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G.R. No.

L-40527 June 30, 1976

PEOPLE OF THE PHILIPPINES, petitioner,

vs.

HERMOGENES MARIANO and HON. AMBROSIO M. GERALDEZ, in his capacity as Presiding Judge of the Court of
First Instance of Bulacan, Branch V, respondents.

Solicitor General Estelito P. Mendoza, Assistant Solicitor General Nathanael P. Pano, Jr., Solicitor Oswaldo D.
Agcaoili, Provincial P.C. Kliachko and Assistant Provincial Fiscal C. G. Perfecto for petitioner.

Eustaquio Evangelista for respondent Hermogenes Mariano.

MUOZ PALMA, J:

This petition for certiorari postulates a ruling on the question of whether or not civil courts and military
commissions exercise concurrent jurisdiction over the offense of estafa of goods valued at not more than six
thousand pesos and allegedly committed by a civilian. 1

On December 18, 1974, the office of the Provincial Fiscal of Bulacan filed an Information (Criminal Case No.
SM-649) accusing private respondent herein Hermogenes Mariano of estafa alleged to have been committed
as follows:

That on or about and during the period from May 11 and June 8, 1971, in the municipality of San Jose del
Monte, province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the said accused
Hermogenes Mariano, being then appointed as Liaison Officer by the then incumbent Municipal Mayor,
Constantino Nolasco, acting for and in behalf of the municipality of San Jose del Monte, Bulacan and authorized
to receive and be receipted for US excess property of USAID/NEC for the use and benefit of said municipality,
received from the said USAID/NEC the following items, to wit:

150 ft. electric cable valued

at $15 or P100.50
525 ft. cable power valued at

$577-50 or P3,859.35

250 ft. electric cable at

$125.00 or P837.50

with a total value of $717.50 or P4,797.35, involving the duty of making delivery of said items to the said
Municipal Mayor, but the said accused Hermogenes Mariano once in possession of the said items and far from
complying with his aforesaid obligation and in spite of repeated demands, did then and there wilfully,
unlawfully and feloniously, with grave abuse of confidence and with deceit, misappropriate, misapply and
convert to his own personal use and benefit the said items valued at $717.50 or P4,797.35, belonging to the
said USAID/NEC, to the damage and prejudice of the said owner in the said sum of $717,50 or P4,797.35. (pp.
rollo).

On February 19, 1975, Hermogenes Mariano thru his counsel Filed a motion to quash the Information on the
following grounds:

1. That the court trying the cause has no jurisdiction of the offense charged or of the person of the
defendant;

2. That the criminal action or liability has been extinguished;

3. That it contains averments which , if true, would constitute a legal excuse or justification. (p. 19, rollo)

In his motion to quash, Mariano claimed that the items which were the subject matter of the Information
against him were the same items for which Mayor Constantino A. Nolasco of San Jose del Monte, province of
Bulacan, was indicted before a Military Commission under a charge of malversation of public property, and for
which Mayor Nolasco had been found guilty and sentenced to imprisonment at hard labor for ten (10) years
and one (1) day to fourteen (14) years and eight (8) months with perpetual disqualification plus a fine of
P19,646.15 (see pp. 23-24, rollo), and that inasmuch as the case against Mayor Nolasco had already been
decided by the Military Tribunal, the Court of First Instance of Bulacan had lost jurisdiction over the case
against him. (pp. 19-20, Ibid)
On March 14, 1975 respondent Judge issued an Order granting the motion to quash on the ground of lack of
jurisdiction reasoning as follows:

Considering that the Military Commission had already taken cognizance of the malversation case against
Mayor Nolasco involving the same subject matter in its concurrent jurisdiction with this Court, the case
involving the subject properties had already been heard and decided by a competent tribunal, the Military
Commission, and as such this Court is without jurisdiction to pass upon anew the same subject matter. (pp.
30-31, rollo, emphasis supplied)

Respondent Judge did not rule on the other grounds invoked in the motion to quash.

The people now seeks a review of the aforesaid Order and presents the sole issue of jurisdiction of respondent
Court over the estafa case filed against respondent Mariano.

"Jurisdiction" is the basic foundation of judicial proceedings. 2 The word "jurisdiction" is derived from two Latin
words "juris" and "dico" "I speak by the law" which means fundamentally the power or capacity given by
the law to a court or tribunal to entertain, hear, and determine certain controversies. 3 Bouvier's own
definition of the term "jurisdiction" has found judicial acceptance, to wit: "Jurisdiction is the right of a Judge
to pronounce a sentence of the law in a case or issue before him, acquired through due process of law;" it is
"the authority by which judicial officers take cognizance of and decide cases." 4

In Herrera vs. Barretto, September 10, 1913, 25 Phil. 245, 251, this Court, in the words of Justice Moreland,
invoking American jurisprudence, defined "jurisdiction" simply as the authority to hear and determine a cause
the right to act in a case. "Jurisdiction" has also been aptly described as the right to put the wheels of justice
in notion and to proceed to the final determination of a cause upon the pleadings and evidence. 5

"Criminal Jurisdiction" is necessarily the authority to hear and try a particular offense and impose the
punishment for it. 6

The conferment of jurisdiction upon courts or judicial tribunals is derived exclusively from the constitution and
statutes of the forum. Thus, the question of jurisdiction of respondent Court of First Instance over the case
filed before it is to be resolved on the basis of the law or statute providing for or defining its jurisdiction. That,
We find in the Judiciary Act of 1948 where in its Section 44 (f) it is provided:

SEC. 44. Original jurisdiction. Courts of First Instance shall have original jurisdiction:
xxx xxx xxx

(f) In all criminal cases in which the penalty provided by law is imprisonment for more than six months,
or a fine of more than two hundred pesos, (emphasis supplied)

The offense of estafa charged against respondent Mariano is penalized with arresto mayor in its maximum
period to prision correccional in its minimum period, or imprisonment from four (4) months and one (1) day
to two (2) years and four (4) months. 7 By reason of the penalty imposed which exceeds six (6) months
imprisonment, the offense alleged to have been committed by the accused, now respondent, Mariano, falls
under the original jurisdiction of courts of first instance.

The above of course is not disputed by respondent Judge; what he claims in his Order is that his court exercises
concurrent jurisdiction with the military commission and because the latter tribunal was the first to take
cognizance of the subject matter, respondent court lost jurisdiction over it .That statement of respondent
court is incorrect.

In People vs. Fontanilla, this Court speaking through then Justice now Chief Justice Fred Ruiz Castro,
categorically reiterated the settled rule that the jurisdiction of a court is determined by the statute in force at
the time of the commencement of the action. 8 In the case at bar, it is rightly contended by the Solicitor
General that at the time Criminal Case No. SM-649 was filed with the Court of First Instance of Bulacan, that
was December 18, 1974, the law in force vesting jurisdiction upon said court was the Judiciary Act of 1948, the
particular provision of which was not affected one way or the other by any Presidential issuances under Martial
Law. General Order No. 49 dated October 4, 1974, which repeals General Order No. 12 and the latter's
amendments and related General Orders inconsistent with the former, redefines the jurisdiction of military
tribunals over certain offense, and estafa and malversation are not among those enumerated therein. 9 In
other words the Military Commission is not vested with jurisdiction over the crime of estafa. 9*

Respondent court therefore gravely erred when it ruled that it lost jurisdiction over the estafa case against
respondent Mariano with the filing of the malversation charge against Mayor Nolasco before the Military
Commission. Estafa and malversation are two separate and distinct offenses and in the case now before Us
the accused in one is different from the accused in the other. But more fundamental is the fact that We do not
have here a situation involving two tribunals vested with concurrent jurisdiction over a particular crime so as
to apply the rule that the court or tribunal which first takes cognizance of the case acquires jurisdiction thereof
exclusive of the other. 10 The Military Commission as stated earlier is without power or authority to hear and
determine the particular offense charged against respondent Mariano, hence, there is no concurrent
jurisdiction between it and respondent court to speak of. Estafa as described in the Information filed in
Criminal Case No. SM-649 falls within the sole exclusive jurisdiction of civil courts.
PREMISES CONSIDERED, the appealed Order dated March 14, 1975, is set aside and respondent Judge is
directed to proceed with the trial of Criminal Case No. SM- 649 without further delay.

SO ORDERED.

G.R. No. L-28782 September 12, 1974

AUYONG HIAN (HONG WHUA HANG), petitioner,

vs.

COURT OF TAX APPEALS, COLLECTOR OF CUSTOMS, COMMISSIONER OF CUSTOMS, CONSOLIDATED INDUSTRIES


OF THE PHILIPPINES, INC. (CTIP), and LUZON STEVEDORING CORPORATIONS, respondents.

Pedro C. Geling for petitioner.

Francisco T. Koh for respondent Consolidated Industries of the Philippines.

Pelaez, Jalandoni & Jamir for respondent Luzon Stevedoring Corp.

Office of the Solicitor General for Collector of Customs, etc.

ZALDIVAR, J.:p

This is the fifth time that a case involving the 600 hogsheads of Virginia leaf tobacco is before this Court. The
first case was the case of "Cesar Climaco, et al., vs. Hon. Manuel Barcelona," G.R. No. L-19597, July 31, 19621
, hereinafter referred to as the Barcelona case; the second, the case of Collector of Customs, et al., vs. Hon.
Francisco Arca, et al.," G.R. No. L-21839, July 17, 19642 , hereinafter referred to as the Arca case; the third,
the case of "Auyong Hian vs. Judge Gaudencio Cloribel, et al.," G.R. No.

L-24704, July 10, 19673 hereinafter referred to as the Cloribel case; and the fourth, "Auyong Hian vs. Court of
Tax Appeals, et al.," G.R. No. L-25181, January 11, 19674 , which was an appeal from the resolution of the
Court of Tax Appeals in CTA Case No. 1560, dismissing Auyong Hian's petition for review of the decision of the
Commissioner of Customs that affirmed the decision of the Collector of Customs upon the ground of lack of
jurisdiction, and which will be hereinafter referred to as the "First CTA Case".
The instant case, the fifth, is a petition for review of the decision of the Court of Tax Appeals in its CTA Case
No. 1560, dated January 31, 1968, finding without merit petitioner's appeal from the decision of the
Commissioner of Customs that affirmed the decision of the Collector of Customs of Manila which ordered the
seizure and forfeiture of the 600 hogsheads of Virginia Leaf tobacco imported by petitioner from the United
States. The instant case may well be called the "Second CTA Case".

The antecedent facts, and the proceedings that spawned the instant case, briefly stated, are as follows:

On June 29, 1953, the import Control Commission approved petitioner Auyong Hian's application for four no
dollar remittance licenses to import Virginia leaf tobacco with an aggregate value of two million dollars, of
which approval petitioner was advised on the following day, June 30, 1953-the day when the effectivity of the
Import Control Law (Republic Act No. 650) expired. In October, 1961, the Office of the President approved the
use of the aforesaid licenses, and petitioner paid the license fees on November 2, 1961. On December 30,
1961 600 hogsheads of Virginia leaf tobacco arrived in the Port of Manila aboard the "SS Fernstate", consigned
to petitioner.

