RULE 19 Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

171805 May 30, 2011

PHILIPPINE NATIONAL BANK, Petitioner, vs. MERELO B. AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (deceased), represented by his heirs; RAMON A. BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD (deceased), represented by his heirs; and RICARDO GABUYA (deceased), represented by his heirs, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 172021 MERELO B. AZNAR and MATIAS B. AZNAR III, Petitioners, vs. PHILIPPINE NATIONAL BANK, Respondent. DECISION LEONARDO-DE CASTRO, J.: Before the Court are two petitions for review on certiorari under Rule 45 of the Rules of Court both seeking to annul and set aside the Decision 1 dated September 29, 2005 as well as the Resolution2 dated March 6, 2006 of the Court of Appeals in CA-G.R. CV No. 75744, entitled "Merelo B. Aznar, Matias B. Aznar III, Jose L. Aznar (deceased) represented by his heirs, Ramon A. Barcenilla (deceased) represented by his heirs, Rosario T. Barcenilla, Jose B. Enad (deceased) represented by his heirs, and Ricardo Gabuya (deceased) represented by his heirs v. Philippine National Bank, Jose Garrido and Register of Deeds of Cebu City." The September 29, 2005 Decision of the Court of Appeals set aside the Decision 3 dated November 18, 1998 of the Regional Trial Court (RTC) of Cebu City, Branch 17, in Civil Case No. CEB-21511. Furthermore, it ordered the Philippine National Bank (PNB) to pay Merelo B. Aznar; Matias B. Aznar III; Jose L. Aznar (deceased), represented by his heirs; Ramon A. Barcenilla (deceased), represented by his heirs; Rosario T. Barcenilla; Jose B. Enad (deceased), represented by his heirs; and Ricardo Gabuya (deceased), represented by his heirs (Aznar, et al.), the amount of their lien based on the Minutes of the Special Meeting of the Board of Directors 4 (Minutes) of the defunct Rural

Insurance and Surety Company, Inc. (RISCO) duly annotated on the titles of three parcels of land, plus legal interests from the time of PNBs acquisition of the subject properties until the finality of the judgment but dismissing all other claims of Aznar, et al. On the other hand, the March 6, 2006 Resolution of the Court of Appeals denied the Motion for Reconsideration subsequently filed by each party. The facts of this case, as stated in the Decision dated September 29, 2005 of the Court of Appeals, are as follows: In 1958, RISCO ceased operation due to business reverses. In plaintiffs desire to rehabilitate RISCO, they contributed a total amount of P212,720.00 which was used in the purchase of the three (3) parcels of land described as follows: "A parcel of land (Lot No. 3597 of the Talisay-Minglanilla Estate, G.L.R.O. Record No. 3732) situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. xxx containing an area of SEVENTY[-]EIGHT THOUSAND ONE HUNDRED EIGHTY[-]FIVE SQUARE METERS (78,185) more or less. x x x" covered by Transfer Certificate of Title No. 8921 in the name of Rural Insurance & Surety Co., Inc."; "A parcel of land (Lot 7380 of the Talisay Minglanilla Estate, G.L.R.O. Record No. 3732), situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. xxx containing an area of THREE HUNDRED TWENTY[-]NINE THOUSAND FIVE HUNDRED FORTY[-]SEVEN SQUARE METERS (329,547), more or less. xxx" covered by Transfer Certificate of Title No. 8922 in the name of Rural Insurance & Surety Co., Inc." and "A parcel of land (Lot 1323 of the subdivision plan Psd-No. 5988), situated in the District of Lahug, City of Cebu, Island of Cebu. xxx containing an area of FIFTY[-]FIVE THOUSAND SIX HUNDRED FIFTY[-]THREE (55,653) SQUARE METERS, more or less." covered by Transfer Certificate of Title No. 24576 in the name of Rural Insurance & Surety Co., Inc." After the purchase of the above lots, titles were issued in the name of RISCO. The amount contributed by plaintiffs constituted as liens and encumbrances on the aforementioned properties as annotated in the titles of said lots. Such annotation was made pursuant to the Minutes of the Special Meeting of the Board of Directors of RISCO (hereinafter referred to as the "Minutes") on March 14, 1961, pertinent portion of which states: xxxx 3. The President then explained that in a special meeting of the stockholders previously called for the purpose of putting up certain amount of P212,720.00 for the rehabilitation of the Company, the following stockholders contributed the amounts indicated opposite their names:

CONTRIBUTED SURPLUS MERELO B. AZNAR MATIAS B. AZNAR JOSE L. AZNAR RAMON A. BARCENILLA P50,000.00 50,000.00 27,720.00 25,000.00

ROSARIO T. BARCENILLA 25,000.00 JOSE B. ENAD RICARDO GABUYA 17,500.00 17,500.00

212,720.00 xxxx And that the respective contributions above-mentioned shall constitute as their lien or interest on the property described above, if and when said property are titled in the name of RURAL INSURANCE & SURETY CO., INC., subject to registration as their adverse claim in pursuance of the Provisions of Land Registration Act, (Act No. 496, as amended) until such time their respective contributions are refunded to them completely. x x x x" Thereafter, various subsequent annotations were made on the same titles, including the Notice of Attachment and Writ of Execution both dated August 3, 1962 in favor of herein defendant PNB, to wit: On TCT No. 8921 for Lot 3597: Entry No. 7416-V-4-D.B. Notice of Attachment By the Provincial Sheriff of Cebu, Civil Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff, versus Iluminada Gonzales, et al., Defendants", attaching all rights, interest and participation of the

defendant Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of the two parcels of land covered by T.C.T. Nos. 8921, Attachment No. 330 and 185. Date of Instrument August 3, 1962. Date of Inscription August 3, 1962, 3:00 P.M. Entry No. 7417-V-4-D.B. Writ of Execution By the Court of First Instance of Manila, commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to make the sum of Seventy[-]One Thousand Three Hundred Pesos (P71,300.00) plus interest etc., in connection with Civil Case No. 47725, File No. T-8021. Date of Instrument July 21, 1962. Date of Inscription August 3, 1962, 3:00 P.M. Entry No. 7512-V-4-D.B. Notice of Attachment By the Provincial Sheriff of Cebu, Civil Case Nos. IV-74065, 73929, 74129, 72818, in the Municipal Court of the City of Manila, entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als., Defendants", attaching all rights, interests and participation of the defendants, to the parcels of land covered by T.C.T. Nos. 8921 & 8922 Attachment No. 186, File No. T-8921. Date of the Instrument August 16, 1962. Date of Inscription August 16, 1962, 2:50 P.M. Entry No. 7513-V-4-D.B. Writ of Execution By the Municipal Court of the City of Manila, commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to make the sum of Three Thousand Pesos (P3,000.00), with interest at 12% per annum from July 20, 1959, in connection with Civil Case Nos. IV-74065, 73929, 74613 annotated above. File No. T-8921 Date of the Instrument August 11, 1962. Date of the Inscription August 16, 1962, 2:50 P.M. On TCT No. 8922 for Lot 7380: (Same as the annotations on TCT 8921) On TCT No. 24576 for Lot 1328 (Corrected to Lot 1323-c per court order): Entry No. 1660-V-7-D.B. Notice of Attachment by the Provincial Sheriff of Cebu, Civil Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff, versus,

Iluminada Gonzales, et al., Defendants", attaching all rights, interest, and participation of the defendants Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of the parcel of land herein described. Attachment No. 330 & 185. Date of Instrument August 3, 1962. Date of Inscription August 3, 1962, 3:00 P.M. Entry No. 1661-V-7-D.B. Writ of Execution by the Court of First Instance of Manila commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants to make the sum of Seventy[-]One Thousand Three Hundred Pesos (P71,300.00), plus interest, etc., in connection with Civil Case No. 47725. File No. T-8921. Date of the Instrument July 21, 1962. Date of the Inscription August 3, 1962 3:00 P.M. Entry No. 1861-V-7-D.B. - Notice of Attachment By the Provincial Sheriff of Cebu, Civil Case Nos. IV-74065, 73929, 74129, 72613 & 72871, in the Municipal Court of the City of Manila, entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als., Defendants", attaching all rights, interest and participation of the defendants, to the parcel of land herein described. Attachment No. 186. File No. T-8921. Date of the Instrument August 16, 1962. Date of the Instription August 16, 1962 2:50 P.M. Entry No. 1862-V-7-D.B. Writ of Execution by the Municipal Court of Manila, commanding the Provincial Sheriff of Cebu, of the lands and buildings of the Defendants, to make the sum of Three Thousand Pesos (P3,000.00), with interest at 12% per annum from July 20, 1959, in connection with Civil Case Nos. IV-74065, 73929, 74129, 72613 & 72871 annotated above. File No. T-8921. Date of the Instrument August 11, 1962. Date of the Inscription August 16, 1962 at 2:50 P.M.

As a result, a Certificate of Sale was issued in favor of Philippine National Bank, being the lone and highest bidder of the three (3) parcels of land known as Lot Nos. 3597 and 7380, covered by T.C.T. Nos. 8921 and 8922, respectively, both situated at Talisay, Cebu, and Lot No. 1328-C covered by T.C.T. No. 24576 situated at Cebu City, for the amount of Thirty-One Thousand Four Hundred Thirty Pesos (P31,430.00). Thereafter, a Final Deed of Sale dated May 27, 1991 in favor of the Philippine National Bank was also issued and Transfer Certificate of Title No. 24576 for Lot 1328-C (corrected to 1323-C) was cancelled and a new certificate of title, TCT 119848 was issued in the name of PNB on August 26, 1991. This prompted plaintiffs-appellees to file the instant complaint seeking the quieting of their supposed title to the subject properties, declaratory relief, cancellation of TCT and reconveyance with temporary restraining order and preliminary injunction. Plaintiffs alleged that the subsequent annotations on the titles are subject to the prior annotation of their liens and encumbrances. Plaintiffs further contended that the subsequent writs and processes annotated on the titles are all null and void for want of valid service upon RISCO and on them, as stockholders. They argued that the Final Deed of Sale and TCT No. 119848 are null and void as these were issued only after 28 years and that any right which PNB may have over the properties had long become stale. Defendant PNB on the other hand countered that plaintiffs have no right of action for quieting of title since the order of the court directing the issuance of titles to PNB had already become final and executory and their validity cannot be attacked except in a direct proceeding for their annulment. Defendant further asserted that plaintiffs, as mere stockholders of RISCO do not have any legal or equitable right over the properties of the corporation. PNB posited that even if plaintiffs monetary lien had not expired, their only recourse was to require the reimbursement or refund of their contribution.51awphi1 Aznar, et al., filed a Manifestation and Motion for Judgment on the Pleadings 6 on October 5, 1998. Thus, the trial court rendered the November 18, 1998 Decision, which ruled against PNB on the basis that there was an express trust created over the subject properties whereby RISCO was the trustee and the stockholders, Aznar, et al., were the beneficiaries or the cestui que trust. The dispositive portion of the said ruling reads: WHEREFORE, judgment is hereby rendered as follows: a) Declaring the Minutes of the Special Meeting of the Board of Directors of RISCO approved on March 14, 1961 (Annex "E," Complaint) annotated on the titles to subject properties on May 15, 1962 as an express trust whereby RISCO was a mere trustee and the above-mentioned stockholders as beneficiaries being the true and lawful owners of Lots 3597, 7380 and 1323;

b) Declaring all the subsequent annotations of court writs and processes, to wit: Entry No. 7416-V-4-D.B., 7417-V-4-D.B., 7512-V-4-D.B., and 7513-V-4-D.B. in TCT No. 8921 for Lot 3597 and TCT No. 8922 for Lot 7380; Entry No. 1660-V-7-D.B., Entry No. 1661-V-7-D.B., Entry No. 1861-V-7-D.B., Entry No. 1862-V-7-D.B., Entry No. 4329-V-7-D.B., Entry No. 3761-V-7-D.B. and Entry No. 26522 v. 34, D.B. on TCT No. 24576 for Lot 1323-C, and all other subsequent annotations thereon in favor of third persons, as null and void; c) Directing the Register of Deeds of the Province of Cebu and/or the Register of Deeds of Cebu City, as the case may be, to cancel all these annotations mentioned in paragraph b) above the titles; d) Directing the Register of Deeds of the Province of Cebu to cancel and/or annul TCTs Nos. 8921 and 8922 in the name of RISCO, and to issue another titles in the names of the plaintiffs; and e) Directing Philippine National Bank to reconvey TCT No. 119848 in favor of the plaintiffs. 7 PNB appealed the adverse ruling to the Court of Appeals which, in its September 29, 2005 Decision, set aside the judgment of the trial court. Although the Court of Appeals agreed with the trial court that a judgment on the pleadings was proper, the appellate court opined that the monetary contributions made by Aznar, et al., to RISCO can only be characterized as a loan secured by a lien on the subject lots, rather than an express trust. Thus, it directed PNB to pay Aznar, et al., the amount of their contributions plus legal interest from the time of acquisition of the property until finality of judgment.lawphil The dispositive portion of the decision reads: WHEREFORE, premises considered, the assailed Judgment is hereby SET ASIDE. A new judgment is rendered ordering Philippine National Bank to pay plaintiffs-appellees the amount of their lien based on the Minutes of the Special Meeting of the Board of Directors duly annotated on the titles, plus legal interests from the time of appellants acquisition of the subject properties until the finality of this judgment. All other claims of the plaintiffs-appellees are hereby DISMISSED.8 Both parties moved for reconsideration but these were denied by the Court of Appeals. Hence, each party filed with this Court their respective petitions for review on certiorari under Rule 45 of the Rules of Court, which were consolidated in a Resolution9 dated October 2, 2006. In PNBs petition, docketed as G.R. No. 171805, the following assignment of errors were raised: I

THE COURT OF APPEALS ERRED IN AFFIRMING THE FINDINGS OF THE TRIAL COURT THAT A JUDGMENT ON THE PLEADINGS WAS WARRANTED DESPITE THE EXISTENCE OF GENUINE ISSUES OF FACTS ALLEGED IN PETITIONER PNBS ANSWER. II THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RIGHT OF RESPONDENTS TO REFUND OR REPAYMENT OF THEIR CONTRIBUTIONS HAD NOT PRESCRIBED AND/OR THAT THE MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF RISCO CONSTITUTED AS AN EFFECTIVE ADVERSE CLAIM. III THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE DISMISSAL OF THE COMPLAINT ON GROUNDS OF RES JUDICATA AND LACK OF CAUSE OF ACTION ALLEGED BY PETITIONER IN ITS ANSWER.10 On the other hand, Aznar, et al.s petition, docketed as G.R. No. 172021, raised the following issue: THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE CONTRIBUTIONS MADE BY THE STOCKHOLDERS OF RISCO WERE MERELY A LOAN SECURED BY THEIR LIEN OVER THE PROPERTIES, SUBJECT TO REIMBURSEMENT OR REFUND, RATHER THAN AN EXPRESS TRUST.11 Anent the first issue raised in G.R. No. 171805, PNB argues that a judgment on the pleadings was not proper because its Answer,12 which it filed during the trial court proceedings of this case, tendered genuine issues of fact since it did not only deny material allegations in Aznar, et al.s Complaint13 but also set up special and affirmative defenses. Furthermore, PNB maintains that, by virtue of the trial courts judgment on the pleadings, it was denied its right to present evidence and, therefore, it was denied due process. The contention is meritorious. The legal basis for rendering a judgment on the pleadings can be found in Section 1, Rule 34 of the Rules of Court which states that "[w]here an answer fails to tender an issue, or otherwise admits the material allegations of the adverse partys pleading, the court may, on motion of that party, direct judgment on such pleading. x x x." Judgment on the pleadings is, therefore, based exclusively upon the allegations appearing in the pleadings of the parties and the annexes, if any, without consideration of any evidence aliunde.14 However, when it appears that not all the material allegations of the complaint were admitted in the answer for some of them were either denied or disputed, and the defendant

has set up certain special defenses which, if proven, would have the effect of nullifying plaintiffs main cause of action, judgment on the pleadings cannot be rendered.15 In the case at bar, the Court of Appeals justified the trial courts resort to a judgment on the pleadings in the following manner: Perusal of the complaint, particularly, Paragraph 7 thereof reveals: "7. That in their desire to rehabilitate RISCO, the above-named stockholders contributed a total amount of PhP212,720.00 which was used in the purchase of the above-described parcels of land, which amount constituted liens and encumbrances on subject properties in favor of the above-named stockholders as annotated in the titles adverted to above, pursuant to the Minutes of the Special Meeting of the Board of Directors of RISCO approved on March 14, 1961, a copy of which is hereto attached as Annex "E". On the other hand, defendant in its Answer, admitted the aforequoted allegation with the qualification that the amount put up by the stockholders was "used as part payment" for the properties. Defendant further averred that plaintiffs liens and encumbrances annotated on the titles issued to RISCO constituted as "loan from the stockholders to pay part of the purchase price of the properties" and "was a personal obligation of RISCO and was thus not a claim adverse to the ownership rights of the corporation." With these averments, We do not find error on the part of the trial court in rendering a judgment on the pleadings. For one, the qualification made by defendant in its answer is not sufficient to controvert the allegations raised in the complaint. As to defendants contention that the money contributed by plaintiffs was in fact a "loan" from the stockholders, reference can be made to the Minutes of the Special Meeting of the Board of Directors, from which plaintiffs-appellees anchored their complaint, in order to ascertain the true nature of their claim over the properties. Thus, the issues raised by the parties can be resolved on the basis of their respective pleadings and the annexes attached thereto and do not require further presentation of evidence aliunde. 16 However, a careful reading of Aznar, et al.s Complaint and of PNBs Answer would reveal that both parties raised several claims and defenses, respectively, other than what was cited by the Court of Appeals, which requires the presentation of evidence for resolution, to wit: Complaint (Aznar, et al.) 11. That these subsequent annotations on the titles of the properties in question are subject to the prior annotation of liens and encumbrances of the above-named stockholders per Entry No. Answer (PNB) 10) Par. 11 is denied as the loan from the stockholders to pay part of the purchase price of the properties was a personal obligation of RISCO and

458-V-7-D.B. inscribed on TCT No. 24576 on May was thus not a claim adverse to the 15, 1962 and per Entry No. 6966-V-4-D.B. on TCT ownership rights of the corporation; No. 8921 and TCT No. 8922 on May 15, 1962; 12. That these writs and processes annotated on the titles are all null and void for total want of valid service upon RISCO and the above-named stockholders considering that as early as sometime in 1958, RISCO ceased operations as earlier stated, and as early as May 15, 1962, the liens and encumbrances of the above-named stockholders were annotated in the titles of subject properties; 13. That more particularly, the Final Deed of Sale (Annex "G") and TCT No. 119848 are null and void as these were issued only after 28 years and 5 months (in the case of the Final Deed of Sale) and 28 years, 6 months and 29 days (in the case of TCT 119848) from the invalid auction sale on December 27, 1962, hence, any right, if any, which PNB had over subject properties had long become stale; 14. That plaintiffs continue to have possession of subject properties and of their corresponding titles, but they never received any process concerning the petition filed by PNB to have TCT 24576 over Lot 1323-C surrendered and/or cancelled; 15. That there is a cloud created on the aforementioned titles of RISCO by reason of the annotate writs, processes and proceedings caused by Jose Garrido and PNB which were apparently valid or effective, but which are in truth and in fact invalid and ineffective, and 11) Par. 12 is denied as in fact notice to RISCO had been sent to its last known address at Plaza Goite, Manila;

12) Par. 13 is denied for no law requires the final deed of sale to be executed immediately after the end of the redemption period. Moreover, another court of competent jurisdiction has already ruled that PNB was entitled to a final deed of sale;

13) Par. 14 is denied as plaintiffs are not in actual possession of the land and if they were, their possession was as trustee for the creditors of RISCO like PNB;

14) Par. 15 is denied as the court orders directing the issuance of titles to PNB in lieu of TCT 24576 and TCT 8922 are valid judgments which cannot be set aside in a collateral proceeding like the instant case.18

prejudicial to said titles and to the rights of the plaintiffs, which should be removed and the titles quieted.17 Furthermore, apart from refuting the aforecited material allegations made by Aznar, et al., PNB also indicated in its Answer the special and affirmative defenses of (a) prescription; (b) res judicata; (c) Aznar, et al., having no right of action for quieting of title; (d) Aznar, et al.s lien being ineffective and not binding to PNB; and (e) Aznar, et al.s having no personality to file the suit.19 From the foregoing, it is indubitably clear that it was error for the trial court to render a judgment on the pleadings and, in effect, resulted in a denial of due process on the part of PNB because it was denied its right to present evidence. A remand of this case would ordinarily be the appropriate course of action. However, in the interest of justice and in order to expedite the resolution of this case which was filed with the trial court way back in 1998, the Court finds it proper to already resolve the present controversy in light of the existence of legal grounds that would dispose of the case at bar without necessity of presentation of further evidence on the other disputed factual claims and defenses of the parties. A thorough and comprehensive scrutiny of the records would reveal that this case should be dismissed because Aznar, et al., have no title to quiet over the subject properties and their true cause of action is already barred by prescription. At the outset, the Court agrees with the Court of Appeals that the agreement contained in the Minutes of the Special Meeting of the RISCO Board of Directors held on March 14, 1961 was a loan by the therein named stockholders to RISCO. We quote with approval the following discussion from the Court of Appeals Decision dated September 29, 2005: Careful perusal of the Minutes relied upon by plaintiffs-appellees in their claim, showed that their contributions shall constitute as "lien or interest on the property" if and when said properties are titled in the name of RISCO, subject to registration of their adverse claim under the Land Registration Act, until such time their respective contributions are refunded to them completely. It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. When the language of the contract is explicit leaving no doubt as to the intention of the drafters thereof, the courts may not read into it any other intention that would contradict its plain import.

