During 1986 and 1987 numerous orders of sequestration, freezing or provisional takeover of companies or properties, real or personal, were issued and implemented. Among those were the orders handed out against the firms or assets hereunder listed, with the dates of sequestration, freezing or take-over, to wit:
SUBJECTS/OBJECTS OF SEQUESTRATION DATE
x x x x
i. Assets and records of Rodolfo Cuenca, May 23, 1986,Universal Holdings Corp., Cuenca July 23, 1987Investment Corporation, PhilippineNational Construction Corp. (formerlyCDCP), San Mariano Mining Corp., etc.51
From the foregoing account, we concluded that UHC had indeed been sequestered by the PCGG in 1986 and 1987. Consequently, the appellate court properly applied Republic as basis for its finding that UHC was a sequestered company. Since the issue of sequestration has been resolved, we see no need to delve into the issue of conclusiveness of judgment. Suffice it to say that with the unequivocal finding that UHC was indeed sequestered, then it is the Sandiganbayan, not
the Makati City RTC, that has exclusive jurisdiction over the subject matter of Civil Case No. 91-2721.
WHEREFORE, the instant petition is DISMISSED for lack of merit. The January 6, 2003 Decision and July 15, 2003 Resolution of the CA in CA-G.R. CV No. 60338 and CA-G.R. SP No. 49686 are AFFIRMED in toto. No costs.
Republic of the PhilippinesSUPREME COURTManila
G.R. No. 163445 December 18, 2007
ASIA INTERNATIONAL AUCTIONEERS, INC. and SUBIC BAY MOTORS CORPORATION, petitioners, vs.HON. GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of the Bureau of Internal Revenue (BIR), THE REGIONAL DIRECTOR, BIR, Region III, THE REVENUE DISTRICT OFFICER, BIR, Special Economic Zone, and OFFICE OF THE SOLICITOR GENERAL, respondents.
D E C I S I O N
At bar is a petition for review on certiorari seeking the reversal of the decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 79329 declaring the Regional Trial Court (RTC) of Olongapo City, Branch 74, without jurisdiction over Civil Case No. 275-0-2003.
The facts are undisputed.
Congress enacted Republic Act (R.A.) No. 7227 creating the Subic Special Economic Zone (SSEZ) and extending a number of economic or tax incentives therein. Section 12 of the law provides:
(a) Within the framework and subject to the mandate and limitations of the Constitution and the pertinent provisions of the Local Government Code, the [SSEZ] shall be developed into a self-sustaining, industrial, commercial, financial and investment center to generate employment opportunities in and around the zone and to attract and promote productive foreign investments;
(b) The [SSEZ] shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the [SSEZ], as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment. However, exportation or removal of goods from the territory of the [SSEZ] to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines;
(c) The provision of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national, shall be imposed within the [SSEZ]. In lieu of paying taxes, three percent (3%) of the gross income earned by all businesses and enterprise within the [SSEZ] shall be remitted to the National Government, one percent (1%) each to the local government units affected by the declaration of the zone in proportion to their population area, and other factors. In addition, there is hereby established a development fund of one percent (1%) of the gross income earned by
all business and enterprise within the [SSEZ] to be utilized for the development of municipalities outside the City of Olongapo and the Municipality of Subic, and other municipalities contiguous to the base areas.
In case of conflict between national and local laws with respect to tax exemption privileges in the [SSEZ], the same shall be resolved in favor of the latter;
(d) No exchange control policy shall be applied and free markets for foreign exchange, gold, securities and future shall be allowed and maintained in the [SSEZ]; (emphasis supplied)
On January 24, 1995, then Secretary of Finance Roberto F. De Ocampo, through the recommendation of then Commissioner of Internal Revenue (CIR) Liwayway Vinzons-Chato, issued Revenue Regulations [Rev. Reg.] No. 1-95,2 providing the "Rules and Regulations to Implement the Tax Incentives Provisions Under Paragraphs (b) and (c) of Section 12, [R.A.] No. 7227, [o]therwise known as the Bases Conversion and Development Act of 1992." Subsequently, Rev. Reg. No. 12-973 was issued providing for the "Regulations Implementing Sections 12(c) and 15 of [R.A.] No. 7227 and Sections 24(b) and (c) of [R.A.] No. 7916 Allocating Two Percent (2%) of the Gross Income Earned by All Businesses and Enterprises Within the Subic, Clark, John Hay, Poro Point Special Economic Zones and other Special Economic Zones under PEZA." On September 27, 1999, Rev. Reg. No. 16-994 was issued "Amending [RR] No. 1-95, as amended, and other related Rules and Regulations to Implement the Provisions of paragraphs (b) and (c) of Section 12 of [R.A.] No. 7227, otherwise known as the ‘Bases Conversion and Development Act of 1992’ Relative to the Tax Incentives Granted to Enterprises Registered in the Subic Special Economic and Freeport Zone."
On June 3, 2003, then CIR Guillermo L. Parayno, Jr. issued Revenue Memorandum Circular (RMC) No. 31-2003 setting the "Uniform Guidelines on the Taxation of Imported Motor Vehicles through the Subic Free Port Zone and Other Freeport Zones that are Sold at Public Auction." The assailed portions of the RMC read:
II. Tax treatments on the transactions involved in the importation of motor vehicles through the SSEFZ and other legislated Freeport zones and subsequent sale thereof through public auction.—Pursuant to existing revenue issuances, the following are the uniform tax treatments that are to be adopted on the different transactions involved in the importation of motor vehicles through the SSEFZ and other legislated Freeport zones that are subsequently sold through public auction:
A. Importation of motor vehicles into the freeport zones
1. Motor vehicles that are imported into the Freeport zones for exclusive use within the zones are, as a general rule, exempt from customs duties, taxes and other charges, provided that the importer-consignee is a registered enterprise within such freeport zone. However, should these motor vehicles be brought out into the customs territory without returning to the freeport zones, the customs duties, taxes and other charges shall be paid to the BOC before release thereof from its custody.
x x x
3. For imported motor vehicles that are imported by persons that are not duly registered enterprises of the freeport zones, or that the same are intended for public auction within the freeport zones, the importer-consignee/auctioneer shall pay the value-added tax (VAT) and excise tax to the BOC before the registration thereof under
its name with the LTO and/or the conduct of the public auction.
x x x
B. Subsequent sale/public auction of the motor vehicles
1. Scenario One – The public auction is conducted by the consignee of the imported motor vehicles within the freeport zone
x x x
1.2. In case the consignee-auctioneer is a registered enterprise and/or locator not entitled to the preferential tax treatment or if the same is entitled from such incentive but its total income from the customs territory exceeds 30% of its entire income derived from the customs territory and the freeport zone, the income derived from the public auction shall be subjected to the regular internal revenue taxes imposed by the Tax Code.
x x x
1.4. In the event that the winning bidder shall bring the motor vehicles into the customs territory, the winning bidder shall be deemed the importer thereof and shall be liable to pay the VAT and excise tax, if applicable, based on the winning bid price. However, in cases where the consignee-auctioneer has already paid the VAT and excise tax on the motor vehicles before the registration thereof with LTO and the conduct of public auction, the additional VAT and excise tax shall be paid by winning bidder resulting from the difference between the winning bid price and the value used by the consignee-auctioneer in payment of such taxes. For excise tax purposes, in case the winning bid price is lower than the
total costs to import, reconditioning/rehabilitation of the motor vehicles, and other administrative and selling expenses, the basis for the computation of the excise tax shall be the total costs plus ten percent (10%) thereof. The additional VAT and excise taxes shall be paid to the BIR before the auctioned motor vehicles are registered with the LTO.
1.5 In case the services of a professional auctioneer is employed for the public auction, the final withholding tax of 25%, in case he/she is a non-resident citizen or alien, or the expanded withholding tax of 20%, in case he/she is a resident citizen or alien, shall be withheld by the consignee-auctioneer from the amount of consideration to be paid to the professional auctioneer and shall be remitted accordingly to the BIR.
This was later amended by RMC No. 32-2003,5 to wit:
II. The imported motor vehicles after its release from Customs custody are sold through public auction/negotiated sale by the consignee within or outside of the Freeport Zone:
A. The gross income earned by the consignee-seller from the public auction/negotiated sale of the imported vehicles shall be subject to the preferential tax rate of five percent (5%) in lieu of the internal revenue taxes imposed by the National Internal Revenue Code of 1997, provided that the following conditions are present:
1.That the consignee-seller is a duly registered enterprise entitled to such preferential tax rate as well as a registered
taxpayer with the Bureau of Internal Revenue (BIR).
2.That the total income generated by the consignee-seller from sources within the customs territory does not exceed thirty percent (30%) of the total income derived from all sources.
B. In case the consignee-seller is a registered enterprise and/or locator not entitled to the preferential tax treatment or if the same is entitled from such incentive but its total income from the customs territory exceeds thirty percent (30%) of its entire income derived from the customs territory and the freeport zone, the sales or income derived from the public auction/negotiated sale shall be subjected to the regular internal revenue taxes imposed by the Tax Code. The consignee-seller shall also observe the compliance requirements prescribed by the Tax Code. When public auction or negotiated sale is conducted within or outside of the freeport zone, the following tax treatment shall be observed:
1. Value Added Tax (VAT)/ Percentage Tax (PT) – VAT or PT shall be imposed on every public auction or negotiated sale.
2. Excise Tax – The imposition of excise tax on public auction or negotiated sale shall be held in abeyance pending verification that the importer’s selling price used as a basis by the Bureau of Customs in computing the excise tax is correctly determined.
Petitioners Asia International Auctioneers, Inc. (AIAI) and Subic Bay Motors Corporation are corporations organized under Philippine laws with principal place of business within the SSEZ. They are engaged in the importation of
mainly secondhand or used motor vehicles and heavy transportation or construction equipment which they sell to the public through auction.
Petitioners filed a complaint before the RTC of Olongapo City, praying for the nullification of RMC No. 31-2003 for being unconstitutional and an ultra vires act. The complaint was docketed as Civil Case No. 275-0-2003 and raffled to Branch 74. Subsequently, petitioners filed their "First Amended Complaint to Declare Void, Ultra Vires, and Unconstitutional [RMC] No. 31-2003 dated June 3, 2003 and [RMC] No. 32-2003 dated June 5, 2003, with Application for a Writ of Temporary Restraining Order and Preliminary Injunction"6 to enjoin respondents from implementing the questioned RMCs while the case is pending. Particularly, they question paragraphs II(A)(1) and (3), II(B)(1.2), (1.4) and (1.5) of RMC No. 31-2003 and paragraphs II(A)(2) and (B) of RMC No. 32-2003. Before a responsive pleading was filed, petitioners filed their Second Amended Complaint7 to include Rev. Reg. Nos. 1-95, 12-97 and 16-99 dated January 24, 1995, August 7, 1997 and September 27, 1999, respectively, which allegedly contain some identical provisions as the questioned RMCs, but without changing the cause of action in their First Amended Complaint.
The Office of the Solicitor General (OSG) submitted its "Comment (In Opposition to the Application for Issuance of a Writ of Preliminary Injunction)."8 Respondents CIR, Regional Director and Revenue District Officer submitted their joint "Opposition (To The Prayer for Preliminary Injunction and/or Temporary Restraining Order by Petitioners)."9
Then Secretary of Finance Jose Isidro N. Camacho filed a Motion to Dismiss the case against him, alleging that he is not a party to the suit and petitioners have no cause of action against him.10 Respondents CIR, BIR Regional Director and BIR Revenue District Officer also filed their joint Motion to Dismiss on the
grounds that "[t]he trial court has no jurisdiction over the subject matter of the complaint" and "[a] condition precedent, that is, exhaustion of administrative remedies, has not been complied with."11 Petitioners filed their "Motion to Expunge from the Records the Respondents[’] Motion to Dismiss"12 for allegedly failing to comply with Section 4, Rule 15 of the Rules of Court. To this, the respondents filed their Opposition.13
Meantime, BIR Revenue District Officer Rey Asterio L. Tambis sent a 10-Day Preliminary Notice14 to the president of petitioner AIAI for unpaid VAT on auction sales conducted on June 6-8, 2003, as per RMC No. 32-2003.
On August 1, 2003, the trial court issued its order15 granting the application for a writ of preliminary injunction. The dispositive portion of the order states:
WHEREFORE, premises considered, petitioners’ application for the issuance of a writ of preliminary injunction is hereby GRANTED. Let the writ issue upon the filing and approval by the court of an injunction bond in the amount of Php 1 Million.
Consequently, respondents CIR, the BIR Regional Director of Region III, the BIR Revenue District Officer of the SSEZ, and the OSG filed with the CA a petition for certiorari under Rule 65 of the Rules of Court with prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction to enjoin the trial court from exercising jurisdiction over the case.17
Meantime, BIR Regional Director Danilo A. Duncano sent a Preliminary Assessment Notice18 to the President of AIAI, informing him of the VAT due from the company for the auction sales conducted on June 6-8, 2003 as
per RMC No. 32-2003, plus surcharge, interest and compromise penalty. Thereafter, a Formal Letter of Demand19 was sent to the President of petitioner AIAI by the Officer-in-Charge of the BIR Office of the Regional Director.
On March 31, 2004, the CA issued its assailed decision, the dispositive portion of which states:
WHEREFORE, the petition is GRANTED. Public respondent Regional Trial Court, Branch 74, of Olongapo City is hereby declared bereft of jurisdiction to take cognizance of Civil Case No. 275-0-2003. Accordingly, said Civil Case No. 275-0-2003 is hereby DISMISSED and the assailed Order dated August 1, 2003,ANNULLED and SET ASIDE.
Hence, this Petition for Review on Certiorari21 with an application for a temporary restraining order and a writ of preliminary injunction to enjoin respondents "from pursuing sending letters of assessments to petitioners." Petitioners raise the following issues:
[a] [W]hether a petition for certiorari under Rule 65 of the New Rules is proper where the issue raised therein has not yet been resolved at the first instance by the Court where the original action was filed, and, necessarily, without first filing a motion for reconsideration;
[b] [W]hich Court- the regular courts of justice established under Batas Pambansa Blg. 129 or the Court of Tax Appeals – is the proper court of jurisdiction to hear a case to declare Revenue Memorandum Circulars unconstitutional and against an existing law where the challenge does not involve the rate and figures of the imposed taxes;
[c] [D]ependent on an affirmative resolution of the second issue in favor of the regular courts of justice, whether the writ of preliminary injunction granted by the Court at Olongapo City was properly and legally issued.22
Petitioners contend that there were fatal procedural defects in respondents’ petition for certiorari with the CA. They point out that the CA resolved the issue of jurisdiction without waiting for the lower court to first rule on the issue. Also, respondents did not file a motion for reconsideration of the trial court’s order granting the writ of preliminary injunction before filing the petition with the CA.
The arguments are unmeritorious.
Jurisdiction is defined as the power and authority of a court to hear, try and decide a case.23 The issue is so basic that it may be raised at any stage of the proceedings, even on appeal.24 In fact, courts may take cognizance of the issue even if not raised by the parties themselves.25 There is thus no reason to preclude the CA from ruling on this issue even if allegedly, the same has not yet been resolved by the trial court.
As to respondents’ failure to file a motion for reconsideration, we agree with the ruling of the CA, which states:
It is now settled that the filing of a motion for reconsideration is not always sine qua non before availing of the remedy of certiorari.26 Hence, the general rule of requiring a motion for reconsideration finds no application in a case where what is precisely being assailed is lack of jurisdiction of the respondent court.27 And considering also the urgent necessity for resolving the issues raised herein, where further delay could prejudice the interests of the government,28 the haste with which the Solicitor General raised these issues
before this Court becomes understandable.29
Now, to the main issue: does the trial court have jurisdiction over the subject matter of this case?
Petitioners contend that jurisdiction over the case at bar properly pertains to the regular courts as this is "an action to declare as unconstitutional, void and against the provisions of [R.A. No.] 7227" the RMCs issued by the CIR. They explain that they "do not challenge the rate, structure or figures of the imposed taxes, rather they challenge the authority of the respondent Commissioner to impose and collect the said taxes." They claim that the challenge on the authority of the CIR to issue the RMCs does not fall within the jurisdiction of the Court of Tax Appeals (CTA).
Petitioners’ arguments do not sway.
R.A. No. 1125, as amended, states:
Sec. 7. Jurisdiction.—The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided—
(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other laws or part of law administered by the Bureau of Internal Revenue; x x x (emphases supplied)
We have held that RMCs are considered administrative rulings which are issued from time to time by the CIR.30
Rodriguez v. Blaquera31 is in point. This case involves Commonwealth Act No. 466, as amended by R.A. No. 84, which imposed upon firearm holders the duty to pay an initial license fee of P15 and an annual fee of P10 for each firearm, with the exception that in case of "bona fide and active members of duly organized gun clubs and accredited by the Provost Marshal General," the annual fee is reduced to P5 for each firearm. Pursuant to this, the CIR issued General Circular No. V-148 which stated that "bona fide and active members of duly organized gun clubs and accredited by the Provost Marshal General… shall pay an initial fee of fifteen pesos and an annual fee of five pesos for each firearm held on license except caliber .22 revolver or rifle." The General Circular further provided that "[m]ere membership in the gun club does not, as a matter of right, entitle the member to the reduced rates prescribed by law. The licensee must be accredited by the Chief of Constabulary… [and] the firearm covered by the license of the member must be of the target model in order that he may be entitled to the reduced rates." Rodriguez, as manager of the Philippine Rifle and Pistol Association, Inc., a duly accredited gun club, in behalf of the members who have paid under protest the regular annual fee of P10, filed an action in the Court of First Instance (now RTC) of Manila for the nullification of the circular and the refund of P5. On the issue of jurisdiction, plaintiff similarly contended that the action was not an appeal from a ruling of the CIR but merely an attempt to nullify General Circular No. V-148, hence, not within the jurisdiction of the CTA. The Court, in finding this argument unmeritorious, explained:
We find no merit in this pretense. General Circular No. V-148 directs the officers charged with the collection of taxes and license fees to adhere strictly to the interpretation given by the defendant to the statutory provision above mentioned, as set forth in the circular. The same incorporates, therefore, a decision of the Collector of Internal Revenue (now Commissioner of
Internal Revenue) on the manner of enforcement of said statute, the administration of which is entrusted by law to the Bureau of Internal Revenue. As such, it comes within the purview of [R.A.] No. 1125, section 7 of which provides that the [CTA] "shall exercise exclusive appellate jurisdiction to review by appeal * * * decisions of the Collector of Internal Revenue in * * * matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue." Besides, it is plain from plaintiff’s original complaint that one of its main purposes was to secure an order for the refund of the sums collected in excess of the amount he claims to be due by way of annual fee from the gun club members, regardless of the class of firearms they have. Although the prayer for reimbursement has been eliminated from his amended complaint, it is only too obvious that the nullification of General Circular No. V-148 is merely a step preparatory to a claim for refund.
Similarly, in CIR v. Leal,32 pursuant to Section 116 of Presidential Decree No. 1158 (The National Internal Revenue Code, as amended) which states that "[d]ealers in securities shall pay a tax equivalent to six (6%) per centum of their gross income. Lending investors shall pay a tax equivalent to five (5%) per cent, of their gross income," the CIR issued Revenue Memorandum Order (RMO) No. 15-91 imposing 5% lending investor’s tax on pawnshops based on their gross income and requiring all investigating units of the BIR to investigate and assess the lending investor’s tax due from them. The issuance of RMO No. 15-91 was an offshoot of the CIR’s finding that the pawnshop business is akin to that of "lending investors" as defined in Section 157(u) of the Tax Code. Subsequently, the CIR issued RMC No. 43-91 subjecting pawn tickets to documentary stamp tax. Respondent therein, Josefina Leal, owner and operator of Josefina’s Pawnshop, asked for a reconsideration of both RMO No. 15-91 and RMC No. 43-91, but the same was denied by
petitioner CIR. Leal then filed a petition for prohibition with the RTC of San Mateo, Rizal, seeking to prohibit petitioner CIR from implementing the revenue orders. The CIR, through the OSG, filed a motion to dismiss on the ground of lack of jurisdiction. The RTC denied the motion. Petitioner filed a petition for certiorari and prohibition with the CA which dismissed the petition "for lack of basis." In reversing the CA, dissolving the Writ of Preliminary Injunction issued by the trial court and ordering the dismissal of the case before the trial court, the Supreme Court held that "[t]he questioned RMO No. 15-91 and RMC No. 43-91 are actually rulings or opinions of the Commissioner implementing the Tax Code on the taxability of pawnshops." They were issued pursuant to the CIR’s power under Section 24533 of the Tax Code "to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including ruling on the classification of articles of sales and similar purposes." The Court held that under R.A. No. 1125 (An Act Creating the Court of Tax Appeals), as amended, such rulings of the CIR are appealable to the CTA.
In the case at bar, the assailed revenue regulations and revenue memorandum circulars are actually rulings or opinions of the CIR on the tax treatment of motor vehicles sold at public auction within the SSEZ to implement Section 12 of R.A. No. 7227 which provides that "exportation or removal of goods from the territory of the [SSEZ] to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines." They were issued pursuant to the power of the CIR under Section 4 of the National Internal Revenue Code,34 viz:
Section 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases.-- The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the
Commissioner, subject to review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. (emphases supplied)
Petitioners point out that the CA based its decision on Section 7 of R.A. No. 1125 that the CTA "shall exercise exclusive appellate jurisdiction to review by appeal…" decisions of the CIR. They argue that in the instant case, there is no decision of the respondent CIR on any disputed assessment to speak of as what is being questioned is purely the authority of the CIR to impose and collect value-added and excise taxes.
Petitioners’ failure to ask the CIR for a reconsideration of the assailed revenue regulations and RMCs is another reason why the instant case should be dismissed. It is settled that the premature invocation of the court's intervention is fatal to one's cause of action. If a remedy within the administrative machinery can still be resorted to by giving the administrative officer every opportunity to decide on a matter that comes within his jurisdiction, then such remedy must first be exhausted before the court’s power of judicial review can be sought.35 The party with an administrative remedy must not only initiate the prescribed administrative procedure to obtain relief but also pursue it to its appropriate conclusion before seeking judicial intervention in order to give the administrative agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature resort to the court. 36
Petitioners’ insistence for this Court to rule on the merits of the case would only prove futile. Having declared the court a quo without jurisdiction over the subject matter of the instant case, any further disquisition would be obiter dictum.
IN VIEW WHEREOF, the petition is DENIED.
I. JURISDICTION CONFERRED BY LAW NOT BY THE PARTIES NOR BY THEIR AGREEMENT OR CONSENT
Republic of the PhilippinesSUPREME COURTManila
G.R. No. 189570 July 31, 2013
HEIRS OF SANTIAGO NISPEROS, TEODORICO NISPEROS, RESTITUTA LARON, CARMEL IT A H. NISPEROS, VIRGILIO H. NISPEROS, CON CHIT A H. NISPEROS, PURIT A H. ISPEROS, PEPITO H. NISPEROS, REBECCA H. NISPEROS, ABRAHAM H. NISPEROS, IGNACIO F. NISPEROS, RODOLFO F. NISPEROS, RAYMUNDO F. NISPEROS, RENA TO F. NISPEROS, FE N. MUNAR, BENITO F. NISPEROS, REYNALDO N. NISPEROS, MELBA N. JOSE, ELY N. GADIANO, represented by TEODORICO NISPEROS,Petitioners, vs.MARISSA NISPEROS-DUCUSIN, Respondent.
D E C I S I O N
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the July 13, 2009 Decision1 and September 14, 2009 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 105898. The appellate court affirmed the Decision3 of the Department of Agrarian Reform Adjudication Board (DARAB) upholding the validity of the Deed of Voluntary Land Transfer and Original Certificate of Title (OCT) No. CLOA-623 issued in favor of respondent Marissa Nisperos-Ducusin.
The instant case stemmed from a complaint4 filed by petitioners with the DARAB alleging the following antecedents:
The 15,837-square-meter parcel of land subject of the instant case is part of the 58,350-square-meter agricultural land in Pao Sur, San Fernando City, La Union acquired by Santiago Nisperos, the predecessor of petitioners, during his lifetime. He declared said property for taxation purposes starting December 1947.5
When Santiago and his wife Estefania died, they were survived by their nine children: Tranquilino, Felix, Olling, Maria, Lenardo, Millan, Fausto, Candido and Cipriana. The heirs of Santiago, petitioners herein, claim that the subject property was occupied, controlled and tilled by all nine children of Santiago. They paid taxes for it and even hired farm workers under Maria and Cipriana’s supervision for the cultivation of the same. For taxation purposes, however, it was initially declared only under the name of Maria.6 Starting 1988, it was declared under the names of Maria and Cipriana.7
During the time when Maria and Cipriana were overseeing the property, Maria took respondent Marissa Nisperos-Ducusin, a daughter of their cousin Purita, as her ward and raised her like her own child.