Inasmuch as the Collector of Customs in Manila, apparently doubting the legality of the importation, refused
to release the shipment of said Virginia leaf tobacco, petitioner filed in the Court of First Instance of Manila an
action for mandamus (Civil Case No. 49639), to compel the Collector of Customs and the Commissioner of
Customs to release the tobacco to petitioner. On March 19, 1962 Judge Barcelona issued an order to release
the tobacco shipment to petitioner. The Collector of Customs and the Commissioner of Customs then filed
with the Supreme Court a petition for certiorari to annul the order of release. This was the Barcelona case. On
July 31, 1962 this Court, in its decision, ruled that the Court of First Instance of Manila had no jurisdiction to
issue the (questioned) order releasing the tobacco shipment; and this Court incidentally declared that the
importation of the tobacco, notwithstanding the alleged approval of the importation by the President of the
Philippines, was illegal upon the ground that the importation was made long after the expiration of the
effectivity of the Import Control Law, and that the importation contravened the government policy as declared
in Republic Acts Nos. 698 and 1194.5

On November 8, 1962, the Collector of Customs instituted seizure proceedings against the 600 hogsheads of
tobacco, and issued a warrant of seizure and detention, in Seizure Identification Case No. 6669. On April 23,
1960 the Collector of Customs rendered a decision declaring the tobacco forfeited to the government, and
ordering the sale thereof at public auction on June 10, 1963. Petitioner received copy of the decision on May
7, 1963. From this decision petitioner filed, on May 21, 1963, his notice of appeal to the Commissioner of
Customs. On December 7, 1964, the Commissioner of Customs affirmed the decision of the. Collector of
Customs.

On January 8, 1965 petitioner filed in the Court of Tax Appeals, in CTA Case No. 1560, a petition for review by
way of appeal from the decision of the Commissioner of Customs. On June 22, 1965 the Court of Tax Appeals
dismissed the petition upon the ground that it had no jurisdiction to entertain the appeal because the Supreme
Court had already decided in the Barcelona and Area cases that the importation in question was illegal. From
this resolution Auyong Hian appealed to the Supreme Court. This was the "First CTA Case" that We have earlier
adverted to, This Court, on January 11, 19676 remanded the case to the Court of Tax Appeals for further
proceedings, and for decision, on matters that this Court had refrained from deciding.

After the case has been remanded to the Court of Tax Appeals, petitioner filed in said court an amended
petition for review to include the Consolidated Tobacco Industries of the Philippines (hereinafter referred to
as CTIP) and the Luzon Stevedoring Corporation, as parties-respondents.

After hearing, respondent Court of Tax Appeals, in its decision dated January 31, 1968, found the appeal to be
without merit and dismissed the same, with costs against petitioner. This is the decision that is now sought to
be reviewed in the instant petition for review before this Court.

While this case was pending decision, the Solicitor General, on February 22, 1972, filed a "motion for leave",
praying that pending final determination of the case, respondents Collector of Customs and Commissioner of
Customs be authorized to refund to the CTIP the storage charges of the tobacco in question pursuant to
Section 2605-c of the Tariff and Customs Code. In a resolution dated February 28, 1972 this Court deferred
action on the petition of the Solicitor General until the case is considered on the merits.

In the present appeal, petitioner Auyong Hian assigns twelve (12) errors allegedly committed by the Court of
Tax Appeals in its decision of January 31, 1968 dismissing the appeal from the decision of the Commissioner
of Customs. The points raised in the assignment of errors boil down to the question of whether or not the
Court of Tax Appeals had correctly sustained the decision of the Commissioner of Customs which affirmed the
decision of the Collector of Customs in connection with the seizure, forfeiture and the sale of the 600
hogsheads of Virginia leaf tobacco that were imported into the country at the instance of petitioner Auyong
Hian. It must be recalled that in the Barcelona and Arca cases, supra, this Court had categorically held that the
importation of the 600 hogsheads of Virginia leaf tobacco was illegal. It was for this reason that the Court of
Tax Appeals, in its resolution of June 22, 1965, in CTA Case No. 1560 (First CTA Case), dismissed the appeal of
Auyong Hian from the decision of the Commissioner of Customs. But this Court, in the first CTA Case held that
the Court of Tax Appeals, had jurisdiction to pass upon the appeal of Auyong Hian from the decision of the
Commissioner of Customs because the appeal involved matters related to the administrative proceedings in
connection with the seizure, forfeiture and sale of the tobacco in question. Here is what this Court said:

... It appears to Us that the Court of Tax Appeals had overlooked the fact that the appeal of Auyong Hian from
the decision of the Commissioner of Customs had raised not only the question of the legality of the importation
but also other matters which called for a ruling by the Court of Tax Appeals in the exercise of its appellate
jurisdiction especially the question of whether the tobacco thus imported were goods the importation of
which was relatively prohibited or absolutely prohibited, and also the question regarding the disposal of the
tobacco that was thus seized. The declaration by this Court, in the Barcelona and Arca cases, supra, that the
importation of the tobacco in question was illegal was not intended to stop the course of the administrative
proceedings in relation to the importation of said tobacco. Let it be noted that when the Barcelona case was
decided on July 31, 1962 the seizure proceedings against the 600 hogsheads of tobacco in question had not
yet been instituted by the Collector of Customs. It was not until November 8, 1962 when Seizure Identification
No. 6669 was instituted. ...

And so this Court, in the First CTA case, declared the Court of Tax Appeals as possessed of jurisdiction to pass
upon the questions raised by Auyong Hian in his appeal from the decision of the Commissioner of Customs
regarding administrative matters relating to the seizure proceedings of the 600 hogsheads of tobacco in
question.

(1) Auyong Hian claims that he was not given a chance to be heard in the seizure proceedings. He claims that
he filed a motion for postponement of the hearing scheduled for November 26, 1962 based on some valid
reasons, that said motion for postponement was not acted upon by the hearing officer, or if it was acted upon
at all the hearing officer did not notify him of the action taken on said motion, and that he was not notified
about the subsequent hearing because he was declared in default by the hearing officer. Auyong Hian
maintains that there can not be a declaration of default in purely administrative proceedings. In short, it is the
contention of Auyong Hian that in the seizure proceedings of the 600 hogsheads of tobacco in question he
was not afforded the benefits of due process of law.

It is a settled doctrine that due process is applicable to administrative proceedings (Asprec vs. Itchon, et al., L-
21685, April 30, 1966, 16 SCRA 921, 925; Cornejo vs. Gabriel, 41 Phil. 188, 193); that the essence of due process
is the requirement of notice and hearing (Algabre vs. Court of Appeals, L-24458-64, July 31, 1969, 26 SCRA
1130, 1140); that the presence of a party at a trial is not always of the essence of due process, and all that due
process requires is an opportunity to be heard (Asprec vs. Itchon, et al., supra).

In this connection, the Court of Tax Appeals made the following findings:

The records show that petitioner was given a notice of hearing in Seizure Identification No. 6669 (re the 600
hogsheads of Virginia leaf tobacco); that on the date of hearing petitioner filed a motion for indefinite
postponement, which was not acted upon or resolved by the proper Customs officials; that upon failure of
petitioner to appear on the date of hearing, the hearing officer declared petitioner in default; and that the
hearing was conducted thereafter in the absence of petitioner. (Decision CTA Case No. 1560; Record, pp. 32-
33).

Petitioner's having filed a motion for postponement, even if the motion is not entirely groundless, confers on
him no right either to assume that the motion for postponement would be granted or to be absent at, and shy
away from, the hearing. Petitioner was consequently guilty of carelessness and neglect when he failed to
appear at the trial. He cannot rightfully claim that the hearing officer was guilty of abuse of discretion in
refusing to grant the postponement (Sarreal vs. Hon. Tan, et al., 92 Phil. 689, 692). And after a party has been
declared in default, he is not entitled to notice of the order placing him in default; neither is he entitled to
notice of proceedings subsequent to default (Lim Toco v. Go Fay, 80 Phil. 166, 168). Petitioner, therefore, has
no cause to complain that he was not afforded a chance to be heard or that he was denied his day in court.

The contention of petitioner that in administrative proceedings a party can not be declared in default is
untenable. If a respondent in an administrative proceeding cannot be declared in default when he fails to
appear, as required, the continuance of an administrative proceeding would be dependent on the will and
caprice of said party to the proceedings, and would render helpless the officer or board conducting an
administrative proceeding. We hold that if the party duly summoned, or duly notified, to appear at an
administrative investigation, refuses to appear, he may be declared in default, and the investigation may
proceed without his presence.

Petitioner's first assignment of error is not only not sustained by the facts. It is furthermore negated by the
pronouncements of this Court which has already passed directly on the issue of whether or not petitioner
Auyong Hian was deprived of due process of law in the seizure proceedings. In the Arca case, respondent
therein claimed that the decision in the seizure proceedings was arbitrary because the hearing officer and the
Collector of Customs declared Auyong Hian in default without notifying him of the action taken on his motion
to postpone the seizure proceedings.

This Court rejected the contention saying:

The record shows that Auyong Hian received on November 21, 1963 notice of hearing on the seizure
proceedings scheduled for November 26, 1962. It is true that he filed a motion to postpone the hearing, but it
was for an indefinite period of time and only in the morning of the date of hearing. He did not bother to find
out what action the Collector of Customs would take on his motion. Continuation of the seizure proceedings
was made on December 6, and December 10, 1962, yet Auyong Hian did not take the trouble to find out about
its status. The facts, therefore, show that Auyong Hian was not deprived of due process of law, but that he is
guilty of abandonment or gross negligence in the protection of his rights, for which he alone is to blame.

This pronouncement, though found only in the opinion, cannot be accurately called, as contended by
petitioner, an obiter dictum just because it was not incorporated in the dispositive portion of the decision. This
Court has already remarked that the dispositive part does not always constitute a judgment and that the
judicial pronouncements in the body of the decision must be considered. (Millare, et al. vs. Millare, et al., 106
Phil. 298-299.) An obiter dictum has been defined as an opinion expressed by a court upon some question of
law which is not necessary to the decision of the case before it (Bouvier's Law Dictionary, third revision, Vol. I,
p. 863). Although the question of whether petitioner Auyong Hian was deprived of due process in the seizure
proceedings was not the precise issue in the Arca case, for this Court itself said that the legal question posed
in that case was:
Who has a better right to the tobacco in question, petitioner Collector of Customs who has ordered the seizure
and declared the forfeiture thereof as a result of Manila Seizure Identification No. 6669, or respondent Tomas
Cloma in whose favor a writ of attachment was issued by the Court of First Instance of Manila covering said
shipment in Civil Case No. 53874, brought by Cloma against Auyong Hian for services rendered to the latter?
(Collector of Customs v. Area, L-21389, July 17, 1964, 11 SCRA 529, 534-535).