The term lien as used in the Minutes is defined as "a discharge on property usually for the payment of some debt or obligation. A lien is a qualified right or a proprietary interest which may be exercised over the property of another. It is a right which the law gives to have a debt satisfied out of a particular thing. It signifies a legal claim or charge on property; whether real or personal, as a collateral or security for the payment of some debt or obligation." Hence, from the use of the word "lien" in the Minutes, We find that the money contributed by plaintiffsappellees was in the nature of a loan, secured by their liens and interests duly annotated on the titles. The annotation of their lien serves only as collateral and does not in any way vest ownership of property to plaintiffs.20(Emphases supplied.) We are not persuaded by the contention of Aznar, et al., that the language of the subject Minutes created an express trust. Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties. An implied trust comes into being by operation of law.21 Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct and positive acts of the settlor or the trustor - by some writing, deed, or will or oral declaration. It is created not necessarily by some written words, but by the direct and positive acts of the parties.22 This is in consonance with Article 1444 of the Civil Code, which states that "[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." In other words, the creation of an express trust must be manifested with reasonable certainty and cannot be inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations.23 No such reasonable certitude in the creation of an express trust obtains in the case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes does not offer any indication that the parties thereto intended that Aznar, et al., become beneficiaries under an express trust and that RISCO serve as trustor. Indeed, we find that Aznar, et al., have no right to ask for the quieting of title of the properties at issue because they have no legal and/or equitable rights over the properties that are derived from the previous registered owner which is RISCO, the pertinent provision of the law is Section 2 of the Corporation Code (Batas Pambansa Blg. 68), which states that "[a] corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence."

As a consequence thereof, a corporation has a personality separate and distinct from those of its stockholders and other corporations to which it may be connected. 24 Thus, we had previously ruled in Magsaysay-Labrador v. Court of Appeals25 that the interest of the stockholders over the properties of the corporation is merely inchoate and therefore does not entitle them to intervene in litigation involving corporate property, to wit: Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent, remote, conjectural, consequential and collateral. At the very least, their interest is purely inchoate, or in sheer expectancy of a right in the management of the corporation and to share in the profits thereof and in the properties and assets thereof on dissolution, after payment of the corporate debts and obligations. While a share of stock represents a proportionate or aliquot interest in the property of the corporation, it does not vest the owner thereof with any legal right or title to any of the property, his interest in the corporate property being equitable or beneficial in nature. Shareholders are in no legal sense the owners of corporate property, which is owned by the corporation as a distinct legal person.26 In the case at bar, there is no allegation, much less any proof, that the corporate existence of RISCO has ceased and the corporate property has been liquidated and distributed to the stockholders. The records only indicate that, as per Securities and Exchange Commission (SEC) Certification27 dated June 18, 1997, the SEC merely suspended RISCOs Certificate of Registration beginning on September 5, 1988 due to its non-submission of SEC required reports and its failure to operate for a continuous period of at least five years. Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the properties at issue in this case on the strength of the Minutes which, at most, is merely evidence of a loan agreement between them and the company. There is no indication or even a suggestion that the ownership of said properties were transferred to them which would require no less that the said properties be registered under their names. For this reason, the complaint should be dismissed since Aznar, et al., have no cause to seek a quieting of title over the subject properties. At most, what Aznar, et al., had was merely a right to be repaid the amount loaned to RISCO. Unfortunately, the right to seek repayment or reimbursement of their contributions used to purchase the subject properties is already barred by prescription. Section 1, Rule 9 of the Rules of Court provides that when it appears from the pleadings or the evidence on record that the action is already barred by the statute of limitations, the court shall dismiss the claim, to wit:

Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. (Emphasis supplied.) In Feliciano v. Canoza,28 we held: We have ruled that trial courts have authority and discretion to dismiss an action on the ground of prescription when the parties pleadings or other facts on record show it to be indeed time barred x x x; and it may do so on the basis of a motion to dismiss, or an answer which sets up such ground as an affirmative defense; or even if the ground is alleged after judgment on the merits, as in a motion for reconsideration; or even if the defense has not been asserted at all, as where no statement thereof is found in the pleadings, or where a defendant has been declared in default. What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period, be otherwise sufficiently and satisfactorily apparent on the record; either in the averments of the plaintiffs complaint, or otherwise established by the evidence.29 (Emphasis supplied.) The pertinent Civil Code provision on prescription which is applicable to the issue at hand is Article 1144(1), to wit: The following actions must be brought within ten years from the time the right of action accrues: 1. Upon a written contract; 2. Upon an obligation created by law; 3. Upon a judgment. (Emphasis supplied.) Moreover, in Nielson & Co., Inc. v. Lepanto Consolidated Mining Co.,30 we held that the term "written contract" includes the minutes of the meeting of the board of directors of a corporation, which minutes were adopted by the parties although not signed by them, to wit: Coming now to the question of prescription raised by defendant Lepanto, it is contended by the latter that the period to be considered for the prescription of the claim regarding participation in the profits is only four years, because the modification of the sharing embodied in the management contract is merely verbal, no written document to that effect having been presented. This contention is untenable. The modification appears in the minutes of the special meeting of the Board of Directors of Lepanto held on August 21, 1940, it having been made upon the authority of its President, and in said minutes the terms of modification had been

specified. This is sufficient to have the agreement considered, for the purpose of applying the statute of limitations, as a written contract even if the minutes were not signed by the parties (3 A.L.R., 2d, p. 831). It has been held that a writing containing the terms of a contract if adopted by two persons may constitute a contract in writing even if the same is not signed by either of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says that an unsigned agreement the terms of which are embodied in a document unconditionally accepted by both parties is a written contract (Corbin on Contracts, Vol. I, p. 85).31 Applied to the case at bar, the Minutes which was approved on March 14, 1961 is considered as a written contract between Aznar, et al., and RISCO for the reimbursement of the contributions of the former. As such, the former had a period of ten (10) years from 1961 within which to enforce the said written contract. However, it does not appear that Aznar, et al., filed any action for reimbursement or refund of their contributions against RISCO or even against PNB. Instead the suit that Aznar, et al., brought before the trial court only on January 28, 1998 was one to quiet title over the properties purchased by RISCO with their contributions. It is unmistakable that their right of action to claim for refund or payment of their contributions had long prescribed. Thus, it was reversible error for the Court of Appeals to order PNB to pay Aznar, et al., the amount of their liens based on the Minutes with legal interests from the time of PNBs acquisition of the subject properties. In view of the foregoing, it is unnecessary for the Court to pass upon the other issues raised by the parties. WHEREFORE, the petition of Aznar, et al., in G.R. No. 172021 is DENIED for lack of merit. The petition of PNB in G.R. No. 171805 is GRANTED. The Complaint, docketed as Civil Case No. CEB21511, filed by Aznar, et al., is hereby DISMISSED. No costs. SO ORDERED. Republic SUPREME Manila FIRST DIVISION G.R. No. 160727 June 26, 2007 THE PHILIPPINES, petitioner, of the Philippines COURT

UNION BANK OF vs. DANILO L. CONCEPCION, respondent. DECISION

GARCIA, J.: In this petition for review under Rule 45 of the Rules of Court, petitioner Union Bank of the Philippines (Union Bank) assails and seeks the setting aside of the Decision 1 dated July 22, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 75355, as effectively reiterated in its Resolution2 of November 7, 2003 denying the petitioners motion for reconsideration. The records, which include a copy of this Courts Decision dated May 19, 1998 in G.R. No. 131729 entitled "Union Bank of the Philippines v. Court of Appeals et al., respondents,"3 yield the following material facts: On September 16, 1997, the EYCO Group of Companies4 (EYCO or EYCO Group) filed with the Securities and Exchange Commission (SEC) a PETITION5 for the declaration of suspension of payment, appointment of a rehabilitation receiver/committee and approval of rehabilitation plan with an alternative prayer for liquidation and dissolution of corporations (Petition for Suspension of Payment, hereinafter). In it, EYCO depicted the Groups composite corporations as having a combined assets that are more than enough to pay off all their debts, but nonetheless unable to pay them as they fall due. Joining EYCO as co-petitioners were Eulogio Yutingco and two other individuals holding controlling interests in the composite corporations (collectively, the Yutingcos). Finding the petition, docketed as SEC Case No. 09-97-5764, to be sufficient in form and substance, the SEC Hearing Panel, by an order of September 19, 1997, directed the suspension of all actions, claims and proceedings against EYCO, et al. pending before any court, tribunal, board or office6 (the Suspension Order). At the same time, the Panel set the petition for hearing. Meanwhile, a consortium of private banks which had granted credit facilities to EYCO, among them, Union Bank, convened to map out their collective collection options. The formation of a management committee (ManCom) to represent the creditor banks was agreed upon in that meeting. Subsequently, Union Bank decided to break away from the consortium and, without notifying its members, filed a slew of civil cases against EYCO, et al. Of relevance is the first, a complaint for a sum of money instituted on September 23, 1997 before the Regional Trial Court (RTC) of Makati City, against four (4) members of the EYCO Group and spouses Eulogio and Bee Kuan Yutingco, as sureties of the corporate obligations, with application for preliminary attachment. This complaint,7 docketed as Civil Case No. 97-2184, eventually ended up in Branch 148 of the court. The next day, the Makati RTC issued the desired writ of preliminary attachment,8 pursuant to which levy on attachment was annotated on the titles, i.e., TCT Nos. V-481929 and V-4819310 of the Registry of Deeds of Valenzuela City, of two parcels of land

under the name of Nikon Plaza, Inc. and EYCO Properties, Inc., respectively. Also attached, per herein respondent Danilo L. Concepcion (Concepcion, for brevity), without denial from the petitioner, is a parcel of land covered by TCT No. V-49678 of the same registry allegedly held by the Yutingcos in trust for Nikon Industrial Corporation.11 On October 22, 1997, Union Bank moved, on jurisdictional ground, for the dismissal of SEC Case No. 09-97-5764. On the same date, EYCO submitted its rehabilitation plan. In January 1998, the SEC Hearing Panel appointed the regular members of the newly created ManCom for EYCO. Meanwhile, Union Bank, without awaiting for the SECs ruling on its motion to dismiss SEC Case No. 09-97-5764, filed with the CA a petition for certiorari to nullify what it tagged as the precipitate September 19, 1997 SEC suspension order12 and its creation of the ManCom. In the same petition, docketed as CA-G.R. SP No. 45774, Union Bank alleged that the jurisdiction over the basic petition for declaration of suspension of payment pertains to the RTC under Act No. 1956, as amended, or the Insolvency Law. On December 22, 1997, in CA-G.R. SP No. 45774, the CA rendered judgment declaring Union Bank guilty of forum shopping and accordingly dismissed its petition for certiorari. This Court, in its Decision13 dated May 19, 1998 in G.R. No. 131729, in turn affirmed that of the CA, but proceeded further to declare the SEC as possessed of jurisdiction over EY COs petition for suspension of payments filed pursuant to Section 5(d) of Presidential Decree (P.D.) No. 902-A, but not insofar as the Yutingcos petition was concerned. With respect to the Yutingcos, the Court held that the SECs jurisdiction on matters of suspension of payments is confined only to those initiated by corporate entities, as the aforecited section does not allow an individual to file, or join in, the corresponding petition. In line with the rule on misjoinder of parties, the Court directed the SEC to drop the individual petitioners from the petition for suspension of payment. Conformably with this Courts Decision aforementioned, the Makati RTC issued, in Civil Case No. 97-2184, an Order14 dated August 17, 1998 thereunder indefinitely suspending the proceedings in that collection suit until further orders. The fallo of the RTCs order reads: WHEREFORE, the complaint filed by the plaintiff *Union Bank] against defendant-corporation *EYCO 4+ is hereby INDEFINITELY SUSPENDED until further Orders from this Court in view of the existing petition for Suspension of Payment before the [SEC]. On the other hand, the defendants motion to dismiss complaint against the individual-defendants, namely: Spouses Eulogio and Bee Kuan Yutingco, is hereby DENIED for lack of merit.

Consequently, in order to give defendant-Spouses [Yutingcos] ample time to prepare for whatever defense they may raise, they are hereby given a new fifteen (15) days period from receipt of this Order within which to file their answer to the complaint against them. SO ORDERED. (Words in brackets and emphasis supplied.) In a related development, the SEC Hearing Panel, over the objection of the consortium of EYCOs creditor banks, approved, on December 18, 1998, the rehabilitation plan prepared by the Strategies and Alliance Corporation for EYCO. The consortium lost no time in appealing to the SEC en banc the Hearing Panels approval order and prayed for the liquidation and dissolution of EYCO, the appellate recourse docketed as SEC AC No. 649. On September 14, 1999, the SEC en banc issued in SEC AC No. 649 an order finding for the consortium, disposing as follows: WHEREFORE, the appeal is, as it is hereby granted and the Order dated 18 December 1998 is set aside. The Petition to be Declared in State of Suspension of Payment is hereby disapproved and the SAC Plan terminated. Consequently, all committees, conservator/receivers created pursuant to said Order are dissolved. xxx The Commission, likewise, orders the liquidation and dissolution of the [EYCO Group]. The case is hereby remanded to the hearing panel below for that purpose. xxx (Words in brackets and emphasis supplied.) Another en banc order15 of March 31, 2001 followed, with the SEC this time appointing respondent Concepcion to act, vice the dissolved Liquidation Committee, as EYCO Liquidator. Among Concepcions first act as such liquidator was to file, on March 8, 2002, in Civil Case No. 97-2184, a Motion to Intervene and To Admit Motion to Set Aside Order of Attachment16 (Motion to Intervene, for brevity). Three days later, Concepcion submitted before the SEC a Liquidation Plan17 for the EYCO Group. After due proceedings, the SEC approved, on April 11, 2002, the Concepcion-submitted Liquidation Plan.18Concepcions motion to intervene, however, met a different fat e. For, by Order19 of August 8, 2002, the Makati RTC denied Concepcions motion to intervene in Civil Case No. 97-2184 on the ground of lack of standing to intervene, his appointment as Liquidator being, according to the court, of doubtful validity. The order, in addition, granted Union Banks earlier motion to declare EYCO in default, and set a date for the ex-parte reception of Union Banks evidence. Concepcion then moved for reconsideration questioning the basis of the denial of his motion to intervene. Questioned, too, was the default aspect of the order, Concepcion arguing in this

regard that the collection proceedings were suspended "until further Orders from this Court" 20 and the RTC of Makati has yet to issue the suspension-lifting order. The Makati RTC denied the motion on December 16, 2002. Earlier, however, Union Bank presented evidence ex parte, on the basis of which the Makati RTC rendered, on December 27, 2002, partial judgment21 ordering EYCO to pay the bank P400 million plus interests and attorneys fees. Via a petition for certiorari and prohibition before the CA, Concepcion challenged the RTCs partial judgment aforementioned and its earlier order denying the motion to intervene. His recourse was docketed as CA-G.R. SP No. 75355. The appellate court eventually issued the herein assailed Decision22 reversing the Makati RTCs impugned issuances and allowing Concepcion to intervene, thus: WHEREFORE, foregoing premises considered, the petition is GRANTED. The assailed orders and partial judgment are hereby ANNULLED and SET ASIDE. Public respondent [RTC Judge Oscar Pimentel, Branch 148, Makati City] is ordered to allow petitioner [Concepcion] to intervene in Civil Case No. 97-2184. SO ORDERED. Following the denial of its motion for reconsideration,23 Union Bank has interposed this petition ascribing to the CA the following errors: 1. In ruling in favor of respondent Concepcions right to intervene in Civil Case No. 97 -2184 pending in the lower court despite his lack of legal interest in the matter in litigation. 2. In ruling in favor of respondent Concepcions right to intervene in said Civil Case No. 97 -2184 despite his lack of legal personality, his appointment by the SEC as liquidator of EYCO being null and void for lack of jurisdiction; and 3. In giving due course to respondent Concepcions petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure despite its being the improper remedy. We DENY. As the Court distinctly notes, the petitioner does not assail the CAs judgment insofar as it nullified the RTCs partial judgment or its default order. As thus couched, the petition particularly sets its sight on that part of the appellate courts ruling allowing respondent Concepcion to intervene in Civil Case No. 97-2184. Of the three errors assigned, the more critical relates to the challenged validity of the respondents appointment by the SEC as

liquidator of the EYCO Group, his right to intervene predicated as it is on his being such liquidator. It is the petitioners posture, following the Makati RTCs line, that the respondents appointment as liquidator of EYCO was invalid for lack of jurisdiction on the part of SEC to preside, in first place, over EYCOs liquidation and dissolution. Pressing on, the petitioner states that EYCO is already insolvent and insolvency proceedings fall under the jurisdiction of regular courts under the Insolvency Law (Act No. 1956, as amended) in relation to the pertinent provision of R.A. No. 8799, otherwise known as the Securities Regulation Code. We are not persuaded. As it were, the underlying petition24 EYCO filed with and over which the SEC assumed jurisdiction was one for declaration of suspension of payment, appointment of a rehabilitation receiver/committee, approval of rehabilitation plan with alternative prayer for liquidation and dissolution. That the SEC, along the way, ordained EYCOs liquidation and dissolution did not, without more, strip the SEC of jurisdiction over the liquidation process. Albeit jurisdiction over a petition to declare a corporation in a state of insolvency strictly lies with regular courts, the SEC possessed, during the period material, ample power under P.D. No. 902-A,25 as amended, to declare a corporation insolvent as an incident of and in continuation of its already acquired jurisdiction over the petition to be declared in the state of suspension of payments in the two instances provided in Section 5(d) thereof.26 Said Section 5(d)27 vests the SEC with exclusive and original jurisdiction over petitions for suspension of payments which may either be: (a) a simple petition for suspension of payments based on the provisions of the Insolvency Law, i.e., the petitioning corporation has sufficient assets to cover all its debts, but foresees the impossibility of meeting the obligations as they fall due, or (b) a similar petition filed by an insolvent corporation accompanied by a prayer for the creation of a management committee and/or rehabilitation receiver based on the provisions of P.D. No. 902-A, as amended by P.D. No. 1758.28 In the case at bench, EYCOs petition for suspension of payment was, at bottom, a mix of both situations adverted to above. For, while EYCO, in the said petition, alleged being solvent but illiquid, it nonetheless pleaded for the constitution of a rehabilitation receiver/committee, with an alternative prayer for liquidation, if warranted. Clearly then, the SEC has, from the start, jurisdiction over EYCOs petition for suspension of payment, such jurisdiction, following Ching,29 continuing for purposes of liquidation after it (SEC) declared EYCO insolvent. The SEC appeared to be aware of the continuity angle as it even ordered the remand to the SEC Hearing Panel of SEC Case No. 09-97-5764 for purposes of liquidating and dissolving the EYCO Group.

If the SEC contextually retained jurisdiction over the liquidation of EYCO, is it not but logical then that it has competence to appoint the respondent or any qualified individual for that matter as liquidator? And lest it be overlooked, the Court had, in G.R. No. 131729, already rejected the petitioners thesis about the SECs purported lack of jurisdiction over EYCOs suspension of payment case owing to its supervening insolvency. Therein, the Court stated: We are of course aware of the argument *of+ petitioner *Union Bank+ that the petition of *EYCO+ should be entirely dismissed and taken out of the SECs jurisdiction on account of the alleged insolvency of [the latter]. In this regard, petitioner theorizes that [EYCO has] already become insolvent when [the composite corporations] allegedly disposed of a substantial portion of their properties hence suspension of payments with the SEC is not the proper remedy. Such argument does not persuade us. Petitioners allegations of *EYCOs+ supposed insolvency are hardly of any consequence to the assumption of jurisdiction by the SEC over the nature or subject matter of the petition for suspension of payments. Aside from the fact that these allegations are evidentiary in nature , we have likewise consistently ruled that what determines the nature of an action, as well as which court or body has jurisdiction over it, are the allegations of the complaint, or a petition as in this case, and the character of the relief sought. That the merits of the case after due proceedings are later found to veer away from the claims asserted by EYCO in its petition, as when it is shown later that it is actually insolvent and may not be entitled to suspension of payments, does not divest the SEC at all of its jurisdiction already acquired as its inception . (Words in brackets and emphasis added.) The Court is certainly aware of the transfer, effected by R.A. No. 8799, to the RTC of the SECs jurisdiction defined under Section 5(d) of P.D. No. 902-A.30 Such transfer, however, did not, as the petitioner and the RTC posit, divest the SEC of its jurisdiction over SEC Case No. 09-97-5764, given that it had already issued, as early as September 19, 1998, the suspension order after it found the petition for suspension filed on September 16, 1998 to be sufficient in form and substance. Subsection 5.2 of R.A. No. 8799 prescribing the jurisdiction transfer and the rules on transition provides as follows: 5.2. The *Securities and Exchange+ Commissions jurisdiction over all cases enumerated under Section 5 of [P.D.] No. 902-A is hereby transferred to the appropriate [RTC]: Provided that the Supreme Court may designate the [RTC] branches that shall exercise jurisdiction over these cases. xxx The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Words in bracket and emphasis added.)