On February 12, 1988, Maria and Cipriana, acting as representatives of their other siblings, executed a Deed of Donation Mortis Causa8 in favor of petitioners over the 58,350-square-meter property and another 46,000-square-meter property.
On April 28, 1992, a Deed of Voluntary Land Transfer9 (VLT) over the subject property was executed between Maria and Cipriana as landowners, and respondent, who was then only 17 years old, as farmer-beneficiary. The instrument was signed by the three in the presence of witnesses Anita, Lucia and Marcelina Gascon and Municipal Agrarian Reform Officer Susimo Asuncion. The same was notarized by Notary Public Atty. Roberto E. Caoayan.
On June 24, 1992, Certificate of Land Ownership Award (CLOA) No. 000212245390210 was issued to respondent by the Department of Agrarian Reform (DAR) over the subject property. By virtue of said CLOA, OCT No. CLOA-62311 was issued to respondent a month later, or on July 24, 1992.
Alleging fraud on the part of respondent which petitioners claim to have discovered only in August 2001, petitioners filed a complaint on September 6, 2001 with the Municipal Agrarian Reform Office (MARO) of San Fernando City, La Union. Unfortunately, no settlement between petitioners and respondent was reached prompting the MARO to issue a Certificate to File Action.12
On January 23, 2002, petitioners filed with the DARAB a complaint for annulment of documents and damages against respondent. Petitioners contended that the transfer of ownership over the subject land was made without the consent of the heirs of Santiago and that respondent took advantage of Maria’s senility and made it appear that Maria and Cipriana sold said property by virtue of the VLT. They further alleged that said document was falsified by respondent because Maria could
not anymore sign but could only affix her thumbmark as she did in a 1988 Deed of Donation. To support their complaint, they attached a Joint Affidavit of Denial13 by Anita and Lucia Gascon the supposed instrumental witnesses to the VLT. In said affidavit, Anita and Lucia claimed that the signatures appearing therein are not theirs as they never affixed their signatures on said document. They further stated that they were never aware of said document.
Petitioners likewise asseverated in their complaint that respondent committed fraud because she was not a bona fide beneficiary as she was not engaged in farming since she was still a minor at that time and that she could not validly enter into a contract with Maria and Cipriana.
On March 6, 2002, respondent filed a Motion to Dismiss14 petitioners’ complaint. She argued that the action for annulment of the VLT and the OCT/CLOA and the claim for damages have already prescribed.
In an Order15 dated April 17, 2002, the DARAB Regional Adjudicator denied respondent’s Motion to Dismiss and ordered her to file her answer to the complaint.
In respondent’s Answer with Counterclaim16 dated July 7, 2002, respondent alleged that Maria and Cipriana acquired the property from Santiago and possessed the same openly, continuously, exclusively and publicly; thus, the consent of petitioners is not necessary to the VLT. She denied the allegations of fraud and falsification, and insisted that she is a bona fide beneficiary as she has been tilling the land with her parents even before 1992. She added that her minority does not disqualify her from availing the benefits of agrarian reform.
On October 16, 2002, DARAB Regional Adjudicator Rodolfo A. Caddarao rendered a
Decision17 annulling the VLT and OCT/CLOA in respondent’s name. The fallo of the said decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring Deed of Voluntary [L]and Transfer dated April 28, 1992 executed by Maria Nisperos in favor of Marissa Nisperos annulled or cancelled and without force and effect for having been executed not in accordance with agrarian laws;
2. Declaring OCT No. 00021224 in the name of Marissa D. Nisperos annulled or cancelled on the ground of material misrepresentation of the alleged agrarian reform beneficiary.
3. Directing the Register of Deeds of La Union to cause the cancellation of the aforementioned title;
4. Directing the concerned Assessor’s Office to reinstate the tax declaration of said landholding in the name of Maria and Cipriana Nisperos;
5. Directing the parties to refer this problem with the court so that the issue of ownership of the landholding could be finally resolved; and
6. Dismissing the other ancillary claims and counterclaims for lack of merit and evidence.
The Regional Adjudicator noted that the land supposedly owned by Maria and Cipriana (which includes the 15,837-square-meter subject property) has a total area of 58,350 square meters. Considering that there are two owners, he ruled that the individual share of
each would be less than five hectares each and well within the retention limit.
The Regional Adjudicator also held there was reason to believe that Maria and Cipriana’s names were stated in the tax declaration for purposes of taxation only as no evidence was presented that they lawfully acquired the property from their parents. It was also ruled that the issuance of the title in respondent’s name was not in accordance with agrarian laws because she cannot be considered as a tenant but more of an heir of the transferors.
Respondent contested the Regional Adjudicator’s decision before the DARAB alleging that the Regional Adjudicator committed grave abuse of discretion. Respondent contended that the complaint should not have been given due course since other parties-in-interest such as Maria, the Register of Deeds of La Union and duly authorized representatives of the DAR were not impleaded and prescription had already set in insofar as the contestability of the CLOA is concerned. She likewise argued that being a farmer or a tenant is not a primordial requisite to become an agrarian reform beneficiary. She added that the Regional Adjudicator went beyond the scope of his authority by directing the parties to litigate the issue of ownership before the court.
On September 16, 2008, the DARAB rendered a Decision19 reversing the decision of the Regional Adjudicator and upholding the validity of the VLT and respondent’s title. The decretal portion reads:
WHEREFORE, premises considered, a new judgment is hereby rendered:
1. DECLARING the VLT executed on April 28, 1992, between respondent-appellant Marissa Nisperos-Ducusin and Maria and Cipriana Nisperos as valid and regular;
2. DECLARING the validity of the Original Certificate of Title (OCT) CLOA No. 623 issued in the name of respondent-appellant Marissa Nisperos-Ducusin covering 15,837 square meter portion of the disputed lot; and
3. MAINTAINING respondent-appellant Marissa Nisperos-Ducusin in peaceful possession and cultivation of the subject lot.
The DARAB dismissed petitioners’ claim of fraud since the VLT was executed in the presence of DAR-MARO Susimo Asuncion, signed by three instrumental witnesses and notarized by Atty. Roberto E. Caoayan of the DAR. It likewise held that the records are bereft of any indication that fraud was employed in the transfer, and mere conjectures that fraud might have been exerted just because Maria was already of advanced age while respondent was her care giver or ward is not evidence. The DARAB also did not give credence to the Affidavit of Denial by the instrumental witnesses since the statements there are mere hearsay because the affiants were not cross-examined.
The DARAB likewise ruled that the fact that respondent was a minor at the time of the execution of the VLT does not void the VLT as this is the reason why there is an active government involvement in the VLT: so that even if the transferee is a minor, her rights shall be protected by law. It also held that petitioners cannot assert their rights by virtue of the Deed of Donation Mortis Causa allegedly executed by Maria and Cipriana in their favor since before the operative condition (the death of the donors) was fulfilled, the donation was revoked by virtue of the VLT. The DARAB further ruled that when OCT No. CLOA-623 was issued in respondent’s name, she acquired absolute ownership of the landholding. Thus
her right thereto has become fixed and established and is no longer open to doubt or controversy.
Aggrieved, petitioners elevated the case to the CA via a petition for review21 where they raised the following issues: (1) whether the subject property is covered by the Comprehensive Agrarian Reform Program (CARP); (2) whether the VLT is valid having been issued through misrepresentation and fraud; and (3) whether the action for annulment had already prescribed.
On July 13, 2009, the appellate court rendered the assailed decision dismissing the petition for review and upholding the DARAB decision. It ruled that the Regional Adjudicator acted with grave abuse of discretion when it held that the subject property was no longer covered by our agrarian laws because of the retention rights of petitioners. The CA held that retention rights, exclusion of a property from CARP coverage and the qualification and disqualification of agrarian reform beneficiaries are issues not cognizable by the Regional Adjudicator and the DARAB but by the DAR Secretary. The appellate court nevertheless held that petitioners failed to discharge their burden of proving that fraud attended the execution of the VLT. It also agreed with the DARAB that considering a certificate of title was already issued in favor of respondent, the same became indefeasible and incontrovertible by the time petitioners instituted the case in January 2002, and thus may no longer be judicially reviewed.
Hence this petition before this Court raising the issues of whether the appellate court erred in:
x x x DECLARING THAT THE PARAB HAS NO JURISDICTION TO RULE THAT THE SUBJECT PIECE OF LAND WAS NO LONGER COVERED BY AGRARIAN LAWS.
x x x AFFIRMING THE DECISION OF THE DARAB DESPITE CLEAR AND CONVINCING EVIDENCE REGARDING THE EXISTENCE OF FRAUD.
x x x RULING THAT THE CERTIFICATES OF TITLE ISSUED IN THE NAME OF THE RESPONDENT IS INDEFEASIBLE.22
We set aside the assailed Decision and Resolution.
The complaint should have been lodged with the Office of the DAR Secretary and not with the DARAB.
Section 1, Rule II of the 1994 DARAB Rules of Procedure, the rule in force at the time of the filing of the complaint by petitioners in 2001, provides:
SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction. The Board shall have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228, 229 and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations. Specifically, such jurisdiction shall include but not be limited to cases involving the following:
x x x x
f) Those involving the issuance, correction and cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs)
which are registered with the Land Registration Authority;
x x x x
However, it is not enough that the controversy involves the cancellation of a CLOA registered with the Land Registration Authority for the DARAB to have jurisdiction. What is of primordial consideration is the existence of an agrarian dispute between the parties.23
Section 3(d) of R.A. No. 6657 defines an agrarian dispute as "any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farmworkers’ associations or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of such tenurial arrangements" and includes "any controversy relating to compensation of lands acquired under this Act and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee."
Thus, in Morta, Sr. v. Occidental,24 this Court held that there must be a tenancy relationship between the parties for the DARAB to have jurisdiction over a case. It is essential to establish all of the following indispensable elements, to wit: (1) that the parties are the landowner and the tenant or agricultural lessee; (2) that the subject matter of the relationship is an agricultural land; (3) that there is consent between the parties to the relationship; (4) that the purpose of the relationship is to bring about agricultural production; (5) that there is personal cultivation on the part of the tenant or agricultural lessee; and (6) that the harvest is shared between the landowner and the tenant or agricultural lessee.25
In the instant case, petitioners, as supposed owners of the subject property, did not allege in their complaint that a tenancy relationship exists between them and respondent. In fact, in their complaint, they described respondent as a "ward" of one of the co-owners, Maria, who is "not a bona fide beneficiary, she being not engaged in farming because she was still a minor" at the time the VLT was executed.26
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or government agency, over the nature and subject matter of a petition or complaint is determined by the material allegations therein and the character of the relief prayed for, irrespective of whether the petitioner or complainant is entitled to any or all such reliefs. Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the law, and not by the consent or waiver of the parties where the court otherwise would have no jurisdiction over the nature or subject matter of the action. Nor can it be acquired through, or waived by, any act or omission of the parties. Moreover, estoppel does not apply to confer jurisdiction to a tribunal that has none over the cause of action. The failure of the parties to challenge the jurisdiction of the DARAB does not prevent the court from addressing the issue, especially where the DARAB’s lack of jurisdiction is apparent on the face of the complaint or petition.27
Considering that the allegations in the complaint negate the existence of an agrarian dispute among the parties, the DARAB is bereft of jurisdiction to take cognizance of the same as it is the DAR Secretary who has authority to resolve the dispute raised by petitioners. As held in Heirs of Julian dela Cruz v. Heirs of Alberto Cruz:
The Court agrees with the petitioners’ contention that, under Section 2(f), Rule II of the DARAB Rules of Procedure, the DARAB has jurisdiction over cases involving the issuance, correction and cancellation of CLOAs which
were registered with the LRA. However, for the DARAB to have jurisdiction in such cases, they must relate to an agrarian dispute between landowner and tenants to whom CLOAs have been issued by the DAR Secretary. The cases involving the issuance, correction and cancellation of the CLOAs by the DAR in the administrative implementation of agrarian reform laws, rules and regulations to parties who are not agricultural tenants or lessees are within the jurisdiction of the DAR and not of the DARAB.28 (Emphasis supplied.)
What the P ARAD should have done is to refer the complaint to the proper office as mandated by Section 4 of DAR Administrative Order No. 6, Series of 2000:
SEC. 4. Referral of Cases.- If a case covered by Section 2 herein is filed before the DARAB, the concerned DARAB official shall refer the case to the proper DAR office for appropriate action within five (5) days after said case is determined to be within the jurisdiction of the Secretary.
Likewise, if a case covered by Section 3 herein is filed before any office other than the DARAB, the concerned DAR official shall refer the case to the DARAB for resolution within the same period provided herein.
While it is true that the PARAD and the DARAB (which was upheld by the CA) thoroughly discussed in their respective decisions the issues pertaining to the validity of the VLT and the OCT/CLOA issued to respondent, the fact that they are bereft of jurisdiction to resolve the same prevents this Court from resolving the instant petition on its merits. The doctrine of primary jurisdiction does not allow a court to arrogate unto itself authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence.29 To assume the power is to short-circuit the administrative process, which has yet to run its regular course. The DAR must be given a chance to correct its
administrative and procedural lapses in the issuance of the CLOA.30Moreover, it is in a better position to resolve the particular issue at hand, being the agency possessing the required expertise on the matter and authority to hear the same.
WHEREFORE, the July 13, 2009 Decision and September 14, 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 105898 are SET ASIDE. The complaint is REFERRED to the Office of the Department of Agrarian Reform Secretary for appropriate action.
No pronouncement as to costs.
COJUANGCO JR. V REPUBLIC OF THE PHILIPPINES 686 SCRA 472 (2013)
Republic of the PhilippinesSUPREME COURTManila
G.R. No. 180705 November 27, 2012
EDUARDO M. COJUANGCO, JR., Petitioner, vs.REPUBLIC OF THE PHILIPPINES, Respondent.
D E C I S I O N
VELASCO, JR., J.:
Of the several coconut levy appealed cases that stemmed from certain issuances of the
Sandiganbayan in its Civil Case No. 0033, the present recourse proves to be one of the most difficult.
In particular, the instant petition for review under Rule 45 of the Rules of Court assails and seeks to annul a portion of the Partial Summary Judgment dated July 11, 2003, as affirmed in a Resolution of December 28, 2004, both rendered by the Sandiganbayan in its Civil Case ("CC") No. 0033-A (the judgment shall hereinafter be referred to as "PSJ-A"), entitled "Republic of the Philippines, Plaintiff, v. Eduardo M. Cojuangco, Jr., et al., Defendants, COCOFED, et al., BALLARES, et al., Class Action Movants." CC No. 0033-A is the result of the splitting into eight (8) amended complaints of CC No. 0033 entitled, "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al.," a suit for recovery of ill-gotten wealth commenced by the Presidential Commission on Good Government ("PCGG"), for the Republic of the Philippines ("Republic"), against Eduardo M. Cojuangco, Jr. ("Cojuangco") and several individuals, among them, Ferdinand E. Marcos, Maria Clara Lobregat ("Lobregat"), and Danilo S. Ursua ("Ursua"). Each of the eight (8) subdivided complaints, CC No. 0033-A to CC No. 0033-H, correspondingly impleaded as defendants only the alleged participants in the transaction/s subject of the suit, or who are averred as owner/s of the assets involved.
Apart from this recourse, We clarify right off that PSJ-A was challenged in two other separate but consolidated petitions for review, one commenced by COCOFED et al., docketed as G.R. Nos. 177857-58, and the other, interposed by Danilo S. Ursua, and docketed as G.R. No. 178193.
By Decision dated January 24, 2012, in the aforesaid G.R. Nos. 177857-58 (COCOFED et al. v. Republic) and G.R. No. 178193 (Ursua v. Republic) consolidated cases1 (hereinafter collectively referred to as "COCOFED v. Republic"), the Court addressed and resolved all key matters elevated to it in relation to PSJ-
A, except for the issues raised in the instant petition which have not yet been resolved therein. In the same decision, We made clear that: (1) PSJ-A is subject of another petition for review interposed by Eduardo Cojuangco, Jr., in G.R. No. 180705, entitled Eduardo M. Cojuangco, Jr. v. Republic of the Philippines, which shall be decided separately by the Court,2 and (2) the issues raised in the instant petition should not be affected by the earlier decision "save for determinatively legal issues directly addressed therein."3
For a better perspective, the instant recourse seeks to reverse the Partial Summary Judgment4 of the anti-graft court dated July 11, 2003, as reiterated in a Resolution5 of December 28, 2004, denying COCOFED’s motion for reconsideration, and the May 11, 2007 Resolution6 denying
COCOFED’s motion to set case for trial and declaring the partial summary judgment final and appealable, all issued in PSJ-A. In our adverted January 24, 2012 Decision in COCOFED v. Republic, we affirmed with modification PSJ-A of the Sandiganbayan, and its Partial Summary Judgment in Civil Case No. 0033-F, dated May 7, 2004 (hereinafter referred to as "PSJ-F’).7
More specifically, We upheld the Sandiganbayan’s ruling that the coconut levy funds are special public funds of the Government. Consequently, We affirmed the Sandiganbayan’s declaration that Sections 1 and 2 of Presidential Decree ("P.D.") 755, Section 3, Article III of P.D. 961 and Section 3, Article III of P.D. 1468, as well as the pertinent implementing regulations of the Philippine Coconut Authority ("PCA"), are unconstitutional for allowing the use and/or the distribution of properties acquired through the coconut levy funds to private individuals for their own direct benefit and absolute ownership. The Decision also affirmed the Government’s ownership of the six CIIF companies, the fourteen holding companies, and the CIIF block of San Miguel
Corporation shares of stock, for having likewise been acquired using the coconut levy funds. Accordingly, the properties subject of the January 24, 2012 Decision were declared owned by and ordered reconveyed to the Government, to be used only for the benefit of all coconut farmers and for the development of the coconut industry.
By Resolution of September 4, 2012,8 the Court affirmed the above-stated Decision promulgated on January 24, 2012.
It bears to stress at this juncture that the only portion of the appealed Partial Summary Judgment dated July 11, 2003 ("PSJ-A") which remains at issue revolves around the following decretal holdings of that court relating to the "compensation" paid to petitioner for exercising his personal and exclusive option to acquire the FUB/UCPB shares.9It will be recalled that the Sandiganbayan declared the Agreement between the PCA and Cojuangco containing the assailed "compensation" null and void for not having the required valuable consideration. Consequently, the UCPB shares of stocks that are subject of the Agreement were declared conclusively owned by the Government. It also held that the Agreement did not have the effect of law as it was not published as part of P.D. 755, even if Section 1 thereof made reference to the same.
We reproduce, below, portions of the statement of facts in COCOFED v. Republic relevant to the present case:10
In 1971, Republic Act No. ("R.A.") 6260 was enacted creating the Coconut Investment Company ("CIC") to administer the Coconut Investment Fund ("CIF"), which, under Section 8 thereof, was to be sourced from a PhP 0.55 levy on the sale of every 100 kg. of copra. Of the PhP 0.55 levy of which the copra seller was – or ought to be – issued COCOFUND receipts,
PhP 0.02 was placed at the disposition of COCOFED, the national association of coconut producers declared by the
Philippine Coconut Administration ("PHILCOA" now "PCA") as having the largest membership.
The declaration of martial law in September 1972 saw the issuance of several presidential decrees ("P.D.") purportedly designed to improve the coconut industry through the collection and use of the coconut levy fund. While coming generally from impositions on the first sale of copra, the coconut levy fund came under various names x x x. Charged with the duty of collecting and administering the Fund was PCA. Like COCOFED with which it had a legal linkage, the PCA, by statutory provisions scattered in different coco levy decrees, had its share of the coco levy.
The following were some of the issuances on the coco levy, its collection and utilization, how the proceeds of the levy will be managed and by whom and the purpose it was supposed to serve:
1. P.D. No. 276 established the Coconut Consumers Stabilization Fund ("CCSF") and declared the proceeds of the CCSF levy as trust fund, to be utilized to subsidize the sale of coconut-based products, thus stabilizing the price of edible oil.
2. P.D. No. 582 created the Coconut Industry Development Fund ("CIDF") to finance the operation of a hybrid coconut seed farm.
3. Then came P.D. No. 755 providing under its Section 1 the following:
It is hereby declared that the policy of the State is to provide readily available credit facilities to the coconut farmers at preferential rates; that this policy can be expeditiously and efficiently realized by the implementation of the "Agreement for the Acquisition of a Commercial Bank for the benefit of Coconut Farmers" executed by the PCA…; and that the PCA is hereby authorized to distribute, for free, the shares of stock of the bank it acquired to the coconut farmers….
Towards achieving the policy thus declared, P.D. No. 755, under its Section 2, authorized PCA to utilize the CCSF and the CIDF collections to acquire a commercial bank and deposit the CCSF levy collections in said bank interest free, the deposit withdrawable only when the bank has attained a certain level of sufficiency in its equity capital. The same section also decreed that all levies PCA is authorized to collect shall not be considered as special and/or fiduciary funds or form part of the general funds of the government within the contemplation of P.D. No. 711.
4. P.D. No. 961 codified the various laws relating to the development of coconut/palm oil industries.
5. The relevant provisions of P.D. No. 961, as later amended by P.D. No. 1468 (Revised Coconut Industry Code), read:
Section 1. Coconut Consumers Stabilization Fund Levy. — The PCA is hereby empowered to impose and
collect … the Coconut Consumers Stabilization Fund Levy, ….
Section 5. Exemption. — The CCSF and theCIDF as well as all disbursements as herein authorized, shall not be construed … as special and/or fiduciary funds, or as part of the general funds of the national government within the contemplation of PD 711; … the intention being that said Fund and the disbursements thereof as herein authorized for the benefit of the coconut farmers shall be owned by them in their private capacities: …. (Emphasis supplied)
6. Letter of Instructions No. ("LOI") 926, s. of 1979, made reference to the creation, out of other coco levy funds, of the Coconut Industry Investment Fund ("CIIF") in P.D. No. 1468 and entrusted a portion of the CIIF levy to UCPB for investment, on behalf of coconut farmers, in oil mills and other private corporations, with the following equity ownership structure:
Section 2. Organization of the Cooperative Endeavor. – The UCPB, in its capacity as the investment arm of the coconut farmers thru the CIIF … is hereby directed to invest, on behalf of the coconut farmers, such portion of the CIIF … in private corporations … under the following guidelines:
a) The coconut farmers shall own or control at least … (50%) of the outstanding voting capital stock of the private corporation acquired thru the CIIF and/or corporation
owned or controlled by the farmers thru the CIIF …. (Words in bracket added.)
Through the years, a part of the coconut levy funds went directly or indirectly to finance various projects and/or was converted into various assets or investments.11 Relevant to the present petition is the acquisition of the First United Bank ("FUB"), which was subsequently renamed as United Coconut Planters Bank ("UCPB").12
Apropos the intended acquisition of a commercial bank for the purpose stated earlier, it would appear that FUB was the bank of choice which Pedro Cojuangco’s group (collectively, "Pedro Cojuangco") had control of. The plan, then, was for PCA to buy all of Pedro Cojuangco’s shares in FUB. However, as later events unfolded, a simple direct sale from the seller (Pedro) to PCA did not ensue as it was made to appear that Cojuangco had the exclusive option to acquire the former’s FUB controlling interests. Emerging from this elaborate, circuitous arrangement were two deeds. The first one was simply denominated as Agreement, dated May 1975, entered into by and between Cojuangco for and in his behalf and in behalf of "certain other buyers", and Pedro Cojuangco in which the former was purportedly accorded the option to buy 72.2% of FUB’s outstanding capital stock, or 137,866 shares (the "option shares," for brevity), at PhP 200 per share. On its face, this agreement does not mention the word "option."
The second but related contract, dated May 25, 1975, was denominated as Agreement for the Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers of the Philippines. It had PCA, for itself and for the benefit of the coconut farmers, purchase from Cojuangco the shares of stock subject of the First Agreement for PhP200.00 per share. As additional consideration for PCA’s buy-out of what Cojuangco would later claim to be his
exclusive and personal option, it was stipulated that, from PCA, Cojuangco shall receive equity in FUB amounting to 10%, or 7.22%, of the 72.2%, or fully paid shares. And so as not to dilute Cojuangco’s equity position in FUB, later UCPB, the PCA agreed under paragraph 6 (b) of the second agreement to cede over to the former a number of fully paid FUB shares out of the shares it (PCA) undertakes to eventually subscribe. It was further stipulated that Cojuangco would act as bank president for an extendible period of 5 years.