Yet, the pronouncement made by this Court upon said question cannot be said to be totally extraneous, and
was not necessary, to the adjudication of the case before it, for to arrive at the conclusion that the Collector
of Customs had a better right, by virtue of the seizure proceedings, that had already been terminated before
Cloma's action was brought, the validity and legality of the seizure proceedings, and necessarily the issue of
the deprivation of due process, had to be passed upon. With respect to a court of last resort, all that is needed
to render its decision authoritative is that there was an application of the judicial mind to the precise question
adjudged, and that the point was investigated with care and considered in its fullest extent (Alexander v.
Worthington, 5 Md. 488, cited in Bouvier's Law Dictionary, third revision, Vol. 1, p. 864). A perusal of the
decision in the Arca case shows that the precise question of deprivation of due process was extensively and
explicitly discussed with a view to settle it, and consequently the pronouncement on said point cannot be
considered a dictum.

2. Petitioner anchors the alleged invalidity of the seizure proceedings on his having been deprived his day in
court. This basis has been shown to be untenable.

Petitioner, however, tried to emasculate respondents' argument by asserting that the declaration of the
illegality of the tobacco importation was incidentally made; hence it has no binding force.

An analysis of the Barcelona case shows that even if the pronouncement therein made regarding the illegality
of the importation was incidentally made, it did not and could not mean that the pronouncement was
extraneous to the subject matter and that it was, therefore, unauthoritative.

The Barcelona case was a petition for certiorari to set aside a writ of preliminary mandatory injunction. issued
by the Hon. Judge Manuel P. Bareelona in Civil Case No. 49639 of the Court of First Instance of Manila, ordering
the respondents therein, Cesar Climaco and Teotimo Roja, to allow entry of the 600 hogsheads of Virginia leaf
tobacco imported under authority of licenses Nos. 17166, 17169, 17196, and 17199 issued by the defunct
Import Control Commission on May 8, 1953 under the provisions of Republic Act No. 650. Respondents therein
opposed the issuance of the writ of preliminary injunction, alleging among other things that the Court of First
Instance had no jurisdiction to order the release of the importation on the ground that the importer Auyong
Hian was not entitled as a matter of right and equity to import the tobacco, for the licenses, under which the
importation was made, were issued under a law that ceased to exist eight years before the importation, and
that the importation was a violation of Rep. Act No. 1194 at the time of importation; and that the imported
tobacco, being under customs custody, could not be ordered released by the Court of First Instance which had
no jurisdiction to review the actuations of customs authorities in any case involving the seizure, detention or
release of any property.

One of the reasons given by the respondent court therein for granting the writ of preliminary mandatory
injunction was that the importation was legal on the ground that the President had issued the licenses in
accordance with the supposed opinions of the Secretary of Justice Nos. 32 and 145, series of 1961.

Although the principal question therein was the court's jurisdiction and the primary relief prayed for by
petitioners was to set aside the preliminary mandatory injunction dated March 20, 1962, the resolution
thereof hinged on another question, which was, to quote the Court:

The question that is, therefore squarely presented for the decision of this Court is whether, under the facts
and circumstances above indicated, the petitioner has the clear legal right to make the importation in question
and the respondents the clear legal duty to allow entry and release of said importation.

The above question in turn depended on whether the importation was legally made.

This Court in the dispositive portion of its decision in said case ruled for the reasons therein given that:

... We are constrained to declare, as we hereby declare, that the importation in question has been illegally
made ... And We, therefore, hereby grant the petition and set aside the order of the court below on March 19,
1962 and the writ of preliminary injunction issued in accordance therewith ....

Said ruling regarding the illegality of the importation, contained in the dispositive portion cannot be said, as
claimed by petitioner, unauthoritative and not binding. Said declaration of illegality was reiterated in the Arca
case thus:

There is no question that the importation of the tobacco leaf in question was illegal, having been made in clear
violation of the policy contained in Republic Acts Nos. 698 and 1194. (Collector of Customs v. Arca, L-21389,
July 17, 1964, 11 SCRA 529, 535.)

3. Petitioner's insistence that the tobacco importation was valid and legal together with the grounds
asserted to sustain the same is not tenable. This Court already had occasion to examine in the Barcelona case
the import licenses claimed to be valid by petitioner. To the petition in said case were appended copies of the
licenses and the receipt evidencing payment of the fees thereon in November, 1961. The alleged reason that
said licenses were valid because the President had issued them in accordance with the supposed opinions of
the Secretary of Justice No. 32 and 145, series of 1961 was already passed upon. This Court said that:

An examination of the licenses shows that the same were approved by the Import Control Commission on June
29, 1953. The following statement is contained in each of the licenses:

This license is valid from date of issue until fully consummated, provided that this license must be presented
to an Authorized Agent (Negotiating Bank) of the Central Bank, and Bank Credit established within thirty (30)
days after date of release. It is not transferable/assignable without authority from the Import Control
Commission and is subject to revocation for cause. Commodities covered by this license must be shipped from
the country of origin before the expiry date of the license, and are subject to Sec. 13 of Republic Act No. 650.

The following provision of Republic Act No. 650 is to be noted:

Sec. 8. Unless extended in accordance with the rules and regulations, import licenses issued under this Act and
which are not used within thirty days after the issue by the opening of a letter of credit or a similar transaction
shall be null and void. Import licenses are non-transferable.

The petitioner has not shown that steps were ever taken to open the corresponding letters of credit amounting
to $500,000 to cover the payment of the Virginia leaf tobacco to he imported, as required by the above-quoted
provision of the law. Neither is it shown that immediately, or within a reasonable time after the approval of
the licenses and their issuance, steps were taken to order the tobacco to be shipped to the Philippines.
Certainly this was not done because the licenses were not fully completed until November 2, 1961, when the
corresponding fees chargeable on the licenses were paid to the Office of the President. (Climaco vs. Barcelona,
L-19597, July 31, 1962, 5 SCRA 850-851.)

and after discussing why the decision in Commissioner of Customs v. Auyong Hian, G.R. No. L-11719, April 29,
1959 could not be applied to the said case, this Court concluded that:

The importation [of the tobacco] in question, therefore, is a gross violation of the policy contained in Republic
Acts Nos. 698 and 1194, limiting the Virginia leaf tobacco importation only to such amounts as could not be
met with by the local production of Virginia leaf tobacco, hence clearly illegal.

The supposed approval of the licenses by the President has been alleged as a ground for the validity of the
importation. The President may not extend the life of licenses issued under Republic Act No. 650; he cannot
make the illegal importation valid; he has no legal authority to do so and his act would be clearly violative of
the express provisions of Republic Act 1194. (Climaco v. Bareelona, L-19597, July 31, 1962, 5 SCRA 846, 848,
850, 853.)

In the Arca case, this Court again said:

There is no question that the importation was illegal having been made in clear violation of the policy contained
in Republic Acts Nos. 698 and 1194. To this effect is the decision of this Court in Climaco vs. Judge Barcelona,
et al., G.R. No. L-19597, July 31, 1962. (Collector of Customs vs. Arca, No. L-21389, July 17, 1964, 11 SCRA 529,
535.)

Petitioner's claim that the Government is estopped to deny the validity of the license cannot be seriously
defended. Time and again, this Court has ruled that the doctrine of estoppel is not applicable against the
Government suing in its capacity as sovereign or asserting governmental rights; the Government is never
estopped by mistake or errors on the part of its agents. (Republic v. Go Bon Lee, L-11499, April 29, 1961, 1
SCRA 1166, 1170; Republic vs. Philippine Rabbit Bus Lines, Inc., L-26862, March 30, 1970, 32 SCRA 211, 218;
Luciano vs. Estrella, L-31622, August 31, 1970, 34 SCRA 769, 776.) Moreover, estoppel cannot give validity to
an act that is prohibited by law or is against public policy. (Republic v. Go Bon Lee, supra.)

The tobacco importation in question was, therefore, subject to seizure and forfeiture in accordance with
Section 2530 of the Tariff and Customs Code and the Collector of Customs had the power to order the seizure
in accordance with the provisions of Section 2205 of the Tariff and Customs Code, as has already been ruled
by this Court in the Arca case.

But the Court of Tax Appeals, insists petitioner, should have decided whether the importation was absolutely
prohibited or merely prohibited, on the ground that in this Court's decision in the Court of Tax Appeals case,
it was said that "the question of whether the tobacco thus imported were goods the importation of which was
relatively prohibited or absolutely prohibited" "called for a ruling of the Court of Tax Appeals in the exercise of
its appellate jurisdiction." (19 SCRA 10, 22). Petitioner also claims that the respondent Court of Tax Appeals
erred when it did not hold that the importation was at worst, only relatively prohibited. In the decision of the
Court of Tax Appeals sought to be reviewed, it appears that the Tax Court discussed the classification of articles
subject to forfeiture under the Customs Law, and the rights of the importer to the delivery of the imported
article under Sections 2301 and 2307 of the same Code, and it concluded that the failure to declare the tobacco
imported as merely qualifiedly prohibited did not affect the substantive rights of petitioner. Said the Tax Court:

There is no evidence of record to show that petitioner herein exercised or attempted to exercise any of the
rights afforded an importer under Sections 2301 and 2307 of the Tariff and Customs Code. ... At any rate, even
if he sought the release of said tobacco by filing a bond for its appraised value or by paying the redemption
price, it is evident that the same could not have been granted because the delivery of said tobacco to him
would be contrary to law. ... It is quite plain that the failure of respondents to declare said tobacco as an article
which merely qualifiedly prohibited has not adversely affected the substantive right of petitioner. (Decision-
CTA Case No. 1560, Record, pp. 47-48.)

The Court of Tax Appeals did not commit a reversible error on this point. There is no question, as this Court
has declared, that the importation made in December, 1961, of tobacco leaf in question was illegal. The same
was made in clear violation of the policy enunciated in Republic Act No. 698, approved May 9, 1952 limiting
the importation of foreign leaf tobacco, and also of its amendatory Act, Republic Act No. 1194, approved
August 25, 1954. These' statutes not only limit the importation of Virginia leaf tobacco but also provide that
the "Virginia-type leaf tobacco authorized to be imported therein shall be allocated and distributed by the
Monetary Board of the Central Bank among legitimate manufacturers of Virginia-type cigarettes; that the
licenses for such importation shall be issued ... by the Central Bank ... that the leaf-tobacco imported without
the necessary license issued under said Act shall be forfeited to the Government" (Sec. 2). Said importation is
also subject to forfeiture under Sec. 2530 of the Tariff and Customs Code.