EYCOs petition for suspension for payment was, for all intents and purposes, still pending with the SEC as of June 30, 2000. Accordingly, the SECs jurisdiction thereon, by the express terms of R.A. No. 8999, still subsists "until [the suspension of payment case and its incidents are] finally disposed." In the words of the CA: As held by this Court Section 5.2 of RA 8799 specifically provided that the SEC shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of June 30, 2000 until finally disposed. The records are clear that the suspension of payment was filed on September 7, 1998. As such, the petition is still pending with the SEC as of the cut-off date set in the rules. xxx31 When the law speaks of "until finally disposed," the reference should include the final disposition of the liquidation and dissolution processes since it is within the power of the SEC by law,32 or as incident of or in continuation of its already acquired jurisdiction over the petition for suspension of payment,33 to order the dissolution/liquidation of a corporation and accordingly appoint a liquidator. In fine, the continuing exercise of jurisdiction by the SEC over the liquidation and dissolution of the EYCO Group is warranted. Once jurisdiction attaches, the court cannot be ousted from the case by any subsequent events, such as a new legislation placing such proceedings under the jurisdiction of another body. The only recognized exceptions to the rule, which find no sway in the present case, arise when the statute expressly so provides or when the statute is clearly intended to apply to actions pending before its enactment.34 Given the above perspective, the Court is at a loss to understand petitioners challenge against the right of the respondent to intervene in Civil Case No. 97-2184, on the postulate that the latter lacks legal interest in the matter in litigation. Intervention is a procedure by which a third person, not originally party to the suit, but claiming an interest in the subject matter, comes into the case, in order to protect his right or interpose his claim.35 Its main purpose is to settle in one action and by a single judgment all conflicting claims of or the whole controversy among the persons involved.36 To warrant intervention under Rule 19, Section 1 of the Rules of Court,37 two requisites must concur: (a) the movant has a legal interest in the matter in litigation, and (b) intervention must not unduly delay or prejudice the adjudication of the rights of the parties, nor should the claim of the intervenor be capable of being properly decided in a separate proceeding. The interest, which entitles one to intervene, must involve the matter in litigation and of such direct and immediate character38 that the intervenor will either gain or lose by the direct legal operation and effect of the judgment.39

Just like the CA, the Court has no doubt about the respondent, as the duly-appointed liquidator of EYCOs remaining assets, having a legal interest in the matter litigated in Civil Case No. 97 2184. This is particularly true with respect to the parcels of land covered by the writ of attachment which, in the implementation of the SEC-approved Liquidation Plan for EYCO, had been conveyed to the respondent40 in trust for the benefit of creditors, EYCOs stockholders and other persons in interest. At the very least, the respondent, as liquidator-trustee, is so situated as to be affected by the distribution or disposition of the attached properties which were under threat of being levied on execution and sold at public auction. Respondent would be unfaithful to his trust if he does take a bona fide effort to intervene in Civil Case No. 97-2184 to thwart the attempt of the petitioner to collect unpaid loans ahead of other legitimate creditors similarly situated. Under the SEC Rules of Procedure on Corporate Recovery pursuant to which the SEC appointed the respondent to liquidate the remaining assets of EYCO, the liquidator is empowered and duty bound to "*R+epresent the debtor in any case filed by or against the debtor in any tribunal" and "[B]ring any action on behalf of the debtor to collect, recover or preserve any of its assets, or to resist or defend against any claim." 41 Any suggestion that allowing intervention would unduly delay the final closure of the collection case cannot be accepted. Far from unnecessarily prolonging or complicating the case, the desired intervention, if allowed, would possibly enable the court in one single action and judgment to protect the collective interests of the creditors of the EYCO Group that are seriously threatened by the imminent exclusion of certain properties from the pool of assets that should legally, if not ideally, be equitably distributed among them. Disallowing intervention would pave the way for the petitioner to seize the proceedings before the Makati RTC to work entirely in its favor. Such course of action trifles with the entire liquidation process. And any decision rendered therein would unlikely be left undisturbed by other legitimate but unpaid creditors whose interest in the attached properties can hardly be disputed. Moreover, the claim of the respondent over the attached properties could not possibly be better threshed out in a separate but subsequent proceedings given that he had already secured titles over them. The third and last issue turns on the propriety of certiorari as a recourse to the denial of a motion for intervention. The correct remedy, according to the petitioner, is an appeal under Rule 45 of the Rules of Court, an order denying intervention being final in character, not merely interlocutory. Petitioner thus faults the CA for allowing respondent Concepcions petition for certiorari under Rule 65 of the Rules as a vehicle to impugn the denial of his motion for intervention. It stresses that the availability of appeal proscribes recourse to the special civil action of certiorari. We are not convinced.

Petitioners statement of the rule on the availability of the extraordinary writ of ce rtiorari under the premises is impeccable. So too is its citation of supporting jurisprudence. Petitioner conveniently forgot, however, to include in its formulation settled exceptions to and qualifications of the rule, even as it glossed over another holding that intervention is merely accessory to the principal action and, as such, is an interlocutory proceeding dependent on the case between the original parties.42 It is true that certiorari may not be resorted to when appeal is available as a remedy. However, it is also true that the Court has allowed the issuance of a writ of certiorari when appeal does not afford a speedy and adequate remedy in the ordinary course of law. As in the past, the Court has ruled that the availability of an appeal does not foreclose recourse to the ordinary remedies or certiorari or prohibition where appeal is not adequate, equally beneficial, expeditious and sufficient.43 Stated a bit differently, certiorari may be availed of where an appeal would be slow, inadequate and insufficient. The determination as to what exactly constitutes plain, speedy and adequate remedy rests on judicial discretion and depends on the particular circumstances of each case. In the case at bar, the CA did not commit any reversible error in allowing the petition for certiorari filed by the respondent. As it were, the respondent was able to convince the CA of the urgency of his cause and that an appeal from the denial of the motion for intervention would not constitute speedy and adequate remedy, thus necessitating the resort to the extraordinary remedy of certiorari. And in an instance justifying the invocation of the remedy of certiorari, it would appear too that the CA found the RTC to have exercised its judicial authority in an oppressive manner,44 so much so that the CA stated the apt observation that: "In the first place, it [RTC] should not have taken cognizance of the case when it was notified of the pending petition [for suspension of payments] before the SEC at the time the complaint was filed."45 Certainly not lost on the Court is an obvious reality: the Makati RTC virtually interfered with and invalidated the appointment made by the SEC when it has no jurisdiction over the latter. WHEREFORE, the instant petition is DENIED and the impugned Decision and Resolution of the Court of Appeals dated July 22, 2003 and November 7, 2003, respectively, are AFFIRMED. Costs against the petitioner. SO ORDERED. Republic SUPREME Manila of the Philippines COURT

SECOND DIVISION G.R. No. 137489 May 29, 2002

COOPERATIVE DEVELOPMENT AUTHORITY, petitioner, vs. DOLEFIL AGRARIAN REFORM BENEFICIARIES COOPERATIVE, INC., ESMERALDO A. DUBLIN, ALICIA SAVAREZ, EDNA URETA, ET AL., respondents. DE LEON, JR., J.: At the core of the instant petition for review on certiorari of the Decision 1 of the Court of Appeals, 13th Division, in CA-G.R. SP. No. 47933 promulgated on September 9, 1998 and its Resolution2 dated February 9, 1999 is the issue of whether or not petitioner Cooperative Development Authority (CDA for brevity) is vested with quasi-judicial authority to adjudicate intra-cooperative disputes. The record shows that sometime in the later part of 1997, the CDA received from certain members of the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. (DARBCI for brevity), an agrarian reform cooperative that owns 8,860 hectares of land in Polomolok, South Cotabato, several complaints alleging mismanagement and/or misappropriation of funds of DARBCI by the then incumbent officers and members of the board of directors of the cooperative, some of whom are herein private respondents. Acting on the complaints docketed as CDA-CO Case No. 97-011, CDA Executive Director Candelario L. Verzosa, Jr. issued an order3 dated December 8, 1997 directing the private respondents to file their answer within ten (10) days from receipt thereof. Before the private respondents could file their answer, however, CDA Administrator Alberto P. Zingapan issued on December 15, 1997 an order,4 upon the motion of the complainants in CDACO Case No. 97-011, freezing the funds of DARBCI and creating a management committee to manage the affairs of the said cooperative. On December 18, 1991, the private respondents filed a Petition for Certiorari 5 with a prayer for preliminary injunction, damages and attorneys fees against the CDA and its officers namely: Candelario L. Verzosa, Jr. and Alberto P. Zingapan, including the DOLE Philippines Inc. before the Regional Trial Court (RTC for brevity) of Polomolok, South Cotabato, Branch 39. The petition which was docketed as SP Civil Case No. 25, primarily questioned the jurisdiction of the CDA to resolve the complaints against the private respondents, specifically with respect to the authority of the CDA to issue the "freeze order" and to create a management committee that would run the affairs of DARBCI.

On February 24, 1998, CDA Chairman Jose C. Medina, Jr. issued an order6 in CDA-CO Case No. 97-011 placing the private respondents under preventive suspension, hence, paving the way for the newly-created management committee7 to assume office on March 10, 1998. On March 27, 1998, the RTC of Polomolok, South Cotabato, Branch 39, issued a temporary restraining order8(TRO), initially for seventy-two (72) hours and subsequently extended to twenty (20) days, in an Order dated March 31, 1998. The temporary restraining order, in effect, directed the parties to restore status quo ante, thereby enabling the private respondents to reassume the management of DARBCI. The CDA questioned the propriety of the temporary restraining order issued by the RTC of Polomolok, South Cotabato on March 27, 1998 through a petition for certiorari before the Court of Appeals, 12th Division, which was docketed as CA-G.R. SP No. 47318. On April 21, 1998, the Court of Appeals, 12th Division, issued a temporary restraining order9 in CA-G.R. SP No. 47318 enjoining the RTC of Polomolok, South Cotabato, Branch 39, from enforcing the restraining order which the latter court issued on March 27, 1998, and ordered that the proceedings in SP Civil Case No. 25 be held in abeyance.1wphi1.nt Consequently, the CDA continued with the proceedings in CDA-CO Case No. 97-011. On May 26, 1998 CDA Administrator Arcadio S. Lozada issued a resolution10 which directed the holding of a special general assembly of the members of DARBCI and the creation of an ad hoc election committee to supervise the election of officers and members of the board of directors of DARBCI scheduled on June 14, 1998. The said resolution of the CDA, issued on May 26, 1998 prompted the private respondents to file on June 8, 1998 a Petition for Prohibition 11 with a prayer for preliminary mandatory injunction and temporary restraining order with the Court of Appeals, 13th Division, which was docketed as CA-G.R. SP No. 47933. On June 10, 1998, the appellate court issued a resolution12 restraining the CDA and its administrator, Arcadio S. Lozada, the three (3) members of the ad hoc election committee or any and all persons acting in their behalf from proceeding with the election of officers and members of the board of directors of DARBCI scheduled on June 14, 1998. Incidentally, on the same date that the Court of Appeals issued a temporary restraining order in CA-G.R. SP No. 47933 on June 10, 1998, a corporation by the name of Investa Land Corporation (Investa for brevity) which allegedly executed a "Lease Agreement with Joint Venture" with DARBCI filed a petition13 with the RTC of Polomolok, South Cotabato, Branch 39, docketed as SP Civil Case No. 28, essentially seeking the annulment of orders and resolutions issued by the CDA in CDA-CO Case No. 97-011 with a prayer for temporary restraining order and preliminary injunction. On the following day, June 11, 1998, the trial court issued a temporary restraining

order14 enjoining the respondents therein from proceeding with the scheduled special general assembly and the elections of officers and members of the board of directors of DARBCI on June 14, 1998. Thereafter, it also issued a writ of preliminary injunction. With the issuance of the two (2) restraining orders by the Court of Appeals, 13 th Division, and the RTC of Polomolok, South Cotabato, Branch 39, on June 10 and 11, 1998, respectively, the scheduled special general assembly and the election of officers and members of the board of directors of DARBCI on June 14, 1998 did not take place. Nevertheless, on July 12, 1998, the majority of the 7,511 members of DARBCI, on their own initiative, convened a general assembly and held an election of the members of the board of directors and officers of the cooperative, thereby effectively replacing the private respondents. Hence, the private respondents filed a Twin Motions for Contempt of Court and to Nullify Proceedings15 with the Court of Appeals in CA-G.R. SP No. 47933. On September 9, 1998 the Court of Appeals, 13th Division, promulgated its subject appealed Decision16 granting the petition in CA-G.R. SP No. 47933, the dispositive portion of which reads: Wherefore, the foregoing considered, the Petition is hereby GRANTED. The Orders of the respondent Cooperative Development Authority in CDA-CO case No. 97-011 dated 08 December 1997, 15 December 1997, 26 January 1998, 24 February 1998, 03 March 1998, and the Resolution dated 26 May 1998, are hereby declared NULL AND VOID and of no legal force and effect. Further, the respondents are hereby ORDERED to perpetually CEASE AND DESIST from taking any further proceedings in CDA-CO Case No. 97-011. Lastly, the respondent CDA is hereby ORDERED to REINSTATE the Board of Directors of DARBCI who were ousted by virtue of the questioned Orders, and to RESTORE the status quo prior to the filing of CDA-CO Case No. 97-011. SO ORDERED. The CDA filed a motion for reconsideration17 of the Decision in CA-G.R. SP No. 47933 but it was denied by the Court of Appeals in its assailed Resolution 18 dated February 9, 1999, thus: WHEREFORE, the Motion for Reconsideration is hereby DENIED for being patently without merit. MOREOVER, acting on petitioners Twin Motion, and in view of the Decision in this case dated 09, September 1998, the tenor of which gives it legal effect nunc pro tunc. We therefore hold the 12 July 1998 election of officers, the resolutions passed during the said assembly, and the

subsequent oath-taking of the officers elected therein, and all actions taken during the said meeting, being in blatant defiance of a valid restraining order issued by this Court, to be NULL AND VOID AB INITIO AND OF NO LEGAL FORCE AND EFFECT. FURTHERMORE, the private respondents are hereby given thirty (30) days from receipt of this Resolution within which to explain in writing why they should not be held in contempt of this Court for having openly defied the restraining order dated 10 July 1998. The Hon. Jose C. Medina of the CDA is given a like period to explain in writing why he should not be cited in contempt for having administered the oath of the "Board of Officers" pending the effectivity of the restraining order. The respondent Arcadio S. Lozada, Administrator of the CDA, is likewise given the same period to explain why he should not be held in contempt for issuing a resolution on 21 July 1998 validating the proceedings of the assembly, and another resolution on 28 August 1998 confirming the election of the officers thereof. SO ORDERED. Hence, the instant petition19 for review which raises the following assignments of error: I THE HONORABLE COURT OF APPEALS, IN NULLIFYING THE ORDERS AND RESOLUTIONS OF THE COOPERATIVE DEVELOPMENT AUTHORITY IN CDA CO CASE NO. 97-011, DECIDED A QUESTION OF SUBSTANCE THAT IS NOT IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THE SUPREME COURT. II THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE RULE ON FORUMSHOPPING. III THE HONORABLE COURT OF APPEALS ERRED IN RENDERING A DECISION ON THE BASIS OF PURE CONJECTURES AND SURMISES AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHICH CALL FOR AN EXERCISE OF THIS HONORABLE COURTS SUPERVISION. Petitioner CDA claims that it is vested with quasi-judicial authority to adjudicate cooperative disputes in view of its powers, functions and responsibilities under Section 3 of Republic Act No. 6939.20 The quasi-judicial nature of its powers and functions was confirmed by the Department of Justice, through the then Acting Secretary of Justice Demetrio G. Demetria, in DOJ Opinion

No. 10, Series of 1995, which was issued in response to a query of the then Chairman Edna E. Aberina of the CDA, to wit: Applying the foregoing, the express powers of the CDA to cancel certificates of registration of cooperatives for non-compliance with administrative requirements or in cases of voluntary dissolution under Section 3(g), and to mandate and conciliate disputes within a cooperative or between cooperatives under Section 8 of R.A. No. 6939, may be deemed quasi-judicial in nature. The reason is that in the performance of its functions such as cancellation of certificate of registration, it is necessary to establish non-compliance or violation of administrative requirement. To do so, there arises an indispensable need to hold hearings, investigate or ascertain facts that possibly constitute non-compliance or violation and, based on the facts investigated or ascertained, it becomes incumbent upon the CDA to use its official discretion whether or not to cancel a cooperatives certificate of registration, thus, clearly revealing the quasi-judicial nature of the said function. When the CDA acts as a conciliatory body pursuant to Section 8 of R.A. No. 6939, it in effect performs the functions of an arbitrator. Arbitrators are by the nature of their functions act in quasi-judicial capacity xxx. The quasi-judicial nature of the foregoing functions is bolstered by the provisions of Sections 3(o) of R.A. No. 6939 which grants CDA on (sic) the exercise of other functions as may be necessary to implement the provisions of cooperative laws, the power to summarily punish for direct contempt any person guilty of misconduct in the presence thereof who seriously interrupts any hearing or inquiry with a fine or imprisonment prescribed therein, a power usually granted to make effective the exercise of quasi-judicial functions.21 Likewise, the Office of the President, through the then Deputy Executive Secretary, Hon. Leonardo A. Quisumbing, espoused the same view in the case of Alberto Ang, et al. v. The Board of Directors, Metro Valenzuela Transport Services Cooperative, Inc., O.P. Case No. 51111, when it declared and ruled that: Concededly, Section 3(o) of R.A. No. 6939 and Article 35(4) of R.A. 6938, may not be relied upon by the CDA as authority to resolve internal conflicts of cooperatives, they being general provisions. Nevertheless, this does not preclude the CDA from resolving the instant case. The assumption of jurisdiction by the CDA on matters which partake of cooperative disputes is a logical, necessary and direct consequence of its authority to register cooperatives. Before a cooperative can acquire juridical personality, registration thereof is a condition sine qua non, and until and unless the CDA issues a certificate of registration under its official seal, any cooperative for that matter cannot be considered as having been legally constituted. To our mind, the grant of this power impliedly carries with it the visitorial power to entertain

cooperative conflicts, a lesser power compared to its authority to cancel registration certificates when, in its opinion, the cooperative fails to comply with some administrative requirements (Sec. 2(g), R.A. No. 6939). Evidently, respondents-appellants claim that the CDA is limited to conciliation and mediation proceedings is bereft of legal basis. Simply stated, the CDA, in the exercise of such other function and in keeping with the mandate of the law, could render the decisions and/or resolutions as long as they pertain to the internal affairs of the public service cooperative, such as the rights and privileges of its members, the rules and procedures for meetings of the general assembly, Board of Directors and committees, election and qualifications of officers, directors and committee members, and allocation and distribution of surpluses.22 The petitioner avers that when an administrative agency is conferred with quasi-judicial powers and functions, such as the CDA, all controversies relating to the subject matter pertaining to its specialization are deemed to be covered within the jurisdiction of said administrative agency. The courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities undertaken upon their special technical knowledge and training. The petitioner added that the decision in the case of CANORECO v. Hon. Ruben D. Torres,23 affirmed the adjudicatory powers and functions of CDA contrary to the view held by the Court of Appeals, when the Supreme Court upheld therein the ruling of the CDA annulling the election of therein respondents Norberto Ochoa, et al. as officers of the Camarines Norte Electric Cooperative. Petitioner CDA also claims that herein private respondents are guilty of forum-shopping by filing cases in three (3) different fora seeking the same relief. Petitioner pointed out that private respondents originally filed a petition with a prayer for preliminary injunction dated December 17, 1997 before the RTC of Polomolok, South Cotabato which was docketed as SP Civil Case No. 25. Subsequently, the same private respondents filed another petition with a prayer for preliminary injunction with the Court of Appeals, 13 th Division, docketed as CA-G.R. SP No. 47933. Thereafter, Investa, also represented by the same counsel of private respondents, Atty. Reni Dublin, filed another case with the RTC of Polomolok, South Cotabato, docketed as SP Civil Case No. 28, likewise praying, among others, for the issuance of preliminary injunction and an application for a temporary restraining order. In effect, petitioner was confronted with three (3) TROs issued in three (3) separate actions enjoining it from enforcing its orders and resolutions in CDA-CO Case No. 97-011. In their Comment,24 private respondents contend that the instant petition for review on certiorari filed by CDA Administrator Alberto Zingapan should be dismissed and struck down