Apart from the aforementioned 72.2%, PCA purchased from other FUB shareholders 6,534 shares of which Cojuangco, as may be gathered from the records, got 10%..
While the 64.98% portion of the option shares (72.2% – 7.22% = 64.98%) ostensibly pertained to the farmers, the corresponding stock certificates supposedly representing the farmers’ equity were in the name of and delivered to PCA. There were, however, shares forming part of the aforesaid 64.98% portion, which ended up in the hands of non-farmers. The remaining 27.8% of the FUB capital stock were not covered by any of the agreements.
Under paragraph # 8 of the second agreement, PCA agreed to expeditiously distribute the FUB shares purchased to such "coconut farmers holding registered COCOFUND receipts" on equitable basis.
As found by the Sandiganbayan, the PCA appropriated, out of its own fund, an amount for the purchase of the said 72.2% equity, albeit it would later reimburse itself from the coconut levy fund.
And per Cojuangco’s own admission, PCA paid, out of the CCSF, the entire acquisition price for the 72.2% option shares.13
As of June 30, 1975, the list of FUB stockholders included Cojuangco with 14,440 shares and PCA with 129,955 shares.14 It would appear later that, pursuant to the stipulation on maintaining Cojuangco’s equity position in the bank, PCA would cede to him 10% of its subscriptions to (a) the authorized but unissued shares of FUB and (b) the increase in FUB’s capital stock (the equivalent of 158,840 and 649,800 shares, respectively). In all, from the "mother" PCA shares, Cojuangco would receive a total of 95,304 FUB (UCPB) shares broken down as follows: 14,440 shares + 10% (158,840 shares) + 10% (649,800 shares) = 95,304.15
We further quote, from COCOFED v. Republic, facts relevant to the instant case:16
Shortly after the execution of the PCA – Cojuangco Agreement, President Marcos issued, on July 29, 1975, P.D. No. 755 directing x x x as narrated, PCA to use the CCSF and CIDF to acquire a commercial bank to provide coco farmers with "readily available credit facilities at preferential rate" x x x.
Then came the 1986 EDSA event. One of the priorities of then President Corazon C. Aquino’s revolutionary government was the recovery of ill-gotten wealth reportedly amassed by the Marcos family and close relatives, their nominees and associates. Apropos thereto, she issued Executive Order Nos. (EO) 1, 2 and 14, as amended by E.O. 14-A, all series of 1986. E.O. 1 created the PCGG and provided it with the tools and processes it may avail of in the recovery efforts;17 E.O. No. 2 asserted that the ill-gotten assets and properties come in the form of shares of stocks, etc., while E.O. No. 14 conferred on the Sandiganbayan exclusive and original jurisdiction over ill-gotten wealth cases, with the proviso that "technical rules of procedure and evidence shall not be applied strictly" to the civil cases filed under the EO. Pursuant to these issuances, the PCGG issued numerous orders of sequestration, among which were those handed out x x x against
shares of stock in UCPB purportedly owned by or registered in the names of (a) the more than a million coconut farmers, (b) the CIIF companies and (c) Cojuangco, Jr., including the SMC shares held by the CIIF companies. On July 31, 1987, the PCGG instituted before the Sandiganbayan a recovery suit docketed thereat as CC No. 0033.
x x x x
3. Civil Case 0033 x x x would be subdivided into eight complaints, docketed as CC 0033-A to CC 0033-H.
x x x x
5. By Decision of December 14, 2001, in G.R. Nos. 147062-64 (Republic v. COCOFED),18 the Court declared the coco levy funds as prima facie public funds. And purchased as the sequestered UCPB shares were by such funds, beneficial ownership thereon and the corollary voting rights prima facie pertain, according to the Court, to the government.
x x x x
Correlatively, the Republic, on the strength of the December 14, 2001 ruling in Republic v. COCOFED and on the argument, among others, that the claim of COCOFED and Ballares et al., over the subject UCPB shares is based solely on the supposed COCOFUND receipts issued for payment of the RA 6260 CIF levy, filed a Motion for Partial Summary Judgment RE: COCOFED, et al. and Ballares, et al. dated April 22, 2002, praying that a summary judgment be rendered declaring:
a. That Section 2 of [PD] 755, Section 5, Article III of P.D. 961 and Section 5, Article III of P.D. No. 1468 are unconstitutional;
b. That x x x (CIF) payments under x x x (R.A.) No. 6260 are not valid and legal
bases for ownership claims over UCPB shares; and
c. That COCOFED, et al., and Ballares, et al. have not legally and validly obtained title over the subject UCPB shares.
Right after it filed the Motion for Partial Summary Judgment RE: COCOFED, et al. and Ballares, et al., the Republic interposed a Motion for Partial Summary Judgment Re: Eduardo M. Cojuangco, Jr., praying that a summary judgment be rendered:
a. Declaring that Section 1 of P.D. No. 755 is unconstitutional insofar as it validates the provisions in the "PCA-Cojuangco Agreement x x x" dated May 25, 1975 providing payment of ten percent (10%) commission to defendant Cojuangco with respect to the FUB, now UCPB shares subject matter thereof;
b. Declaring that x x x Cojuangco, Jr. and his fronts, nominees and dummies, including x x x and Danilo S. Ursua, have not legally and validly obtained title over the subject UCPB shares; and
c. Declaring that the government is the lawful and true owner of the subject UCPB shares registered in the names of … Cojuangco, Jr. and the entities and persons above-enumerated, for the benefit of all coconut farmers. x x x
Following an exchange of pleadings, the Republic filed its sur-rejoinder praying that it be conclusively declared the true and absolute owner of the coconut levy funds and the UCPB shares acquired therefrom.19
We quote from COCOFED v. Republic:20
A joint hearing on the separate motions for summary judgment to determine what material facts exist with or without controversy then ensued. By Order of March 11, 2003, the Sandiganbayan detailed, based on this Court’s ruling in related ill-gotten cases, the parties’ manifestations made in open court and the pleadings and evidence on record, the facts it found to be without substantial controversy, together with the admissions and/or extent of the admission made by the parties respecting relevant facts, as follows:
As culled from the exhaustive discussions and manifestations of the parties in open court of their respective pleadings and evidence on record, the facts which exist without any substantial controversy are set forth hereunder, together with the admissions and/or the extent or scope of the admissions made by the parties relating to the relevant facts:
1. The late President Ferdinand E. Marcos was President x x x for two terms under the 1935 Constitution and, during the second term, he declared Martial Law through Proclamation No. 1081 dated September 21, 1972.
2. On January 17, 1973, he issued Proclamation No. 1102 announcing the ratification of the 1973 Constitution.
3. From January 17, 1973 to April 7, 1981, he x x x exercised the powers and prerogative of President under the 1935 Constitution and the powers and prerogative of President x x x the 1973 Constitution.
He x x x promulgated various P.D.s, among which were P.D. No. 232, P.D. No. 276, P.D. No. 414, P.D. No. 755, P.D. No. 961 and P.D. No. 1468.
4. On April 17, 1981, amendments to the 1973 Constitution were effected and, on
June 30, 1981, he, after being elected President, "reassumed the title and exercised the powers of the President until 25 February 1986."
5. Defendants Maria Clara Lobregat and Jose R. Eleazar, Jr. were PCA Directors x x x during the period 1970 to 1986 x x x.
6. Plaintiff admits the existence of the following agreements which are attached as Annexes "A" and "B" to the Opposition dated October 10, 2002 of defendant Eduardo M. Cojuangco, Jr. to the above-cited Motion for Partial Summary Judgment:
a) "This Agreement made and entered into this ______ day of May, 1975 at Makati, Rizal, Philippines, by and between:
PEDRO COJUANGCO, Filipino, of legal age and with residence at 1575 Princeton St., Mandaluyong, Rizal, for and in his own behalf and in behalf of certain other stockholders of First United Bank listed in Annex "A" attached hereto (hereinafter collectively called the SELLERS);
– and –
EDUARDO COJUANGCO, JR., Filipino, of legal age and with residence at 136 9th Street corner Balete Drive, Quezon City, represented in this act by his duly authorized attorney-in-fact, EDGARDO J. ANGARA, for and in his own behalf and in behalf of certain other buyers, (hereinafter collectively called the BUYERS)";
WHEREAS, the SELLERS own of record and beneficially a total of 137,866 shares of
stock, with a par value of P100.00 each, of the common stock of the First United Bank (the "Bank"), a commercial banking corporation existing under the laws of the Philippines;
WHEREAS, the BUYERS desire to purchase, and the SELLERS are willing to sell, the aforementioned shares of stock totaling 137,866 shares (hereinafter called the "Contract Shares") owned by the SELLERS due to their special relationship to EDUARDO COJUANGCO, JR.;
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants herein contained, the parties agree as follows:
1. Sale and Purchase of Contract Shares
Subject to the terms and conditions of this Agreement, the SELLERS hereby sell, assign, transfer and convey unto the BUYERS, and the BUYERS hereby purchase and acquire, the Contract Shares free and clear of all liens and encumbrances thereon.
2. Contract Price
The purchase price per share of the Contract Shares payable by the BUYERS is P200.00 or an aggregate price of P27,573,200.00 (the "Contract Price").
3. Delivery of, and payment for, stock certificates
Upon the execution of this Agreement, (i) the SELLERS shall deliver to the BUYERS the stock certificates representing the Contract Shares, free
and clear of all liens, encumbrances, obligations, liabilities and other burdens in favor of the Bank or third parties, duly endorsed in blank or with stock powers sufficient to transfer the shares to bearer; and (ii) BUYERS shall deliver to the SELLERS P27,511,295.50 representing the Contract Price less the amount of stock transfer taxes payable by the SELLERS, which the BUYERS undertake to remit to the appropriate authorities. (Emphasis added.)
4. Representation and Warranties of Sellers
The SELLERS respectively and independently of each other represent and warrant that:
(a) The SELLERS are the lawful owners of, with good marketable title to, the Contract Shares and that (i) the certificates to be delivered pursuant thereto have been validly issued and are fully paid and non-assessable; (ii) the Contract Shares are free and clear of all liens, encumbrances, obligations, liabilities and other burdens in favor of the Bank or third parties x x x.
This representation shall survive the execution and delivery of this Agreement and the consummation or transfer hereby contemplated.
(b) The execution, delivery and performance of this Agreement by the SELLERS does not conflict with or constitute any breach of any provision in any agreement to which they are a party or by which they may be bound.
(c) They have complied with the condition set forth in Article X of the Amended Articles of Incorporation of the Bank.
5. Representation of BUYERS
x x x x
The parties hereto hereby agree to execute or cause to be executed such documents and instruments as may be required in order to carry out the intent and purpose of this Agreement.
x x x x
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands at the place and on the date first above written.
PEDRO COJUANGCO(on his own behalf and in behalf of the other listed in Annex "A" hereof)(SELLERS)
EDUARDO COJUANGCO, JR.(on his own behalf and in behalfSellers of the other Buyers)(BUYERS)
EDGARDO J. ANGARAAttorney-in-Fact
x x x x
b) "Agreement for the Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers of the Philippines, made and entered into this 25th day of
May 1975 at Makati, Rizal, Philippines, by and between:
EDUARDO M. COJUANGCO, JR., Filipino, of legal age, with business address at 10th Floor, Sikatuna Building, Ayala Avenue, Makati, Rizal, hereinafter referred to as the SELLER;
– and –
PHILIPPINE COCONUT AUTHORITY, a public corporation created by Presidential Decree No. 232, as amended, for itself and for the benefit of the coconut farmers of the Philippines, (hereinafter called the BUYER)"
WHEREAS, on May 17, 1975, the Philippine Coconut Producers Federation ("PCPF"), through its Board of Directors, expressed the desire of the coconut farmers to own a commercial bank which will be an effective instrument to solve the perennial credit problems and, for that purpose, passed a resolution requesting the PCA to negotiate with the SELLER for the transfer to the coconut farmers of the SELLER’s option to buy the First United Bank (the "Bank") under such terms and conditions as BUYER may deem to be in the best interest of the coconut farmers and instructed Mrs. Maria Clara Lobregat to convey such request to the BUYER;
WHEREAS, the PCPF further instructed Mrs. Maria Clara Lobregat to make representations with the BUYER to utilize its funds to finance the purchase of the Bank;
WHEREAS, the SELLER has the exclusive and personal option to buy 144,400 shares (the "Option Shares") of the Bank, constituting 72.2% of the present outstanding shares of stock of the Bank, at the price of P200.00 per share, which option only the SELLER can validly exercise;
WHEREAS, in response to the representations made by the coconut farmers, the BUYER has requested the SELLER to exercise his personal option for the benefit of the coconut farmers;
WHEREAS, the SELLER is willing to transfer the Option Shares to the BUYER at a price equal to his option price of P200 per share;
WHEREAS, recognizing that ownership by the coconut farmers of a commercial bank is a permanent solution to their perennial credit problems, that it will accelerate the growth and development of the coconut industry and that the policy of the state which the BUYER is required to implement is to achieve vertical integration thereof so that coconut farmers will become participants in, and beneficiaries of the development and growth of the coconut industry, the BUYER approved the request of PCPF that it acquire a commercial bank to be owned by the coconut farmers and, appropriated, for that purpose, the sum of P150 Million to enable the farmers to buy the Bank and capitalize the Bank to such an extension as to be in a position to adopt a credit policy for the coconut farmers at preferential rates;
WHEREAS, x x x the BUYER is willing to subscribe to additional shares ("Subscribed Shares") and place the Bank in a more favorable financial position to extend loans and credit
facilities to coconut farmers at preferential rates;
NOW, THEREFORE, for and in consideration of the foregoing premises and the other terms and conditions hereinafter contained, the parties hereby declare and affirm that their principal contractual intent is (1) to ensure that the coconut farmers own at least 60% of the outstanding capital stock of the Bank; and (2) that the SELLER shall receive compensation for exercising his personal and exclusive option to acquire the Option Shares, for transferring such shares to the coconut farmers at the option price of P200 per share, and for performing the management services required of him hereunder.
1. To ensure that the transfer to the coconut farmers of the Option Shares is effected with the least possible delay and to provide for the faithful performance of the obligations of the parties hereunder, the parties hereby appoint the Philippine National Bank as their escrow agent (the "Escrow Agent").
Upon execution of this Agreement, the BUYER shall deposit with the Escrow Agent such amount as may be necessary to implement the terms of this Agreement x x x.
2. As promptly as practicable after execution of this Agreement, the SELLER shall exercise his option to acquire the Option Share and SELLER shall immediately thereafter deliver and turn over to the Escrow Agent such stock certificates as are herein provided to be received from the existing stockholders of the Bank by virtue of the exercise on the aforementioned option x x x.
3. To ensure the stability of the Bank and continuity of management and credit policies to be adopted for the benefit of the coconut farmers, the parties undertake to cause the stockholders and the Board of Directors of the Bank to authorize and approve a management contract between the Bank and the SELLER under the following terms:
(a) The management contract shall be for a period of five (5) years, renewable for another five (5) years by mutual agreement of the SELLER and the Bank;
(b) The SELLER shall be elected President and shall hold office at the pleasure of the Board of Directors. While serving in such capacity, he shall be entitled to such salaries and emoluments as the Board of Directors may determine;
(c) The SELLER shall recruit and develop a professional management team to manage and operate the Bank under the control and supervision of the Board of Directors of the Bank;
(d) The BUYER undertakes to cause three (3) persons designated by the SELLER to be elected to the Board of Directors of the Bank;
(e) The SELLER shall receive no compensation for managing the Bank, other than such salaries or emoluments to which he may be entitled by virtue of the discharge of his function and duties as President, provided x x x and
(f) The management contract may be assigned to a management company owned and controlled by the SELLER.
4. As compensation for exercising his personal and exclusive option to
acquire the Option Shares and for transferring such shares to the coconut farmers, as well as for performing the management services required of him, SELLER shall receive equity in the Bank amounting, in the aggregate, to 95,304 fully paid shares in accordance with the procedure set forth in paragraph 6 below;
5. In order to comply with the Central Bank program for increased capitalization of banks and to ensure that the Bank will be in a more favorable financial position to attain its objective to extend to the coconut farmers loans and credit facilities, the BUYER undertakes to subscribe to shares with an aggregate par value of P80,864,000 (the "Subscribed Shares"). The obligation of the BUYER with respect to the Subscribed Shares shall be as follows:
(a) The BUYER undertakes to subscribe, for the benefit of the coconut farmers, to shares with an aggregate par value of P15,884,000 from the present authorized but unissued shares of the Bank; and
(b) The BUYER undertakes to subscribe, for the benefit of the coconut farmers, to shares with an aggregate par value of P64,980,000 from the increased capital stock of the Bank, which subscriptions shall be deemed made upon the approval by the stockholders of the increase of the authorized capital stock of the Bank from P50 Million to P140 Million.
The parties undertake to declare stock dividends of P8 Million out of the present authorized but unissued capital stock of P30 Million.
6. To carry into effect the agreement of the parties that the SELLER shall receive as his compensation 95,304 shares:
(a) The Escrow Agent shall, upon receipt from the SELLER of the stock certificates representing the Option Shares, duly endorsed in blank or with stock powers sufficient to transfer the same to bearer, present such stock certificates to the Transfer Agent of the Bank and shall cause such Transfer Agent to issue stock certificates of the Bank in the following ratio: one share in the name of the SELLER for every nine shares in the name of the BUYER.
(b) With respect to the Subscribed Shares, the BUYER undertakes, in order to prevent the dilution of SELLER’s equity position, that it shall cede over to the SELLER 64,980 fully-paid shares out of the Subscribed Shares. Such undertaking shall be complied with in the following manner: upon receipt of advice that the BUYER has subscribed to the Subscribed Shares upon approval by the stockholders of the increase of the authorized capital stock of the Bank, the Escrow Agent shall thereupon issue a check in favor of the Bank covering the total payment for the Subscribed Shares. The Escrow Agent shall thereafter cause the Transfer Agent to issue a stock certificates of the Bank in the following ratio: one share in the name of the SELLER for every nine shares in the name of the BUYER.
7. The parties further undertake that the Board of Directors and management of the Bank shall establish and implement a loan policy for the Bank of making available for loans at preferential rates of interest to the coconut farmers x x x.
8. The BUYER shall expeditiously distribute from time to time the shares of the Bank, that shall be held by it for the benefit of the coconut farmers of the
Philippines under the provisions of this Agreement, to such, coconut farmers holding registered COCOFUND receipts on such equitable basis as may be determine by the BUYER in its sound discretion.
9. x x x x
10. To ensure that not only existing but future coconut farmers shall be participants in and beneficiaries of the credit policies, and shall be entitled to the benefit of loans and credit facilities to be extended by the Bank to coconut farmers at preferential rates, the shares held by the coconut farmers shall not be entitled to pre-emptive rights with respect to the unissued portion of the authorized capital stock or any increase thereof.
11. After the parties shall have acquired two-thirds (2/3) of the outstanding shares of the Bank, the parties shall call a special stockholders’ meeting of the Bank:
(a) To classify the present authorized capital stock of P50,000,000 divided into 500,000 shares, with a par value of P100.00 per share into: 361,000 Class A shares, with an aggregate par value of P36,100,000 and 139,000 Class B shares, with an aggregate par value of P13,900,000. All of the Option Shares constituting 72.2% of the outstanding shares, shall be classified as Class A shares and the balance of the outstanding shares, constituting 27.8% of the outstanding shares, as Class B shares;
(b) To amend the articles of incorporation of the Bank to effect the following changes:
(i) change of corporate name to First United Coconut Bank;
(ii) replace the present provision restricting the transferability of the shares with a limitation on ownership by any individual or entity to not more than 10% of the outstanding shares of the Bank;
(iii) provide that the holders of Class A shares shall not be entitled to pre-emptive rights with respect to the unissued portion of the authorized capital stock or any increase thereof; and
(iv) provide that the holders of Class B shares shall be absolutely entitled to pre-emptive rights, with respect to the unissued portion of Class B shares comprising part of the authorized capital stock or any increase thereof, to subscribe to Class B shares in proportion t the subscriptions of Class A shares, and to pay for their subscriptions to Class B shares within a period of five (5) years from the call of the Board of Directors.
(c) To increase the authorized capital stock of the Bank from P50 Million to P140 Million, divided into 1,010,800 Class A shares and 389,200 Class B shares, each with a par value of P100 per share;
(d) To declare a stock dividend of P8 Million payable to the SELLER, the BUYER and other stockholders of the Bank out of the present authorized but unissued capital stock of P30 Million;
(e) To amend the by-laws of the Bank accordingly; and
(f) To authorize and approve the management contract provided in paragraph 2 above.
The parties agree that they shall vote their shares and take all the necessary corporate action in order to carry into effect the foregoing provisions of this paragraph 11, including such other amendments of the articles of incorporation and by-laws of the Bank as are necessary in order to implement the intention of the parties with respect thereto.
12. It is the contemplation of the parties that the Bank shall achieve a financial and equity position to be able to lend to the coconut farmers at preferential rates.
In order to achieve such objective, the parties shall cause the Bank to adopt a policy of reinvestment, by way of stock dividends, of such percentage of the profits of the Bank as may be necessary.
13. The parties agree to execute or cause to be executed such documents and instruments as may be required in order to carry out the intent and purpose of this Agreement.
IN WITNESS WHEREOF x x x
PHILIPPINE COCONUT AUTHORITY(BUYER)
EDUARDO COJUANGCO, JR.(SELLER)
x x x x
7. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit that the x x x (PCA) was the "other buyers" represented by defendant Eduardo M. Cojuangco, Jr. in the May 1975 Agreement entered into between Pedro Cojuangco (on his own behalf and in behalf of
other sellers listed in Annex "A"of the agreement) and defendant Eduardo M. Cojuangco, Jr. (on his own behalf and in behalf of the other buyers). Defendant Cojuangco insists he was the "only buyer" under the aforesaid Agreement.
8. Defendant Eduardo M. Cojuangco, Jr. did not own any share in the x x x (FUB) prior to the execution of the two Agreements x x x.
9. Defendants Lobregat, et al., and COCOFED, et al., and Ballares, et al. admit that in addition to the 137,866 FUB shares of Pedro Cojuangco, et al. covered by the Agreement, other FUB stockholders sold their shares to PCA such that the total number of FUB shares purchased by PCA … increased from 137,866 shares to 144,400 shares, the OPTION SHARES referred to in the Agreement of May 25, 1975. Defendant Cojuangco did not make said admission as to the said 6,534 shares in excess of the 137,866 shares covered by the Agreement with Pedro Cojuangco.
10. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit that the Agreement, described in Section 1 of Presidential Decree (P.D.) No. 755 dated July 29, 1975 as the "Agreement for the Acquisition of a Commercial Bank for the Benefit of Coconut Farmers" executed by the Philippine Coconut Authority" and incorporated in Section 1 of P.D. No. 755 by reference, refers to the "AGREEMENT FOR THE ACQUISITION OF A COMMERCIAL BANK FOR THE BENEFIT OF THE COCONUT FARMERS OF THE PHILIPPINES" dated May 25, 1975 between defendant Eduardo M. Cojuangco, Jr. and the PCA (Annex "B" for defendant Cojuangco’s OPPOSITION TO PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT RE: EDUARDO M. COJUANGCO, JR. dated September 18, 2002).
Plaintiff refused to make the same admission.
11. As to whether P.D. No. 755 and the text of the agreement described therein was published, the Court takes judicial notice that P.D. No. 755 was published in x x x volume 71 of the Official Gazette but the text of the agreement x x x was not so published with P.D. No. 755.
12. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit that the PCA used public funds x x x in the total amount of P150 million, to purchase the FUB shares amounting to 72.2% of the authorized capital stock of the FUB, although the PCA was later reimbursed from the coconut levy funds and that the PCA subscription in the increased capitalization of the FUB, which was later renamed the x x x (UCPB), came from the said coconut levy funds x x x.
13. Pursuant to the May 25, 1975 Agreement, out of the 72.2% shares of the authorized and the increased capital stock of the FUB (later UCPB), entirely paid for by PCA, 64.98% of the shares were placed in the name of the "PCA for the benefit of the coconut farmers" and 7,22% were given to defendant Cojuangco. The remaining 27.8% shares of stock in the FUB which later became the UCPB were not covered by the two (2) agreements referred to in item no. 6, par. (a) and (b) above. "There were shares forming part of the aforementioned 64.98% which were later sold or transferred to non-coconut farmers.
14. Under the May 27, 1975 Agreement, defendant Cojuangco’s equity in the FUB (now UCPB) was ten percent (10%) of the shares of stock acquired by the PCA for the benefit of the coconut farmers.
15. That the fully paid 95.304 shares of the FUB, later the UCPB, acquired by defendant x x x Cojuangco, Jr. pursuant to the May 25, 1975 Agreement were paid for by the PCA in accordance with the terms and conditions provided in the said Agreement. 16. Defendants Lobregat, et al. and COCOFED, et
al. and Ballares, et al. admit that the affidavits of the coconut farmers (specifically, Exhibit "1-Farmer" to "70-Farmer") uniformly state that:
a. they are coconut farmers who sold coconut products;
b. in the sale thereof, they received COCOFUND receipts pursuant to R.A. No. 6260;
c. they registered the said COCOFUND receipts; and
d. by virtue thereof, and under R.A. No. 6260, P.D. Nos. 755, 961 and 1468, they are allegedly entitled to the subject UCPB shares.
but subject to the following qualifications:
a. there were other coconut farmers who received UCPB shares although they did not present said COCOFUND receipt because the PCA distributed the unclaimed UCPB shares not only to those who already received their UCPB shares in exchange for their COCOFUND receipts but also to the coconut farmers determined by a national census conducted pursuant to PCA administrative issuances;
b. there were other affidavits executed by Lobregat, Eleazar, Ballares and Aldeguer relative to the said distribution of the unclaimed UCPB shares; and
c. the coconut farmers claim the UCPB shares by virtue of their compliance not only with the laws mentioned in item (d) above but also with the relevant issuances of the PCA such as, PCA Administrative Order No. 1, dated August 20, 1975 (Exh. "298-Farmer"); PCA Resolution No. 033-78 dated February 16, 1978….
The plaintiff did not make any admission as to the foregoing qualifications.
17. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. claim that the UCPB shares in question have legitimately become the private properties of the 1,405,366 coconut farmers solely on the basis of their having acquired said shares in compliance with R.A. No. 6260, P.D. Nos. 755, 961 and 1468 and the administrative issuances of the PCA cited above.
18. On the other hand, defendant … Cojuangco, Jr. claims ownership of the UCPB shares, which he holds, solely on the basis of the two Agreements…. (Emphasis and words in brackets added.)
On July 11, 2003, the Sandiganbayan issued the assailed PSJ-A, ruling in favor of the Republic, disposing insofar as pertinent as follows:21
WHEREFORE, in view of the foregoing, we rule as follows:
x x x x
C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: EDUARDO M. COJUANGCO, JR.) dated September 18, 2002 filed by plaintiff.
1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA and defendant Eduardo M. Cojuangco, Jr. dated May 25, 1975 nor did it give the Agreement the binding force of a law because of the non-publication of the said Agreement.
2. Regarding the questioned transfer of the shares of stock of FUB (later UCPB) by PCA to defendant Cojuangco or the so-called "Cojuangco UCPB shares" which cost the PCA more than
Ten Million Pesos in CCSF in 1975, we declare, that the transfer of the following FUB/UCPB shares to defendant Eduardo M. Cojuangco, Jr. was not supported by valuable consideration, and therefore null and void:
a. The 14,400 shares from the "Option Shares";
b. Additional Bank Shares Subscribed and Paid by PCA, consisting of:
1. Fifteen Thousand Eight Hundred Eighty-Four (15,884) shares out of the authorized but unissued shares of the bank, subscribed and paid by PCA;
2. Sixty Four Thousand Nine Hundred Eighty (64,980) shares of the increased capital stock subscribed and paid by PCA; and
3. Stock dividends declared pursuant to paragraph 5 and paragraph 11 (iv) (d) of the Agreement.
3. The above-mentioned shares of stock of the FUB/UCPB transferred to defendant Cojuangco are hereby declared conclusively owned by the plaintiff Republic of the Philippines.
4. The UCPB shares of stock of the alleged fronts, nominees and dummies of defendant Eduardo M. Cojuangco, Jr. which form part of the 72.2% shares of the FUB/UCPB paid for by the
PCA with public funds later charged to the coconut levy funds, particularly the CCSF, belong to the plaintiff Republic of the Philippines as their true and beneficial owner.
Let trial of this Civil Case proceed with respect to the issues which have not been disposed of in this Partial Summary Judgment. For this purpose, the plaintiff’s Motion Ad Cautelam to Present
Additional Evidence dated March 28, 2001 is hereby GRANTED.22 (Emphasis and underlining added.)
As earlier explained, the core issue in this instant petition is Part C of the dispositive portion in PSJ-A declaring the 7.22% FUB (now UCPB) shares transferred to Cojuangco, plus the other shares paid by the PCA as "conclusively" owned by the Republic. Parts A and B of the same dispositive portion have already been finally resolved and adjudicated by this Court in COCOFED v. Republic on January 24, 2012.23
From PSJ-A, Cojuangco moved for partial reconsideration but the Sandiganbayan, by Resolution24 of December 28, 2004, denied the motion.
Hence, the instant petition.
Cojuangco’s petition formulates the issues in question form, as follows:25
a. Is the acquisition of the so-called Cojuangco, Jr. UCPB shares by petitioner Cojuangco x x x "not supported by valuable consideration and, therefore, null and void"?
b. Did the Sandiganbayan have jurisdiction, in Civil Case No. 0033-A, an "ill-gotten wealth" case brought under EO Nos. 1 and 2, to declare the Cojuangco UCPB shares acquired by virtue of the Pedro Cojuangco, et al. Agreement and/or the PCA Agreement
null and void because "not supported by valuable consideration"?
c. Was the claim that the acquisition by petitioner Cojuangco of shares representing 7.2% of the outstanding capital stock of FUB (later UCPB) "not supported by valuable consideration", a "claim" pleaded in the complaint and may therefore be the basis of a "summary judgment" under Section 1, Rule 35 of the Rules of Court?
d. By declaring the Cojuangco UCPB shares as "not supported by valuable consideration, and therefore, null and void", did the Sandiganbayan effectively nullify the PCA Agreement? May the Sandiganbayan nullify the PCA Agreement when the parties to the Agreement, namely: x x x concede its validity? If the PCA Agreement be deemed "null and void", should not the FUB (later UCPB) shares revert to petitioner Cojuangco (under the PCA Agreement) or to Pedro Cojuangco, et al. x x x? Would there be a basis then, even assuming the absence of consideration x x x, to declare 7.2% UCPB shares of petitioner Cojuangco as "conclusively owned by the plaintiff Republic of the Philippines"?26
The Court’s Ruling
THE SANDIGANBAYAN HAS JURISDICTION OVER THE SUBJECT MATTER OF THE SUBDIVIDED AMENDED COMPLAINTS, INCLUDING THE SHARES ALLEGEDLY ACQUIRED BY COJUANGCO BY VIRTUE OF THE PCA AGREEMENTS.
The issue of jurisdiction over the subject matter of the subdivided amended complaints has peremptorily been put to rest by the Court in its January 24, 2012 Decision in COCOFED v.
Republic. There, the Court, citing Regalado27 and settled jurisprudence, stressed the following interlocking precepts: Subject matter jurisdiction is conferred by law, not by the consent or acquiescence of any or all of the parties. In turn, the issue on whether a suit comes within the penumbra of a statutory conferment is determined by the allegations in the complaint, regardless of whether or not the suitor will be entitled to recover upon all or part of the claims asserted.
The Republic’s material averments in its complaint subdivided in CC No. 0033-A included the following:
CC No. 0033-A
12. Defendant Eduardo M. Cojuangco, Jr. served as a public officer during the Marcos administration. During the period of his incumbency as a public officer, he acquired assets, funds and other property grossly and manifestly disproportionate to his salaries, lawful income and income from legitimately acquired property.
13. Defendant Eduardo M. Cojuangco, Jr., taking undue advantage of his association, influence, connection, and acting in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, AND THE INDIVIDUAL DEFENDANTS, embarked upon devices, schemes and stratagems, to unjustly enrich themselves at the expense of Plaintiff and the Filipino people, such as when he –
a) manipulated, beginning the year 1975 with the active collaboration of Defendants x x x Maria Clara Lobregat, Danilo Ursua etc., the purchase by . . . (PCA) of 72.2% of the outstanding capital stock of the x x x (FUB) which was subsequently converted into a universal bank named x x x (UCPB) through the use of the Coconut Consumers
Stabilization Fund (CCSF) being initially in the amount of P85,773,100.00 in a manner contrary to law and to the specific purposes for which said coconut levy funds were imposed and collected under P.D. 276, and with sinister designs and under anomalous circumstances, to wit:
(i) Defendant Eduardo Cojuangco, Jr. coveted the coconut levy funds as a cheap, lucrative and risk-free source of funds with which to exercise his private option to buy the controlling interest in FUB; thus, claiming that the 72.2% of the outstanding capital stock of FUB could only be purchased and transferred through the exercise of his "personal and exclusive action option to acquire the 144,000 shares" of the bank, Defendant Eduardo M. Cojuangco, Jr. and PCA, x x x executed on May 26, 1975 a purchase agreement which provides, among others, for the payment to him in fully paid shares as compensation thereof 95,384 shares worth P1,444,000.00 with the further condition that he shall manage and control the bank as Director and President for a term of five (5) years renewable for another five (5) years and to designate three (3) persons of his choice who shall be elected as members of the Board of Directors of the Bank;
(ii) to legitimize a posteriori his highly anomalous and irregular use and diversion of government funds to advance his own private and commercial interests, Defendant Eduardo Cojuangco, Jr. caused the issuance by Defendant Ferdinand E. Marcos of PD 755 (a) declaring that the coconut levy funds shall not be considered special and fiduciary and trust funds and do not form part of the general funds of the National Government, conveniently repealing for that purpose a series of previous decrees, PDs 276 and 414, establishing the character of the coconut levy funds as special, fiduciary, trust and governmental funds; (b) confirming the
agreement between Defendant Eduardo Cojuangco, Jr. and PCA on the purchase of FUB by incorporating by reference said private commercial agreement in PD 755;
(iii)To further consolidate his hold on UCPB, Defendant Eduardo Cojuangco, Jr. imposed as consideration and conditions for the purchase that (a) he gets one out of every nine shares given to PCA, and (b) he gets to manage and control UCPB as president for a term of five (5) years renewable for another five (5) years;
(iv) To perpetuate his opportunity to deal with and make use of the coconut levy funds x x x Cojuangco, Jr. caused the issuance by Defendant Ferdinand E. Marcos of an unconstitutional decree (PD 1468) requiring the deposit of all coconut levy funds with UCPB, interest free to the prejudice of the government.
(v) In gross violation of their fiduciary positions and in contravention of the goal to create a bank for the coconut farmers of the country, the capital stock of UCPB as of February 25, 1986 was actually held by the defendants, their lawyers, factotum and business associates, thereby finally gaining control of the UCPB by misusing the names and identities of the so-called "more than one million coconut farmers."
14. The acts of Defendants, singly or collectively, and/or in unlawful concert with one another, constitute gross abuse of official position and authority, flagrant breach of public trust and fiduciary obligations, brazen abuse of right and power, and unjust enrichment, violation of the constitution and laws of the Republic of the Philippines, to the grave and irreparable damage of Plaintiff and the Filipino people.28
In no uncertain terms, the Court has upheld the Sandiganbayan’s assumption of jurisdiction over the subject matter of Civil Case Nos. 0033-A and 0033-F.29 The Court wrote:
Judging from the allegations of the defendants’ illegal acts thereat made, it is fairly obvious that both CC Nos. 0033-A and CC 0033-F partake, in the context of EO Nos. 1, 2 and 14, series of 1986, the nature of ill-gotten wealth suits. Both deal with the recovery of sequestered shares, property or business enterprises claimed, as alleged in the corresponding basic complaints, to be ill-gotten assets of President Marcos, his cronies and nominees and acquired by taking undue advantage of relationships or influence and/or through or as a result of improper use, conversion or diversion of government funds or property. Recovery of these assets––determined as shall hereinafter be discussed as prima facie ill-gotten––falls within the unquestionable jurisdiction of the Sandiganbayan.30
P.D. No. 1606, as amended by R.A. 7975 and E.O. No. 14, Series of 1986, vests the Sandiganbayan with, among others, original jurisdiction over civil and criminal cases instituted pursuant to and in connection with E.O. Nos. 1, 2, 14 and 14-A. Correlatively, the PCGG Rules and Regulations defines the term "Ill-Gotten Wealth" as "any asset, property, business enterprise or material possession of persons within the purview of E.O. Nos. 1 and 2, acquired by them directly, or indirectly thru dummies, nominees, agents, subordinates and/or business associates by any of the following means or similar schemes":
(1) Through misappropriation, conversion, misuse or malversation of public funds or raids on the public treasury;
(2) x x x x
(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the government or any of its subdivisions, agencies or instrumentalities or government-owned or controlled corporations;
(4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or participation in any business enterprise or undertaking;
(5) Through the establishment of agricultural, industrial or commercial monopolies or other combination and/or by the issuance, promulgation and/or implementation of decrees and orders intended to benefit particular persons or special interests; and
(6) By taking undue advantage of official position, authority, relationship or influence for personal gain or benefit. (Emphasis supplied)
Section 2(a) of E.O. No. 1 charged the PCGG with the task of assisting the President in "The recovery of all ill-gotten wealth accumulated by former … President Marcos, his immediate family, relatives, subordinates and close associates … including the takeover or sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship." Complementing the aforesaid Section 2(a) is Section 1 of E.O. No. 2 decreeing the freezing of all assets "in which the Marcoses their close relatives, subordinates, business associates, dummies, agents or nominees have any interest or participation."
The Republic’s averments in the amended complaints, particularly those detailing the alleged wrongful acts of the defendants, sufficiently reveal that the subject matter thereof comprises the recovery by the
Government of ill-gotten wealth acquired by then President Marcos, his cronies or their associates and dummies through the unlawful, improper utilization or diversion of coconut levy funds aided by P.D. No. 755 and other sister decrees. President Marcos himself issued these decrees in a brazen bid to legalize what amounts to private taking of the said public funds.
x x x x
There was no actual need for Republic, as plaintiff a quo, to adduce evidence to show that the Sandiganbayan has jurisdiction over the subject matter of the complaints as it leaned on the averments in the initiatory pleadings to make visible the jurisdiction of the Sandiganbayan over the ill-gotten wealth complaints. As previously discussed, a perusal of the allegations easily reveals the sufficiency of the statement of matters disclosing the claim of the government against the coco levy funds and the assets acquired directly or indirectly through said funds as ill-gotten wealth. Moreover, the Court finds no rule that directs the plaintiff to first prove the subject matter jurisdiction of the court before which the complaint is filed. Rather, such burden falls on the shoulders of defendant in the hearing of a motion to dismiss anchored on said ground or a preliminary hearing thereon when such ground is alleged in the answer.
x x x x
Lest it be overlooked, this Court has already decided that the sequestered shares are prima facie ill-gotten wealth rendering the issue of the validity of their sequestration and of the jurisdiction of the Sandiganbayan over the case beyond doubt. In the case of COCOFED v. PCGG, We stated that:
It is of course not for this Court to pass upon the factual issues thus raised. That function pertains to the Sandiganbayan in the first
instance. For purposes of this proceeding, all that the Court needs to determine is whether or not there is prima facie justification for the sequestration ordered by the PCGG. The Court is satisfied that there is. The cited incidents, given the public character of the coconut levy funds, place petitioners COCOFED and its leaders and officials, at least prima facie, squarely within the purview of Executive Orders Nos. 1, 2 and 14, as construed and applied in BASECO, to wit:
"1. that ill-gotten properties (were) amassed by the leaders and supporters of the previous regime;
"a. more particularly, that ‘(i) Ill-gotten wealth was accumulated by x x x Marcos, his immediate family, relatives, subordinates and close associates, x x x (and) business enterprises and entities (came to be) owned or controlled by them, during x x x (the Marcos) administration, directly or through nominees, by taking undue advantage of their public office and using their powers, authority, influence, connections or relationships’;
"b. otherwise stated, that ‘there are assets and properties purportedly pertaining to the Marcoses, their close relatives, subordinates, business associates, dummies, agents or nominees which had been or were acquired by them directly or indirectly, through or as a result of the improper or illegal use of funds or properties owned by the Government x x x or any of its branches, instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of their office, authority, influence, connections or relationship, resulting in their unjust enrichment x x x;
x x x x
2. The petitioners’ claim that the assets acquired with the coconut levy funds are privately owned by the coconut farmers is
founded on certain provisions of law, to wit Sec. 7, RA 6260 and Sec. 5, Art. III, PD 1468… (Words in bracket added; italics in the original).
x x x x
E.O. 1, 2, 14 and 14-A, it bears to stress, were issued precisely to effect the recovery of ill-gotten assets amassed by the Marcoses, their associates, subordinates and cronies, or through their nominees. Be that as it may, it stands to reason that persons listed as associated with the Marcoses refer to those in possession of such ill-gotten wealth but holding the same in behalf of the actual, albeit undisclosed owner, to prevent discovery and consequently recovery. Certainly, it is well-nigh inconceivable that ill-gotten assets would be distributed to and left in the hands of individuals or entities with obvious traceable connections to Mr. Marcos and his cronies. The Court can take, as it has in fact taken, judicial notice of schemes and machinations that have been put in place to keep ill-gotten assets under wraps. These would include the setting up of layers after layers of shell or dummy, but controlled, corporations31 or manipulated instruments calculated to confuse if not altogether mislead would-be investigators from recovering wealth deceitfully amassed at the expense of the people or simply the fruits thereof. Transferring the illegal assets to third parties not readily perceived as Marcos cronies would be another. So it was that in PCGG v. Pena, the Court, describing the rule of Marcos as a "well entrenched plundering regime of twenty years," noted the magnitude of the past regime’s organized pillage and the ingenuity of the plunderers and pillagers with the assistance of experts and the best legal minds in the market.32
Prescinding from the foregoing premises, there can no longer be any serious challenge as to the Sandiganbayan’s subject matter jurisdiction. And in connection therewith, the Court wrote in COCOFED v. Republic, that the instant petition shall be decided separately and
should not be affected by the January 24, 2012 Decision, "save for determinatively legal issues directly addressed" therein.33 Thus:
We clarify that PSJ-A is subject of another petition for review interposed by Eduardo Cojuangco, Jr., in G.R. No. 180705 entitled, Eduardo M. Cojuangco, Jr. v. Republic of the Philippines, which shall be decided separately by this Court. Said petition should accordingly not be affected by this Decision save for determinatively legal issues directly addressed herein.34 (Emphasis Ours.)
We, therefore, reiterate our holding in COCOFED v. Republic respecting the Sandiganbayan’s jurisdiction over the subject matter of Civil Case No. 0033-A, including those matters whose adjudication We shall resolve in the present case.
PRELIMINARILY, THE AGREEMENT BETWEEN THE PCA AND EDUARDO M. COJUANGCO, JR. DATED MAY 25, 1975 CANNOT BE ACCORDED THE STATUS OF A LAW FOR THE LACK OF THE REQUISITE PUBLICATION.
It will be recalled that Cojuangco’s claim of ownership over the UCPB shares is hinged on two contract documents the respective contents of which formed part of and reproduced in their entirety in the aforecited Order35 of the Sandiganbayan dated March 11, 2003. The first contract refers to the agreement entered into by and between Pedro Cojuangco and his group, on one hand, and Eduardo M. Cojuangco, Jr., on the other, bearing date "May 1975"36(hereinafter referred to as "PC-ECJ Agreement"), while the second relates to the accord between the PCA and Eduardo M. Cojuangco, Jr. dated May 25, 1975 (hereinafter referred to as "PCA-Cojuangco Agreement"). The PC-ECJ Agreement allegedly contains, inter alia, Cojuangco’s personal and exclusive option to acquire the FUB ("UCPB")
shares from Pedro and his group. The PCA-Cojuangco Agreement shows PCA’s acquisition of the said option from Eduardo M. Cojuangco, Jr.
Section 1 of P.D. No. 755 incorporated, by reference, the "Agreement for the Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers" executed by the PCA. Particularly, Section 1 states:
Section 1. Declaration of National Policy. It is hereby declared that the policy of the State is to provide readily available credit facilities to the coconut farmers at preferential rates; that this policy can be expeditiously and efficiently realized by the implementation of the "Agreement for the Acquisition of a Commercial Bank for the benefit of the Coconut Farmers" executed by the Philippine Coconut Authority, the terms of which "Agreement" are hereby incorporated by reference; and that the Philippine Coconut Authority is hereby authorized to distribute, for free, the shares of stock of the bank it acquired to the coconut farmers under such rules and regulations it may promulgate. (Emphasis Ours.)
It bears to stress at this point that the PCA-Cojuangco Agreement referred to above in Section 1 of P.D. 755 was not reproduced or attached as an annex to the same law. And it is well-settled that laws must be published to be valid. In fact, publication is an indispensable condition for the effectivity of a law. Tañada v. Tuvera37 said as much:
Publication of the law is indispensable in every case x x x.
x x x x
We note at this point the conclusive presumption that every person knows the law, which of course presupposes that the law has been published if the presumption is to have any legal justification at all. It is no less
important to remember that Section 6 of the Bill of Rights recognizes "the right of the people to information on matters of public concern," and this certainly applies to, among others, and indeed especially, the legislative enactments of the government.
x x x x
We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature, or, at present, directly conferred by the Constitution. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation.38
We even went further in Tañada to say that:
Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot feint, parry or cut unless the naked blade is drawn.39
The publication, as further held in Tañada, must be of the full text of the law since the purpose of publication is to inform the public of the contents of the law. Mere referencing the number of the presidential decree, its title or whereabouts and its supposed date of
effectivity would not satisfy the publication requirement.40
In this case, while it incorporated the PCA-Cojuangco Agreement by reference, Section 1 of P.D. 755 did not in any way reproduce the exact terms of the contract in the decree. Neither was acopy thereof attached to the decree when published. We cannot, therefore, extend to the said
Agreement the status of a law. Consequently, We join the Sandiganbayan in its holding that the PCA-Cojuangco Agreement shall be treated as an ordinary transaction between agreeing minds to be governed by contract law under the Civil Code.
THE PCA-COJUANGCO AGREEMENT IS A VALID CONTRACT FOR HAVING THE REQUISITE CONSIDERATION.
In PSJ-A, the Sandiganbayan struck down the PCA-Cojuangco Agreement as void for lack of consideration/cause as required under Article 1318, paragraph 3 in relation to Article 1409, paragraph 3 of the Civil Code. The Sandiganbayan stated:
In sum, the evidence on record relied upon by defendant Cojuangco negates the presence of: (1) his claimed personal and exclusive option to buy the 137,866 FUB shares; and (2) any pecuniary advantage to the government of the said option, which could compensate for generous payment to him by PCA of valuable shares of stock, as stipulated in the May 25, 1975 Agreement between him and the PCA.41
On the other hand, the aforementioned provisions of the Civil Code state:
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (Emphasis supplied)42
Art. 1409. The following contracts are inexistent and void from the beginning:
x x x x
(3) Those whose cause or object did not exist at the time of the transaction;43
The Sandiganbayan found and so tagged the alleged cause for the agreement in question, i.e., Cojuangco’s "personal and exclusive option to acquire the Option Shares," as fictitious. A reading of the purchase agreement between Cojuangco and PCA, so the Sandiganbayan ruled, would show that Cojuangco was not the only seller; thus, the option was, as to him, neither personal nor exclusive as he claimed it to be. Moreover, as the Sandiganbayan deduced, that option was inexistent on the day of execution of the PCA-Cojuangco Agreement as the Special Power of Attorney executed by Cojuangco in favor of now Senator Edgardo J. Angara, for the latter to sign the PC-ECJ Agreement, was dated May 25, 1975 while the PCA-Cojuangco Agreement was also signed on May 25, 1975. Thus, the Sandiganbayan believed that when the parties affixed their signatures on the second Agreement, Cojuangco’s option to purchase the FUB shares of stock did not yet exist. The Sandiganbayan further ruled that there was no justification in the second Agreement for the compensation of Cojuangco of 14,400 shares, which it viewed as exorbitant. Additionally, the Sandiganbayan ruled that PCA could not validly enter, in behalf of FUB/UCPB, into a veritable bank management contract with Cojuangco, PCA having a personality separate and distinct from that of FUB. As such, the Sandiganbayan
concluded that the PCA-Cojuangco Agreement was null and void. Correspondingly, the Sandiganbayan also ruled that the sequestered FUB (UCPB) shares of stock in the name of Cojuangco are conclusively owned by the Republic.
After a circumspect study, the Court finds as inconclusive the evidence relied upon by Sandiganbayan to support its ruling that the PCA-Cojuangco Agreement is devoid of sufficient consideration. We shall explain.
Rule 131, Section 3(r) of the Rules of Court states:
Sec. 3. Disputable presumptions.—The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence:
x x x x
(r) That there was a sufficient consideration for a contract;
The Court had the occasion to explain the reach of the above provision in Surtida v. Rural Bank of Malinao (Albay), Inc.,44 to wit:
Under Section 3, Rule 131 of the Rules of Court, the following are disputable presumptions: (1) private transactions have been fair and regular; (2) the ordinary course of business has been followed; and (3) there was sufficient consideration for a contract. A presumption may operate against an adversary who has not introduced proof to rebut it. The effect of a legal presumption upon a burden of proof is to create the necessity of presenting evidence to meet the legal presumption or the prima facie case created thereby, and which if no proof to the contrary is presented and offered, will prevail. The burden of proof remains where it is, but by the presumption, the one who has that burden is relieved for the
time being from introducing evidence in support of the averment, because the presumption stands in the place of evidence unless rebutted.
The presumption that a contract has sufficient consideration cannot be overthrown by the bare uncorroborated and self-serving assertion of petitioners that it has no consideration. To overcome the presumption of consideration, the alleged lack of consideration must be shown by preponderance of evidence. Petitioners failed to discharge this burden x x x. (Emphasis Ours.)
The assumption that ample consideration is present in a contract is further elucidated in Pentacapital Investment Corporation v. Mahinay:45
Under Article 1354 of the Civil Code, it is presumed that consideration exists and is lawful unless the debtor proves the contrary. Moreover, under Section 3, Rule 131 of the Rules of Court, the following are disputable presumptions: (1) private transactions have been fair and regular; (2) the ordinary course of business has been followed; and (3) there was sufficient consideration for a contract. A presumption may operate against an adversary who has not introduced proof to rebut it. The effect of a legal presumption upon a burden of proof is to create the necessity of presenting evidence to meet the legal presumption or the prima facie case created thereby, and which, if no proof to the contrary is presented and offered, will prevail. The burden of proof remains where it is, but by the presumption, the one who has that burden is relieved for the time being from introducing evidence in support of the averment, because the presumption stands in the place of evidence unless rebutted.46 (Emphasis supplied.)
The rule then is that the party who stands to profit from a declaration of the nullity of a contract on the ground of insufficiency of consideration––which would necessarily refer to
one who asserts such nullity––has the burden of overthrowing the presumption offered by the aforequoted Section 3(r). Obviously then, the presumption contextually operates in favor of Cojuangco and against the Republic, as plaintiff a quo, which then had the burden to prove that indeed there was no sufficient consideration for the Second Agreement. The Sandiganbayan’s stated observation, therefore, that based on the wordings of the Second Agreement, Cojuangco had no personal and exclusive option to purchase the FUB shares from Pedro Cojuangco had really little to commend itself for acceptance. This, as opposed to the fact that such sale and purchase agreement is memorialized in a notarized document whereby both Eduardo Cojuangco, Jr. and Pedro Cojuangco attested to the correctness of the provisions thereof, among which was that Eduardo had such option to purchase. A notarized document, Lazaro v. Agustin47 teaches, "generally carries the evidentiary weight conferred upon it with respect to its due execution, and documents acknowledged before a notary public have in their favor the disputable presumption of regularity."
In Samanilla v. Cajucom,48 the Court clarified that the presumption of a valid consideration cannot be discarded on a simple claim of absence of consideration, especially when the contract itself states that consideration was given:
x x x This presumption appellants cannot overcome by a simple assertion of lack of consideration. Especially may not the presumption be so lightly set aside when the contract itself states that consideration was given, and the same has been reduced into a public instrument will all due formalities and solemnities as in this case. (Emphasis ours.)
A perusal of the PCA-Cojuangco Agreement disclosed an express statement of consideration for the transaction:
NOW, THEREFORE, for and in consideration of the foregoing premises and the other terms and conditions hereinafter contained, the parties hereby declare and affirm that their principal contractual intent is (1) to ensure that the coconut farmers own at least 60% of the outstanding capital stock of the Bank, and (2) that the SELLER shall receive compensation for exercising his personal and exclusive option to acquire the Option Shares, for transferring such shares to the coconut farmers at the option price of P200 per share, and for performing the management services required of him hereunder.
x x x x
4. As compensation for exercising his personal and exclusive option to acquire the Option ShareApplying Samanilla to the case at bar, the express and positive declaration by the parties of the presence of adequate consideration in the contract makes conclusive the presumption of sufficient consideration in the PCA Agreement. Moreover, the option to purchase shares and management services for UCPB was already availed of by petitioner Cojuangco for the benefit of the PCA. The exercise of such right resulted in the execution of the PC-ECJ Agreement, which fact is not disputed. The document itself is incontrovertible proof and hard evidence that petitioner Cojuangco had the right to purchase the subject FUB (now UCPB) shares. Res ipsa loquitur.
The Sandiganbayan, however, pointed to the perceived "lack of any pecuniary value or advantage to the government of the said option, which could compensate for the generous payment to him by PCA of valuable shares of stock, as stipulated in the May 25, 1975 Agreement between him and the PCA."49
Inadequacy of the consideration, however, does not render a contract void under Article 1355 of the Civil Code:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied.)
Alsua-Betts v. Court of Appeals50 is instructive that lack of ample consideration does not nullify the contract:
Inadequacy of consideration does not vitiate a contract unless it is proven which in the case at bar was not, that there was fraud, mistake or undue influence. (Article 1355, New Civil Code). We do not find the stipulated price as so inadequate to shock the court’s conscience, considering that the price paid was much higher than the assessed value of the subject properties and considering that the sales were effected by a father to her daughter in which case filial love must be taken into account. (Emphasis supplied.)s and for transferring such shares to the coconut farmers, as well as for performing the management services required of him, SELLER shall receive equity in the Bank amounting, in the aggregate, to 95,304 fully paid shares in accordance with the procedure set forth in paragraph 6 below. (Emphasis supplied.)
Vales v. Villa51 elucidates why a bad transaction cannot serve as basis for voiding a contract:
x x x Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. x x x Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them – indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a violation of law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it. (Emphasis ours.)
While one may posit that the PCA-Cojuangco Agreement puts PCA and the coconut farmers at a disadvantage, the facts do not make out a clear case of violation of any law that will necessitate the recall of said contract. Indeed, the anti-graft court has not put forward any specific stipulation therein that is at war with any law, or the Constitution, for that matter. It is even clear as day that none of the parties who entered into the two agreements with petitioner Cojuangco contested nor sought the nullification of said agreements, more particularly the PCA who is always provided legal advice in said transactions by the Government corporate counsel, and a battery of lawyers and presumably the COA auditor assigned to said agency. A government agency, like the PCA, stoops down to level of an ordinary citizen when it enters into a private transaction with private individuals. In this setting, PCA is bound by the law on contracts and is bound to comply with the terms of the PCA-Cojuangco Agreement which is the law between the parties. With the silence of PCA not to challenge the validity of the PCA-Cojuangco Agreement and the inability of government to demonstrate the lack of ample consideration in the transaction, the Court is left with no other choice but to uphold the validity of said agreements.
While consideration is usually in the form of money or property, it need not be monetary. This is clear from Article 1350 which reads:
Art. 1350. In onerous contracts the cause is understood to be, for each contracting party, the prestation or promise of a thing or service by the other; in remuneratory ones, the service or benefit which is remunerated; and in contracts of pure beneficence, the mere liability of the benefactor. (Emphasis supplied.)
Gabriel v. Monte de Piedad y Caja de Ahorros52 tells us of the meaning of consideration:
x x x A consideration, in the legal sense of the word, is some right, interest, benefit, or advantage conferred upon the promisor, to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss, or disadvantage suffered or undertaken by the promisee other than to such as he is at the time of consent bound to suffer. (Emphasis Ours.)
The Court rules that the transfer of the subject UCPB shares is clearly supported by valuable consideration.
To justify the nullification of the PCA-Cojuangco Agreement, the Sandiganbayan centered on the alleged imaginary option claimed by petitioner to buy the FUB shares from the Pedro Cojuangco group. It relied on the phrase "in behalf of certain other buyers" mentioned in the PC-ECJ Agreement as basis for the finding that petitioner’s option is neither personal nor exclusive. The pertinent portion of said agreement reads:
EDUARDO COJUANGCO, JR., Filipino, of legal age and with residence at 136 9th Street corner Balete Drive, Quezon City, represented in this act by his duly authorized attorney-in-fact, EDGARDO J. ANGARA, for and in his own behalf and in behalf of certain other buyers, (hereinafter collectively called the "BUYERS"); x x x.
A plain reading of the aforequoted description of petitioner as a party to the PC-ECJ Agreement reveals that petitioner is not only the buyer. He is the named buyer and there are other buyers who were unnamed. This is clear from the word "BUYERS." If petitioner is the only buyer, then his description as a party to the sale would only be "BUYER." It may be true that petitioner intended to include other buyers. The fact remains, however, that the identities of the unnamed buyers were not revealed up to the present day. While one can conjure or speculate that PCA may be one of the buyers, the fact that PCA entered into an agreement to purchase the FUB shares with
petitioner militates against such conjecture since there would be no need at all to enter into the second agreement if PCA was already a buyer of the shares in the first contract. It is only the parties to the PC-ECJ Agreement that can plausibly shed light on the import of the phrase "certain other buyers" but, unfortunately, petitioner was no longer allowed to testify on the matter and was precluded from explaining the transactions because of the motion for partial summary judgment and the eventual promulgation of the July 11, 2003 Partial Summary Judgment.
Even if conceding for the sake of argument that PCA is one of the buyers of the FUB shares in the PC-ECJ Agreement, still it does not necessarily follow that petitioner had no option to buy said shares from the group of Pedro Cojuangco. In fact, the very execution of the first agreement undeniably shows that he had the rights or option to buy said shares from the Pedro Cojuangco group. Otherwise, the PC-ECJ Agreement could not have been consummated and enforced. The conclusion is incontestable that petitioner indeed had the right or option to buy the FUB shares as buttressed by the execution and enforcement of the very document itself.
We can opt to treat the PC-ECJ Agreement as a totally separate agreement from the PCA-Cojuangco Agreement but it will not detract from the fact that petitioner actually acquired the rights to the ownership of the FUB shares from the Pedro Cojuangco group. The consequence is he can legally sell the shares to PCA. In this scenario, he would resell the shares to PCA for a profit and PCA would still end up paying a higher price for the FUB shares. The "profit" that will accrue to petitioner may just be equal to the value of the shares that were given to petitioner as commission. Still we can only speculate as to the true intentions of the parties. Without any evidence adduced on this issue, the Court will not venture on any unproven conclusion or finding which should be avoided in judicial adjudication.
The anti-graft court also inferred from the date of execution of the special power of attorney in favor of now Senator Edgardo J. Angara, which is May 25, 1975, that the PC-ECJ Agreement appears to have been executed on the same day as the PCA-Cojuangco Agreement (dated May 25, 1975). The coincidence on the dates casts "doubts as to the existence of defendant Cojuangco’s prior ‘personal and exclusive’ option to the FUB shares."
The fact that the execution of the SPA and the PCA-Cojuangco Agreement occurred sequentially on the same day cannot, without more, be the basis for the conclusion as to the non-existence of the option of petitioner. Such conjecture cannot prevail over the fact that without petitioner Cojuangco, none of the two agreements in question would have been executed and implemented and the FUB shares could not have been successfully conveyed to PCA.
Again, only the parties can explain the reasons behind the execution of the two agreements and the SPA on the same day. They were, however, precluded from elucidating the reasons behind such occurrence. In the absence of such illuminating proof, the proposition that the option does not exist has no leg to stand on.
More importantly, the fact that the PC-ECJ Agreement was executed not earlier than May 25, 1975 proves that petitioner Cojuangco had an option to buy the FUB shares prior to that date. Again, it must be emphasized that from its terms, the first Agreement did not create the option.It, however, proved the exercise of the option by petitioner.
The execution of the PC-ECJ Agreement on the same day as the PCA-Cojuangco Agreement more than satisfies paragraph 2 thereof which requires petitioner to exercise his option to purchase the FUB shares as promptly as practicable after, and not before, the execution of the second agreement, thus:
2. As promptly as practicable after execution of this Agreement, the SELLER shall exercise his option to acquire the Option Shares and SELLER shall immediately thereafter deliver and turn over to the Escrow Agent such stock certificates as are herein provided to be received from the existing stockholders of the bank by virtue of the exercise on the aforementioned option. The Escrow Agent shall thereupon issue its check in favor of the SELLER covering the purchase price for the shares delivered. (Emphasis supplied.)
The Sandiganbayan viewed the compensation of petitioner of 14,400 FUB shares as exorbitant. In the absence of proof to the contrary and considering the absence of any complaint of illegality or fraud from any of the contracting parties, then the presumption that "private transactions have been fair and regular"53 must apply.
Lastly, respondent interjects the thesis that PCA could not validly enter into a bank management agreement with petitioner since PCA has a personality separate and distinct from that of FUB. Evidently, it is PCA which has the right to challenge the stipulations on the management contract as unenforceable. However, PCA chose not to assail said stipulations and instead even complied with and implemented its prestations contained in said stipulations by installing petitioner as Chairman of UCPB. Thus, PCA has waived and forfeited its right to nullify said stipulations and is now estopped from questioning the same.
In view of the foregoing, the Court is left with no option but to uphold the validity of the two agreements in question.
COJUANGCO IS NOT ENTITLED TO THE UCPB SHARES WHICH WERE BOUGHT WITH PUBLIC FUNDS AND HENCE, ARE PUBLIC PROPERTY.
The coconut levy funds were exacted for aspecial public purpose. Consequently, anyuse or transfer of the funds that directlybenefits private individuals should beinvalidated.
The issue of whether or not taxpayers’ money, or funds and property acquired through the imposition of taxes may be used to benefit a private individual is once again posed. Preliminarily, the instant case inquires whether the coconut levy funds, and accordingly, the UCPB shares acquired using the coconut levy funds are public funds. Indeed, the very same issue took center stage, discussed and was directly addressed in COCOFED v. Republic. And there is hardly any question about the subject funds’ public and special character. The following excerpts from COCOFED v. Republic,54 citing Republic v. COCOFED and related cases, settle once and for all this core, determinative issue:
Indeed, We have hitherto discussed, the coconut levy was imposed in the exercise of the State’s inherent power of taxation. As We wrote in Republic v. COCOFED:
Indeed, coconut levy funds partake of the nature of taxes, which, in general, are enforced proportional contributions from persons and properties, exacted by the State by virtue of its sovereignty for the support of government and for all public needs.
Based on its definition, a tax has three elements, namely: a) it is an enforced proportional contribution from persons and properties; b) it is imposed by the State by virtue of its sovereignty; and c) it is levied for the support of the government. The coconut levy funds fall squarely into these elements for the following reasons:
(a) They were generated by virtue of statutory enactments imposed on the coconut farmers requiring the payment of prescribed amounts.
Thus, PD No. 276, which created the … (CCSF), mandated the following:
"a. A levy, initially, of P15.00 per 100 kilograms of copra resecada or its equivalent in other coconut products, shall be imposed on every first sale, in accordance with the mechanics established under RA 6260, effective at the start of business hours on August 10, 1973.
"The proceeds from the levy shall be deposited with the Philippine National Bank or any other government bank to the account of the Coconut Consumers Stabilization Fund, as a separate trust fund which shall not form part of the general fund of the government."
The coco levies were further clarified in amendatory laws, specifically PD No. 961 and PD No. 1468 – in this wise:
"The Authority (PCA) is hereby empowered to impose and collect a levy, to be known as the Coconut Consumers Stabilization Fund Levy, on every one hundred kilos of copra resecada, or its equivalent … delivered to, and/or purchased by, copra exporters, oil millers, desiccators and other end-users of copra or its equivalent in other coconut products. The levy shall be paid by such copra exporters, oil millers, desiccators and other end-users of copra or its equivalent in other coconut products under such rules and regulations as the Authority may prescribe. Until otherwise prescribed by the Authority, the current levy being collected shall be continued."
Like other tax measures, they were not voluntary payments or donations by the people. They were enforced contributions exacted on pain of penal sanctions, as provided under PD No. 276:
"3. Any person or firm who violates any provision of this Decree or the rules and regulations promulgated thereunder, shall, in addition to penalties already prescribed under
existing administrative and special law, pay a fine of not less than P2, 500 or more than P10,000, or suffer cancellation of licenses to operate, or both, at the discretion of the Court."
Such penalties were later amended thus: ….
(b) The coconut levies were imposed pursuant to the laws enacted by the proper legislative authorities of the State. Indeed, the CCSF was collected under PD No. 276, …."
(c) They were clearly imposed for a public purpose. There is absolutely no question that they were collected to advance the government’s avowed policy of protecting the coconut industry.
This Court takes judicial notice of the fact that the coconut industry is one of the great economic pillars of our nation, and coconuts and their byproducts occupy a leading position among the country’s export products; ….
Taxation is done not merely to raise revenues to support the government, but also to provide means for the rehabilitation and the stabilization of a threatened industry, which is so affected with public interest as to be within the police power of the State ….
Even if the money is allocated for a special purpose and raised by special means, it is still public in character…. In Cocofed v. PCGG, the Court observed that certain agencies or enterprises "were organized and financed with revenues derived from coconut levies imposed under a succession of law of the late dictatorship … with deposed Ferdinand Marcos and his cronies as the suspected authors and chief beneficiaries of the resulting coconut industry monopoly." The Court continued: "…. It cannot be denied that the coconut industry is one of the major industries supporting the national economy. It is, therefore, the State’s concern to make it a strong and secure source
not only of the livelihood of a significant segment of the population, but also of export earnings the sustained growth of which is one of the imperatives of economic stability. (Emphasis Ours.)
The following parallel doctrinal lines from Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan (PKSMMN) v. Executive Secretary55 came next:
The Court was satisfied that the coco-levy funds were raised pursuant to law to support a proper governmental purpose. They were raised with the use of the police and taxing powers of the State for the benefit of the coconut industry and its farmers in general. The COA reviewed the use of the funds. The Bureau of Internal Revenue (BIR) treated them as public funds and the very laws governing coconut levies recognize their public character.
The Court has also recently declared that the coco-levy funds are in the nature of taxes and can only be used for public purpose. Taxes are enforced proportional contributions from persons and property, levied by the State by virtue of its sovereignty for the support of the government and for all its public needs. Here, the coco-levy funds were imposed pursuant to law, namely, R.A. 6260 and P.D. 276. The funds were collected and managed by the PCA, an independent government corporation directly under the President. And, as the respondent public officials pointed out, the pertinent laws used the term levy, which means to tax, in describing the exaction.
Of course, unlike ordinary revenue laws, R.A. 6260 and P.D. 276 did not raise money to boost the government’s general funds but to provide means for the rehabilitation and stabilization of a threatened industry, the coconut industry, which is so affected with public interest as to be within the police power of the State. The funds sought to support the coconut industry, one of the main economic backbones of the country, and to secure economic benefits for
the coconut farmers and far workers. The subject laws are akin to the sugar liens imposed by Sec. 7(b) of P.D. 388, and the oil price stabilization funds under P.D. 1956, as amended by E.O. 137.
From the foregoing, it is at once apparent that any property acquired by means of the coconut levy funds, such as the subject UCPB shares, should be treated as public funds or public property, subject to the burdens and restrictions attached by law to such property. COCOFED v. Republic, delved into such limitations, thusly:
We have ruled time and again that taxes are imposed only for a public purpose. "They cannot be used for purely private purposes or for the exclusive benefit of private persons." When a law imposes taxes or levies from the public, with the intent to give undue benefit or advantage to private persons, or the promotion of private enterprises, that law cannot be said to satisfy the requirement of public purpose. In Gaston v. Republic Planters Bank, the petitioning sugar producers, sugarcane planters and millers sought the distribution of the shares of stock of the Republic Planters Bank (RPB), alleging that they are the true beneficial owners thereof. In that case, the investment, i.e., the purchase of RPB, was funded by the deduction of PhP 1.00 per picul from the sugar proceeds of the sugar producers pursuant to P.D. No. 388. In ruling against the petitioners, the Court held that to rule in their favor would contravene the general principle that revenues received from the imposition of taxes or levies "cannot be used for purely private purposes or for the exclusive benefit of private persons." The Court amply reasoned that the sugar stabilization fund is to "be utilized for the benefit of the entire sugar industry, and all its components, stabilization of the domestic market including foreign market, the industry being of vital importance to the country’s economy and to national interest."
Similarly in this case, the coconut levy funds were sourced from forced exactions decreed under P.D. Nos. 232, 276 and 582, among others, with the end-goal of developing the entire coconut industry. Clearly, to hold therefore, even by law, that the revenues received from the imposition of the coconut levies be used purely for private purposes to be owned by private individuals in their private capacity and for their benefit, would contravene the rationale behind the imposition of taxes or levies.
Needless to stress, courts do not, as they cannot, allow by judicial fiat the conversion of special funds into a private fund for the benefit of private individuals. In the same vein, We cannot subscribe to the idea of what appears to be an indirect – if not exactly direct – conversion of special funds into private funds, i.e., by using special funds to purchase shares of stocks, which in turn would be distributed for free to private individuals. Even if these private individuals belong to, or are a part of the coconut industry, the free distribution of shares of stocks purchased with special public funds to them, nevertheless cannot be justified. The ratio in Gaston, as articulated below, applies mutatis mutandis to this case:
The stabilization fees in question are levied by the State … for a special purpose – that of "financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market." The fact that the State has taken possession of moneys pursuant to law is sufficient to constitute them as state funds even though they are held for a special purpose….
That the fees were collected from sugar producers etc., and that the funds were channeled to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fund for their benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from
them since it is also they who are benefited from the expenditure of the funds derived from it. ….56
In this case, the coconut levy funds were being exacted from copra exporters, oil millers, desiccators and other end-users of copra or its equivalent in other coconut products.57 Likewise so, the funds here were channeled to the purchase of the shares of stock in UCPB. Drawing a clear parallelism between Gaston and this case, the fact that the coconut levy funds were collected from the persons or entities in the coconut industry, among others, does not and cannot entitle them to be beneficial owners of the subject funds – or more bluntly, owners thereof in their private capacity. Parenthetically, the said private individuals cannot own the UCPB shares of stocks so purchased using the said special funds of the government.58 (Emphasis Ours.)
As the coconut levy funds partake of the nature of taxes and can only be used for public purpose, and importantly, for the purpose for which it was exacted, i.e., the development, rehabilitation and stabilization of the coconut industry, they cannot be used to benefit––whether directly or indirectly–– private individuals, be it by way of a commission, or as the subject Agreement interestingly words it, compensation. Consequently, Cojuangco cannot stand to benefit by receiving, in his private capacity, 7.22% of the FUB shares without violating the constitutional caveat that public funds can only be used for public purpose. Accordingly, the 7.22% FUB (UCPB) shares that were given to Cojuangco shall be returned to the Government, to be used "only for the benefit of all coconut farmers and for the development of the coconut industry."59
The ensuing are the underlying rationale for declaring, as unconstitutional, provisions that convert public property into private funds to be used ultimately for personal benefit:
… not only were the laws unconstitutional for decreeing the distribution of the shares of stock for free to the coconut farmers and therefore negating the public purposed declared by P.D. No. 276, i.e., to stabilize the price of edible oil and to protect the coconut industry. They likewise reclassified the coconut levy fund as private fund, to be owned by private individuals in their private capacities, contrary to the original purpose for the creation of such fund. To compound the situation, the offending provisions effectively removed the coconut levy fund away from the cavil of public funds which normally can be paid out only pursuant to an appropriation made by law. The conversion of public funds into private assets was illegally allowed, in fact mandated, by these provisions. Clearly therefore, the pertinent provisions of P.D. Nos. 755, 961 and 1468 are unconstitutional for violating Article VI, Section 29 (3) of the Constitution. In this context, the distribution by PCA of the UCPB shares purchased by means of the coconut levy fund – a special fund of the government – to the coconut farmers is, therefore, void.60
It is precisely for the foregoing that impels the Court to strike down as unconstitutional the provisions of the PCA-Cojuangco Agreement that allow petitioner Cojuangco to personally and exclusively own public funds or property, the disbursement of which We so greatly protect if only to give light and meaning to the mandates of the Constitution.
As heretofore amply discussed, taxes are imposed only for a public purpose.61 They must, therefore, be used for the benefit of the public and not for the exclusive profit or gain of private persons.62 Otherwise, grave injustice is inflicted not only upon the Government but most especially upon the citizenry––the taxpayers––to whom We owe a great deal of accountability.
In this case, out of the 72.2% FUB (now UCPB) shares of stocks PCA purchased using the coconut levy funds, the May 25, 1975
Agreement between the PCA and Cojuangco provided for the transfer to the latter, by way of compensation, of 10% of the shares subject of the agreement, or a total of 7.22% fully paid shares. In sum, Cojuangco received public assets – in the form of FUB (UCPB) shares with a value then of ten million eight hundred eighty-six thousand pesos (PhP 10,886,000) in 1975, paid by coconut levy funds. In effect, Cojuangco received the aforementioned asset as a result of the PCA-Cojuangco Agreement, and exclusively benefited himself by owning property acquired using solely public funds. Cojuangco, no less, admitted that the PCA paid, out of the CCSF, the entire acquisition price for the 72.2% option shares.63 This is in clear violation of the prohibition, which the Court seeks to uphold.1âwphi1
We, therefore, affirm, on this ground, the decision of the Sandiganbayan nullifying the shares of stock transfer to Cojuangco. Accordingly, the UCPB shares of stock representing the 7.22% fully paid shares subject of the instant petition, with all dividends declared, paid or issued thereon, as well as any increments thereto arising from, but not limited to, the exercise of pre-emptive rights, shall be reconveyed to the Government of the Republic of the Philippines, which as We previously clarified, shall "be used only for the benefit of all coconut farmers and for the development of the coconut industry."64
But apart from the stipulation in the PCA-Cojuangco Agreement, more specifically paragraph 4 in relation to paragraph 6 thereof, providing for the transfer to Cojuangco for the UCPB shares adverted to immediately above, other provisions are valid and shall be enforced, or shall be respected, if the corresponding prestation had already been performed. Invalid stipulations that are independent of, and divisible from, the rest of the agreement and which can easily be separated therefrom without doing violence to the manifest intention of the contracting minds do not nullify the entire contract.65
WHEREFORE, Part C of the appealed Partial Summary Judgment in Sandiganbayan Civil Case No. 0033-A is AFFIRMED with modification. As MODIFIED, the dispositive portion in Part C of the Sandiganbayan’s Partial Summary Judgment in Civil Case No. 0033-A, shall read as follows:
C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: EDUARDO M. COJUANGCO, JR.) dated September 18, 2002 filed by Plaintiff.
1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA and defendant Eduardo M. Cojuangco, Jr. dated May 25, 1975 nor did it give the Agreement the binding force of a law because of the non-publication of the said Agreement.
2. The Agreement between PCA and defendant Eduardo M. Cojuangco, Jr. dated May 25, 1975 is a valid contract for having the requisite consideration under Article 1318 of the Civil Code.
3. The transfer by PCA to defendant Eduardo M. Cojuangco, Jr. of 14,400 shares of stock of FUB (later UCPB) from the "Option Shares" and the additional FUB shares subscribed and paid by PCA, consisting of
a. Fifteen Thousand Eight Hundred Eighty-Four (15,884) shares out of the authorized but unissued shares of the bank, subscribed and paid by PCA;
b. Sixty Four Thousand Nine Hundred Eighty (64,980) shares of the increased capital stock subscribed and paid by PCA; and
c. Stock dividends declared pursuant to paragraph 5 and paragraph 11 (iv) (d) of the PCA-Cojuangco Agreement dated May 25, 1975. or the so-called "Cojuangco-UCPB shares" is declared unconstitutional, hence null and void.1âwphi1
4. The above-mentioned shares of stock of the FUB/UCPB transferred to defendant Cojuangco are hereby declared conclusively owned by the Republic of the Philippines to be used only for the benefit of all coconut farmers and for the development of the coconut industry, and ordered reconveyed to the Government.
5. The UCPB shares of stock of the alleged fronts, nominees and dummies of defendant Eduardo M. Cojuangco, Jr. which form part of the 72.2% shares of the FUB/UCPB paid for by the PCA with public funds later charged to the coconut levy funds, particularly the CCSF, belong to the plaintiff Republic of the Philippines as their true and beneficial owner.
Accordingly, the instant petition is hereby DENIED.
Costs against petitioner Cojuangco.
II. HOW JURISDICTION IS DETERMINED
Republic of the PhilippinesSupreme CourtManila
BASES CONVERSION DEVELOPMENT AUTHORITY, Petitioner,
- versus -
PROVINCIAL AGRARIAN REFORM OFFICER OF PAMPANGA, REGISTER OF DEEDS OF ANGELES CITY, BENJAMIN POY LORENZO, LAVERNIE POY LORENZO, DIOSDADO DE GUZMAN, ROSEMARY ENG TAY TAN, LEANDRO DE GUZMAN, BENJAMIN G. LORENZO, ANTONIO MANALO, andSOCORRO DE GUZMAN, Respondents.
G.R. Nos. 155322-29
LEONARDO-DE CASTRO,* Acting Chairperson, BERSAMIN, DEL CASTILLO, VILLARAMA, JR., and PERLAS-BERNABE,** JJ.
June 27, 2012
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari to reverse the September 24, 2002 Order of the Regional Trial Court (RTC) of Angeles City, Branch 58, in Civil Case Nos. 10362, 10363, 10364, 10376, 10377, 10378, 10379, and 10380.
Petitioner Bases Conversion
Development Authority (BCDA) is a government owned and controlled corporation (GOCC) created under Republic Act No. 7227 or the Bases Conversion and Development Act of
1992, as amended by Republic Act No. 7917.
The respondents are the Provincial
Agrarian Reform Officer (PARO) of Pampanga, as the government official responsible for approving and issuing the Certificates of Land Ownership Awards (CLOAs) involved in this case; the Register of Deeds of Pampanga (Register of Deeds), as the government official who has custody of all the original copies of the Certificates of Title subject of this petition; and Benjamin Poy Lorenzo, Lavernie Poy Lorenzo, Diosdado de Guzman, Rosemary Eng Tay Tan, Leandro de Guzman, Benjamin G. Lorenzo, Antonio Manalo, and Socorro de Guzman (private respondents) as the private individuals who were awarded the CLOAs.
Pursuant to the national policy of
accelerating the sound and balanced conversion of the Clark and Subic military reservations and their extensions into alternative productive uses for the promotion of economic and social development of Central Luzon and the entire country in general, the BCDA was created with the following purposes:
(a) To own, hold and/or administer the military reservations of John Hay Air Station, Wallace Air Station, O'Donnell Transmitter Station, San Miguel Naval Communications Station, Mt. Sta. Rita Station (Hermosa, Bataan) and those portions of Metro Manila military camps which may be transferred to it by the President; (b) To adopt, prepare and implement a comprehensive and detailed development plan embodying a list of projects including but not limited to those provided in the Legislative-Executive Bases Council (LEBC) framework plan for the sound and balanced conversion of the Clark and Subic military reservations and their extensions consistent with ecological and environmental standards, into other productive uses to promote the
economic and social development of Central Luzon in particular and the country in general; (c) To encourage the active participation of the private sector in transforming the Clark and Subic military reservations and their extensions into other productive uses; (d) To serve as the holding company of subsidiary companies created pursuant to Section 16 of this Act and to invest in Special Economic Zones declared under Sections 12 and 15 of this Act; (e) To manage and operate through private sector companies developmental projects outside the jurisdiction of subsidiary companies and Special Economic Zones declared by presidential proclamations and established under this Act;
(f) To establish a mechanism in coordination with the appropriate local government units to effect meaningful consultation regarding the plans, programs and projects within the regions where such plans, programs and/or project development are part of the conversion of the Clark and Subic military reservations and their extensions and the surrounding communities as envisioned in this Act; and (g) To plan, program and undertake the readjustment, relocation, or resettlement of population within the Clark and Subic military reservations and their extensions as may be deemed necessary and beneficial by the Conversion Authority, in coordination with the appropriate government agencies and local government units.
On April 3, 1993, Executive Order No.
80 was issued, authorizing the
establishment of the Clark Development Corporation (CDC) to act as the operating and implementing arm of the BCDA with regard to the management of the Clark Special Economic Zone (CSEZ).
On the same day, then President Fidel
V. Ramos likewise issued Proclamation No. 163, creating and designating the areas covered by the CSEZ as those “consisting of the Clark military reservations, including the Clark Air Base proper and portions of the Clark reverted baselands, and excluding the areas covered by previous Presidential Proclamations, the areas turned over to the Department of Agrarian Reform (DAR), and the areas in the reverted baselands for military use.” Under Section 2 of Proclamation No. 163, these lands were transferred to the BCDA, which shall determine how to utilize and dispose of such lands.
As such, the BCDA became the owner
of these lands, as registered in the name of the Republic of the Philippines, and covered by Transfer Certificate of Title (TCT) Nos. 18247-R and 18257-R.
On March 31, 2000, CDC, the Land
Registration Authority (LRA), the Bureau of Local Government Finance (BLGF), and the Department of Environment and Natural Resources (DENR) Region III, entered into a Memorandum of Agreement (MOA), wherein they created a CSEZ Technical Research Committee to conduct a technical research of properties within CSEZ covered by patents and certificates of title, applications for patent and title registration, property surveys, and tax declarations and payments. The objective was to identify various levels of ownership claims as reflected in the official records of the concerned agencies.
The CSEZ Technical Research
Committee discovered that titles over parcels of land within the CSEZ, which had just been transferred to the BCDA, had already been issued in the names of private individuals, to wit:
Certificate of Land Ownership Award A property within CSEZ Main Zone near the Friendship Gate, covered by a title in the name of the Republic of the Philippines, was later partially cancelled due to the issuance of Nine (9) [C]ertificates of Land Ownership Award (CLOA) from the Department of Agrarian Reform dated June 19, 1998. Property is covered by TCT No. 18257 and TCT No. 18247, in the name of the Republic of the Philippines. This lot is equivalent to Lot 857-A of Angeles Cadastre, BSD 10204 portion of Lot 857. The following CLOA’s with a total area of 3[1,]891 hectares were inscribed at the back of the title as encumbrances[:]
NAME TCT No.
AREA (sq. m)
Benjamin Poy Lorenzo
Rosemary Eng Tay Tan
Diosdado O. de Guzman
Antonio M. Manalo
Benjamin G. Lorenzo
Leandro de Guzman
Socorro de Guzman
Leandro de Guzman
Benjamin Poy Lorenzo
Lavernie Poy Lorenzo
Lavernie Poy Lorenzo
In view of the findings, the BCDA filed separate Complaints for Cancellation of Title against the private respondents, the PARO, and the Register of Deeds of Angeles City, Pampanga. These cases were docketed as Civil Case Nos. 10362, 10363, 10364, 10376, 10377, 10378, 10379, and 10380. In its complaints, the BCDA alleged that since the properties (subject properties) were outside those allocated to DAR, and were already titled in the name of the Republic of the Philippines then transferred to the BCDA, they could not be the subject of an award by the PARO. The BCDA added that the subject properties, which had already been transferred to it, were reserved by the Philippine government as part of the Clark military reservations in accordance with the 1947 Military Bases Agreement between the Philippines and the United States of America.  Moreover, the BCDA claimed that the approval and issuance of CLOAs by the PARO, which became the bases for the TCTs issued to private respondents, were null and void in view of the fact that these subject properties were already titled in the name of the Republic of the Philippines under TCT Nos. 18247-R and 18257-R, issued on February 11, 1958, and were derivative titles of Original Certificate of Title (OCT) issued earlier.
In their separate Motions to Dismiss, the private respondents and the PARO moved for the dismissal of the complaints based on the following grounds:
1. That the Honorable [RTC] with due respect lacks jurisdiction over the subject matter and the nature of the action in the instant case.
2. That the [BCDA] has no cause or causes of action against the private defendant and public defendant PARO.
The respondents argued that since the subject properties, which were part of the landholdings of the National Housing Authority, were awarded to the private respondents as the bona fide and de jure farmer-beneficiaries under Republic Act No. 6657 or the Comprehensive Agrarian Reform Law of 1988, jurisdiction over the cancellation of their titles fall under the DAR through its Adjudication Board known as the Department of Agrarian Reform Adjudication Board (DARAB).
The BCDA, commenting on the
Motions to Dismiss, averred that it was erroneous to state that the DARAB had jurisdiction over the cases as they do not involve an agrarian reform issue.
On September 24, 2002, the RTC
issued one Order/Resolution dismissing the eight cases, without prejudice, for being prematurely filed.
The RTC, in dismissing the cases,
declared that while it had jurisdiction to cancel CLOAs, questions on the legality of their issuance should be addressed to the DARAB. The RTC added:
Evident on the allegations in the complaint that plaintiff BCDA impugned the validity of the issuances of the subject CLOAs to private respondents and questioned the act of public respondent PARO to be beyond of its authority in awarding the subject parcels of land to said respondents on the ground that the subject parcels of land are outside the areas allocated to the Department of Agrarian Reform to be distributed to farmer-beneficiaries and that the same is registered in the name of the Republic of the Philippines. These allegations alone had divested this court from acquiring jurisdiction over the subject matter of the cases, much less to decide and delve into the issue of the legality of the issuances of the subject CLOAs, which original jurisdiction is vested with an administrative tribunal (DARAB).
x x x x
This Court believes that it is the Department of Agrarian Reform which is vested with exclusive jurisdiction to try and decide the instant controversy. It is not a simple cancellation of registration of title as the same involves agrarian reform issues. x x x.
Aggrieved, the BCDA elevated its
cause to this Court. However, before this Court could resolve the petition, private respondent Benjamin Poy Lorenzo, on February 23, 2004, filed a Motion to Cite the Petitioner in Contempt of Court for certifying before two branches of the RTC in Angeles City, wherein it filed eminent domain cases against him and Lavernie Poy Lorenzo, that it has not commenced any other action before this Court. Opposing the motion, the BCDA argued that the complaints for expropriation involve issues that are completely different from the one posed in this petition. Moreover, the BCDA said, it had no intention at all to mislead the RTCs of Angeles City as it mentioned, in both complaints for expropriation, that the private respondents’ titles were subject to pending complaints at the RTC for Cancellation of Title. The BCDA went on to point out Benjamin Poy Lorenzo’s improper initiation of a contempt proceeding, as it was done through a mere motion instead of a verified petition.
Issue The resolution of this petition boils
down to the determination of the following lone issue as presented by the BCDA:
THE SOLE ISSUE SUBMITTED FOR THE RESOLUTION OF THIS HONORABLE SUPREME COURT IS WHETHER THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD (DARAB), HAS JURISDICTION OVER THE CASE AS RULED BY THE HON. RTC JUDGE
PHILBERT ITURALDE, OR THE REGIONAL TRIAL COURT.
The BCDA asseverates that for the
case to fall within the ambit of DARAB’s jurisdiction, there must exist a tenancy relationship between the parties. The BCDA believes that since it had no tenurial relationship with the private respondents, it should not submit itself to the jurisdiction of the DARAB. The BCDA further contends that under Sections 78 and 112 of the Land Registration Act, the RTC has the authority to decide petitions for cancellation of titles. Corollarily, the BCDA claims, since the TCTs of the private respondents, as holders of CLOAs, were issued by the Register of Deeds, these titles are governed by the Torrens system, which is under the exclusive jurisdiction of the RTC. In their Comment, the private respondents reiterated their position that under Section 50 of Republic Act No. 6657, and Section 1, Rule II of the DARAB New Rules of Procedure, the jurisdiction over their cases falls under the DARAB.
Anent the Motion to Cite the BCDA in Contempt
This Court, at the outset, would like to
resolve Benjamin Poy Lorenzo’s motion to cite the BCDA in contempt, for allegedly certifying before the RTCs in Angeles City, that it had not commenced a similar action before the Supreme Court. Since the alleged misconduct falls under indirect contempt, proceedings should be initiated either motu proprio by order of or a formal charge by the offended court, or by a verified petition with supporting particulars and certified true copies of documents or papers involved therein, and upon full compliance with the requirements for filing initiatory pleadings for civil actions in the court concerned.
It is clear that Benjamin Poy Lorenzo
has missed out on all of the above requirements. Moreover, as the BCDA has
shown, it did not hide the fact that it had commenced a separate action involving his lot before RTC Branch 58 of Angeles City. In fact, the BCDA mentioned it both in its Complaint for Expropriation and in its Verification and Certification as to Non-Forum Shopping. This Court is, therefore, denying the motion of Benjamin Poy Lorenzo and will not belabor the point that such is not in keeping with the rules and jurisprudence.
This Court’s Ruling on the Main Issue
This case properly falls within the
jurisdiction of the RTC. Rule II, Section 1 of the Revised Rules
of Procedure of the DARAB provides:
Section 1. Primary, Original and Appellate Jurisdiction. ---The Agrarian Reform Adjudication Board shall have primary jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian Reform Program under Republic Act No. 6657, Executive Order Nos. 229, 228 and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations.
Under Section 3(d) of Republic Act No.
6657 an “agrarian dispute” is defined as follows:
(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.
It includes any controversy relating to compensation of lands acquired under this Act and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee.
This Court agrees with the BCDA for this case to fall within the ambit of DARAB’s jurisdiction, the issue must be one that involves an agrarian dispute, which is not attendant in the instant case.
It is a basic rule that jurisdiction is
determined by the allegations in the complaint.  The BCDA’s complaints did not contain any allegation that would, even in the slightest, imply that the issue to be resolved in this case involved an agrarian dispute. In the action filed by the BCDA, the issue to be resolved was who between the BCDA and the private respondents and their purported predecessors-in-interest, have a valid title over the subject properties in light of the relevant facts and applicable laws. The case thus involves a controversy relating to the ownership of the subject properties, which is beyond the scope of the phrase “agrarian dispute.”
The RTC, therefore, gravely erred
when it dismissed the complaints on the grounds that they were prematurely filed. The action filed by the BCDA was cognizable by regular courts.
WHEREFORE, the petition is
hereby GRANTED. The Order/Resolution of the Regional Trial Court, Branch 58 of Angeles City dated September 24, 2002 is REVERSED and SET ASIDE. Said court is ORDERED to assume jurisdiction over Civil Case Nos. 10362, 10363, 10364, 10376, 10377, 10378, 10379, and 10380 and conduct further proceedings in said cases.
REPUBLIC V ROMAN CATHOLIC ARCHBISHOP MANILA 685 SCRA 216 (2013)
BANK PHILIPPINE ISLAND V HONG666 SCRA 71 (2013)
Republic of the PhilippinesSupreme CourtManila SECOND DIVISION HEIRS OF CANDIDO DEL ROSARIOand HEIRS OF GIL DEL ROSARIO, Petitioners,
- versus -
MONICA DEL ROSARIO, Respondent.
x-----------------------------------------------------------------------------------------x DECISION REYES, J.:
Nature of the Petition This is a petition for review
on certiorari under Rule 45 of the Rules of Court filed by the Heirs of Candido Del Rosario and the Heirs of Gil Del Rosario (petitioners), assailing the Decision dated January 21, 2008 issued by the Court of Appeals (CA) in CA-G.R. SP No. 85483.
The Antecedent Facts
This involves a parcel of land with an area of 9,536 square meters situated in Barangay Caingin, Bocaue, Bulacan. The subject land was formerly owned by Pedro G. Lazaro and tenanted by the spouses Jose Del Rosario and Florentina De Guzman (Spouses Del Rosario).
Spouses Del Rosario had three
children: Monica Del Rosario (Monica), Candido Del Rosario (Candido) and Gil Del Rosario (Gil). The petitioners claimed that when Spouses Del Rosario died, only they continued to tenant and actually till the subject land.
Sometime in February 1991, Monica
and Gil agreed that the latter would facilitate the application for an Emancipation Patent over the subject land in the name of the former. In exchange, Monica agreed to cede to Gil one-third of the said land after the Emancipation Patent had been issued to her.
On May 29, 1998, the Department of
Agrarian Reform (DAR) issued to Monica Emancipation Patent No. 00733146 over the land. Subsequently, on October 22, 1998, the Registry of Deeds for the Province of Bulacan issued Transfer Certificate of Title (TCT) No. EP-257-M in the name of Monica.
The petitioners claimed that Monica,
despite repeated demands, refused to cede to Gil the one-third portion of the subject land pursuant to their agreement. Thus, on April 17, 2000, the petitioners filed with the Office of the Provincial Agrarian Reform Adjudicator (PARAD) in Malolos, Bulacan a complaint against Monica for amendment of TCT No. EP-257-M and partition of the subject land.
For her part, Monica claimed that their
father entrusted to her the cultivation of the subject land after the latter became ill and incapacitated sometime in 1950. Gil and Candido, in turn, were entrusted with the cultivation of other parcels of land tenanted by
Spouses Del Rosario. Further, after Presidential Decree No. 27 (P.D. No. 27) took effect, Monica claimed that she was the one listed in the files of the DAR as the tenant-beneficiary of the subject land and that she was the one who was paying the amortizations over the same.
The PARAD’s Decision
On May 22, 2002, PARAD Provincial Adjudicator Toribio E. Ilao, Jr. (PA Ilao) rendered a Decision the decretal portion of which, in part, reads:
WHEREFORE, premises considered, judgment is hereby rendered in the following manner: 1). Ordering the Register of Deeds of Bulacan to cancel TCT/EP No. 257(M)/00733146 containing an area of 9,536 square meters, more or less, issued to Monica del Rosario and partitioned (sic) the covered lot among the heirs of the late spouses Jose del Rosario and Florentina de Guzman; 2). Ordering the respondent to cede the ONE THIRD (1/3) portion of the 9,536 square meters, equivalent to 3,178 square meters of the subject agricultural land in favor of the heirs of the late Gil Del Rosario in compliance with their agreement; 3). Ordering the remaining portion of 6,358 square meters to be subdivided into four (4) equal shares: to the surviving heirs of the late spouses Jose del Rosario and Florentina de Guzman as follows, to wit: a. Respondent Monica del Rosario – 1,589 square meters;b. Heirs of Candido del Rosario represented by his children – 1,589 square meters;c. Heirs of Gil del Rosario represented by his children – 1,589 square meters; and
d. Consolacion del Rosario – 1,589 square meters. 4). Directing the PARO of Bulacan thru the Operations Division and all DAR personnel concerned to generate and issue EPs/titles in the name of the parties concerned with the corresponding area of tillage as indicated above, in accordance with the DAR existing rules and regulations, and cause the registration of the new EPs/titles with the Registry of Deeds of Bulacan.
PA Ilao found that Monica was not the bona fide tenant-farmer of the subject land and that she had continuously failed to cultivate or develop the same.
Unperturbed, Monica appealed from
the foregoing disposition of PA Ilao to the Department of Agrarian Reform Adjudication Board (DARAB).
The DARAB’s Decision
On January 8, 2004, the DARAB rendered a Decision, which reversed and set aside the Decision dated May 22, 2002 of PA Ilao. The DARAB held that:
[Monica] and her siblings are not co-heirs to the landholding in question. The said land was not a part of the inheritance of their late parents. This conclusion is based on the simple reason that tenants are not the owners of the landholding they cultivate. Under the law, inheritance includes all the property, rights and obligations of a person which are not extinguished by his death x x x. In the case of a tenant, what he may transfer to his successor upon his death is merely the right to cultivate the landholding. Such transfer of right to cultivate, however, cannot be applied in the instant case. The right to cultivate the subject landholding was being exercised by [Monica’s] father
until he became incapacitated (due to high blood pressure) to till the land, at which time, he passed the responsibility of cultivation to his eldest child, [Monica]. x x x The records show that the parents of [Monica] gave her the right to till the property of Pedro Lazaro. This is corroborated by the fact that Pedro Lazaro has recognized [Monica] as the only registered tenant of the subject property as evidenced by their “Kasunduan Sa Pamumuwisan” dated 25 September 1973 x x x.
Further, the DARAB ruled that the agreement between Monica and Gil that one-third of the subject land would be ceded to the latter after the same had been registered under Monica’s name is contrary to law as P.D. No. 27 prohibits the transfer of parcels of land given to qualified farmer-beneficiaries other than by hereditary succession or to the government.
The petitioners sought a
reconsideration of the Decision dated January 8, 2004, but it was denied by the DARAB in its Resolutiondated July 8, 2004.
Subsequently, the petitioners filed a
petition for review with the CA alleging that the DARAB erred in ruling that they and Monica are not co-owners of the subject land.
The CA’s Decision
On January 21, 2008, the CA rendered the herein assailed decision denying the petition for review filed by the petitioners. The CA held that the PARAD and the DARAB had no jurisdiction to take cognizance of the petitioners’ complaint for amendment of the Emancipation Patent and partition of the subject land, there being no agrarian dispute or tenancy relations between the parties. Thus:
While it is true that the DARAB has primary and exclusive jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP), which include those involving the issuance, correction and cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority, however, for the DARAB to have jurisdiction over a case, there must exist a tenancy relationship between the parties, which does not obtain in the petition at bench. The jurisdiction of a tribunal or quasi-judicial body over the subject matter is determined by the averments of the complaint/petition and the law extant at the time of the commencement of the suit/complaint/petition. All proceedings before a tribunal or quasi-judicial agency bereft of jurisdiction over the subject matter of the action are null and void. (Citations omitted)
Nevertheless, the CA also held that the petitioners are bound by the decision of the DARAB declaring Monica as the bona fideholder of TCT No. EP-257-M since they participated in the proceedings before the PARAD and the DARAB without raising any objection thereto.
In the instant petition, the petitioners submit the following issues for this Court’s resolution:
[I] THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED THE PETITION FOR REVIEW ON GROUND OF LACK OF JURISDICTION ON [THE] PART OF THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD (DARAB). [II]
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT HELD THAT PETITIONERS ARE BOUND BY THE DECISION OF THE DARAB DECLARING MONICA DEL ROSARIO AS BONA FIDE TCT/EP HOLDER, THAT THEY ARE NOT CO-HEIRS TO THE SUBJECT LANDHOLDING, THAT THE AGREEMENT THAT ONE THIRD (1/3) OF THE SUBJECT LANDHOLDING SHALL BE GIVEN TO GIL DEL ROSARIO IS NULL AND VOID FOR BEING CONTRARY [TO] AGRARIAN LAWS AND ORDERING THEM NOT TO INTERFERE WITH MONICA DEL ROSARIO’S CULTIVATION OF SUBJECT LANDHOLDING.
Simply put, the issues for this Court’s
resolution are the following: first, whether the PARAD and the DARAB have jurisdiction to take cognizance of the petitioners’ complaint for amendment and partition; and second, if the PARAD and the DARAB have no jurisdiction over the complaint for amendment and partition, whether the petitioners are bound by their respective dispositions.
The Court’s Ruling The petition is partly meritorious. First Issue: Jurisdiction of the PARAD and the DARAB
Contrary to the CA’s disposition, the petitioners insist that the PARAD and the DARAB have the jurisdiction to take cognizance of their complaint for amendment of the Emancipation Patent and partition of the subject land notwithstanding the absence of tenancy relationship between them and Monica. They assert that the complaint below essentially involves a determination of the actual tenant and eventual rightful beneficiary of the subject land.
On the other hand, Monica asserts
that the CA did not err in declaring that the
PARAD and the DARAB have no jurisdiction over the said complaint for amendment and partition since there was simply no “tenancy relationship” alleged therein.
The jurisdiction of the PARAD and the DARAB is limited only to all agrarian disputes and matters or incidents involving the implementation of the CARP.
In the process of reorganizing the DAR, Executive Order (E.O.) No. 129-A created the DARAB to assume the powers and functions with respect to the adjudication of agrarian reform matters.
At the time the complaint for
amendment and partition was filed by the petitioners, the proceedings before the PARAD and the DARAB were governed by the DARAB New Rules of Procedures, which were adopted and promulgated on May 30, 1994, and came into effect on June 21, 1994 after publication (1994 DARAB Rules). The 1994 DARAB Rules identified the cases over which the DARAB shall have jurisdiction, to wit:
RULE II JURISDICTION OF THE ADJUDICATION BOARD
SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction. – The Board shall have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228, and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations. Specifically, such jurisdiction shall include but not be limited to cases involving the following:
a) The rights and obligations of persons, whether natural or juridical, engaged in the management, cultivation and use of all agricultural lands covered by the CARP and other agrarian laws;
b) The valuation of land, and the preliminary determination and payment of just compensation, fixing and collection of lease rentals, disturbance compensation, amortization payments, and similar disputes concerning the functions of the Land Bank of the Philippines (LBP);
c) The annulment or cancellation of lease contracts or deeds of sale or their amendments involving lands under the administration and disposition of the DAR or LBP; d) Those case arising from, or connected with membership or representation in compact farms, farmers’ cooperatives and other registered farmers’ associations or organizations, related to lands covered by the CARP and other agrarian laws; e) Those involving the sale, alienation, mortgage, foreclosure, pre-emption and redemption of agricultural lands under the coverage of the CARP or other agrarian laws;
f) Those involving the issuance, correction and cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority;
g) Those cases previously falling under the original and exclusive jurisdiction of the defunct Court of Agrarian Relations under Section 12 of Presidential No. 946, except sub-paragraph (Q) thereof and Presidential Decree No. 815.
It is understood that the aforementioned cases, complaints or petitions were filed with the DARAB after August 29, 1987. Matters involving strictly the administrative implementation of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARP) of 1988 and other agrarian laws as enunciated by pertinent rules shall be the exclusive prerogative of and cognizable by the Secretary of the DAR.
h) And such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR.
SECTION 2. Jurisdiction of the Regional and Provincial Adjudicator. – The RARAD and the PARAD shall have concurrent original jurisdiction with the Board to hear, determine and adjudicate all agrarian cases and disputes, and incidents in connection therewith, arising within their assigned territorial jurisdiction. (Emphasis supplied.)
Specifically, the PARAD and the DARAB have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act (R.A.) No. 6657, as amended by R.A. No. 9700, E.O. Nos. 228, 229, and 129-A, R.A. No. 3844 as amended by R.A. No. 6389, P.D. No. 27 and other agrarian laws and their Implementing Rules and Regulations.
Thus, the jurisdiction of the PARAD
and the DARAB is only limited to cases involving agrarian disputes, including incidents arising from the implementation of agrarian laws. Section 3(d) of R.A. No. 6657 defines an agrarian dispute in this wise:
(d) Agrarian dispute refers to any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over
lands devoted to agriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements. It includes any controversy relating to compensation of lands acquired under R.A. 6657 and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee.
The petitioners’ complaint for amendment and partition is beyond the jurisdiction of the PARAD and the DARAB.
Where a question of jurisdiction between the DARAB and the RTC is at the core of a dispute, basic jurisprudential tenets come into play. It is the rule that the jurisdiction of a tribunal, including a quasi-judicial office or government agency, over the nature and subject matter of a petition or complaint is determined by the material allegations therein and the character of the relief prayed for irrespective of whether the petitioner or complainant is entitled to any or all such reliefs.
Accordingly, we turn to the petitioners’ complaint for amendment and partition, wherein they alleged that: 2. The subject agricultural land identified as Lot No. C, Psd-03-091057 (AR) consisting of an area of 9,536 square meters more or less situated at Brgy. Caingin, Bocaue, Bulacan, was formerly owned by Pedro Lazaro and was tenanted by SPOUSES JOSE DEL ROSARIO AND FLORENTINA DE GUZMAN, the late grandparents of herein petitioners, as the
registered tenant-farmers over the subject agricultural land devoted to planting of palay; 3. When the late grandparents of herein petitioners died, the children of the former, specifically, brothers CANDIDO DEL ROSARIO and GIL DEL ROSARIO, predecessors-in-interest of herein petitioners, continued in the tillage of the subject agricultural land; x x x x 6. The EP was issued by the DAR to the respondent with the help of her brother Gil Del Rosario who, aside from shouldering all expenses relative thereto, lodged the petition in Monica del Rosario’s name for the issuance of EP over the subject agricultural land being tilled by them, including the co-tenant farmers that are adjacent and adjoining in that area; 7. The respondent, after receiving the EP over the subject agricultural land, refused to give the shares of her brothers (predecessors-in-interest of herein petitioners) and subdivide equally the subject land among them, they being surviving heirs of their late parents who first tilled the subject agricultural land despite persistent demand;
x x x x
10. An agreement was likewise entered into by the respondent and the other tenant farmers of the adjoining lots, with the late Gil del Rosario dated February 1991, committing themselves that after the issuance of their EPs by the DAR, the ONE THIRD (1/3) portion of their tillage will be segregated and given to her brother Gil del Rosario in consideration of the assistance of the latter, x x x;
x x x x
12. The petitioners are seeking the assistance of this Honorable Board to amend and partition the EP issued to the respondent and the subject agricultural land be
divided equally among the respondent and the predecessors-in-interest of herein petitioners; (Emphasis supplied)
Based on these allegations, the petitioners sought the following reliefs:
WHEREFORE, premises considered, it [is] most respectfully prayed of this Honorable Board that after due hearing, judgment be rendered in the above-entitled petition as follows: (a) Ordering respondent to partition or subdivide equally among the respondent and herein petitioners, in representation of their respective predecessors-in-interest, the subject agricultural land; (b) Ordering respondent to stop collecting lease rentals from the herein petitioners relative to their establishments and those erected by their predecessors-in-interest; (c) Ordering respondent to stop cutting [of] trees and other improvements thereon established by the herein petitioners and their predecessors-in-interest; (d) Ordering respondent to allow the petitioners to plant palay or vegetable plants (sic) over the agricultural land occupied by them;
(e) Ordering respondent to pay attorney’s fees of [P]50,000.00 to petitioners and costs of litigation. (Emphasis supplied)
A perusal of the foregoing will readily show that the complaint essentially sought the following: first, the enforcement of the agreement entered into by and between Gil
and Monica wherein the latter promised to cede to the former one-third portion of the subject land upon the issuance of the emancipation patent over the same; and second, the recovery of petitioners’ purported hereditary share over the subject land, in representation of Gil and Candido.
Indubitably, the said complaint for
amendment and partition does not involve any “agrarian dispute,” nor does it involve any incident arising from the implementation of agrarian laws. The petitioners and Monica have no tenurial, leasehold, or any agrarian relationswhatsoever that will bring this controversy within the jurisdiction of the PARAD and the DARAB. Since the PARAD and the DARAB have no jurisdiction over the present controversy, they should not have taken cognizance of the petitioners’ complaint for amendment of the Emancipation Patent and partition.
Further, the instant case does not
involve an “incident arising from the implementation of agrarian laws” as would place it within the jurisdiction of the PARAD and the DARAB. Admittedly, the petitioners alleged that it was Gil and Candido who continued the tillage of the subject land after the death of Spouses Del Rosario. While the foregoing allegation seems to raise a challenge to Monica’s qualification as a farmer-beneficiary of the subject land, we nevertheless find the same insufficient to clothe the PARAD and the DARAB with jurisdiction over the complaint.
While ostensibly assailing Monica’s
qualification as a farmer-beneficiary, the petitioners did not seek the nullification of the emancipation patent issued to Monica and the issuance of a new one in their names. Instead, the petitioners merely sought that the subject land be equally partitioned among the surviving heirs of Spouses Del Rosario, including Monica. Verily, by merely asking for the recovery of their alleged hereditary share in the subject land, the petitioners implicitly recognized the validity of the issuance of the
emancipation patent over the subject land in favor of Monica.
Second Issue: Effect of the DARAB’s Decision
Despite its finding that the PARAD and the DARAB lacked jurisdiction to take cognizance of the petitioners’ complaint for amendment and partition, the CA nevertheless ruled that the petitioners were bound by the DARAB’s Decision dated January 8, 2004. Thus:
However, considering that petitioners invoked the jurisdiction of the DARAB Provincial Adjudicator by opposing Monica’s motion to dismiss the case on the ground that said Adjudicator has no jurisdiction over the case, they are, therefore, bound by the Decision of the DARAB declaring Monica as the bona fide TCT/EP holder; that they are not co-heirs to the subject landholding; and that the agreement that one third (1/3) of the subject landholding shall be given to Gil del Rosario is null and void for being contrary to agrarian laws; and ordering them not to interfere with Monica’s cultivation of her landholding. Settled is the rule that participation by certain parties in the administrative proceedings without raising any objection thereto, bars them from any jurisdictional infirmity after an adverse decision is rendered against them. (Citation omitted)
We do not agree with the foregoing ratiocination of the CA. The Decision dated January 8, 2004 of the DARAB is null and void and, thus, produced no effect whatsoever, the DARAB having no jurisdiction to take cognizance of the petitioners’ complaint for amendment and partition. On this point, our disquisition in Spouses Atuel v. Spouses Valdez is instructive, thus:
Jurisdiction over the subject matter cannot be acquired through,
or waived by, any act or omission of the parties. The active participation of the parties in the proceedings before the DARAB does not vest jurisdiction on the DARAB, as jurisdiction is conferred only by law. The courts or the parties cannot disregard the rule of non-waiver of jurisdiction. Likewise, estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. The failure of the parties to challenge the jurisdiction of the DARAB does not prevent this Court from addressing the issue, as the DARAB’s lack of jurisdiction is apparent on the face of the complaint. Issues of jurisdiction are not subject to the whims of the parties.
In a long line of decisions, this Court has consistently held that an order or decision rendered by a tribunal or agency without jurisdiction is a total nullity. Accordingly, we rule that the decision of the DARAB in the instant case is null and void. Consequently, the decision of the Court of Appeals affirming the decision of the DARAB is likewise invalid. This Court finds no compelling reason to rule on the other issues raised by the Spouses Atuel and the Spouses Galdiano. (Citations omitted and emphases supplied)
WHEREFORE, in consideration of the foregoing disquisitions, the Decision dated January 21, 2008 of the Court of Appeals in CA-G.R. SP No. 85483 is hereby REVERSED and SET ASIDE. The Provincial Agrarian Reform Adjudicator’s Decision dated May 22, 2002, and the Department of Agrarian Reform Adjudication Board’s Decision dated January 8, 2004 and Resolution dated July 8, 2004, are declared NULL and VOID for lack of jurisdiction.
Republic of the PhilippinesSUPREME COURTManila
G.R. Nos. 154470-71 September 24, 2012
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.
D E C I S I O N
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 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 evidenced by a Trading Order8 and a Confirmation of Sale.9 However, instead of delivering the Treasury Bills, the PDB delivered the seven CB bills to the BOC, as evidenced by a PDB Security Delivery Receipt, bearing a "note: ** substitution in lieu of 06-29-94" – referring to the Treasury Bills.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 0453512BB XM 0453522BB 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 045373BB 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 ofthe 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."
x x x x
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
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 XISUPPLEMENTAL RULES
Section 1. Central Bank Circular No. 28 – The provisions of Central Bank Circular No. 28 shall have suppletory application to matters not specially covered by these Rules.
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,72or at least to amend earlier CB circulars, is supported by its text "revoking" or "modif[ying" "all circulars" which are inconsistent with its terms.
At the outset, we stress that none of the parties disputes that the subject CB bills fall within the category of a certificate or evidence of indebtedness and that these were issued by the Central Bank, now the BSP. Thus, even without resorting to statutory construction aids, matters involving the subject CB bills should necessarily be governed by CB Circular No. 769-80. Even granting, however, that reliance on CB Circular No. 769-80 alone is not enough, we find that CB Circular No. 769-80 impliedly repeals CB Circular No. 28.
An implied repeal transpires when a substantial conflict exists between the new and the prior
laws. In the absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and the old laws.73 Repeal by implication is not favored, unless manifestly intended by the legislature, or unless it is convincingly and unambiguously demonstrated, that the laws or orders are clearly repugnant and patently inconsistent with one another so that they cannot co-exist; the legislature is presumed to know the existing law and would express a repeal if one is intended.74
There are two instances of implied repeal. One takes place when the provisions in the two acts on the same subject matter are irreconcilably contradictory, in which case, the later act, to the extent of the conflict, constitutes an implied repeal of the earlier one. The other occurs when the later act covers the whole subject of the earlier one and is clearly intended as a substitute; thus, it will operate to repeal the earlier law.75
A general reading of the two circulars shows that the second instance of implied repeal is present in this case. CB Circular No. 28, entitled "Regulations Governing Open Market Operations, Stabilization of Securities Market, Issue, Servicing and Redemption of Public Debt," is a regulation governing the servicing and redemption of public debt, including the issue, inscription, registration, transfer, payment and replacement of bonds and securities representing the public debt.76 On the other hand, CB Circular No. 769-80, entitled "Rules and Regulations Governing Central Bank Certificate of Indebtedness," is the governing regulation on matters77 (i) involving certificate of indebtedness78issued by the Central Bank itself and (ii) which are similarly covered by CB Circular No. 28.
The CB Monetary Board issued CB Circular No. 28 to regulate the servicing and redemption of public debt, pursuant to Section 124 (now
Section 119 of Republic Act R.A. No. 7653) of the old Central Bank law79 which provides that "the servicing and redemption of the public debt shall also be effected through the Bangko Sentral." However, even as R.A. No. 7653 continued to recognize this role by the BSP, the law required a phase-out of all fiscal agency functions by the BSP, including Section 119 of R.A. No. 7653.
In other words, even if CB Circular No. 28 applies broadly to both government-issued bonds and securities and Central Bank-issued evidence of indebtedness, given the present state of law, CB Circular No. 28 and CB Circular No. 769-80 now operate on the same subject – Central Bank-issued evidence of indebtedness. Under Section 1, Article XI of CB Circular No. 769-80, the continued relevance and application of CB Circular No. 28 would depend on the need to supplement any deficiency or silence in CB Circular No. 769-80 on a particular matter.
In the present case, both CB Circular No. 28 and CB Circular No. 769-80 provide the BSP with a course of action in case of an allegedly fraudulently assigned certificate of indebtedness. Under CB Circular No. 28, in case of fraudulent assignments, the BSP would have to "call upon the owner and the person presenting the bond to substantiate their respective claims" and, from there, determine who has a better right over the registered bond. On the other hand, under CB Circular No. 769-80, the BSP shall merely "issue and circularize a ‘stop order’ against the transfer, exchange, redemption of the [registered] certificate" without any adjudicative function (which is the precise root of the present controversy). As the two circulars stand, the patent irreconcilability of these two provisions does not require elaboration. Section 5, Article V of CB Circular No. 769-80 inescapably repealed Section 10 (d) 4 of CB Circular No. 28.
The issue of BSP’s jurisdiction, lay hidden
On that note, the Court could have written finis to the present controversy by simply sustaining the BSP’s hands-off approach to the PDB’s problem under CB Circular No. 769-80. However, the jurisdictional provision of CB Circular No. 769-80 itself, in relation to CB Circular No. 28, on the matter of fraudulent assignment, has given rise to a question of jurisdiction - the core question of law involved in these petitions - which the Court cannot just treat sub-silencio.
Broadly speaking, jurisdiction is the legal power or authority to hear and determine a cause.80 In the exercise of judicial or quasi-judicial power, it refers to the authority of a court to hear and decide a case.81 In the context of these petitions, we hark back to the basic principles governing the question of jurisdiction over the subject matter.
First, jurisdiction over the subject matter is determined only by the Constitution and by law.82 As a matter of substantive law, procedural rules alone can confer no jurisdiction to courts or administrative agencies.83 In fact, an administrative agency, acting in its quasi-judicial capacity, is a tribunal of limited jurisdiction and, as such, could wield only such powers that are specifically granted to it by the enabling statutes. In contrast, an RTC is a court of general jurisdiction, i.e., it has jurisdiction over cases whose subject matter does not fall within the exclusive original jurisdiction of any court, tribunal or body exercising judicial or quasi-judicial functions.84
Second, jurisdiction over the subject matter is determined not by the pleas set up by the defendant in his answer85but by the allegations in the complaint,86 irrespective of whether the plaintiff is entitled to favorable judgment on the basis of his assertions.87 The reason is that the complaint is supposed to contain a concise statement of the ultimate facts constituting the plaintiff's causes of action.88
Third, jurisdiction is determined by the law in force at the time of the filing of the complaint.89
Parenthetically, the Court observes that none of the parties ever raised the issue of whether the BSP can simply disown its jurisdiction, assuming it has, by the simple expedient of promulgating a new circular (specially applicable to a certificate of indebtedness issued by the BSP itself), inconsistent with an old circular, assertive of its limited jurisdiction over ownership issues arising from fraudulent assignments of a certificate of indebtedness. The PDB, in particular, relied solely and heavily on CB Circular No. 28.
In light of the above principles pointing to jurisdiction as a matter of substantive law, the provisions of the law itself that gave CB Circular 769-80 its life and jurisdiction must be examined.
The Philippine Central Bank
On January 3, 1949, Congress created the Central Bank of the Philippines (Central Bank) as a corporate body with the primary objective of (i) maintaining the internal and external monetary stability in the Philippines; and (ii) preserving the international value and the convertibility of the peso.90 In line with these broad objectives, the Central Bank was empowered to issue rules and regulations "necessary for the effective discharge of the responsibilities and exercise of the powers assigned to the Monetary Board and to the Central Bank."91 Specifically, the Central Bank is authorized to organize (other) departments for the efficient conduct of its business and whose powers and duties "shall be determined by the Monetary Board, within the authority granted to the Board and the Central Bank"92 under its original charter.
With the 1973 Constitution, the then Central Bank was constitutionally made as the country’s central monetary authority until such
time that Congress93 shall have established a central bank. The 1987 Constitution continued to recognize this function of the then Central Bank until Congress, pursuant to the Constitution, created a new central monetary authority which later came to be known as the Bangko Sentral ng Pilipinas.
Under the New Central Bank Act (R.A. No. 7653),94 the BSP is given the responsibility of providing policy directions in the areas of money, banking and credit; it is given, too, the primary objective of maintaining price stability, conducive to a balanced and sustainable growth of the economy, and of promoting and maintaining monetary stability and convertibility of the peso.95
The Constitution expressly grants the BSP, as the country’s central monetary authority, the power of supervision over the operation of banks, while leaving with Congress the authority to define the BSP’s regulatory powers over the operations of finance companies and other institutions performing similar functions. Under R.A. No. 7653, the BSP’s powers and functions include (i) supervision over the operation of banks; (ii) regulation of operations of finance companies and non-bank financial institutions performing quasi banking functions; (iii) sole power and authority to issue currency within the Philippine territory; (iv) engaging in foreign exchange transactions; (v) making rediscounts, discounts, loans and advances to banking and other financial institutions to influence the volume of credit consistent with the objective of achieving price stability; (vi) engaging in open market operations; and (vii) acting as banker and financial advisor of the government.1âwphi1
On the BSP’s power of supervision over the operation of banks, Section 4 of R.A. No. 8791 (The General Banking Law of 2000) elaborates as follows:
CHAPTER IIAUTHORITY OF THE BANGKO SENTRAL
SECTION 4. Supervisory Powers. — The operations and activities of banks shall be subject to supervision of the Bangko Sentral. "Supervision" shall include the following:
4.1. The issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions or functions covered, taking into consideration the distinctive character of the operations of institutions and the substantive similarities of specific functions to which such rules, modes or standards are to be applied;
4.2. The conduct of examination to determine compliance with laws and regulations if the circumstances so warrant as determined by the Monetary Board;
4.3. Overseeing to ascertain that laws and regulations are complied with;
4.4. Regular investigation which shall not be oftener than once a year from the last date of examination to determine whether an institution is conducting its business on a safe or sound basis: Provided, That the deficiencies/irregularities found by or discovered by an audit shall be immediately addressed;
4.5. Inquiring into the solvency and liquidity of the institution (2-D); or
4.6. Enforcing prompt corrective action. (n)
The Bangko Sentral shall also have supervision over the operations of and exercise regulatory powers over quasi-banks, trust entities and other financial institutions which under special
laws are subject to Bangko Sentral supervision. (2-Ca)
For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the borrowing of funds through the issuance, endorsement or assignment with recourse or acceptance of deposit substitutes as defined in Section 95 of Republic Act No. 7653 (hereafter the "New Central Bank Act") for purposes of relending or purchasing of receivables and other obligations. [emphasis ours]
While this provision empowers the BSP to oversee the operations and activities of banks to "ascertain that laws and regulations are complied with," the existence of the BSP’s jurisdiction in the present dispute cannot rely on this provision. The fact remains that the BSP already made known to the PDB its unfavorable position on the latter’s claim of fraudulent assignment due to the latter’s own failure to comply96 with existing regulations:
In this connection, Section 10 (b) 2 also requires that a "Detached assignment will be recognized or accepted only upon previous notice to the Central Bank x x x." In fact, in a memo dated September 23, 1991 xxx then CB Governor Jose L. Cuisia advised all banks (including PDB) xxx as follows:
In view recurring incidents ostensibly disregarding certain provisions of CB circular No. 28 (as amended) covering assignments of registered bonds, all banks and all concerned are enjoined to observe strictly the pertinent provisions of said CB Circular as hereunder quoted:
x x x x
Under Section 10.b. (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.
(d) Assignment of securities which have changed ownership several times.
(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. [Boldfacing supplied]
Again, the books of the BSP do not show that the supposed assignment of subject CB Bills was ever recorded in the BSP’s books. [Boldfacing supplied]
However, the PDB faults the BSP for not recording the assignment of the CB bills in the PDB’s favor despite the fact that the PDB already requested the BSP to record its assignment in the BSP’s books as early as June 30, 1994.97
The PDB’s claim is not accurate. What the PDB requested the BSP on that date was not the recording of the assignment of the CB bills in its favor but the annotation of its claim over the CB bills at the time when (i) it was no longer in possession of the CB bills, having been transferred from one entity to another
and (ii) all it has are the detached assignments, which the PDB has not shown to be compliant with Section 10 (b) 2 above-quoted. Obviously, the PDB cannot insist that the BSP take cognizance of its plaint when the basis of the BSP’s refusal under existing regulation, which the PDB is bound to observe, is the PDB’s own failure to comply therewith.
True, the BSP exercises supervisory powers (and regulatory powers) over banks (and quasi banks). The issue presented before the Court, however, does not concern the BSP’s supervisory power over banks as this power is understood under the General Banking Law. In fact, there is nothing in the PDB’s petition (even including the letters it sent to the BSP) that would support the BSP’s jurisdiction outside of CB Circular No. 28, under its power of supervision, over conflicting claims to the proceeds of the CB bills.
BSP has quasi-judicial powers over aclass of cases which does not includethe adjudication of ownership of theCB bills in question
In United Coconut Planters Bank v. E. Ganzon, Inc.,98 the Court considered the BSP as an administrative agency,99exercising quasi-judicial functions through its Monetary Board. It held:
A quasi-judicial agency or body is an organ of government other than a court and other than a legislature, which affects the rights of private parties through either adjudication or rule-making. The very definition of an administrative agency includes its being vested with quasi-judicial powers. The ever increasing variety of powers and functions given to administrative agencies recognizes the need for the active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies which cannot possibly be handled by regular courts. A "quasi-judicial function" is a term which applies to the action,
discretion, etc., of public administrative officers or bodies, who are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature.
Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-judicial powers or functions. As aptly observed by the Court of Appeals, the BSP Monetary Board is an independent central monetary authority and a body corporate with fiscal and administrative autonomy, mandated to provide policy directions in the areas of money, banking and credit. It has power to issue subpoena, to sue for contempt those refusing to obey the subpoena without justifiable reason, to administer oaths and compel presentation of books, records and others, needed in its examination, to impose fines and other sanctions and to issue cease and desist order. Section 37 of Republic Act No. 7653, in particular, explicitly provides that the BSP Monetary Board shall exercise its discretion in determining whether administrative sanctions should be imposed on banks and quasi-banks, which necessarily implies that the BSP Monetary Board must conduct some form of investigation or hearing regarding the same. [citations omitted]
The BSP is not simply a corporate entity but qualifies as an administrative agency created, pursuant to constitutional mandate,100 to carry out a particular governmental function.101 To be able to perform its role as central monetary authority, the Constitution granted it fiscal and administrative autonomy. In general, administrative agencies exercise powers and/or functions which may be characterized as administrative, investigatory, regulatory, quasi-legislative, or quasi-judicial, or a mix of these five, as may be conferred by the Constitution or by statute.102
While the very nature of an administrative agency and the raison d'être for its
creation103 and proliferation dictate a grant of quasi-judicial power to it, the matters over which it may exercise this power must find sufficient anchorage on its enabling law, either by express provision or by necessary implication. Once found, the quasi-judicial power partakes of the nature of a limited and special jurisdiction, that is, to hear and determine a class of cases within its peculiar competence and expertise. In other words, the provisions of the enabling statute are the yardsticks by which the Court would measure the quantum of quasi-judicial powers an administrative agency may exercise, as defined in the enabling act of such agency.104
Scattered provisions in R.A. No. 7653 and R.A. No. 8791, inter alia, exist, conferring jurisdiction on the BSP on certain matters.105 For instance, under the situations contemplated under Section 36, par. 2106 (where a bank or quasi bank persists in carrying on its business in an unlawful or unsafe manner) and Section 37107 (where the bank or its officers willfully violate the bank’s charter or by-laws, or the rules and regulations issued by the Monetary Board) of R.A. No. 7653, the BSP may place an entity under receivership and/or liquidation or impose administrative sanctions upon the entity or its officers or directors.
Among its several functions under R.A. No. 7653, the BSP is authorized to engage in open market operations and thereby "issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral" in the following manner.
SEC. 90. Principles of Open Market Operations. – 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.
x x x x
SEC. 92. Issue and Negotiation of Bangko Sentral Obligations. – In order to provide the Bangko Sentral with effective instruments for open market operations, the Bangko Sentral may, subject to such rules and regulations as the Monetary Board may prescribe and in accordance with the principles stated in Section 90 of this Act, issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral: Provided, That issuance of such certificates of indebtedness shall be made only in cases of extraordinary movement in price levels. Said evidences of indebtedness may be issued directly against the international reserve of the Bangko Sentral or against the securities which it has acquired under the provisions of Section 91 of this Act, or may be issued without relation to specific types of assets of the Bangko Sentral.
The Monetary Board shall determine the interest rates, maturities and other characteristics of said obligations of the Bangko Sentral, and may, if it deems it advisable, denominate the obligations in gold or foreign currencies.
Subject to the principles stated in Section 90 of this Act, the evidences of indebtedness of the Bangko Sentral to which this section refers may be acquired by the Bangko Sentral before their maturity, 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. The evidences of indebtedness acquired or redeemed by the Bangko Sentral shall not be included among its assets, and shall be immediately retired and cancelled.108 (italics supplied; emphases ours)
The primary objective of the BSP is to maintain price stability.109 The BSP has a number of monetary policy instruments at its disposal to promote price stability. To increase or reduce liquidity in the financial system, the BSP uses open market operations, among others.110 Open market operation is a monetary tool where the BSP publicly buys or sells government
securities111 from (or to) banks and financial institutions in order to expand or contract the supply of money. By controlling the money supply, the BSP is able to exert some influence on the prices of goods and services and achieve its inflation objectives.112
Once the issue and/or sale of a security is made, the BSP would necessarily make a determination, in accordance with its own rules, of the entity entitled to receive the proceeds of the security upon its maturity. This determination by the BSP is an exercise of its administrative powers113 under the law as an incident to its power to prescribe rules and regulations governing open market operations to achieve the "primary objective of achieving price stability."114As a matter of necessity, too, the same rules and regulations facilitate transaction with the BSP by providing for an orderly manner of, among others, issuing, transferring, exchanging and paying securities representing public debt.
Significantly, when competing claims of ownership over the proceeds of the securities it has issued are brought before it, the law has not given the BSP the quasi-judicial power to resolve these competing claims as part of its power to engage in open market operations. Nothing in the BSP’s charter confers on the BSP the jurisdiction or authority to determine this kind of claims, arising out of a subsequent transfer or assignment of evidence of indebtedness – a matter that appropriately falls within the competence of courts of general jurisdiction. That the statute withholds this power from the BSP is only consistent with the fundamental reasons for the creation of a Philippine central bank, that is, to lay down stable monetary policy and exercise bank supervisory functions. Thus, the BSP’s assumption of jurisdiction over competing claims cannot find even a stretched-out justification under its corporate powers "to do and perform any and all things that may be necessary or proper to carry out the purposes" of R.A. No. 7653. 115
To reiterate, open market operation is a monetary policy instrument that the BSP employs, among others, to regulate the supply of money in the economy to influence the timing, cost and availability of money and credit, as well as other financial factors, for the purpose of stabilizing the price level.116 What the law grants the BSP is a continuing role to shape and carry out the country’s monetary policy – not the authority to adjudicate competing claims of ownership over the securities it has issued – since this authority would not fall under the BSP’s purposes under its charter.
While R.A. No. 7653117 empowers the BSP to conduct administrative hearings and render judgment for or against an entity under its supervisory and regulatory powers and even authorizes the BSP Governor to "render decisions, or rulings x x x on matters regarding application or enforcement of laws pertaining to institutions supervised by the BSP and laws pertaining to quasi-banks, as well as regulations, policies or instructions issued by the Monetary Board," it is precisely the text of the BSP’s own regulation (whose validity is not here raised as an issue) that points to the BSP’s limited role in case of an allegedly fraudulent assignment to simply (i) issuing and circularizing a ‘"stop order" against the transfer, exchange, redemption of the certificate of indebtedness, including the payment of interest coupons, and (ii) withholding action on the certificate.
A similar conclusion can be drawn from the BSP’s administrative adjudicatory power in cases of "willful failure or refusal to comply with, or violation of, any banking law or any order, instruction or regulation issued by the Monetary Board, or any order, instruction or ruling by the Governor."118 The non-compliance with the pertinent requirements under CB Circular No. 28, as amended, deprives a party from any right to demand payment from the BSP.
In other words, the grant of quasi-judicial authority to the BSP cannot possibly extend to situations which do not call for the exercise by the BSP of its supervisory or regulatory functions over entities within its jurisdiction.119
The fact alone that the parties involved are banking institutions does not necessarily call for the exercise by the BSP of its quasi-judicial powers under the law.120
The doctrine of primary jurisdictionargues against BSP’s purportedauthority to adjudicate ownershipissues over the disputed CB bills
Given the preceding discussions, even the PDB’s invocation of the doctrine of primary jurisdiction is misplaced.
In the exercise of its plenary legislative power, Congress may create administrative agencies endowed with quasi-legislative and quasi-judicial powers. Necessarily, Congress likewise defines the limits of an agency’s jurisdiction in the same manner as it defines the jurisdiction of courts.121 As a result, it may happen that either a court or an administrative agency has exclusive jurisdiction over a specific matter or both have concurrent jurisdiction on the same. It may happen, too, that courts and agencies may willingly relinquish adjudicatory power that is rightfully theirs in favor of the other. One of the instances when a court may properly defer to the adjudicatory authority of an agency is the applicability of the doctrine of primary jurisdiction.122
As early as 1954, the Court applied the doctrine of primary jurisdiction under the following terms:
6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions and boards the power to resolve specialized disputes xxx ruled that Congress in requiring the Industrial Court's intervention in
the resolution of labor-management controversies xxx meant such jurisdiction to be exclusive, although it did not so expressly state in the law. The Court held that under the "sense-making and expeditious doctrine of primary jurisdiction ... the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered."123 (emphasis ours)
In Industrial Enterprises, Inc. v. Court of Appeals,124 the Court ruled that while an action for rescission of a contract between coal developers appears to be an action cognizable by regular courts, the trial court remains to be without jurisdiction to entertain the suit since the contract sought to be rescinded is "inextricably tied up with the right to develop coal-bearing lands and the determination of whether or not the reversion of the coal operating contract over the subject coal blocks to [the plaintiff] would be in line with the country’s national program and objective on coal-development and over-all coal-supply-demand balance." It then applied the doctrine of primary jurisdiction –
In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many cases involving matters that demand the special competence of administrative agencies. It may occur that the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in character. However, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative
proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body."
Clearly, the doctrine of primary jurisdiction finds application in this case since the question of what coal areas should be exploited and developed and which entity should be granted coal operating contracts over said areas involves a technical determination by the Bureau of Energy Development as the administrative agency in possession of the specialized expertise to act on the matter. The Trial Court does not have the competence to decide matters concerning activities relative to the exploration, exploitation, development and extraction of mineral resources like coal. These issues preclude an initial judicial determination. [emphases ours]
The absence of any express or implied statutory power to adjudicate conflicting claims of ownership or entitlement to the proceeds of its certificates of indebtedness finds complement in the similar absence of any technical matter that would call for the BSP’s special expertise or competence.125 In fact, what the PDB’s petitions bear out is essentially the nature of the transaction it had with the subsequent transferees of the subject CB bills (BOC and Bancap) and not any matter more appropriate for special determination by the BSP or any administrative agency.
In a similar vein, it is well-settled that the interpretation given to a rule or regulation by those charged with its execution is entitled to the greatest weight by the courts construing such rule or regulation.126 While there are exceptions127 to this rule, the PDB has not convinced us that a departure is warranted in
this case. Given the non-applicability of the doctrine of primary jurisdiction, the BSP’s own position, in light of Circular No. 769-80, deserves respect from the Court.
Ordinarily, cases involving the application of doctrine of primary jurisdiction are initiated by an action invoking the jurisdiction of a court or administrative agency to resolve the substantive legal conflict between the parties. In this sense, the present case is quite unique since the court’s jurisdiction was, originally, invoked to compel an administrative agency (the BSP) to resolve the legal conflict of ownership over the CB bills - instead of obtaining a judicial determination of the same dispute.
The remedy of interpleader
Based on the unique factual premise of the present case, the RTC acted correctly in initially assuming jurisdiction over the PDB’s petition for mandamus, prohibition and injunction.128 While the RTC agreed (albeit erroneously) with the PDB’s view (that the BSP has jurisdiction), it, however, dismissed not only the BOC’s/the BSP’s counterclaims but the PDB’s petition itself as well, on the ground that it lacks jurisdiction.
This is plain error.
Not only the parties themselves, but more so the courts, are bound by the rule on non-waiver of jurisdiction.129believes that jurisdiction over the BOC’s counterclaims and the BSP’s counterclaim/crossclaim for interpleader calls for the application of the doctrine of primary jurisdiction, the allowance of the PDB’s petition even becomes imperative because courts may raise the issue of primary jurisdiction sua sponte.130
Of the three possible options available to the RTC, the adoption of either of these two would lead the trial court into serious legal error: first,
if it granted the PDB’s petition, its decision would have to be set aside on appeal because the BSP has no jurisdiction as previously discussed; and second when it dismissed the PDB’s petitions and the BOC’s counterclaims on the ground that it lacks jurisdiction, the trial court seriously erred because precisely, the resolution of the conflicting claims over the CB bills falls within its general jurisdiction.
Without emasculating its jurisdiction, the RTC could have properly dismissed the PDB’s petition but on the ground that mandamus does not lie against the BSP; but even this correct alternative is no longer plausible since the BSP, as a respondent below, already properly brought before the RTC the remaining conflicting claims over the subject CB bills by way of a counterclaim/crossclaim for interpleader. Section 1, Rule 62 of the Rules of Court provides when an interpleader is proper:
SECTION 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or may be made against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves.
The remedy of an action of interpleader131 is designed to protect a person against double vexation in respect of a single liability.7 It requires, as an indispensable requisite, that conflicting claims upon the same subject matter are or may be made against the stakeholder (the possessor of the subject matter) who claims no interest whatever in the subject matter or an interest which in whole or in part is not disputed by the claimants.132
Through this remedy, the stakeholder can join all competing claimants in a single proceeding to determine conflicting claims without exposing the stakeholder to the possibility of
having to pay more than once on a single liability.133
When the court orders that the claimants litigate among themselves, in reality a new action arises,134 where the claims of the interpleaders themselves are brought to the fore, the stakeholder as plaintiff is relegated merely to the role of initiating the suit. In short, the remedy of interpleader, when proper, merely provides an avenue for the conflicting claims on the same subject matter to be threshed out in an action. Section 2 of Rule 62 provides:
SEC. 2. Order. – Upon the filing of the complaint, the court shall issue an order requiring the conflicting claimants to interplead with one another. If the interests of justice so require, the court may direct in such order that the subject matter be paid or delivered to the court.
This is precisely what the RTC did by granting the BSP’s motion to interplead. The PDB itself "agreed that the various claimants should now interplead." Thus, the PDB and the BOC subsequently entered into two separate escrow agreements, covering the CB bills, and submitted them to the RTC for approval.
In granting the BSP’s motion, the RTC acted on the correct premise that it has jurisdiction to resolve the parties’ conflicting claims over the CB bills - consistent with the rules and the parties’ conduct - and accordingly required the BOC to amend its answer and for the PDB to comment thereon. Suddenly, however, the PDB made an about-face and questioned the jurisdiction of the RTC. Swayed by the PDB’s argument, the RTC dismissed even the PDB’s petition - which means that it did not actually compel the BSP to resolve the BOC’s and the PDB’s claims.
Without the motion to interplead and the order granting it, the RTC could only dismiss the
PDB’s petition since it is the RTC which has jurisdiction to resolve the parties’ conflicting claims – not the BSP. Given that the motion to interplead has been actually filed, the RTC could not have really granted the relief originally sought in the PDB’s petition since the RTC’s order granting the BSP’s motion to interplead - to which the PDB in fact acquiesced into - effectively resulted in the dismissal of the PDB’s petition. This is not altered by the fact that the PDB additionally prayed in its petition for damages, attorney’s fees and costs of suit "against the public respondents" because the grant of the order to interplead effectively sustained the propriety of the BSP’s resort to this procedural device.
1. as a special civil action
What is quite unique in this case is that the BSP did not initiate the interpleader suit through an original complaint but through its Answer. This circumstance becomes understandable if it is considered that insofar as the BSP is concerned, the PDB does not possess any right to have its claim recorded in the BSP’s books; consequently, the PDB cannot properly be considered even as a potential claimant to the proceeds of the CB bills upon maturity. Thus, the interpleader was only an alternative position, made only in the BSP’s Answer.135
The remedy of interpleader, as a special civil action, is primarily governed by the specific provisions in Rule 62 of the Rules of Court and secondarily by the provisions applicable to ordinary civil actions.136 Indeed, Rule 62 does not expressly authorize the filing of a complaint-in-interpleader as part of, although separate and independent from, the answer. Similarly, Section 5, Rule 6, in relation to Section 1, Rule 9 of the Rules of Court137 does not include a complaint-in-interpleader as a claim,138 a form of defense,139 or as an objection that a defendant may be allowed to put up in his answer or in a motion to dismiss. This does
not mean, however, that the BSP’s "counter-complaint/cross-claim for interpleader" runs counter to general procedures.
Apart from a pleading,140 the rules141 allow a party to seek an affirmative relief from the court through the procedural device of a motion. While captioned "Answer with counter complaint/cross-claim for interpleader," the RTC understood this as in the nature of a motion,142 seeking relief which essentially consists in an order for the conflicting claimants to litigate with each other so that "payment is made to the rightful or legitimate owner"143 of the subject CB bills.
The rules define a "civil action" as "one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong." Interpleader may be considered as a stakeholder’s remedy to prevent a wrong, that is, from making payment to one not entitled to it, thereby rendering itself vulnerable to lawsuit/s from those legally entitled to payment.
Interpleader is a civil action made special by the existence of particular rules to govern the uniqueness of its application and operation. Under Section 2, Rule 6 of the Rules of Court, governing ordinary civil actions, a party’s claim is asserted "in a complaint, counterclaim, cross-claim, third (fourth, etc.)-party complaint, or complaint-in-intervention." In an interpleader suit, however, a claim is not required to be contained in any of these pleadings but in the answer-(of the conflicting claimants)-in-interpleader. This claim is different from the counter-claim (or cross-claim, third party-complaint) which is separately allowed under Section 5, par. 2 of Rule 62.
2. the payment of docket fees covering BOC’s counterclaim
The PDB argues that, even assuming that the RTC has jurisdiction over the issue of ownership of the CB bills, the BOC’s failure to pay the appropriate docket fees prevents the RTC from acquiring jurisdiction over the BOC’s "counterclaims."
We disagree with the PDB.
To reiterate and recall, the order granting the "PDB’s motion to interplead," already resulted in the dismissal of the PDB’s petition. The same order required the BOC to amend its answer and for the conflicting claimants to comment, presumably to conform to the nature of an answer-in interpleader. Perhaps, by reason of the BOC’s denomination of its claim as a "compulsory counterclaim" and the PDB’s failure to fully appreciate the RTC’s order granting the "BSP’s motion for interpleader" (with the PDB’s conformity), the PDB mistakenly treated the BOC’s claim as a "permissive counterclaim" which necessitates the payment of docket fees.
As the preceding discussions would show, however, the BOC’s "claim" - i.e., its assertion of ownership over the CB bills – is in reality just that, a "claim" against the stakeholder and not as a "counterclaim,"144 whether compulsory145or permissive. It is only the BOC’s alternative prayer (for the PDB to deliver to the BOC, as the buyer in the April 15 transaction and the ultimate successor-in-interest of the buyer in the April 19 transaction, either the original subjects of the sales or the value thereof plus whatever income that may have been earned pendente lite) and its prayer for damages that are obviously compulsory counterclaims against the PDB and, therefore, does not require payment of docket fees.146
The PDB takes a contrary position through its insistence that a compulsory counterclaim should be one where the presence of third parties, of whom the court cannot acquire jurisdiction, is not required. It reasons out that since the RCBC and All Asia (the intervening
holders of the CB bills) have already been dropped from the case, then the BOC’s counterclaim must only be permissive in nature and the BOC should have paid the correct docket fees.
We see no reason to belabor this claim. Even if we gloss over the PDB’s own conformity to the dropping of these entities as parties, the BOC correctly argues that a remedy is provided under the Rules. Section 12, Rule 6 of the Rules of Court reads:
SEC. 12. Bringing new parties. – When the presence of parties other than those to the original action is required for the granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order them to be brought in as defendants, if jurisdiction over them can be obtained.
Even then, the strict characterization of the BOC’s counterclaim is no longer material in disposing of the PDB’s argument based on non-payment of docket fees.
When an action is filed in court, the complaint must be accompanied by the payment of the requisite docket and filing fees by the party seeking affirmative relief from the court. It is the filing of the complaint or appropriate initiatory pleading, accompanied by the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the claim or the nature of the action.147 However, the non-payment of the docket fee at the time of filing does not automatically cause the dismissal of the case, so long as the fee is paid within the applicable prescriptive or reglementary period, especially when the claimant demonstrates a willingness to abide by the rules prescribing such payment.148
In the present case, considering the lack of a clear guideline on the payment of docket fee by the claimants in an interpleader suit, compounded by the unusual manner in which
the interpleader suit was initiated and the circumstances surrounding it, we surely cannot deduce from the BOC’s mere failure to specify in its prayer the total amount of the CB bills it lays claim to (or the value of the subjects of the sales in the April 15 and April 19 transactions, in its alternative prayer) an intention to defraud the government that would warrant the dismissal of its claim.149
At any rate, regardless of the nature of the BOC’s "counterclaims," for purposes of payment of filing fees, both the BOC and the PDB, properly as defendants-in-interpleader, must be assessed the payment of the correct docket fee arising from their respective claims. The seminal case of Sun Insurance Office, Ltd. v. Judge Asuncion150 provides us guidance in the payment of docket fees, to wit:
1. x x x Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period. [underscoring ours]
This must be the rule considering that Section 7, Rule 62 of which reads:
SEC. 7. Docket and other lawful fees, costs and litigation expenses as liens. – The docket and other lawful fees paid by the party who filed a complaint under this Rule, as well as the costs and litigation expenses, shall constitute a lien
or charge upon the subject matter of the action, unless the court shall order otherwise.
only pertain to the docket and lawful fees to be paid by the one who initiated the interpleader suit, and who, under the Rules, actually "claims no interest whatever in the subject matter." By constituting a lien on the subject matter of the action, Section 7 in effect only aims to actually compensate the complainant-in-interpleader, who happens to be the stakeholder unfortunate enough to get caught in a legal crossfire between two or more conflicting claimants, for the faultless trouble it found itself into. Since the defendants-in-interpleader are actually the ones who make a claim - only that it was extraordinarily done through the procedural device of interpleader - then to them devolves the duty to pay the docket fees prescribed under Rule 141 of the Rules of Court, as amended.151
The importance of paying the correct amount of docket fee cannot be overemphasized:
The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court expenses in the handling of cases. Consequently, in order to avoid tremendous losses to the judiciary, and to the government as well, the payment of docket fees cannot be made dependent on the outcome of the case, except when the claimant is a pauper-litigant.152
WHEREFORE, premises considered the consolidated PETITIONS are GRANTED. The Planters Development Bank is hereby REQUIRED to file with the Regional Trial Court its comment or answer-in-interpleader to Bank of Commerce’s Amended Consolidated Answer with Compulsory Counterclaim, as previously ordered by the Regional Trial Court. The Regional Trial Court of Makati City, Branch 143, is hereby ORDERED to assess the docket fees due from Planters Development Bank and Bank of Commerce and order their payment, and to resolve with DELIBERATE DISPATCH the parties’
conflicting claims of ownership over the proceeds of the Central Bank bills.
The Clerk of Court of the Regional Trial Court of Makati City, Branch 143, or his duly authorized representative is hereby ORDERED to assess and collect the appropriate amount of docket fees separately due the Bank of Commerce and Planters Development Bank as conflicting claimants in Bangko Sentral ng Pilipinas’ interpleader suit, in accordance with this decision.