The substantive right of petitioner is not affected, as declared by the Tax Court, by the failure to declare
whether the importation was absolutely or qualifiedly prohibited.

Although the illegally imported subject tobacco may not be absolutely prohibited, but only qualifiedly
prohibited under Sec. 102 (K) of the Tariff and Customs Code, for it may be imported subject to certain
conditions, it is nonetheless prohibited and is a contraband (Comm. of Customs vs. CTA & Dichoco, L-33471,
Jan. 31, 1972), and the legal effects of the importation of qualifiedly prohibited articles are the same as those
of absolutely prohibited articles (Geotina vs. Court of Tax Appeals, No. L-33500, August 30, 1971, 40 SCRA 362,
379, 383; Comm. of Customs vs. CTA & Dichoco, supra).

Under Sec. 2301 of the Tariff and Customs Code, upon making any seizure, the Collector of Customs shall issue
a warrant for the detention of property; and if the owner or importer desires to secure the release of the
property for legitimate use, the Collector may surrender it upon the filing of a sufficient bond, in an amount
to be fixed by him, conditioned for the payment of the appraised value of the article and/or any fine, expenses
and costs which may be adjudged in the case, provided, the articles the importation of which is prohibited by
law shall not be released under bond. Pursuant, thereto, the importer of the subject tobacco, the importation
of which is prohibited by law, has no right that the tobacco be released to him even if he puts up a bond to be
determined by the Collector of Customs.

Sec. 2307 of the Tariff and Customs Code, which authorizes in a seizure case the settlement of the case by
payment of fine or the redemption of forfeited property, also provides that:

Redemption of forfeited property shall not be allowed in any case where the importation is absolutely
prohibited or where the surrender of the property to the persons offering to redeem the same would be
contrary to law. (Emphasis supplied.)
Petitioner Auyong Hian would, accordingly, not even be entitled to redeem, even if he wanted to, the forfeited
tobacco, for the surrender to him of said tobacco would be contrary to law, because petitioner could not really
be legally entitled to import it inasmuch as he was not a legitimate manufacturer of Virginia-type cigarettes,
among whom alone shall be allocated and distributed by the Monetary Board of the Central Bank the Virginia-
type leaf tobacco authorized to be imported. (Sec. 2, Rep. Act No. 1194.)

What has been said above would have applied even if petitioner had attempted to exercise the right of
redemption under Sec. 2307 of the Tariff and Customs Code. The fact, however, as found by the Court of Tax
Appeals is

There is no evidence or record to show that petitioner herein exercised or attempted to exercise any of the
rights afforded an importer under Section 2307 of the Tariff and Customs Code. All that he sought was the
release of tobacco in question upon payment of the duties and taxes due thereon because of his insistence
that the importation was made in accordance with law.

4. What has been said in the third assignment of error suffices to dispose of the fourth and fifth assignments.
Therein it was shown that pursuant to the provisions of Republic Acts Nos. 650 and 1194, petitioner was
disqualified to import the Virginia-leaf tobacco, he not being a legitimate manufacturer of this type of cigarette,
and under the provisions of Secs. 2301 and 2307 of the Tariff and Customs Code, the tobacco could not be
delivered to him, even if he had made attempts to put up a bond. Neither could the tobacco be legally delivered
to him even if he had attempted to redeem it. Hence, the alleged error committed by the Court of Tax Appeals
in finding that petitioner did not attempt to exercise any of the rights afforded an importer under Section 2307
of the Tariff and Customs Code, even if sustained, would not affect the outcome of the instant petition.

5. Petitioner's contention that the sale to the CTIP was invalid cannot be upheld.

It has been shown in the previous discussion that the decision of the Collector of Customs in ordering the
forfeiture and sale of the subject tobacco was correct and legal. Seized property, other than contraband,
pursuant to Sections 2601 and 2602 of the Tariff and Customs Code, shall be sold, or otherwise disposed of,
upon the order of the Collector of the port where the property in question is found. The property shall be sold
at public auction after ten days notice conspicuously posted at the port and such other advertisements as may
appear to the Collector to be advisable in the particular case (Sec. 2603). If the article seized, however, is
perishable, the Collector may proceed to advertise and sell the same at auction upon notice as he shall deem
to be reasonable (Sec. 2607).

Implementing his decision dated May 9, 1963, to have the seized tobacco sold to buyers who could meet
certain qualifications and conditions, and after having created a Committee to implement the decision, the
Collector of Customs issued a notice of sale (Exhibit 6 Customs), setting the public auction sale "at June 10,
1963 at 9:00 A.M. and every morning thereafter until terminated." which notice of sale was given the requisite
publication at least ten days before the auction sale (before June 10, 1963) in accordance with Section 2603
of the Tariff and Customs Code. The sale, therefore, could not have been invalid, for lack of public notice.

Two prospective bidders the respondent CTIP and the Philippine Associated Resources registered with
the Special Bidding Committee but only the CTIP was found to be a qualified bidder.

On June 10, 1963, the date set for the public auction sale, the Collector of Customs was served the writ of
preliminary injunction issued by Judge Francisco Arca in Civil Case No. 53824 directing the former to desist
from holding the auction sale. This writ was served upon him at 8:55 A.M. (pp. 270-272, 329, 360 t.s.n., Brief
for Respondent CTIP, p. 48), but before the writ was served, the CTIP had submitted its bid at around 8:00
A.M. (Ibid., p. 48), and these facts were not impugned by petitioner (See Petitioner's Reply Brief, pp. 26-27).
At any rate, even if the bid were submitted after the Collector had been served with the writ of preliminary
injunction, his act would not constitute a violation of the writ for the submission and reception of a bid could
not constitute a consummated sale. But on June 17, 1963 the Supreme Court issued a preliminary injunction
in L-21389 (Arca case) prohibiting Judge Arca from executing or enforcing the writ of preliminary injunction
issued by him against the petitioner in Civil Case No. 53874 (11 SCRA 529, 532-533).

On June 26, 1963, the bid of the CTIP was finally approved and the tobacco was awarded to it. This took place
before 5:00 p.m. However, at 5:38 p.m. of the same day another restraining order from the Supreme Court in
the Arca case directed the Collector to desist temporarily from continuing with the public auction of the
tobacco until July 3, 1963. Before the Collector received the restraining order, CTIP had already paid P500,000
on account of its approved and accepted bid of P1,500,000.00 and had filed the required surety bond of
P1,000,000 to guarantee the exportation of the locally grown tobacco. It is clear, therefore, that at the time
the bid of the CTIP was approved and at the time payment was made, there was no restraining order either of
the CFI or of the Supreme Court enjoining the sale.

But even assuming arguendo that at the time the sale was made there was already a restraining order enjoining
it, the sale would still not be null and void. A restraining order like injunction operates upon a person as it is
granted in exercise of equity jurisdiction, and an injunction has no in rem effect to invalidate an act done in
contempt of an order of the court except where by statutory authorization the decree is so framed as to act
in rem on property. (Town of Fond Du Lac v. City of Fond Du Lac, 22 Wis. 2d 525,126 NW 2d 206). In 42 Am.
Jur. 2d, pp. 1144-1145, we read:

Where an injunction is granted and the decree operates in personam, an act done in violation of injunction is
not a nullity. On the contrary, the act is ordinarily valid and legally effective, except as to the person who
obtained the injunction and those claiming under him, and as to them, the act is valid unless and until they
attack it in a proper manner. If an injunction prohibits the defendant from transferring property, but he
transfers the property in violation of the injunction, and the transfer is made to an innocent third person, the
transferee obtains good title and the injunction. does not affect his rights.
Neither may petitioner's contention that the continuation of the sale for more than three days, i.e. from June
10 to June 26, 1963 would render the sale void, because it is violative of Section 2607 of the Tariff and Customs
Code, be sustained. Said section in part provides:

Section 2607. Disposition of article liable to deterioration. Perishable articles shall not be deposited in a
bonded warehouse; and, if not immediately entered for export or for transportation from the vessel or aircraft
in which imported or entered for consumption and the duties and taxes paid thereon, such articles may be
sold at auction, after such public notice, not exceeding three days, as the necessities of the case permit.

The three days mentioned in said section refers to the period of public notice, not to continuation of the sale
as contended by petitioner.

Untenable also is petitioner's contention that the Collector had no right to have the tobacco sold because the
Bureau of Customs was not yet the owner of the tobacco at the time of the sale. This contention loses sight of
the fact that the Collector of Customs when sitting in forfeiture proceedings, constitutes a tribunal upon which
the law confers jurisdiction to determine all questions touching the forfeiture and further disposition of the
illegally imported merchandise. (Commissioner of Customs v. Cloribel, L-20266, Jan. 31, 1967, 19 SCRA 234;
Auyong Hian vs. Court of Tax Appeals, L-25181, January 11, 1967, 19 SCRA 10). The Tariff and Customs Code
requires the Collector, upon making any seizure to issue a warrant for the detention of the property (Section
2301); to make in writing, after hearing, a declaration of forfeiture (Section 2312), and to sell or otherwise
dispose of the property under customs custody (Sec. 2602). The forfeiture constitutes a statutory transfer of
the right of property. Title is vested in the government by administrative forfeiture, although such title may
not be absolute, but resoluble subject to the right of redemption on the part of the owner of the forfeited
merchandise (Sec. 1388 Administrative Code). The consequence of this forfeiture was already declared by this
Court in the Arca case when it said:

It is to be noted that the seizure proceedings had already been terminated and the tobacco shipment declared
forfeited to the Government, thereby ceasing to be the property of Auyong Hian .... The seizure proceedings
were taken by the Collector of Customs in the exercise of its jurisdiction of the customs law (Secs. 2205 and
2530, Tariff and Customs Code) ... (11 SCRA 529, 537).

And this Court continued:

Auyong Hian, therefore, had lost all his rights to the shipment, not only because we declared the licenses void
and the shipment illegal in the case of Climaco vs. Barcelona, G.R. No. L-19597, but also because the seizure
proceedings have been found to be regular and had deprived Auyong Hian of his rights to the shipment as
importer; at least while the order of seizure has not been set aside. (11 SCRA 529, 538.)
Petitioner, however, insists that the Collector could not sell the forfeited tobacco after he lost jurisdiction
thereof upon the perfection of the appeal on May 21, 1963 to the Commissioner of Customs. Petitioner seems
to imply that the sale, if any, should have been made by, or at least with, the approval of the Commissioner of
Customs. This is what happened. When the Collector of Customs approved, on June 26, 1963, the offer of the
CTIP, his action was backed by prior approval of the Commissioner of Customs. To this effect we read in the
appealed decision, thus:

Apparently, to preclude any doubt as to the regularity of the sale, the Collector of Customs, on June 11, 1963,
sought the advice of the Secretary of Finance, and the latter referred the matter to the Secretary of Justice,
who, at that time, was the Chairman of the Cabinet Committee on Public Bidding of Tobacco. In an
indorsement (rated June 24, 1963, signed by the Secretary of Justice and all the members of the said Cabinet
Committee, the sale was approved. The indorsement of the Cabinet Committee was transmitted to the
Secretary of Finance and the Commissioner of Customs, who informed the Collector of Customs of such
approval (See Exhs. "E", "F" and "G", CTIP, pp. 205-211, CTA Records), When, therefore, the Collector of
Customs approved on June 26, 1963, the recommendation 'of the Special Bidding Committee to accept the
offer of Consolidated Tobacco Industries of the Philippines, his action had the prior approval of the
Commissioner of Customs, the Secretary of Finance and the Cabinet Committee. (Brief for Petitioner, pp. 140-
141.)