as a mere scrap of paper for lack of authority to file the same from the Office of the Solicitor General and for having been filed without approval from the Board of Administrators of CDA. The private respondents also contend that, contrary to the claim of the petitioner, the powers, functions and responsibilities of the CDA show that it was merely granted regulatory or supervisory powers over cooperatives in addition to its authority to mediate and conciliate between parties involving the settlement of cooperative disputes. Private respondents denied that they are guilty of forum-shopping. They clarified that the case filed with the RTC of Polomolok, South Cotabato, Branch 39, docketed as SP Civil Case No. 25, was a petition for certiorari. On the other hand, the case that they filed with the Court of Appeals, 13th Division, docketed therein as CA-G.R. SP No. 47933, was a petition for prohibition to stop the holding of a special general assembly and the election of a new set of DARBCI officers on June 14, 1998 as ordered by the petitioner CDA on May 26, 1998, which events have not yet occurred at the time the petition for certiorari was filed by the private respondents with the RTC of Polomolok, South Cotabato, Branch 39. Private respondents also denied that the filing by Investa of the petition for the declaration of nullity of the orders and resolutions of petitioner CDA, with a prayer for temporary restraining order with the RTC of Polomolok, South Cotabato, docketed therein as SP Civil Case No. 28, constituted forum-shopping on their part. They pointed out that Investa has a separate juridical personality from DARBCI and that, contrary to the claim of petitioner CDA, the former is not represented by the lawyer of the private respondents. By way of reply,25 petitioner claims that Atty. Rogelio P. Madriaga was properly deputized, among other lawyers, as Special Attorney by the Office of the Solicitor General to represent the CDA in the instant petition pursuant to the letter26 of Assistant Solicitor General Carlos N. Ortega addressed to CDA Chairman Jose C. Medina, Jr. dated April 8, 1999. Likewise, the filing of the instant petition was an official act of CDA Administrator Alberto P. Zingapan who was duly appointed by the CDA Board of Administrators as chairman of the Oversight Committee on Legal Matters per Resolution No. 201, S-1998.27 Meanwhile, on March 26, 1999, certain persons alleging to be incumbent officers and members of the board of directors of DARBCI filed a motion to intervene in the instant petition which was granted by this Court per its Resolution dated July 7, 1999. 28 In the same resolution, this Court required both petitioner CDA and the private respondents in this case to file their respective comments to the petition-in-intervention within ten (10) days from notice, but both parties failed to comply to do so up to the present. We note that the instant petition for review on certiorari suffers from a basic infirmity for lack of the requisite imprimatur from the Office of the Solicitor General, hence, it is dismissible on

that ground. The general rule is that only the Solicitor General can bring or defend actions on behalf of the Republic of the Philippines and that actions filed in the name of the Republic, or its agencies and instrumentalities for that matter, if not initiated by the Solicitor General, will be summarily dismissed.29 The authority of the Office of the Solicitor General to represent the Republic of the Philippines, its agencies and instrumentalities, is embodied under Section 35(1), Chapter 12, Title III, Book IV of the Administrative Code of 1987 which provides that: SEC. 35. Powers and Functions.The Office of the Solicitor General shall represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of lawyers. When authorized by the President or head of the office concerned, it shall also represent government owned or controlled corporations. The Office of the Solicitor General shall constitute the law office of the Government and, as such, shall discharge duties requiring the services of lawyers. It shall have the following specific powers and functions: (1) Represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the Government and its officers in the Supreme Court, Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the Government or any officer thereof in his official capacity is a party. The import of the above-quoted provision of the Administrative Code of 1987 is to impose upon the Office of the Solicitor General the duty to appear as counsel for the Government, its agencies and instrumentalites and its officials and agents before the Supreme Court, the Court of Appeals, and all other courts and tribunals in any litigation, proceeding, investigation or matter requiring the services of a lawyer. Its mandatory character was emphasized by this Court in the case of Gonzales v. Chavez,30 thus: It is patent that the intent of the lawmaker was to give the designated official, the Solicitor General, in this case, the unequivocal mandate to appear for the government in legal proceedings. Spread out in the laws creating the office is the discernible intent which may be gathered from the term "shall", which is invariably employed, from Act No. 136 (1901) to the more recent Executive Order No. 292 (1987). xxx xxx xxx

The decision of this Court as early as 1910 with respect to the duties of the Attorney-General well applies to the Solicitor General under the facts of the present case. The Court then declared:

In this jurisdiction, it is the duty of the Attorney General to perform the duties imposed upon him by law and he shall prosecute all causes, civil and criminal, to which the Government of the Philippine Islands, or any officer thereof, in his official capacity, is a party x xx. xxx xxx xxx

The Court is firmly convinced that considering the spirit and the letter of the law, there can be no other logical interpretation of Sec. 35 of the Administrative Code than that it is, indeed, mandatory upon the OSG to "represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of a lawyer." As an exception to the general rule, the Solicitor General, in providing legal representation for the government, is empowered under Section 35(8), Chapter 12, Title III, Book IV of the Administrative Code of 1987 to "deputize legal officers of government departments, bureaus, agencies and offices to assist the Solicitor General and appear or represent the Government in cases involving their respective offices, brought before the courts and exercise supervision and control over such legal officers with respect to such cases." Petitioner claims that its counsel of record, Atty. Rogelio P. Madriaga, was deputized by the Solicitor General to represent the CDA in the instant petition. To prove its claim, the petitioner attached to its Reply to the Comment dated January 31, 2000, a photocopy of the alleged deputation letter31 from the Office of the Solicitor General signed by Hon. Carlos N. Ortega, Assistant Solicitor General, addressed to CDA Chairman Jose C. Medina, Jr. A close scrutiny of the alleged deputation letter from the Office of the Solicitor General shows, however, that said counsel for the petitioner was only "authorized to appear as counsel in all civil cases in the lower courts (RTCs and MTCs) wherein the CDA is a party-litigant". Likewise, the same letter appears to be dated April 8, 1999 while the Petition for Review on Certiorari filed by the petitioner was dated February 26, 1999. Clearly then, when the petition was filed with this Court on March 3, 1999, Atty. Rogelio P. Madriaga was not yet deputized by the Office of the Solicitor General to represent the CDA. Even on the assumption that the alleged letter from the Office of the Solicitor General was intended to validate or ratify the authority of counsel to represent the petitioner in this case, the same contains certain conditions, one of which is that petitioner "shall submit to the Solicitor General, for review, approval and signature, all important pleadings and motions, including motions to withdraw complaints or appeals, as well as compromise agreements." Significantly, one of the major pleadings filed subsequently by the petitioner in this case namely, the Reply to the Respondents Comment on the Petition dated January 31, 2000, does not have any indication that the same was previously submitted to the Office of the Solicitor

General for review or approval, much less bear the requisite signature of the Solicitor General as required in the alleged deputation letter. Nonetheless, in view of the novelty of the main issue raised in this petition concerning the nature and scope of jurisdiction of the CDA in the settlement of cooperative disputes as well as the long standing legal battle involving the management of DARBCI between two (2) opposing factions that inevitably threatens the very existence of one of the countrys major cooperatives, this Court has decided to act on and determine the merits of the instant petition. Section 3 of R.A. No. 6939 enumerates the powers, functions and responsibilities of the CDA, thus: SEC. 3. Powers, Functions and Responsibilities.The Authority shall have the following powers, functions and responsibilities: (a) Formulate, adopt and implement integrated and comprehensive plans and programs on cooperative development consistent with the national policy on cooperatives and the overall socio-economic development plan of the Government; (b) Develop and conduct management and training programs upon request of cooperatives that will provide members of cooperatives with the entrepreneurial capabilities, managerial expertise, and technical skills required for the efficient operation of their cooperatives and inculcate in them the true spirit of cooperativism and provide, when necessary, technical and professional assistance to ensure the viability and growth of cooperatives with special concern for agrarian reform, fishery and economically depressed sectors; (c) Support the voluntary organization and consensual development of activities that promote cooperative movements and provide assistance to wards upgrading managerial and technical expertise upon request of the cooperatives concerned; (d) Coordinate the effects of the local government units and the private sector in the promotion, organization, and development of cooperatives; (e) Register all cooperatives and their federations and unions, including their division, merger, consolidation, dissolution or liquidation. It shall also register the transfer of all or substantially all of their assets and liabilities and such other matters as may be required by the Authority; (f) Require all cooperatives, their federations and unions to submit their annual financial statements, duly audited by certified public accountants, and general information sheets;

(g) Order the cancellation after due notice and hearing of the cooperatives certificate of registration for non-compliance with administrative requirements and in cases of voluntary dissolution; (h) Assist cooperatives in arranging for financial and other forms of assistance under such terms and conditions as are calculated to strengthen their viability and autonomy; (i) Establish extension offices as may be necessary and financially viable to implement this Act. Initially, there shall be extension offices in the Cities of Dagupan, Manila, Naga, Iloilo, Cebu, Cagayan de Oro and Davao; (j) Impose and collect reasonable fees and charges in connection with the registration of cooperatives; (k) Administer all grants and donations coursed through the Government for cooperative development, without prejudice to the right of cooperatives to directly receive and administer such grants and donations upon agreement with the grantors and donors thereof; (l) Formulate and adopt continuing policy initiatives consultation with the cooperative sector through public hearing; (m) Adopt rules and regulations for the conduct of its internal operations; (n) Submit an annual report to the President and Congress on the state of the cooperative movement; (o) Exercise such other functions as may be necessary to implement the provisions of the cooperative laws and, in the performance thereof, the Authority may summarily punish for direct contempt any person guilty of misconduct in the presence of the Authority which seriously interrupts any hearing or inquiry with a fine of not more than five hundred pesos (P500.00) or imprisonment of not more than ten (10) days, or both. Acts constituting indirect contempt as defined under Rule 71 of the Rules of Court shall be punished in accordance with the said Rule. It is a fundamental rule in statutory construction that when the law speaks in clear and categorical language, there is no room for interpretation, vacillation or equivocation there is only room for application.32 It can be gleaned from the above-quoted provision of R.A. No. 6939 that the authority of the CDA is to discharge purely administrative functions which consist of policy-making, registration, fiscal and technical assistance to cooperatives and implementation of cooperative laws. Nowhere in the said law can it be found any express grant to the CDA of authority to adjudicate cooperative disputes. At most, Section 8 of the same law provides that "upon request of either or both parties, the Authority shall mediate and conciliate disputes with

a cooperative or between cooperatives" however, with a restriction "that if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of nonresolution shall be issued by the commission prior to the filing of appropriate action before the proper courts". Being an administrative agency, the CDA has only such powers as are expressly granted to it by law and those which are necessarily implied in the exercise thereof. 33 Petitioner CDA, however, insists that its authority to conduct hearings or inquiries and the express grant to it of contempt powers under Section 3, paragraphs (g) and (o) of R. A. No. 6939, respectively, necessarily vests upon the CDA quasi-judicial authority to adjudicate cooperative disputes. A review of the records of the deliberations by both chambers of Congress prior to the enactment of R.A. No. 6939 provides a definitive answer that the CDA is not vested with quasi-judicial authority to adjudicate cooperative disputes. During the house deliberations on the then House Bill No. 10787, the following exchange transpired: MR. AQUINO (A.). The response of the sponsor is not quite clear to this humble Representation. Let me just point out other provisions under this particular section, which to the mind of this humble Representation appear to provide this proposed Authority with certain quasi-judicial functions. Would I be correct in this interpretation of paragraphs (f) and (g) under this section which state that among the powers of the Authority are: To administer the dissolution, disposal of assets and settlement of liabilities of any cooperative that has been found to be inoperable, inactive or defunct. To make appropriate action on cooperatives found to be in violation of any provision It appears to the mind of this humble Representation that the proposed Authority may be called upon to adjudicate in these particular instances. Is it therefore vested with quasi-judicial authority? MR. ROMUALDO. No, Mr. Speaker. We have to resort to the courts, for instance, for the dissolution of cooperatives. The Authority only administers once a cooperative is dissolved. It is also the CDA which initiates actions against any group of persons that may use the name of a cooperative to its advantage, that is, if the word "cooperative" is merely used by it in order to advance its intentions, Mr. Speaker. MR. AQUINO (A.). So, is the sponsor telling us that the adjudication will have to be left to the courts of law? MR. ROMUALDO. To the courts, Mr. Speaker.34 xxx xxx xxx

MR. ADASA. One final question, Mr. Speaker. On page 4, line 33, it seems that one of the functions given to the Cooperative Development Authority is to recommend the filing of legal charges against any officer or member of a cooperative accused of violating the provisions of this Act, existing laws and cooperative by-laws and other rules and regulations set forth by the government. Would this not conflict with the function of the prosecuting fiscal? MR. ROMUALDO. No, it will be the provincial fiscal that will file the case. The Authority only recommends the filing of legal charges, that is, of course, after preliminary investigation conducted by the provincial fiscal or the prosecuting arm of the government. MR. ADASA. Does the Gentleman mean to say that the Cooperative Development Authority can take the place of the private complainant or the persons who are the offended party if the latter would not pursue the case? MR. ROMULDO. Yes, Mr. Speaker. The Authority can initiate even the filing of the charges as embraced and defined on line 33 of page 4 of this proposed bill.35 xxx xxx xxx

MR. CHIONGBIAN. xxx. Under the same section, line 28, subparagraph (g) says that the Authority can take appropriate action on cooperatives found to be violating any provision of this Act, existing laws and cooperative by-laws, and other rules and regulations set forth by the government by way of withdrawal of Authority assistance, suspension of operation or cancellation of accreditation. My question is: If a cooperative, whose officers are liable for wrongdoing, is found violating any of the provisions of this Act, are we going to sacrifice the existence of that cooperative just because some of the officers have taken advantage of their positions and misused some of the funds? It would be very unfair for the Authority to withdraw its assistance at the expense of the majority. It is not clear as to what the liabilities of the members of these cooperatives are. xxx xxx xxx

MR. ROMUALDO. Mr. Speaker, before this action may be taken by the Authority, there will be due process. However, this provision is applicable in cases where the cooperative as a whole violated the provisions of this Act as well as existing laws. In this case, punitive actions may be taken against the cooperative as a body. With respect to the officials, if they themselves should be punished, then Section (h) of this chapter provides that legal charges shall be filed by the Cooperative Development Authority. 36

In like manner, the deliberations on Senate Bill No. 485, which was the counterpart of House Bill No. 10787, yield the same legislative intent not to grant quasi-judicial authority to the CDA as shown by the following discussions during the period of amendments: SEN. ALVAREZ. On page 3, between lines 5 and 6, if I may, insert the following as one of the powers: CONDUCT INQUIRIES, STUDIES, HEARINGS AND INVESTIGATIONS AND ISSUE ORDERS, DECISIONS AND CIRCULARS AS MAY BE NECESSARY TO IMPLEMENT ALL LAWS, RULES AND REGULATIONS RELATING TO COOPERATIVES. THE AGENCY MAY SUMMARILY PUNISH FOR CONTEMPT BY A FINE OF NOT MORE THAN TWO HUNDRED PESOS (P200.00) OR IMPRISONMENT NOT EXCEEDING TEN (10) DAYS, OR BOTH, ANY PERSONS GUILTY OF SUCH MISCONDUCT IN THE PRESENCE OF THE AGENCY WHICH SERIOUSLY INTERRUPTS ANY HEARING OR INVESTIGATION, INCLUDING WILFULL FAILURE OR REFUSAL, WITHOUT JUST CAUSE, COMPLY WITH A SUMMONS, SUBPOENA, SUBPOENA DUCES TECUM, DECISION OR ORDER, RULE OR REGULATION, OR, BEING PRESENT AT A HEARING OR INVESTIGATION, REFUSES TO BE SWORN IN AS A WITNESS OR TO ANSWER QUESTIONS OR TO FURNISH INFORMATION REQUIRED BY THE AGENCY. THE SHERIFF AND/OR POLICE AGENCIES OF THE PLACE WHERE THE HEARING OR INVESTIGATION IS CONDUCTED SHALL, UPON REQUEST OF THE AGENCY, ASSIST IT TO ENFORCE THE PENALTY. THE PRESIDENT. That is quite a long amendment. Does the Gentleman have a written copy of his amendment, so that the Members will have an opportunity to go over it and examine its implications? Anyway, why do we not hold in abeyance the proposed amendment? Do we have that? xxx xxx xxx

SEN. ALVAREZ. Mr. President, this is almost an inherent power of a registering body. With the tremendous responsibility that we have assigned to the Authority or the agency for it to be able to function and discharge its mandateit will need this authority.1wphi1.nt SEN. AQUINO. Yes, Mr. President, conceptually, we do not like the agency to have quasi-judicial powers. And, we are afraid that if we empower the agency to conduct inquiries, studies, hearings and investigations, it might interfere in the autonomous character of cooperatives. So, I am sorry Mr. President, we dont accept the amendment.37 The decision to withhold quasi-judicial powers from the CDA is in accordance with the policy of the government granting autonomy to cooperatives. It was noted that in the past 75 years cooperativism failed to flourish in the Philippines. Of the 23,000 cooperatives organized under P.D. No. 175, only 10 to 15 percent remained operational while the rest became dormant. The dismal failure of cooperativism in the Philippines was attributed mainly to the stifling attitude

of the government toward cooperatives. While the government wished to help, it invariably wanted to control.38 Also, in its anxious efforts to push cooperativism, it smothered cooperatives with so much help that they failed to develop self-reliance. As one cooperative expert put it, "The strong embrace of government ends with a kiss of death for cooperatives." 39 But then, acknowledging the role of cooperatives as instruments of national development, the framers of the 1987 Constitution directed Congress under Article XII, Section 15 thereof to create a centralized agency that shall promote the viability and growth of cooperatives. Pursuant to this constitutional mandate, the Congress approved on March 10, 1990 Republic Act No. 6939 which is the organic law creating the Cooperative Development Authority. Apparently cognizant of the errors in the past, Congress declared in an unequivocal language that the state shall "maintain the policy of non-interference in the management and operation of cooperatives."40 After ascertaining the clear legislative intent underlying R.A. No. 6939, effect should be given to it by the judiciary.41 Consequently, we hold and rule that the CDA is devoid of any quasi-judicial authority to adjudicate intra-cooperative disputes and more particularly disputes as regards the election of the members of the Board of Directors and officers of cooperatives. The authority to conduct hearings or inquiries and the power to hold any person in contempt may be exercised by the CDA only in the performance of its administrative functions under R.A. No. 6939. The petitioners reliance on the case of CANORECO is misplaced for the reason that the central issue raised therein was whether or not the Office of the President has the authority to supplant or reverse the resolution of an administrative agency, specifically the CDA, that had long became final and on which issue we ruled in the negative. In fact, this Court declared in the said case that the CDA has no jurisdiction to adjudicate intra-cooperative disputes thus:42 xxx xxx xxx

Obviously there was a clear case of intra-cooperative dispute. Article 121 of the Cooperative Code is explicit on how the dispute should be resolved; thus: ART. 121. Settlement of Disputes. Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the bylaws of the cooperative, and in applicable laws. Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction. Complementing this Article is Section 8 of R.A. No. 6939, which provides:

SEC. 8. Mediation and Conciliation. Upon request of either or both or both parties, the [CDA] shall mediate and conciliate disputes with the cooperative or between cooperatives: Provided, That if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution shall be issued by the request thereof, a certificate of nonresolution shall be issued by the commission prior to the filing of appropriate action before the proper courts. Likewise, we do not find any merit in the allegation of forum-shopping against the private respondents. Forum-shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other.43 The requisites for the existence of litis pendentia, in turn, are (1) identity of parties or at least such representing the same interest in both actions; (2) identity of rights asserted as prayed for, the relief being founded on the same facts; and (3) the identity in both cases is such that the judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata to the other case.44 While there may be identity of parties between SP Civil Case No. 25 filed with the RTC of Polomolok, South Cotabato, Branch 39, and CA-G.R. SP No. 47933 before the Court of Appeals, 13th Division, the two (2) other requisites are not present. The Court of Appeals correctly observed that the case filed with the RTC of Polomolok, South Cotabato was a petition for certiorari assailing the orders of therein respondent CDA for having been allegedly issued without or in excess of jurisdiction. On the other hand, the case filed with the Court of Appeals was a petition for prohibition seeking to restrain therein respondent from further proceeding with the hearing of the case. Besides, the filing of the petition for prohibition with the Court of Appeals was necessary after the CDA issued the Order dated May 26, 1998 which directed the holding of a special general assembly for purposes of conducting elections of officers and members of the board of DARBCI after the Court of Appeals, 12 th Division, in CA-G.R. SP No. 47318 issued a temporary restraining order enjoining the proceedings in Special Civil Case No. 25 and for the parties therein to maintain the status quo. Under the circumstances, the private respondents could not seek immediate relief before the trial court and hence, they had to seek recourse before the Court of Appeals via a petition for prohibition with a prayer for preliminary injunction to forestall the impending damage and injury to them in view of the order issued by the petitioner on May 26, 1998. The filing of Special Civil Case No. 28 with the RTC of Polomolok, South Cotabato does not also constitute forum-shopping on the part of the private respondents. Therein petitioner Investa, which claims to have a subsisting lease agreement and a joint venture with DARBCI, is an entity whose juridical personality is separate and distinct from that of private respondent cooperative or herein individual private respondents and that they have totally different interests in the

subject matter of the case. Moreover, it was incorrect for the petitioner to charge the private respondents with forum-shopping partly based on its erroneous claim that DARBCI and Investa were both represented by the same counsel. A charge of forum-shopping may not be anchored simply on the fact that the counsel for different petitioners in two (2) cases is one and the same.45 Besides, a review of the records of this case shows that the counsel of record of Investa in Special Civil Case No. 28 is a certain Atty. Ignacio D. Debuque, Jr. and not the same counsel representing the private respondents.46 Anent the petition-in-intervention, the intervenors aver that the Resolution of the Court of Appeals dated February 9, 1999 in CA-G.R. SP No. 47933 denying the motion for reconsideration of herein petitioner CDA also invalidated the election of officers and members of the board of directors of DARBCI held during the special general assembly on July 12, 1998, thus adversely affecting their substantial rights including their right to due process. They claim that the object of the order issued by the appellate court on June 10, 1998 was to restrain the holding of the general assembly of DARBCI as directed in the order of CDA Administrator Arcadio Lozada dated May 26, 1998. In compliance with the said order of the Court of Appeals, no general assembly was held on June 14, 1998. However, due to the grave concern over the alleged tyrannical administration and unmitigated abuses of herein private respondents, the majority of the members of DARBCI, on their own initiative and in the exercise of their inherent right to assembly under the law and the 1987 Constitution, convened a general assembly on July 12, 1998. On the said occasion, the majority of the members of DARBCI unanimously elected herein petitioners-in-intervention as new officers and members of the board of directors of DARBCI,47 and thereby resulting in the removal of the private respondents from their positions in DARBCI. Petitioners-in-intervention pointed out that the validity of the general assembly held on July 12, 1998 was never raised as an issue in CA-G.R. SP No. 47933. The petitioners-in-intervention were not even ordered by the Court of Appeals to file their comment on the "Twin Motions For Contempt of Court and to Nullify Proceedings" filed by the private respondents on July 29, 1998. As earlier noted, the Court of Appeals issued a temporary restraining order 48 in CA-G.R. SP No. 47933 on June 10, 1998, the pertinent portion of which reads: Meanwhile, respondents or any and all persons acting in their behalf and stead are temporarily restrained from proceeding with the election of officers and members of the board of directors of the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. scheduled on June 14, 1998 and or any other date thereafter.

It was also noted that as a consequence of the temporary restraining order issued by the appellate court, the general assembly and the election of officers and members of the board of directors of DARBCI, pursuant to the resolution issued by CDA Administrator Arcadio S. Lozada, did not take place as scheduled on June 14, 1998. However, on July 12, 1998 the majority of the members of DARBCI, at their own initiative, held a general assembly and elected a new set of officers and members of the board of directors of the cooperative which resulted in the ouster of the private respondents from their posts in the said cooperative. The incident on July 12, 1998 prompted herein private respondents to file their Twin Motions for Contempt of Court and to Nullify Proceedings on July 26, 1998. The twin motions prayed, among others, that after due notice and hearing, certain personalities, including the petitioners-in-intervention, be cited in indirect contempt for their participation in the subject incident and for the nullification of the election on July 12, 1998 for being illegal, contrary to the by-laws of the cooperative and in defiance of the injunctive processes of the appellate court. On September 9, 1998, the Court of Appeals, 13th Division, rendered a Decision in CA-G.R. SP No. 47933 which declared the CDA devoid of quasi-judicial jurisdiction to settle the dispute in CDA-CO Case No. 97-011 without however, taking any action on the "Twin Motions for Contempt of Court and to Nullify Proceedings" filed by the private respondents. As it turned out, it was only in its Resolution dated February 9, 1999 denying petitioners motion for reconsideration of the Decision in CA-G.R. SP No. 47933 that the Court of Appeals, 13 th Division, acted on the "Twin Motions for Contempt of Court and to Nullify Proceedings" by declaring as null and void the election of the petitioners-in-intervention on July 12, 1998 as officers and members of the board of directors of DARBCI. We find, however, that the action taken by the Court of Appeals, 13 th Division, on the "Twin Motions for Contempt of Court and to Nullify Proceedings" insofar as it nullified the election of the officers and members of the Board of Directors of DARBCI, violated the constitutional right of the petitioners-in-intervention to due process. The requirement of due process is satisfied if the following conditions are present, namely: (1) there must be a court or tribunal clothed with judicial power to hear and determine the matter before it; (2) jurisdiction must be lawfully acquired over the person of the defendant or over the property which is the subject of the proceedings; (3) the defendant must be given an opportunity to be heard; and (4) judgment must be rendered upon lawful hearing.49The appellate court should have first required the petitioners-in-intervention to file their comment or opposition to the said "Twin Motions For Contempt Of Court And to Nullify Proceedings" which also refers to the elections held during the general assembly on July 12, 1998. It was precipitate for the appellate court to render judgment against the petitioners-in-intervention in its Resolution dated February 9, 1999

without due notice and opportunity to be heard. Besides, the validity of the general assembly held on July 12, 1998 was not raised as an issue in CA-G.R. SP No. 47933.1wphi1.nt WHEREFORE, judgment is hereby rendered as follows: 1. The petition for review on certiorari is hereby DENIED for lack of merit. The orders, resolutions, memoranda and any other acts rendered by petitioner Cooperative Development Authority in CDA-CO Case No. 97-011 are hereby declared null and void ab initio for lack of quasi-judicial authority of petitioner to adjudicate intra-cooperative disputes; and the petitioner is hereby ordered to cease and desist from taking any further proceedings therein; and 2. In the interest of justice, the dispositive portion of the Resolution of the Court of Appeals, dated February 9, 1999, in CA-G.R. SP No. 47933, insofar as it nullified the elections of the members of the Board of Directors and Officers of DARBCI held during the general assembly of the DARBCI members on July 12, 1998, is hereby SET ASIDE. No pronouncement as to costs. SO ORDERED. Bellosillo, Mendoza, Quisumbing, and Corona, JJ., concur. Republic SUPREME Manila SECOND DIVISION G.R. No. 182902 October 5, 2011 of the Philippines COURT

VIRRA MALL TENANTS ASSOCIATION, INC., Petitioner, vs. VIRRA MALL GREENHILLS ASSOCIATION, INC., LOLITA C. REGALADO, ANNIE L. TRIAS, WILSON GO, PABLO OCHOA, JR., BILL OBAG and GEORGE V. WINTERNITZ, Respondents. DECISION SERENO, J.: Before us is a Petition for Review of the 21 May 2007 Decision1 and 14 May 2008 Resolution2 of the Court of Appeals (CA) dismissing the Complaint-in-Intervention and denying the Motion for Reconsideration both filed by petitioner.

Ortigas & Company, Limited Partnership (Ortigas) is the owner of the Greenhills Shopping Center (GSC). On 5 November 1975, Ortigas and Virra Realty Development Corporation (Virra Realty) entered into a Contract of Lease (First Contract of Lease) over a portion of the GSC. The 25-year lease was to expire on 15 November 2000. Pursuant thereto, Virra Realty constructed a commercial building, the Virra Mall Shopping Center (Virra Mall), which was divided into either units for lease or units whose leasehold rights were sold.3 Thereafter, Virra Realty organized respondent Virra Mall Greenhills Association (VMGA), an association of all the tenants and leasehold right holders, who managed and operated Virra Mall. In the First Contract of Lease, VMGA assumed and was subrogated to all the rights, obligations and liabilities of Virra Realty.4 On 22 November 2000, VMGA, through its president, William Uy (Uy), requested from Ortigas the renewal of the First Contract of Lease.5 VGMA secured two insurance policies to protect Virra Mall against damage by fire and other causes. However, these insurance coverages expired simultaneously with the First Contract of Lease on 15 November 2000.6Subsequently, on 13 March 2001, VGMA acquired new sets of insurance policies effective 10 January 2001 to 31 December 2001.7 On 5 May 2001, Virra Mall was gutted by fire, requiring substantial repair and restoration. VMGA thus filed an insurance claim through the insurance broker, respondent Winternitz Associates Insurance Company, Inc. (Winternitz). Thereafter, the proceeds of the insurance were released to VMGA.8 On 3 September 2001, Ortigas entered into a Contract of Lease (Second Contract of Lease) with Uy effective 2 November 2001 to 31 December 2004. On 11 September 2001, the latter assigned and transferred to petitioner Virra Mall Tenants Association (VMTA) all his rights and interests over the property.9 On 7 February 2003, Ortigas filed a Complaint for Specific Performance with Damages and Prayer for Issuance of a Writ of Preliminary Attachment against several defendants, including herein respondents. It accused them of fraud, misappropriation and conversion of substantial portions of the insurance proceeds for their own personal use unrelated to the repair and restoration of Virra Mall. To secure the subject insurance proceeds, Ortigas also sought the issuance of a writ of preliminary attachment against herein respondents. The case was docketed as Civil Case No. 69312, and raffled to the Regional Trial Court, National Capital Judicial Region, Pasig City, Branch 67 (RTC Br. 67), which issued a Writ of Preliminary Attachment on 12 February 2003.10

On 17 February 2003, VMTA filed a Complaint-in-Intervention.11 It claimed that as the assignee or transferee of the rights and obligations of Uy in the Second Contract of Lease, and upon the order of Ortigas, it had engaged the services of various contractors. These contractors undertook the restoration of the damaged area of Virra Mall amounting to P18,902,497.75. Thus, VMTA sought the reimbursement of the expenses it had incurred in relation thereto.12 RTC Br. 67 admitted the Complaint-in-Intervention in its Order dated 8 January 2004.13 On 5 March 2004, herein respondents moved for the dismissal of the Complaint-in-Intervention on the ground that it stated no cause of action.14 In its Omnibus Order dated 2 August 2005, RTC Br. 67 denied this Motion to Dismiss.15 The trial court based its Decision on the grounds that (a) by filing the said motion, herein respondents hypothetically admitted the truth of the facts alleged in the Complaint-in-Intervention, and (b) the test of sufficiency of the facts alleged was whether or not the court could render a valid judgment as prayed for, accepting as true the exclusive facts set forth in the Complaint.16 Thus, RTC Br. 67 held that if there are doubts as to the truth of the facts averred, then the court must not dismiss the Complaint, but instead require an answer and proceed to trial on the merits.17 On a Rule 65 Petition for Certiorari alleging grave abuse of discretion, the CA reversed the ruling of RTC Br. 67 and dismissed the Complaint-in-Intervention on the following grounds: (a) VMTA failed to state a cause of action; (b) VMTA has no legal interest in the matter in litigation; and (c) the Complaint-in-Intervention would cause a delay in the trial of the action, make the issues more complicated, prejudice the adjudication of the rights of the parties, stretch the issues, and increase the breadth of the remedies and relief.18 The relevant portions of the Decision read: Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a party violates the right of another. Its essential elements are as follows: 1. A right in favor of the plaintiff by whatever means and under whatever law it arises or is created; 2. An obligation on the part of the named defendant to respect or not to violate such right; and 3. Act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or other appropriate relief. It is, thus, only upon the occurrence of the last element that a cause of action arises, giving the plaintiff the right to maintain an action in court for recovery of damages or other appropriate relief. (Swagman Hotels and Travel, Inc. v. Court of Appeals, G.R. No. 161135, April 8, 2005, 455

SCRA 175, 183). If these elements are absent, the complaint is dismissible on the ground of failure to state a cause of action. What VMTA actually seeks in filing a complaint-in-intervention is the reimbursement of the cost of the restoration and rehabilitation of the burned area of the Virra Mall building. And VMTA believes that such reimbursement must be made from the fire insurance proceeds released to VMGA. Such position cannot be sustained. Firstly, We find that the complaint-in-intervention fails to state a cause of action against the petitioners. The material averments of the complaint-in-intervention belie any correlative obligation on the part of herein petitioners vis--vis the legal right of VMTA for reimbursement. The petitioners are not the proper parties against whom the subject action for reimbursement must be directed to. On the contrary, since "x x x plaintiff Ortigas, as owner of the building, has ordered intervenor VMTA to undertake with dispatch the restoration and rehabilitation of the burned area or section of the Virra Mall buiding x x x" (par. 7 of Complaint-in-Intervention), VMTAs recourse would be to file and direct its claim against ORTIGAS who has the obligation to pay for the same. The complaint-in-intervention is not the proper action for VMTA to enforce its right of reimbursement. At any rate, VMTAs rights, if any, can be ventilated and protected in a separate action. The complaint-in-intervention is therefore dismissible for failure to state a cause of action against the petitioners. Secondly, VMTA has no legal interest in the matter in litigation. It is not privy to the Contract of Lease between ORTIGAS and VMGA. It came into the picture only after the expiration of the said contract. Finally, Section 1, Rule 19 of the 1997 Rules of Civil Procedure provides: Section 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of the property in the custody of the court or of an offices thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenors rights may be fully protected in a separate proceeding. As a general guide in determining whether a party may intervene, the court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenors rights may be fully protected in a

separate proceeding (Sec. 2(b), Rule 12; Balane, et al. vs. De Guzman, et al., 20 SCRA 177 [1967]). The complaint below is primarily on the issue of specific performance. The relief being sought by the VMTA in its complaint-in-intervention is the reimbursement of expenses incurred by it for the repair/restoration of the Virra Mall Building. VMTAs cause of action has a standpoint which is unique to itself. New, unrelated, and conflicting issues would be raised which do not concern the petitioners herein, or VMTA as intervenor. Inevitably, the allowance of the intervention will not only cause delay in the trial of the action, make the issues even more complicated, and stretch the issues in the action as well as amplify the breadth of the remedies and relief. Thereafter, VMTA filed a Motion for Reconsideration, which the CA denied in the assailed Resolution dated 14 May 2008.19 Hence, the instant Petition raising the following issues: I. With due respect, the Honorable Court of Appeals committed grave error in declaring that the complaint in intervention failed to state a cause of action against private respondents when it declared that the complaint in intervention belies any correlative obligation on the part of private respondents vis--vis the legal right of petitioner for reimbursement. II. With due respect, the Honorable Court of Appeals committed grave error in holding that private respondents are not the proper parties against whom the subject action for reimbursement must be directed to but recourse would be for petitioner VMTA to file and direct its claim against OCLP who has the obligation to pay petitioner VMTA since it was OCLP who has (sic) ordered to undertake the restoration and rehabilitation of the burned area or section of the Virra Mall Building. III. With due respect, the Honorable Court of Appeals similarly committed grave error when it ruled that the complaint-in-intervention is not the proper action to enforce its right in the controversy between OCLP and private respondents since the proper remedy is for petitioner VMTA to ventilate and protect its right in a separate action.20 The determination of whether the CA committed reversible error in dismissing the Complaintin-Intervention filed by VMTA boils down to the sole issue of the propriety of this remedy in enforcing the latters rights.

According to VMTA, it has a legal interest in Civil Case No. 69312, which is rooted in the alleged failure of VMGA to turn over the insurance proceeds for the restoration and rehabilitation of Virra Mall, in breach of the latters contractual obligation to Ortigas. However, the CA ruled against this position taken by VMTA not only because, in the CAs view, VMTAs Complaint -inIntervention failed to state a cause of action, but also because it has no legal interest in the matter in litigation. We rule in favor of VMTA. Section 1, Rule 19 of the Rules of Court provides: Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenors rights may be fully protected in a separate proceeding. In Executive Secretary v. Northeast Freight,21 this Court explained intervention in this wise: Intervention is not a matter of absolute right but may be permitted by the court when the applicant shows facts which satisfy the requirements of the statute authorizing intervention. Under our Rules of Court, what qualifies a person to intervene is his possession of a legal interest in the matter in litigation or in the success of either of the parties, or an interest against both; or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or an officer thereof. As regards the legal interest as qualifying factor, this Court has ruled that such interest must be of a direct and immediate character so that the intervenor will either gain or lose by the direct legal operation of the judgment. The interest must be actual and material, a concern which is more than mere curiosity, or academic or sentimental desire; it must not be indirect and contingent, indirect and remote, conjectural, consequential or collateral. However, notwithstanding the presence of a legal interest, permission to intervene is subject to the sound discretion of the court, the exercise of which is limited by considering "whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenors rights may be fully protected in a separate proceeding."22 (Emphasis supplied.) Applying the foregoing points to the case at bar, VMTA may be allowed to intervene, and the ruling of RTC Br. 67 allowing intervention was wrongly reversed by the CA because such a ruling does not constitute grave abuse of discretion. VMTA has a cause of action

A cause of action is defined as "the act or omission by which a party violates a right of another."23 In Shell Philippines v. Jalos,24 this Court expounded on what constitutes a cause of action, to wit: A cause of action is the wrongful act or omission committed by the defendant in violation of the primary rights of the plaintiff. Its elements consist of: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect the plaintiffs right, and (3) an a ct or omission of the defendant in violation of such right. To sustain a motion to dismiss for lack of cause of action, however, the complaint must show that the claim for relief does not exist and not only that the claim was defectively stated or is ambiguous, indefinite or uncertain.25 In the case at bar, VMTA, in its Complaint-in-Intervention, explicitly laid down its cause of action as follows:26 Pursuant to and by virtue of such claim, defendant VMGA and defendant VMGA Board Members, impleaded as party defendants herein, received, at various times, from their insurance broker, and it is in their custody, the insurance proceeds arising out of such claim which, as of January 8, 2003, aggregated P48.6-Million. Having failed to deliver the said proceeds to the real beneficiary inspite of due notice and demand, plaintiff Ortigas herein instituted the present action against all the defendants to compel delivery of the said insurance proceeds which are being unlawfully and illegally withheld by all the defendant VMGA and defendant VMGA Board Members inspite of written demands made therefor. Worse, a portion of said insurance proceeds, aggregating P8.6-Million had already been disbursed and misappropriated in breach of trust and fiduciary duty. (Emphasis supplied.) It is clear from the foregoing allegations that VMTAs purpor ted right is rooted in its claim that it is the real beneficiary of the insurance proceeds, on the grounds that it had (a) facilitated the repair and restoration of the insured infrastructure upon the orders of Ortigas, and (b) advanced the costs thereof. Corollarily, respondents have a duty to reimburse it for its expenses since the insurance proceeds had already been issued in favor of respondent VMGA, even if the latter was not rightfully entitled thereto. Finally, the imputed act or omission on the part of respondents that supposedly violated the right of VMTA was respondent VMGAs refusal, despite demand, to release the insurance proceeds it received to reimburse the former for the expenses it had incurred in relation to the restoration and repair of Virra Mall. Clearly, then, VMTA was able to establish its cause of action. VMTA has a legal interest in the matter in litigation VMTA was also able to show its legal interest in the matter in litigation VMGAs insurance proceeds considering that it had already advanced the substantial amount of P18,902,497.75 for the repair and restoration of Virra Mall. That VMTA seeks reimbursement from Ortigas is

precisely the reason why intervention is proper. The main issue in Civil Case No. 69312 is whether Ortigas has a contractual right to the insurance proceeds received by VMGA. Thus, the recoupment by VMTA of the expenses it incurred in the repair of Virra Mall depends on the success of either party in the main case. VMTA therefore has an undeniable stake in Civil Case No. 69312 that would warrant its intervention therein. Further, the issuance to Ortigas of a Writ of Preliminary Attachment against VMGA puts VMTA in a situation in which it will be adversely affected by a distribution or other disposition of the property in the custody of the court, pursuant to the said writ. lawphil The prospect of any distribution or disposition of the attached property will likewise affect VMTAs claim for reimbursement. VMTAs intervention in Civil Case No. 69312 will avoid a multiplicity of suits Lastly, allowing VMTA to intervene in Civil Case No. 69312 finds support in Heirs of Medrano v. De Vera,27 to wit: The purpose of intervention is to enable a stranger to an action to become a party in order for him to protect his interest and for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits more than on due process considerations. 28 Thus, although the CA was correct in stating that VMTA could always file a separate case against Ortigas, allowing VMTA to intervene will facilitate the orderly administration of justice and avoid a multiplicity of suits. We do not see how delay will be inordinately occasioned by the intervention of VMTA, contrary to the fear of the CA. WHEREFORE, the instant petition is GRANTED. The Decision dated 21 May 2007 and Resolution dated 14 May 2008 of the CA are hereby REVERSED and SET ASIDE insofar as the dismissal of the Complaint-in-Intervention filed by VMTA is concerned. The Complaint-in-Intervention of VMTA in Civil Case No. 69312 is allowed to proceed before RTC Br. 67. SO ORDERED. RULE 20 NO CASE!