Neither can the inadequate consideration, even if true, invalidate the sale to the CTIP.

The other factor which, according to petitioner, militates against the validity of the sale is the measly sum of
P1,500,000 paid by the CTIP for the tobacco which had a value, according to petitioner, of P7,000,000. What
is really the value of the imported tobacco? According to the Tax Court, the records show that when the
tobacco arrived in the Philippines, petitioner filed and Affidavit and Pro Forma Invoice giving the invoice value
of the tobacco as $103,453 and an appraised value, for tax purposes, of P227,675. Petitioner contends that
this declaration was merely its invoice value and does not include the other expenses incurred in the
importation. Because of these different declarations, the Tax Court confessed it was at a loss as to which of
petitioner's declaration was to be believed. When it suits petitioner's purpose he claims that the tobacco was
worth P227,675.00. For other purposes the value was P7,000,000. If the claim of petitioner that the tobacco
was really worth P7,000,000.00, then there will be another cause for forfeiture which would be petitioner's
filing a false declaration under section 2530 (m) of the Tariff and Customs Code.

We cannot say that the appraisal of the value of the tobacco was incorrect. According to the Tax Court, the
Collector of Customs took precautionary measures to insure a correct appraisal of the tobacco. The appraisal
was made by a competent appraiser of the Bureau of Customs, and both the Commissioner of Customs and
the Secretary of Finance, who exercise supervisory authority over the Collector of Customs and who were
consulted on the matter, approved the sale, or at least, interposed no objection to the sale. Anent this matter
it has been said that an appraisal made by the Commissioner of Customs under Section 1377 of the Revised
Administrative Code is presumed to be correct, unless the contrary is proven by the importer. (Lazaro vs.
Commissioner of Customs, L-22511 and L-22343, May 16, 1966, 17 SCRA 36, 41 and cases cited therein.)

But, assuming arguendo, that the consideration paid for the forfeited tobacco was inadequate, such
inadequate consideration is not a ground for the invalidity of a contract. Anent this matter Article 1355 of the
Civil Code provides:

Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has
been fraud, mistake or undue influence.

Petitioner has not shown that the instant sale is a case exempted by law from the operation of Art. 1355;
neither has petitioner shown that there was fraud, mistake or undue influence in the sale. Hence, this Court
cannot but conclude with the Court of Tax Appeals that "In these circumstances, we find no reason to
invalidate the sale of said tobacco to Consolidated Tobacco Industries of the Philippines."

The Court of Tax Appeals is claimed to have erred also in holding that the subject tobacco was deteriorating.
We note, that the imported tobacco has a very unique nature. According to petitioner, it is highly perishable,
but in spite of the lapse of several years, it has not deteriorated. In Civil Case No. 49639 of the Court of First
Instance of Manila, petitioner herein averred that the Virginia leaf tobacco imported is highly perishable in
nature so that delay in the release thereof would cause him irreparable injury (Climaco v. Barcelona, L-19597,
July 31, 1962, 5 SCRA 846, 848). In his "petition to release tobacco under bond" dated March 14, 1967, filed
with respondent court, he alleged that:

16. That considering the time that has elapsed since the arrival in Manila of the 600 hogsheads of Virginia leaf
tobacco same may be deteriorated unless sooner disposed of ...

Now he claims that the tobacco has not deteriorated.

But let us give petitioner the benefit of the doubt. We do not see, however, how the deterioration or not of
the tobacco will affect the outcome of this petition. Hence, it is unnecessary to deal on it further.

Petitioner's contention that the Court of Tax Appeals erred in holding that he had no legal personality to
question the legality of the sale, should be sustained. Even if petitioner had lost all his rights to the tobacco
shipment after the same has been seized and forfeited, such loss of right was still subject to a contingency
that is, "at least while the order of seizure has not been set aside." It is unwarranted to conclude that the loss
of his rights to the tobacco while the seizure has not been set aside carried with it the loss of his legal
personality to question the legality of the sale. The Tariff and Customs Code itself expressly gives to any person
aggrieved by the decision or action of the Collector of Customs in any case of seizure, the right to have the
decision reviewed by the Commissioner of Customs (Section 2313), and from the decision of the latter, he has
a right to appeal to the Court of Tax Appeals (Section 2402), and from the latter's decision to the Supreme
Court.

Neither can it be accurately said that petitioner has no right to have the contract of sale to the CTIP annulled,
on the ground that he was not a party bound either principally or subsidiarily by the contract. (Art. 1397 Civil
Code.) Petitioner seeks the declaration of the nullity of the sale not as a party to the sale, but because he had
an interest that was affected by the sale. This Court has held that a person who is not a party obliged principally
or subsidiarily in a contract may exercise an action for nullity of the contract if he is prejudiced in his rights
with respect to one of the contracting parties, and can show the detriment which would positively result to
him from the contract in which he had no intervention. (Ibaez v. Hongkong and Shanghai Bank, 22 Phil. 572,
584-585; Teves vs. People's Homesite and Housing Corporation, et al., L-21498, June 27, 1968, 23 SCRA 1141,
1147-1148). It would be stating the obvious that in the instant case the petitioner will suffer detriment as a
consequence of the sale, in case it is not set aside.

As a matter of fact, this Court has recognized the personality of petitioner to question the legality of the sale
when in the Court of Appeals case, L-25181, this Court remanded the case to the Court of Tax Appeals to
decide the validity of the administrative proceedings and the question regarding the disposal and sale of the
tobacco that was seized. It was therein implied that petitioner had personality to question the sale.

The error assigned regarding the amount of warehousing charges that had accumulated is immaterial to the
decision of the instant case, and whether the Court of Tax Appeals did commit the error or not, will not affect
the result of the case. This point, therefore, need not be commented on.

This Court recognizes that petitioner has the right to take all legal steps to enforce his legal and/or equitable
rights to the tobacco in question. One who makes use of his own legal right does no injury. Qui jure suo utitur
mullum damnum facit. If damage results from a person's exercising his legal rights, it is damnum absque injuria.
The consequent delay in the delivery of the tobacco is an incident to said exercise of his rights. But, again,
whatever might be petitioner's motive in this regard will hardly affect the outcome of this case.

6. The property, subject of litigation is not by that fact a line, in custodia legis. "When property is lawfully taken,
by virtue of legal process, it is in the custody of the law, and not otherwise." (Gilman v. Williams, Wis. 334, 76
Am. Dec. 219.)

In the case of Millare et all, vs. Millare et al., 106 Phil. 203, 299, a motion for contempt was filed in this Court
by appellant charging respondents with having committed contempt by selling or otherwise disposing the land
in question pending the appeal. This Court held that there being no attachment, injunction or receivership
issued with respect to the land, and in view of the conclusion reached on the merits of the case, there was no
reason to declare the respondents guilty of contempt. This ruling is in point in the instant case. At the time the
CTIP took possession of the tobacco and disposed it on September 12, 1967, there was no existing order of
the Court of Tax Appeals restraining such possession and disposition. By specific order of the Court of Tax
Appeals, it declared that the restraining order previously issued by it was of no further effect on September
12, 1967 due to appellants' failure to post the bond required.

It has been shown above, furthermore, that petitioner herein was not entitled to the tobacco, consequently
he had no right to the proceeds of the sale, and to have the proceeds thereof deposited.

7. Regarding the "Motion for Leave" filed by the Solicitor General's Office praying authority to refund the
storage charges of the subject tobacco to the CTIP, this Court notes that the same is not in issue in the instant
case, and, therefore, abstains from making any resolution regarding the matter. The claim of the CTIP for
refund must be prosecuted administratively.

WHEREFORE, the instant petition for review is dismissed, and the decision of the Court of Tax Appeals,
appealed from is affirmed.

It is so ordered.

G.R. No. 74854 April 2, 1991

JESUS DACOYCOY, petitioner,

vs.

HON. INTERMEDIATE APPELLATE COURT, HON. ANTONIO V. BENEDICTO, Executive Judge, Regional Trial Court,
Branch LXXI, Antipolo, Rizal, and RUFINO DE GUZMAN, respondents.

Ramon V. Sison for petitioner.

Public Attorney's Office for private respondent.

FERNAN, C.J.:

May the trial court motu proprio dismiss a complaint on the ground of improper venue? This is the issue
confronting the Court in the case at bar.
On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the Regional
Trial Court, Branch LXXI, Antipolo, Rizal, a complaint against private respondent Rufino de Guzman praying for
the annulment of two (2) deeds of sale involving a parcel of riceland situated in Barrio Estanza, Lingayen,
Pangasinan, the surrender of the produce thereof and damages for private respondent's refusal to have said
deeds of sale set aside upon petitioner's demand.

On May 25, 1983, before summons could be served on private respondent as defendant therein, the RTC
Executive Judge issued an order requiring counsel for petitioner to confer with respondent trial judge on the
matter of venue. After said conference, the trial court dismissed the complaint on the ground of improper
venue. It found, based on the allegations of the complaint, that petitioner's action is a real action as it sought
not only the annulment of the aforestated deeds of sale but also the recovery of ownership of the subject
parcel of riceland located in Estanza, Lingayen, Pangasinan, which is outside the territorial jurisdiction of the
trial court.

Petitioner appealed to the Intermediate Appellate Court, now Court of Appeals, which in its decision of April
11, 1986,1 affirmed the order of dismissal of his complaint.

In this petition for review, petitioner faults the appellate court in affirming what he calls an equally erroneous
finding of the trial court that the venue was improperly laid when the defendant, now private respondent, has
not even answered the complaint nor waived the venue.2

Petitioner claims that the right to question the venue of an action belongs solely to the defendant and that
the court or its magistrate does not possess the authority to confront the plaintiff and tell him that the venue
was improperly laid, as venue is waivable. In other words, petitioner asserts, without the defendant objecting
that the venue was improperly laid, the trial court is powerless to dismiss the case motu proprio.

Private respondent, on the other hand, maintains that the dismissal of petitioner's complaint is proper because
the same can "readily be assessed as (a) real action." He asserts that "every court of justice before whom a
civil case is lodged is not even obliged to wait for the defendant to raise that venue was improperly laid. The
court can take judicial notice and motu proprio dismiss a suit clearly denominated as real action and improperly
filed before it. . . . the location of the subject parcel of land is controlling pursuant to Sec. 2, par. (a), Rule 4 of
the New Rules of Court . . .3

We grant the petition.

The motu proprio dismissal of petitioner's complaint by respondent trial court on the ground of improper
venue is plain error, obviously attributable to its inability to distinguish between jurisdiction and venue.
Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised Rules of Court.
It is said that the laying of venue is procedural rather than substantive. It relates to the jurisdiction of the court
over the person rather than the subject matter. Provisions relating to venue establish a relation between the
plaintiff and the defendant and not between the court and the subject matter. Venue relates to trial not to
jurisdiction, touches more of the convenience of the parties rather than the substance of the case.4

Jurisdiction treats of the power of the court to decide a case on the merits; while venue deals on the locality,
the place where the suit may be had.5

In Luna vs. Carandang,6 involving an action instituted before the then Court of First Instance of Batangas for
rescission of a lease contract over a parcel of agricultural land located in Calapan, Oriental Mindoro, which
complaint said trial court dismissed for lack of jurisdiction over the leased land, we emphasized:

(1) A Court of First Instance has jurisdiction over suits involving title to, or possession of, real estate
wherever situated in the Philippines, subject to the rules on venue of actions (Manila Railroad Company vs.
Attorney General, etc., et al., 20 Phil. 523; Central Azucarera de Tarlac vs. De Leon, et al., 56 Phil. 169; Navarro
vs. Aguila, et al., 66 Phil. 604; Lim Cay, et al. vs. Del Rosario, etc., et al., 55 Phil. 692);

(2) Rule 4, Section 2, of the Rules of Court requiring that an action involving real property shall be brought
in the Court of First Instance of the province where the land lies is a rule on venue of actions, which may be
waived expressly or by implication.

In the instant case, even granting for a moment that the action of petitioner is a real action, respondent trial
court would still have jurisdiction over the case, it being a regional trial court vested with the exclusive original
jurisdiction over "all civil actions which involve the title to, or possession of, real property, or any interest
therein . . ." in accordance with Section 19 (2) of Batas Pambansa Blg. 129. With respect to the parties, there
is no dispute that it acquired jurisdiction over the plaintiff Jesus Dacoycoy, now petitioner, the moment he
filed his complaint for annulment and damages. Respondent trial court could have acquired jurisdiction over
the defendant, now private respondent, either by his voluntary appearance in court and his submission to its
authority, or by the coercive power of legal process exercised over his person.7

Although petitioner contends that on April 28, 1963, he requested the City Sheriff of Olongapo City or his
deputy to serve the summons on defendant Rufino de Guzman at his residence at 117 Irving St., Tapinac,
Olongapo City,8 it does not appear that said service had been properly effected or that private respondent
had appeared voluntarily in court9 or filed his answer to the complaint.10 At this stage, respondent trial court
should have required petitioner to exhaust the various alternative modes of service of summons under Rule
14 of the Rules of Court, i.e., personal service under Section 7, substituted service under Section 8, or service
by publication under Section 16 when the address of the defendant is unknown and cannot be ascertained by
diligent inquiry.
Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at
this stage of the proceeding, particularly as venue, in inferior courts as well as in the courts of first instance
(now RTC), may be waived expressly or impliedly. Where defendant fails to challenge timely the venue in a
motion to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the trial to be held and
a decision to be rendered, he cannot on appeal or in a special action be permitted to challenge belatedly the
wrong venue, which is deemed waived.11

Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot be truly
said to have been improperly laid, as for all practical intents and purposes, the venue, though technically
wrong, may be acceptable to the parties for whose convenience the rules on venue had been devised. The
trial court cannot pre-empt the defendant's prerogative to object to the improper laying of the venue by motu
proprio dismissing the case.

Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by dismissing motu
proprio the complaint on the ground of improper venue without first allowing the procedure outlined in the
Rules of Court to take its proper course. Although we are for the speedy and expeditious resolution of cases,
justice and fairness take primary importance. The ends of justice require that respondent trial court faithfully
adhere to the rules of procedure to afford not only the defendant, but the plaintiff as well, the right to be
heard on his cause.

WHEREFORE, in view of the foregoing, the decision of the Intermediate Appellate Court, now Court of Appeals,
dated April 11, 1986, is hereby nullified and set aside. The complaint filed by petitioner before the Regional
Trial Court of Antipolo, Branch LXXI is revived and reinstated. Respondent court is enjoined to proceed therein
in accordance with law.

SO ORDERED.

G.R. No. L-25716 July 28, 1966

FERNANDO LOPEZ, petitioner,

vs.

GERARDO ROXAS and PRESIDENTIAL ELECTORAL TRIBUNAL, respondents.

Vicente Francisco for petitioner.

Sycip and Salazar for respondents.


CONCEPCION, C.J.:

Petitioner Fernando Lopez and respondent Gerardo Roxas were the main contenders for the Office of Vice-
President of the Philippines in the general elections held on November 9, 1965. By Resolution No. 2, approved
on December 17, 1965, the two Houses of Congress, in joint session assembled as the board charged with the
duty to canvass the votes then cast for President and Vice President of the Philippines, proclaimed petitioner
Fernando Lopez elected to the latter office with 3,531,550 votes, or a plurality of 26,724 votes over his closest
opponent, respondent Gerardo M. Roxas, in whose favor 3,504,826 votes had been tallied, according to said
resolution. On January 5, 1966, respondent filed, with the Presidential Electoral Tribunal, Election Protest No.
2, contesting the election of petitioner herein as Vice-President of the Philippines, upon the ground that it was
not he, but said respondent, who had obtained the largest number of votes for said office.

On February 22, 1966, petitioner Lopez instituted in the Supreme Court the present original action, for
prohibition with preliminary injunction, against respondent Roxas, to prevent the Presidential Electoral
Tribunal from hearing and deciding the aforementioned election contest, upon the ground that Republic Act
No. 1793, creating said Tribunal, is "unconstitutional," and that, "all proceedings taken by it are a nullity."

Petitioner's contention is predicated upon the ground, that Congress may not, by law, authorize an election
contest for President and Vice-President, the Constitution being silent thereon; that such contest tends to
nullify the constitutional authority of Congress to proclaim the candidates elected for President and Vice-
President; that the recount of votes by the Presidential Electoral Tribunal, as an incident of an election contest,
is inconsistent with the exclusive power of Congress to canvass the election returns for the President and the
Vice-President; that no amendment to the Constitution providing for an election protest involving the office
of President and Vice-President has been adopted, despite the constitutional amendment governing election
contests for Members of Congress; that the tenure of the President and the Vice-President is fixed by the
Constitution and cannot be abridged by an Act of Congress, like Republic Act No. 1793; that said Act has the
effect of amending the Constitution, in that it permits the Presidential Electoral Tribunal to review the
congressional proclamation of the president-elect and the vice-president-elect; that the constitutional
convention had rejected the original plan to include in the Constitution a provision authorizing election contest
affecting the president-elect and the vice-president-elect before an electoral commission; that the people
understood the Constitution to authorize election contests only for Members of Congress, not for President
and Vice-President, and, in interpreting the Constitution, the people's intent is paramount; that it is illegal for
Justices of the Supreme Court to sit as members of the Presidential Electoral Tribunal, since the decisions
thereof are appealable to the Supreme Court on questions of law; that the Presidential Electoral Tribunal is a
court inferior to the Supreme Court; and that Congress cannot by legislation appoint in effect the members of
the Presidential Electoral Tribunal.

Pursuant to the Constitution, "the Judicial power shall be vested in one Supreme Court and in such inferior
courts as may be established by law.1
This provision vests in the judicial branch of the government, not merely some specified or limited judicial
power, but "the" judicial power under our political system, and, accordingly, the entirety or "all" of said power,
except, only, so much as the Constitution confers upon some other agency, such as the power to "judge all
contests relating to the election, returns and qualifications" of members of the Senate and those of the House
of Representatives which is vested by the fundamental law solely in the Senate Electoral Tribunal and the
House Electoral Tribunal, respectively.2

Judicial power is the authority to settle justiciable controversies or disputes involving rights that are
enforceable and demandable before the courts of justice or the redress of wrongs for violations of such rights.3
The proper exercise of said authority requires legislative action: (1) defining such enforceable and demandable
rights and/or prescribing remedies for violations thereof; and (2) determining the court with jurisdiction to
hear and decide said controversies or disputes, in the first instance and/or on appeal. For this reason, the
Constitution ordains that "Congress shall have the power to define, prescribe, and apportion the jurisdiction
of the various courts," subject to the limitations set forth in the fundamental law.4

Prior to the approval of Republic Act No. 1793, a defeated candidate for president or vice-president, who
believe that he was the candidate who obtained the largest number of votes for either office, despite the
proclamation by Congress of another candidate as the president-elect or vice-president-elect, had no legal
right to demand by election protest a recount of the votes cast for the office concerned, to establish his right
thereto. As a consequence, controversies or disputes on this matter were not justiciable.5

Section 1 of Republic Act No. 1793, which provides that:

There shall be an independent Presidential Electoral Tribunal ... which shall be the sole judge of all contests
relating to the election, returns, and qualifications of the president-elect and the vice-president-elect of the
Philippines.

has the effect of giving said defeated candidate the legal right to contest judicially the election of the President-
elect or Vice-President-elect and to demand a recount of the votes cast for the office involved in the litigation
as well as to secure a judgment declaring that he6 is the one elected president or vice-president, as the case
may be,7 and that, as such, he is entitled to assume the duties attached to said office. And by providing,
further, that the Presidential Electoral Tribunal "shall be composed of the Chief Justice and the other ten
Members of the Supreme Court," said legislation has conferred upon such Court an additional original
jurisdiction of an exclusive character.8

Republic Act No. 1793 has not created a new or separate court. It has merely conferred upon the Supreme
Court the functions of a Presidential Electoral Tribunal. The result of the enactment may be likened to the fact
that courts of first instance perform the functions of such ordinary courts of first instance,9 those of court of
land registration, 10 those of probate courts, 11 and those of courts of juvenile and domestic relations. 12 It
is, also, comparable to the situation obtaining when the municipal court of a provincial capital exercises its
authority, pursuant to law, over a limited number of cases which were previously within the exclusive
jurisdiction of courts of first instance. 13

In all of these instances, the court (court of first instance or municipal court) is only one, although the functions
may be distinct and, even, separate. Thus the powers of a court of first instance, in the exercise of its
jurisdiction over ordinary civil cases, are broader than, as well as distinct and separate from, those of the same
court acting as a court of land registration or a probate court, or as a court of juvenile and domestic relations.
So too, the authority of the municipal court of a provincial capital, when acting as such municipal court, is,
territorially more limited than that of the same court when hearing the aforementioned cases which are
primary within the jurisdiction of courts of first instance. In other words, there is only one court, although it
may perform the functions pertaining to several types of courts, each having some characteristics different
from those of the others.