RULE 21

Republic SUPREME Manila SECOND DIVISION A.M. No. RTJ-99-1467

of

the

Philippines COURT

August 5, 1999

ATTY. SAMUEL D. PAGDILAO, JR., Chief of Police, Caloocan City, complainant, vs. JUDGE ADORACION G. ANGELES, RTC, Branch 121, Caloocan City, respondent. RESOLUTION MENDOZA, J.: This is a complaint for grave abuse of discretion filed against respondent Judge Adoracion G. Angeles of the Regional Trial Court, Branch 121, Caloocan City. Complainant is the Chief of Police of Caloocan City, Samuel D. Pagdilao, Jr. The complaint stemmed from several orders of arrest issued by respondent against Caloocan City policemen for their failure to attend hearings in criminal cases and testify as state witnesses, which respondent wanted complainant to personally enforce.1wphi1.nt The record shows that on August 10, 1998, respondent issued an order of arrest which reads as follows:1 In today's initial trial in Criminal Case Nos. C-53625 (98), 53626 (98), 53622 and 53623 (98), accused Manuel Mendoza and Romeo Cendao appeared and assisted by Atty. Ojer Pacis of the Public Attorney's Office (PAO). However, there was no appearance on the part of PO2 Alexander Buan. The records will show however that he was duly notified of today's hearing but despite notice he did not appear thereby delaying the early termination of these cases. Consequently, and on motion of the public prosecutor, let a warrant of arrest be issued against PO2 ALEXANDER BUAN and the Chief of Police, Caloocan City, Police Superintendent Samuel Pagdilao is hereby directed to effect the service of the warrant of arrest and to bring the body of the witness not later then 8:30 o'clock in the morning tomorrow, August 11, 1998 for him to testify in these cases. The accused is likewise directed to appear tomorrow, August 11, 1998. WHEREFORE, let the scheduled hearing for today be cancelled and have it reset tomorrow, August 11, 1998 at 8:30 o'clock in the morning.

SO ORDERED. On August 11, 1998, respondent issued another order in another case (Criminal Case No. C53081(97)), the pertinent portion of which reads:2 After the pre-trial in this case has been waived by the accused through counsel, the Public Prosecutor failed to present its evidence on the ground that his witnesses, mostly police officers, did not appear despite notices. Consequently, on motion of the Public Prosecutor, let a warrant of arrest be issued against SPO1 Edgardo Fernandez and PO3 Eduardo S. Avila. Let the service of the warrant of arrest upon SPO1 Edgardo Fernandez and PO3 Eduardo S. Avila be effected by no less than the Chief of Police of Caloocan City, Supt. Samuel Pagdilao and the latter is directed to make a return on or before September 1, 1998. On August 12, 1998, in Criminal Case No. C-53796(98), respondent issued an order reading:3 A cursory examination of the records will readily show that on June 23, 1998 P/Insp. Emmanuel R. Bravo appeared and signed for the scheduled hearing today, August 12, 1998 at 8:30 o'clock in the morning, but he did not appear despite notice thereby delaying the early termination of this case. Let it be noted that the accused is a detention prisoner who is entitled to a speedy trial and the trial could not proceed in view of the non-appearance of the aforesaid witness. Consequently, and on motion of the public prosecutor, let a warrant of arrest be issued against P/Insp. Emmanuel R. Bravo of the Caloocan City Police Force and let the warrant be served personally by the Chief of Police of Caloocan City, Police Superintendent Samuel Pagdilao and the latter is directed to make a return of the warrant not later than 8:30 o'clock in the morning tomorrow, August 13, 1998. Apparently, resenting the tenor of the orders directed personally at him, complainant wrote respondent on August 14, 1998 asking for the reconsideration of the foregoing orders:4 14 August 1998 Honorable Adoracion Acting Presiding RTC Branch 125, Caloocan City Your Honor: G. Angeles Judge

This is with regards to orders lately coming from that (sic) Honorable Court directing the undersigned to personally serve and return subpoenas and warrants of arrests against PNP personnel assigned within and/or outside the Caloocan City Police Station. As Chief of Police of one of the three biggest Police Departments in the National Capital Region (next only to Manila and Quezon City), I have to attend to many matters which would prevent my personally performing the task of service on (sic) subpoena and warrants. May I, therefore, respectfully request the Honorable Court to reconsider such orders and instead allow the undersigned to delegate to subordinate officers particularly, the Chief, Warrant and Subpoena Section and Sub-Station Commanders, the performance of this task. This will allow the undersigned to personally attend to the many operational activities of law enforcement as well as the various administrative functions as Head of the City's Police Department. The order of the Honorable Judge to the undersigned Chief of Police disregards the time honored tradition and system of Command and Control practiced in our organization and reduces the level of the Chief of Police into a subpoena server and arresting officer. A job which can be readily accomplished by the Chief of Warrant and Subpoena Section and by other officers whom the Commander may direct under this system. Records show that service of warrants and subpoena to PNP personnel have all been duly accomplished by our warrant and Subpoena Section. I hope that this request will merit your favorable consideration. Very respectfully yours, (signed) ATTY. Police Chief of Police Copy Furnished: The Honorable Chief The Honorable Court The Chief of the Philippine National Police Justice, Administrator, Supreme Supreme Court Court SAMUEL D. Superintendent PAGDILAO JR. (DSC)

Respondent's reaction was just as acerbic. In an order, dated August 21, 1998, denying complainant's request for reconsideration, she said:5

Before this court for consideration is a Letter-Request dated August 14, 1998 filed by P/Supt. Samuel D. Pagdilao, Jr., Chief of Police of the Caloocan City Police Department. He assails the orders coming from this court directing him to personally serve and return subpoenas and warrants of arrest against PNP personnel assigned within and/or outside the Caloocan City Police Station. He further contends that such orders disregard the time-honored tradition and system of Command and Control practiced in their organization and reduces the level of the Chief of Police into a subpoena server and arresting officer. Apparently, P/Supt. Samuel D. Pagdilao, Jr. perceives the assailed orders as an affront to the eminence of his position as Chief of Police above all else. Nonetheless, this court has never entertained thoughts of debasing the Chief of Police or anybody else for that matter. Nor was it ever enticed to employ dictatorial schemes to abbreviate its proceedings despite the fact that the Presiding Judge is practically handling three (3) salas at the moment the first as the duly appointed judge, the second in an acting capacity and the third as the pairing judge for the presiding judge thereat who has been on leave for quite some time already.1wphi1.nt Notwithstanding the incessant pressure inherent in the job, this court takes pride in the fact that it has never lost its clear vision that it exists primarily for the proper and expeditious administration of justice. Indeed, this court has always been very zealous in the discharge of its bounder duties. Nonetheless, its earnest efforts to promote a speedy administration of justice has many times been unduly hampered by the frequent non-appearances of police officers in court hearings despite sufficient notice. It has always been a big disappointment to the court that its dedication to duty is sometimes not matched by some law-enforcement officers. Hence, in order to solve this dilemma, the Court directed the Chief of Police to personally ensure the attendance of his men in court hearings so much so that ( sic) their testimonies are very vital to the outcome of the criminal cases herein. The Orders of the court were never meant to disregard the system of Command and Control being employed in the Police Force. Its only concern was that such system of Command and Control must be effectively used to address the lukewarm attitude of the Chief of Police's subordinate relative to their duty to appear in court. It is noteworthy to mention that since the issuance of the assailed Orders, the concerned law enforcement officers have shown an impressive attendance in court hearings which confirms that it makes a lot of difference when the Chief of Police himself acts to ensure the compliance of his subordinates to a lawful court Order.

Needless to state, the court was able to solve a perennial problem with the renewed cooperation of the City's police force. The court should not therefore be taken to task for its issuance of the questioned Orders because the same was done in the interest of justice. On the other hand, the Chief of Police must be reminded that this is not the time to be onionskinned and regard the said Orders as a personal insult to his dignity. During this time when criminality is on the rise, would it not be more prudent for the Chief of Police to lay aside his egotistical concerns and instead work with the courts of justice in addressing the more pressing problems of criminally, violence and injustice? WHEREFORE, premises considered, the Letter-Request of the Chief of Police of Caloocan City is duly noted but the court reiterates its stand that its foremost concern is the administration of justice and with this consideration indelibly etched in its mind, it will issue such Orders which are geared towards the achievement of its noble purpose. Let copies of this Order be furnished upon the Honorable Chief Justice and Honorable Court Administrator of the Supreme Court as well as to the Chief of the Philippine National Police (PNP). SO ORDERED. In his complaint, dated October 28, 1998, complainant avers that respondent's orders betray her ignorance of the rulings of this Court in several cases that non-attendance at a trial does not constitute direct but indirect contempt punishable only after written charge and hearing under Rule 71 of the Rules of Court. He states that the action of respondent not only seriously affects the service records of the concerned policemen but also jeopardizes their promotions. Complainant likewise assails the orders of respondent requiring him personally to arrest the policemen concerned, make a return of the orders, and in the case of PO2 Alexander Buan, to bring the latter to respondent's court not later than 8:30 in the morning of August 11, 1998. Complainant claims that the order is capricious and whimsical because the time given to him for serving the warrant was short and disregarded the "system of command and control, and the doctrine of qualified political agency in the administration of public offices." According to complainant, when he asked respondent to reconsider her order and allow his subordinates, particularly the Chief of the Warrant and Subpoena Section and the Sub-Station Commanders, to serve the orders in question, respondent "arrogantly dismissed [the principle complainant was raising] as nothing but a display of egotistical concerns."

In her comment on the complaint, respondent contended that the warrants of arrest against the Caloocan City policemen were issued merely for the purpose of compelling the attendance of the policemen at the court hearings as state witnesses as it had been her experience that the policemen ignored her orders. She stated that in issuing the orders in question she was never motivated by ill will but that her concern was solely to expedite the proceedings in two salas of the court over which she was presiding since justice delayed is justice denied. She reiterated what she said in her order denying complainant's request to be relieved from serving the orders. Respondent contends that a prior charge or hearing is not required before a warrant of arrest may be issued under Rule 21, 8 of the Rules of Court. She argues that this provision only requires proof of service of subpoena on a witness and the fact that the witness failed to attend the scheduled hearing before a court can exercise its power of compulsion. On the allegation that complainant was given a very short period of time for serving the warrant of arrest against witness PO2 Buan, respondent points out that the policeman was right in the Caloocan City Police Station were complainant held office. As for her statement that complainant's letter was "nothing but a display of egotistical concerns," respondent said that obviously complainant took offense because of what he considered his "exalted position as chief of police." Replying to respondent's comment, complainant argues that Rule 21, 8 invoked by respondent to justify her orders is not applicable. He points out that the orders were intended not only to compel the attendance of policemen in court but also to punish them for contempt of court. He also alleges that, contrary to respondent's statement in her order dated March 10, 1999, in Criminal Case Nos. C-55145(98) and 55146(98), that he did not make a return of the warrant of arrest against PO3 Nestor Aquino, complainant says he made a return which, in fact, was received in respondent's court on March 10, 1999 at 10:22 a.m.6 Respondent's order reads as follows:7 In an order of the court dated March 8, 1999, a warrant for the arrest of PO3 Nestor Aquino, prosecution's witness in these cases were issued by the Court directing the Chief of Police of Caloocan City or the duly authorized representative of the latter to produce the body of the aforesaid police officer not later than March 10, 1999 at 8:30 o'clock in the morning. A cursory examination of the records will show that the order was received by the Chief of Police of Caloocan City on the same date, March 8, 1999 but despite receipt thereof, the Chief of Police of Caloocan City did not bother to make a return of the warrant of arrest thereby delaying the early disposition of these cases. Let it be stressed that this is a joint trial of Crim. Case No. 55145 (98) and Crim. Case No. C55146 (98) for the violation of the drugs law.

This indeed does not speak well of the Chief of Police of Caloocan City. WHEREFORE, the Chief of Police of Caloocan City is hereby given a period of three (3) days from receipt of a copy of this order to explain and to show cause why he should not be cited in contempt of court for failure to produce today, March 10, 1999, the body of the afore-said witness. Let copies of this order be furnished upon the Director of the Philippine National Police (PNP) National Capital Judicial Region (NCJR), Bicutan, Metro Manila as well as to the Director General of the PNP, Roberto Lastimosa for them to know the actuation of the Chief of Police of Caloocan City in the discharged of its official function. Complainant's return, bearing the stamp "RTC, Branch 121, Caloocan, City, received, 3/10/99, 10:22 a.m.," reads:8 Date 10 March 1999 Respectfully returned to the Branch Clerk of Court RTC BR 121 Cal City the attached Warrant/Order of Arrest in Crim. Case No. 55145-55146 (98) against PO3 NESTER AQUINO with address at DDEU, NPDC, Tanigue St., Kaunlaran Vill. Caloocan City for the crime of Nonappearance (at the scheduled hearing held on 8 March 1999. REASONS: UNSERVED. Subject PNP personnel was already dismissed from the service effective 16 February 1999. Attached herewith is the xerox copy of Spl Order No. 366 relative to his dismissal. Complainant adds that, in Caloocan City, only respondent issues orders to policemen to serve court processes on short notice, and orders their arrest without hearing in case they fail to comply without taking into account that they also have other work to do. He states that he filed the instant complaint against respondent not to cause her dishonor but to promote respect for the law and to correct the misimpression that Caloocan City policemen are "inefficient or defying court orders." The Office of the Court Administration (OCA) recommends the dismissal of the complaint against respondent for lack of merit. In its report, it states among other things: A cursory reading of the records of this case shows the utter lack of merit of complainant's cause. First, a perusal of the questioned orders issued by the respondent reveals that the subject policemen were not punished for contempt of court hence the contempt provisions under the Revised Rules of Court is not applicable. Prior written charge and hearing therefore is not

necessary before Judge Angeles can issue warrant of arrest to compel their attendance in court hearings; Second, a judge is not prohibited to issue orders directing heads of police stations to personally serve and return processes from the court; Third, it cannot be considered as unreasonable the period given to complainant within which to effect the service of the warrants of arrest issued by the court considering that the police officers to be served by said warrants are working right at the Station headed by the complainant himself; and Lastly, on the charge that respondent arrogantly regarded the letter of complainant as "nothing but a display of egotistical concerns" we are inclined to believe that the respondent's remarks were not tainted with malice and that her only concern is for the "speedy and efficient administration of justice." Rule 21, 8, pursuant to which respondent issued her orders, states that "in case of failure of a witness to attend, the court or judge issuing the subpoena, upon proof of the service thereof and of the failure of the witness, may issue a warrant to the sheriff of the province, or his deputy, to arrest the witness and bring him before the court or officer where his attendance is required." Respondent is thus correct in contending that a judge may issue a warrant of arrest against a witness simply upon proof that the subpoena had been served upon him but he failed to attend the hearing. The purpose is to bring the witness before the court where his attendance is required, not to punish him for contempt which requires a previous hearing.9 However, unnecessary tension and asperity could have been avoided had respondent simply called the attention of complainant to the failure of the latter's men to comply with her orders instead of directing complainant to personally serve the orders and bring the policemen himself to her sala. Moreover, as is clear from Rule 21, 8, the orders of arrest should have been addressed to the sheriff or the latter's deputy. Respondent could have done this while calling complainant's attention to the alleged disregard by policemen of her orders so that appropriate disciplinary action could be taken if necessary. It would appear that respondent's order of August 10, 1998 in Criminal Case Nos. C-53625(98), 53626(98), 53622, and 53623(98), which provoked this incident and gave rise to the "word war" between the parties, was made because respondent thought that in the other cases (Criminal Case Nos. 55145(98) and 55146(98)) heard that morning, complainant ignored her order to produce a policeman whom she had ordered arrested. However, as already noted, the policeman could no longer be presented in court as he had already been dismissed from the service, and complainant did make a return informing the court of this fact, although his return

did reach the court a few hours after the hearing in which the policeman's testimony was required. It was this unfortunate incident which provoked the exchanges between complainant and respondent: respondent acting on the erroneous belief that complainant had ignored her order and, consequently, requiring complainant to personally arrest his own men and take them to her court, and complainant taking umbrage at the orders. The observance of restraint was never more demanded on the part of both parties. Respondent acted a bit rashly while complainant reacted too strongly. The courts and the law enforcers are two of the five pillars of the criminal justice system, the other three being the prosecution, the correctional subsystem, and the community.10 Cooperation among, and coordination between, the five pillars are needed in order to make the system work effectively. Indeed, complainant and respondent, both avow a common objective of dispensing justice. More than that, the parties should observe mutual respect and forbearance. WHEREFORE, respondent Judge Adoracion G. Angeles of the Regional Trial Court, Branch 121, Caloocan City is ADMONISHED to be more circumspect in the discharge of her judicial function with WARNING that repetition of the same or similar acts will be dealt with more severely. The instant complaint is DISMISSED.1wphi1.nt SO ORDERED. Bellosillo, Quisumbing and Buena, JJ., concur.

RULE 22 Republic SUPREME Manila FIRST DIVISION G.R. No. 172038 April 14, 2008 of the Philippines COURT

DANTE D. DE LA CRUZ, petitioner, vs. MAERSK FILIPINAS CREWING, INC. and ELITE SHIPPING A.S., respondents. DECISION CORONA, J.:

This petition for review on certiorari1 seeks to set aside the November 26, 2004 decision2 and March 9, 2006 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 74097. Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third engineer for the vessel M/S Arktis Morning through its local agency in the Philippines, corespondent Maersk Filipinas Crewing Inc. The contract of employment was for a period of nine months, starting April 19, 1999, with a monthly basic salary of US$1,004.00 plus other benefits. Petitioner was deployed to Jebel Ali, United Arab Emirates and boarded M/S Arktis Morning on May 14, 1999. In a logbook entry dated June 18, 1999, chief engineer Normann Per Nielsen expressed his dissatisfaction over petitioner's performance: 3rd Eng. Dante D. de la Cruz has[,] since he signed on[,] not been able to live up to the company's SMS job describtion (sic) for 3rdEngineer[.] Today he has been informed that if he do[es] not improve his Job/Working performance within [a] short time he will be signed off according to CBA Article 1 (7). Said Article 1 (7) of the collective bargaining agreement (CBA) between respondent Elite Shipping A.S. and its employees reads: (7) The first sixty (60) days of service is to be considered a probationary period which entitles a shipowner or his representative, i.e.[,] the master of the vessel[,] to terminate the contract by giving fourteen (14) days of written notice. This entry was followed by another one dated June 26, 1999 which was similar in content. On June 27, 1999, petitioner was informed of his discharge through a notice captioned "Notice according to CBA Article 1 (7)," to wit: To: 3rd engineer Dante D. de la Cruz Pls. be informed that you will be discharged according to CBA article 1 (7) in first possible port. Reason for the decision is, as you have been informed by chief engineer Per Nielsen on several occasions, he [does] not find you qualified for the position as 3rdengineer onboard this vessel. The chief engineer has also made 2 entries in the engine logbook, regarding your insufficient job/working, which you are well aware of. Petitioner was then made to disembark at the port of Houston, Texas and was repatriated to Manila on July 17, 1999.

Petitioner thereafter filed a complaint for illegal dismissal with claims for the monetary equivalent of the unexpired portion of his contract, damages and attorney's fees in the National Labor Relations Commission (NLRC) on September 21, 1999. The labor arbiter (LA) ruled that petitioner was dismissed without just cause and due process as the logbook entry (which respondents claimed to be the first notice to petitioner) was vague. It failed to expound on or state the details of petitioner's shortcomings or infractions. As such, petitioner was deprived of a real or meaningful opportunity to explain his side. Hence, the LA ruled that petitioner was entitled to a monetary equivalent of salaries for three months, moral and exemplary damages and attorney's fees. On appeal, the NLRC upheld the LA's finding of illegal dismissal but deleted the award of moral and exemplary damages. Respondents moved for reconsideration. It was denied. Thereafter, respondents filed a petition for certiorari (under Rule 65) with the CA. It granted the petition. It held that, although the findings of fact of the LA and NLRC were entitled to great respect, this rule was inapplicable because the NLRC committed grave abuse of discretion in upholding the LA's decision. The findings were not only unsupported by substantial evidence but were also based solely on the ground that the logbook entries were vague and without concrete standards. The CA deemed the logbook entries to be sufficient compliance with the first notice requirement of the law. It was a written appraisal of petitioner's poor job performance coupled with a warning that should he fail to improve his performance, he would be signed off in accordance with the provisions of the CBA. It reasoned that a probationary employee may be dismissed at anytime during the probationary period for failure to live up to the expectations of the employer. Petitioner filed a motion for reconsideration of the CA decision. It was denied. Hence, this petition. The main issue raised before us is whether or not petitioner was illegally dismissed by respondents. Before addressing the merits of the controversy, we need to settle two preliminary issues. First, respondents interposed in their comment that the present petition should be dismissed outright as the motion for extension of time to file this petition for review was filed late. In his petition, petitioner indicated that he received a copy of the CA resolution (dated March 9, 2006) denying his motion for reconsideration on March 24, 2006. He, therefore, had until April 8, 2006 to appeal said resolution to this Court or to file a motion for extension of time to file the petition. However, as April 8, 2006 fell on a Saturday,

petitioner deemed it sufficient compliance to file his motion for extension on April 10, 2006, in accordance with Section 1, Rule 22 of the Rules of Court: SECTION 1. How to compute time. - xxx If the last day of the period, as thus computed, falls on a Saturday, a Sunday, or a legal holiday in the place where the court sits, the time shall not run until the next working day. Respondents countered that A.M. No. 00-2-14-SC dated February 29, 2000 (Re: Computation of Time When the Last Day Falls on Saturday, Sunday or Legal Holiday and a Motion for Extension on Next Working Day is Granted) clarified that the aforementioned rule is applicable only to the filing of pleadings other than motions for extension of time, such that when a party seeks an extension to file a desired pleading, the provision no longer applies and the motion should be filed on the due date itself, regardless of the fact that it falls on a Saturday, Sunday or legal holiday. Respondents' contention is incorrect. A.M. No. 00-2-14-SC provides: xxx Whereas, the aforecited provision [Section 1, Rule 22 of the Rules of Court] applies in the matter of filing of pleadings in courts when the due date falls on a Saturday, Sunday or legal holiday, in which case, the filing of the said pleading on the next working day is deemed on time; Whereas, the question has been raised if the period is extended ipso jure to the next working day immediately following where the last day of the period is a Saturday, Sunday or legal holiday so that when a motion for extension of time is filed, the period of extension is to be reckoned from the next working day and not from the original expiration of the period. NOW THEREFORE, the Court Resolves, for the guidance of the Bench and the Bar, to declare that Section 1, Rule 22 speaks only of "the last day of the period" so that when a party seeks an extension and the same is granted, the due date ceases to be the last day and hence, the provision no longer applies. Any extension of time to file the required pleading should therefore be counted from the expiration of the period regardless of the fact that said due date is a Saturday, Sunday or legal holiday.(emphasis supplied) Section 1, Rule 22, as clarified by the circular, is clear. Should a party desire to file any pleading, even a motion for extension of time to file a pleading, and the last day falls on a Saturday, Sunday or a legal holiday, he may do so on the next working day. This is what petitioner did in the case at bar.

However, according to the same circular, the petition for review on certiorari was indeed filed out of time. The provision states that in case a motion for extension is granted, the due date for the extended period shall be counted from the original due date, not from the next working day on which the motion for extension was filed. In Luz v. National Amnesty Commission,4 we had occasion to expound on the matter. In that case, we held that the extension granted by the court should be tacked to the original period and commences immediately after the expiration of such period. In the case at bar, although petitioner's filing of the motion for extension was within the period provided by law, the filing of the petition itself was not on time. Petitioner was granted an additional period of 30 days within which to file the petition. Reckoned from the original period, he should have filed it on May 8, 2006. Instead, he did so only on May 11, 2006, that is, 3 days late. Nevertheless, we will gloss over this technicality and resolve the case on its merits in the exercise of this Court's equity jurisdiction as we have done in a number of cases. 5 Well settled is the rule that litigations should, as much as possible, be decided on their merits and not on technicalities.6 In accordance with this legal precept, this Court has ruled that being a few days late in the filing of the petition for review does not automatically warrant the dismissal thereof,7 specially where strong considerations of substantial justice are manifest in the petition.8 Such is the case here. The second preliminary issue we need to address is the matter of this Court's jurisdiction in petitions for review on certiorari under Rule 45. It should be noted that our jurisdiction in such cases is limited only to questions of law. It does not extend to questions of fact. This doctrine applies with greater force in labor cases. 9 As such, the findings of fact of the CA are binding and conclusive upon this Court. However, this rule is not absolute but admits of certain exceptions. Factual findings may be reviewed in a case when the findings of fact of the LA and the NLRC are in conflict with those of the CA.10 In this case, the LA and the NLRC held that respondents did not comply with the notice requirement; the CA found otherwise. Thus, although the instant petition involves a question of fact, that is, whether or not the notice requirement was met, we can still rule on it. Now, the merits of the instant controversy. The CA committed an error in holding that petitioner was not illegally dismissed. The contrary findings and conclusions made by the LA and the NLRC were supported by jurisprudence and the evidence on record. An employer has the burden of proving that an employee's dismissal was for a just cause. Failure to show this necessarily means that the dismissal was unjustified and therefore illegal.11 Furthermore, not only must the dismissal be for a cause provided by law, it should also comply with the rudimentary requirements of due process, that is, the opportunity to be heard and to defend oneself.12

These requirements are of equal application to cases of Filipino seamen recruited to work on board foreign vessels. Procedural due process requires that a seaman must be given a written notice of the charges against him and afforded a formal investigation where he can defend himself personally or through a representative before he can be dismissed and disembarked from the vessel.13 The employer is bound to furnish him two notices: (1) the written charge and (2) the written notice of dismissal (in case that is the penalty imposed).14 This is in accordance with the POEA Revised Standard Employment Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA Revised Standard Employment Terms and Conditions). Section 17 of the POEA Revised Standard Employment Terms and Conditions laid down the disciplinary procedures to be taken against erring seafarers: Section 17. DISCIPLINARY PROCEDURES The Master shall comply with the following disciplinary procedures against an erring seafarer: A. The Master shall furnish the seafarer with a written notice containing the following: 1. Grounds for the charges as listed in Section 31 of this Contract. 2. Date, time and place for a formal investigation of the charges against the seafarer concerned. B. The Master or his authorized representative shall conduct the investigation or hearing, giving the seafarer the opportunity to explain or defend himself against the charges. An entry on the investigation shall be entered into the ship's logbook. C. If, after the investigation or hearing, the Master is convinced that imposition of a penalty is justified, the Master shall issue a written notice of penalty and the reasons for it to the seafarer, with copies furnished to the Philippine agent. xxx xxx xxx

Furthermore, the notice must state with particularity the acts or omissions for which his dismissal is being sought.15 Contrary to respondents' claim, the logbook entries did not substantially comply with the first notice, or the written notice of charge(s). It did not state the particular acts or omissions for which petitioner was charged. The statement therein that petitioner had "not been able to live up to the company's SMS job description for 3rd Engineer" and that he had "been informed that if he [does] not improve his job/working performance within

[a] short time he will have to be signed off according to CBA Article 1 (7)" was couched in terms too general for legal comfort. The CA held that the logbook entries were sufficient to enable petitioner to explain his side or to contest the negative assessment of his performance and were clearly intended to inform him to improve the same. We cannot fathom how the CA arrived at such a conclusion. The entries did not contain any information at all as to why he was even being warned of discharge in the first place. Even we were left to speculate as to what really transpired, calling for such an extreme course of action from the chief engineer. The entries raised more questions than answers. How exactly was he unable to live up to the company's SMS job description of a third engineer? Respondents should have indicated the grounds for the threatened termination, the specific acts or omissions illustrating the same, along with the date and the approximate time of their occurrence. For how else could petitioner be expected to meet the charges against him if all he was given as reason for his discharge was a vague and general accusation such as that handed down by the chief engineer? Even if the chief engineer verbally informed him of what his specific shortcomings were, as insisted upon by respondents, the POEA Revised Standard Employment Terms and Conditions and jurisprudence require that the charges be put in writing. The same thing may be said of the written notice of dismissal. It sorely lacked the necessary details that should accompany it. Instead of delving into the grounds for petitioner's discharge, it merely echoed the logbook entries by nebulously justifying his dismissal on the ground that the chief engineer "[did] not find [petitioner] qualified for the position as 3rd engineer." Much like the first notice, it barely made mention of the grounds for his discharge. Again, we were left in the dark as to the nature of the acts or omissions relied upon as basis for the termination of petitioner's employment. These ambiguities, attributable solely to respondents, should be resolved against them. Moreover, we observed that the records were devoid of any proof indicating that petitioner was ever given an opportunity to present his side. In their comment, respondents in fact admitted not having conducted any formal investigation: A formal investigation in this case was not necessary because the findings against petitioner were not in the form of infractions that ought to be investigated. The issue against petitioner was the quality of his work as 3 rd Engineer. Having been duly notified of his shortcomings, it devolved upon the petitioner to improve the quality of his work in order to pass his probationary period and be a regular employee. But petitioner did not. They also insisted that as petitioner was served notice of his termination, the same constituted sufficient compliance with the requirement of notice and due process as the notice gave him an opportunity to defend himself.16

Clearly, respondents were unmindful of the requirements explicitly laid down by law and jurisprudence. Anything short of complying with the same amounts to a dismissal. Thus, no amount of justification from respondents can move us now to declare the dismissal as being in accordance with the procedural requirements provided for by law. It cannot be overemphasized that sufficient notice should be given as part of due process because a worker's employment is his property in the constitutional sense. 17 As to the substantive aspect of the requirement, suffice it to say that respondents dismally failed to prove that petitioner's termination from employment was for cause. As the logbook entries were too general and vague, we cannot even reach any conclusion on whether or not respondents had a valid cause to discharge petitioner. Not only was petitioner's dismissal procedurally flawed, it was also without just cause. Lastly, petitioner and respondents were at odds over the former's employment status when he was discharged from the vessel. It was petitioner's position that he was already a regular employee when his services were terminated; respondents, on the other hand, insisted that he was then still on probationary status. This, according to respondents, entitled them to dismiss him in accordance with the provisions of Article 1 (7) of the CBA (which allows the master to terminate the contract of one under probation by merely serving a written notice 14 days prior to the contemplated discharge) and the requirements on the termination of a probationary employee's employment as laid down inManila Hotel Corporation v. NLRC.18 It is well to remind both parties that, as early as Brent School, Inc. v. Zamora,19 we already held that seafarers are not covered by the term regular employment, as defined under Article 280 of the Labor Code. This was reiterated in Coyoca v. National Labor Relations Commission.20 Instead, they are considered contractual employees whose rights and obligations are governed primarily by the POEA Standard Employment Contract for Filipino Seamen (POEA Standard Employment Contract), the Rules and Regulations Governing Overseas Employment, and, more importantly, by Republic Act No. 8042, otherwise known as The Migrant Workers and Overseas Filipinos Act of 1995.21 Even the POEA Standard Employment Contract itself mandates that in no case shall a contract of employment concerning seamen exceed 12 months. It is an accepted maritime industry practice that the employment of seafarers is for a fixed period only. The Court acknowledges this to be for the mutual interest of both the seafarer and the employer. Seafarers cannot stay for a long and indefinite period of time at sea as limited access to shore activity during their employment has been shown to adversely affect them. Furthermore, the diversity in nationality, culture and language among the crew necessitates the limitation of the period of employment.22 While we recognize that petitioner was a registered member of the Associated Marine Officers and Seamen's Union of the Philippines which had a CBA with respondent Elite Shipping A.S. providing for a probationary period of employment, the CBA cannot override the provisions of the POEA Standard Employment Contract. The law is read

into, and forms part of, contracts. And provisions in a contract are valid only if they are not contrary to law, morals, good customs, public order or public policy. 23 In Millares v. NLRC,24 this Court had occasion to rule on the use of the terms "permanent and probationary masters and employees" vis--vis contracts of enlistment of seafarers. In that case, petitioners made much of the fact that they were continually re-hired for 20 years by private respondent Esso International. By such circumstances, they claimed to have acquired regular status with all the rights and benefits appurtenant thereto. The Court quoted with favor the NLRC's explanation that the reference to permanent and probationary masters and employees was a misnomer. It did not change the fact that the contract for employment was for a definite period of time. In using the terms "probationary" and "permanent" vis--vis seafarers, what was really meant was "eligible for re-hire." This is the only logical explanation possible as the parties cannot and should not violate the POEA's directive that a contract of enlistment must not exceed 12 months. WHEREFORE, the petition is hereby GRANTED. The November 26, 2004 decision and March 9, 2006 resolution of the Court of Appeals in CA-G.R. SP No. 74097 are REVERSED and SET ASIDE. The March 22, 2002 resolution of the National Labor Relations Commission in NLRC NCR CA No. 029139-01 is REINSTATED.
SO ORDERED.

RULE 23 Republic SUPREME Manila FIRST DIVISION of the Philippines COURT

G.R. No. 137136 November 3, 1999 NORTHWEST AIRLINES, vs. CAMILLE T. CRUZ and COURT OF APPEALS, respondents. INC., petitioner,

KAPUNAN, J.: Before this Court is a petition for review on certiorari of the Decision of the Court of Appeals, dated September 30, 1998; and, of its Resolution, dated January 11, 1999.

The antecedents facts are as follows: On August 24, 1992, herein private respondents Camille T. Cruz, then a teenage girl who would be travelling alone for the first time, purchased from petitioner Northwest Airlines a round-trip ticket for a flight from Manila to Boston via Tokyo and back. The scheduled departure date from Manila to Boston was August 27, 1992 at 8:40 a.m. in economy class while the scheduled return flight from Boston to Manila in business class was on December 22, 1992 at 10:25 a.m. 1 On November 25, 1992, private respondents re-scheduled her return flight from Boston to Manila to December 17, 1992 at 10:05 a.m. Accordingly, petitioner booked her on Northwest flight NW005 C ("Flight 5") with route as follows: Boston to Chicago; Chicago to Tokyo; and, Tokyo to Manila. 2 Petitioner reconfirmed the flight from Boston, U.S.A. to Manila scheduled on December 17, 1992 at least seventy-two (72) hours prior to the said scheduled flight. 3 However, barely a day before the scheduled date of departure, petitioner called private respondent and informed her that instead of following her original itinerary of Boston to Chicago; Chicago to Tokyo; and, Tokyo to Manila, private respondent should instead board the TWA flight from Boston to Kennedy International Airport in New York. Private respondent was further instructed by petitioner to proceed to the latter's counter at the Logan Airport in Boston before boarding the TWA flight on the scheduled date of departure. 4 On December 17, 1992, upon petitioner's instructions, private respondent proceeded early to the petitioner's counter at Logan Airport in Boston but was referred to the TWA counter where she was informed that she may not be able to take the TWA flight. Notwithstanding this uncertainty, private respondent was made to proceed to the International Gate where she was informed that the TWA flight she was to take to Kennedy International Airport in New York was cancelled. 5 Due to the unexplained and belated cancellation of the TWA flight, private respondent had to rush back from the International Gate to petitioner's counter in Logan Airport in Boston where she was again told to proceed immediately to the Delta Airlines terminal to catch the Delta Airlines flight to La Guardia Airport in New York and thence took the service car to Kennedy Airport in New York. 6 In her haste to catch the said flight, private respondent tripped and fell down on her way from petitioner's counter to the Delta Airlines counter in Logan Airport in Boston thereby suffering slight physical injuries and embarrassment. 7

When private respondent reached La Guardia Airport in New York, she again had to rush to the service car that would take her to Kennedy International Airport which is several miles away from La Guardia. In her haste and anxiety to catch her flight, private respondent again tripped and fell down thereby suffering more physical injuries, embarrassment and great inconvenience. 8 Private respondent's apprehension was further aggravated when she was informed at petitioner's counter in Kennedy International Airport that she was issued the wrong ticket to Seoul instead of Tokyo. Although the error was rectified by petitioner at Kennedy International Airport, private respondent was by then extremely nervous, worried, stressed out, and exhausted. 9 To make matters worse, petitioner downgraded private respondent from business class to economy class on two legs of her flight without notice nor apology. Neither did petitioner offer to refund the excess fare private respondent paid for a business class seat. 10 Hence, on August 6, 1993, private respondent filed a complaint 11 against petitioner Northwest Airlines, Inc. for breach of contract of carriage committed when petitioner changed private respondent's original itinerary of Boston to Chicago, Chicago to Tokyo, Tokyo to Manila to a new itinerary of Boston to New York, New York to Tokyo, Tokyo to Manila, thereby downgrading private respondent on two legs of her return flight to Manila from business to economy class (flights from Boston to New York, and from Tokyo to Manila). Private respondent claimed to have suffered actual, moral and exemplary damages. 12 Petitioner filed its answer with compulsory counterclaim alleging therein that the flight on which private respondent was originally booked was cancelled due to maintenance problems and bad weather, 13 and that the airline had done its best to re-book private respondent on the next available flights. Trial progressed until 1995 when it was petitioner's turn to present its witness on three scheduled dates. Two of the settings were cancelled when petitioner's counsel filed notice for oral deposition of one Mario Garza, witness for petitioner, in New York. Private respondent filed her opposition and suggested written interrogatories instead. However, in an Order dated July 26, 1995, the trial court denied private respondent's opposition, thus allowing the deposition to proceed. The oral deposition took place in New York on July 24, 1995 14 or notably two days before the issuance of the trial court's order allowing the deposition to proceed. The records show that although it was the Honorable Consul Milagros R. Perez who swore in the deponent, 15 she thereafter designated one "Attorney Gonzalez" as Deposition Officer. 16 After stating his personal circumstances, Mr. Mario Garza, testified as follows:

xxx xxx xxx ATTY. AUTEA What is your present position? MR. GARZA I am currently a customer supervisor and instructor for Northwest in Boston. ATTY. AUTEA In or about December 1992, what was your position? MR. GARZA I was a customer service supervisor and instructor. ATTY. AUTEA As a customer service supervisor and instructor what are the duties which you discharged? MR. GARZA My responsibilities are in Boston field work to oversee the ground staff and for the employees of Northwest who work at the counter, gates, luggage service operations. ATTY. AUTEA Do you discharge any responsibilities in connection with canceled flights? MR. GARZA Yes, I do. If a flight is canceled it is my responsibility amongst many supervisor, to determine how we are gonna best serve our customers with rebooking for protection some other main customer services. ATTY. AUTEA Have you ever been come across the name of Camille T. Cruz in connection with a canceled Northwest flight? MR. GARZA Yes, I have. xxx xxx xxx

ATTY. AUTEA Based on this passenger name record marked as Exhibit 2 and the transcript marked as Exhibit 3, very briefly can you tell us what was the original flight schedule of Camille T. Cruz on her return flight from Boston to Manila on December 17, 1992? MR. GARZA It actually she goes back a little before that, she was booked originally to return to Manila on the 22nd of December and she was advised of the schedule change wherein Northwest Flight 3 to Northwest Flight 5 and then on the 14th of October the reservation from, I can tell here for the customer was changed from the 22nd of December to 17th of December, Boston to Manila. ATTY. AUTEA Okay. You said that there was a change of flight from Northwest Flight 3 to Northwest Flight 5, what brought about the change? MR. GARZA There was a schedule change and during schedule changes sometime, anytime there's a change in departure time or change in flight number and that's referred as a schedule change if there is a phone contact we are advised to contact the customers so they will know what flight they are supposed to be on. ATTY. AUTEA And and (sic) that does it show there as it is stated in the complaint filed by the plaintiff that she requested for the change from December 22 to December 17? MR. GARZA Yes. ATTY. AUTEA Now under this uhnew flight schedule Northwest Flight 5, what was the itinerary of Camille T. Cruz? MR. GARZA Flight 5 is referred to as Direct Flight from Boston to Manila, uhh the routing for that flight goes Boston Chicago, Tokyo-Manila with a change of equipment and it is a change of aircraft type in Chicago.