Indeed, the Supreme Court, 14 the Court of Appeals 15 and courts of first instance, 16 are vested with original
jurisdiction, as well as with appellate jurisdiction, in consequence of which they are booth trial courts and
appellate courts, without detracting from the fact that there is only one Supreme Court, one Court of Appeals,
and one court of first instance, clothed with authority to discharged said dual functions. A court of first
instance, when performing the functions of a probate court or a court of land registration, or a court of juvenile
and domestic relations, although with powers less broad than those of a court of first instance, hearing
ordinary actions, is not inferior to the latter, for one cannot be inferior to itself. So too, the Presidential
Electoral Tribunal is not inferior to the Supreme Court, since it is the same Court although the functions
peculiar to said Tribunal are more limited in scope than those of the Supreme Court in the exercise of its
ordinary functions. Hence, the enactment of Republic Act No. 1793, does not entail an assumption by Congress
of the power of appointment vested by the Constitution in the President. It merely connotes the imposition of
additional duties upon the Members of the Supreme Court. 17

Moreover, the power to be the "judge ... of ... contests relating to the election, returns, and qualifications" of
any public officer is essentially judicial. As such under the very principle of separation of powers invoked by
petitioner herein it belongs exclusively to the judicial department, except only insofar as the Constitution
provides otherwise. This is precisely the reason why said organic law ordains that "the Senate and the House
of Representatives shall each have an Electoral Tribunal which shall be the sole judge of all contests relating
to the election, returns, and qualifications of their respective Members" (Article VI, Section 11, of the
Constitution). In other words, the purpose of this provision was to exclude the power to decide such contests
relating to Members of Congress which by nature is judicial 18 from the operation of the general grant
of judicial power 19 to "the Supreme Court and such inferior courts as may be established by law.

Instead of indicating that Congress may not enact Republic Act No. 1793, the aforementioned provision of the
Constitution, establishing said Electoral Tribunals for Members of Congress only, proves the exact opposite,
namely: that the Constitution intended to vest Congress with discretion 20 to determine by law whether or
not the election of a president-elect or that of a vice-president-elect may be contested and, if Congress should
decide in the affirmative, which court of justice shall have jurisdiction to hear the contest. It is, even, debatable
whether such jurisdiction may be conferred, by statute, to a board, commission or tribunal composed partly
of Members of Congress and Members of the Supreme Court because of its possible inconsistency with the
constitutional grant of the judicial power to "the Supreme Court and ... such inferior courts as may be
established by law," for said board, commission or tribunal would be neither "the Supreme Court, 21 nor,
certainly, "such inferior courts as, may be established by law."

It follows, therefore, not only that Republic Act No. 1793 is not inconsistent with the Constitution or with the
principle of separation of powers underlying the same, but, also, that it is in harmony with the aforementioned
grant of "the judicial power" to said courts. Indeed, when Claro M. Recto, Chairman of the Constitutional
Convention, proposed that the original move therein to include in the fundamental law a provision creating an
Electoral Commission 22 to hear election contests against the President-elect and the Vice-President-elect, be
given up, he expressed the view that the elimination of said provision would have the effect of leaving in the
hands of the legislative department the power to decide what entity or body would "look into the protests for
the positions of President and Vice-President." 23 Twenty-two (22) years later, or on May 3, 1957 then Senator
Recto reiterated this view, when, in the course of the debates on the Bill which later became Republic Act No.
1793, he stated:

... Mr. President, as far as I can remember, the intention of the constitutional convention was to leave this
matter to ordinary legislation.

Such was, also, the impression of Dr. Jose M. Aruego, another prominent Member of the Convention, who
says 24 that

Election protests for the Presidency and the Vice-Presidendency were left to be judged in a manner and by a
body decided by the National Assembly. (Emphasis ours.)

No less than one of the main counsel for petitioner herein, himself, another delegate to the Constitutional
Convention, evidently shared this view as late as September 30, 1965, for the introduction to his 1965 edition
of "the Revised Election Code" states that "he will always be remembered for ... his famous bill creating the
Presidential Electoral Tribunal ...". Indeed as a member of the Senate, on January 3, 1950, he Introduced
Senate Bill No. 1 seeking to create a Presidential Electoral Tribunal "to try, hear and decide protests contesting
the election of the President and the Vice-President of the Philippines", which shall be composed of three
Justices of the Supreme Court, including the Chief Justice, and four Senators and four Members of the House
of Representatives.

Then, again, the records of the Convention show, that in voting eventually to eliminate, from the draft of the
Constitution, the provision establishing a Presidential Electoral Commission, the delegates were influenced by
the fact that there was no similar provision in the Federal Constitution of the United States. Having followed
the pattern thereof, it must be assumed, therefore, in the absence of any indicium to the contrary,25 that the
Convention had adhered, also, to the interpretation given to this feature of said Federal Constitution, as may
be deduced from the fact that, by an act of Congress of the United States, approved on January 29, 1877, an
Electoral Commission was created to hear and decide certain issues concerning the election of the President
of said nation held in 1876. It is, also worthy of notice that pursuant to said Act, nothing therein "shall be held
to impair or affect any right now existing under the Constitution and laws to question, by proceedings in the
judicial courts of the United States, the right or title of the person who shall be declared elected, or who shall
claim to be President or Vice-President of the United States, if any such right exists". 26 Thus the absence of a
provision in said Federal Constitution governing protests against the election of the President and the Vice-
President had been construed to be without prejudice to the right of the defeated candidate to file a protest
before the courts of justice of the United States, if the laws thereof permitted it. In other words, the Federal
Congress was deemed clothed with authority to determine, by ordinary legislation, whether or not protests
against the election of said officers may properly be entertained by the judicial department.

Needless to say, the power of congress to declare who, among the candidates for President and/or Vice-
President, has obtained the largest number of votes, is entirely different in nature from and not inconsistent
with the jurisdiction vested in the Presidential Electoral Tribunal by Republic Act No. 1793. Congress merely
acts as a national board of canvassers, charged with the ministerial and executive duty 27 to make said
declaration, on the basis of the election returns duly certified by provincial and city boards of canvassers. 28
Upon the other hand, the Presidential Electoral Tribunal has the judicial power to determine whether or not
said duly certified election returns have been irregularly made or tampered with, or reflect the true result of
the elections in the areas covered by each, and, if not, to recount the ballots cast, and, incidentally thereto,
pass upon the validity of each ballot or determine whether the same shall be counted, and, in the affirmative,
in whose favor, which Congress has power to do.

It is, likewise, patent that the aforementioned authority of the Presidential Electoral Tribunal to determine
whether or not the protestant has a better right than the President and/or the Vice-President declared elected
by Congress would not abridge the constitutional tenure. If the evidence introduced in the election protest
shows that the person really elected president or vice-president is the protestant, not the person declared
elected by Congress, then the latter had legally no constitutional tenure whatsoever, and, hence, he can claim
no abridgement thereof.1wph1.t

It is similarly obvious that, in imposing upon the Supreme Court the additional duty of performing the functions
of a Presidential Electoral Tribunal, Congress has not, through Republic Act No. 1793, encroached upon the
appointing power of the Executive. The imposition of new duties constitutes, neither the creation of an office,
nor the appointment of an officer. 29

In view of a resolution of this Court dated July 8, 1966, upholding the validity of Republic Act No. 1793, upon
the ground that it merely vests additional jurisdiction in the Supreme Court, petitioner has filed a motion dated
July 13, 1966, praying this Court "to clarify whether or not" this "election contest should as a consequence ...
be docketed with, and the records thereof transferred, to this Supreme Court, and all pleadings, papers and
processes relative thereto should thence forth be filed with it". The motion is, evidently, based upon the
premise that the Supreme Court is different and distinct from the Presidential Electoral Tribunal, which is
erroneous, as well as contrary to the ruling made in said resolution.

Wherefore, the petition herein is hereby dismissed and the writs therein prayed for denied accordingly. The
aforesaid motion is, moreover, denied. With costs against the petitioner. It is so ordered.

G.R. No. 78206 March 19, 1990

PAULINO ZAMORA, LAURENTINO MEJORADA, PLACIDO JOSON, AGAPITO MEJORADA, EZPERANZA ALAMBAN,
CELEDONIO RINAN, POLICARUSO T. BUSIG, FRANCISCO T. PILAPIL, JR., CELSO CABUNGCAG, RICARDO CUGDAN,
GERARDO TABON, TERESA MARTEL DY, LINO CACAYAN, PACIENCIA D. MEJORADA, GREGORIO OUANO,
JUSTINIANO BAJAO, ROMULO PADILLA, PEDRO ALBA, ANANCORITO B. TAN, BRAULIO REGIS, SEGUNDO ANG,
CERUNDIO ACERO, ROSARIO D. TANG-AN, COCOMIA CANETA, EDILBERTO G. BAJAO, EUGENIA N. PUPOS,
JACINTO M. BALISTOY, VIDAL T. AGUILAR, LUCIO R. AGUILAR, ESMAEL T. WAHIMAN, ALUD PABULARIO, LEONILA
LLORENTE, BERNABE BATAHOY, MODITO JUMARITO, AGUIDO REMEGOSO, ANTONIO TAGAYLO, EMELIANO
LAGBAS, BRIGIDO AYUMAN, NATIVIDAD CABALDO, BERNARDINO DACAR, NICOLAS E. YALMORIDA, DAMIAN
LAGBAS, HILARIO MAGALLANES, FELIX ABAD, SERVANDO SIMON, GALMACIO BACHARPA, GIL GACATGAT,
DEMETERIO JAGAPE, EUSEBIO PADERO, VICENTE MANZANO, JOSE CO, PEDRO BALILI, petitioners,

vs.

HONORABLE COURT OF APPEALS, MEDINA RECREATION CENTER, INC., FELOMINO DELEGENCIA, JUAN PANKIAN,
MELECIO BERSABAL, CATALINO IPANAAG, MATEO DELEGENCIA, DEMOSTENES LIMBACO, respondents.

Mario D. Ortiz for petitioners.

Augusto G. Maderazo and Mateo G. Delegencia for private respondents.

CRUZ, J.:

This case involves a conflict of jurisdiction between the Regional Trial Court and the Securities and Exchange
Commission. The petitioners claim they are suing as members of an unregistered association and so come
under the jurisdiction of the regular courts. The private respondents disagree, insisting that they are being
sued in an intra-corporate dispute covered by P.D. No. 902-A. The issue was resolved by the respondent court
in favor of the private respondents. We are now asked by the petitioners to review its decision and to find that
it has erred.

It is not disputed that sometime in 1966 the petitioners and the private respondents organized an unregistered
partnership called the Medina People's Cockpit Association, with its funds coming from the contributions of
its members. Such funds were used in 1975 for the purchase of a lot and the construction of a building in the
name of the association. Subsequently, in 1976, a corporation called the Medina Recreation Center, Inc. was
created, with respondent Felomino Delegencia and three of his relatives among the incorporators. The
properties of the association were transferred to the corporation in 1977. The petitioners, alleging
irregularities in the transfer, then filed a complaint against the private respondents, first with the Securities
and Exchange Commission in 1979 and later with the Court of First Instance of Misamis Oriental in 1980. It is
the propriety of these complaints that is now before us.

We do not deal here with the merits of the questioned transfer of properties from the association to the
corporation. That will be resolved by the proper body. What we are examining here is which as between the
Regional Trial Court and the Securities and Exchange Commission has the appropriate jurisdiction.

The record shows that after having filed their complaint with the Securities and Exchange Commission on
December 8, 1979,1 the petitioners either withdrew or did not pursue it and instead filed a similar complaint
five months later, on April 22, 1980, with the Court of First Instance. 2 Here they also alleged that they should
be regarded as stockholders of the corporation, prompting the defendants to move for a bill of particulars on
May 2, 1980, to determine in what capacity the plaintiffs were suing. This was followed on May 7, 1980, by a
motion to dismiss for lack of jurisdiction, 3 but the plaintiffs amended their complaint on May 13, 1980, to
delete therefrom the allegation that they were suing as stockholders of the corporation. 4 The defendants
then moved to strike out the amended complaint and also to dismiss the original complaint for lack of
jurisdiction. 5 These motions were denied on January 2, 1981,6 and the defendants filed their answer on
January 28, 1981, where they reiterated their motion to dismiss and reserved the right to question the
jurisdiction of the court. 7 Trial followed. On January 23, 1985, the court placed the disputed properties under
receivership.8 On March 13, 1985, the defendants reiterated their motions for reconsideration and to dismiss,
and upon their denial on June 17, 1985, filed with this Court a petition for certiorari, prohibition and
preliminary injunction.9 We issued a temporary restraining order on October 7, 1985, enjoining the trial court
from further proceeding with the case and then referred the petition to the respondent court.10 In its decision
dated November 13, 1986, the dispositive portion read as follows:

WHEREFORE, premises considered, the Writ of certiorari and Prohibition with preliminary injunction is hereby
granted.

The Order dated January 2, 1981, denying the motion to strikeout amended complaint with supplemental
motion to dismiss; as well as the Order dated June 17, 1985, denying reconsideration thereof, are hereby
annulled.
The Order dated January 23, 1985, granting tile motion for appointment of receiver is likewise reversed.

Finally, respondent judge is commanded to desist from taking further proceedings in Civil Case No. 516-M.

SO ORDERED.

Jurisdiction is defined as the power and authority of a court to hear, try and decide a case. 11 Jurisdiction over
the subject matter is conferred by the Constitution or by law while jurisdiction over the person is acquired by
his voluntary submission to the authority of the court or through the exercise of its coercive processes.
Jurisdiction over the res is obtained by actual constructive seizure placing the property under the orders of the
court. 12

We are concerned here only with the first kind of jurisdiction, to wit, jurisdiction over the subject matter.

The private respondents point to the undenied fact that the petitioners first filed their complaint with the
Securities and Exchange Commission where they averred that they were stockholders of the Medina
Recreation Center, Inc. Later, the petitioners filed with the Court of First Instance of Misamis Oriental a similar
complaint, which they later amended to remove there from the allegation that they were suing as stockholders
of the said corporation. The private respondents argue that by such acts, the petitioners are now estopped
from denying such allegation. The amendment of the complaint did not do the petitioners any good either
because they were bound by their original averments, let alone the fact that the said amendment was not
made with leave of court.

The petitioners belittle these arguments, contending that the complaint filed with the Securities and Exchange
Commission was only one of the several recourses taken by them, which included complaints with the NBI and
the PC. They were exhausting all possible remedies available to them against the frauds perpetrated by the
private respondents. Moreover, they later withdrew their complaint from the SEC and amended their original
complaint in the Court of First Instance, as allowed by the trial judge, to make it clear that they were suing not
as stockholders of the corporation but as members of the association. The amendment was in fact proper even
without prior leave of court because this was done before the filing of responsive pleadings by the defendants.

The petitioners further stress that the motion to dismiss their complaint was denied in 1981, and it was only
in 1985 that the denial was questioned in the petition filed by the private respondents with this Court and
referred by us to the Court of Appeals. That petition having been clearly filed after more than four years, it
should not have been given due course by the respondent court.
It is settled that jurisdiction over the subject matter cannot be changed by agreement of the parties or by the
act of either of them that will contravene the legislative will. As this court has repeatedly held:

Nothing can change the jurisdiction of the court over the subject matter. None of the parties to the litigation
can enlarge or diminish it or dictate when it shall attach or when it shall be removed. That power is a matter
of legislative enactment which none but the legislature may change. Thus, the (Congress) has the sole power
to define, prescribe and apportion the jurisdiction of the various courts. 13

It follows that as a rule the filing of a complaint with one court which has no jurisdiction over it does not
prevent the plaintiff from filing the same complaint later with the competent court. The plaintiff is not
estopped from doing so simply because it made a mistake before in the choice of the proper forum. In such a
situation, the only authority the first court can exercise is to dismiss the case for lack of jurisdiction. This has
to be so as a contrary conclusion would allow a party to divest the competent court of its jurisdiction, whether
erroneously or even deliberately in derogation of the law.

Applying these principles, we hold that the mere fact that the petitioners first filed their complaint with the
Securities and Exchange Commission did not have the effect of precluding them from filing the same complaint
with the Court of First Instance if this was the court that was vested with the appropriate jurisdiction. They
would then be only rectifying their error. However, this is only on the assumption that it is really the Court of
First Instance and not the Securities and Exchange Commission that should hear the petitioners' claims against
the private respondents. The question is, which as between the two bodies is the competent court?

We affirm the finding of the respondent court that the petitioners are actually suing as stockholders of the
corporation and not as members of the association. This is clear from their opening statement in the letter-
complaint they filed with the Securities and Exchange Commission where they categorically declared:

The undersigned PETITIONERS are bonafide Stockholders of the Medina Recreation Center, Inc., situated in
Medina, Misamis Oriental, who are constrained to file this petition to your Office to compel the Management
of our Recreation Center, under the leadership of Mr. Felomino Delegencia, to render and furnish every
bonafide stockholder, the following:

1. An annual or periodic financial report;

2. Statement of Assets and Liabilities;

3. Declaration of dividends, if any; and


4. Holding of annual stockholders' meeting. 14

and from the testimony of several of them as cited in the private respondent's memorandum, which the
petitioners have not successfully refuted. 15 Moreover, there is the Deed of Transfer in Exchange of Shares of
Stocks dated February 1, 1977, by virtue of which the 484 members of the association became stockholders
of the corporation and in effect abolished the association. 16 It has also been shown that they received stock
and even cash dividends from the corporation, although they said they later tried to return these.

From these findings, we conclude that it is really the Securities and Exchange Commission and not the Regional
Trial Court of Misamis Oriental that has jurisdiction over the case in question. And as it has been established
that the petitioners are suing as stockholders of the Medina Recreation Center, Inc., there should also be no
question that their claim against the private respondents, as the officers of such corporation, comes under the
concept of an intra-corporate dispute. In their complaint, they allege that the private respondents fraudulently
transferred their properties to the corporation and are now managing them to the detriment of the
petitioner's interests. This is undoubtedly a matter falling under Section 5 of P.D. No. 902-A, which provides:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

(a) Devices or schemes employed by, or any acts of, the Board of Directors, business associations, its
officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of
the public and/or of the stockholder, partners, members of associations or organizations registered with the
Commission.

(b) Controversies arising out of intra-corporate or partnership relations, between and among
stockholders, members, or associates; between any and/or all of them and the corporation, partnership or
association of which they are stockholders, members or associates, respectively; and between such
corporation, partnership or association and the state insofar as it concerns their individual franchise or right
to exist as such entity.

(c) Controversies in the election or appointments of directors, trustees, officers or managers of such
corporations, partnerships, or associations.

(d) Petitions or corporations, partnerships or associations to be declared in the state of suspension of


payments in cases where the corporation, partnership or association possesses sufficient property to cover all
its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the
corporation, partnership or association has no sufficient assets to cover its liabilities but is under the
management of a Rehabilitation Receiver on Management Committee created pursuant to this Decree.

The petitioners can no longer, deny that they are suing as stockholders of the corporation. It is thus immaterial
that the petitioners amended their original complaint in the Court of First Instance to delete their allegation
that they were suing in that capacity. Although they had a right to make that amendment because the
defendants had not yet filed their answer, the fact is that the statement made by the petitioners in their
complaint with the SEC was still binding on them as to estop them from alleging otherwise.

Finally, it should be remembered that the question of jurisdiction may be raised at any time, even on appeal,
as by the petition for certiorari, prohibition and preliminary injunction, 17 filed by the private respondents in
1985. The record shows that when the original complaint was filed in the Court of First Instance of Misamis
Oriental in 1980, the defendants immediately moved to dismiss on the ground of lack of jurisdiction. While it
is true that the defendants did not pursue this ground until after four years later, such failure did not constitute
laches and prevent them from raising the question again in the said petition. As we have held:

The jurisdiction over the subject matter of a case may be objected to at any stage of the proceedings, for such
jurisdiction is conferred only by law and cannot be acquired through, or waived by, any act or omission of the
parties. Hence, it may be alleged, for the first time, on appeal, or considered by the Court motu proprio. 18

xxx xxx xxx

If the lower court had no jurisdiction, but the case was tried and decided upon the theory that it had
jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same must exist as
a matter of law, and may not be conferred by consent of the parties or by estoppel. 19

The reason for the rule is that a court without jurisdiction cannot render a valid judgment. The exception
announced in Tijam v. Sibonghanoy 20 does not apply here because the private respondents had from the very
start questioned the jurisdiction of the Court of First Instance of Misamis Oriental.

We reiterate as we conclude this opinion that we are not ruling now on the validity of the transfer of the
properties of the Medina People's Cockpit Association to the Medina Recreation Center, Inc. That is a factual
question that has yet to be resolved by the proper body. We merely declare here that the competent forum
for the resolution of that dispute is not the Regional Trial Court of Misamis Oriental but the Securities and
Exchange Commission. It is before this agency that the petitioners may still prosecute their complaint against
the private respondent in accordance with P.D. No. 902-A.
WHEREFORE, the appealed decision is AFFIRMED in toto, with costs against the petitioners. It is so ordered.

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