ATTY. AUTEA Okay. What happened to that flight? Northwest Flight 5? The originally first leg of which was Boston to Chicago? MR. GARZA On the 17th, Flight 5 from Boston to Chicago canceled due to maintenance problem. xxx xxx xxx ATTY. AUTEA Ahh. In other words Mr. Garza, the aircraft which the plaintiff in this case was scheduled to take came from Washington D.C., is that right? MR. GARZA That is correct. ATTY. AUTEA And from Washington DC that aircraft flew to Boston is that right? MR. GARZA Well it supposed to fly it is it didn't fly. ATTY. AUTEA It was supposed to fly but it didn't fly? MR. GARZA That is correct. ATTY. AUTEA What is the reason for the inability of the aircraft to fly from Washington DC to Boston? MR. GARZA Based on this messages says "Emergency Lights INOP and unable to repair." xxx xxx xxx ATTY. AUTEA

In other words Mr. Garza, when the original Northwest Flight Number 5 of the passenger Camille T. Cruz was canceled due to maintenance work she was given two options, is that right? MR. GARZA Yes. ATTY. AUTEA And the first option is that written in Item Number 8, is that right? MR. GARZA That is correct. ATTY. AUTEA The second option is that written in Item Number 9 of Exhibit 3, is that right? MR. GARZA That is correct. ATTY. AUTEA And who made the decision for Camille T. Cruz as to which option to take? MR. GARZA In this case to me it would be the customer, because we would always have to go with the customer wants. ATTY. AUTEA When you say that it was the customer who made the decision you are referring to Camille T. Cruz the plaintiff in this case? MR. GARZA That's correct. ATTY. AUTEA In other words Camille T. Cruz, the plaintiff was the one who chose the alternate flight shown in Item Number 9 of Exhibit 3? MR. GARZA

That's correct. xxx xxx xxx ATTY. AUTEA Why in coach? MR. GARZA I would say because that was what all that was available, she is a business class passenger and there is no business class on domestic flights, we do upgrade our business class passenger to first class domestically on a space available basis so they would indicate to me that possibly from Detroit was probably already sold out in first class but we would be able to confirm her in coach but a smaller flight. ATTY. AUTEA Are you saying that because of the cancellation of the original flight of Camille T. Cruz, Northwest tried to book the passenger on the available flight but that the available flight which was then available was this coach class Northwest 440? MR. GARZA That's correct, from Boston to Detroit. xxx xxx xxx ATTY. AUTEA Okay. The second leg of this trip in Item Number 9 says "NW 017 F JFKNRT 17th December 1240 to 1700, what does that mean? MR. GARZA That means that we re-booked it from New York Kennedy to Tokyo non-stop Narita Airport on Northwest Flight 17 in first class as opposed to business class and that left Kennedy at 1240 arriving into Tokyo at 1700. ATTY. AUTEA Why was she booked in first class? MR. GARZA

Again I would say that business class was already sold out on that flight so since she already been inconvenience before we are allowed at the airport under types of circumstances then to move the business class passenger into first class. xxx xxx xxx ATTY. AUTEA Now, the third leg of the trip under Item Number 9 of Exhibit 3 says "NW 005 Y NRT MNI, 18th December 1815 to 2155, "what does that mean? MR. GARZA That means that upon arriving in Tokyo she would connect to Flight 5 from Tokyo to Manila on the 18th departing at 1815 and arriving at 2155 and that was booked in coach. ATTY. AUTEA Why was she booked in coach? MR. GARZA I was again in uhh. Because first and business class would have been sold out. 17 On November 9, 1995, at the hearing of the instant case, petitioner presented the deposition record of its witness while private respondent reserved her right to cross-examine and present rebuttal evidence. Private respondent, likewise, questioned the conduct of the oral deposition as irregular and moved for suppression of the same on the following grounds: 1. The deposition has been improperly and irregularly taken and returned in that: (a) The deposition was taken on July 24, 1995 despite the fact that this Honorable Court only ruled on the matter on July 26, 1995. (b) There is no certification given by the officer taking the deposition that the same is a true record of the testimony given by the deponent in violation of Rule 24, Section 20 of the Rules of Court. (c) The deposition was not securely sealed in an envelope indorsed with the title of the action and marked "Deposition of (here insert the name of witness)" in violation of Rule 24, Section 20 of the Rules of Court.

(d) The officer taking the deposition did not give any notice to the plaintiff of the filing of the deposition in violation of Rule 24, Section 21 of the Rules of Court. (e) The person designated as deposition officer is not among those persons authorized to take deposition in foreign countries in violation of Rule 24, Section 11 of the Rules of Court. (f) There is no showing on record that the deponent read and signed the deposition in violation of Rule 24, Section 19 of the Rules of Court. 2. These irregularities or defects were discovered by the plaintiff during the hearing on November 9, 1995 and plaintiff has acted with reasonable promptness after having ascertained the existence of the aforesaid irregularities and defects. 18 However, court. 19 private respondent's motion was denied anew by the trial

In its Order, dated July 23, 1996, the trial court admitted petitioner's formal offer of evidence with supplement thereto and gave private respondent three days from receipt within which to signify her intention to present rebuttal evidence. On August 2, 1996, private respondent filed a manifestation and motion stating that the court failed to rule on its motion to suppress deposition and to grant her the right to cross-examine petitioner's deponent. Private respondent also manifested her intention to present rebuttal evidence. In its Order, dated September 5, 1996, the trial court denied private respondent's manifestation and motion. Said court, likewise, denied private respondent's motion for reconsideration of the above order. Hence, private respondent filed a petition for certiorari with the Court of Appeals on April 7, 1998. 20 On September 30, 1998, the appellate court rendered a Decision, the dispositive portion of which reads: WHEREFORE, the petition is GRANTED. The questioned rulings of the Regional Trial Court are hereby SET ASIDE, and judgments is hereby rendered ORDERING the court a quo to disallow the deposition and continue with the trial of the case without prejudice to petitioner's right to cross examine defendant's witness and to present rebuttal evidence. SO ORDERED. 21 Petitioner Northwest, thereafter, filed this instant petition for review alleging that:

I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT DISMISSING THE PETITION OUTRIGHT SINCE THE REMEDY OF APPEAL IS AVAILABLE TO PRIVATE RESPONDENT. BESIDES, THE PETITION WAS FILED OUT OF TIME. II. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN FINDING THAT THE TRIAL COURT GRAVELY ABUSED ITS DISCRETION BY ADMITTING INTO EVIDENCE THE ORAL DEPOSITION. III. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN FINDING THAT PRIVATE RESPONDENT HAS NOT WAIVED HER RIGHT TO CROSS-EXAMINE PETITIONER'S WITNESS AND TO PRESENT REBUTTAL EVIDENCE. 22 Petitioner argues that the remedy of certiorari before respondent Court of Appeals was improper, as private respondent has every opportunity to question on appeal the trial court's ruling admitting the deposition. According to petitioner, a careful analysis of the petition in the Court of Appeals shows that at the heart of the issues raised is the correctness of the observed procedure by the trial court in appreciating the admissibility of the transcript of the deposition of Mr. Mario Garza. Such being the case, assuming without admitting that the trial court committed any error in issuing the questioned orders, such error is only an error of judgment, and not an error of jurisdiction. Petitioner further asserts that the trial court did not gravely abuse its discretion by admitting into evidence the oral deposition. While as a general rule, Section 1, Rule 132 of the Rules of Court 23 governs the conduct of trial, this rule admits of exceptions which this Court recognized in the case of Dasmarinas Garments, Inc. vs. Reyes. 24According to petitioner, one of the exceptions is "when the witness is out of the Philippines." In this case, petitioner has the right to take the deposition of its witness and offer it in evidence since Mr. Mario Garza reside and works outside the Philippines. The deposition-taking at the Philippine Consulate in New York City falls within the exceptions to the requirement that a witness give his testimony in open court pursuant to Section 1, Rule 132 of the Rules. Finally, petitioner alleges that private respondent must be deemed to have waived her right to cross-examine petitioner's witness and her right to present rebuttal evidence by her failure to attend the deposition-taking despite due notice thereof, or at the very least, to timely reserve her right to serve written interrogatories. Petitioner's arguments are untenable. Sec. 16 of Rule 24 (now Rule 23 of he Rules of Civil Procedure of 1997) provides that after notice is served for taking a deposition by oral examination, upon motion seasonably made by any party or by the person to be examined and for good cause shown, the court in which the

action is pending may, among others, make an order that the deposition shall not be taken. The rest of the same section allows the taking of the deposition subject to certain conditions specified therein. The provision explicitly vesting in the court the power to order that the deposition shall not be taken connotes the authority to exercise discretion on the matter. However, the discretion conferred by law is not unlimited. It must be exercised, not arbitrarily or oppresively, but in a reasonable manner and in consonance with the spirit of he law. The courts should always see to it that the safeguards for the protection of the parties and deponents are firmly maintained. As aptly stated by Chief Justice Moran: . . . . (T)his provision affords the adverse party, as well as the deponent, sufficient protection against abuses that may be committed by a party in the exercise of his unlimited right to discovery. As a writer said: "Any discovery involves a prying into another person's affairs prying that is quite justified if it is to be a legitimate aid to litigation, but not justified if it is not to be such an aid." For this reason, courts are given ample powers to forbid discovery which is intended not as an aid to litigation, but merely to annoy, embarrass or oppress either the deponent or the adverse party, or both. 25 Respondent court correctly observed that the deposition in this case was not used for discovery purposes, as the examinee was the employee of petitioner, but rather to accommodate the former who was in Massachusetts, U.S.A. Such being the case, the general rules on examination of witnesses under Rule 132 of the Rules of Court requiring said examination to be done in court following the order set therein, should be observed. Respondent court also correctly noted that private respondent's objections to the oral deposition had been made promptly and vehemently, as required by the Rules, but these were wrongly disregarded as immaterial by the trial court. We note with approval respondent court's ruling disallowing the depositions and upholding private respondent's right to cross-examine: . . . [The] deposition was not a mode of discovery but rather a direct testimony by respondent's witness and there appears a strategy by respondent to exclude petitioner's participation from the proceedings. While a month's notice would ordinarily be sufficient, the circumstances in this case are different. Two days of trial were cancelled and notice for oral deposition was given in lieu of the third date. The locus of oral deposition is not easily within reach of ordinary citizens for it requires time to get a travel visa to the United States, book a flight in July to the United States,

and more importantly substantial travel fare is needed to obtain a round trip ticket by place (sic) from Manila to New York and back to Manila. As an international carrier, Northwest could very conveniently send its counsel to New York. However, the ends of justice would have been better served if the witness were instead brought to the Philippines. Written interrogatories was (sic) requested to balance this inconvenience which was nonetheless also objected to and denied for simply being time consuming. While time is a factor in deciding cases, the more important principles would have been the thorough presentation and deliberation of a case to ensure that the ends of justice are met since this is the principal mission of a civilized judicial system. The objections raised by petitioner [private respondent], in the light of the above considerations, take on a greater weight. Section 11 of Rule 24 provides: "In a foreign state or country, depositions shall be taken (a) on notice before a secretary of embassy or legation, consul general, consul, vice-consul or consular agent of the Republic of the Philippines, or (b) before such person or officer as may be appointed by commission or under letters rogatory." The deposition document clearly indicates that while the consul swore in the witness and the stenographer, it was another officer in the Philippine Consulate who undertook the entire proceedings thereafter. Respondent Northwest argues on the presumption of regularity of official functions and even obtained a certification to this effect plus an assertion that none of the participants in the Consulate were in any way related to the respondent or their counsel. But presumptions should fail when the record itself bears out the irregularity. The Rules (Rules 24, Sec. 29) indicate that objections to the oral deposition will be waived unless the objections are made with reasonable promptness. In this case, the objections have been prompt and vehement, yet they were disregarded as not material such that the deposition and the exhibits related thereto were admitted. Moreover, a Supplemental Offer of Evidence pertaining to a certification by the consul in New York which tends to correct the objections raised was also admitted by the Court. Respondents argue that the rules were not exactly mandatory but merely guides to ensure that the ends of justice are met. The Court interpreted with leniency the objections despite the acknowledged mandatory language of the rules. There is clear language of the law and the same should not be modified in practice. The separate certification of the FSO from the transcript proper was also questioned as irregular by petitioner [private respondent]. In so doing, she was merely being vigilant of her rights considering that she was not present then. No other proof thereon is needed when the same is clear on the face of the deposition material given.

Petitioner's [private respondent] right to cross examine and to present rebuttal evidence, having been reserved earlier, needed no reiteration. Even then, this was nevertheless manifested and even vehemently argued. As defendant's oral deposition was admitted, despite substantial issues raised against it in the interest of justice, similar consideration, aside from substantial and technical basis, also dictates that petitioner's [private respondent] right to cross-examine and present rebuttal evidence should be granted. An even handed treatment of the parties would require the same attitude towards the acceptance of petitioner's [private respondent's] right to cross-examine and present its rebuttal evidence on the same. 26 In Fortune Corporation vs. Court of Appeals, 27 this Court set aside upon review by certiorari the order of the trial court allowing deposition because the order did not conform to the essential requirements of law and may reasonably cause material injury to the adverse party: The rule is that certiorari will generally not lie to review a discretionary action of any tribunal. Also, as a general proposition, a writ of certiorari is available only to review final judgment or decrees, and will be refused where there has been no final judgment or order and the proceedings for which the writ is sought is still pending and undetermined in the lower tribunal. Pursuant to this rule, it has been held that certiorari will not lie to review or correct discovery orders made prior to trial. This is because, like other discovery orders, orders made under Section 16, Rule 24 are interlocutory and not appealable considering that they of not finally dispose of the proceeding or of any independent offshoot of it. However, such rules are subject to the exception that discretionary acts will be reviewed where the lower court or tribunal has acted without or in excess of its jurisdiction, where an interlocutory order does not conform to essential requirements of law and may reasonably cause material injury throughout the subsequent proceedings for which the remedy of appeal will be inadequate, or where there is a clear or serious abuse of discretion. IN VIEW OF THE FOREGOING, the Court hereby DENIES the petition for failure of the petitioner to sufficiently show that respondent Court of Appeals committed any reversible error. SO ORDERED. Republic SUPREME COURT THIRD DIVISION G.R. No. 133154 December 9, 2005 of the Philippines

JOWEL vs. CYRIL A. SABINO, Respondent. DECISION GARCIA, J.:

SALES, Petitioner,

Assailed and sought to be set aside in this petition for review on certiorari under Rule 45 of the Rules of Court are the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 44078, to wit: 1. Decision1 dated January 20, 1998, affirming an earlier order of the Regional Trial Court, Branch 152, National Capital Judicial Region, which admitted the deposition of one Buaneres Corral as part of respondents evidence in an action for damages; and 2. Resolution2 dated March 22, 1998, denying petitioners motion for reconsideration. Briefly, the facts may be stated as follows: On February 20, 1995, in the Regional Trial Court (RTC) at Pasig City, Metro Manila, herein respondent Cyril A. Sabino filed an amended complaint 3 for damages against, among others, herein petitioner Jowel Sales, driver of the vehicle involved in the accident which ultimately caused the death of respondents son, Elbert. Before any responsive pleading could be filed, respondent, as plaintiff a quo, notified the defendants that he will take the deposition of one Buaneres Corral before the Clerk of Court, RTC- Pasig City. On December 27, 1995 and resumed on January 3, 1996, the deposition on oral examination of Buaneres Corral was taken before the Clerk of Court of Pasig, in the presence and with the active participation of petitioners counsel, Atty. Roldan Villacorta, who even lengthily crossexamined the deponent. In the course of trial, respondent had the deposition of Buaneres Corral marked as her Exhibits "DD"4 and "EE"5, with submarkings. Upon conclusion of her evidentiary presentation, respondent made a Formal Offer of Exhibits,6 among which are Exhibits "DD" and "EE". Likewise offered in evidence as Exhibit "BB"7 is a certification from the Bureau of Immigration attesting to the May 28, 1996 departure for abroad of Buaneres Corral via Flight No. PR 658. Petitioner opposed the admission of Exhs. "DD" and "EE" and even asked that they be expunged from the records on the ground that the jurisdictional requirements for their

admission under Section 4, Rule 23 of the Rules of Court, infra, were not complied with. He also downplayed the evidentiary value of Exhibit "BB" for reasons he would repeat in this petition. In its order of February 3, 1997,8 the trial court admitted, among other evidence, respondents Exhibits "DD", "EE" and "BB". With his motion for reconsideration 9 having been denied by the court in its subsequent order of March 25, 1997,10 petitioner went on certiorari to the Court of Appeals in CA-G.R. SP No. 44078, imputing grave abuse of discretion on the part of the trial court in admitting in evidence the deposition in question (Exhibits "DD" and "EE"). As stated at the threshold hereof, the appellate court, in the herein assailed decision dated January 20, 1998,11upheld the trial court and effectively denied due course to and dismissed petitioners recourse, explaining, inter alia, that petitioners active participation, through counsel, during the taking of subject deposition and adopting it as his own exhibits, has thereby estopped him from assailing the admissibility thereof as part of respondents evidence. His motion for reconsideration having been denied by the appellate court in its equally assailed resolution of March 22, 1998, petitioner is now with us via the instant petition, raising the following issues of his own formulation: 1. Whether or not the requirements of Section 4, Rule 24 (now Section 3) of the Revised Rules of Court were satisfied by the respondent when it presented a certification attesting to the fact that deponent has left the country but silent as to whether or not at the time his deposition was offered in evidence is in the Philippines 2. Whether or not the petitioner in cross-examining the deponent during the taking of his deposition waived any and all objections in connection therewith.12 The petition lacks merit. Section 4, Rule 2313 of the Rules of Court, upon which petitioner mounts his challenge to the admission in evidence of the subject deposition, pertinently reads: SEC. 4. Use of depositions.- At the trial . . . any part or all of a deposition, so far as admissible under the rules of evidence, may be used against any party who was present or represented at the taking of the deposition or who had due notice thereof, in accordance with any of the following provisions: xxx xxx xxx (c) The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at a distance more than one hundred (100) kilometers from the place of trial or hearing, or is out of the Philippines, unless it appears that his absence was procured by the party offering the

deposition; or (3) that the witness is unable to attend or testify because of age, sickness, infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to procure the attendance of the witness by subpoena; or (5) upon application and notice, that such exception circumstances exist and with due regard to the importance of presenting the testimony of witnesses orally in open court, to allow the deposition to be used. (Emphasis supplied). It is petitioners posture that none of the above conditions exists in this case to justify the admission in evidence of respondents Exhibits "DD" and "EE". Hence, it was error for the appellate court to have upheld the admission thereof by the trial court. Discounting the probative value of the certification from the Bureau of Immigration (Exh. "BB") that deponent Buaneres Corral departed for abroad on May 28, 1996, petitioner argues that said certification merely proves the fact of Corral having left the country on the date therein mentioned. It does not, however, establish that he has not returned since then and is unavailable to be present in court to personally testify. While depositions may be used as evidence in court proceedings, they are generally not meant to be a substitute for the actual testimony in open court of a party or witness. Stated a bit differently, a deposition is not to be used when the deponent is at hand. 14 Indeed, any deposition offered during a trial to prove the facts therein set out, in lieu of the actual oral testimony of the deponent in open court, may be opposed and excluded on the ground of hearsay. However, depositions may be used without the deponent being called to the witness stand by the proponent, provided the existence of certain conditions is first satisfactorily established. Five (5) exceptions for the admissibility of a deposition are listed in Section 4, Rule 23, supra, of the Rules of Court. Among these is when the witness is out of the Philippines. The trial court had determined that deponent Bueneres Corral was abroad when the offer of his deposition was made. This factual finding of absence or unavailability of witness to testify deserves respect, having been adequately substantiated. As it were, the certification by the Bureau of Immigration Exh. "BB"- provides that evidentiary support. Accordingly, the attribution of grave abuse of discretion on the part of the trial court must be struck down. It has been said to be customary for courts to accept statements of parties as to the unavailability of a witness as a predicate to the use of depositions.15 Had deponent Buaneres Corral indeed returned to the Philippines subsequent to his departure via Flight No. PR 658, petitioner could have presented evidence to show that such was the case. As it is, however, the petitioner does not even assert the return as a fact, only offering it as a possibility since no contrary proof had been adduced. Given the foregoing perspective, the second issue of whether or not petitioner is estopped from objecting to the use of Corrals deposition as part of respondents evidence is really n o

longer determinative of the outcome of this case, and need not detain us long. Suffice it to state that, as a rule, the inadmissibility of testimony taken by deposition is anchored on the ground that such testimony is hearsay, i.e., the party against whom it is offered has no opportunity to cross-examine the deponent at the time his testimony is offered. But as jurisprudence teaches, it matters not that opportunity for cross-examination was afforded during the taking of the deposition; for normally, the opportunity for cross-examination must be accorded a party at the time the testimonial evidence is actually presented against him during the trial or hearing.16 In fine, the act of cross-examining the deponent during the taking of the deposition cannot, without more, be considered a waiver of the right to object to its admissibility as evidence in the trial proper. In participating, therefore, in the taking of the deposition, but objecting to its admissibility in court as evidence, petitioner did not assume inconsistent positions. He is not, thus, estopped from challenging the admissibility of the deposition just because he participated in the taking thereof. Lest it be overlooked, Section 29, Rule 23 of the Rules of Court, no less, lends support to the conclusion just made. In gist, it provides that, while errors and irregularities in depositions as to notice, qualifications of the officer conducting the deposition, and manner of taking the deposition are deemed waived if not objected to before or during the taking of the deposition, objections to the competency of a witness or the competency, relevancy, or materiality of testimony may be made for the first time at the trial and need not be made at the time of the taking of the deposition, unless they could be obviated at that point. 17 While perhaps a bit anti-climactic to state at this point, certiorari will not lie against an order admitting or rejecting a deposition in evidence, the remedy being an appeal from the final judgment.18 For this singular reason alone, the appellate court could have had already dismissed herein petitioners invocation of its certiorari jurisdiction. WHEREFORE, the instant petition is hereby DENIED. Costs against petitioner. SO ORDERED. CANCIO C. GARCIA Associate Justice WE CONCUR: