G.

R. No. 162322 March 14, 2012 Acting on an appeal filed by the Republic,14 the CA ruled that
REPUBLIC OF THE PHILIPPINES, Petitioner, since the former had actively participated in the proceedings
vs. before the lower court, but failed to raise the jurisdictional
BANTIGUE POINT DEVELOPMENT challenge therein, petitioner is thereby estopped from
CORPORATION, Respondent. questioning the jurisdiction of the lower court on appeal.15 The
CA further found that respondent Corporation had sufficiently
D E C I S I O N established the latter’s registrable title over the subject
SERENO, J.: property after having proven open, continuous, exclusive and
notorious possession and occupation of the subject land by
This Rule 45 Petition requires this Court to address the issue of itself and its predecessors-in-interest even before the
the proper scope of the delegated jurisdiction of municipal outbreak of World War II.16
trial courts in land registration cases. Petitioner Republic of the
Philippines (Republic) assails the Decision of the Court of Dissatisfied with the CA’s ruling, petitioner Republic filed this
Appeals (CA)1 in CA-G.R. CV No. 70349, which affirmed the instant Rule 45 Petition and raised the following arguments in
Decision of the Municipal Trial Court (MTC) of San Juan, support of its appeal:
Batangas2 in LRC Case No. N-98-20, LRA Record No. 68329,
granting respondent Bantigue Point Development I.
Corporation’s (Corporation) application for original THE REPUBLIC CANNOT BE ESTOPPED FROM QUESTIONING
registration of a parcel of land. Since only questions of law THE JURISDICTION OF THE MUNICIPAL TRIAL COURT OVER
have been raised, petitioner need not have filed a Motion for THE APPLICATION FOR ORIGINAL REGISTRATION OF LAND
Reconsideration of the assailed CA Decision before filing this TITLE EVEN FOR THE FIRST TIME ON APPEAL
Petition for Review.
II.
The Facts THE MUNICIPAL TRIAL COURT FAILED TO ACQUIRE
On 17 July 1997, respondent Bantigue Point Development JURISDICTION OVER THE APPLICATION FOR ORIGINAL
Corporation filed with the Regional Trial Court (RTC) of REGISTRATION OF LAND TITLE.17
Rosario, Batangas an application for original registration of The Court’s Ruling
title over a parcel of land with an assessed value of ₱4,330, We uphold the jurisdiction of the MTC, but remand the case to
₱1,920 and ₱8,670, or a total assessed value of ₱14,920 for the the court a quo for further proceedings in order to determine
entire property, more particularly described as Lot 8060 of Cad if the property in question forms part of the alienable and
453-D, San Juan Cadastre, with an area of more or less 10,732 disposable land of the public domain.
square meters, located at Barangay Barualte, San Juan,
Batangas. 3 i
The Republic is not estopped from raising the issue of
On 18 July 1997, the RTC issued an Order setting the case for jurisdiction in this case.
initial hearing on 22 October 1997.4 On 7 August 1997, it issued At the outset, we rule that petitioner Republic is not estopped
a second Order setting the initial hearing on 4 November from questioning the jurisdiction of the lower court, even if the
1997.5 former raised the jurisdictional question only on appeal. The
Petitioner Republic filed its Opposition to the application for rule is settled that lack of jurisdiction over the subject matter
registration on 8 January 1998 while the records were still with may be raised at any stage of the proceedings.18 Jurisdiction
the RTC.6 over the subject matter is conferred only by the Constitution
or the law.19 It cannot be acquired through a waiver or
On 31 March 1998, the RTC Clerk of Court transmitted motu enlarged by the omission of the parties or conferred by the
proprio the records of the case to the MTC of San Juan, acquiescence of the court.20 Consequently, questions of
because the assessed value of the property was allegedly less jurisdiction may be cognizable even if raised for the first time
than ₱100,000.7 on appeal.21
Thereafter, the MTC entered an Order of General Default8 and
commenced with the reception of evidence.9 Among the The ruling of the Court of Appeals that "a party may be
documents presented by respondent in support of its estopped from raising such [jurisdictional] question if he has
application are Tax Declarations,10 a Deed of Absolute Sale in actively taken part in the very proceeding which he questions,
its favor,11 and a Certification from the Department of belatedly objecting to the court’s jurisdiction in the event that
Environment and Natural Resources (DENR) Community the judgment or order subsequently rendered is adverse to
Environment and Natural Resources Office (CENRO) of him"22 is based on the doctrine of estoppel by laches. We are
Batangas City that the lot in question is within the alienable aware of that doctrine first enunciated by this Court in Tijam
and disposable zone.12 Thereafter, it awarded the land to v. Sibonghanoy.23 In Tijam, the party-litigant actively
respondent Corporation.13 participated in the proceedings before the lower court and
filed pleadings therein. Only 15 years thereafter, and after
receiving an adverse Decision on the merits from the appellate
court, did the party-litigant question the lower court’s days from the Order.30 While the date set by the RTC was
jurisdiction. Considering the unique facts in that case, we held beyond the 90-day period provided for in Section 23, this fact
that estoppel by laches had already precluded the party- did not affect the jurisdiction of the trial court. In Republic v.
litigant from raising the question of lack of jurisdiction on Manna Properties, Inc.,31 petitioner Republic therein
appeal. In Figueroa v. People,24 we cautioned that Tijam must contended that there was failure to comply with the
be construed as an exception to the general rule and applied jurisdictional requirements for original registration, because
only in the most exceptional cases whose factual milieu is there were 125 days between the Order setting the date of the
similar to that in the latter case. initial hearing and the initial hearing itself. We ruled that the
lapse of time between the issuance of the Order setting the
The facts are starkly different in this case, making the date of initial hearing and the date of the initial hearing itself
exceptional rule in Tijam inapplicable. Here, petitioner was not fatal to the application. Thus, we held:
Republic filed its Opposition to the application for registration
when the records were still with the RTC.25 At that point, x x x [A] party to an action has no control over the
petitioner could not have questioned the delegated Administrator or the Clerk of Court acting as a land court; he
jurisdiction of the MTC, simply because the case was not yet has no right to meddle unduly with the business of such official
with that court. When the records were transferred to the in the performance of his duties. A party cannot intervene in
MTC, petitioner neither filed pleadings nor requested matters within the exclusive power of the trial court. No fault
affirmative relief from that court. On appeal, petitioner is attributable to such party if the trial court errs on matters
immediately raised the jurisdictional question in its within its sole power. It is unfair to punish an applicant for an
Brief.26 Clearly, the exceptional doctrine of estoppel by laches act or omission over which the applicant has neither
is inapplicable to the instant appeal. responsibility nor control, especially if the applicant has
complied with all the requirements of the law.32
Laches has been defined as the "failure or neglect, for an Indeed, it would be the height of injustice to penalize
unreasonable and unexplained length of time, to do that respondent Corporation by dismissing its application for
which, by exercising due diligence, could or should have been registration on account of events beyond its control.
done earlier; it is negligence or omission to assert a right within
a reasonable time, warranting the presumption that the party Moreover, since the RTC issued a second Order on 7 August
entitled to assert it either has abandoned or declined to assert 1997 setting the initial hearing on 4 November 1997,33 within
it."27 In this case, petitioner Republic has not displayed such the 90-day period provided by law, petitioner Republic argued
unreasonable failure or neglect that would lead us to conclude that the jurisdictional defect was still not cured, as the second
that it has abandoned or declined to assert its right to question Order was issued more than five days from the filing of the
the lower court's jurisdiction. application, again contrary to the prescribed period under the
Property Registration Decree.34
II
The Municipal Trial Court properly acquired jurisdiction over Petitioner is incorrect.
the case.
The RTC’s failure to issue the Order setting the date and hour
In assailing the jurisdiction of the lower courts, petitioner of the initial hearing within five days from the filing of the
Republic raised two points of contention: (a) the period for application for registration, as provided in the Property
setting the date and hour of the initial hearing; and (b) the Registration Decree, did not affect the court’s its jurisdiction.
value of the land to be registered. Observance of the five-day period was merely directory, and
First, petitioner argued that the lower court failed to acquire failure to issue the Order within that period did not deprive the
jurisdiction over the application, because the RTC set the date RTC of its jurisdiction over the case. To rule that compliance
and hour of the initial hearing beyond the 90-day period with the five-day period is mandatory would make jurisdiction
provided under the Property Registration Decree.28 over the subject matter dependent upon the trial court.
We disagree. Jurisdiction over the subject matter is conferred only by the
Constitution or the law.35 It cannot be contingent upon the
The Property Registration Decree provides: action or inaction of the court.
This does not mean that courts may disregard the statutory
Sec. 23. Notice of initial hearing, publication, etc. - The court periods with impunity. We cannot assume that the law
shall, within five days from filing of the application, issue an deliberately meant the provision "to become meaningless and
order setting the date and hour of the initial hearing which to be treated as a dead letter."36 However, the records of this
shall not be earlier than forty-five days nor later than ninety case do not show such blatant disregard for the law. In fact,
days from the date of the order. x x x. the RTC immediately set the case for initial hearing a day after
In this case, the application for original registration was filed the filing of the application for registration,37 except that it had
on 17 July 1997.29 On 18 July 1997, or a day after the filing of to issue a second Order because the initial hearing had been
the application, the RTC immediately issued an Order setting set beyond the 90-day period provided by law.
the case for initial hearing on 22 October 1997, which was 96
Second, petitioner contended38 that since the selling price of respondent Bantigue Point Development Corporation claims
the property based on the Deed of Sale annexed to the property.
respondent’s application for original registration was
₱160,000,39 the MTC did not have jurisdiction over the case. The value of the property must therefore be ascertained with
Under Section 34 of the Judiciary Reorganization Act, as reference to the corresponding Tax Declarations submitted by
amended,40 the MTC’s delegated jurisdiction to try cadastral respondent Corporation together with its application for
and land registration cases is limited to lands, the value of registration. From the records, we find that the assessed value
which should not exceed ₱100,000. of the property is ₱4,330, ₱1,920 and ₱8,670, or a total
assessed value of ₱14,920 for the entire property.43 Based on
We are not persuaded. these Tax Declarations, it is evident that the total value of the
land in question does not exceed ₱100,000. Clearly, the MTC
The delegated jurisdiction of the MTC over cadastral and land may exercise its delegated jurisdiction under the Judiciary
registration cases is indeed set forth in the Judiciary Reorganization Act, as amended.
Reorganization Act, which provides:
III
Sec. 34. Delegated Jurisdiction in Cadastral and Land A certification from the CENRO is not sufficient proof that the
Registration Cases. - Metropolitan Trial Courts, Municipal Trial property in question is alienable and disposable land of the
Courts, and Municipal Circuit Trial Courts may be assigned by public domain.
the Supreme Court to hear and determine cadastral or land
registration cases covering lots where there is no controversy Even as we affirm the propriety of the MTC’s exercise of its
or opposition, or contested lots where the value of which does delegated jurisdiction, we find that the lower court erred in
not exceed One hundred thousand pesos (₱100,000.00), such granting respondent Corporation’s application for original
value to be ascertained by the affidavit of the claimant or by registration in the absence of sufficient proof that the property
agreement of the respective claimants if there are more than in question was alienable and disposable land of the public
one, or from the corresponding tax declaration of the real domain.
property. Their decision in these cases shall be appealable in
the same manner as decisions of the Regional Trial Courts. (As The Regalian doctrine dictates that all lands of the public
amended by R.A. No. 7691) (Emphasis supplied.) domain belong to the State.44 The applicant for land
registration has the burden of overcoming the presumption of
Thus, the MTC has delegated jurisdiction in cadastral and land State ownership by establishing through incontrovertible
registration cases in two instances: first, where there is no evidence that the land sought to be registered is alienable or
controversy or opposition; or, second, over contested lots, the disposable based on a positive act of the government.45 We
value of which does not exceed ₱100,000. held in Republic v. T.A.N. Properties, Inc. that a CENRO
certification is insufficient to prove the alienable and
The case at bar does not fall under the first instance, because disposable character of the land sought to be registered.46 The
petitioner opposed respondent Corporation’s application for applicant must also show sufficient proof that the DENR
registration on 8 January 1998.41 Secretary has approved the land classification and released the
land in question as alienable and disposable.47
However, the MTC had jurisdiction under the second instance,
because the value of the lot in this case does not exceed Thus, the present rule is that an application for original
₱100,000. registration must be accompanied by (1) a CENRO or
PENRO48 Certification; and (2) a copy of the original
Contrary to petitioner’s contention, the value of the land classification approved by the DENR Secretary and certified as
should not be determined with reference to its selling price. a true copy by the legal custodian of the official records.49
Rather, Section 34 of the Judiciary Reorganization Act provides
that the value of the property sought to be registered may be Here, respondent Corporation only presented a CENRO
ascertained in three ways: first, by the affidavit of the certification in support of its application.50 Clearly, this falls
claimant; second, by agreement of the respective claimants, if short of the requirements for original registration.
there are more than one; or, third, from the corresponding tax
declaration of the real property.42 We therefore remand this case to the court a quo for reception
of further evidence to prove that the property in question
In this case, the value of the property cannot be determined forms part of the alienable and disposable land of the public
using the first method, because the records are bereft of any domain. If respondent Bantigue Point Development
affidavit executed by respondent as to the value of the Corporation presents a certified true copy of the original
property. Likewise, valuation cannot be done through the classification approved by the DENR Secretary, the application
second method, because this method finds application only for original registration should be granted. If it fails to present
where there are multiple claimants who agree on and make a sufficient proof that the land in question is alienable and
joint submission as to the value of the property. Here, only
disposable based on a positive act of the government, the subject of the suit, or who are averred as owner/s of the assets
application should be denied. involved.
WHEREFORE, premises considered, the instant Petition for
Review is DENIED. Let this case be REMANDED to the The original complaint, CC No. 0033, as later amended to make
Municipal Trial Court of San Juan, Batangas, for reception of the allegations more specific, is described in Republic v.
evidence to prove that the property sought to be registered is Sandiganbayan2 (one of several ill-gotten suits of the same
alienable and disposable land of the public domain. title disposed of by the Court) as revolving around the
SO ORDERED. provisional take over by the PCGG of COCOFED, Cocomark, and
Coconut Investment Company and their assets and the
sequestration of shares of stock in United Coconut Planters
Bank (UCPB) allegedly owned by, among others, over a million
coconut farmers, and the six (6) Coconut Industry Investment
Fund (CIIF) corporations,3 referred to in some pleadings as CIIF
G.R. Nos. 177857-58 January 24, 2012 oil mills and the fourteen (14) CIIF holding
PHILIPPINE COCONUT, PRODUCERS FEDERATION, INC. companies4 (hereafter collectively called "CIIF companies"),
(COCOFED), MANUEL V. DEL ROSARIO, DOMINGO P. ESPINA, so-called for having been either organized, acquired and/or
SALVADOR P. BALLARES, JOSELITO A. MORALEDA, PAZ M. funded as UCPB subsidiaries with the use of the CIIF levy. The
YASON, VICENTE A. CADIZ, CESARIA DE LUNA TITULAR, and basic complaint also contained allegations about the alleged
RAYMUNDO C. DE VILLA, Petitioners, misuse of the coconut levy funds to buy out the majority of the
vs. outstanding shares of stock of San Miguel Corporation (SMC).
REPUBLIC OF THE PHILIPPINES, Respondent,
WIGBERTO E. TAÑADA, OSCAR F. SANTOS, SURIGAO DEL SUR More particularly, in G.R. Nos. 177857-58, class action
FEDERATION OF AGRICULTURAL COOPERATIVES (SUFAC) and petitioners COCOFED and a group of purported coconut
MORO FARMERS ASSOCIATION OF ZAMBOANGA DEL SUR farmers and COCOFED members (hereinafter "COCOFED et al."
(MOFAZS), represented by ROMEO C. collectively)5 seek the reversal of the following judgments and
ROYANDOYAN, Intervenors. resolutions of the anti-graft court insofar as these issuances
x - - - - - - - - - - - - - - - - - - - - - - -x are adverse to their interests:
G.R. No. 178193
DANILO S. URSUA, Petitioner, 1) Partial Summary Judgment6 dated July 11, 2003, as
vs. reiterated in a resolution7 of December 28, 2004,
REPUBLIC OF THE PHILIPPINES, Respondent, denying COCOFED’s motion for reconsideration, and
D E C I S I O N the May 11, 2007 resolution denying COCOFED’s
VELASCO, JR., J.: motion to set case for trial and declaring the partial
summary judgment final and appealable,8 all issued in
The Case Civil Case No. 0033-A; and
Cast against a similar backdrop, these consolidated petitions
for review under Rule 45 of the Rules of Court assail and seek 2) Partial Summary Judgment9 dated May 7, 2004, as
to annul certain issuances of the Sandiganbayan in its Civil Case also reiterated in a resolution10 of December 28,
No. 0033-A entitled, "Republic of the Philippines, Plaintiff, v. 2004, and the May 11, 2007 resolution11 issued in
Eduardo M. Cojuangco, Jr., et al., Defendants, COCOFED, et al., Civil Case No. 0033-F. The December 28, 2004
BALLARES, et al., Class Action Movants," and Civil Case No. resolution denied COCOFED’s Class Action Omnibus
0033-F entitled, "Republic of the Philippines, Plaintiff, v. Motion therein praying to dismiss CC Case No. 0033-
Eduardo M. Cojuangco, Jr., et al., Defendants." Civil Case (CC) F on jurisdictional ground and alternatively,
Nos. 0033-A and 0033-F are the results of the splitting into reconsideration and to set case for trial. The May 11,
eight (8) amended complaints of CC No. 0033 entitled, 2007 resolution declared the judgment final and
"Republic of the Philippines v. Eduardo Cojuangco, Jr., et al.," appealable.
a suit for recovery of ill-gotten wealth commenced by the
Presidential Commission on Good Government (PCGG), for the For convenience, the partial summary judgment (PSJ)
Republic of the Philippines (Republic), against Ferdinand E. rendered on July 11, 2003 in CC No. 0033-A shall hereinafter
Marcos and several individuals, among them, Ma. Clara be referred to as PSJ-A, and that issued on May 7, 2004 in CC
Lobregat (Lobregat) and petitioner Danilo S. Ursua (Ursua). 0033-F, as PSJ-F. PSJ-A and PSJ-F basically granted the
Lobregat and Ursua occupied, at one time or another, Republic’s separate motions for summary judgment.
directorial or top management positions in either the
Philippine Coconut Producers Federation, Inc. (COCOFED) or On June 5, 2007, the court a quo issued a Resolution in CC No.
the Philippine Coconut Authority (PCA), or both.1 Each of the 0033-A, which modified PSJ-A by ruling that no further trial is
eight (8) subdivided complaints correspondingly impleaded as needed on the issue of ownership of the subject properties.
defendants only the alleged participants in the transaction/s Likewise, on May 11, 2007, the said court issued a Resolution
in CC No. 0033-F amending PSJ-F in like manner.
 subsidize the sale of coconut-based products, thus
On the other hand, petitioner Ursua, in G.R. No. 178193, limits stabilizing the price of edible oil.22
his petition for review on PSJ-A to the extent that it negates his 2. P.D. No. 582 created the Coconut Industry
claims over shares of stock in UCPB. Development Fund (CIDF) to finance the operation of
a hybrid coconut seed farm.
Tañada, et al. have intervened12 in G.R. Nos. 177857-58 in 3. Then came P.D. No. 755 providing under its Section 1
support of the government’s case. the following:

Another petition was filed and docketed as G.R. No. 180705. It It is hereby declared that the policy of the State is to provide
involves questions relating to Eduardo M. Cojuangco, Jr.’s readily available credit facilities to the coconut farmers at a
(Cojuangco, Jr.’s) ownership of the UCPB shares, which he preferential rates; that this policy can be expeditiously and
allegedly received as option shares, and which is one of the efficiently realized by the implementation of the "Agreement
issues raised in PSJ-A.13 G.R. No. 180705 was consolidated with for the Acquisition of a Commercial Bank for the benefit of
G.R. Nos. 177857-58 and 178193. On September 28, 2011, Coconut Farmers" executed by the [PCA]…; and that the [PCA]
respondent Republic filed a Motion to Resolve G.R. Nos. is hereby authorized to distribute, for free, the shares of stock
177857-58 and 178193.14 On January 17, 2012, the Court of the bank it acquired to the coconut farmers….
issued a Resolution deconsolidating G.R. Nos. 177857-58 and
178193 from G.R. No. 180705. This Decision is therefore Towards achieving the policy thus declared, P.D. No. 755,
separate and distinct from the decision to be rendered in G.R. under its Section 2, authorized PCA to utilize the CCSF and the
No. 180705. CIDF collections to acquire a commercial bank and deposit the
CCSF levy collections in said bank, interest free, the deposit
The Facts withdrawable only when the bank has attained a certain level
The relevant facts, as culled from the records and as gathered of sufficiency in its equity capital. The same section also
from Decisions of the Court in a batch of coco levy and illegal decreed that all levies PCA is authorized to collect shall not be
wealth cases, are: considered as special and/or fiduciary funds or form part of the
general funds of the government within the contemplation of
In 1971, Republic Act No. (R.A.) 6260 was enacted creating the P.D. No. 711.23
Coconut Investment Company (CIC) to administer the Coconut
Investment Fund (CIF), which, under Section 815 thereof, was 4. P.D. No. 961 codified the various laws relating to the
to be sourced from a PhP 0.55 levy on the sale of every 100 kg. development of coconut/palm oil industries.
of copra. Of the PhP 0.55 levy of which the copra seller was, or 5. The relevant provisions of P.D. No. 961, as later
ought to be, issued COCOFUND receipts, PhP 0.02 was placed amended by P.D. No. 1468 (Revised Coconut Industry
at the disposition of COCOFED, the national association of Code), read:
coconut producers declared by the Philippine Coconut
Administration (PHILCOA, now PCA16 ) as having the largest ARTICLE III
membership.17 Levies
The declaration of martial law in September 1972 saw the Section 1. Coconut Consumers Stabilization Fund Levy. — The
issuance of several presidential decrees ("P.Ds.") purportedly [PCA] is hereby empowered to impose and collect … the
designed to improve the coconut industry through the Coconut Consumers Stabilization Fund Levy ….
collection and use of the coconut levy fund. While coming ….
generally from impositions on the first sale of copra, the Section 5. Exemption. — The [CCSF] and the [CIDF] as well as
coconut levy fund came under various names, the different all disbursements as herein authorized, shall not be construed
establishing laws and the stated ostensible purpose for the … as special and/or fiduciary funds, or as part of the general
exaction explaining the differing denominations. Charged with funds of the national government within the contemplation of
the duty of collecting and administering the Fund was PD 711; … the intention being that said Fund and the
PCA.18 Like COCOFED with which it had a legal linkage,19 the disbursements thereof as herein authorized for the benefit of
PCA, by statutory provisions scattered in different coco levy the coconut farmers shall be owned by them in their private
decrees, had its share of the coco levy.20 capacities: …. (Emphasis supplied.)

The following were some of the issuances on the coco levy, its 6. Letter of Instructions No. (LOI) 926, Series of
collection and utilization, how the proceeds of the levy will be 1979, made reference to the creation, out of other
managed and by whom, and the purpose it was supposed to coco levy funds, of the Coconut Industry Investment
serve: Fund (CIIF) in P.D. No. 1468 and entrusted a portion
of the CIIF levy to UCPB for investment, on behalf of
1. P.D. No. 276 established the Coconut Consumers coconut farmers, in oil mills and other private
Stabilization Fund (CCSF) and declared the proceeds corporations, with the following equity ownership
of the CCSF levy as trust fund,21 to be utilized to structure:24

Section 2. Organization of the Cooperative Endeavor. – The farmers.33 The remaining 27.8% of the FUB capital stock were
[UCPB], in its capacity as the investment arm of the coconut not covered by any of the agreements.
farmers thru the [CIIF] … is hereby directed to invest, on behalf
of the coconut farmers, such portion of the CIIF … in private Under paragraph 8 of the second agreement, PCA agreed to
corporations … under the following guidelines: expeditiously distribute the FUB shares purchased to such
"coconut farmers holding registered COCOFUND receipts" on
a) The coconut farmers shall own or control at least … (50%) equitable basis.
of the outstanding voting capital stock of the private
corporation [acquired] thru the CIIF and/or corporation As found by the Sandiganbayan, the PCA appropriated, out of
owned or controlled by the farmers thru the CIIF …. its own fund, an amount for the purchase of the said 72.2%
(Words in bracket added.) equity, albeit it would later reimburse itself from the coconut
levy fund.34
Through the years, a part of the coconut levy funds went
directly or indirectly to various projects and/or was converted As of June 30, 1975, the list of FUB stockholders shows PCA
into different assets or investments.25 Of particular relevance with 129,955 shares.35
to this case was their use to acquire the First United
Bank (FUB), later renamed UCPB, and the acquisition by UCPB, Shortly after the execution of the PCA – Cojuangco, Jr.
through the CIIF companies, of a large block of SMC shares. 26 Agreement, President Marcos issued, on July 29, 1975, P.D.
No. 755 directing, as earlier narrated, PCA to use the CCSF and
Apropos the intended acquisition of a commercial bank for the CIDF to acquire a commercial bank to provide coco farmers
purpose stated earlier, it would appear that FUB was the bank with "readily available credit facilities at preferential rate," and
of choice which the Pedro Cojuangco group (collectively, PCA "to distribute, for free," the bank shares to coconut
"Pedro Cojuangco") had control of. The plan, then, was for PCA farmers.
to buy all of Pedro Cojuangco’s shares in FUB. However, as
later events unfolded, a simple direct sale from the seller Then came the 1986 EDSA event. One of the priorities of then
(Pedro) to PCA did not ensue as it was made to appear that President Corazon C. Aquino’s revolutionary government was
Cojuangco, Jr. had the exclusive option to acquire the former’s the recovery of ill-gotten wealth reportedly amassed by the
FUB controlling interests. Emerging from this elaborate, Marcos family and close relatives, their nominees and
circuitous arrangement were two deeds; the first, simply associates. Apropos thereto, she issued Executive Order Nos.
denominated as Agreement,27 dated May 1975,28 entered into (E.Os.) 1, 2 and 14, as amended by E.O. 14-A, all Series of 1986.
by and between Cojuangco, Jr., for and in his behalf and in E.O. 1 created the PCGG and provided it with the tools and
behalf of "certain other buyers," and Pedro Cojuangco, processes it may avail of in the recovery efforts;36 E.O. No. 2
purportedly accorded Cojuangco, Jr. the option to asserted that the ill-gotten assets and properties come in the
buy 72.2% of FUB’s outstanding capital stock, or 137,866 form of shares of stocks, etc.; while E.O. No. 14 conferred on
shares (the "option shares," for brevity), at PhP 200 per share. the Sandiganbayan exclusive and original jurisdiction over ill-
gotten wealth cases, with the proviso that "technical rules of
The second but related contract, dated May 25, 1975, was procedure and evidence shall not be applied strictly" to the
denominated as Agreement for the Acquisition of a civil cases filed under the E.O. Pursuant to these issuances, the
Commercial Bank for the Benefit of the Coconut Farmers of the PCGG issued numerous orders of sequestration, among which
Philippines.29 It had PCA,30 for itself and for the benefit of the were those handed out, as earlier mentioned, against shares
coconut farmers, purchase from Cojuangco, Jr. the shares of of stock in UCPB purportedly owned by or registered in the
stock subject of the First Agreement for PhP 200 per share. As names of (a) more than a million coconut farmers and (b) the
additional consideration for PCA’s buy-out of what Cojuangco, CIIF companies, including the SMC shares held by the CIIF
Jr. would later claim to be his exclusive and personal companies. On July 31, 1987, the PCGG instituted before the
option,31 it was stipulated that, from PCA, Cojuangco, Jr. shall Sandiganbayan a recovery suit docketed thereat as CC No.
receive equity in FUB amounting to 10%, or 7.22%, of the 0033.
72.2%, or fully paid shares.
After the filing and subsequent amendments of the complaint
Apart from the aforementioned 72.2%, PCA purchased from in CC 0033, Lobregat, COCOFED et al., and Ballares et al.,
other FUB shareholders 6,534 shares. purportedly representing over a million coconut farmers,
sought and were allowed to intervene.37 Meanwhile, the
While the 64.98% portion of the option shares (72.2% – 7.22% following incidents/events transpired:
= 64.98%) ostensibly pertained to the farmers, the
corresponding stock certificates supposedly representing the 1. On the postulate, inter alia, that its coco-farmer
farmers’ equity were in the name of and delivered to members own at least 51% of the outstanding capital
PCA.32 There were, however, shares forming part of the stock of UCPB, the CIIF companies, etc., COCOFED et
aforesaid 64.98% portion, which ended up in the hands of non- al., on November 29, 1989, filed Class Action Omnibus
Motion praying for the lifting of the orders of
 sequestration referred to above and for a chance to the coconut farmers in accordance with PD 755 and
present evidence to prove the coconut farmers’ the IRR that PCA shall issue;
ownership of the UCPB and CIIF shares. The plea to
present evidence was denied; 2) Pursuant to the stock distribution procedures set out
in PCA Administrative Order No. 1, s. of 1975, (PCA AO
2. Later, the Republic moved for and secured approval 1),44 farmers who had paid to the CIF under RA 6260
of a motion for separate trial which paved the way for and registered their COCOFUND (CIF) receipts with
the subdivision of the causes of action in CC 0033, PCA were given their corresponding UCPB stock
each detailing how the assets subject thereof were certificates. As of June 1976, the cut-off date for the
acquired and the key roles the principal played; extended registration, only 16 million worth of
COCOFUND receipts were registered, leaving over 50
3. Civil Case 0033, pursuant to an order of the million shares undistributed;
Sandiganbayan would be subdivided into eight
complaints, docketed as CC 0033-A to CC 0033-H.38 3) PCA would later pass Res. 074-78, s. of 1978, to
allocate the 50 million undistributed shares to (a)
farmers who were already recipients thereof and (b)
Lobregat, Ballares et al., COCOFED, et al., on the strength of qualified farmers to be identified by COCOFED after a
their authority to intervene in CC 0033, continued to national census.
participate in CC 0033-A where one of the issues raised was
the misuse of the names/identities of the over a million 4) As of May 1981, some 15.6 million shares were still
coconut farmers;39 held by and registered in the name of COCOFED "in
behalf of coconut farmers" for distribution
4. On February 23, 2001, Lobregat, COCOFED, immediately after the completion of the national
Ballares et al., filed a Class Action Omnibus Motion to census, to all those determined by the PCA to
enjoin the PCGG from voting the sequestered UCPB be bonafide coconut farmers, but who have not
shares and the SMC shares registered in the names of received the bank shares;45 and
the CIIF companies. The Sandiganbayan, by Order of
February 28, 2001, granted the motion, sending the 5) Prior to June 1986, a large number of coconut farmers
Republic to come to this Court on certiorari, docketed opted to sell all/part of their UCPB shares below their
as G.R. Nos. 147062-64, to annul said order; and par value. This prompted the UCPB Board to
authorize the CIIF companies to buy these
5. By Decision of December 14, 2001, in G.R. Nos. shares. Some 40.34 million common voting shares of
147062-64 (Republic v. COCOFED), 40 the Court UCPB ended up with these CIIF companies albeit
declared the coco levy funds as prima facie public initially registered in the name of UCPB.
funds. And purchased as the sequestered UCPB
shares were by such funds, beneficial ownership On the other hand, the subject of CC 0033-F are two (2) blocks
thereon and the corollary voting rights prima of SMC shares of stock, the first referring to shares purchased
facie pertain, according to the Court, to the through and registered in the name of the CIIF holding
government. companies. The purported ownership of the second block of
SMC shares is for the nonce irrelevant to the disposition of this
The instant proceedings revolve around CC 0033-A (Re: case. During the time material, the CIIF block of SMC shares
Anomalous Purchase and Use of [FUB] now [UCPB])41 and CC represented 27% of the outstanding capital stock of SMC.
0033-F (Re: Acquisition of San Miguel Corporation Shares of
Stock), the first case pivoting mainly on the series of Civil Case No. 0033-A
transactions culminating in the alleged anomalous purchase of After the pre-trial, but before the Republic, as plaintiff a quo,
72.2% of FUB’s outstanding capital stock and the transfer by could present, as it committed to, a list of UCPB stockholders
PCA of a portion thereof to private individuals. COCOFED, et al. as of February 25, 1986,46 among other evidence, COCOFED, et
and Ballares, et al. participated in CC No. 0033-A as class action al., on the premise that the sequestered farmers’ UCPB shares
movants. are not unlawfully acquired assets, filed in April 2001
their Class Action Motion for a Separate Summary
Petitioners COCOFED et al.42 and Ursua43 narrate in their Judgment. In it, they prayed for a judgment dismissing the
petitions how the farmers’ UCPB shares in question ended up complaint in CC 0033-A, for the reason that the over than a
in the possession of those as hereunder indicated: million unimpleaded coconut farmers own the UCPB shares. In
March 2002, they filed Class Action Motion for Partial Separate
1) The farmers’ UCPB shares were originally registered Trial on the issue of whether said UCPB shares have
in the name of PCA for the eventual free distribution legitimately become the private property of the million
thereof to and registration in the individual names of coconut farmers.

Correlatively, the Republic, on the strength of the December
14, 2001 ruling in Republic v. COCOFED47 and on the argument, 5. Defendants Maria Clara Lobregat and Jose R. Eleazar, Jr.
among others, that the claim of COCOFED and Ballares et al. were [PCA] Directors … during the period 1970 to 1986….
over the subject UCPB shares is based solely on the supposed
COCOFUND receipts issued for payment of the R.A. 6260 CIF 6. Plaintiff admits the existence of the following agreements
levy, filed a Motion for Partial Summary Judgment [RE: which are attached as Annexes "A" and "B" to the
COCOFED, et al. and Ballares, et al.] dated April 22, 2002, Opposition dated October 10, 2002 of defendant Eduardo
praying that a summary judgment be rendered declaring: M. Cojuangco, Jr. to the above-cited Motion for Partial
Summary Judgment:
a. That Section 2 of [PD] 755, Section 5, Article III of P.D. 961
and Section 5, Article III of P.D. No. 1468 are unconstitutional; a) "Agreement made and entered into this ______ day
b. That … (CIF) payments under … (R.A.) No. 6260 are not valid of May, 1975 at Makati, Rizal, Philippines, by and
and legal bases for ownership claims over UCPB shares; and between:
c. That COCOFED, et al., and Ballares, et al. have not legally and b)
validly obtained title over the subject UCPB shares. PEDRO COJUANGCO, Filipino, x x x, for and in his own behalf
and in behalf of certain other stockholders of First United Bank
After an exchange of pleadings, the Republic filed its sur- listed in Annex "A" attached hereto (hereinafter collectively
rejoinder praying that it be conclusively held to be the true and called the SELLERS);
absolute owner of the coconut levy funds and the UCPB shares
acquired therefrom.48 – and –

A joint hearing on the separate motions for summary EDUARDO COJUANGCO, JR., Filipino, x x x, represented in this
judgment to determine what material facts exist with or act by his duly authorized attorney-in-fact, EDGARDO J.
without controversy followed.49 By Order50 of March 11, 2003, ANGARA, for and in his own behalf and in behalf of certain
the Sandiganbayan detailed, based on this Court’s ruling in other buyers, (hereinafter collectively called the BUYERS)";
related cases, the parties’ manifestations made in open court
and the pleadings and evidence on record, the facts it found to WITNESSETH: That
be without substantial controversy, together with the
admissions and/or extent of the admission made by the parties WHEREAS, the SELLERS own of record and beneficially a total
respecting relevant facts, as follows: of 137,866 shares of stock, with a par value of P100.00 each,
of the common stock of the First United Bank (the "Bank"), a
As culled from the exhaustive discussions and manifestations commercial banking corporation existing under the laws of the
of the parties in open court of their respective pleadings and Philippines;
evidence on record, the facts which exist without any WHEREAS, the BUYERS desire to purchase, and the SELLERS are
substantial controversy are set forth hereunder, together with willing to sell, the aforementioned shares of stock totaling
the admissions and/or the extent or scope of the admissions 137,866 shares (hereinafter called the "Contract Shares")
made by the parties relating to the relevant facts: owned by the SELLERS due to their special relationship to
EDUARDO COJUANGCO, JR.;
1. The late President Ferdinand E. Marcos was President …
for two terms . . . and, during the second term, … declared NOW, THEREFORE, for and in consideration of the premises
Martial Law through Proclamation No. 1081 dated and the mutual covenants herein contained, the parties agree
September 21, 1972. as follows:
1. Sale and Purchase of Contract Shares
2. On January 17, 1973, [he] issued Proclamation No. 1102 Subject to the terms and conditions of this Agreement, the
announcing the ratification of the 1973 Constitution. SELLERS hereby sell, assign, transfer and convey unto the
3. From January 17, 1973 to April 7, 1981, [he] . . .exercised BUYERS, and the BUYERS hereby purchase and acquire, the
the powers and prerogative of President under the 1935 Contract Shares free and clear of all liens and encumbrances
Constitution and the powers and prerogative of President thereon.
. . . the 1973 Constitution.
2. Contract Price
[He] …promulgated various [P.D.s], among which were P.D. The purchase price per share of the Contract Shares payable
No. 232, P.D. No. 276, P.D. No. 414, P.D. No. 755, P.D. No. 961 by the BUYERS is P200.00 or an aggregate price of
and P.D. No. 1468. P27,573,200.00 (the "Contract Price").

4. On April 17, 1981, amendments to the 1973 Constitution 3. Delivery of, and payment for, stock certificates
were effected and, on June 30, 1981, [he], after being Upon the execution of this Agreement, (i) the SELLERS shall
elected President, "reassumed the title and exercised the deliver to the BUYERS the stock certificates representing the
powers of the President until 25 February 1986." Contract Shares, free and clear of all liens, encumbrances,
obligations, liabilities and other burdens in favor of the Bank EDUARDO M. COJUANGCO, JR., x x x, hereinafter referred to as
or third parties, duly endorsed in blank or with stock powers the SELLER;
sufficient to transfer the shares to bearer; and (ii) BUYERS shall – and –
deliver to the SELLERS P27,511,295.50 representing the
Contract Price less the amount of stock transfer taxes payable PHILIPPINE COCONUT AUTHORITY, a public corporation
by the SELLERS, which the BUYERS undertake to remit to the created by Presidential Decree No. 232, as amended, for itself
appropriate authorities. (Emphasis added.) and for the benefit of the coconut farmers of the Philippines,
(hereinafter called the BUYER)"
4. Representation and Warranties of Sellers WITNESSETH: That
The SELLERS respectively and independently of each other
represent and warrant that: WHEREAS, on May 17, 1975, the Philippine Coconut Producers
Federation ("PCPF"), through its Board of Directors, expressed
(a) The SELLERS are the lawful owners of, with good the desire of the coconut farmers to own a commercial bank
marketable title to, the Contract Shares and that (i) the which will be an effective instrument to solve the perennial
certificates to be delivered pursuant thereto have been validly credit problems and, for that purpose, passed a resolution
issued and are fully paid and no-assessable; (ii) the Contract requesting the PCA to negotiate with the SELLER for the
Shares are free and clear of all liens, encumbrances, transfer to the coconut farmers of the SELLER’s option to buy
obligations, liabilities and other burdens in favor of the Bank the First United Bank (the "Bank") under such terms and
or third parties… conditions as BUYER may deem to be in the best interest of the
This representation shall survive the execution and delivery of coconut farmers and instructed Mrs. Maria Clara Lobregat to
this Agreement and the consummation or transfer hereby convey such request to the BUYER;
contemplated. WHEREAS, the PCPF further instructed Mrs. Maria Clara
Lobregat to make representations with the BUYER to utilize its
(b) The execution, delivery and performance of this Agreement funds to finance the purchase of the Bank;
by the SELLERS does not conflict with or constitute any breach
of any provision in any agreement to which they are a party or WHEREAS, the SELLER has the exclusive and personal option to
by which they may be bound. buy 144,400 shares (the "Option Shares") of the Bank,
constituting 72.2% of the present outstanding shares of stock
(c) They have complied with the condition set forth in Article X of the Bank, at the price of P200.00 per share, which option
of the Amended Articles of Incorporation of the Bank. only the SELLER can validly exercise;

5. Representation of BUYERS …. WHEREAS, in response to the representations made by the
coconut farmers, the BUYER has requested the SELLER to
6. Implementation exercise his personal option for the benefit of the coconut
The parties hereto hereby agree to execute or cause to be farmers;
executed such documents and instruments as may be required
in order to carry out the intent and purpose of this Agreement. WHEREAS, the SELLER is willing to transfer the Option Shares
to the BUYER at a price equal to his option price of P200 per
7. Notices …. share;
IN WITNESS WHEREOF, the parties hereto have hereunto set WHEREAS, recognizing that ownership by the coconut farmers
their hands at the place and on the date first above written. of a commercial bank is a permanent solution to their
PEDRO COJUANGCO perennial credit problems, that it will accelerate the growth
(on his own behalf and EDUARDO and development of the coconut industry and that the policy
in COJUANGCO, JR. of the state which the BUYER is required to implement is to
behalf of the other (on his own behalf and achieve vertical integration thereof so that coconut farmers
Sellers in behalf will become participants in, and beneficiaries of, the request
listed in Annex "A" of the other Buyers) of PCPF that it acquire a commercial bank to be owned by the
hereof) (BUYERS) coconut farmers and, appropriated, for that purpose, the sum
(SELLERS) of P150 Million to enable the farmers to buy the Bank and
capitalize the Bank to such an extension as to be in a position
By:
to adopt a credit policy for the coconut farmers at preferential
EDGARDO J. ANGARA
Attorney-in-Fact rates;
x x x x x x x x x
b) "Agreement for the Acquisition of a Commercial Bank for WHEREAS, x x x the BUYER is willing to subscribe to additional
shares ("Subscribed Shares") and place the Bank in a more
the Benefit of the Coconut Farmers of the Philippines, made
favorable financial position to extend loans and credit facilities
and entered into this 25th day of May 1975 at Makati, Rizal,
Philippines, by and between: to coconut farmers at preferential rates;

NOW, THEREFORE, for and in consideration of the foregoing emoluments to which he may be entitled by virtue of
premises and the other terms and conditions hereinafter the discharge of his function and duties as President,
contained, the parties hereby declare and affirm that their provided … and
principal contractual intent is (1) to ensure that the coconut
farmers own at least 60% of the outstanding capital stock of (f) The management contract may be assigned to a
the Bank; and (2) that the SELLER shall receive compensation management company owned and controlled by the SELLER.
for exercising his personal and exclusive option to acquire the
Option Shares, for transferring such shares to the coconut 4. As compensation for exercising his personal and exclusive
farmers at the option price of P200 per share, and for option to acquire the Option Shares and for transferring such
performing the management services required of him shares to the coconut farmers, as well as for performing the
hereunder. management services required of him, SELLER shall receive
equity in the Bank amounting, in the aggregate, to 95,304 fully
1. To ensure that the transfer to the coconut farmers of the paid shares in accordance with the procedure set forth in
Option Shares is effected with the least possible delay and to paragraph 6 below;
provide for the faithful performance of the obligations of the
parties hereunder, the parties hereby appoint the Philippine 5. In order to comply with the Central Bank program for
National Bank as their escrow agent (the "Escrow Agent"). increased capitalization of banks and to ensure that the Bank
will be in a more favorable financial position to attain its
Upon execution of this Agreement, the BUYER shall deposit objective to extend to the coconut farmers loans and credit
with the Escrow Agent such amount as may be necessary to facilities, the BUYER undertakes to subscribe to shares with an
implement the terms of this Agreement…. aggregate par value of P80,864,000 (the "Subscribed Shares").
The obligation of the BUYER with respect to the Subscribed
2. As promptly as practicable after execution of this Shares shall be as follows:
Agreement, the SELLER shall exercise his option to acquire the
Option Share and SELLER shall immediately thereafter deliver (a) The BUYER undertakes to subscribe, for the benefit of
and turn over to the Escrow Agent such stock certificates as the coconut farmers, to shares with an aggregate par
are herein provided to be received from the existing value of P15,884,000 from the present authorized but
stockholders of the Bank by virtue of the exercise on the unissued shares of the Bank; and
aforementioned option….
(b) The BUYER undertakes to subscribe, for the benefit of
3. To ensure the stability of the Bank and continuity of the coconut farmers, to shares with an aggregate par
management and credit policies to be adopted for the benefit value of P64,980,000 from the increased capital stock
of the coconut farmers, the parties undertake to cause the of the Bank, which subscriptions shall be deemed
stockholders and the Board of Directors of the Bank to made upon the approval by the stockholders of the
authorize and approve a management contract between the increase of the authorized capital stock of the Bank
Bank and the SELLER under the following terms: from P50 Million to P140 Million.

(a) The management contract shall be for a period of The parties undertake to declare stock dividends of P8 Million
five (5) years, renewable for another five (5) years by out of the present authorized but unissued capital stock of P30
mutual agreement of the SELLER and the Bank; Million.

(b) The SELLER shall be elected President and shall 6. To carry into effect the agreement of the parties that the
hold office at the pleasure of the Board of Directors. SELLER shall receive as his compensation 95,304 shares:
While serving in such capacity, he shall be entitled to
such salaries and emoluments as the Board of (a) ….
Directors may determine; (b) With respect to the Subscribed Shares, the BUYER
undertakes, in order to prevent the dilution of SELLER’s equity
(c) The SELLER shall recruit and develop a professional position, that it shall cede over to the SELLER 64,980 fully-paid
management team to manage and operate the Bank shares out of the Subscribed Shares. Such undertaking shall be
under the control and supervision of the Board of complied with in the following manner: ….
Directors of the Bank;
7. The parties further undertake that the Board of Directors
(d) The BUYER undertakes to cause three (3) persons and management of the Bank shall establish and
designated by the SELLER to be elected to the Board implement a loan policy for the Bank of making available
of Directors of the Bank; for loans at preferential rates of interest to the coconut
farmers ….
(e) The SELLER shall receive no compensation for 8.
managing the Bank, other than such salaries or
8. The BUYER shall expeditiously distribute from time to time Class B shares within a period of five (5)
the shares of the Bank, that shall be held by it for the benefit years from the call of the Board of Directors.
of the coconut farmers of the Philippines under the provisions
of this Agreement, to such, coconut farmers holding registered (c) To increase the authorized capital stock of the Bank
COCOFUND receipts on such equitable basis as may be from P50 Million to P140 Million….;
determine by the BUYER in its sound discretion.
(d) To declare a stock dividend of P8 Million payable to
9. …. the SELLER, the BUYER and other stockholders of the
Bank out of the present authorized but unissued
10. To ensure that not only existing but future coconut farmers capital stock of P30 Million;
shall be participants in and beneficiaries of the credit policies,
and shall be entitled to the benefit of loans and credit facilities (e) To amend the by-laws of the Bank accordingly; and
to be extended by the Bank to coconut farmers at preferential
rates, the shares held by the coconut farmers shall not be (f) To authorize and approve the management contract
entitled to pre-emptive rights with respect to the unissued provided in paragraph 2 above.
portion of the authorized capital stock or any increase thereof.
The parties agree that they shall vote their shares and take all
11. After the parties shall have acquired two-thirds (2/3) of the the necessary corporate action in order to carry into effect the
outstanding shares of the Bank, the parties shall call a special foregoing provisions of this paragraph 11 ….
stockholders’ meeting of the Bank:
12. It is the contemplation of the parties that the Bank shall
(a) To classify the present authorized capital stock of achieve a financial and equity position to be able to lend to the
P50,000,000 divided into 500,000 shares, with a par coconut farmers at preferential rates.
value of P100.00 per share into: 361,000 Class A
shares, with an aggregate par value of P36,100,000 In order to achieve such objective, the parties shall cause the
and 139,000 Class B shares, with an aggregate par Bank to adopt a policy of reinvestment, by way of stock
value of P13,900,000. All of the Option Shares dividends, of such percentage of the profits of the Bank as may
constituting 72.2% of the outstanding shares, shall be be necessary.
classified as Class A shares and the balance of the
outstanding shares, constituting 27.8% of the 13. The parties agree to execute or cause to be executed such
outstanding shares, as Class B shares; documents and instruments as may be required in order to
carry out the intent and purpose of this Agreement.
(b) To amend the articles of incorporation of the Bank to
effect the following changes: IN WITNESS WHEREOF, …
PHILIPPINE COCONUT AUTHORITY
(i) change of corporate name to First United (BUYER)
Coconut Bank;
By:
(ii) replace the present provision restricting EDUARDO COJUANGCO, JR. MARIA CLARA L. LOBREGAT
the transferability of the shares with a (SELLER)
limitation on ownership by any individual or x x x x x x x x x
entity to not more than 10% of the
outstanding shares of the Bank; 7. Defendants Lobregat, et al. and COCOFED, et al. and
Ballares, et al. admit that the … (PCA) was the "other buyers"
(iii) provide that the holders of Class A shares represented by …. Cojuangco, Jr. in the May 1975 Agreement
shall not be entitled to pre-emptive rights entered into between Pedro Cojuangco (on his own behalf and
with respect to the unissued portion of the in behalf of other sellers listed in Annex "A" of the agreement)
authorized capital stock or any increase and … Cojuangco, Jr. (on his own behalf and in behalf of the
thereof; and other buyers). Defendant Cojuangco insists he was the "only
buyer" under the aforesaid Agreement.
(iv) provide that the holders of Class B shares
shall be absolutely entitled to pre-emptive 8. …..
rights, with respect to the unissued portion
of Class B shares comprising part of the 9. Defendants Lobregat, et al., and COCOFED, et al., and
authorized capital stock or any increase Ballares, et al. admit that in addition to the 137,866 FUB shares
thereof, to subscribe to Class B shares in of Pedro Cojuangco, et al. covered by the Agreement, other
proportion t the subscriptions of Class A FUB stockholders sold their shares to PCA such that the total
shares, and to pay for their subscriptions to number of FUB shares purchased by PCA … increased from
137,866 shares to 144,400 shares, the OPTION SHARES 16. Defendants Lobregat, et al. and COCOFED, et al. and
referred to in the Agreement of May 25, 1975. Defendant Ballares, et al. admit that the affidavits of the coconut farmers
Cojuangco did not make said admission as to the said 6,534 (specifically, Exhibit "1-Farmer" to "70-Farmer") uniformly
shares in excess of the 137,866 shares covered by the state that:
Agreement with Pedro Cojuangco.
a. they are coconut farmers who sold coconut products;
10. Defendants Lobregat, et al. and COCOFED, et al. and b. in the sale thereof, they received COCOFUND receipts
Ballares, et al. admit that the Agreement, described in Section pursuant to R.A. No. 6260;
1 of Presidential Decree (P.D.) No. 755 dated July 29, 1975 as c. they registered the said COCOFUND receipts; and
the "Agreement for the Acquisition of a Commercial Bank for d. by virtue thereof, and under R.A. No. 6260, P.D. Nos. 755,
the Benefit of Coconut Farmers" executed by the Philippine 961 and 1468, they are allegedly entitled to the subject UCPB
Coconut Authority" and incorporated in Section 1 of P.D. No. shares.
755 by reference, refers to the "AGREEMENT FOR THE but subject to the following qualifications:
ACQUISITION OF A COMMERCIAL BANK FOR THE BENEFIT OF
THE COCONUT FARMERS OF THE PHILIPPINES" dated May 25, a. there were other coconut farmers who received
1975 between defendant Eduardo M. Cojuangco, Jr. and the UCPB shares although they did not present said
[PCA] (Annex "B" for defendant Cojuangco’s OPPOSITION TO COCOFUND receipt because the PCA distributed the
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT [RE: unclaimed UCPB shares not only to those who already
EDUARDO M. COJUANGCO, JR.] dated September 18, 2002). received their UCPB shares in exchange for their
Plaintiff refused to make the same admission. COCOFUND receipts but also to the coconut farmers
determined by a national census conducted pursuant
11. … the Court takes judicial notice that P.D. No. 755 was to PCA administrative issuances;
published [in] … volume 71 of the Official Gazette but the text
of the agreement … was not so published with P.D. No. 755. b. [t]here were other affidavits executed by Lobregat,
Eleazar, Ballares and Aldeguer relative to the said
12. Defendants Lobregat, et al. and COCOFED, et al. and distribution of the unclaimed UCPB shares; and
Ballares, et al. admit that the PCA used public funds, … in the
total amount of P150 million, to purchase the FUB shares c. the coconut farmers claim the UCPB shares by virtue
amounting to 72.2% of the authorized capital stock of the FUB, of their compliance not only with the laws mentioned
although the PCA was later reimbursed from the coconut levy in item (d) above but also with the relevant issuances
funds and that the PCA subscription in the increased of the PCA such as, PCA Administrative Order No. 1,
capitalization of the FUB, which was later renamed the … dated August 20, 1975 (Exh. "298-Farmer"); PCA
(UCPB), came from the said coconut levy funds…. Resolution No. 033-78 dated February 16, 1978….

13. Pursuant to the May 25, 1975 Agreement, out of the 72.2% The plaintiff did not make any admission as to the foregoing
shares of the authorized and the increased capital stock of the qualifications.
FUB (later UCPB), entirely paid for by PCA, 64.98% of the
shares were placed in the name of the "PCA for the benefit of 17. Defendants Lobregat, et al. and COCOFED, et al. and
the coconut farmers" and 7,22% were given to defendant Ballares, et al. claim that the UCPB shares in question have
Cojuangco. The remaining 27.8% shares of stock in the FUB legitimately become the private properties of the 1,405,366
which later became the UCPB were not covered by the two (2) coconut farmers solely on the basis of their having acquired
agreements referred to in item no. 6, par. (a) and (b) above. said shares in compliance with R.A. No. 6260, P.D. Nos. 755,
961 and 1468 and the administrative issuances of the PCA cited
"There were shares forming part of the aforementioned above.
64.98% which were later sold or transferred to non-coconut
farmers. 18. …..

14. Under the May 27, 1975 Agreement, defendant On July 11, 2003, the Sandiganbayan issued the assailed PSJ-A
Cojuangco’s equity in the FUB (now UCPB) was ten percent finding for the Republic, the judgment accentuated by (a) the
(10%) of the shares of stock acquired by the PCA for the benefit observation that COCOFED has all along manifested as
of the coconut farmers. representing over a million coconut farmers and (b) a
declaration on the issue of ownership of UCPB shares and the
15. That the fully paid 95.304 shares of the FUB, later the unconstitutionality of certain provisions of P.D. No. 755 and its
UCPB, acquired by defendant … Cojuangco, Jr. pursuant to the implementing regulations. On the matter of ownership in
May 25, 1975 Agreement were paid for by the PCA in particular, the anti-graft court declared that the 64.98%
accordance with the terms and conditions provided in the said sequestered "Farmers’ UCPB shares," plus other shares paid by
Agreement. PCA are "conclusively" owned by the Republic. In its pertinent
parts, PSJ-A, resolving the separate motions for summary
judgment in seriatim with separate dispositive portions for C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE:
each, reads: EDUARDO M. COJUANGCO, JR.) dated September 18, 2002
filed by Plaintiff.
WHEREFORE, in view of the foregoing, we rule as follows:
x x x x x x x x x 1. Sec. 1 of P.D. No. 755 did not validate the Agreement
A. Re: CLASS ACTION MOTION FOR A SEPARATE SUMMARY between PCA and defendant Eduardo M. Cojuangco, Jr. dated
JUDGMENT dated April 11, 2001 filed by Defendant Maria May 25, 1975 nor did it give the Agreement the binding force
Clara L. Lobregat, COCOFED, et al., and Ballares, et al. of a law because of the non-publication of the said Agreement.

The Class Action Motion for Separate Summary Judgment 2. Regarding the questioned transfer of the shares of stock of
dated April 11, 2001 filed by defendant Maria Clara L. FUB (later UCPB) by PCA to defendant Cojuangco or the so-
Lobregat, COCOFED, et al. and Ballares, et al., is hereby DENIED called "Cojuangco UCPB shares" which cost the PCA more than
for lack of merit. Ten Million Pesos in CCSF in 1975, we declare, that the transfer
of the following FUB/UCPB shares to defendant Eduardo M.
B. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: Cojuangco, Jr. was not supported by valuable consideration,
COCOFED, ET AL. AND BALLARES, ET AL.) dated April 22, 2002 and therefore null and void:
filed by Plaintiff.
a. The 14,400 shares from the "Option Shares";
1. a. Section 1 of P.D. No. 755, taken in relation to Section 2 of
the same P.D., is unconstitutional: (i) for having allowed the b. Additional Bank Shares Subscribed and Paid by PCA,
use of the CCSF to benefit directly private interest by the consisting of:
outright and unconditional grant of absolute ownership of the
FUB/UCPB shares paid for by PCA entirely with the CCSF to the 1. Fifteen Thousand Eight Hundred Eighty-Four
undefined "coconut farmers", which negated or circumvented (15,884) shares out of the authorized but
the national policy or public purpose declared by P.D. No. 755 unissued shares of the bank, subscribed and
to accelerate the growth and development of the coconut paid by PCA;
industry and achieve its vertical integration; and (ii) for having
unduly delegated legislative power to the PCA. 2. Sixty Four Thousand Nine Hundred Eighty
(64,980) shares of the increased capital stock
b. The implementing regulations issued by PCA, namely, subscribed and paid by PCA; and
Administrative Order No. 1, Series of 1975 and Resolution No.
074-78 are likewise invalid for their failure to see to it that the 3. Stock dividends declared pursuant to
distribution of shares serve exclusively or at least primarily or paragraph 5 and paragraph 11 (iv) (d) of the
directly the aforementioned public purpose or national policy Agreement.
declared by P.D. No. 755.
4. The above-mentioned shares of stock of the
2. Section 2 of P.D. No. 755 which mandated that the coconut FUB/UCPB transferred to defendant Cojuangco
levy funds shall not be considered special and/or fiduciary are hereby declared conclusively owned by the
funds nor part of the general funds of the national government Republic of the Philippines.
and similar provisions of Sec. 5, Art. III, P.D. No. 961 and Sec.
5, Art. III, P.D. No. 1468 contravene the provisions of the 5. The UCPB shares of stock of the alleged fronts,
Constitution, particularly, Art. IX (D), Sec. 2; and Article VI, Sec. nominees and dummies of defendant Eduardo
29 (3). M. Cojuangco, Jr. which form part of the 72.2%
shares of the FUB/UCPB paid for by the PCA
3. Lobregat, COCOFED, et al. and Ballares, et al. have not legally with public funds later charged to the coconut
and validly obtained title of ownership over the subject UCPB levy funds, particularly the CCSF, belong to the
shares by virtue of P.D. No. 755, the Agreement dated May 25, plaintiff Republic of the Philippines as their
1975 between the PCA and defendant Cojuangco, and PCA true and beneficial owner.
implementing rules, namely, Adm. Order No. 1, s. 1975 and
Resolution No. 074-78.

4. The so-called "Farmers’ UCPB shares" covered by 64.98% of Let trial of this Civil Case proceed with respect to the issues
the UCPB shares of stock, which formed part of the 72.2% of which have not been disposed of in this Partial Summary
the shares of stock of the former FUB and now of the UCPB, Judgment. For this purpose, the plaintiff’s Motion Ad Cautelam
the entire consideration of which was charged by PCA to the to Present Additional Evidence dated March 28, 2001 is hereby
CCSF, are hereby declared conclusively owned by, the Plaintiff GRANTED.
Republic of the Philippines. From PSJ-A, Lobregat moved for reconsideration which
COCOFED, et al. and Ballares, et al. adopted. All these motions
were denied in the extended assailed Resolution51 of The Motion for Partial Summary Judgment (Re: Defendants
December 28, 2004. CIIF Companies, 14 Holding Companies and Cocofed et al.) filed
by Plaintiff is hereby GRANTED. ACCORDINGLY, THE CIIF
Civil Case No. 0033-F COMPANIES, namely:
Here, the Republic, after filing its pre-trial brief, interposed
a Motion for Judgment on the Pleadings and/or for [PSJ] (Re: 1. Southern Luzon Coconut Oil Mills (SOLCOM);
Defendants CIIF Companies, 14 Holding Companies and 2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
COCOFED, et al.) praying that, in light of the parties’ 3. Iligan Coconut Industries, Inc. (ILICOCO);
submissions and the supervening ruling in Republic v. 4. San Pablo Manufacturing Corp. (SPMC);
COCOFED52 which left certain facts beyond question, a 5. Granexport Manufacturing Corp. (GRANEX); and
judgment issue: 6. Legaspi Oil Co., Inc. (LEGOIL),
AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:
1) Declaring Section 5 of Article III of P.D. No. 961 1. Soriano Shares, Inc.;
(Coconut Industry Code) and Section 5 of Article III of 2. ACS Investors, Inc.;
P.D. No. 1468 (Revised Coconut Industry Code) to be 3. Roxas Shares, Inc.;
unconstitutional; 4. Arc Investors, Inc.;
5. Toda Holdings, Inc.;
2) Declaring that CIF payments under RA No. 6260 are 6. AP Holdings, Inc.;
not valid and legal bases for ownership claims over 7. Fernandez Holdings, Inc.;
the CIIF companies and, ultimately, the CIIF block of 8. SMC Officers Corps, Inc.;
SMC shares; and 9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
3) Ordering the reconveyance of the CIIF companies, the 11. Randy Allied Ventures, Inc.;
14 holding companies, and the 27% CIIF block of San 12. Rock Steel Resources, Inc.;
Miguel Corporation shares of stocks in favor of the 13. Valhalla Properties Ltd., Inc.; and
government and declaring the ownership thereof to 14. First Meridian Development, Inc.
belong to the government in trust for all the coconut
farmers. AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION
(SMC) SHARES OF STOCK TOTALLING 33,133,266 SHARES AS
At this juncture, it may be stated that, vis-à-vis CC 0033-F, OF 1983 … ARE DECLARED OWNED BY THE GOVERNMENT IN
Gabay Foundation, Inc. sought but was denied leave to TRUST FOR ALL THE COCONUT FARMERS GOVERNMENT AND
intervene. But petitioners COCOFED, et al. moved and were ORDERDED RECONVEYED TO THE GOVERNMENT.58 (Emphasis
allowed to intervene53 on the basis of their claim that and capitalization in the original; underscoring added.)
COCOFED members beneficially own the block of SMC shares
held by the CIIF companies, at least 51% of whose capitol stock Let the trial of this Civil Case proceed with respect to the issues
such members own. The claim, as the OSG explained, arose which have not been disposed of in this Partial Summary
from the interplay of the following: (a) COCOFED et al.’s Judgment, including the determination of whether the CIIF
alleged majority ownership of the CIIF companies under Block of SMC Shares adjudged to be owned by the Government
Sections 954 and 1055 of P.D. No. 1468, and (b) their alleged represents 27% of the issued and outstanding capital stock of
entitlement to shares in the CIIF companies by virtue of their SMC according to plaintiff or to 31.3% of said capital stock
supposed registration of COCOFUND receipts allegedly issued according to COCOFED, et al and Ballares, et al.
to COCOFED members upon payment of the R.A. 6260 CIF
levy.56 SO ORDERED.

Just as in CC No. 0033-A, the Sandiganbayan also conducted a Expressly covered by the declaration and the reconveyance
hearing in CC No. 0033-F to determine facts that appeared directive are "all dividends declared, paid and issued thereon
without substantial controversy as culled from the records as well as any increments thereto arising from, but not limited
and, by Order57 of February 23, 2004, outlined those facts. to, exercise of pre-emptive rights."

On May 7, 2004, the Sandiganbayan, in light of its ruling in CC On May 26, 2004, COCOFED et al., filed an omnibus motion (to
No. 0033-A and disposing of the issue on ownership of the CIIF dismiss for lack of subject matter jurisdiction or alternatively
oil and holding companies and their entire block of subject for reconsideration and to set case for trial), but this motion
SMC shares, issued the assailed PSJ-F also finding for the was denied per the Sandiganbayan’s Resolution59 of December
Republic, the fallo of which pertinently reading: 28, 2004.
On May 11, 2007, in CC 0033-A, the Sandiganbayan issued a
WHEREFORE, in view of the foregoing, we hold that: Resolution60 denying Lobregat’s and COCOFED’s separate
motions to set the case for trial/hearing, noting that there is
no longer any point in proceeding to trial when the issue of
their claim of ownership of the sequestered UCPB shares and
related sub-issues have already been resolved in PSJ-A. C. Under Section 1 of Rule 9 of the Rules of Court, lack
of jurisdiction over the subject matter may be raised
For ease of reference, PSJ-A and PSJ-F each originally decreed at any stage of the proceedings…. In any event, in
trial or further hearing on issues yet to be disposed of. pursuing its intervention in the ill-gotten wealth
However, the Resolution61 issued on June 5, 2007 in CC 0033- cases, COCOFED, et al precisely questioned the
A and the Resolution62 of May 11, 2007 rendered in CC 0033-F Sandiganbayan’s subject matter jurisdiction, asserted
effectively modified the underlying partial summary that the jurisdictional fact does not exist, moved to
judgments by deleting that portions on the necessity of further dismiss the ill-gotten wealth cases and even prayed
trial on the issue of ownership of (1) the sequestered UCPB that the writs of sequestration over the sequestered
shares, (2) the CIIF block of SMC shares and (3) the CIIF assets be lifted. In concluding that those actions
companies. As the anti-graft court stressed in both resolutions, constitute an "invocation" of its jurisdiction, the
the said issue of ownership has been finally resolved in the Sandiganbayan clearly acted whimsically, capriciously
corresponding PSJs.63 and in grave abuse of its discretion.
Hence, the instant petitions.
II. Through the assailed PSJs and the assailed Resolutions, the
The Issues Sandiganbayan declared certain provisions of the coconut levy
COCOFED et al., in G.R. Nos. 177857-58, impute reversible laws as well as certain administrative issuances of the PCA as
error on the Sandiganbayan for (a) assuming jurisdiction over unconstitutional. In doing so, the Sandiganbayan erroneously
CC Nos. 0033-A and 0033-F despite the Republic’s failure to employed, if not grossly abused, its power of judicial review….
establish below the jurisdictional facts, i.e., that the
sequestered assets sought to be recovered are ill-gotten in the A. … the Sandiganbayan gravely erred, if not brazenly
context of E.O. Nos. 1, 2, 14 and 14-A; (b) declaring certain exceeded its statutory jurisdiction and abused the
provisions of coco levy issuances unconstitutional; and (c) judicial powers, when it concluded that the public
denying the petitioners’ plea to prove that the sequestered purpose of certain coconut levy laws was not evident,
assets belong to coconut farmers. Specifically, petitioners when it thereupon formulated its own public policies
aver: and purposes for the coconut levy laws and at the
same time disregarded the national policies
I. The Sandiganbayan gravely erred … when it refused to specifically prescribed therein.
acknowledge that it did not have subject matter jurisdiction
over the ill-gotten wealth cases because the respondent B. In ruling that "it is not clear or evident how the means
Republic failed to prove, and did not even attempt to prove, employed by the [coconut levy] laws" would "serve
the jurisdictional fact that the sequestered assets constitute ill- the avowed purpose of the law" or "can serve a public
gotten wealth of former President Marcos and Cojuangco. purpose", the Sandiganbayan erroneously examined,
Being without subject matter jurisdiction over the ill-gotten determined and evaluated the wisdom of such laws,
wealth cases, a defect previously pointed out and repeatedly a constitutional power within the exclusive province
assailed by COCOFED, et al., the assailed PSJs and the assailed of the legislative department.
Resolutions are all null and void.
D. The Sandiganbayan gravely erred in declaring Section
A. Insofar as the ill-gotten wealth cases are concerned, 1 of PD 755, PCA [AO] 1 and PCA Resolution No. 074-
the Sandiganbayan’s subject matter jurisdiction is 78 constitutionally infirm by reason of alleged but
limited to the recovery of "ill-gotten wealth" as unproven and unsubstantiated flaws in their
defined in Eos 1, 2, 14 and 14-A. Consistent with that implementation.
jurisdiction, the subdivided complaints in the ill-
gotten wealth cases expressly alleged that the C. The Sandiganbayan gravely erred in concluding that
sequestered assets constitutes "ill-gotten wealth" of Section 1 of PD 755 constitutes an undue delegation
former President Marcos and Cojuangco, having been of legislative power insofar as it authorizes the PCA to
filed pursuant to, and in connection with, Eos 1, 2, 14 promulgate rules and regulations governing the
and 14-A, the Sandiganbayan gravely erred, if not distribution of the UCPB shares to the coconut
exceeded its jurisdiction, when it refused to require farmers. Rather, taken in their proper context,
the respondent Republic to prove the aforesaid Section 1 of PD 755 was complete in itself, [and]
jurisdictional fact. prescribed sufficient standards that circumscribed
the discretion of the PCA….
B. …. Having no evidence on record to prove the said
jurisdictional fact, the Sandiganbayan gravely erred, if More importantly, this Honorable Court has, on three (3)
not grossly exceeded its statutory jurisdiction, when separate occasions, rejected respondent Republic’s motion to
it rendered the assailed PSJs instead of dismissing the declare the coconut levy laws unconstitutional. The
ill-gotten wealth cases…. Sandiganbayan gravely erred, if not acted in excess of its
jurisdiction, when it ignored the settled doctrines of law of the B. The Sandiganbayan gravely erred if not grossly
case and/or stare decisis and granted respondent Republic’s abused its discretion when it repeatedly disregarded,
fourth attempt to declare the coconut levy laws and outrightly refused to recognize, the operative
unconstitutional, despite fact that such declaration of facts that existed as well as the rights that vested
unconstitutionality was not necessary to resolve the ultimate from the time the coconut levy laws were enacted
issue of ownership involved in the ill-gotten wealth cases. until their declaration of unconstitutionality in the
assailed PSJs. As a result, the assailed PSJs constitute
III. In rendering the assailed PSJs and thereafter refusing to a proscribed retroactive application of the
proceed to trial on the merits, on the mere say-so of the declaration of unconstitutionality, a taking of private
respondent Republic, the Sandiganbayan committed gross and property, and an impairment of vested rights of
irreversible error, gravely abused its judicial discretion and ownership, all without due process of
flagrantly exceeded its jurisdiction as it effectively sanctioned law.64 Otherwise stated, the assailed PSJs and the
the taking of COCOFED, et al.’s property by the respondent assailed Resolutions effectively penalized the coconut
Republic without due process of law and through retroactive farmers whose only possible mistake, offense or
application of the declaration of unconstitutionality of the misfortune was to follow the laws that were then
coconut levy laws, an act that is not only illegal and violative of legal, valid and constitutional.
the settled Operative Fact Doctrine but, more importantly,
inequitable to the coconut farmers whose only possible IV. The voluminous records of these ill-gotten wealth cases
mistake, offense or misfortune was to follow the law. readily reveal the various dilatory tactics respondent Republic
resorted to…. As a result, despite the lapse of almost twenty
A. …. (20) years of litigation, the respondent Republic has not been
1. In the course of the almost twenty (20) years that the required to, and has not even attempted to prove, the bases
ill-gotten wealth cases were pending, COCOFED, et al. of its perjurious claim that the sequestered assets constitute
repeatedly asked to be allowed to present evidence ill-gotten wealth of former President Marcos and his crony,
to prove that the true, actual and beneficial owners Cojuangco. In tolerating respondent Republic’s antics for
of the sequestered assets are the coconut farmers almost twenty (20) years…, the Sandiganbayan so glaringly
and not Cojuangco, an alleged "crony" of former departed from procedure and thereby flagrantly violated
President Marcos. The Sandiganbayan grievously COCOFED, et al.’s right to speedy trial.
erred and clearly abused its judicial discretion when it
repeatedly and continuously denied COCOFED, et In G.R. No. 178193, petitioner Ursua virtually imputes to the
al. the opportunity to present their evidence to Sandiganbayan the same errors attributed to it by petitioners
disprove the baseless allegations of the Ill-Gotten in G.R. Nos. 177857-58.65 He replicates as follows:
Wealth Cases that the sequestered assets constitute
ill-gotten wealth of Cojuangco and of former I
President Marcos, an error that undeniably and The Sandiganbayan decided in a manner not in accord with the
illegally deprived COCOFED, et al of their Rules of Court and settled jurisprudence in rendering the
constitutional right to be heard. questioned PSJ as final and appealable thereafter taking the
sequestered assets from their owners or record without
2. The Sandiganbayan erroneously concluded that the presentation of any evidence, thus, the questioned PSJ and the
Assailed PSJs and Assailed Resolutions settled the questioned Resolutions are all null and void.
ultimate issue of ownership of the Sequestered
Assets and, more importantly, resolved all factual and A. The Sandiganbayan’s jurisdiction insofar as the ill-
legal issues involved in the ill-gotten wealth cases. gotten wealth cases are concerned, is limited to the
Rather, as there are triable issues still to be resolved, recovery of "ill-gotten wealth" as defined in Executive
it was incumbent upon the Sandiganbayan to receive Orders No. 1, 2, 14 and 14-A.
evidence thereon and conduct trial on the merits. B. The Sandiganbayan should have decided to dismiss
the case or continue to receive evidence instead of
3. Having expressly ordered the parties to proceed to ruling against the constitutionality of some coconut
trial and thereafter decreeing that trial is unnecessary levy laws and PCA issuances because it could decide
as the Assailed PSJs were "final" and "appealable" on other grounds available to it.
judgments, the Sandiganbayan acted whimsically,
capriciously and contrary to the Rules of Court, II
treated the parties in the ill-gotten wealth cases The Sandiganbayan gravely erred when it declared PD. 755,
unfairly, disobeyed the dictate of this Honorable Section 1 and 2, Section 5, Article 1 of PD 961, and Section 5 of
Court and, worse, violated COCOFED, et al’s right to Art. III of PD 1468 as well as administrative issuances of the
due process and equal protection of the laws. PCA as unconstitutional in effect, it abused it power of judicial
review….

 A. The Sandiganbayan gravely erred in concluding that the sequestered coconut farmers’ UCPB shares. Accordingly,
the purpose of PD 755 Section 1 and 2, Section 5, the controversy is removed from the subject matter
Article 1 of PD 961, and Section 5 of Art. III of PD 1468 jurisdiction of the Sandiganbayan and necessarily any decision
is not evident. It then proceeded to formulated its rendered on the merits, such as PSJ-A and PSJ-F, is void.
own purpose thereby intruding into the wisdom of
the legislature in enacting [t]he law. To petitioners, it behooves the Republic to prove the
B. The Sandiganbayan gravely erred in declaring Section jurisdictional facts warranting the Sandiganbayan’s continued
1 of PD 755, PCA [AO] No. 1 and PCA Resolution No. exercise of jurisdiction over ill-gotten wealth cases. Citing
074-78 unconstitutional due to alleged flaws in their Manila Electric Company [Meralco] v. Ortañez,66 petitioners
implementation. argue that the jurisdiction of an adjudicatory tribunal
C. The Sandiganbayan gravely erred in concluding that exercising limited jurisdiction, like the Sandiganbayan,
Section 1 of PD No. 755 constitutes an undue "depends upon the facts of the case as proved at the trial and
delegation of legislative power insofar as it authorizes not merely upon the allegation in the complaint."67 Cited too
the PCA to promulgate rules and regulations is PCGG v. Nepumuceno,68 where the Court held:
governing the distribution of the UCPB shares to the
coconut farmers. Section 1 of PD 755 was complete in The determinations made by the PCGG at the time of issuing
itself, prescribed sufficient standards that sequestration … orders cannot be considered as final
circumscribed the discretion of the PCA and merely determinations; that the properties or entities sequestered or
authorized the PCA to fill matters of detail an taken-over in fact constitute "ill-gotten wealth" according to
execution through promulgated rules and [E.O.] No. 1 is a question which can be finally determined only
regulations. by a court – the Sandiganbayan. The PCGG has the burden of
proving before the Sandiganbayan that the assets it has
III sequestered or business entity it has provisionally taken-over
The coconut levy laws, insofar as they allowed the PCA to constitutes "ill-gotten wealth" within the meaning of [E.O.] No.
promulgate rules and regulations governing the distribution of 1 and Article No. XVIII (26) of the 1987 Constitution.
the UCPB to the coconut farmers, do not constitute an undue Petitioners’ above posture is without merit.
delegation of legislative power as they were complete in
themselves and prescribed sufficient standards that Justice Florenz D. Regalado explicates subject matter
circumscribed the discretion of the PCA. jurisdiction:

IV 16. Basic … is the doctrine that the jurisdiction of a court over
Assuming ex-gratia argumenti that the coconut levy laws are the subject-matter of an action is conferred only by the
unconstitutional, still, the owners thereof cannot be deprived Constitution or the law and that the Rules of Court yield to
of their property without due process of law considering that substantive law, in this case, the Judiciary Act and B.P. Blg. 129,
they have in good faith acquired vested rights over the both as amended, and of which jurisdiction is only a part.
sequestered assets. Jurisdiction … cannot be acquired through, or waived, enlarged
or diminished by, any act or omission of the parties; neither
In sum, the instant petitions seek to question the decisions of can it be conferred by the acquiescence of the court….
the Sandiganbayan in both CC Nos. 0033-A and 0033-F, along Jurisdiction must exist as a matter of law…. Consequently,
with the preliminary issues of objection. We shall address at questions of jurisdiction may be raised for the first time on
the outset, (1) the common preliminary questions, including appeal even if such issue was not raised in the lower court….
jurisdictional issue, followed by (2) the common primary
contentious issues (i.e. constitutional questions), and (3) the 17. Nevertheless, in some case, the principle of estoppel by
issues particular to each case. laches has been availed … to bar attacks on jurisdiction….69

The Court’s Ruling It is, therefore, clear that jurisdiction over the subject matter
is conferred by law. In turn, the question on whether a given
I suit comes within the pale of a statutory conferment is
The Sandiganbayan has jurisdiction over the subject determined by the allegations in the complaint, regardless of
matter ofthe subdivided amended complaints. whether or not the plaintiff will be entitled at the end to
recover upon all or some of the claims asserted therein.70 We
The primary issue, as petitioners COCOFED, et al. and Ursua said as much in Magay v. Estiandan:71
put forward, boils down to the Sandiganbayan’s alleged lack of
jurisdiction over the subject matter of the amended [J]urisdiction over the subject matter is determined by the
complaints. Petitioners maintain that the jurisdictional facts allegations of the complaint, irrespective of whether or not the
necessary to acquire jurisdiction over the subject matter in CC plaintiff is entitled to recover upon all or some of the claims
No. 0033-A have yet to be established. In fine, the Republic, so asserted therein-a matter that can be resolved only after and
petitioners claim, has failed to prove the ill-gotten nature of as a result of the trial. Nor may the jurisdiction of the court be
made to depend upon the defenses set up in the answer or purpose a series of previous decrees …
upon the motion to dismiss, for, were we to be governed by establishing the character of the coconut
such rule, the question of jurisdiction could depend almost levy funds as special, fiduciary, trust and
entirely upon the defendant. governments; (b) confirming the
agreement between …Cojuangco and PCA
Of the same tenor was what the Court wrote in Allied Domecq on the purchase of FUB by incorporating
Philippines, Inc. v. Villon:72 by reference said private commercial
agreement in PD 755;
Jurisdiction over the subject matter is the power to hear and
determine the general class to which the proceedings in
question belong. Jurisdiction over the subject matter is
conferred by law and not by the consent or acquiescence of (iii) ….
any or all of the parties or by erroneous belief of the court that
it exists. Basic is the rule that jurisdiction over the subject (iv) To perpetuate his opportunity … to build
matter is determined by the cause or causes of action as his economic empire, … Cojuangco caused
alleged in the complaint. the issuance of an unconstitutional decree
(PD 1468) requiring the deposit of all
The material averments in subdivided CC No. 0033-A and CC coconut levy funds with UCPB interest free
No. 0033-F included the following: to the prejudice of the government and
finally
12. Defendant Eduardo Cojuangco, Jr served as a public officer
during the Marcos administration…. (v) Having fully established himself as the
undisputed "coconut king" with unlimited
13. Defendant Eduardo Cojuangco, Jr., taking advantage of his powers to deal with the coconut levy
association, influence and connection, acting in unlawful funds, the stage was now set for
concert with the [Marcoses] and the individual defendants, Defendant Eduardo Cojuangco, Jr. to
embarked upon devices, schemes and stratagems, including launch his predatory forays into almost all
the use of defendant corporations as fronts, to unjustly enrich aspects of Philippine activity namely …. oil
themselves as the expense of the Plaintiff and the Filipino mills.
people, such as when he –
(vi) In gross violation of their fiduciary
a) manipulated, beginning the year 1975 with the active positions and in contravention of the goal
collaboration of Defendants …, Marai Clara Lobregat, to create a bank for coconut farmers of the
Danilo Ursua [etc.], the purchase by the … (PCA) of country, the capital stock of UCPB as of
72.2% of the outstanding capital stock of the … (FUB) February 25, 1986 was actually held by the
which was subsequently converted into a universal defendants, their lawyers, factotum and
bank named … (UCPB) through the use of … (CCSF) … business associates, thereby finally
in a manner contrary to law and to the specific gaining control of the UCPB by misusing
purposes for which said coconut levy funds were the names and identities of the so-called
imposed and collected under P.D. 276 and under "more than one million coconut farmers."
anomalous and sinister designs and circumstances, to
wit: (b) created and/or funded with the use of coconut levy
funds various corporations, such as … (COCOFED) …
(i) Defendant Eduardo Cojuangco, Jr. coveted with the active collaboration and participation of
the coconut levy funds as a cheap, Defendants Juan Ponce Enrile, Maria Clara Lobregat
lucrative and risk-free source of funds with … most of whom comprised the interlocking officers
which to exercise his private option to buy and directors of said companies; dissipated, misused
the controlling interest in FUB…. and/or misappropriated a substantial part of said
coco levy funds … FINALLY GAIN OWNERSHIP AND
(ii) to legitimize a posteriori his highly CONTROL OF THE UNITED COCONUT PLANTERS BANK
anomalous and irregular use and diversion BY MISUSING THE NAMES AND/OR IDENTIFIES OF THE
of government funds to advance his own SO-CALLLED "MORE THAN ONE MILLION COCONUT
private and commercial interests … FARNMERS;
Defendant Eduardo Cojuangco, Jr. caused
the issuance … of PD 755 (a) declaring that (c) misappropriated, misused and dissipated P840
the coconut levy funds shall not be million of the … (CIDF) levy funds deposited with the
considered special and fiduciary and trust National Development Corporation (NIDC) as
funds … conveniently repealing for that administrator –trustee of said funds and later with
 UCPB, of which Defendant Eduardo Cojuangco, Jr.
was the Chief Executive Officer…. (c) Later that year [1983], Cojuangco also acquired the Soriano
stocks through a series of complicated and secret agreements,
(d) established and caused to be funded with coconut a key feature of which was a "voting trust agreement" that
levy fundfs, with the active collaboration of stipulated that Andres, Jr. or his heir would proxy over the vote
Defendants Ferdinand E. Marcos through the of the shares owned by Soriano and Cojuangco….
issuance of LOI 926 and of [other] defendants … the x x x x x x x x x
United Coconut Oil Mills, Inc., a corporation
controlled by Defendant Eduardo Cojuangco, Jr. and (g) All together, Cojuangco purchased 33 million shares of the
bought sixteen (16) certain competing oil mills at SMC through the … 14 holding companies
exorbitant prices … then mothballed them… x x x x x x x x x

x x x x x x x x x 3.1. The same fourteen companies were in turn owned by the
(i) misused coconut levy funds to buy majority of the … six (6) so-called CIIF Companies….
outstanding shares of stock of San Miguel Corporation….
x x x x x x x x x (h) Defendant Corporations are but "shell" corporations
owned by interlocking shareholders who have previously
14. Defendants Eduardo Cojuangco, Jr. … of the Angara admitted that they are just "nominee stockholders" who do
Concepcion Cruz Regala and Abello law offices (ACCRA) not have any proprietary interest over the shares in their
plotted, devised, schemed, conspired and confederated with names…. [L]awyers of the Angara Abello Concepcion Regala &
each other in setting up, through the use of the coconut levy Cruz (ACCRA) Law offices, the previous counsel who
funds the financial and corporate structures that led to the incorporated said corporations, prove that they were merely
establishment of UCPB UNICOM [etc.] and more than twenty nominee stockholders thereof.
other coconut levy funded corporations including the
acquisition of [SMC] shares and its institutionalization through (l) These companies, which ACCRA Law Offices organized for
presidential directives of the coconut monopoly…. Defendant Cojuangco to be able to control more than 60% of
SMC shares, were funded by institutions which depended
x x x x x x x x x upon the coconut levy such as the UCPB, UNICOM, …
16. The acts of Defendants, singly or collectively, and /or in (COCOLIFE), among others. Cojuangco and his ACCRA lawyers
unlawful concert with one another, constitute gross abuse of used the funds from 6 large coconut oil mills and 10 copra
official position and authority, flagrant breach of public trust trading companies to borrow money from the UCPB and
and fiduciary obligations, brazen abuse of right and power, purchase these holding companies and the SMC stocks.
unjust enrichment, violation of the Constitution and laws … to Cojuangco used $ 150 million from the coconut levy, broken
the grave and irreparable damage of the Plaintiff and the down as follows:
Filipino people.
Amount Source Purpose
CC No. 0033-F (in million)
12. Defendant Eduardo Cojuangco, Jr., served as a public $ 22.26 Oil Mills equity in holding
officer during the Marcos administration…. Companies
$ 65.6 Oil Mills loan to holding
13. Having fully established himself as the undisputed Companies
"coconut king" with unlimited powers to deal with the coconut $ 61.2 UCPB loan to holding
levy funds, the stage was now set for … Cojuangco, Jr. to launch Companies [164]
his predatory forays into almost all aspects of Philippine
economic activity namely … oil mills …. The entire amount, therefore, came from the coconut levy,
some passing through the Unicom Oil mills, others directly
14. Defendant Eduardo Cojuangco, Jr., taking undue advantage from the UCPB.
of his association, influence, and connection, acting in unlawful
concert with Defendants Ferdinand E. Marcos and Imelda R. (m) With his entry into the said Company, it began to get favors
Marcos, and the individual defendants, embarked upon from the Marcos government, significantly the lowering of the
devices, schemes and stratagems, including the use of excise taxes … on beer, one of the main products of SMC.
defendant corporations as fronts, to unjustly enrich
themselves at the expense of Plaintiff and the Filipino people… 15. Defendants … plotted, devised, schemed, conspired and
. confederated with each other in setting up, through the use of
(a) Having control over the coconut levy, Defendant Eduardo coconut levy funds, the financial and corporate framework and
M. Cojuangco invested the funds in diverse activities, such as structures that led to the establishment of UCPB, [etc.], and
the various businesses SMC was engaged in….; more than twenty other coconut levy-funded corporations,
x x x x x x x x x including the acquisition of [SMC] shares and its
institutionalization through presidential directives of the wealth accumulated by former … [President] Marcos, his
coconut monopoly…. immediate family, relatives, subordinates and close associates
… including the takeover or sequestration of all business
16. The acts of Defendants, singly or collectively, and/or in enterprises and entities owned or controlled by them, during
unlawful concert with one another, constitute gross abuse of his administration, directly or through nominees, by taking
official position and authority, flagrant breach of public trust undue advantage of their public office and/or using their
and fiduciary obligations, brazen abuse of right and power, powers, authority, influence, connections or relationship."
unjust enrichment, violation of the constitution and laws of the Complementing the aforesaid Section 2(a) is Section 1 of E.O.
Republic of the Philippines, to the grave and irreparable No. 2 decreeing the freezing of all assets "in which the
damage of Plaintiff and the Filipino people.73 [Marcoses] their close relatives, subordinates, business
associates, dummies, agents or nominees have any interest or
Judging from the allegations of the defendants’ illegal acts participation."
thereat made, it is fairly obvious that both CC Nos. 0033-A and The Republic’s averments in the amended complaints,
CC 0033-F partake, in the context of EO Nos. 1, 2 and 14, series particularly those detailing the alleged wrongful acts of the
of 1986, the nature of ill-gotten wealth suits. Both deal with defendants, sufficiently reveal that the subject matter thereof
the recovery of sequestered shares, property or business comprises the recovery by the Government of ill-gotten wealth
enterprises claimed, as alleged in the corresponding basic acquired by then President Marcos, his cronies or their
complaints, to be ill-gotten assets of President Marcos, his associates and dummies through the unlawful, improper
cronies and nominees and acquired by taking undue utilization or diversion of coconut levy funds aided by P.D. No.
advantage of relationships or influence and/or through or as a 755 and other sister decrees. President Marcos himself issued
result of improper use, conversion or diversion of government these decrees in a brazen bid to legalize what amounts to
funds or property. Recovery of these assets––determined as private taking of the said public funds.
shall hereinafter be discussed as prima facie ill-gotten––falls
within the unquestionable jurisdiction of the Sandiganbayan.74 Petitioners COCOFED et al. and Ursua, however, would insist
that the Republic has failed to prove the jurisdiction facts: that
P.D. No. 1606, as amended by R.A. 7975 and E.O. No. 14, Series the sequestered assets indeed constitute ill-gotten wealth as
of 1986, vests the Sandiganbayan with, among others, original averred in the amended subdivided complaints.
jurisdiction over civil and criminal cases instituted pursuant to
and in connection with E.O. Nos. 1, 2, 14 and 14-A. This contention is incorrect.
Correlatively, the PCGG Rules and Regulations defines the There was no actual need for Republic, as plaintiff a quo, to
term "Ill-Gotten Wealth" as "any asset, property, business adduce evidence to show that the Sandiganbayan has
enterprise or material possession of persons within the purview jurisdiction over the subject matter of the complaints as it
of [E.O.] Nos. 1 and 2, acquired by them directly, or indirectly leaned on the averments in the initiatory pleadings to make
thru dummies, nominees, agents, subordinates and/or visible the jurisdiction of the Sandiganbayan over the ill-gotten
business associates by any of the following means or similar wealth complaints. As previously discussed, a perusal of the
schemes": allegations easily reveals the sufficiency of the statement of
matters disclosing the claim of the government against the
(1) Through misappropriation, conversion, misuse or coco levy funds and the assets acquired directly or indirectly
malversation of public funds or raids on the public treasury; through said funds as ill-gotten wealth. Moreover, the Court
(2) ….; finds no rule that directs the plaintiff to first prove the subject
(3) By the illegal or fraudulent conveyance or disposition of matter jurisdiction of the court before which the complaint is
assets belonging to the government or any of its subdivisions, filed. Rather, such burden falls on the shoulders of defendant
agencies or instrumentalities or government-owned or in the hearing of a motion to dismiss anchored on said ground
controlled corporations; or a preliminary hearing thereon when such ground is alleged
(4) By obtaining, receiving or accepting directly or indirectly in the answer.
any shares of stock, equity or any other form of interest or COCOFED et al. and Ursua’s reliance on Manila Electric
participation in any business enterprise or undertaking; Company [Meralco] v. Ortanez76 is misplaced, there being a
(5) Through the establishment of agricultural, industrial or total factual dissimilarity between that and the case at bar.
commercial monopolies or other combination and/or by the Meralco involved a labor dispute before the Court of Industrial
issuance, promulgation and/or implementation of decrees and Relations (CIR) requiring the interpretation of a collective
orders intended to benefit particular persons or special bargaining agreement to determine which between a regular
interests; and court and CIR has jurisdiction. There, it was held that in case of
(6) By taking undue advantage of official position, authority, doubt, the case may not be dismissed for failure to state a
relationship or influence for personal gain or cause of action as jurisdiction of CIR is not merely based on the
benefit.75 (Emphasis supplied) allegations of the complaint but must be proved during the
trial of the case. The factual milieu of Meralco shows that the
Section 2(a) of E.O. No. 1 charged the PCGG with the task of said procedural holding is peculiar to the CIR. Thus, it is not and
assisting the President in "[T]he recovery of all ill-gotten could not be a precedent to the cases at bar.
 all stages of a case before a trial court effectively estops a party
Even PCGG v. Nepomuceno77 is not on all fours with the cases from challenging its jurisdiction. One cannot belatedly reject
at bench, the issue therein being whether the regional trial or repudiate its decision after voluntarily submitting to its
court has jurisdiction over the PCGG and sequestered jurisdiction, just to secure affirmative relief against one’s
properties, vis-à-vis the present cases, which involve an issue opponent or after failing to obtain such relief. If, by deed or
concerning the Sandiganbayan’s jurisdiction. Like in Meralco, conduct, a party has induced another to act in a particular
the holding in Nepomuceno is not determinative of the manner, estoppel effectively bars the former from adopting an
outcome of the cases at bar. inconsistent position, attitude or course of conduct that
While the 1964 Meralco and the Nepomuceno cases are thereby causes loss or injury to the latter.
inapplicable, the Court’s ruling in Tijam v. Sibonhonoy78 is the
leading case on estoppel relating to jurisdiction. In Tijam, the Lest it be overlooked, this Court has already decided that the
Court expressed displeasure on "the undesirable practice of a sequestered shares are prima facie ill-gotten wealth rendering
party submitting his case for decision and then accepting the issue of the validity of their sequestration and of the
judgment, only if favorable, and then attacking it for lack of jurisdiction of the Sandiganbayan over the case beyond doubt.
jurisdiction, when adverse." In the case of COCOFED v. PCGG,81 We stated that:

Considering the antecedents of CC Nos. 0033-A and 0033-F, It is of course not for this Court to pass upon the factual issues
COCOFED, Lobregat, Ballares, et al. and Ursua are already thus raised. That function pertains to the Sandiganbayan in the
precluded from assailing the jurisdiction of the Sandiganbayan. first instance. For purposes of this proceeding, all that the
Remember that the COCOFED and the Lobregat group were Court needs to determine is whether or not there is prima
not originally impleaded as defendants in CC No. 0033. They facie justification for the sequestration ordered by the PCGG.
later asked and were allowed by the Sandiganbayan to The Court is satisfied that there is. The cited incidents, given
intervene. If they really believe then that the Sandiganbayan is the public character of the coconut levy funds, place
without jurisdiction over the subject matter of the complaint petitioners COCOFED and its leaders and officials, at least
in question, then why intervene in the first place? They could prima facie, squarely within the purview of Executive Orders
have sat idly by and let the proceedings continue and would Nos. 1, 2 and 14, as construed and applied in BASECO, to wit:
not have been affected by the outcome of the case as they can
challenge the jurisdiction of the Sandiganbayan when the time "1. that ill-gotten properties (were) amassed by the leaders
for implementation of the flawed decision comes. More and supporters of the previous regime;
importantly, the decision in the case will have no effect on "a. more particularly, that ‘(i)ll-gotten wealth was accumulated
them since they were not impleaded as indispensable parties. by … Marcos, his immediate family, relatives, subordinates and
After all, the joinder of all indispensable parties to a suit is not close associates, …. (and) business enterprises and entities
only mandatory, but jurisdictional as well.79 By their (came to be) owned or controlled by them, during … (the
intervention, which the Sandiganbayan allowed per its Marcos) administration, directly or through nominees, by
resolution dated September 30, 1991, COCOFED and Ursua taking undue advantage of their public office and using their
have clearly manifested their desire to submit to the powers, authority, influence, connections or relationships’;
jurisdiction of the Sandiganbayan and seek relief from said
court. Thereafter, they filed numerous pleadings in the "b. otherwise stated, that ‘there are assets and properties
subdivided complaints seeking relief and actively participated purportedly pertaining to [the Marcoses], their close relatives,
in numerous proceedings. Among the pleadings thus filed are subordinates, business associates, dummies, agents or
the Oppositions to the Motion for Intervention interposed by nominees which had been or were acquired by them directly or
the Pambansang Koalisyon ng mga Samahang Magsasaka at indirectly, through or as a result of the improper or illegal use
Manggagawa sa Niyogan and Gabay ng Mundo sa Kaunlaran of funds or properties owned by the Government …or any of its
Foundation, Inc., a Class Action Omnibus Motion to enjoin the branches, instrumentalities, enterprises, banks or financial
PCGG from voting the SMC shares dated February 23, 2001 institutions, or by taking undue advantage of their office,
(granted by Sandiganbayan) and the Class Action Motion for a authority, influence, connections or relationship, resulting in
Separate Summary Judgment dated April 11, 2001. By these their unjust enrichment ….;
acts, COCOFED et al. are now legally estopped from asserting x x x x x x x x x
the Sandiganbayn’s want of jurisdiction, if that be the case, 2. The petitioners’ claim that the assets acquired with the
over the subject matter of the complaint as they have coconut levy funds are privately owned by the coconut farmers
voluntarily yielded to the jurisdiction of the Sandiganbayan. is founded on certain provisions of law, to wit [Sec. 7, RA 6260
Estoppel has now barred the challenge on Sandiganbayan’s and Sec. 5, Art. III, PD 1468]… (Words in bracket added; italics
jurisdiction. in the original).

The ensuing excerpts from Macahilig v. Heirs of Magalit80 are In their attempt to dismiss the amended complaints in
instructive: question, petitioners asseverate that (1) the coconut farmers
We cannot allow her to attack its jurisdiction simply because it cannot be considered as "subordinates, close and/or business
rendered a Decision prejudicial to her position. Participation in associates, dummies, agents and nominees" of Cojuangco, Jr.
or the Marcoses, and (2) the sequestered shares were not well-nigh inconceivable that ill-gotten assets would be
illegally acquired nor acquired "through or as result of distributed to and left in the hands of individuals or entities
improper or illegal use or conversion of funds belonging to the with obvious traceable connections to Mr. Marcos and his
Government." While not saying so explicitly, petitioners are cronies. The Court can take, as it has in fact taken, judicial
doubtless conveying the idea that wealth, however acquired, notice of schemes and machinations that have been put in
would not be considered "ill-gotten" in the context of EO 1, 2 place to keep ill-gotten assets under wraps. These would
and 14, s. of 1986, absent proof that the recipient or end include the setting up of layers after layers of shell or dummy,
possessor thereof is outside the Marcos’ circle of friends, but controlled, corporations87 or manipulated instruments
associates, cronies or nominees. calculated to confuse if not altogether mislead would-be
investigators from recovering wealth deceitfully amassed at
We are not convinced. the expense of the people or simply the fruits thereof.
As may be noted, E.O. 1 and 2 advert to President Marcos, or Transferring the illegal assets to third parties not readily
his associates’ nominees. In its most common signification, the perceived as Marcos cronies would be another. So it was that
term "nominee" refers to one who is designated to act for in PCGG v. Pena, the Court, describing the rule of Marcos as a
another usually in a limited way; 82 a person in whose name a "well entrenched plundering regime of twenty years," noted
stock or bond certificate is registered but who is not the actual the magnitude of the past regime’s organized pillage and the
owner thereof is considered a nominee."83 Corpus Juris ingenuity of the plunderers and pillagers with the assistance of
Secundum describes a nominee as one: experts and the best legal minds in the market.88

… designated to act for another as his representative in a Hence, to give full effect to E.O. 1, 2 and 14, s. of 1986, the
rather limited sense. It has no connotation, however, other term "nominee," as used in the above issuances, must be taken
than that of acting for another, in representation of another or to mean to include any person or group of persons, natural or
as the grantee of another. In its commonly accepted meaning juridical, in whose name government funds or assets were
the term connoted the delegation of authority to the nominee transferred to by Pres. Marcos, his cronies or his associates. To
in a representative or nominal capacity only, and does not this characterization must include what the Sandiganbayan
connote the transfer or assignment to the nominee of any considered the "unidentified" coconut farmers, more than a
property in, or ownership of, the rights of the person million of faceless and nameless coconut farmers, the alleged
nominating him.84 beneficiaries of the distributed UCPB shares, who, under the
terms of Sec. 10 of PCA A.O. No. 1, s. of 1975, were required,
So, the next question that comes to the fore is: would the term upon the delivery of their respective stock certificates, to
"nominee" include the more than one million coconut farmers execute an irrevocable proxy in favor of the Bank’s manager.
alleged to be the recipients of the UCPB shares? There is thus ample truth to the observations - "[That] the PCA
provided this condition only indicates that the PCA had no
Guided by the foregoing definitions, the query must be intention to constitute the coconut farmer UCPB stockholder
answered in the affirmative if only to give life to those as a bona fide stockholder;" that the 1.5 million registered
executive issuances aimed at ensuring the recovery of ill- farmer-stockholders were "mere nominal stockholders."89
gotten wealth. It is basic, almost elementary, that:
From the foregoing, the challenge on the Sandiganbayan’s
Laws must receive a sensible interpretation to promote the subject matter jurisdiction at bar must fail.
ends for which they are enacted. They should be so given
reasonable and practical construction as will give life to them, II
if it can be done without doing violence to reason. Conversely, Petitioners COCOFED et al. were not
a law should not be so construed as to allow the doing of an deprived of their right to be heard.
act which is prohibited by law, not so interpreted as to afford As a procedural issue, COCOFED, et al. and Ursua next contend
an opportunity to defeat compliance with its terms, create an that in the course of almost 20 years that the cases have been
inconsistency, or contravene the plain words of the law. with the anti-graft court, they have repeatedly sought leave to
Interpretatio fienda est ut res magis valeat quam pereat or adduce evidence (prior to respondent’s complete presentation
that interpretation as will give the thing efficacy is to be of evidence) to prove the coco farmers’ actual and beneficial
adopted.85 ownership of the sequestered shares. The Sandiganbayan,
however, had repeatedly and continuously disallowed such
E.O. 1, 2, 14 and 14-A, it bears to stress, were issued precisely requests, thus depriving them of their constitutional right to
to effect the recovery of ill-gotten assets amassed by the be heard.
Marcoses, their associates, subordinates and cronies, or
through their nominees. Be that as it may, it stands to reason This contention is untenable, their demand to adduce
that persons listed as associated with the Marcoses86 refer to evidence being disallowable on the ground of prematurity.
those in possession of such ill-gotten wealth but holding the
same in behalf of the actual, albeit undisclosed owner, to The records reveal that the Republic, after adducing its
prevent discovery and consequently recovery. Certainly, it is evidence in CC No. 0033-A, subsequently filed a Motion Ad
Cautelam for Leave to Present Additional Evidence dated
March 28, 2001. This motion remained unresolved at the time SECTION 1. Summary judgment for claimant.—A party seeking
the Republic interposed its Motion for Partial Summary to recover upon a claim, counterclaim, or cross-claim … may,
Judgment. The Sandiganbayan granted the later motion and at any time after the pleading in answer thereto has been
accordingly rendered the Partial Summary Judgment, served, move with supporting affidavits, depositions or
effectively preempting the presentation of evidence by the admissions for a summary judgment in his favor upon all or any
defendants in said case (herein petitioners COCOFED and part thereof.
Ursua).
Section 5, Rule 30 the Rules of Court clearly sets out the order SEC. 2. Summary judgment for defending party.—A party
of presenting evidence: against whom a claim, counterclaim or cross-claim is asserted
… is sought may, at any time, move with supporting affidavits,
SEC. 5. Order of trial.—Subject to the provisions of section 2 of depositions or admissions for a summary judgment in his favor
Rule 31, and unless the court for special reasons otherwise as to all or any part thereof.
directs, the trial shall be limited to the issues stated in the pre-
trial order and shall proceed as follows: SEC. 4. Case not fully adjudicated on motion.—If on motion
(a) The plaintiff shall adduce evidence in support of his under this Rule, judgment is not rendered upon the whole case
complaint; or for all the reliefs sought and a trial is necessary, the court at
(b) The defendant shall then adduce evidence in support of his the hearing of the motion, by examining the pleadings and the
defense, counterclaim, cross-claim and third-party complaint; evidence before it and by interrogating counsel shall ascertain
x x x x x x x x x what material facts exist without substantial controversy and
(g) Upon admission of the evidence, the case shall be deemed what are actually and in good faith controverted. It shall
submitted for decision, unless the court directs the parties to thereupon make an order specifying the facts that appear
argue or to submit their respective memoranda or any further without substantial controversy, including the extent to which
pleadings. the amount of damages or other relief is not in controversy,
and directing such further proceedings in the action as are just.
If several defendants or third-party defendants, and so forth. The facts so specified shall be deemed established, and the
having separate defenses appear by different counsel, the trial shall be conducted on the controverted facts accordingly.
court shall determine the relative order of presentation of Clearly, petitioner COCOFED’s right to be heard had not been
their evidence. (Emphasis supplied.) violated by the mere issuance of PSJ-A and PSJ-F before they
can adduce their evidence.
Evidently, for the orderly administration of justice, the plaintiff
shall first adduce evidence in support of his complaint and As it were, petitioners COCOFED et al. were able to present
after the formal offer of evidence and the ruling thereon, then documentary evidence in conjunction with its "Class Action
comes the turn of defendant under Section 3 (b) to adduce Omnibus Motion" dated February 23, 2001 where they
evidence in support of his defense, counterclaim, cross-claim appended around four hundred (400) documents including
and third party complaint, if any. Deviation from such order of affidavits of alleged farmers. These petitioners manifested
trial is purely discretionary upon the trial court, in this case, the that said documents comprise their evidence to prove the
Sandiganbayan, which cannot be questioned by the parties farmers’ ownership of the UCPB shares, which were
unless the vitiating element of grave abuse of discretion distributed in accordance with valid and existing laws.92
supervenes. Thus, the right of COCOFED to present evidence
on the main case had not yet ripened. And the rendition of the Lastly, COCOFED et al. even filed their own Motion for
partial summary judgments overtook their right to present Separate Summary Judgment, an event reflective of their
evidence on their defenses. admission that there are no more factual issues left to be
determined at the level of the Sandiganbayan. This act of filing
It cannot be stressed enough that the Republic as well as a motion for summary judgment is a judicial admission against
herein petitioners were well within their rights to move, as COCOFED under Section 26, Rule 130 which declares that the
they in fact separately did, for a partial summary judgment. "act, declaration or omission of a party as to a relevant fact
Summary judgment may be allowed where, save for the may be given in evidence against him."
amount of damages, there is, as shown by affidavits and like
evidentiary documents, no genuine issue as to any material Viewed in this light, the Court has to reject petitioners’ self-
fact and the moving party is entitled to a judgment as a matter serving allegations about being deprived the right to adduce
of law. A "genuine issue", as distinguished from one that is evidence.
fictitious, contrived and set up in bad faith, means an issue of
fact that calls for the presentation of evidence.90 Summary or III
accelerated judgment, therefore, is a procedural technique The right to speedy trial was not violated.
aimed at weeding out sham claims or defenses at an early This brings to the fore the alleged violation of petitioners’ right
stage of the litigation.91 Sections 1, 2 and 4 of Rule 35 of the to a speedy trial and speedy disposition of the case. In support
Rules of Court on Summary Judgment, respectively provide: of their contention, petitioners cite Licaros v.
Sandiganbayan,93 where the Court dismissed the case pending people as well. Since the accused has completely failed to
before the Sandiganbayan for violation of the accused’s right assert his right seasonably and inasmuch as the respondent
to a speedy trial. judge was not in a position to dispose of the case on the
merits… we hold it proper and equitable to give the parties fair
It must be clarified right off that the right to a speedy opportunity to obtain … substantial justice in the premises.
disposition of case and the accused’s right to a speedy trial are
distinct, albeit kindred, guarantees, the most obvious The more recent case of Tello v. People96 laid stress to the
difference being that a speedy disposition of cases, as provided restrictive dimension to the right to speedy disposition of
in Article III, Section 16 of the Constitution, obtains regardless cases, i.e., it is lost unless seasonably invoked:
of the nature of the case:
In Bernat …, the Court denied petitioner’s claim of denial of his
Section 16. All persons shall have the right to a speedy right to a speedy disposition of cases considering that [he] …
disposition of their cases before all judicial, quasi-judicial, or chose to remain silent for eight years before complaining of
administrative bodies. the delay in the disposition of his case. The Court ruled that
petitioner failed to seasonably assert his right and he merely
In fine, the right to a speedy trial is available only to an accused sat and waited from the time his case was submitted for
and is a peculiarly criminal law concept, while the broader right resolution. In this case, petitioner similarly failed to assert his
to a speedy disposition of cases may be tapped in any right to a speedy disposition of his case…. He only invoked his
proceedings conducted by state agencies. Thus, in Licaros the right to a speedy disposition of cases after [his conviction]….
Court dismissed the criminal case against the accused due to Petitioner’s silence may be considered as a waiver of his right.
the palpable transgression of his right to a speedy trial.
An examination of the petitioners’ arguments and the cited
In the instant case, the appropriate right involved is the right indicia of delay would reveal the absence of any allegation that
to a speedy disposition of cases, the recovery of ill-gotten petitioners moved before the Sandiganbayan for the dismissal
wealth being a civil suit. of the case on account of vexatious, capricious and oppressive
delays that attended the proceedings. Following Tello,
Nonetheless, the Court has had the occasion to dismiss several petitioners are deemed to have waived their right to a speedy
cases owing to the infringement of a party’s right to a speedy disposition of the case. Moreover, delays, if any, prejudiced
disposition of cases.94 Dismissal of the case for violation of this the Republic as well. What is more, the alleged breach of the
right is the general rule. Bernat v. The Honorable right in question was not raised below. As a matter of settled
Sandiganbayan (5th Division)95 expounds on the extent of the jurisprudence, but subject to equally settled exception, an
right to a speedy disposition of cases as follows: issue not raised before the trial court cannot be raised for the
first time on appeal.97 The sporting idea forbidding one from
Section 16 of Article III of the Constitution guarantees the right pulling surprises underpins this rule. For these reasons, the
of all persons to a "speedy disposition of their cases." instant case cannot be dismissed for the alleged violation of
Nevertheless, this right is deemed violated only when the petitioners’ right to a speedy disposition of the case.
proceedings are attended by vexatious, capricious and
oppressive delays. Moreover, the determination of whether IV
the delays are of said nature is relative and cannot be based Sections 1 and 2 of P.D. No. 755, Article III, Section 5 of P.D.
on a mere mathematical reckoning of time. Particular regard No. 961 and Article III, Section 5 of P.D. No. 1468, are
must be taken of the facts and circumstances peculiar to each unconstitutional.
case. As a guideline, the Court in Dela Peña v. Sandiganbayan The Court may pass upon the constitutionality of P.D. Nos.
mentioned certain factors that should be considered and 755, 961 and 1468.
balanced, namely: 1) length of delay; 2) reasons for the delay; Petitioners COCOFED et al. and Ursua uniformly scored the
3) assertion or failure to assert such right by the accused; and Sandiganbayan for abusing its power of judicial review and
4) prejudice caused by the delay. wrongly encroaching into the exclusive domain of Congress
x x x x x x x x x when it declared certain provisions of the coconut levy laws
and PCA administrative issuances as unconstitutional.
While this Court recognizes the right to speedy disposition
quite distinctly from the right to a speedy trial, and although We are not persuaded.
this Court has always zealously espoused protection from It is basic that courts will not delve into matters of
oppressive and vexatious delays not attributable to the party constitutionality unless unavoidable, when the question of
involved, at the same time, we hold that a party’s individual constitutionality is the very lis mota of the case, meaning, that
rights should not work against and preclude the people’s the case cannot be legally resolved unless the constitutional
equally important right to public justice. In the instant case, issue raised is determined. This rule finds anchorage on the
three people died as a result of the crash of the airplane that presumptive constitutionality of every enactment. Withal, to
the accused was flying. It appears to us that the delay in the justify the nullification of a statute, there must be a clear and
disposition of the case prejudiced not just the accused but the
unequivocal breach of the Constitution. A doubtful or all disbursements of said funds for the benefit of the coconut
speculative infringement would simply not suffice.98 farmers as herein authorized shall not be construed or
Just as basic is the precept that lower courts are not precluded interpreted, under any law or regulation, as special and/or
from resolving, whenever warranted, constitutional questions, fiduciary funds, or as part of the general funds of the national
subject only to review by this Court. government within the contemplation of P.D. No. 711; nor as
a subsidy, donation, levy, government funded investment, or
To Us, the present controversy cannot be peremptorily government share within the contemplation of P.D. 898, the
resolved without going into the constitutionality of P.D. Nos. intention being that said Fund and the disbursements thereof
755, 961 and 1468 in particular. For petitioners COCOFED et al. as herein authorized for the benefit of the coconut farmers
and Ballares et al. predicate their claim over the sequestered shall be owned by them in their own private
shares and necessarily their cause on laws and martial law capacities.100 (Emphasis Ours)
issuances assailed by the Republic on constitutional grounds.
Indeed, as aptly observed by the Solicitor General, this case is P.D. No. 1468
for the recovery of shares grounded on the invalidity of certain Section 5. Exemptions. The [CCSF] and the [CIDF] as well as all
enactments, which in turn is rooted in the shares being public disbursement as herein authorized, shall not be construed or
in character, purchased as they were by funds raised by the interpreted, under nay law or regulation, as special and/or
taxing and/or a mix of taxing and police powers of the fiduciary funds, or as part of the general funds of the national
state.99 As may be recalled, P.D. No. 755, under the policy- government within the contemplation of PD 711; nor as
declaring provision, authorized the distribution of UCPB shares subsidy, donation, levy government funded investment, or
of stock free to coconut farmers. On the other hand, Section 2 government share within the contemplation of PD 898, the
of P.D. No. 755, hereunder quoted below, effectively intention being that said Fund and the disbursements thereof
authorized the PCA to utilize portions of the CCSF to pay the as herein authorized for the benefit of the coconut farmers
financial commitment of the farmers to acquire UCPB and to shall be owned by them in their private
deposit portions of the CCSF levies with UCPB interest free. capacities….101 (Emphasis Ours.)
And as there also provided, the CCSF, CIDF and like levies that
PCA is authorized to collect shall be considered as non-special In other words, the relevant provisions of P.D. Nos. 755, as well
or fiduciary funds to be transferred to the general fund of the as those of P.D. Nos. 961 and 1468, could have been the only
Government, meaning they shall be deemed private funds. plausible means by which close to a purported million and a
half coconut farmers could have acquired the said shares of
Section 2 of P.D. No. 755 reads: stock. It has, therefore, become necessary to determine the
Section 2. Financial Assistance. — To enable the coconut validity of the authorizing law, which made the stock transfer
farmers to comply with their contractual obligations under the and acquisitions possible.
aforesaid Agreement, the [PCA] is hereby directed to draw and
utilize the collections under the [CCSF] authorized to be levied To reiterate, it is of crucial importance to determine the
by [PD] No. 232, as amended, to pay for the financial validity of P.D. Nos. 755, 961 and 1468 in light of the
commitments of the coconut farmers under the said constitutional proscription against the use of special funds
agreement and, except for [PCA’s] budgetary requirements …, save for the purpose it was established. Otherwise,
all collections under the [CCSF] Levy and (50%) of the petitioners’ claim of legitimate private ownership over UCPB
collections under the [CIDF] shall be deposited, interest free, shares and indirectly over SMC shares held by UCPB’s
with the said bank of the coconut farmers and such deposits subsidiaries will have no leg to stand on, P.D. No. 755 being the
shall not be withdrawn until the … the bank has sufficient only law authorizing the distribution of the SMC and UCPB
equity capital …; and since the operations, and activities of the shares of stock to coconut farmers, and with the
[PCA] are all in accord with the present social economic plans aforementioned provisions actually stating and holding that
and programs of the Government, all collections and levies the coco levy fund shall not be considered as a special – not
which the [PCA] is authorized to levy and collect such as but even general – fund, but shall be owned by the farmers in their
not limited to the [CCS Levy] and the [CIDF] … shall not be private capacities.102
considered or construed, under any law or regulation, special
and/or fiduciary funds and do not form part of the general The Sandiganbayan’s ensuing ratiocination on the need to pass
funds of the national government within the contemplation of upon constitutional issues the Republic raised below
[P.D.] No. 711. (Emphasis supplied) commends itself for concurrence:

A similar provision can also be found in Article III, Section 5 of This Court is convinced of the imperative need to pass upon
P.D. No. 961 and Article III, Section 5 of P.D. No. 1468, which the issues of constitutionality raised by Plaintiff. The issue of
We shall later discuss in turn: constitutionality of the provisions of P.D. No. 755 and the laws
related thereto goes to the very core of Plaintiff’s causes of
P.D. No. 961 action and defenses thereto. It will serve the best interest of
Section 5. Exemptions. The Coconut Consumers Stabilization justice to define this early the legal framework within which
Fund and the Coconut Industry Development Fund as well as this case shall be heard and tried, taking into account the
admission of the parties and the established facts, particularly aforesaid two [PDs]. P.D. No. 755 allegedly legitimized the
those relating to the main substance of the defense of "highly anomalous and irregular use and diversion of
Lobregat, COCOFED, et al. and Ballares, et al., which is government funds to advance his [defendant Cojuangco’s]
anchored on the laws being assailed by Plaintiff on own private and commercial interest." The issuance of the said
constitutional grounds. [PD] which has the force and effect of a law can only be
x x x x x x x x x assailed on constitutional grounds. The merits of the grounds
adverted to in the allegations of the Third Amended Complaint
The Court is also mindful that lower courts are admonished to (Subdivided) can only be resolved by this Court by testing the
observe a becoming modesty in examining constitutional questioned [PDs], which are considered part of the laws of the
questions, but that they are nonetheless not prevented from land….
resolving the same whenever warranted, subject only to
review by the highest tribunal (Ynot v. Intermediate Appellate As early as June 20, 1989, this Court in its Resolution expressed
Court). this Court’s understanding of the import of the allegations of
x x x x x x x x x the complaint, as follows:

It is true that, as a general rule, the question of "It is likewise alleged in the Complaint that in order to
constitutionality must be raised at the earliest opportunity. legitimize the diversion of funds, defendant Ferdinand E.
The Honorable Supreme Court … has clearly stated that the Marcos issued the Presidential Decrees referred to by the
general rule admits of exceptions, thus: movants. This is then the core of Plaintiff’s complaint: that,
x x x x x x x x x insofar as the coconut levy is concerned, these decrees had
been enacted as tools for the acquisition of ill-gotten wealth
‘For courts will pass upon a constitutional question only when for specific favored individuals.
presented before it in bona fide cases for determination, and
the fact that the question has not been raised before is not a "Even if Plaintiff may not have said so effectively, the
valid reason for refusing to allow it to be raised later…. It has complaint in fact disputes the legitimacy, and, if one pleases,
been held that the determination of a constitutional question the constitutionality of such enactments….
is necessary whenever it is essential to the decision of the case
… as where the right of a party is founded solely on a statute, "The issue is validly raised on the face of the complaint and
the validity of which is attacked.’ defendants must respond to it."

In the case now before us, the allegations of the Subdivided Since … the question of constitutionality … may be raised even
Complaint are consistent with those in the subject Motion, and on appeal if the determination of such a question is essential
they sufficiently raise the issue of constitutionality of the to the decision of the case, we find more reason to resolve this
provisions of laws in question. The Third Amended Complaint constitutional question at this stage of the proceedings, where
(Subdivided) states: the defense is grounded solely on the very laws the
‘(ii) to legitimize a posteriori his highly anomalous and irregular constitutionality of which are being questioned and where the
use and diversion of government funds to advance his own evidence of the defendants would seek mainly to prove their
private and commercial interests, … Cojuangco, Jr. caused the faithful and good faith compliance with the said laws and their
issuance … of PD 755 (a) declaring that the coconut levy funds implementing rules and regulations.103 (Emphasis added.)
shall not be considered special and fiduciary and trusts funds
and do not form part of the general funds of the National The Court’s rulings in COCOFED v. PCGG and Republic v.
Government, conveniently repealing for that purpose a series Sandiganbayan, as law of the case, are speciously invoked.
of coconut levy funds as special, fiduciary, trust and To thwart the ruling on the constitutionality of P.D. Nos. 755,
government funds…. 961 and 1468, petitioners would sneak in the argument that
x x x x x x x x x the Court has, in three separate instances, upheld the validity,
and thumbed down the Republic’s challenge to the
‘(iv) To perpetuate his opportunity to deal with and make use constitutionality, of said laws imposing the different coconut
the coconut levy funds to build his economic empire, levies and prescribing the uses of the fund collected. The
Cojuangco, Jr. caused the issuance by Defendant Ferdinand E. separate actions of the Court, petitioners add, would conclude
Marcos of an unconstitutional decree (PD 1468) requiring the the Sandiganbayan on the issue of constitutionality of said
deposit of all coconut levy funds with UCPB, interest free, to issuances, following the law-of-the-case principle.
the prejudice of the government.’
Petitioners allege:
The above-quoted allegations in the Third Amended Complaint Otherwise stated, the decision of this Honorable Court in the
(Subdivided) already question the "legitimacy" of the exercise COCOFED Case overruling the strict public fund theory
by former President Marcos of his legislative authority when espoused by the Respondent Republic, upholding the
he issued P.D. Nos. 755 and 1468. The provision of Sec. 5, Art. propriety of the laws imposing the collections of the different
III of P.D. 961 is substantially similar to the provisions of the Coconut Levies and expressly allowing COCOFED, et al., to
prove that the Sequestered Assets have legitimately become as well as to whether P.D. No. 755 constitutes undue
their private properties had become final and immutable.104 delegation of legislative power. Clearly, the issues in both sets
of cases are so different as to preclude the application of the
Petitioners are mistaken. law of the case rule.

Yu v. Yu,105 as effectively reiterated in Vios v. The second and third instances that petitioners draw attention
Pantangco,106 defines and explains the ramifications of the law to refer to the rulings in Republic v. Sandiganbayan, where the
of the case principle as follows: Court by Resolution of December 13, 1994, as reiterated in
Law of the case has been defined as the opinion delivered on another resolution dated March 26, 1996, resolved to deny the
a former appeal. It is a term applied to an established rule that separate motions of the Republic to resolve legal questions on
when an appellate court passes on a question and remands the the character of the coconut levy funds, more particularly to
case to the lower court for further proceedings, the question declare as unconstitutional (a) coconut levies collected
there settled becomes the law of the case upon subsequent pursuant to various issuances as public funds and (b) Article III,
appeal. It means that whatever is once irrevocably established Section 5 of P.D. No. 1468.
as the controlling legal rule or decision between the same
parties in the same case continues to be the law of the case, … Prescinding from the foregoing considerations, petitioners
so long as the facts on which such decision was predicated would state: "Having filed at least three (3) motions … seeking,
continue to be the facts of the case before the court. among others, to declare certain provisions of the Coconut
Levy Laws unconstitutional and having been rebuffed all three
Otherwise put, the principle means that questions of law that times by this Court," the Republic - and necessarily
have been previously raised and disposed of in the Sandiganbayan – "should have followed as [they were] legally
proceedings shall be controlling in succeeding instances where bound by this … Court’s prior determination" on that above
the same legal question is raised, provided that the facts on issue of constitutionality under the doctrine of Law of the Case.
which the legal issue was predicated continue to be the facts
of the case before the court. Guided by this definition, the law Petitioners are wrong. The Court merely declined to pass upon
of the case principle cannot provide petitioners any comfort. the constitutionality of the coconut levy laws or some of their
We shall explain why. provisions. It did not declare that the UCPB shares acquired
with the use of coconut levy funds have legitimately become
In the first instance, petitioners cite COCOFED v. private.
PCGG.107 There, respondent PCGG questioned the validity of
the coconut levy laws based on the limits of the state’s taxing The coconut levy funds are in the nature of taxes and can only
and police power, as may be deduced from the ensuing be used for public purpose. Consequently, they cannot be
observations of the Court: used to purchase shares of stocks to be given for free to
private individuals.
…. Indeed, the Solicitor General suggests quite strongly that
the laws operating or purporting to convert the coconut levy Indeed, We have hitherto discussed, the coconut levy was
funds into private funds, are a transgression of the basic imposed in the exercise of the State’s inherent power of
limitations for the licit exercise of the state's taxing and police taxation. As We wrote in Republic v. COCOFED:109
powers, and that certain provisions of said laws are merely
clever stratagems to keep away government audit in order to Indeed, coconut levy funds partake of the nature of taxes,
facilitate misappropriation of the funds in question. which, in general, are enforced proportional contributions
from persons and properties, exacted by the State by virtue of
The utilization and proper management of the coconut levy its sovereignty for the support of government and for all public
funds, [to acquire shares of stocks for coconut farmers and needs.
workers] raised as they were by the State’s police and taxing
power are certainly the concern of the Government…. The Based on its definition, a tax has three elements, namely: a) it
coconut levy funds are clearly affected with public interest. is an enforced proportional contribution from persons and
Until it is demonstrated satisfactorily that they have properties; b) it is imposed by the State by virtue of its
legitimately become private funds, they must prima facie be sovereignty; and c) it is levied for the support of the
accounted subject to measures prescribed in EO Nos. 1, 2, and government. The coconut levy funds fall squarely into these
14 to prevent their concealment, dissipation, etc….108 [Words elements for the following reasons:
in bracket added.]
(a) They were generated by virtue of statutory enactments
The issue, therefore, in COCOFED v. PCGG turns on the legality imposed on the coconut farmers requiring the payment of
of the transfer of the shares of stock bought with the coconut prescribed amounts. Thus, PD No. 276, which created the
levy funds to coconut farmers. This must be distinguished with Coconut Consumer[s] Stabilization Fund (CCSF), mandated the
the issues in the instant case of whether P.D. No. 755 violated following:
Section 29, paragraph 3 of Article VI of the 1987 Constitution
"a. A levy, initially, of P15.00 per 100 kilograms of copra Even if the money is allocated for a special purpose and raised
resecada or its equivalent in other coconut products, shall be by special means, it is still public in character…. In Cocofed v.
imposed on every first sale, in accordance with the mechanics PCGG, the Court observed that certain agencies or enterprises
established under RA 6260, effective at the start of business "were organized and financed with revenues derived from
hours on August 10, 1973. coconut levies imposed under a succession of law of the late
dictatorship … with deposed Ferdinand Marcos and his cronies
"The proceeds from the levy shall be deposited with the as the suspected authors and chief beneficiaries of the
Philippine National Bank or any other government bank to the resulting coconut industry monopoly." The Court continued:
account of the Coconut Consumers Stabilization Fund, as a "…. It cannot be denied that the coconut industry is one of the
separate trust fund which shall not form part of the general major industries supporting the national economy. It is,
fund of the government." therefore, the State’s concern to make it a strong and secure
The coco levies were further clarified in amendatory laws, source not only of the livelihood of a significant segment of the
specifically PD No. 961 and PD No. 1468 – in this wise: population, but also of export earnings the sustained growth
of which is one of the imperatives of economic
"The Authority (PCA) is hereby empowered to impose and stability.110 (Emphasis Ours)
collect a levy, to be known as the Coconut Consumers
Stabilization Fund Levy, on every one hundred kilos of copra We have ruled time and again that taxes are imposed only for
resecada, or its equivalent … delivered to, and/or purchased a public purpose.111 "They cannot be used for purely private
by, copra exporters, oil millers, desiccators and other end- purposes or for the exclusive benefit of private
users of copra or its equivalent in other coconut products. The persons."112 When a law imposes taxes or levies from the
levy shall be paid by such copra exporters, oil millers, public, with the intent to give undue benefit or advantage to
desiccators and other end-users of copra or its equivalent in private persons, or the promotion of private enterprises, that
other coconut products under such rules and regulations as law cannot be said to satisfy the requirement of public
the Authority may prescribe. Until otherwise prescribed by the purpose.113 In Gaston v. Republic Planters Bank, the petitioning
Authority, the current levy being collected shall be continued." sugar producers, sugarcane planters and millers sought the
Like other tax measures, they were not voluntary payments or distribution of the shares of stock of the Republic Planters
donations by the people. They were enforced contributions Bank, alleging that they are the true beneficial owners
exacted on pain of penal sanctions, as provided under PD No. thereof.114 In that case, the investment, i.e., the purchase of
276: the said bank, was funded by the deduction of PhP 1.00 per
picul from the sugar proceeds of the sugar producers pursuant
"3. Any person or firm who violates any provision of this to P.D. No. 388.115 In ruling against the petitioners, the Court
Decree or the rules and regulations promulgated thereunder, held that to rule in their favor would contravene the general
shall, in addition to penalties already prescribed under existing principle that revenues received from the imposition of taxes
administrative and special law, pay a fine of not less than or levies "cannot be used for purely private purposes or for the
P2,500 or more than P10,000, or suffer cancellation of licenses exclusive benefit of private persons."116 The Court amply
to operate, or both, at the discretion of the Court." reasoned that the Stabilization Fund must "be utilized for the
benefit of the entire sugar industry, and all its components,
Such penalties were later amended thus: …. stabilization of the domestic market including foreign market,
the industry being of vital importance to the country’s
(b) The coconut levies were imposed pursuant to the laws economy and to national interest."117
enacted by the proper legislative authorities of the State.
Indeed, the CCSF was collected under PD No. 276…." Similarly in this case, the coconut levy funds were sourced
from forced exactions decreed under P.D. Nos. 232, 276 and
(c) They were clearly imposed for a public purpose. There is 582, among others,118 with the end-goal of developing the
absolutely no question that they were collected to advance the entire coconut industry.119 Clearly, to hold therefore, even by
government’s avowed policy of protecting the coconut law, that the revenues received from the imposition of the
industry. This Court takes judicial notice of the fact that coconut levies be used purely for private purposes to be
the coconut industry is one of the great economic pillars of our owned by private individuals in their private capacity and for
nation, and coconuts and their byproducts occupy a leading their benefit, would contravene the rationale behind the
position among the country’s export products…. imposition of taxes or levies.

Taxation is done not merely to raise revenues to support the Needless to stress, courts do not, as they cannot, allow by
government, but also to provide means for the rehabilitation judicial fiat the conversion of special funds into a private fund
and the stabilization of a threatened industry, which is so for the benefit of private individuals. In the same vein, We
affected with public interest as to be within the police power cannot subscribe to the idea of what appears to be an indirect
of the State…. – if not exactly direct – conversion of special funds into private
funds, i.e., by using special funds to purchase shares of stocks,
which in turn would be distributed for free to private
individuals. Even if these private individuals belong to, or are a purpose, which should be treated as a special account in the
part of the coconut industry, the free distribution of shares of National Treasury.126 (Emphasis Ours.)
stocks purchased with special public funds to them,
nevertheless cannot be justified. The ratio in Gaston,120 as If only to stress the point, P.D. No. 1234 expressly stated that
expressed below, applies mutatis mutandis to this case: coconut levies are special funds to be remitted to the Treasury
in the General Fund of the State, but treated as Special
The stabilization fees in question are levied by the State … for Accounts:
a special purpose – that of "financing the growth and
development of the sugar industry and all its components, Section 1. All income and collections for Special or Fiduciary
stabilization of the domestic market including the foreign Funds authorized by law shall be remitted to the Treasury and
market." The fact that the State has taken possession of treated as Special Accounts in the General Fund, including the
moneys pursuant to law is sufficient to constitute them as following:
state funds even though they are held for a special purpose….
(a) [PCA] Development Fund, including all income derived
That the fees were collected from sugar producers,[etc.], and therefrom under Sections 13 and 14 of [RA] No. 1145; Coconut
that the funds were channeled to the purchase of shares of Investments Fund under Section 8 of [RA] No. 6260, including
stock in respondent Bank do not convert the funds into a earnings, profits, proceeds and interests derived therefrom;
trust fund for their benefit nor make them the beneficial Coconut Consumers Stabilization Funds under Section 3-A of
owners of the shares so purchased. It is but rational that the PD No. 232, as inserted by Section 3 of P.D. No. 232, as inserted
fees be collected from them since it is also they who are by Section 2 of P.D. No. 583; and all other fees accruing to the
benefited from the expenditure of the funds derived from [PCA] under the provisions of Section 19 of [RA] No. 1365, in
it. ….121 (Emphasis Ours.) accordance with Section 2 of P.D. No. 755 and all other income
accruing to the [PCA] under existing laws.127 (Emphasis Ours)
In this case, the coconut levy funds were being exacted from
copra exporters, oil millers, desiccators and other end-users of Moreover, the Court, in Gaston, stated the observation that
copra or its equivalent in other coconut products.122 Likewise the character of a stabilization fund as a special fund "is
so, the funds here were channeled to the purchase of the emphasized by the fact that the funds are deposited in the
shares of stock in UCPB. Drawing a clear parallelism between Philippine National Bank [PNB] and not in the Philippine
Gaston and this case, the fact that the coconut levy funds were Treasury, moneys from which may be paid out only in
collected from the persons or entities in the coconut industry, pursuance of an appropriation made by law."128 Similarly in
among others, does not and cannot entitle them to be this case, Sec.1 (a) of P.D. No. 276 states that the proceeds
beneficial owners of the subject funds – or more bluntly, from the coconut levy shall be deposited with the PNB, then a
owners thereof in their private capacity. Parenthetically, the government bank, or any other government bank under the
said private individuals cannot own the UCPB shares of stocks account of the CCSF, as a separate trust fund, which shall not
so purchased using the said special funds of the form part of the government’s general fund.129 And even
government.123 assuming arguendo that the coconut levy funds were
transferred to the general fund pursuant to P.D. No. 1234, it
Coconut levy funds are special public funds of the was with the specific directive that the same be treated as
government. special accounts in the general fund.130
Plainly enough, the coconut levy funds are public funds. We
have ruled in Republic v. COCOFED that the coconut levy funds The coconut levy funds can only be used for the special
are not only affected with public interest; they are prima facie purpose and the balance thereof should revert back to the
public funds.124 In fact, this pronouncement that the levies are general fund. Consequently, their subsequent reclassification
government funds was admitted and recognized by as a private fund to be owned by private individuals in their
respondents, COCOFED, et al., in G.R. No. 147062-64.125 And private capacities under P.D. Nos. 755, 961 and 1468 are
more importantly, in the same decision, We clearly explained unconstitutional.
exactly what kind of government fund the coconut levies are.
We were categorical in saying that coconut levies are treated To recapitulate, Article VI, Section 29 (3) of the 1987
as special funds by the very laws which created them: Constitution, restating a general principle on taxation, enjoins
the disbursement of a special fund in accordance with the
Finally and tellingly, the very laws governing the coconut levies special purpose for which it was collected, the balance, if there
recognize their public character. Thus, the third Whereas be any, after the purpose has been fulfilled or is no longer
clause of PD No. 276 treats them as special funds for a specific forthcoming, to be transferred to the general funds of the
public purpose. Furthermore, PD No. 711 transferred to the government, thus:
general funds of the State all existing special and fiduciary Section 29(3)….
funds including the CCSF. On the other hand, PD No. 1234
specifically declared the CCSF as a special fund for a special (3) All money collected on any tax levied for a special purpose
shall be treated as a special fund and paid out for such purpose
only. If the purpose for which a special fund was created has
been fulfilled or abandoned, the balance, if any, shall be As couched, P.D. No. 276 created and exacted the CCSF "to
transferred to the general funds of the Government. advance the government’s avowed policy of protecting the
(Emphasis Ours) coconut industry."132 Evidently, the CCSF was originally set up
as a special fund to support consumer purchases of coconut
Correlatively, Section 2 of P.D. No. 755 clearly states that: products. To put it a bit differently, the protection of the entire
Section 2. Financial Assistance. To enable the coconut farmers coconut industry, and even more importantly, for the
to comply with their contractual obligations under the consuming public provides the rationale for the creation of the
aforesaid Agreement, the [PCA] is hereby directed to draw and coconut levy fund. There can be no quibbling then that the
utilize the collections under the Coconut Consumers foregoing provisions of P.D. No. 276 intended the fund created
Stabilization Fund [CCSF] authorized to be levied by [P.D.] 232, and set up therein not especially for the coconut farmers but
as amended, to pay for the financial commitments of the for the entire coconut industry, albeit the improvement of the
coconut farmers under the said agreement…. and the Coconut industry would doubtless redound to the benefit of the
Industry Development Fund as prescribed by Presidential farmers. Upon the foregoing perspective, the following
Decree No. 582 shall not be considered or construed, under provisions of P.D. Nos. 755, 961 and 1468 insofar as they
any law or regulation, special and/or fiduciary funds and do not declared, as the case may be, that: "[the coconut levy] fund
form part of the general funds of the national government and the disbursements thereof [shall be] authorized for the
within the contemplation of Presidential Decree No. 711. benefit of the coconut farmers and shall be owned by them in
(Emphasis Ours) their private capacities;"133 or the coconut levy fund shall not
be construed by any law to be a special and/or fiduciary fund,
Likewise, as discussed supra, Article III, Section 5 of both P.D. and do not therefore form part of the general fund of the
Nos. 961 and 1468 provides that the CCSF shall not be national government later on;134 or the UCPB shares acquired
construed by any law as a special and/or trust fund, the stated using the coconut levy fund shall be distributed to the coconut
intention being that actual ownership of the said fund shall farmers for free,135 violated the special public purpose for
pertain to coconut farmers in their private capacities.131 Thus, which the CCSF was established.
in order to determine whether the relevant provisions of P.D.
Nos. 755, 961 and 1468 complied with Article VI, Section 29 (3) In sum, not only were the challenged presidential issuances
of the 1987 Constitution, a look at the public policy or the unconstitutional for decreeing the distribution of the shares of
purpose for which the CCSF levy was imposed is necessary. stock for free to the coconut farmers and, therefore, negating
the public purpose declared by P.D. No. 276, i.e., to stabilize
The CCSF was established by virtue of P.D. No. 276 wherein it the price of edible oil136 and to protect the coconut
is stated that: industry.137 They likewise reclassified, nay treated, the coconut
WHEREAS, an escalating crisis brought about by an abnormal levy fund as private fund to be disbursed and/or invested for
situation in the world market for fats and oils has resulted in the benefit of private individuals in their private capacities,
supply and price dislocations in the domestic market for contrary to the original purpose for which the fund was
coconut-based goods, and has created hardships for created. To compound the situation, the offending provisions
consumers thereof; effectively removed the coconut levy fund away from the cavil
of public funds which normally can be paid out only pursuant
WHEREAS, the representatives of the coconut industry … have to an appropriation made by law.138 The conversion of public
proposed the implementation of an industry-financed funds into private assets was illegally allowed, in fact
stabilization scheme which will permit socialized pricing of mandated, by these provisions. Clearly therefore, the
coconut-based commodities; pertinent provisions of P.D. Nos. 755, 961 and 1468 are
unconstitutional for violating Article VI, Section 29 (3) of the
WHEREAS, it is the policy of the State to promote the welfare Constitution. In this context, the distribution by PCA of the
and economic well-being of the consuming public; UCPB shares purchased by means of the coconut levy fund – a
…. special fund of the government – to the coconut farmers, is
therefore void.
1. In addition to its powers granted under [P.D.] No. 232, the
[PCA] is hereby authorized to formulate and immediately We quote with approval the Sandiganbayan’s reasons for
implement a stabilization scheme for coconut-based declaring the provisions of P.D. Nos. 755, 961 and 1468 as
consumer goods, along the following general guidelines: unconstitutional:
It is now settled, in view of the ruling in Republic v. COCOFED,
(a) ….The proceeds of the levy shall be deposited with the et al., supra, that "Coconut levy funds are raised with the use
Philippine National Bank or any other government bank to the of the police and taxing powers of the State;" that "they are
account of the CCSF as a separate trust fund…. levies imposed by the State for the benefit of the coconut
(b) The Fund shall be utilized to subsidize the sale of coconut- industry and its farmers" and that "they were clearly imposed
based products at prices set by the Price Control Council….: for a public purpose." This public purpose is explained in the
…. said case, as follows:
 farmers, can only be accorded constitutional sanction if it will
…. c) They were clearly imposed for a public purpose. There is directly serve the public purpose declared by law….139
absolutely no question that they were colleted to advance the
government’s avowed policy of protecting the coconut Section 1 of P.D. No. 755, as well as PCA Administrative Order
industry…. No. 1, Series of 1975 (PCA AO 1), and Resolution No. 074-75,
are invalid delegations of legislative power.
"Taxation is done not merely to raise revenues to support the
government, but also to provide means for the rehabilitation Petitioners argue that the anti-graft court erred in declaring
and the stabilization of a threatened industry, which is so Section 1 of PD 755, PCA Administrative Order No. 1 and PCA
affected with public interest as to be within the police power Resolution No. 074-78 constitutionally infirm by reason of
of the State, as held in Caltex Philippines v. COA and Osmeña alleged but unproven and unsubstantiated flaws in their
v. Orbos. implementation. Additionally, they explain that said court
x x x x x x x x x erred in concluding that Section 1 of PD No. 755 constitutes an
undue delegation of legislative power insofar as it authorizes
The avowed public purpose for the disbursement of the CCSF the PCA to promulgate rules and regulations governing the
is contained in the perambulatory clauses and Section 1 of P.D. distribution of the UCPB shares to the farmers.
No. 755. The imperativeness of enunciating the public purpose These propositions are meritless.
of the expenditure of funds raised through taxation is
underscored in the case of Pascual v. The Secretary of Public The assailed PSJ-A noted the operational distribution
Works and Communications, et al, supra, which held: nightmare faced by PCA and the mode of distribution of UCPB
shares set in motion by that agency left much room for
"As regards the legal feasibility of appropriating public funds diversion. Wrote the Sandiganbayan:
for a private purpose the principle according to Ruling Case
Law, is this: The actual distribution of the bank shares was admittedly an
‘It is a general rule that the legislature is without power to enormous operational problem which resulted in the failure of
appropriate public revenue for anything but a public purpose the intended beneficiaries to receive their shares of stocks in
… it is the essential character of the direct object of the the bank, as shown by the rules and regulations, issued by the
expenditure which must determine its validity as justifying a PCA, without adequate guidelines being provided to it by P.D.
tax, and not the magnitude of the interests to be affected nor No. 755. PCA Administrative Order No. 1, Series of 1975
the degree to which the general advantage of the community, (August 20, 1975), "Rules and Regulations Governing the
and thus the public welfare may be ultimately benefited by Distribution of Shares of Stock of the Bank Authorized to be
their promotion. Incidental advantage to the public or to the Acquired Pursuant to PCA Board Resolution No. 246-75",
state, which results from the promotion of private interests quoted hereunder discloses how the undistributed shares of
and the prosperity of private enterprises or business, does not stocks due to anonymous coconut farmers or payors of the
justify their aid by the use of public money.’ 25 R.L.C. pp. 398- coconut levy fees were authorized to be distributed to existing
400) shareholders of the Bank:

"The rule is set forth in Corpus Juris Secundum in the following "Section 9. Fractional and Undistributed Shares – Fractional
language: shares and shares which remain undistributed … shall be
x x x x x x x x x distributed to all the coconut farmers who have qualified and
received equity in the Bank and shall be apportioned among
‘The test of the constitutionality of a statute requiring the use them, as far as practicable, in proportion to their equity in
of public funds is whether the statute is designed to promote relation to the number of undistributed equity and such
the public interests, as opposed to the furtherance of the further rules and regulations as may hereafter be
advantage of individuals, although each advantage to promulgated.’
individuals might incidentally serve the public….’ (81 C.J.S. p.
1147) The foregoing PCA issuance was further amended by
Resolution No. 074-78, still citing the same problem of
"Needless to say, this Court is fully in accord with the foregoing distribution of the bank shares….:
views…. Besides, reflecting as they do, the established x x x x x x x x x
jurisprudence in the United States, after whose constitutional
system ours has been patterned, said views and jurisprudence Thus, when 51,200,806 shares in the bank remained
are, likewise, part and parcel of our own constitutional law." undistributed, the PCA deemed it proper to give a "bonanza"
to coconut farmers who already got their bank shares, by
The gift of funds raised by the exercise of the taxing powers of giving them an additional share for each share owned by them
the State which were converted into shares of stock in a and by converting their fractional shares into full shares. The
private corporation, slated for free distribution to the coconut rest of the shares were then transferred to a private
organization, the COCOFED, for distribution to those
determined to be "bona fide coconut farmers" who had "not measure enacted. The legislature does not abdicate its
received shares of stock of the Bank." …. functions when it describes what job must be done, who is to
do it, and what is the scope of his authority….
The PCA thus assumed, due to lack of adequate guidelines set
by P.D. No. 755, that it had complete authority to define who To avoid the taint of unlawful delegation, there must be a
are the coconut farmers and to decide as to who among the standard, which implies at the very least that the legislature
coconut farmers shall be given the gift of bank shares; how itself determines matters of principle and lays down
many shares shall be given to them, and what basis it shall use fundamental policy. Otherwise, the charge of complete
to determine the amount of shares to be distributed for free abdication may be hard to repel. A standard thus defines
to the coconut farmers. In other words, P.D. No. 755 fails the legislative policy, marks its limits, maps out its boundaries and
completeness test which renders it constitutionally infirm. specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be
Regarding the second requisite of standard, it is settled that effected. It is the criterion by which legislative purpose may be
legislative standard need not be expressed…. carried out. Thereafter, the executive or administrative office
designated may in pursuance of the above guidelines
We observed, however, that the PCA [AO] No. 1, Series of 1975 promulgate supplemental rules and regulations.142 (Emphasis
and PCA Rules and Regulations 074-78, did not take into supplied)
consideration the accomplishment of the public purpose or
the national standard/policy of P.D. No. 755 which is directly Jurisprudence is consistent as regards the two tests, which
to accelerate the development and growth of the coconut must be complied with to determine the existence of a valid
industry and as a consequence thereof, to make the coconut delegation of legislative power. In Abakada Guro Party List, et
farmers "participants in and beneficiaries" of such growth and al. v. Purisima,143 We reiterated the discussion, to wit:
development. The said PCA issuances did nothing more than
provide guidelines as to whom the UCPB shares were to be Two tests determine the validity of delegation of legislative
distributed and how many bank shares shall be allotted to the power: (1) the completeness test and (2) the sufficient
beneficiaries. There was no mention of how the distributed standard test. A law is complete when it sets forth therein the
shares shall be used to achieve exclusively or at least directly policy to be executed, carried out or implemented by the
or primarily the aim or public purpose enunciated by P.D. No. delegate. It lays down a sufficient standard when it provides
755. The numerical or quantitative distribution of shares adequate guidelines or limitations in the law to map out the
contemplated by the PCA regulations which is a condition for boundaries of the delegate’s authority and prevent the
the validly of said administrative issuances. There was a delegation from running riot. To be sufficient, the standard
reversal of priorities. The narrow private interests prevailed must specify the limits of the delegate’s authority, announce
over the laudable objectives of the law…. However, under the the legislative policy and identify the conditions under which it
May 25, 1975 agreement implemented by the PCA issuances, is to be implemented.
the PCA acquired only 64.98% of the shares of the bank and
even the shares covering the said 64.98% were later on In the instant case, the requisite standards or criteria are
transferred to non-coconut farmers." absent in P.D. No. 755. As may be noted, the decree authorizes
the PCA to distribute to coconut farmers, for free, the shares
The distribution for free of the shares of stock of the CIIF of stocks of UCPB and to pay from the CCSF levy the financial
Companies is tainted with the above-mentioned constitutional commitments of the coconut farmers under the Agreement for
infirmities of the PCA administrative issuances. In view of the the acquisition of such bank. Yet, the decree does not even
foregoing, we cannot consider the provision of P.D. No. 961 state who are to be considered as coconut farmers. Would,
and P.D. No. 1468 and the implementing regulations issued by say, one who plants a single coconut tree be already
the PCA as valid legal basis to hold that assets acquired with considered a coconut farmer and, therefore, entitled to own
public funds have legitimately become private UCPB shares? If so, how many shares shall be given to him?
properties." 140 (Emphasis added.) The definition of a coconut farmer and the basis as to the
number of shares a farmer is entitled to receive for free are
P.D. No. 755 involves an invalid delegation of legislative power, important variables to be determined by law and cannot be
a concept discussed in Soriano v. Laguardia,141 citing the left to the discretion of the implementing agency.
following excerpts from Edu v. Ericta:
Moreover, P.D. No. 755 did not identify or delineate any clear
It is a fundamental … that Congress may not delegate its condition as to how the disposition of the UCPB shares or their
legislative power…. What cannot be delegated is the authority conversion into private ownership will redound to the
… to make laws and to alter and repeal them; the test is the advancement of the national policy declared under it. To
completeness of the statute in all its term and provisions when recall, P.D. No. 755 seeks to "accelerate the growth and
it leaves the hands of the legislature. To determine whether or development of the coconut industry and achieve a vertical
not there is an undue delegation of legislative power, the integration thereof so that coconut farmers will become
inquiry must be directed to the scope and definiteness of the participants in, and beneficiaries of, such growth and
development."144 The Sandiganbayan is correct in its equity and such further rules and regulations as may hereafter
observation and ruling that the said law gratuitously gave away be promulgated.
public funds to private individuals, and converted them
exclusively into private property without any restriction as to The foregoing provision directs and authorizes the distribution
its use that would reflect the avowed national policy or public of fractional and undistributed shares as a consequence of the
purpose. Conversely, the private individuals to whom the failure of the coconut farmers with Coco Fund receipts to
UCPB shares were transferred are free to dispose of them by register them, even without a clear mandate or instruction on
sale or any other mode from the moment of their acquisition. the same in any pertinent existing law. PCA Resolution No.
In fact and true enough, the Sandiganbayan categorically 078-74 had a similar provision, albeit providing more detailed
stated in its Order dated March 11, 2003,145 that out of the information. The said Resolution identified 51,200,806 shares
72.2% shares and increased capital stock of the FUB (later of the bank that remained undistributed and PCA devised its
UCPB) allegedly covered by the May 25, 1975 own rules as to how these undistributed and fractional shares
Agreement,146 entirely paid for by PCA, 7.22% were given to shall be disposed of, notwithstanding the dearth as to the
Cojuangco and the remaining 64.98%, which were originally standards or parameters in the laws which it sought to
held by PCA for the benefit of the coconut farmers, were later implement.
sold or transferred to non-coconut farmers.147 Even the
proposed rewording of the factual allegations of Lobregat, Eventually, what happened was that, as correctly pointed out
COCOFED, et al. and Ballares, et al., reveals that indeed, P.D. by the Sandiganbayan, the PCA gave a "bonanza" to supposed
No. 755 did not provide for any guideline, standard, condition coconut farmers who already got their bank shares, by giving
or restriction by which the said shares shall be distributed to them extra shares according to the rules established – on its
the coconut farmers that would ensure that the same will be own – by the PCA under PCA AO 1 and Resolution No. 078-74.
undertaken to accelerate the growth and development of the Because of the lack of adequate guidelines under P.D. No. 755
coconut industry pursuant to its national policy. The proposed as to how the shares were supposed to be distributed to the
rewording of admissions reads: coconut farmers, the PCA thus assumed that it could decide for
itself how these shares will be distributed. This obviously
There were shares forming part of the aforementioned 64.98% paved the way to playing favorites, if not allowing outright
which were, after their distribution, for free, to the coconut shenanigans. In this regard, this poser raised in the Court’s
farmers as required by P.D. No. 755, sold or February 16, 1993 Resolution in G.R. No. 96073 is as relevant
transferred respectively by individual coconut farmers who then as it is now: "How is it that shares of stocks in such entities
were then the registered stockholders of those UCPB which was organized and financed by revenues derived from
shares to non-coconut farmers.148 coconut levy funds which were imbued with public interest
ended up in private hands who are not farmers or
Clearly, P.D. No. 755, insofar as it grants PCA a veritable carte beneficiaries; and whether or not the holders of said stock,
blanche to distribute to coconut farmers UCPB shares at the who in one way or another had had some part in the collection,
level it may determine, as well as the full disposition of such administration, disbursement or other disposition of the
shares to private individuals in their private capacity without coconut levy funds were qualified to acquire stock in the
any conditions or restrictions that would advance the law’s corporations formed and operated from these funds." 149
national policy or public purpose, present a case of undue
delegation of legislative power. As such, there is even no need Likewise, the said PCA issuances did not take note of the
to discuss the validity of the administrative orders and national policy or public purpose for which the coconut levy
resolutions of PCA implementing P.D. No. 755. Water cannot funds were imposed under P.D. No. 755, i.e. the acceleration
rise higher than its source. of the growth and development of the entire coconut industry,
and the achievement of a vertical integration thereof that
Even so, PCA AO 1 and PCA Resolution No. 078-74, are in could make the coconut farmers participants in, and
themselves, infirm under the undue delegation of legislative beneficiaries of, such growth and development.150 Instead, the
powers. Particularly, Section 9 of PCA AO I provides: PCA prioritized the coconut farmers themselves by fully
disposing of the bank shares, totally disregarding the national
SECTION 9. Fractional and Undistributed Shares – Fractional policy for which the funds were created. This is clearly an
shares and shares which remain undistributed as a undue delegation of legislative powers.
consequence of the failure of the coconut farmers to register With this pronouncement, there is hardly any need to establish
their COCOFUND receipts or the destruction of the COCOFUND that the sequestered assets are ill-gotten wealth. The
receipts or the registration of COCOFUND receipts in the name documentary evidence, the P.D.s and Agreements, prove that
of an unqualified individual, after the final distribution is made the transfer of the shares to the more than one million of
on the basis of the consolidated IBM registration Report as of supposed coconut farmers was tainted with illegality.
March 31, 1976 shall be distributed to all the coconut farmers
who have qualified and received equity in the Bank and shall Article III, Section 5 of P.D. No. 961 and Article III, Section 5
be appointed among them, as far as practicable, in proportion of P.D. No. 1468 violate Article IX (D) (2) of the 1987
to their equity in relation to the number of undistributed Constitution.
Article III, Section 5 of P.D. No. 961 explicitly takes away the The Constitution, by express provision, vests the COA with the
coconut levy funds from the coffer of the public funds, or, to responsibility for State audit.154 As an independent supreme
be precise, privatized revenues derived from the coco levy. State auditor, its audit jurisdiction cannot be undermined by
Particularly, the aforesaid Section 5 provides: any law. Indeed, under Article IX (D), Section 3 of the 1987
Constitution, "[n]o law shall be passed exempting any entity of
Section 5. Exemptions. The Coconut Consumers Stabilization the Government or its subsidiary in any guise whatever, or any
Fund and the Coconut Industry Development fund as well as investment of public funds, from the jurisdiction of the
all disbursements of said funds for the benefit of the coconut Commission on Audit."155 Following the mandate of the COA
farmers as herein authorized shall not be construed or and the parameters set forth by the foregoing provisions, it is
interpreted, under any law or regulation, as special and/or clear that it has jurisdiction over the coconut levy funds, being
fiduciary funds, or as part of the general funds of the national special public funds. Conversely, the COA has the power,
government within the contemplation of P.D. No. 711; nor as authority and duty to examine, audit and settle all accounts
a subsidy, donation, levy, government funded investment, or pertaining to the coconut levy funds and, consequently, to the
government share within the contemplation of P.D. 898 the UCPB shares purchased using the said funds. However,
intention being that said Fund and the disbursements thereof declaring the said funds as partaking the nature of private
as herein authorized for the benefit of the coconut farmers funds, ergo subject to private appropriation, removes them
shall be owned in their own private capacity.151 (Emphasis from the coffer of the public funds of the government, and
Ours) consequently renders them impervious to the COA audit
jurisdiction. Clearly, the pertinent provisions of P.D. Nos. 961
The same provision is carried over in Article III, Section 5 of P.D. and 1468 divest the COA of its constitutionally-mandated
No. 1468, the Revised Coconut Industry Code: function and undermine its constitutional independence.

These identical provisions of P.D. Nos. 961 and 1468 likewise The assailed purchase of UCPB shares of stocks using the
violate Article IX (D), Section 2(1) of the Constitution, defining coconut levy funds presents a classic example of an investment
the powers and functions of the Commission on Audit ("COA") of public funds. The conversion of these special public funds
as a constitutional commission: into private funds by allowing private individuals to own them
in their private capacities is something else. It effectively
Sec. 2. (1) The Commission on Audit shall have the power, deprives the COA of its constitutionally-invested power to
authority, and duty to examine, audit, and settle all accounts audit and settle such accounts. The conversion of the said
pertaining to the revenue and receipts of, and expenditures or shares purchased using special public funds into pure and
uses of funds and property, owned or held in trust by, or exclusive private ownership has taken, or will completely take
pertaining to, the Government, or any of its subdivisions, away the said funds from the boundaries with which the COA
agencies, or instrumentalities, including government-owned has jurisdiction. Obviously, the COA is without audit
and controlled corporations with original charters, and on a jurisdiction over the receipt or disbursement of private
post-audit basis: (a) constitutional bodies, commissions and property. Accordingly, Article III, Section 5 of both P.D. Nos.
offices that have been granted fiscal autonomy under this 961 and 1468 must be struck down for being unconstitutional,
Constitution; (b) autonomous state colleges and universities; be they assayed against Section 2(1), Article XII (D) of the 1973
(c) other government-owned or controlled corporations and Constitution or its counterpart provision in the 1987
their subsidiaries;.152 (Emphasis Ours) Constitution.

A similar provision was likewise previously found in Article XII The Court, however, takes note of the dispositive portion of
(D), Section 2 (1) of the 1973 Constitution, thus: PSJ-A, which states that:156
x x x x x x x x x
Section 2. The Commission on Audit shall have the following
powers and functions: 2. Section 2 of P.D. No. 755 which mandated that the coconut
(1) Examine, audit, and settle, in accordance with law and levy funds shall not be considered special and/or fiduciary
regulations, all accounts pertaining to the revenues and funds nor part of the general funds of the national
receipts of, and expenditures or uses of funds and property, government and similar provisions of Sec. 3, Art. III, P.D.
owned or held in trust by, or pertaining to, the Government, 961 and Sec. 5, Art. III, P.D. 1468 contravene the provisions of
or any of its subdivisions, agencies, or instrumentalities, the Constitution, particularly, Art. IX (D), Sec. 2; and Article VI,
including government-owned and controlled corporations; Sec. 29 (3). (Emphasis Ours)
keep the general accounts of the government and, for such x x x x x x x x x
period as may be provided by law, preserve the vouchers
pertaining thereto; and promulgate accounting and auditing However, a careful reading of the discussion in PSJ-A reveals
rules and regulations including those for the prevention of that it is Section 5 of Article III of P.D. No. 961 and not Section
irregular, unnecessary, excessive, or extravagant expenditures 3 of said decree, which is at issue, and which was therefore
or use of funds and property.153 (Emphasis Ours) held to be contrary to the Constitution. The dispositive portion
of the said PSJ should therefore be corrected to reflect the
proper provision that was declared as unconstitutional, which to the government as, at the very least, their beneficial and
is Section 5 of Article III of P.D. No. 961 and not Section 3 true owner.
thereof.
We thus affirm the decision of the Sandiganbayan on this
V point. But as We have earlier discussed, reiterating our holding
The CIIF Companies and the CIIF Block in Republic v. COCOFED, the State’s avowed policy or purpose
of SMC shares are public funds/assets in creating the coconut levy fund is for the development of the
From the foregoing discussions, it is fairly established that the entire coconut industry, which is one of the major industries
coconut levy funds are special public funds. Consequently, any that promotes sustained economic stability, and not merely
property purchased by means of the coconut levy funds should the livelihood of a significant segment of the
likewise be treated as public funds or public property, subject population.166 Accordingly, We sustain the ruling of the
to burdens and restrictions attached by law to such property. Sandiganbayan in CC No. 0033-F that the CIIF companies and
the CIIF block of SMC shares are public funds necessary owned
In this case, the 6 CIIF Oil Mills were acquired by the UCPB by the Government. We, however, modify the same in the
using coconut levy funds.157 On the other hand, the 14 CIIF following wise: These shares shall belong to the Government,
holding companies are wholly owned subsidiaries of the CIIF which shall be used only for the benefit of the coconut farmers
Oil Mills.158 Conversely, these companies were acquired using and for the development of the coconut industry.
or whose capitalization comes from the coconut levy funds.
However, as in the case of UCPB, UCPB itself distributed a part Sandiganbayan did not err in ruling that
of its investments in the CIIF oil mills to coconut farmers, and PCA (AO) No. 1, Series of 1975 and
retained a part thereof as administrator.159 The portion PCA rules and regulations 074-78 did
distributed to the supposed coconut farmers followed the not comply with the national standard
procedure outlined in PCA Resolution No. 033-78.160 And as the or policy of P.D. No. 755.
administrator of the CIIF holding companies, the UCPB
authorized the acquisition of the SMC shares.161 In fact, these According to the petitioners, the Sandiganbayan has identified
companies were formed or organized solely for the purpose of the national policy sought to be enhanced by and expressed
holding the SMC shares.162 As found by the Sandiganbayan, the under Section 1 in relation to Section 2 of P.D. No. 755. Yet, so
14 CIIF holding companies used borrowed funds from the petitioners argue, that court, with grave abuse of discretion,
UCPB to acquire the SMC shares in the aggregate amount of disregarded such policy and thereafter, ruled that Section 1 in
P1.656 Billion.163 relation to Section 2 of P.D. No. 755 is unconstitutional as the
decree failed to promote the purpose for which it was enacted
Since the CIIF companies and the CIIF block of SMC shares were in the first place.
acquired using coconut levy funds – funds, which have been
established to be public in character – it goes without saying We are not persuaded. The relevant assailed portion of PSJ-A
that these acquired corporations and assets ought to be states:
regarded and treated as government assets. Being We observe, however, that the PCA [AO] No. 1, Series of 1975
government properties, they are accordingly owned by the and PCA Rules and Regulations 074-78, did not take into
Government, for the coconut industry pursuant to currently consideration the accomplishment of the public purpose or
existing laws.164 the national standard/policy of P.D. No. 755 which is directly
to accelerate the development and growth of the coconut
It may be conceded hypothetically, as COCOFED et al. urge, industry and as a consequence thereof, to make the coconut
that the 14 CIIF holding companies acquired the SMC shares in farmers "participants in and beneficiaries" of such growth and
question using advances from the CIIF companies and from development.…
UCPB loans. But there can be no gainsaying that the same
advances and UCPB loans are public in character, constituting It is a basic legal precept that courts do not look into the
as they do assets of the 14 holding companies, which in turn wisdom of the laws passed. The principle of separation of
are wholly-owned subsidiaries of the 6 CIIF Oil Mills. And these powers demands this hands-off attitude from the judiciary.
oil mills were organized, capitalized and/or financed using Saguiguit v. People167 teaches why:
coconut levy funds. In net effect, the CIIF block of SMC shares
are simply the fruits of the coconut levy funds acquired at the … [W]hat the petitioner asks is for the Court to delve into the
expense of the coconut industry. In Republic v. policy behind or wisdom of a statute, … which, under the
COCOFED,165 the en banc Court, speaking through Justice (later doctrine of separation of powers, it cannot do,…. Even with the
Chief Justice) Artemio Panganiban, stated: "Because the best of motives, the Court can only interpret and apply the law
subject UCPB shares were acquired with government funds, and cannot, despite doubts about its wisdom, amend or repeal
the government becomes their prima facie beneficial and true it. Courts of justice have no right to encroach on the
owner." By parity of reasoning, the adverted block of SMC prerogatives of lawmakers, as long as it has not been shown
shares, acquired as they were with government funds, belong that they have acted with grave abuse of discretion. And while
the judiciary may interpret laws and evaluate them for
constitutional soundness and to strike them down if they are grave abuse of discretion, a phrase which, in the abstract,
proven to be infirm, this solemn power and duty do not include denotes the idea of capricious or whimsical exercise of
the discretion to correct by reading into the law what is not judgment or the exercise of power in an arbitrary or despotic
written therein. manner by reason of passion or personal hostility as to be
equivalent to having acted without jurisdiction.169
We reproduce the policy-declaring provision of P.D. No. 755,
thus: The Operative Fact Doctrine does not apply
Section 1. Declaration of National Policy. — It is hereby Petitioners assert that the Sandiganbayan’s refusal to
declared that the policy of the State is to provide readily recognize the vested rights purportedly created under the
available credit facilities to the coconut farmers at preferential coconut levy laws constitutes taking of private property
rates; that this policy can be … efficiently realized by the without due process of law. They reason out that to accord
implementation of the "Agreement for the Acquisition of a retroactive application to a declaration of unconstitutionality
Commercial Bank for the benefit of the Coconut Farmers" would be unfair inasmuch as such approach would penalize
executed by the [PCA], the terms of which "Agreement" are the farmers who merely obeyed then valid laws.
hereby incorporated by reference; and that the [PCA] is hereby
authorized to distribute, for free, the shares of stock of the This contention is specious.
bank it acquired to the coconut farmers under such rules and
regulations it may promulgate. In Yap v. Thenamaris Ship’s Management,170 the Operative
Fact Doctrine was discussed in that:
P.D. No. 755 having stated in no uncertain terms that the As a general rule, an unconstitutional act is not a law; it confers
national policy of providing cheap credit facilities to coconut no rights; it imposes no duties; it affords no protection; it
farmers shall be achieved with the acquisition of a commercial creates no office; it is inoperative as if it has not been passed
bank, the Court is without discretion to rule on the wisdom of at all. The general rule is supported by Article 7 of the Civil
such an undertaking. It is abundantly clear, however, that the Code, which provides:
Sandiganbayan did not look into the policy behind, or the Art. 7. Laws are repealed only by subsequent ones, and their
wisdom of, P.D. No. 755. In context, it did no more than to violation or non-observance shall not be excused by disuse or
inquire whether the purpose defined in P.D. No. 755 and for custom or practice to the contrary.
which the coco levy fund was established would be carried out,
obviously having in mind the (a) dictum that the power to tax The doctrine of operative fact serves as an exception to the
should only be exercised for a public purpose and (b) aforementioned general rule. In Planters Products, Inc. v.
command of Section 29, paragraph 3 of Article VI of the 1987 Fertiphil Corporation, we held:
Constitution that:
The doctrine of operative fact, as an exception to the general
(3) All money collected on any tax levied for a special purpose rule, only applies as a matter of equity and fair play. It
shall be treated as a special fund and paid out for such purpose nullifies the effects of an unconstitutional law by recognizing
only. If the purpose for which a special fund was created has that the existence of a statute prior to a determination of
been fulfilled or abandoned, the balance, if any, shall be unconstitutionality is an operative fact and may have
transferred to the general funds of the Government. consequences which cannot always be ignored. The past
(Emphasis supplied) cannot always be erased by a new judicial declaration.

For the above reason, the above-assailed action of the The doctrine is applicable when a declaration of
Sandiganbayan was well within the scope of its sound unconstitutionality will impose an undue burden on those who
discretion and mandate. have relied on the invalid law. Thus, it was applied to a criminal
Moreover, petitioners impute on the anti-graft court the case when a declaration of unconstitutionality would put the
commission of grave abuse of discretion for going into the accused in double jeopardy or would put in limbo the acts
validity of and in declaring the coco levy laws as done by a municipality in reliance upon a law creating it.171
unconstitutional, when there were still factual issues to be
resolved in a full blown trial as directed by this Court.168 In that case, this Court further held that the Operative Fact
Doctrine will not be applied as an exception when to rule
Petitioners COCOFED and the farmer representatives miss the otherwise would be iniquitous and would send a wrong signal
point. They acknowledged that their alleged ownership of the that an act may be justified when based on an unconstitutional
sequestered shares in UCPB and SMC is predicated on the coco provision of law.172
levy decrees. Thus, the legality and propriety of their The Court had the following disquisition on the concept of the
ownership of these valuable assets are directly related to and Operative Fact Doctrine in the case of Chavez v. National
must be assayed against the constitutionality of those Housing Authority:173
presidential decrees. This is a primordial issue, which must be
determined to address the validity of the rest of petitioners’ The "operative fact" doctrine is embodied in De Agbayani v.
claims of ownership. Verily, the Sandiganbayan did not commit Court of Appeals, wherein it is stated that a legislative or
executive act, prior to its being declared as unconstitutional by challenged decree…. It is quite clear, however, that such broad
the courts, is valid and must be complied with, thus: statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The
As the new Civil Code puts it: "When the courts declare a law actual existence of a statute, prior to [the determination of its
to be inconsistent with the Constitution, the former shall be invalidity], is an operative fact and may have consequences
void and the latter shall govern. Administrative or executive which cannot justly be ignored. The past cannot always be
acts, orders and regulations shall be valid only when they are erased by a new judicial declaration. The effect of the
not contrary to the laws of the Constitution." It is subsequent ruling as to invalidity may have to be considered
understandable why it should be so, the Constitution being in various aspects –with respect to particular conduct, private
supreme and paramount. Any legislative or executive act and official. Questions of rights claimed to have become
contrary to its terms cannot survive. vested, of status, of prior determinations deemed to have
finality and acted upon accordingly, of public policy in the light
Such a view has support in logic and possesses the merit of of the nature both of the statute and of its previous
simplicity. It may not however be sufficiently realistic. It does application, demand examination. These questions are among
not admit of doubt that prior to the declaration of nullity such the most difficult of those which have engaged the attention
challenged legislative or executive act must have been in force of courts, state and federal, and it is manifest from numerous
and had to be complied with. This is so as until after the decisions that an all-inclusive statement of a principle of
judiciary, in an appropriate case, declares its invalidity, it is absolute retroactive invalidity cannot be justified.
entitled to obedience and respect. Parties may have acted
under it and may have changed their positions. What could be Moreover, the Court ruled in Chavez that:
more fitting than that in a subsequent litigation regard be had Furthermore, when petitioner filed the instant case against
to what has been done while such legislative or executive act respondents on August 5, 2004, the JVAs were already
was in operation and presumed to be valid in all respects. It is terminated by virtue of the MOA between the NHA and RBI.
now accepted as a doctrine that prior to its being nullified, its The respondents had no reason to think that their agreements
existence as a fact must be reckoned with. This is merely to were unconstitutional or even questionable, as in fact, the
reflect awareness that precisely because the judiciary is the concurrent acts of the executive department lent validity to
governmental organ which has the final say on whether or not the implementation of the Project. The SMDRP agreements
a legislative or executive measure is valid, a period of time may have produced vested rights in favor of the slum dwellers, the
have elapsed before it can exercise the power of judicial buyers of reclaimed land who were issued titles over said land,
review that may lead to a declaration of nullity. It would be to and the agencies and investors who made investments in the
deprive the law of its quality of fairness and justice then, if project or who bought SMPPCs. These properties and rights
there be no recognition of what had transpired prior to such cannot be disturbed or questioned after the passage of around
adjudication. ten (10) years from the start of the SMDRP implementation.
Evidently, the "operative fact" principle has set in. The titles to
In the language of an American Supreme Court decision: "The the lands in the hands of the buyers can no longer be
actual existence of a statute, prior to such a determination [of invalidated.174
unconstitutionality], is an operative fact and may have In the case at bar, the Court rules that the dictates of justice,
consequences which cannot justly be ignored. The past cannot fairness and equity do not support the claim of the alleged
always be erased by a new judicial declaration. The effect of farmer-owners that their ownership of the UCPB shares should
the subsequent ruling as to invalidity may have to be be respected. Our reasons:
considered in various aspects, with respect to particular
relations, individual and corporate, and particular conduct, 1. Said farmers or alleged claimants do not have any legal right
private and official." This language has been quoted with to own the UCPB shares distributed to them. It was not
approval in a resolution in Araneta v. Hill and the decision in successfully refuted that said claimants were issued receipts
Manila Motor Co., Inc. v. Flores. An even more recent instance under R.A. 6260 for the payment of the levy that went into the
is the opinion of Justice Zaldivar speaking for the Court in Coconut Investment Fund (CIF) upon which shares in the
Fernandez v. Cuerva and Co. (Emphasis supplied.) "Coconut Investment Company" will be issued. The Court
upholds the finding of the Sandiganbayan that said investment
The principle was further explicated in the case of Rieta v. company is a different corporate entity from the United
People of the Philippines, thus: Coconut Planters Bank. This was in fact admitted by petitioners
In similar situations in the past this Court had taken the during the April 17, 2001 oral arguments in G.R. Nos. 147062-
pragmatic and realistic course set forth in Chicot County 64.175
Drainage District vs. Baxter Bank to wit:
The payments under R.A. 6260 cannot be equated with the
The courts below have proceeded on the theory that the Act payments under P.D. No. 276, the first having been made as
of Congress, having been found to be unconstitutional, was contributions to the Coconut Investment Fund while the
not a law; that it was inoperative, conferring no rights and payments under P.D. No. 276 constituted the Coconut
imposing no duties, and hence affording no basis for the Consumers Stabilization Fund ("CCSF"). R.A. 6260 reads:

Section 2. Declaration of Policy. It is hereby declared to be the Unfortunately, the said resolution was never complied with in
national policy to accelerate the development of the coconut the distribution of the so-called "farmers" UCPB shares.
industry through the provision of adequate medium and long-
term financing for capital investment in the industry, by The payments therefore under R.A. 6260 are not the same as
instituting a Coconut Investment fund capitalized and those under P.D. No. 276. The amounts of CIF contributions
administered by coconut farmers through a Coconut under R.A. 6260 which were collected starting 1971 are
Investment Company.176 undeniably different from the CCSF levy under P.D. No. 276,
which were collected starting 1973. The two (2) groups of
P.D. No. 276 provides: claimants differ not only in identity but also in the levy paid,
1. In addition to its powers granted under Presidential Decree the amount of produce and the time the government started
No. 232, the Philippine Coconut Authority is hereby authorized the collection.
to formulate and immediately implement a stabilization
scheme for coconut-based consumer goods, along the Thus, petitioners and the alleged farmers claiming them
following general guidelines: pursuant to R.A. 6260 do not have any legal basis to own the
UCPB shares distributed to them, assuming for a moment the
(a) …. legal feasibility of transferring these shares paid from the R.A.
The proceeds from the levy shall be deposited with the 6260 levy to private individuals.
Philippine National Bank or any other government bank to the
account of the Coconut Consumers Stabilization Fund, as a 2. To grant all the UCPB shares to petitioners and its alleged
separate trust fund which shall not form part of the general members would be iniquitous and prejudicial to the remaining
fund of the government. 4.6 million farmers who have not received any UCPB shares
(b) The Fund shall be utilized to subsidize the sale of coconut- when in fact they also made payments to either the CIF or the
based products at prices set by the Price Control Council, CCSF but did not receive any receipt or who was not able to
under rules and regulations to be promulgated by the register their receipts or misplaced them.
Philippine Consumers Stabilization Committee….177
The PCA, via Resolution No. 045-75 dated May 21, 1975, Section 1 of P.D. No. 755 which was declared unconstitutional
clarified the distinction between the CIF levy payments under cannot be considered to be the legal basis for the transfer of
R.A. 6260 and the CCSF levy paid pursuant to P.D. 276, thusly: the supposed private ownership of the UCPB shares to
petitioners who allegedly paid the same under R.A. 6260. The
It must be remembered that the receipts issued under R.A. No. Solicitor General is correct in concluding that such
6260 were to be registered in exchange for shares of stock in unauthorized grant to petitioners constitutes illegal
the Coconut Investment Company (CIC), which obviously is a deprivation of property without due process of law. Due
different corporate entity from UCPB. This fact was admitted process of law would mean that the distribution of the UCPB
by petitioners during the April 17, 2001 oral arguments in G.R. shares should be made only to farmers who have paid the
Nos. 147062-64. contribution to the CCSF pursuant to P.D. No. 276, and not to
those who paid pursuant to R.A. 6260. What would have been
In fact, while the CIF levy payments claimed to have been paid the appropriate distribution scheme was violated by Section 1
by petitioners were meant for the CIC, the distribution of UCPB of P.D. No. 755 when it required that the UCPB shares should
stock certificates to the coconut farmers, if at all, were meant be distributed to coconut farmers without distinction – in fact,
for the payors of the CCSF in proportion to the coconut giving the PCA limitless power and free hand, to determine
farmer’s CCSF contributions pursuant to PCA Resolution No. who these farmers are, or would be.
045-75 dated May 21, 1975:
We cannot sanction the award of the UCPB shares to
RESOLVED, FURTHER, That the amount of ONE HUNDRED petitioners who appear to represent only 1.4 million members
FIFTY MILLION (P150,000,000.00) PESOS be appropriated and without any legal basis to the extreme prejudice of the other
set aside from available funds of the PCA to be utilized in 4.6 million coconut farmers (Executive Order No. 747 fixed the
payment for the shares of stock of such existing commercial number of coconut farmers at 6 million in 1981). Indeed,
bank and that the Treasurer be instructed to disburse the said petitioners constitute only a small percentage of the coconut
amount accordingly. farmers in the Philippines. Thus, the Sandiganbayan correctly
x x x x x x x x x declared that the UCPB shares are government assets in trust
for the coconut farmers, which would be more beneficial to all
RESOLVED, FINALLY, That … be directed to organize a team the coconut farmers instead of a very few dubious claimants;
which shall prepare a list of coconut farmers who have paid
the levy and contributed to the [CCSF] and to prepare a stock 3. The Sandiganbayan made the finding that due to enormous
distribution plan to the end that the aforesaid coconut farmers operational problems and administrative complications, the
shall receive certificates of stock of such commercial bank in intended beneficiaries of the UCPB shares were not able to
proportion to their contributions to the Fund.
receive the shares due to them. To reiterate what the anti- WHEREAS, it was determined by the PCA Board, in consonance
graft court said: with the policy of the state on the integration of the coconut
industry, that the Bank shares must be widely distributed as
The actual distribution of the bank shares was admittedly an possible among the coconut farmers, for which purpose a
enormous operational problem which resulted in the failure of national census of coconut farmers was made through the
the intended beneficiaries to receive their shares of stocks in Philippine Coconut Producers Federation (COCOFED);
the bank, as shown by the rules and regulations, issued by the WHEREAS, to implement such determination of the PCA Board,
PCA, without adequate guidelines being provided to it by P.D. there is a need to accordingly amend Administrative Order No.
No. 755. PCA Administrative Order No. 1, Series of 1975 1, Series of 1975;
(August 20, 1975), "Rules and Regulations Governing the
Distribution of Shares of Stock of the Bank Authorized to be NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY
Acquired Pursuant to PCA Board Resolution No. 246-75", RESOLVED, that the remaining 51,200,806 shares of stock of
quoted hereunder discloses how the undistributed shares of the Bank authorized to be acquired pursuant to the PCA Board
stocks due to anonymous coconut farmers or payors of the Resolution No. 246-75 dated July 25, 1975 be distributed as
coconut levy fees were authorized to be distributed to existing follows:
shareholders of the Bank:
(1) All the coconut farmers who have received their
"Section 9. Fractional and Undistributed Shares – Fractional shares in the equity of the Bank on the basis of
shares and shares which remain undistributed as a Section 8 of Administrative Order No. 1, Series of
consequence of the failure of the coconut farmers to register 1975, shall receive additional share for each share
their COCOFUND receipts or the destruction of the COCOFUND presently owned by them;
receipts or the registration of the COCOFUND receipts in the
name of an unqualified individual, after the final distribution is (2) Fractional shares shall be completed into full shares,
made on the basis of the consolidated IBM registration Report and such full shares shall be distributed among the
as of March 31, 1976 shall be distributed to all the coconut coconut farmers who qualified for the corresponding
farmers who have qualified and received equity in the Bank fractional shares;
and shall be apportioned among them, as far as practicable, in
proportion to their equity in relation to the number of (3) The balance of the shares, after deducting those to be
undistributed equity and such further rules and regulations as distributed in accordance with (1) and (2) above, shall
may hereafter be promulgated.’ be transferred to COCOFED for distribution,
immediately after completion of the national census
The foregoing PCA issuance was further amended by of coconut farmers prescribed under Resolution No.
Resolution No. 074-78, still citing the same problem of 033-78 of the PCA Board, to all those who are
distribution of the bank shares. This latter Resolution is quoted determined by the PCA Board to be bona fide coconut
as follows: farmers and have not received shares of stock of the
Bank. The shares shall be equally determined among
RESOLUTION NO. 074-78 them on the basis of per capita.
AMENDMENT OF ADMINISTRATIVE ORDER
NO. 1, SERIES OF 1975, GOVERNING THE RESOLVED, FURTHER, That the rules and regulations under
DISTRIBUTION OF SHARES Administrative Order No. 1, Series of 1975, which are
inconsistent with this Administrative Order be, as they are
WHEREAS, pursuant to PCA Board Resolution No. 246-75, the hereby, repealed and/or amended accordingly."
total par value of the shares of stock of the Bank purchased by
the PCA for the benefit of the coconut farmers is Thus, when 51,200,806 shares in the bank remained
P85,773,600.00 with a par value of P1.00 per share or undistributed, the PCA deemed it proper to give a "bonanza"
equivalent to 85,773.600 shares; to coconut farmers who already got their bank shares, by
WHEREAS, out of the 85,773,600 shares, a total of 34,572,794 giving them an additional share for each share owned by them
shares have already been distributed in accordance with and by converting their fractional shares into full shares. The
Administrative Order No. 1, Series of 1975, to wit: rest of the shares were then transferred to a private
organization, the COCOFED, for distribution to those
First Distribution - 12,573,059 determined to be "bona fide coconut farmers" who had "not
Second Distribution - 10,841,409 received shares of stock of the Bank." The distribution to the
Third Distribution - 11,158,326 latter was made on the basis of "per capita", meaning without
34,572,794 regard to the COCOFUND receipts. The PCA considered itself
free to disregard the said receipts in the distribution of the
"WHEREAS, there is, therefore, a total of 51,200,806 shares shares although they were considered by the May 25, 1975
still available for distribution among the coconut farmers; Agreement between the PCA and defendant Cojuangco (par.
[8] of said Agreement) and by Sections 1, 3, 4, 6 and 9, PCA
Administrative Order No. 1, Series of 1975 as the basis for the Philippines, which shall be decided separately by this Court.
distribution of shares. Said petition should accordingly not be affected by this
Decision save for determinatively legal issues directly
The PCA thus assumed, due to lack of adequate guidelines set addressed herein.
by P.D. No. 755, that it had complete authority to define who
are the coconut farmers and to decide as to who among the WHEREFORE, the petitions in G.R. Nos. 177857-58 and 178793
coconut farmers shall be given the gift of bank shares; how are hereby DENIED. The Partial Summary Judgment dated July
many shares shall be given to them, and what basis it shall use 11, 2003 in Civil Case No. 0033-A as reiterated with
to determine the amount of shares to be distributed for free modification in Resolution dated June 5, 2007, as well as the
to the coconut farmers. In other words, P.D. No. 755 fails the Partial Summary Judgment dated May 7, 2004 in Civil Case No.
completeness test which renders it constitutionally infirm. 0033-F, which was effectively amended in Resolution dated
May 11, 2007, are AFFIRMED with modification, only with
Due to numerous flaws in the distribution of the UCPB shares respect to those issues subject of the petitions in G.R. Nos.
by PCA, it would be best for the interest of all coconut farmers 177857-58 and 178193. However, the issues raised in G.R. No.
to revert the ownership of the UCBP shares to the government 180705 in relation to Partial Summary Judgment dated July 11,
for the entire coconut industry, which includes the farmers; 2003 and Resolution dated June 5, 2007 in Civil Case No. 0033-
A, shall be decided by this Court in a separate decision.
4. The Court also takes judicial cognizance of the fact
that a number, if not all, of the coconut farmers who The Partial Summary Judgment in Civil Case No. 0033-A dated
sold copra did not get the receipts for the payment of July 11, 2003, is hereby MODIFIED, and shall read as follows:
the coconut levy for the reason that the copra they
produced were bought by traders or middlemen who WHEREFORE, in view of the foregoing, We rule as follows:
in turn sold the same to the coconut mills. The reality
on the ground is that it was these traders who got the SUMMARY OF THE COURT’S RULING.
receipts and the corresponding UCPB shares. In A. Re: CLASS ACTION MOTION FOR A SEPARATE SUMMARY
addition, some uninformed coconut farmers who JUDGMENT dated April 11, 2001 filed by Defendant Maria
actually got the COCOFUND receipts, not appreciating Clara L. Lobregat, COCOFED, et al., and Ballares, et al.
the importance and value of said receipts, have The Class Action Motion for Separate Summary Judgment
already sold said receipts to non-coconut farmers, dated April 11, 2001 filed by defendant Maria Clara L.
thereby depriving them of the benefits under the Lobregat, COCOFED, et al. and Ballares, et al., is hereby DENIED
coconut levy laws. Ergo, the coconut farmers are the for lack of merit.
ones who will not be benefited by the distribution of
the UCPB shares contrary to the policy behind the B. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE:
coconut levy laws. The nullification of the distribution COCOFED, ET AL. AND BALLARES, ET AL.) dated April 22, 2002
of the UCPB shares and their transfer to the filed by Plaintiff.
government for the coconut industry will, therefore, 1. a. The portion of Section 1 of P.D. No. 755, which reads:
ensure that the benefits to be deprived from the …and that the Philippine Coconut Authority is hereby
UCPB shares will actually accrue to the intended authorized to distribute, for free, the shares of stock of the
beneficiaries – the genuine coconut farmers. bank it acquired to the coconut farmers under such rules and
regulations it may promulgate.
From the foregoing, it is highly inappropriate to apply the
operative fact doctrine to the UCPB shares. Public funds, which taken in relation to Section 2 of the same P.D., is
were supposedly given utmost safeguard, were haphazardly unconstitutional: (i) for having allowed the use of the CCSF to
distributed to private individuals based on statutory provisions benefit directly private interest by the outright and
that are found to be constitutionally infirm on not only one but unconditional grant of absolute ownership of the FUB/UCPB
on a variety of grounds. Worse still, the recipients of the UCPB shares paid for by PCA entirely with the CCSF to the undefined
shares may not actually be the intended beneficiaries of said "coconut farmers", which negated or circumvented the
benefit. Clearly, applying the Operative Fact Doctrine would national policy or public purpose declared by P.D. No. 755 to
not only be iniquitous but would also serve injustice to the accelerate the growth and development of the coconut
Government, to the coconut industry, and to the people, who, industry and achieve its vertical integration; and (ii) for having
whether willingly or unwillingly, contributed to the public unduly delegated legislative power to the PCA.
funds, and therefore expect that their Government would take
utmost care of them and that they would be used no less, than b. The implementing regulations issued by PCA, namely,
for public purpose. Administrative Order No. 1, Series of 1975 and Resolution No.
074-78 are likewise invalid for their failure to see to it that the
We clarify that PSJ-A is subject of another petition for review distribution of shares serve exclusively or at least primarily or
interposed by Eduardo Cojuangco, Jr., in G.R. No. 180705 directly the aforementioned public purpose or national policy
entitled, Eduardo M. Cojuangco, Jr. v. Republic of the declared by P.D. No. 755.
 4. Arc Investors; Inc.;
2. Section 2 of P.D. No. 755 which mandated that the coconut 5. Toda Holdings, Inc.;
levy funds shall not be considered special and/or fiduciary 6. AP Holdings, Inc.;
funds nor part of the general funds of the national government 7. Fernandez Holdings, Inc.;
and similar provisions of Sec. 5, Art. III, P.D. No. 961 and Sec. 8. SMC Officers Corps, Inc.;
5, Art. III, P.D. No. 1468 contravene the provisions of the 9. Te Deum Resources, Inc.;
Constitution, particularly, Art. IX (D), Sec. 2; and Article VI, Sec. 10. Anglo Ventures, Inc.;
29 (3). 11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
3. Lobregat, COCOFED, et al. and Ballares, et al. have not legally 13. Valhalla Properties Ltd., Inc.; and
and validly obtained title of ownership over the subject UCPB 14. First Meridian Development, Inc.
shares by virtue of P.D. No. 755, the Agreement dated May 25, AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC)
1975 between the PCA and defendant Cojuangco, and PCA SHARES OF STOCK TOTALING 33,133,266 SHARES AS OF 1983
implementing rules, namely, Adm. Order No. 1, s. 1975 and TOGETHER WITH ALL DIVIDENDS DECLARED, PAID AND ISSUED
Resolution No. 074-78. THEREON AS WELL AS ANY INCREMENTS THERETO ARISING
FROM, BUT NOT LIMITED TO, EXERCISE OF PRE-EMPTIVE
4. The so-called "Farmers’ UCPB shares" covered by 64.98% of RIGHTS ARE DECLARED OWNED BY THE GOVERNMENT TO BE
the UCPB shares of stock, which formed part of the 72.2% of USED ONLY FOR THE BENEFIT OF ALL COCONUT FARMERS AND
the shares of stock of the former FUB and now of the UCPB, FOR THE DEVELOPMENT OF THE COCONUT INDUSTRY, AND
the entire consideration of which was charged by PCA to the ORDERED RECONVEYED TO THE GOVERNMENT.
CCSF, are hereby declared conclusively owned by, the Plaintiff
Republic of the Philippines. The Court affirms the Resolutions issued by the Sandiganbayan
x x x x x x x x x on June 5, 2007 in civil case no. 0033-A and ON May 11, 2007
in civil case No. 0033-F, that there is no more necessity of
So ordered. further trial with respect to the issue of ownership of (1) the
sequestered UCPB shares, (2) the CIIF block of SMC shares, and
The Partial Summary Judgment in Civil Case No. 0033-F dated (3) the CIIF companies. as they have finally been ADJUDICATED
May 7, 2004, is hereby MODIFIED, and shall read as follows: in the AFOREMENTIONED PARTIAL SUMMARY JUDGMENTS
WHEREFORE, the Motion for Execution of Partial summary DATED jULY 11, 2003 AND mAY 7, 2004.
judgment (re: CIIF Block of Smc Shares of Stock) dated August SO ORDERED.
8, 2005 of the plaintiff is hereby denied for lack of merit.
However, this Court orders the severance of this particular
claim of Plaintiff. The Partial Summary Judgment dated May 7,
2004 is now considered a separate final and appealable
judgment with respect to the said CIIF Block of SMC shares of
stock.

The Partial Summary Judgment rendered on May 7, 2004 is
modified by deleting the last paragraph of the dispositive
portion, which will now read, as follows:

Wherefore, in view of the foregoing, we hold that: January 25, 2016
G.R. No. 195477
The Motion for Partial Summary Judgment (Re: Defendants SPOUSES HERMINIO E. ERORITA and EDITHA C.
CIIF Companies, 14 Holding Companies and Cocofed, et al) filed ERORITA, Petitioners,
by Plaintiff is hereby GRANTED. Accordingly, the CIIF vs.
Companies, namely: SPOUSES LIGAYA DUMLAO and ANTONIO
DUMLAO, Respondents.
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL); D E C I S I O N
3. Iligan Coconut Industries, Inc. (ILICOCO); BRION, J.:
4. San Pablo Manufacturing Corp. (SPMC);
5. Granexport Manufacturing Corp. (GRANEX); and We resolve the petition for review on certiorari filed by
6. Legaspi Oil Co., Inc. (LEGOIL), petitioners to challenge the July 28, 2010 decision1 and
As well as the 14 Holding Companies, namely: January 4, 2011 resolution of the Court of Appeals (CA) in CA-
1. Soriano Shares, Inc.; GR CV No. 92770. The CA affirmed the Regional Trial
2. ACS Investors, Inc.; Court's (RTC) decision ordering the petitioners to vacate the
3. Roxas Shares, Inc.; property.

THE ANTECEDENTS The CA ruled that the applicable law on jurisdiction when the
Spouses Antonio and Ligaya Dumlao (Spouses Dumlao) are the complaint was filed, was Republic Act No. 76913 (RA 7691).
registered owners of a parcel of land located at Barangay San This law provides that in civil actions involving a real property’s
Mariano, Roxas, Oriental Mindoro, and covered by TCT No. T- title or possession, jurisdiction depends on the property’s
53000. The San Mariano Academy structures are built on the assessed value and location – if the assessed value exceeds
property. fifty thousand pesos (P50,000.00) in Metro Manila, and twenty
thousand pesos (P20,000.00) outside of Metro Manila, the RTC
The Spouses Dumlao bought the property in an extrajudicial has jurisdiction. If the assessed value does not exceed these
foreclosure sale on April 25, 1990. Because the former owners, amounts, then, the Municipal Trial Court (MTC) has
Spouses Herminio and Editha Erorita (Spouses Erorita), failed jurisdiction.
to redeem it, the title was consolidated in the buyers’ name.
Because the tax declaration showed that the assessed value of
The Spouses Dumlao agreed to allow the petitioners to the property and its improvements exceeded P20,000.00, the
continue to operate the school on the property. The Spouses CA concluded that the RTC had jurisdiction.
Erorita appointed Hernan and Susan Erorita as the San
Mariano Academy’s administrators. Citing Barbosa v. Hernandez,4 the CA held that this case
involves an action for possession of real property and not
The Spouses Dumlao alleged that the Eroritas agreed on a unlawful detainer.
monthly rent of Twenty Thousand Pesos (P20,000.00), but had
failed to pay rentals since 1990. The Spouses Erorita countered The CA denied the petitioners’ motion for reconsideration;
that the Dumlaos allowed them to continue to run the school hence, this petition.
without rental out of goodwill and friendship.
THE PARTIES’ ARGUMENTS
On December 16, 2002, the Spouses Dumlao asked the In their petition, the Spouses Erorita essentially argue that: (a)
petitioners to vacate the property. Although the Spouses the RTC had no jurisdiction because the allegations in the
Erorita wanted to comply, they could not immediately close complaint show a case for unlawful detainer; and (b) Hernan
the school without clearance from the Department of and Susan were improperly impleaded as parties to this case.
Education, Culture, and Sports to whom they are accountable. In their comment, the respondents argue that: (a) the RTC had
jurisdiction because this case involves issues other than
On March 4, 2004, the Spouses Dumlao filed a complaint for physical possession; (b) even assuming the RTC initially had no
recovery of possession before the Regional Trial Court (RTC) jurisdiction, the petitioners’ active participation during the
against the defendants Hernan, Susan, and the Spouses proceedings bar them from attacking jurisdiction; (c) Hernan
Erorita.2 and Susan are real parties in interest as the lease contract’s
primary beneficiaries; and (d) this last issue cannot be raised
In their joint answer, the defendants prayed that the for the first time on appeal.
complaint be dismissed because they cannot be forced to
vacate and to pay the rentals under their factual ISSUES
circumstances. Based on the parties’ positions, the issues for our resolution
are:
After the issues were joined, the case was set for pre-trial.
However, the defendants-Eroritas failed to appear despite I. Whether the RTC had jurisdiction; and
notice. Thus, the RTC declared them in default and ordered the II. Whether Hernan and Susan were improperly impleaded.
Spouses Dumlao to present evidence ex parte.
OUR RULING
On June 4, 2007, the RTC decided in the Spouses Dumlao’s The petition is partly meritorious.
favor. It ordered the defendants (1) to immediately vacate the We hold that: (1) the MTC had jurisdiction; and (2) the second
property and turn it over to the Spouses Dumlao, and (2) to issue was not raised before the lower courts; thus, it cannot be
pay accumulated rentals, damages, and attorney’s fees. The considered in the present case.
RTC also prohibited the defendants from accepting enrolees to
the San Mariano Academy. Jurisdiction is based on the allegations in the complaint.

The defendants Erorita appealed to the CA arguing that the On the first issue, the allegations in the complaint determine
complaint patently shows a case for unlawful detainer. Thus, the nature of an action and jurisdiction over the
the RTC had no jurisdiction over the subject matter of the case. case.5 Jurisdiction does not depend on the complaint’s
caption.6 Nor is jurisdiction changed by the defenses in the
THE CA RULING answer; otherwise, the defendant may easily delay a case by
On appeal, the CA affirmed the RTC’s decision. raising other issues, then, claim lack of jurisdiction.7
 questioned ruling had been rendered and after the movant
To make a case for unlawful detainer, the complaint must actively participated in several stages of the proceedings. It
allege that: (a) initially, the defendant lawfully possessed the was only invoked, too, after the CA rendered a decision
property, either by contract or by plaintiff’s tolerance; (b) the adverse to the movant.
plaintiff notified the defendant that his right of possession
is terminated; (c) the defendant remained in possession and In Figueroa v. People,15 we ruled that the failure to assail
deprived plaintiff of its enjoyment; and (d) the plaintiff filed a jurisdiction during trial is not sufficient for estoppel by laches
complaint within one year from the last demand on defendant to apply. When lack of jurisdiction is raised before the
to vacate the property.8 A complaint for accion publiciana or appellate court, no considerable length of time had elapsed for
recovery of possession of real property will not be considered laches to apply.16 Laches refers to the "negligence or omission
as an action for unlawful detainer if any of these special to assert a right within a reasonable length of time, warranting
jurisdictional facts is omitted.9 a presumption that the party entitled to assert it either has
abandoned it or declined to assert it."17
A review of the complaint shows that: (a) the owners, Spouses
Dumlao, agreed to allow the petitioners to continue operating The factual setting of this present case is not similar to Tijam so
the school on the disputed property; (b) in a demand letter as to trigger the application of the estoppel by laches
dated February 12, 2004, the Spouses Dumlao told the doctrine. As in Figueroa, the present petitioners assailed the
petitioners to pay and/or vacate the property; (c) the RTC’s jurisdiction in their appeal before the CA. Asserting lack
respondents refused to vacate the property; and (d) the of jurisdiction on appeal before the CA does not constitute
Spouses Dumlao filed the complaint (March 4, 2004) within a laches. Furthermore, the filing of an answer and the failure to
year from the last demand to vacate (February 12, 2004). attend the pre-trial do not constitute the active participation
in judicial proceedings contemplated in Tijam.
Thus, although the complaint bears the caption "recovery of
possession," its allegations contain the jurisdictional facts for Thus, the general rule should apply… The petitioners timely
an unlawful detainer case. Under RA 7691, an action for questioned the RTC's jurisdiction.
unlawful detainer is within the MTC’s exclusive jurisdiction
regardless of the property’s assessed value.10 Issue not raised before the lower court
On the second issue, it is settled that issues that have not been
The CA incorrectly applied our ruling in Barbosa. In that case, raised before the lower courts cannot be raised for the first
the complaint did not state that (i) possession was unlawfully time on appeal.18 Basic consideration of due process dictates
withheld and (ii) the complaint was filed within a year from the this rule.19
last demand. Because these special jurisdictional facts for an
unlawful detainer case were lacking, we held that the case We note that the second issue raised by the petitioners were
should be accion publiciana over which the RTC has not raised before the lower courts. The petitioners only raised
jurisdiction this issue in their petition before this Court. Thus, we need not
discuss this issue at our level.
In the present case, however, the complaint clearly contained
the elements of an unlawful detainer case. Thus, the case WHEREFORE, we hereby GRANT the petition. The July 28,
should have been filed with the MTC. The RTC had no 2010 decision and January 4, 2011 resolution of the Court of
jurisdiction over this case. Appeals in CA-GR CV No. 92770 are hereby REVERSED and SET
ASIDE. Accordingly, we DECLARE the June 4, 2007 decision of
Since a decision rendered by a court without jurisdiction is the RTC in Civil Case No. C-492 void for lack of jurisdiction.
void,11 the RTC’s decision is void. SO ORDERED.

Jurisdiction over the subject matter may be raised at any
time.
With the jurisdictional issue resolved, we now examine
whether the petitioners timely raised this issue.
G.R. No. 174835 March 22, 2010
As a general rule, lack of jurisdiction over the subject matter ANITA REYES-MESUGAS, Petitioner,
may be raised at any time, or even for the first time on vs.
appeal.12 An exception to this rule is the principle of estoppel ALEJANDRO AQUINO REYES, Respondent.
by laches.13
D E C I S I O N
Estoppel by laches may only be invoked to bar the defense of CORONA, J.:
lack of jurisdiction if the factual milieu is analogous to Tijam v.
Sibonghanoy.14 In that case, lack of jurisdiction was raised for This is a petition for review on certiorari1 seeking to reverse
the first time after almost fifteen (15) years after the the June 23, 2006 and September 21, 2006 orders2 of the
Regional Trial Court of Makati (RTC), Branch 62 denying the to prevent access. He argued that, unless petitioner permitted
petitioner’s motion to cancel a notice of lis pendens. the inscription of the right of way on the certificate of title
pursuant to their agreement, the notice of lis pendens in TCT
Petitioner Anita Reyes-Mesugas and respondent Alejandro A. No. 24475 must remain.
Reyes are the children of Lourdes Aquino Reyes and Pedro N.
Reyes. Lourdes died intestate, leaving to her heirs, among In its order8 dated January 26, 2006, the RTC denied the
others, three parcels of land, including a lot covered by motion to cancel the notice of lis pendens annotation for lack
Transfer Certificate of Title (TCT) No. 24475. of sufficient merit. It found that the cancellation of the notice
of lis pendens was unnecessary as there were reasons for
On February 3, 2000, respondent filed a petition for settlement maintaining it in view of petitioner's non-compliance with the
of the estate of Lourdes,3 praying for his appointment as alleged right of way agreement between the parties. It stated
administrator due to alleged irregularities and fraudulent that:
transactions by the other heirs. Petitioner, her father Pedro
and Arturo, a sibling of the petitioner, opposed the petition. A careful perusal of the compromise agreement dated
September 13, 2000 revealed that one of the properties
On August 30, 2000, a compromise agreement4 was entered mentioned is a parcel of land with improvements consisting
into by the parties whereby the estate of Lourdes was [of] two hundred nine (209) square meters situated in Makati
partitioned. A decision5 dated September 13, 2000 was covered under TCT No. 24475 of the Registry of Deeds [of] Rizal
rendered by the RTC pursuant to the said compromise in the name of Pedro N. Reyes married to Lourdes Aquino
agreement. The compromise agreement with respect to TCT Reyes and form[s] part of the notarized right of way agreement
No. 24475 is reproduced below: on TCT No. 24475, considering that the movant Anita Reyes is
still bound by the right of way agreement, the same should be
5. That the parties hereto hereby agree to recognize, complied with before the cancellation of the subject
acknowledge and respect: annotation.9 (Citations omitted)

5.1. the improvements found on the parcel of land Petitioner filed a notice of appeal.10 Because the denial of a
covered under TCT No. 24475 of the Registry of motion to cancel the notice of lis pendens annotation was an
Deeds of Rizal consisting of two lots namely Lot 4- interlocutory order, the RTC denied the notice of appeal as it
A and Lot 4-B of the new survey with two (2) could not be appealed until the judgment on the main case
residential houses presently occupied and was rendered.11 A motion for reconsideration was filed by
possessed as owners thereof by Antonio Reyes petitioner but the same was also denied.12
and Anita Reyes-Mesugas to constitute part of
their shares in the estate of Lourdes Aquino Reyes; Hence, this petition.

5.2 further, the improvement consisting of a We find for petitioner.
bakery-store under lease to a third party. The
proceeds thereof shall be shared by Antonio A compromise is a contract whereby the parties, by making
Reyes and Pedro N. Reyes; reciprocal concessions, avoid litigation or put an end to one
already commenced.13 Once submitted to the court and
5.3 that the expenses for the partition and titling stamped with judicial approval, it becomes more than a mere
of the property between Antonio Reyes and private contract binding upon the parties; having the sanction
Anita Reyes-Mesugas shall be equally shared of the court and entered as its determination of the
by them. controversy, it has the force and effect of any judgment.14

On December 7, 2004, petitioner filed a motion to cancel lis Consequently, a judgment rendered in accordance with a
pendens annotation for TCT No. 244756 in the RTC in view of compromise agreement is immediately executory as there is
the finality of judgment in the settlement of the estate. no appeal from such judgment.15 When both parties enter into
Petitioner argued that the settlement of the estate proceeding an agreement to end a pending litigation and request that a
had terminated; hence, the annotation of lis pendens could decision be rendered approving said agreement, such action
already be cancelled since it had served its purpose. constitutes an implied waiver of the right to appeal against the
said decision.16
Respondent opposed the motion and claimed that the parties,
in addition to the compromise agreement, executed "side In this instance, the case filed with the RTC was a special
agreements" which had yet to be fulfilled. One such proceeding for the settlement of the estate of Lourdes. The
agreement was executed between petitioner7 and respondent RTC therefore took cognizance of the case as a probate court.
granting respondent a one-meter right of way on the lot Settled is the rule that a probate court is a tribunal of limited
covered by TCT No. 24475. However, petitioner refused to give jurisdiction. It acts on matters pertaining to the estate but
the right of way and threatened to build a concrete structure never on the rights to property arising from the contract.17 It
approves contracts entered into for and on behalf of the estate Thus, when the September 13, 2000 decision was recorded in
or the heirs to it but this is by fiat of the Rules of Court.18 It is the Registry of Deeds of Rizal pursuant to Section 4, Rule 90 of
apparent therefore that when the RTC approved the the Rules of Court, the notice of lis pendens inscribed on TCT
compromise agreement on September 13, 2000, the No. 24475 was deemed cancelled by virtue of Section 77 of PD
settlement of the estate proceeding came to an end. No. 1529.

Moreover, a notice of lis pendens may be cancelled when the WHEREFORE, the petition is hereby GRANTED. The Orders of
annotation is not necessary to protect the title of the party the Regional Trial Court of Makati, Branch 62 dated June 23,
who caused it to be recorded.19 The compromise agreement 2006 and September 21, 2006 are SET ASIDE. The notice of lis
did not mention the grant of a right of way to respondent. Any pendens annotated on TCT No. 24475 is hereby
agreement other than the judicially approved compromise declared CANCELLED pursuant to Section 77 of the PD No.
agreement between the parties was outside the limited 1529 in relation to Section 4, Rule 90 of the Rules of Court.
jurisdiction of the probate court. Thus, any other agreement SO ORDERED.
entered into by the petitioner and respondent with regard to
a grant of a right of way was not within the jurisdiction of the
RTC acting as a probate court. Therefore, there was no reason
for the RTC not to cancel the notice of lis pendens on TCT No.
24475 as respondent had no right which needed to be
protected. Any alleged right arising from the "side agreement" G.R. No. 208232 March 10, 2014
on the right of way can be fully protected by filing an ordinary SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely:
action for specific performance in a court of general EPIFANIA G. BAUTISTA and ZOEY G. BAUTISTA, Petitioners,
jurisdiction.1avvphi1 vs.
FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF
More importantly, the order of the probate court approving FILIPINA DAQUIGAN, namely: MA. LOURDES DAQUIGAN,
the compromise had the effect of directing the delivery of the IMELDA CATHERINE DAQUIGAN, IMELDA DAQUIGAN and
residue of the estate of Lourdes to the persons entitled thereto CORSINO DAQUIGAN, REBECCA QUIAMCO and ANDRES
under the compromise agreement. As such, it brought to a QUIAMCO, ROMULO LORICA and DELIA LORICA, GEORGE
close the intestate proceedings20 and the probate court lost CAJES and LAURA CAJES, MELIDA BANEZ and FRANCISCO
jurisdiction over the case, except only as regards to the BANEZ, MELANIE GOFREDO, GERV ACIO CAJES and ISABEL
compliance and the fulfillment by the parties of their CAJES, EGMEDIO SEGOVIA and VERGINIA SEGOVIA, ELSA N.
respective obligations under the compromise agreement. SAM, PEDRO M. SAM and LINA SAM, SANTIAGO MENDEZ and
MINA MENDEZ, HELEN M. BURTON and LEONARDO BURTON,
Having established that the proceedings for the settlement of JOSE JACINTO and BIENVENIDA JACINTO, IMELDA
the estate of Lourdes came to an end upon the RTC’s DAQUIGAN, LEO MA TIGA and ALICIA MATIGA, FLORENCIO
promulgation of a decision based on the compromise ACEDO JR., and LYLA VALERIO, Respondents.
agreement, Section 4, Rule 90 of the Rules of Court provides:
Sec. 4. Recording the order of partition of estate. - Certified D E C I S I O N
copies of final orders and judgments of the court relating to VELASCO, JR., J.:
the real estate or the partition thereof shall be recorded in the
registry of deeds of the province where the property is The Case
situated. This is a Petition for Review on Certiorari under Rule 45
assailing the April 25, 2013 Order of the Regional Trial Court
In line with the recording of the order for the partition of the (RTC) in Civil Case No. (1798)-021 as well as its Order of July 3,
estate, paragraph 2, Section 77 of Presidential Decree (PD) No. 2013 denying reconsideration.
152921 provides:
The Facts
Section 77. Cancellation of Lis Pendens – xxx xxx xxx Alfredo R. Bautista (Bautista), petitioner’s predecessor,
xxx xxx inherited in 1983 a free-patent land located in Poblacion,
Lupon, Davao Oriental and covered by Original Certificate of
At any time after final judgment in favor of the defendant, or Title (OCT) No. (1572) P-6144. A few years later, he subdivided
other disposition of the action such as to terminate finally all the property and sold it to several vendees, herein
rights of the plaintiff in and to the land and/or buildings respondents, via a notarized deed of absolute sale dated May
involved, in any case in which a memorandum or notice of lis 30, 1991. Two months later, OCT No. (1572) P-6144 was
pendens has been registered as provided in the preceding canceled and Transfer Certificates of Title (TCTs) were issued
section, the notice of lis pendens shall be deemed in favor of the vendees.1
cancelled upon the registration of a certificate of the clerk of
court in which the action or proceeding was pending stating Three years after the sale, or on August 5, 1994, Bautista filed
the manner of disposal thereof. (emphasis supplied) a complaint for repurchase against respondents before the
RTC, Branch 32, Lupon, Davao Oriental, docketed as Civil Case With respect to the belated filing of the motion, the RTC, citing
No. 1798,2 anchoring his cause of action on Section 119 of Cosco Philippines Shipping, Inc. v. Kemper Insurance
Commonwealth Act No. (CA) 141, otherwise known as the Company,6 held that a motion to dismiss for lack of jurisdiction
"Public Land Act," which reads: may be filed at any stage of the proceedings, even on appeal,
and is not lost by waiver or by estoppel. The dispositive portion
SECTION 119. Every conveyance of land acquired under the of the assailed Order reads:
free patent or homestead provisions, when proper, shall be
subject to repurchase by the applicant, his widow, or legal WHEREFORE, the complaint for Repurchase, Consignation,
heirs, within a period of five years from the date of the with Preliminary Injunction and Damages is hereby dismissed
conveyance. for lack of jurisdiction.
SO ORDERED.7
Respondents, in their Answer, raised lack of cause of action,
estoppel, prescription, and laches, as defenses. Assignment of Errors
Their motion for reconsideration having been denied,
Meanwhile, during the pendency of the case, Bautista died and petitioners now seek recourse before this Court with the
was substituted by petitioner Epifania G. Bautista (Epifania). following assigned errors:
Respondents Francisco and Welhilmina Lindo later entered
into a compromise agreement with petitioners, whereby they I
agreed to cede to Epifania a three thousand two hundred and THE PUBLIC RESPONDENT RTC ERRED IN ADMITTING THE
thirty square meter (3,230 sq.m.)-portion of the property as MOTION TO DISMISS DATED FEBRUARY 4, 2013, BELATEDLY
well as to waive, abandon, surrender, and withdraw all claims FILED BY THE PRIVATE RESPONDENTS IN THE CASE.
and counterclaims against each other. The compromise was
approved by the RTC in its Decision dated January 27, 2011, II
the fallo of which reads: THE PUBLIC RESPONDENT RTC ERRED IN HOLDING THAT THE
INSTANT CASE FOR REPURCHASE IS A REAL ACTION.8
WHEREFORE, a DECISION is hereby rendered based on the
above-quoted Compromise Agreement and the parties are The Issue
enjoined to strictly comply with the terms and conditions of Stated differently, the issue for the Court’s resolution is:
the same. whether or not the RTC erred in granting the motion for the
SO ORDERED.3 dismissal of the case on the ground of lack of jurisdiction over
the subject matter.
Other respondents, however, filed a Motion to Dismiss4 dated
February 4, 2013, alleging that the complaint failed to state the Arguments
value of the property sought to be recovered. Moreover, they Petitioners argue that respondents belatedly filed their Motion
asserted that the total selling price of all the properties is only to Dismiss and are now estopped from seeking the dismissal of
sixteen thousand five hundred pesos (PhP 16,500), and the the case, it having been filed nine (9) years after the filing of
selling price or market value of a property is always higher than the complaint and after they have actively participated in the
its assessed value. Since Batas Pambansa Blg. (BP) 129, as proceedings. Additionally, they allege that an action for
amended, grants jurisdiction to the RTCs over civil actions repurchase is not a real action, but one incapable of pecuniary
involving title to or possession of real property or interest estimation, it being founded on privity of contract between the
therein where the assessed value is more than PhP 20,000, parties. According to petitioners, what they seek is the
then the RTC has no jurisdiction over the complaint in question enforcement of their right to repurchase the subject property
since the property which Bautista seeks to repurchase is below under Section 119 of CA 141.
the PhP 20,000 jurisdictional ceiling.
Respondents, for their part, maintain that since the land is no
RTC Ruling5 longer devoted to agriculture, the right of repurchase under
Acting on the motion, the RTC issued the assailed order said law can no longer be availed of, citing Santana v.
dismissing the complaint for lack of jurisdiction. The trial court Mariñas.9 Furthermore, they suggest that petitioners intend to
found that Bautista failed to allege in his complaint that the resell the property for a higher profit, thus, the attempt to
value of the subject property exceeds 20 thousand pesos. repurchase. This, according to respondents, goes against the
Furthermore, what was only stated therein was that the total policy and is not in keeping with the spirit of CA 141 which is
and full refund of the purchase price of the property is PhP the preservation of the land gratuitously given to patentees by
16,500. This omission was considered by the RTC as fatal to the the State as a reward for their labor in cultivating the property.
case considering that in real actions, jurisdictional amount is Also, the Deed of Absolute Sale presented in evidence by
determinative of whether it is the municipal trial court or the Bautista was unilaterally executed by him and was not signed
RTC that has jurisdiction over the case. by respondents. Lastly, respondents argue that repurchase is a
real action capable of pecuniary estimation.

 Our Ruling It is a well-settled rule that jurisdiction of the court is
The petition is meritorious. determined by the allegations in the complaint and the
character of the relief sought.10 In this regard, the Court, in
Jurisdiction of courts is granted by the Constitution and Russell v. Vestil,11 wrote that "in determining whether an
pertinent laws. action is one the subject matter of which is not capable of
pecuniary estimation this Court has adopted the criterion of
Jurisdiction of RTCs, as may be relevant to the instant petition, first ascertaining the nature of the principal action or remedy
is provided in Sec. 19 of BP 129, which reads: sought. If it is primarily for the recovery of a sum of money, the
claim is considered capable of pecuniary estimation, and
Sec. 19. Jurisdiction in civil cases.―Regional Trial Courts shall whether jurisdiction is in the municipal courts or in the RTCs
exercise exclusive original jurisdiction: would depend on the amount of the claim." But where the
basic issue is something other than the right to recover a sum
1) In all civil actions in which the subject of the litigation of money, where the money claim is purely incidental to, or a
is incapable of pecuniary estimation; consequence of, the principal relief sought, this Court has
considered such actions as cases where the subject of the
2) In all civil actions which involve the title to, or litigation may not be estimated in terms of money, and, hence,
possession of, real property, or any interest therein, are incapable of pecuniary estimation. These cases are
where the assessed value of the property involved cognizable exclusively by RTCs.12
exceeds Twenty thousand pesos (₱20,000.00) or, for
civil actions in Metro Manila, where such value Settled jurisprudence considers some civil actions as incapable
exceeds Fifty thousand pesos (₱50,000.00) except of pecuniary estimation, viz:
actions for forcible entry into and unlawful detainer
of lands or buildings, original jurisdiction over which 1. Actions for specific performance;
is conferred upon the Metropolitan Trial Courts, 2. Actions for support which will require the
Municipal Trial Courts, and Municipal Circuit Trial determination of the civil status;
Courts. 3. The right to support of the plaintiff;
4. Those for the annulment of decisions of lower courts;
On the other hand, jurisdiction of first level courts is prescribed 5. Those for the rescission or reformation of contracts;13
in Sec. 33 of BP 129, which provides: 6. Interpretation of a contractual stipulation.14

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal The Court finds that the instant cause of action to redeem the
Trial Courts and Municipal Circuit Trial Courts in civil land is one for specific performance.
cases.―Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise: The facts are clear that Bautista sold to respondents his lots
x x x x which were covered by a free patent. While the deeds of sale
do not explicitly contain the stipulation that the sale is subject
3) Exclusive original jurisdiction in all civil actions which involve to repurchase by the applicant within a period of five (5) years
title to, or possession of, real property, or any interest therein from the date of conveyance pursuant to Sec. 119 of CA 141,
where the assessed value of the property or interest therein still, such legal provision is deemed integrated and made part
does not exceed Twenty thousand pesos (₱20,000.00) or, in of the deed of sale as prescribed by law. It is basic that the law
civil actions in Metro Manila, where such assessed value does is deemed written into every contract.15 Although a contract is
not exceed Fifty thousand pesos (₱50,000.00) exclusive of the law between the parties, the provisions of positive law
interest, damages of whatever kind, attorney’s fees, litigation which regulate contracts are deemed written therein and shall
expenses and costs: Provided, That in cases of land not limit and govern the relations between the parties.16 Thus, it is
declared for taxation purposes, the value of such property a binding prestation in favor of Bautista which he may seek to
shall be determined by the assessed value of the adjacent lots. enforce. That is precisely what he did. He filed a complaint to
The core issue is whether the action filed by petitioners is one enforce his right granted by law to recover the lot subject of
involving title to or possession of real property or any interest free patent. Ergo, it is clear that his action is for specific
therein or one incapable of pecuniary estimation. performance, or if not strictly such action, then it is akin or
analogous to one of specific performance. Such being the case,
The course of action embodied in the complaint by the present his action for specific performance is incapable of pecuniary
petitioners’ predecessor, Alfredo R. Bautista, is to enforce his estimation and cognizable by the RTC.
right to repurchase the lots he formerly owned pursuant to the
right of a free-patent holder under Sec. 119 of CA 141 or the Respondents argue that Bautista’s action is one involving title
Public Land Act. to or possession of real property or any interests therein and
since the selling price is less than PhP 20,000, then jurisdiction
The Court rules that the complaint to redeem a land subject of is lodged with the MTC. They rely on Sec. 33 of BP 129.
a free patent is a civil action incapable of pecuniary estimation.
Republic Act No. 769117 amended Sec. 33 of BP 129 and gave PhP 500,000 as moral damages, PhP 100,000 by way
Metropolitan Trial Courts, Municipal Trial Courts, and of exemplary damages, and costs of suit;
Municipal Circuit Trial Courts exclusive original jurisdiction in
all civil actions which involve title to, or possession of, real 2. By participating in Pre-trial;
property, or any interest therein where the assessed value of
the property or interest therein does not exceed twenty 3. By moving for the postponement of their
thousand pesos (PhP 20,000) or, in civil actions in Metro presentation of evidence;20
Manila, where such assessed value does not exceed fifty
thousand pesos (PhP 50,000) exclusive of interest, damages of 4. By presenting their witness;21 and
whatever kind, attorney’s fees, litigation expenses and costs.
At first blush, it appears that the action filed by Bautista 5. By submitting the compromise agreement for
involves title to or possession of the lots he sold to approval.22
respondents. Since the total selling price is less than PhP
20,000, then the MTC, not the RTC, has jurisdiction over the Having fully participated in all stages of the case, and even
case. This proposition is incorrect for the re-acquisition of the invoking the RTC’s authority by asking for affirmative reliefs,
lots by Bautista or herein successors-in-interests, the present respondents can no longer assail the jurisdiction of the said
petitioners, is but incidental to and an offshoot of the exercise trial court. Simply put, considering the extent of their
of the right by the latter to redeem said lots pursuant to Sec. participation in the case, they are, as they should be,
119 of CA 141. The reconveyance of the title to petitioners is considered estopped from raising lack of jurisdiction as a
solely dependent on the exercise of such right to repurchase ground for the dismissal of the action.1
the lots in question and is not the principal or main relief or âwphi1
remedy sought. Thus, the action of petitioners is, in reality, WHEREFORE, premises considered, the instant petition is
incapable of pecuniary estimation, and the reconveyance of hereby GRANTED. The April 25, 2013 and July 3, 2013 Orders
the lot is merely the outcome of the performance of the of the Regional Trial Court in Civil Case No. (1798)-021 are
obligation to return the property conformably to the express hereby REVERSED and SET ASIDE.
provision of CA 141.
The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is
Even if we treat the present action as one involving title to real ORDERED to proceed with dispatch in resolving Civil Case No.
property or an interest therein which falls under the (1798)-021.
jurisdiction of the first level court under Sec. 33 of BP 129, as No pronouncement as to costs.
the total selling price is only PhP 16,000 way below the PhP SO ORDERED.
20,000 ceiling, still, the postulation of respondents that MTC
has jurisdiction will not hold water. This is because
respondents have actually participated in the proceedings
before the RTC and aggressively defended their position, and
by virtue of which they are already barred to question the
jurisdiction of the RTC following the principle of jurisdiction by G.R. No. 176020 September 29, 2014
estoppel. HEIRS OF TELESFORO JULAO, namely, ANITA VDA. DE
ENRIQUEZ, SONIA J. TOLENTINO and RODERICK
In Heirs of Jose Fernando v. De Belen, it was held that the party JULAO, Petitioners,
raising defenses to the complaint, actively participating in the vs.
proceedings by filing pleadings, presenting his evidence, and SPOUSES ALEJANDRO and MORENITA DE
invoking its authority by asking for an affirmative relief is JESUS, Respondents.
deemed estopped from questioning the jurisdiction of the
court.18 D E C I S I O N
DEL CASTILLO, J.:
Here, we note that aside from the belated filing of the motion
to dismiss––it having been filed nine (9) years from the filing Jurisdiction over the subject matter is conferred by law and is
of the complaint––respondents actively participated in the determined by the material allegations of the
proceedings through the following acts: complaint.1 Thus, it cannot be acquired through, or waived by,
any act or omission of the parties;2 nor can it be cured by their
1. By filing their Answer and Opposition to the Prayer for silence, acquiescence, or even express consent.3
Injunction19 dated September 29, 1994 whereby they
even interposed counterclaims, specifically: PhP This Petition for Review on Certiorari4 under Rule 45 of the
501,000 for unpaid survey accounts, PhP 100,000 Rules of Court assails the Decision5 dated December 4, 2006 of
each as litigation expenses, PhP 200,000 and PhP the Court of Appeals (CA) in CA-G.R. CV No. 72845.
3,000 per daily appearance by way of attorney’s fees,

 Factual Antecedents Respondent spouses filed a Motion to Dismiss28 on the ground
Sometime in the 1960's, Telesforo Julao (Telesforo)6 filed of prescription, which the RTC denied for lack of merit.29 Thus,
before the Department of Environment and Natural Resources they filed an Answer30 contending that they are the true and
(DENR), Baguio City, two Townsite Sales Applications (TSA), lawful owners and possessors of the subject property;31 that
TSA No. V-2132 and TSA No. V-6667.7 Upon his death on June they acquired the said property from petitioners' brother,
1, 1971, his applications were transferred to his heirs.8 Solito;32 and that contrary to the claim of petitioners, TSA No.
V-6667 and TSA No. V-2132 pertain to the same property.33
On April 30, 1979,9 Solito Julao (Solito) executed a Deed of
Transfer of Rights,10 transferring his hereditary share in the During the trial, petitioners disputed the validity of the Deed
property covered by TSA No. V-6667 to respondent spouses of Transfer of Rights executed by Solito. They presented
Alejandro and Morenita De Jesus. In 1983, respondent spouses evidence to show that Telesforo submitted two applications,
constructed a house on the property they acquired from TSA No. V-2132 and TSA No. V-6667.34 The first one, TSA No.
Solito.11 In 1986, Solito went missing.12 V-2132, resulted in the issuance of OCT No. P-2446 in favor of
the heirs ofTelesforo, while the second one, TSA No. V-6667,
On March 15, 1996, the DENR issued an Order: Rejection and was dropped from the records.35 They also presented evidence
Transfer of Sales Rights,13 to wit: to prove that Solito had no hereditary share in the estate of
Telesforo because Solito was not Telesforo's biological son, but
WHEREFORE, premises considered and it appearing that his stepson, and that Solito 's real name was Francisco
herein applicant is a holder of two (2) applications in violation Bognot.36
with established policy in the disposition [of] public lands in
the City of Baguio, TSA V-6667 is hereby ordered dropped from After petitioners rested their case, respondent spouses filed a
the records. Accordingly, it is henceforth ordered that TSA Motion for Leave of Court to File a Demurrer to
2132 in the name ofTELESFORO JULAO be, as [it is] hereby Evidence.37 The RTC, however, denied the Motion.38
transferred to the heirs of TELESFORO JULAO, represented by
ANITA VDA. DE ENRIQUEZ, and as thus transferred, the same The heirs of Solito then moved to intervene and filed an
shall continue to be given due course. For convenience of easy Answer-lnlntervention,39 arguing that their father, Solito, is a
reference, it is directed that the [pertinent] records be legitimate son ofTelesforo and that Solito sold his hereditary
consolidated in the name of the latter. share in the estate of his father to respondent spouses by
SO ORDERED.14 virtue of a Deed of Transfer of Rights.40

Consequently, on December 21, 1998, Original Certificate of To refute the evidence presented by petitioners, respondent
Title (OCT) No. P-2446,15 covering a 641-square meter spouses presented two letters from the DENR: ( 1) a letter
property, was issued in favor of the heirs of Telesforo.16 dated April 27, 1999 issued by Amando I. Francisco, the
Officer-In-Charge of CENRO-Baguio City, stating that "it can be
On March 2, 1999, petitioners Anita Julao vda. De Enriquez, concluded that TSA No. V-2132 and TSA No. V-6667 referred
Sonia J. Tolentino and Roderick Julao,17 representing to one and the same application covering one and the same
themselves to be the heirs of Telesforo, filed before the lot;"41 and (2) a letter42 dated September 30, 1998 from the
Regional Trial Court (RTC), Baguio City, a Complaint or DENR stating that "the land applied for with assigned number
Recovery of Possession of Real Property,18 docketed as Civil TSA No. V-2132 was renumbered as TSA No. V-6667 as per 2nd
Case No. 4308-R,19 against respondent spouses. Petitioners Indorsement dated November 20, 1957 x x x."43 They also
alleged that they are the true and lawful owners of a 641- presented two affidavits,44 both dated August 31, 1994,
square meter parcel of land located at Naguilian Road, Baguio executed by petitioners Sonia Tolentino and Roderick
City, covered by OCT No. P-2446;20 that the subject property Julao,45 acknowledging that Solito was their co-heir and that
originated from TSA No. V-2132;21 that respondent spouses' he was the eldest son of Telesforo.46 Ruling of the Regional
house encroached on 70 square meters of the subject Trial Court
property;22 that on August 4, 1998, petitioners sent a demand
letter to respondent spouses asking them to return the subject On August 10, 2001, the RTC rendered a Decision47 in favor of
property;23 that respondent spouses refused to accede to the petitioners… The RTC found that although petitioners failed to
demand, insisting that they acquired the subject property from prove their allegation that Solito was not an heir of
petitioners' brother, Solito, by virtue of a Deed of Transfer of Telesforo,48 they were nevertheless able to convincingly show
Rights;24 that in the Deed of Transfer of Rights, Solito expressly that Telesforo filed with the DENR two applications, covering
transferred in favor of respondent spouses his hereditary two separate parcels of land, and that it was his first
share in the parcel of land covered by TSA No. V-6667;25 that application, TSA No. V-2132, which resulted in the issuance of
TSA No. V-6667 was rejected by the DENR;26 and that OCT No. P-2446.49 And since what Solito transferred to
respondent spouses have no valid claim over the subject respondent spouses was his hereditary share in the parcel of
property because it is covered by a separate application, TSA land covered by TSA No. V-6667, respondent spouses acquired
No. V-2132.27 no right over the subject property, which was derived from a

separate application, TSA No. V-2132.50 Thus, the RTC disposed resolution based on the pleadings filed. To date, petitioners
of the case in this wise: have not done so.

WHEREFORE, premises considered, judgment is hereby Our Ruling
rendered in favor of the [petitioners] and against the The Petition lacks merit.
[respondents] who are hereby ordered to restore the
possession of the land in question consisting of an area of 70 The assessed value must be alleged in the complaint to
square meters, more or less, which is a portion of the land determine which court has jurisdiction over the action.
covered by [OCT] No. P-2446. The [respondents] are ordered Jurisdiction as we have said is conferred by law and is
to remove the house and/or other improvements that they detennined by the allegations in the complaint, which contains
constructed over the said parcel of land and to vacate the the concise statement of the ultimate facts of a plaintiffs cause
same upon the finality of this decision. of action.60
SO ORDERED.51
Section 19(2) and Section 33(3) of Batas Pambansa Big. 129, as
Ruling of the Court of Appeals amended by Republic Act No. 7691, provide:
Aggrieved, respondent spouses elevated the case to the CA.
SEC. 19. Jurisdiction in Civil Cases. - Regional Trial Courts shall
On December 4, 2006, the CA reversed the ruling of the RTC. exercise exclusive original jurisdiction:
The CA found the Complaint dismissible on two grounds: (1) x x x x
failure on the part of petitioners to identify the property
sought to be recovered; and (2) lack of jurisdiction. The CA (2) In all civil actions which involve the title to, or possession
noted that petitioners failed to pinpoint the property sought of, real property, or any interest therein, where the assessed
to be recovered.52 In fact, they did not present any survey plan value of the property involved exceeds twenty thousand pesos
to show that respondent spouses actually encroached on (₱20,000.00) or for civil actions in Metro Manila, where such
petitioners' property.53 Moreover, the CA was not fully value exceeds Fifty thousand pesos (₱50,000.00) except
convinced that the two applications pertain to two separate actions for forcible entry into and unlawful detainer of lands or
parcels of land since respondent spouses were able to present buildings, original jurisdiction over which is conferred upon the
evidence to refute such allegation.54 The CA likewise pointed Metropolitan Trial Courts, Municipal Trial Courts, and
out that the Complaint failed to establish that the RTC had Municipal Circuit Trial Courts:
jurisdiction over the case as petitioners failed to allege the x x x x
assessed value of the subject property.55 Thus:
SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal
WHEREFORE, premises considered, the appeal is GRANTED. Trial Courts and Municipal Circuit Trial Courts in Civil Cases. –
The decision appealed from is REVERSED and SET ASIDE. The Metropolitan Trial Courts, Municipal Trial Courts, and
complaint is DISMISSED. Municipal Circuit Trial Courts shall exercise:
SO ORDERED.56
x x x x (3) Exclusive original jurisdiction in all civil actions which
Issues involve title to, or possession of, real property, or any interest
Hence, petitioners filed the instant Petition for Review on therein where the assessed value of the property or interest
Certiorari, raising the following errors: therein does not exceed Twenty Thousand Pesos (₱20,000.00)
or, in civil actions in Metro Manila, where such assessed value
I does not exceed Fifty Thousand Pesos (₱50,000.00) exclusive
THE [CA] COMMITTED REVERSIBLE ERROR IN RULING THAT of interest, damages of whatever kind, attorney's fees,
PETITIONERS FAILED TO PROVE THE IDENTITY OF THE litigation expenses and costs: Provided, That in cases of land
PROPERTY IN QUESTION. not declared for taxation purposes, the value of such property
shall be determined by the assessed value of the adjacent lots.
II Based on the foregoing, it is clear that in an action for recovery
THE [CA] COMMITTED REVERSIBLE ERROR IN RULING THAT of possession, the assessed value of the property sought to be
THE TRIAL COURT DID NOT ACQUIRE JURISDICTION OVER THE recovered determines the court's jurisdiction.61
COMPLAINT.57
In this case, for the RTC to exercise jurisdiction, the assessed
At this juncture, it must be mentioned that in the value of the subject property must exceed ₱20,000.00. Since
Resolution58 dated March 19, 2007, we required respondent petitioners failed to allege in their Complaint the assessed
spouses to file their Comment to the Petition which they failed value of the subject property, the CA correctly dismissed the
to comply with. Thus, in the Resolution59 dated March 11, Complaint as petitioners failed to establish that the RTC had
2013, we dispensed with the filing of respondent spouses' jurisdiction over it. In fact, since the assessed value of the
Comment. At the same time, we required petitioners to property was not alleged, it cannot be determined which trial
manifest whether they are willing to submit the case for court had original and exclusive jurisdiction over the case.
 D E C I S I O N
Furthermore, contrary to the claim of petitioners, the issue of PERALTA, J.:
lack of jurisdiction was raised by respondents in their
Appellant's Brief62 And the fact that it was raised for the first Before the Court is a petition for review on certiorari seeking
time on appeal is of no moment. Under Section 1,63 Rule 9 of to reverse and set aside the Decision 1 and Resolution2 of the
the Revised Rules of Court, defenses not pleaded either in a Court of Appeals (CA), dated April 26, 2012 and October 30,
motion to dismiss or in the answer are deemed waived, except 2012, respectively, in CA-G.R. SP No. 118687. The assailed CA
for lack of jurisdiction, litis pendentia, res judicata, and Decision reversed and set aside the Decision of the Regional
prescription, which must be apparent from the pleadings or Trial Court (RTC) of Calamba City, Branch 35, in an unlawful
the evidence on record. In other words, the defense of lack of detainer case docketed as Civil Case No. 3361-03-C, while the
jurisdiction over the subject matter may be raised at any stage CA Resolution denied petitioners' motion for reconsideration.
of the proceedings, even for the first time on appeal.64 In fact,
the court may motu proprio dismiss a complaint at any time The facts of the case are as follows:
when it appears from the pleadings or the evidence on record On January 18, 2001, Danilo Arrienda (Arrienda) filed against
that lack of jurisdiction exists.65 herein respondent and three other persons a Complaint3 for
unlawful detainer with the Municipal Trial Court (MTC) of
In an action to recover, the property must be identified Calauan, Laguna, alleging that: he is the owner of an 11,635
square-meter parcel of land located along National Road,
Moreover, Article 434 of the Civil Code states that "[i]n an Barangay Lamot 2, Calauan, Laguna; the seller of the property
action to recover, the property must be identified, and the warranted that the same is not tenanted and is free from any
plaintiff must rely on the strength of his title and not on the occupants or claimants; despite such warranty, Arrienda later
weakness of the defendant's claim." The plaintiff, therefore, is discovered, that a portion of it was actually being occupied by
duty-bound to clearly identify the land sought to be recovered, herein respondent and the other defendants; after talking to
in accordance with the title on which he anchors his right of respondent and the other defendants, petitioner allowed
ownership.66 It bears stressing that the failure of the plaintiff them to continue occupying the premises in which they have
to establish the identity of the property claimed is fatal to his settled, subject to the condition that they will immediately
case.67 vacate the same upon prior notice by Arrienda that he will be
needing it; sometime in November 2000, Arrienda, informed
In this case, petitioners failed to identify the property they respondent and the other defendants of his intention to use
seek to recover as they failed to describe the location, the the subject land; despite repeated demands, the last of which
area, as well as the boundaries thereof. In fact, as aptly pointed was a letter dated December 7, 2000, respondent and the
out by the CA, no survey plan was presented by petitioners to other defendants failed and refused to vacate the disputed
prove that respondent spouses actually encroached upon the premises. Hence, the complaint, praying that respondent and
70-square meter portion of petitioners' property.68 Failing to the other defendants be ordered to vacate the premises and
prove their allegation, petitioners are not entitled to the relief restore possession thereof to Arrienda; to pay a reasonable
prayed for in their Complaint. amount for the use and occupation of the same; and to pay
moral and exemplary damages, attorney's fees and costs of
All told, we find no error on the part of the CA in dismissing the suit.
Complaint for lack of jurisdiction and for failing to identify the
property sought to be recovered. In her Answer with Counterclaims,4 respondent denied the
material allegations in Arrienda's Complaint and contended
WHEREFORE, the Petition is hereby DENIED. The Decision that: the MTC has no jurisdiction over the nature of the action,
dated December 4, 2006 of the Court of Appeals in CA-G.R. CV considering that the main issue in the case is the ownership of
No. 72845 is hereby AFFIRMED. the disputed lot and not simply who among the parties is
SO ORDERED. entitled to possession de facto of the same; the issue of
ownership converts the unlawful detainer suit into one which
is incapable of pecuniary estimation and, as such, the case
should be placed under the exclusive jurisdiction of the RTC;
the subject lot is an agricultural land of which respondent was
a tenant; she and her family later obtained ownership over the
April 6, 2016 subject property when their landlord donated the said
G.R. No. 204314 property to them; Arrienda failed to secure a Certification from
HEIRS OF DANILO ARRIENDA, ROSA G ARRIENDA, MA. the Department of Agrarian Reform that the disputed
CHARINA ROSE ARRIENDA-ROMANO, MA. CARMELLIE premises is not really an agricultural land, which is a condition
ARRIENDA-MARA, DANILO MARIA ALVIN G. ARRIENDA, JR., precedent in the filing of the case. As counterclaim,
and JESUS FRANCIS DOMINIC G ARRIENDA, Petitioners, respondent alleged that, by reason of Arrienda's bad faith,
vs. greed and malice in filing the complaint, she suffered from
ROSARIO KALAW, Respondents. anxiety, wounded feelings and similar injuries and was forced
to engage the services of a counsel to defend her rights. As Aggrieved by the RTC Decision, respondent filed a petition for
such, she prayed that Arrienda be ordered to pay moral review with the CA. Pending resolution of respondent's appeal,
damages, attorney's fees, litigation expenses and other reliefs Arrienda died and was substituted by his heirs.
which the court may deem just and equitable.
On April 26, 2012, the CA promulgated its assailed Decision
The other defendants adopted respondent's Answer with reversing and setting aside the RTC Decision. The CA held that
Counterclaim. the RTC did not acquire jurisdiction over the case for Arrienda's
failure to allege the assessed value of the subject property and,
After Arrienda filed his Reply,5 the parties subsequently as a consequence, the assailed RTC Decision is null and void.
submitted their Position Papers.
Herein petitioners filed their Motion for Reconsideration, but
On November 20, 2002, the MTC rendered its the CA denied it in its October 30, 2012 Resolution.
Decision6 dismissing the complaint on the ground of lack of
jurisdiction, holding as follows: Hence, the instant petition based on the following grounds:
x x x x I
WITH ALL DUE RESPECT, THE HONORABLE COURT OF
[I]t is well settled that the mere allegation by the defendant in APPEALS MUST HAVE BEEN CONFUSED WITH THE ORIGINAL
an ejectment case that he is the owner of the property AND APPELLATE JURISDICTION OF THE REGIONAL TRIAL
involved therein does not and cannot divest the inferior court COURTS.
of its jurisdiction over the case. But if [it] appears during the
trial that by the nature of proof presented, the question of II
possession cannot be properly determined without settling IT BEING OBVIOUS, AND AS SO ADMITTED BY THE
that of ownership, then the jurisdiction of the court is lost and HONORABLE COURT OF APPEALS THAT "IN THIS CASE,
action should be DISMISSED. x x x Further, Plaintiff must not ARRIENDA'S COMPLAINT FOR UNLAWFUL DETAINER DATED
only prove his ownership of the property but must also identify 17 JANUARY 2001 WAS FIRST FILED WITH THE MTC OF
the land he claim[s] to remove uncertainties.7 CALAUAN, LAGUNA," THE HONORABLE COURT OF APPEALS
x x x x GRAVELY ERRED IN RULING: "THUS, FOR FAILURE OF
ARRIENDA TO DISCLOSE THE ASSESSED VALUE OF THE
The counterclaims of respondent and the other defendants SUBJECT PROPERTY IN HIS COMPLAINT, THE COURT A QUO IS
were likewise dismissed on the ground that the complaint was BEREFT OF JURISDICTION OF TAKING COGNIZANCE OF THE
not maliciously filed. CASE. WITHOUT ANY JURISDICTION THEN, THE ASSAILED
DECISION AND RESOLUTION ARE NULL AND VOID."
On appeal by Arrienda, the RTC agreed with the MTC that
jurisdiction lies with the RTC. The RTC then took cognizance of III
the case and conducted trial. On April 6, 2010, the RTC WITH ALL DUE RESPECT, THE QUESTIONED APRIL 26, 2012
rendered its Decision disposing as follows: DECISION AND OCTOBER 30, 2012 RESOLUTION OF THE
HONORABLE COURT OF APPEALS WOULD WIPE OUT SECTION
WHEREFORE, premises considered, judgment is hereby 8, RULE 40 ON "APPEAL FROM ORDERS DISMISSING CASE
rendered ordering the defendants-appellees Rosario Kalaw, WITHOUT TRIAL; LACK OF JURISDICTION" FROM THE 1997
Felix Taklan, Maximo Valenzuela and Felicidad Ulan and all RULES OF CIVIL PROCEDURE, IF NOT NULLIFIED BY THIS
persons claiming rights under them to vacate the parcel of land HONORABLE SUPREME COURT.9
situated at National Road, Barangay Lamot 2, Calauan, Laguna,
covered by Transfer Certificate of Title No. T-204409 The petition is meritorious.
containing an area of 11,635 square meters, more or less, and The basic issue in the instant petition is whether or not the RTC
restore the same to the plaintiff-appellant Danilo T. Arrienda. has jurisdiction over Arrienda's appeal of the MTC Decision.
The defendants are likewise ordered to pay plaintiff the sum The Court rules in the affirmative.
of P10,000.00 as attorney's fees and the sum of P500.00 per
month as reasonable rental for the use and occupation of the It bears to reiterate that under Batas Pambansa Bilang. 129
premises beginning January 2001 until the premises are finally (B.P. Blg. 129), as amended by Republic Act No. 7691 (RA
vacated. 7691), RTCs are endowed with original and appellate
SO ORDERED.[[8]] jurisdictions.

In so ruling, the RTC held that since it was established that For purposes of the present petition, Section 19 of B.P. Blg.
Arrienda is the owner of the subject lot, he is, under the law, 129, as amended, provides for the RTCs’ exclusive original
entitled to all the attributes of ownership of the property, jurisdiction in civil cases involving title to or possession of real
including possession thereof. property or any interest therein, pertinent portions of which
read as follows:

Section 19. Jurisdiction in civil cases.– Regional Trial Courts interest therein, there is a need to allege the assessed value of
shall exercise exclusive original jurisdiction: the real property subject of the action, or the interest therein,
x x x x for purposes of determining which court (MeTC/MTC/MCTC or
RTC) has jurisdiction over the action. However, it must be
In all civil actions which involve the title to, or possession of, clarified that this requirement applies only if these courts are
real property, or any interest therein, where the assessed in the exercise of their original jurisdiction.11 In the present
value of the property involved exceeds Twenty thousand pesos case, the RTC was exercising its appellate, not original,
(P20,000.00) or for civil actions in Metro Manila, where such jurisdiction when it took cognizance of Arrienda's appeal and
value exceeds Fifty thousand pesos (P50,000.00), except Section 22 of B.P. Blg. 129 does not provide any amount or
actions for forcible entry into and unlawful detainer of lands or value of the subject property which would limit the RTC's
buildings, original jurisdiction over which is conferred upon exercise of its appellate jurisdiction over cases decided by first
Metropolitan Trial Courts, Municipal Trial Courts, and level courts. Clearly then, in the instant case, contrary to the
Municipal Circuit Trial Courts. ruling of the CA, the assessed value of the disputed lot is
x x x immaterial for purposes of the RTC’s appellate
jurisdiction.12 Indeed, all cases decided by the MTC are
Based on the amendments introduced by RA 7691, real actions generally appealable to the RTC irrespective of the amount
no longer reside under the exclusive original jurisdiction of the involved.13 Hence, the CA erred in nullifying the RTC decision
RTCs. Under the said amendments, Metropolitan Trial Courts for lack of jurisdiction.
(MeTCs), Municipal Trial Courts (MTCs) and Municipal Circuit
Trial Courts (MCTCs) now have jurisdiction over real actions if Finally, in coming up with its Decision, the RTC made an
the assessed value of the property involved does not exceed exhaustive and definitive finding on Arrienda's main cause of
P20,000.00, or in Metro Manila, where such assessed value action. It is within the RTC's competence to make this finding
does not exceed P50,000.00. Otherwise, if the assessed value in the exercise of its appellate jurisdiction, as it would, in the
exceeds P20,000.00 or P50,000.00, as the case may be, exercise of its original jurisdiction.14
jurisdiction is with the RTC.
WHEREFORE, the instant petition is GRANTED. The Decision
On the other hand, the RTCs’ appellate jurisdiction, as and Resolution of the Court of Appeals, dated April 26, 2012
contrasted to its original jurisdiction, is provided in Section 22 and October 30, 2012, respectively, in CA-G.R. SP No. 118687
of B.P. Blg. 129, as amended,thus: are SET ASIDE. The Decision of the Regional Trial Court of
Calamba City, Branch 35, dated April 6, 2010, in Civil Case No.
SECTION 22. Appellate jurisdiction. – Regional Trial Courts 3361-03-C, is REINSTATED.
shall exercise appellate jurisdiction over all cases decided by SO ORDERED.
Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts in their respective territorial
jurisdictions. Such cases shall be decided on the basis of the
entire record of the proceedings had in the court of origin such
memoranda and/or briefs as may be submitted by the parties
or required by the Regional Trial Courts.10 G.R. No. 202664, November 20, 2015
MANUEL LUIS C. GONZALES AND FRANCIS MARTIN D.
From the above-quoted provision, it is clear that the RTC GONZALES, Petitioners, v. GJH LAND, INC. (FORMERLY
exercises appellate jurisdiction over all cases decided by first KNOWN AS S.J. LAND, INC.), CHANG HWAN JANG A.K.A.
level courts in their respective territorial jurisdictions.1âwphi1 STEVE JANG, SANG RAK KIM, MARIECHU N. YAP, AND ATTY.
Thus, in the present case, when the RTC took cognizance of ROBERTO P. MALLARI II, Respondent.
Arrienda's appeal from the adverse decision of the MTC in the
ejectment suit, it (RTC) was unquestionably exercising its D E C I S I O N
appellate jurisdiction as mandated by law. Perforce, its PERLAS-BERNABE, J.:
decision may not be annulled on the basis of lack of jurisdiction
as the RTC has, beyond question, jurisdiction to decide the This is a direct recourse to the Court, via a petition for review
appeal and its decision should be deemed promulgated in the on certiorari,1 from the Orders dated April 17, 20122 and July
exercise of that jurisdiction. 9, 20123 of the Regional Trial Court (RTC) of Muntinlupa City,
Branch 276 (Branch 276) dismissing Civil Case No. 11-077 for
The Court does not agree with the ruling of the CA that the RTC lack of jurisdiction.
lacks jurisdiction over the case on the ground that Arrienda
failed to allege the assessed value of the subject land in his The Facts
Complaint. On August 4, 2011, petitioners Manuel Luis C. Gonzales4 and
Francis Martin D. Gonzales (petitioners) filed a Complaint5 for
It is true that under the prevailing law, as discussed above, in "Injunction with prayer for Issuance of Status Quo Order,
actions involving title to or possession of real property or any Three (3) and Twenty (20)-Day Temporary Restraining Orders,
and Writ of Preliminary Injunction with Damages" against The Issue Before the Court
respondents GJH Land, Inc. (formerly known as S.J. Land, Inc.), The essential issue for the Court's resolution is whether or
Chang Hwan Jang, Sang Rak Kim, Mariechu N. Yap, and Atty. not Branch 276 of the RTC of Muntinlupa City erred in
Roberto P. Mallari II6 (respondents) before the RTC of dismissing the case for lack of jurisdiction over the subject
Muntinlupa City seeking to enjoin the sale of S.J. Land, Inc.'s matter.
shares which they purportedly bought from S.J. Global, Inc. on
February 1, 2010. Essentially, petitioners alleged that the The Court's Ruling
subscriptions for the said shares were already paid by them in The petition is meritorious.
full in the books of S.J. Land, Inc.,7 but were nonetheless
offered for sale on July 29, 2011 to the corporation's At the outset, the Court finds Branch 276 to have correctly
stockholders,8 hence, their plea for injunction. categorized Civil Case No. 11-077 as a commercial case, more
particularly, an intra-corporate dispute,23 considering that it
The case was docketed as Civil Case No. 11-077 and raffled relates to petitioners' averred rights over the shares of stock
to Branch 276, which is not a Special Commercial Court. On offered for sale to other stockholders, having paid the same in
August 9, 2011, said branch issued a temporary restraining full. Applying the relationship test and the nature of the
order,9 and later, in an Order10 dated August 24, 2011, granted controversy test, the suit between the parties is clearly rooted
the application for a writ of preliminary injunction. in the existence of an intra-corporate relationship and pertains
to the enforcement of their correlative rights and obligations
After filing their respective answers11 to the complaint, under the Corporation Code and the internal and intra-
respondents filed a motion to dismiss12 on the ground of lack corporate regulatory rules of the corporation,24 hence, intra-
of jurisdiction over the subject matter, pointing out that the corporate, which should be heard by the designated Special
case involves an intra-corporate dispute and should, thus, be Commercial Court as provided under A.M. No. 03-03-03-
heard by the designated Special Commercial Court of SC25 dated June 17, 2003 in relation to Item 5.2, Section 5 of
Muntinlupa City.13 RA 8799.

The RTC Ruling The present controversy lies, however, in the procedure to be
followed when a commercial case - such as the instant intra-
In an Order14 dated April 17, 2012, Branch 276 granted the corporate dispute -has been properly filed in the official
motion to dismiss filed by respondents. It found that the case station of the designated Special Commercial Court but is,
involves an intra-corporate dispute that is within the original however, later wrongly assigned by raffle to a regular branch
and exclusive jurisdiction of the RTCs designated as Special of that station.
Commercial Courts. It pointed out that the RTC of Muntinlupa
City, Branch 256 (Branch 256) was specifically designated by As a basic premise, let it be emphasized that a court's
the Court as the Special Commercial Court, hence, Branch 276 acquisition of jurisdiction over a particular case's subject
had no jurisdiction over the case and cannot lawfully exercise matter is different from incidents pertaining to the exercise of
jurisdiction on the matter, including the issuance of a Writ of its jurisdiction. Jurisdiction over the subject matter of a case
Preliminary Injunction.15 Accordingly, it dismissed the case. is conferred by law, whereas a court's exercise of jurisdiction,
unless provided by the law itself, is governed by the Rules of
Dissatisfied, petitioners filed a motion for Court or by the orders issued from time to time by the
reconsideration,16 arguing that they filed the case with the Court.26 In Lozada v. Bracewell,27 it was recently held that the
Office of the Clerk of Court of the RTC of Muntinlupa City which matter of whether the RTC resolves an issue in the exercise
assigned the same to Branch 276 by raffle.17 As the raffle was of its general jurisdiction or of its limited jurisdiction as a
beyond their control, they should not be made to suffer the special court is only a matter of procedure and has nothing to
consequences of the wrong assignment of the case, especially do with the question of jurisdiction.
after paying the filing fees in the amount of P235,825.00 that
would be for naught if the dismissal is upheld.18 They further Pertinent to this case is RA 8799 which took effect on August
maintained that the RTC has jurisdiction over intra-corporate 8, 2000. By virtue of said law, jurisdiction over cases
disputes under Republic Act No. (RA) 8799,19 but since the enumerated in Section 528 of Presidential Decree No. 902-
Court selected specific branches to hear and decide such suits, A29 was transferred from the Securities and Exchange
the case must, at most, be transferred or raffled off to the Commission (SEC) to the RTCs, being courts of general
proper branch. jurisdiction. Item 5.2, Section 5 of RA 8799 provides:

In an Order21 dated July 9, 2012, Branch 276 denied the motion SEC. 5. Powers and Functions of the Commission. - x x x
for reconsideration, holding that it has no authority or power x x x x
to order the transfer of the case to the proper Special
Commercial Court, citing Calleja v. Panday22 (Calleja); hence, 5.2 The Commission's jurisdiction over all cases
the present petition. enumerated under Section 5 of Presidential Decree
No. 902-A is hereby transferred to the Courts of
 general jurisdiction or the appropriate Regional Trial
Court: Provided, that the Supreme Court in the x x x. The first major departure is as regards the
exercise of its authority may designate the Regional Securities and Exchange Commission. The Securities
Trial Court branches that shall exercise jurisdiction and Exchange Commission has been authorized
over the cases. The Commission shall retain under this proposal to reorganize itself. As an
jurisdiction over pending cases involving intra- administrative agency, we strengthened it and at the
corporate disputes submitted for final resolution same time we take away the quasi-judicial
which should be resolved within one (1) year from the functions. The quasi-judicial functions are now
enactment of this Code. The Commission shall retain given back to the courts of general jurisdiction - the
jurisdiction over pending suspension of Regional Trial Court, except for two categories of
payments/rehabilitation cases filed as of 30 June cases.
2000 until finally disposed. (Emphasis supplied)
In the case of corporate disputes, only those that are
The legal attribution of Regional Trial Courts as courts of now submitted for final determination of the SEC
general jurisdiction stems from Section 19 (6), Chapter II of will remain with the SEC. So, all those cases, both
Batas Pambansa Bilang (BP) 129,30 known as "The Judiciary memos of the plaintiff and the defendant, that have
Reorganization Act of 1980": been submitted for resolution will continue. At the
same time, cases involving rehabilitation,
Section 19. Jurisdiction in civil cases.- Regional Trial bankruptcy, suspension of payments and
Courts shall exercise exclusive original jurisdiction: receiverships that were filed before June 30, 2000
x x x x will continue with the SEC. in other words, we are
avoiding the possibility, upon approval of this bill, of
(6) In all cases not within the exclusive jurisdiction of people filing cases with the SEC, in manner of
any court, tribunal, person or body exercising speaking, to select their court.35
jurisdiction or any court, tribunal, person or body
exercising judicial or quasi-judicial functions; x x x x x x x x (Emphasis supplied)

Therefore, one must be disabused of the notion that the
As enunciated in Durisol Philippines, Inc. v. CA: transfer of jurisdiction was made only in favor of particular RTC
branches, and not the RTCs in general.
The regional trial court, formerly the court of first
instance, is a court of general jurisdiction. All cases, Consistent with the foregoing, history depicts that when the
the jurisdiction over which is not specifically transfer of SEC cases to the RTCs was first implemented, they
provided for by law to be within the jurisdiction of were transmitted to the Executive Judges of the RTCs for raffle
any other court, fall under the jurisdiction of the between or among its different branches, unless a specific
regional trial court.32ChanRoblesVirtualawlibrary branch has been designated as a Special Commercial Court,
in which instance, the cases were transmitted to said
To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was branch.36 It was only on November 21, 2000 that the Court
intentionally used by the legislature to particularize the fact designated certain RTC branches to try and decide said SEC
that the phrase "the Courts of general jurisdiction" is cases37 without, however, providing for the transfer of the
equivalent to the phrase "the appropriate Regional Trial cases already distributed to or filed with the regular branches
Court." In other words, the jurisdiction of the SEC over the thereof. Thus, on January 23, 2001, the Court issued SC
cases enumerated under Section 5 of PD 902-A was Administrative Circular No. 08-200138 directing the transfer of
transferred to the courts of general jurisdiction, that is to say said cases to the designated courts (commercial SEC courts).
(or, otherwise known as), the proper Regional Trial Courts. This Later, or on June 17, 2003, the Court issued A.M. No. 03-03-
interpretation is supported by San Miguel Corp. v. Municipal 03-SC consolidating the commercial SEC courts and the
Council,33 wherein the Court held that: intellectual property courts39 in one RTC branch in a particular
locality, i.e., the Special Commercial Court, to streamline the
[T]he word "or" may be used as the equivalent of court structure and to promote expediency.40 Accordingly,
"that is to say" and gives that which precedes it the the RTC branch so designated was mandated to try and decide
same significance as that which follows it. It is not SEC cases, as well as those involving violations of intellectual
always disjunctive and is sometimes interpretative or property rights, which were, thereupon, required to be filed in
expository of the preceding word.34cralawlawlibrary the Office of the Clerk of Court in the official station of the
designated Special Commercial Courts, to wit:
Further, as may be gleaned from the following excerpt of the
Congressional deliberations: 1. The Regional Courts previously designated as SEC
Senator [Raul S.] Roco: x x x. Courts through the: (a) Resolutions of this Court
x x x x dated 21 November 2000, 4 July 2001, 12 November
 2002, and 9 July 2002 all issued in A.M. No. 00-11-03- assigned44to the sole Special Commercial Court in the RTC of
SC; (b) Resolution dated 27 August 2001 in A.M. No. Muntinlupa City, which is Branch 256. This error may have
01-5-298-RTC; and (c) Resolution dated 8 July 2002 in been caused by a reliance on the complaint's caption, i.e.,
A.M. No. 01-12-656-RTC are hereby DESIGNATED and "Civil Case for Injunction with prayer for Status Quo Order, TRO
shall be CALLED as Special Commercial Courts to try and Damages,"45 which, however, contradicts and more
and decide cases involving violations of Intellectual importantly, cannot prevail over its actual allegations that
Property Rights which fall within their jurisdiction clearly make out an intra-corporate dispute:
and those cases formerly cognizable by the Securities
and Exchange Commission: 16. To the surprise of MLCG and FMDG, however, in
x x x x two identical letters both dated 13 May 2011, under
the letterhead of GJH Land, Inc., Yap, now acting as its
4. The Special Commercial Courts shall have President, Jang and Kim demanded payment of
jurisdiction over cases arising within their respective supposed unpaid subscriptions of MLCG and FMDG
territorial jurisdiction with respect to the National amounting to P10,899,854.30 and P2,625,249.41,
Capital Judicial Region and within the respective respectively.
provinces with respect to the First to Twelfth Judicial
Regions. Thus, cases shall be filed in the Office of the 16.1 Copies of the letters dated 13 May 2011
Clerk of Court in the official station of the designated are attached hereto and made integral parts
Special Commercial Court;41 hereof as Annexes "J" and "K", repectively.

x x x x (Underscoring supplied) 17. On 29 July 2011, MLCG and FMDG received an
Offer Letter addressed to stockholders of GJH Land,
It is important to mention that the Court's designation of Inc. from Yap informing all stockholders that GJH
Special Commercial Courts was made in line with its Land, Inc. is now offering for sale the unpaid shares of
constitutional authority to supervise the administration of all stock of MLCG and FMDG. The same letter states that
courts as provided under Section 6, Article VIII of the 1987 the offers to purchase these shares will be opened on
Constitution: 10 August 2011 with payments to be arranged by
deposit to the depository bank of GJH Land, Inc.
Section 6. The Supreme Court shall have
administrative supervision over all courts and the 17.1 A copy of the undated Offer Letter is
personnel thereof. attached hereto and made and made an
integral part hereof as Annex "L".
The objective behind the designation of such specialized courts
is to promote expediency and efficiency in the exercise of the 18. The letter of GJH Land, Inc. through Yap, is totally
RTCs' jurisdiction over the cases enumerated under Section 5 without legal and factual basis because as evidenced
of PD 902-A. Such designation has nothing to do with the by the Deeds of Assignment signed and certified by
statutory conferment of jurisdiction to all RTCs under RA 8799 Yap herself, all the S.J. Land, Inc. shares acquired by
since in the first place, the Court cannot enlarge, diminish, or MLCG and FMDG have been fully paid in the books of
dictate when jurisdiction shall be removed, given that the S.J. Land, Inc.
power to define, prescribe, and apportion jurisdiction is, as a
general rule, a matter of legislative prerogative.42 Section 2, 19. With the impending sale of the alleged unpaid
Article VIII of the 1987 Constitution provides: subscriptions on 10 August 2011, there is now a clear
danger that MLCG and FMDG would be deprived of
Section 2. The Congress shall have the power to define, these shares without legal and factual basis.
prescribe, and apportion the jurisdiction of the various courts
but may not deprive the Supreme Court of its jurisdiction over 20. Furthermore, if they are deprived of these shares
cases enumerated in Section 5 hereof. through the scheduled sale, both MLCG and FMDG
x x x x would suffer grave and irreparable damage incapable
of pecuniary estimation.
Here, petitioners filed a commercial case, i.e., an intra-
corporate dispute, with the Office of the Clerk of Court in the 21. For this reason, plaintiffs now come to the
RTC of Muntinlupa City, which is the official station of the Honorable Court for injunctive relief so that after trial
designated Special Commercial Court, in accordance with A.M. on the merits, a permanent injunction should be
No. 03-03-03-SC. It is, therefore, from the time of such filing issued against the defendants preventing them from
that the RTC of Muntinlupa City acquired jurisdiction over the selling the shares of the plaintiffs, there being no
subject matter or the nature of the basis for such sale.46cralawlawlibrary
action.43 Unfortunately, the commercial case was wrongly
raffled to a regular branch, e.g., Branch 276, instead of being According to jurisprudence, "it is not the caption but the
allegations in the complaint or other initiatory pleading which two different RTCs, i.e., the RTC of San Jose, Camarines Sur
give meaning to the pleading and on the basis of which such and the RTC of Naga City, whereas the instant case only
pleading may be legally characterized."47 However, so as to involves one RTC, i.e., the RTC of Muntinlupa City, albeit
avert any future confusion, the Court requires henceforth, that involving two different branches of the same
all initiatory pleadings state the action's nature both in its court, i.e., Branches 256 and 276. Hence, owing to the variance
caption and the body, which parameters are defined in the in the facts attending, it was then improper for the RTC to rely
dispositive portion of this Decision. on the Calleja ruling.

Going back to the case at bar, the Court nonetheless deems Besides, the Court observes that the fine line that distinguishes
that the erroneous raffling to a regular branch instead of to a subject matter jurisdiction and exercise of jurisdiction had
Special Commercial Court is only a matter of procedure - that been clearly blurred in Calleja. Harkening back to the statute
is, an incident related to the exercise of jurisdiction - and, thus, that had conferred subject matter jurisdiction, two things are
should not negate the jurisdiction which the RTC of apparently clear: (a) that the SEC's subject matter
Muntinlupa City had already acquired. In such a scenario, the jurisdiction over intra-corporate cases under Section 5 of
proper course of action was not for the commercial case to be Presidential Decree No. 902-A was transferred to the Courts of
dismissed; instead, Branch 276 should have first referred the general jurisdiction, i.e., the appropriate Regional Trial Courts;
case to the Executive Judge for re-docketing as a commercial and (b) the designated branches of the Regional Trial Court, as
case; thereafter, the Executive Judge should then assign said per the rules promulgated by the Supreme Court,
case to the only designated Special Commercial Court in the shall exercise jurisdiction over such cases. Item 5.2, Section 5
station, i.e., Branch 256. of RA 8799 provides:

Note that the procedure would be different where the RTC SEC. 5. Powers and Functions of the Commission. - xx
acquiring jurisdiction over the case has multiple special x x x x
commercial court branches; in such a scenario, the Executive
Judge, after re-docketing the same as a commercial case, 5.2 The Commission's jurisdiction over all cases
should proceed to order its re-raffling among the said special enumerated under Section 5 of Presidential
branches. Decree No. 902-A is hereby transferred to the
Courts of general jurisdiction or the appropriate
Meanwhile, if the RTC acquiring jurisdiction has no branch Regional Trial Court: Provided, that the
designated as a Special Commercial Court, then it Supreme Court in the exercise of its authority
should refer the case to the nearest RTC with a designated may designate the Regional Trial Court branches
Special Commercial Court branch within the judicial that shall exercise jurisdiction over the cases, x
region.48 Upon referral, the RTC to which the case was referred x x.
to should re-docket the case as a commercial case, and then:
(a) if the said RTC has only one branch designated as a Special In contrast, the appropriate jurisprudential reference to this
Commercial Court, assign the case to the sole special branch; case would be Tan v. Bausch & Lomb, Inc.,50 which involves a
or (b) if the said RTC has multiple branches designated as criminal complaint for violation of intellectual property rights
Special Commercial Courts, raffle off the case among those filed before the RTC of Cebu City but was raffled to a regular
special branches. branch thereof (Branch 21), and not to a Special Commercial
Court. As it turned out, the regular branch subsequently
In all the above-mentioned scenarios, any difference regarding denied the private complainant's motion to transfer the case
the applicable docket fees should be duly accounted for. On to the designated special court of the same RTC, on the ground
the other hand, all docket fees already paid shall be duly of lack of jurisdiction. The CA reversed the regular branch and,
credited, and any excess, refunded. consequently, ordered the transfer of the case to the
designated special court at that time (Branch 9). The Court,
At this juncture, the Court finds it fitting to clarify that the RTC affirming the CA, declared that the RTC had acquired
mistakenly relied on the Calleja case to support its ruling. jurisdiction over the subject matter. In view, however, of the
In Calleja, an intra-corporate dispute49 among officers of a designation of another court as the Special Commercial Court
private corporation with principal address at Goa, Camarines in the interim (Branch 11 of the same Cebu City RTC), the Court
Sur, was filed with the RTC of San Jose, Camarines Sur, Branch accordingly ordered the transfer of the case and the
58 instead of the RTC of Naga City, which is the official station transmittal of the records to said Special Commercial Court
of the designated Special Commercial Court for Camarines Sur. instead.51Similarly, the transfer of the present intra-
Consequently, the Court set aside the RTC of San Jose, corporate dispute from Branch 276 to Branch 256 of the same
Camarines Sur's order to transfer the case to the RTC of Naga RTC of Muntinlupa City, subject to the parameters above-
City and dismissed the complaint considering that it was filed discussed is proper and will further the purposes stated in
before a court which, having no internal branch designated as A.M. No. 03-03-03-SC of attaining a speedy and efficient
a Special Commercial Court, had no jurisdiction over those administration of justice.
kinds of actions, i.e., intra-corporate disputes. Calleja involved
For further guidance, the Court finds it apt to point out that 1. If a commercial case filed before the proper RTC is
the same principles apply to the inverse situation of ordinary wrongly raffled to its regular branch, the proper
civil cases filed before the proper RTCs but wrongly raffled to courses of action are as follows:
its branches designated as Special Commercial Courts. In such
a scenario, the ordinary civil case should then be referred to 1.1 If the RTC has only one branch designated as a Special
the Executive Judge for re-docketing as an ordinary civil case; Commercial Court, then the case shall be referred to
thereafter, the Executive Judge should then order the raffling the Executive Judge for re-docketing as a commercial
of the case to all branches of the same RTC, subject to case, and thereafter, assigned to the sole special
limitations under existing internal rules, and the payment of branch;
the correct docket fees in case of any difference. Unlike the
limited assignment/raffling of a commercial case only to 1.2 If the RTC has multiple branches designated as Special
branches designated as Special Commercial Courts in the Commercial Courts, then the case shall be referred to
scenarios stated above, the re-raffling of an ordinary civil case the Executive Judge for re-docketing as a commercial
in this instance to all courts is permissible due to the fact that case, and thereafter, raffled off among those special
a particular branch which has been designated as a Special branches; and
Commercial Court does not shed the RTC's general jurisdiction
over ordinary civil cases under the imprimatur of statutory
law, i.e., Batas Pambansa Bilang (BP) 129.52 To restate, the 1.3 If the RTC has no internal branch designated as a
designation of Special Commercial Courts was merely intended Special Commercial Court, then the case shall be
as a procedural tool to expedite the resolution of commercial referred to the nearest RTC with a designated Special
cases in line with the court's exercise of jurisdiction. This Commercial Court branch within the judicial region.
designation was not made by statute but only by an internal Upon referral, the RTC to which the case was referred
Supreme Court rule under its authority to promulgate rules to should re- docket the case as a commercial case,
governing matters of procedure and its constitutional and then: (a) if the said RTC has only one branch
mandate to supervise the administration of all courts and the designated as a Special Commercial Court, assign the
personnel thereof.53 Certainly, an internal rule promulgated by case to the sole special branch; or (b) if the said RTC
the Court cannot go beyond the commanding statute. But as a has multiple branches designated as Special
more fundamental reason, the designation of Special Commercial Courts, raffle off the case among those
Commercial Courts is, to stress, merely an incident related to special branches.
the court's exercise of jurisdiction, which, as first discussed, is
distinct from the concept of jurisdiction over the subject 2. If an ordinary civil case filed before the proper RTC is
matter. The RTC's general jurisdiction over ordinary civil cases wrongly raffled to its branch designated as a Special
is therefore not abdicated by an internal rule streamlining Commercial Court, then the case shall be referred to
court procedure. the Executive Judge for re-docketing as an ordinary
civil case. Thereafter, it shall be raffled off to all courts
In fine, Branch 276's dismissal of Civil Case No. 11-077 is set of the same RTC (including its designated special
aside and the transfer of said case to Branch 256, the branches which, by statute, are equally capable of
designated Special Commercial Court of the same RTC of exercising general jurisdiction same as regular
Muntinlupa City, under the parameters above-explained, is branches), as provided for under existing rules.
hereby ordered.
3. All transfer/raffle of cases is subject to the payment
WHEREFORE, the petition is GRANTED. The Orders dated April of the appropriate docket fees in case of any
17, 2012 and July 9, 2012 of the Regional Trial Court (RTC) of difference. On the other hand, all docket fees already
Muntinlupa City, Branch 276 in Civil Case No. 11-077 are paid shall be duly credited, and any excess, refunded.
hereby REVERSED and SET ASIDE. Civil Case No. 11-077
is REFERRED to the Executive Judge of the RTC of Muntinlupa
4. Finally, to avert any future confusion, the Court
City for re-docketing as a commercial case. Thereafter, the requires that all initiatory pleadings state the action's
Executive Judge shall ASSIGN said case to Branch 256, the sole nature both in its caption and body. Otherwise, the
designated Special Commercial Court in the RTC of Muntinlupa
initiatory pleading may, upon motion or by order of
City, which is ORDERED to resolve the case with reasonable
the court motu proprio, be dismissed without
dispatch. In this regard, the Clerk of Court of said RTC
prejudice to its re-filing after due rectification. This
shall DETERMINE the appropriate amount of docket fees and, last procedural rule is prospective in application.
in so doing, ORDER the payment of any difference or, on the

other hand, refund any excess.
5. All existing rules inconsistent with the foregoing are
Furthermore, the Court hereby RESOLVES that henceforth, deemed superseded.
the following guidelines shall be observed: SO ORDERED.

 of the same building. It also prays to hold respondents
G.R. No. 203678 solidarily liable for actual damages, moral damages, exemplary
CONCORDE CONDOMINIUM, INC., by itself and comprising damages, attorney's fees, litigation expenses and costs of suit.
the Unit Owners of Concorde Condominium The case was docketed as Civil Case No. No. 12-309 and raffled
Building, Petitioner, to the Makati RTC, Branch 149, which was designated as a
vs. Special Commercial Court.2
AUGUSTO H. BACULIO; NEW PPI CORPORATION; ASIAN
SECURITY and INVESTIGATION AGENCY and its security On April 24, 2012, the RTC called the case for hearing to
guards; ENGR. NELSON B. MORALES, in his capacity as determine the propriety of issuing a TRO, during which one
Building Official of the Makati City Engineering Department; Mary Jane Prieto testified and identified some documents.
SUPT. RICARDO C. PERDIGON, in his capacity as City Fire While she was undergoing crossexamination by a counsel from
Marshal of the Makati City Fire Station; F/C SUPT. the Office of the Solicitor General (OSG) relative to the fire
SANTIAGO E. LAGUNA, in his capacity as Regionaf Director deficiencies of petitioner's building, the RTC interrupted her
of the Bureau of Fire Protection-NCR, and any and all testimony to find a better solution to the problem, and issued
persons acting with or under them, Respondents. an Order which reads:

D E C I S I O N Wherefore, this court ordered Supt. Ricardo C. Perdigon, Fire
PERALTA, J.: Marshal of Makati City, to conduct an inspection of Concorde
Condominium Building. He is hereby ordered to submit a
This resolves the Petition for Review on Certiorari under Rule report on his investigation not later than 5:00 o'clock in the
45 of the Rules of Court, seeking to reverse and set aside the afternoon tomorrow.
Order dated June 28, 2012 and Resolution dated September
20, 2012 of the Regional Trial Court (RTC) of Makati City, In the same manner, the Building Official of Makati City, being
Branch 149,1 which dismissed Civil Case No. 12-309 for represented by Atty. Fabio is also hereby ordered to conduct
Injunction with Damages for lack of jurisdiction. an investigation on the status of the said building to ascertain
whether it [isl still structurally sound to stand. Such report shall
The antecedent facts are as follows: be submitted to this court not later than 5:00 o'clock in the
afternoon tomorrow.
On April 16, 2012, petitioner Concorde Condominium, Inc., by
itself and comprising the Unit Owners of Concorde If the report of the Building Official is negative, the unit owners
Condominium Building, (petitioner) filed with the Regional of the condominium will be given the opportunity to be heard
Trial Court (RTC) of Makati City a Petition for Injunction [with on whether to condemn the building or not.
Damages with prayer for the issuance of a Temporary
Restraining Order (TRO), Writ of Preliminary (Prohibitory) In the same manner, the alleged owner of the land, who should
Injunction, and Writ of Preliminary Mandatory Injunction] have transferred it to the condominium corporation once the
against respondents New PPI Corporation and its President latter was created, and it appears that it was not complied
Augusto H. Baculio; Asian Security and Investigation Agency with, they are also given the opportunity to get their own
and its security guards, Engr. Nelson B. Morales in his capacity structural engineer to ascertain the structural soundness of
as Building Official of the Makati City Engineering Department; the building. Afterwhich, the court will issue the necessary
Supt. Ricardo C. Perdigon in his capacity as City Fire Marshal of order whether to condemn or not the building and the
the Makati City Fire Station; F/C Supt. Santiago E. Laguna, in President of the condominium corporation has acceded to
his capacity as Regional Director of the Bureau of Fire such undertaking because that's the only way how to give
Protection - NCR, and any and all persons acting with or under them fair play and be heard on their right as condominium
them (respondents). owner of Concorde Building located at 200 Benavidez corner
Salcedo Streets, Legaspi Village, Makati City.
Petitioner seeks (1) to enjoin respondents Baculio and New PPI
Corporation from misrepresenting to the public, as well as to The President of the condominium corporation is hereby
private and government offices/agencies, that they are the given, if there is still a chance to repair, four (4) months from
owners of the disputed lots and Concorde Condominium April 30, 2012 or up to August 30, 2012 to r.emedy all those
Building, and from pushing for the demolition of the building problems and/or deficiencies of the building.
which they do not even own; (2) to prevent respondent Asian
Security and Investigation Agency from deploying its security The other parties are hereby enjoined not to threaten,
guards within the perimeter of the said building; and (3) to interfere or molest the condominium unit owners of said
restrain respondents Engr. Morales, Supt. Perdigon and F/C building. Any other party, including the herein parties, who will
Supt. Laguna from responding to and acting upon the letters obstruct the smooth implementation of this Order, is already
being sent by Baculio, who is a mere impostor and has no legal considered to have committed a direct contempt of the order
personality with regard to matters concerning the revocation of the court.
or building and occupancy permits, and the fire safety issues
Let the continuation of the testimony of Ms. Mary Jane Prieto Branch 149 of the Makati RTC, a designated Special
be set on September 17, 2012 at 8:30 in the morning. Commercial Court tasked to hear intra-corporate disputes.
SO ORDERED.3
Petitioner notes that R.A. 8799 merely transferred the
Meanwhile, respondents Bactllio and New PPI Corporation Securities and Exchange Commission's jurisdiction over cases
filed an Urgent Motion to Re-Raffle dated April 25, 2012, enumerated under Section 5 of P.D. No. 902-A to the courts of
claiming that it is a regular court, not a Special Commercial general jurisdiction or the appropriate Regional Trial Court,
Court, which has jurisdiction over the case. and that there is nothing in R.A. 8799 or in A.M. No. 00-11-03-
SC which would limit or diminish the jurisdiction of those RTCs
In an Order dated April 26, 2012, the RTC denied the motion to designated as Special Commercial Comis. Petitioner stresses
rcraffle on the ground of failure to comply with Sections 44 and that such courts shall continue to participate in the raffle of
55 of Rule 15 of the Rules of Court. other cases, pursuant to OCA Circular No. 82-2003 on
Consolidation of Intellectual Property Courts with Commercial
In their Motion to Vacate Order and Motion to Dismiss dated Court. It insists that for purposes of determining the
May 8, 2012, respondents Baculio and New PPI Corporation jurisdiction of the RTC, the different branches thereof (in case
assailed the RTC Order dated April 24, 2012, stating that the of a multiple sala court) should not be taken as a separate or
case is beyond its jurisdiction as a Special Commercial Court. compartmentalized unit. It, thus, concludes that the
Respondents claimed that the petition seeks to restrain or designation by the Supreme Court of Branch 149 as a Special
compel certain individuals and government officials to stop Commercial Court did not divest it of its power as a court of
doing or performing patiicular acts, and that there is no general jurisdiction.
showing that the case involves a matter embraced in Section 5
of Presidential Decree (P.D.) No. 902-A, which enumerates the Petitioner also submits that prior to the issuance of the Order
cases over which the SEC [now the RTC acting as Special setting the case for hearing on April 24, 2012, the Presiding
Commercial Court pursuant to Republic Act (R.A.) No. Judge of Branch 149 had already determined from the
8799] exercises exclusive jurisdiction. They added that averments in the petition that it is an ordinary civil action and
petitioner failed to exhaust administrative remedies, which is not an intra-corporate matter; thus, he should have referred it
a condition precedent before filing the said petition. back to the Executive Judge or the Office of the Clerk of Court
for re-raffle to other branches of the RTC, instead of
In an Order dated June 28, 2012, the RTC dismissed the case calendaring it for hearing or dismissing it.
for lack of jurisdiction. It noted that by petitioner's own
allegations and admissions, respondents Bactllio and New PPI For public respondents Superintendent Ricardo C. Pedrigon
Corporation are not owners of the two subject lots and the and Fire Chief Superintendent Santiago E. Laguna, the OSG
building. Due to the absence of intra-corporate relations avers that the petition for review on certiorari should be
between the parties, it ruled that the case docs not involve an denied for lack of merit. It points out that petitioner failed to
intra-corporate controversy cognizable by it sitting as a Special exhaust administrative remedies, i.e., appeal the revocation of
Commercial Court. It also held that there is no more necessity the building and occupancy permits with the Department of
to discuss the other issues raised in the motion to dismiss, as Public Works and Highways (DPWfI) Secretary, pursuant to
well as the motion to vacate order, for lack or jurisdiction over Section 307 of the National Building Code (Presidential Decree
the case. No. 1096); hence, the filing of a petition for injunction with
damages is premature and immediately dismissible for lack of
Petitioner filed a motion for reconsideration of the Order cause of action.
dated June 28, 2012, which the RTC denied for lack of
merit.6 Hence, this petition for review on certiorari. The OSG further argues that even if the case is remanded back
Petitioner raises a sole question of law in support of its to the RTC, the same will not prosper due to procedural and
petition: substantive defects, and will only further clog the trial court's
dockets, for the following reasons: (1) petitioner failed to imp
A. lead an indispensable party, namely, the DPWH Secretary to
THE REGIONAL TRIAL COURT COMMITTED A MANIFEST ERROR whom the power to reinstate the building permit and the
OF LAW AND ACTED IN A MANNER CONTRARY TO LAW AND occupancy permit is lodged; (2) with regard to the occupancy
ESTABLISHED JURISPRUDENCE IN DISMISSING THE PETITION permit and the "water sprinkler" clearance, they cannot be
ON THE GROUND OF LACK OF JURISDICTION.7 issued without a building permit; and (3) the said clearance
cannot also be issued due to lack of certification from either
Petitioner contends that its petition for injunction with the Building Official or Tandem, the structural engineers
damages is an ordinary civil case correctly filed with the RTC personally hired by petition, that the structural integrity of
which has jurisdiction over actions where the subject matter is Concorde Condominium Building can withstand the necessary
incapable of pecuniary estimation. However, petitioner claims damage and load that would be caused by the installation of
that through no fault on its part, the petition was raffled to the water sprinkler system.

For their part, respondents Baculio and New PPI Corporation Pambansa Blg. 129, otherwise known as the Judiciary
aver that the petition filed before the RTC should be dismissed Reorganization Act of 1980, as amended by R.A. 7691:9
for lack of proper verification. They likewise assert that Branch
149 has no jurisdiction over the same petition because (l) such Sec. 19 . .Jurisdiction in civil cases. Regional Trial Courts shall
case is not an intra-corporate controversy; (2) petitioner failed exercise exclusive original jurisdiction:
to exhaust administrative remedies which is a condition
precedent before filing such case; (3) the subject building is a (1) In all civil actions in which the subject of the litigations is
threat to the safety of members of petitioner themselves and incapable of pecuniary estimation;
of the public in general; (4) the two lots allegedly owned by x x x x
petitioner are both registered in the name of New PPI
Corporation; and (5) the engineering firm hired by petitioner (6) In all cases not within the exclusive jurisdiction of any court,
could not even guarantee the building's structural capacity. tribunal, person or body exercising x x x judicial or quasi-
judicial functions;
Meanwhile, respondent Asian Security & Investigation Agency x x x x
claims that petitioner's allegations against it are already moot
and academic because it had already terminated its security (8) In all other cases in which the demand, exclusive of interest,
contract with respondents New PPI Corporation and Baculio, damages of whatever kind, attorney's fees, litigation expenses,
and pulled out its guards from petitioner's premises. At any and costs or the value of the property in controversy exceeds
rate, it manifests that it is adopting as part of its Comment the Three hundred thousand pesos (P300,000.00) or, in such other
said respondents' Comment/Opposition to the petition for cases in Metro Manila, where the demand exclusive of the
review on certiorari. above-mentioned items exceeds Four hundred thousand
pesos (P400,000.00).
Respondent Office of the Building Official of Makati City,
represented by Engineer Mario V. Badillo, likewise contends Meanwhile, Section 6 (a) of P.D. No. 902-A empowered the SEC
that the petition for review on certiorari should be dismissed to issue preliminary or permanent injunctions, whether
for these reasons: (1) that petitioner failed to exhaust prohibitory or mandatory, in all cases in which it exercises
administrative remedies which is a mandatory requirement original and exclusive jurisdiction,10 to wit :
before filing the case with the RTC of Makati City; (2) that
Branch l 49, as a Special Commercial Court, has jurisdiction (a) Devices or schemes employed by or any acts, of the
over the said case because it is not an intra-corporate board of directors, business associates, its officers or
controversy; and (3) petitioner's building is old and partnership, amounting to fraud and
dilapidated, and ocular inspections conducted show that misrepresentation which may be detrimental to the
several violations of the National Building Code were not interest of the public and/or of the stockholder,
corrected, despite several demands and extensions made by partners, members of associations or organizations
the Building Official. registered with the Commission;

The petition is impressed with merit. (b) Controversies arising out of intra-corporate or
partnership relations, between and among
In resolving the issue of whether Branch 149 of the Makati RTC, stockholders, members or associates; between any or
a designated Special Commercial Court, erred in dismissing the all of them and the corporation, partnership or
petition for injunction with damages for lack of jurisdiction association of which they are stockholders, members
over the subject matter, the CoUii is guided by the rule "that or associates, respectively; and between such
jurisdiction over the subject matter of a case is conferred by corporation, partnership or association and the state
law and determined by the allegations in the complaint which insofar as it concerns their individual franchise or
comprise a concise statement of the ultimate facts constituting right to exist as such entity; and
the plaintiff's cause of action. The nature of an action, as well
as which court or body has jurisdiction over it, is determined (c) Controversies in the election or appointments of
based on the allegations contained in the complaint of the directors, trustees, officers or managers of such
plaintiff, irrespective of whether or not the plaintiff is entitled corporations, partnerships or associations.11
to recover upon all or some of the claims asserted therein. The
averments in the complaint and the character of the relief However, jurisdiction of the SEC over intra-corporate cases
sought are the ones to be consulted. Once vested by the was transferred to Courts of general jurisdiction or the
allegations in the complaint, jurisdiction also remains vested appropriate Regional Trial Court when R.A. No. 8799 took
irrespective of whether or not the plaintiff is entitled to effect on August 8, 2000. Section 5.2 of R.A. No. 8799 provides:
recover upon all or some of the claims asserted therein."8 SEC. 5.2 The Commission's jurisdiction over all cases
enumerated under Section 5 of Presidential Decree No. 902-A
As a rule, actions for injunction and damages lie within the is hereby transferred to the Courts of general jurisdiction or
jurisdiction of the RTC, pursuant to Section 19 of Batas the appropriate Regional Trial Court: Provided, that the
Supreme Court in the exercise of its authority may designate court is only a matter of procedure and has nothing to do
the Regional Trial Court branches that shall exercise with the question of jurisdiction.
jurisdiction over these cases. The Commission shall retain
jurisdiction over pending cases involving intra-corporate Pertinent to this case is RA 8799 which took effect on August
disputes submitted for final resolution which should be 8, 2000. By virtue of said Jaw, jurisdiction over cases
resolved within one (1) year from the enactment of this Code. enumerated in Section 5 of Presidential Decree No. 902-A was
The Commission shall retain jurisdiction over pending transferred from the Securities and Exchange Commission
suspension of payments/rehabilitation cases filed as of 30 June (SEC) to the RTCs, being courts of general jurisdiction. Item
2000 until rinally disposed. 5.2, Section 5 of RA 8799 provides:

In GD Express rVorldwide N. V, et al. v. Court of Appeals SEC. 5. Powers and Functions <~lthe Commission. -
(4th Div.) et al.,12 the Comi stressed that Special Commercial x x x x
Courts are still considered courts of general jurisdiction which
have the power to hear and decide cases of all nature, whether 5.2 The Commission's jurisdiction over all cases
civil, criminal or special proceedings, thus: enumerated under Section 5 of Presidential Decree
No. 902-A is hereby transferred to the Courts of
x x x Section 5.2 of R.A. No. 8799 directs merely the Supreme general jurisdiction or the appropriate Regional Trial
Court's designation of RTC branches that shall exercise Court: Provided, that the Supreme Court in the
jurisdiction over intra-corporate disputes. Nothing in the exercise of its authority may designate the Regional
language of the law suggests the diminution of jurisdiction of Trial Court branches that shall exercise ,jurisdiction
those R TCs to be designated as SCCs. The assignment of intra- over the cases. The Commission shall retain
corporate disputes to secs is only for the purpose of jurisdiction over pending cases involving intra-
streamlining the workload of the R TCs so that certain corporate disputes submitted for final resolution
branches thereof like the secs can focus only on a particular which should be resolved within one (1) year from the
subject matter. enactment of this code. The Commission shall retain
jurisdiction over pending suspension of
The designation of certain RTC branches to handle specific payment/rehabilitation cases filed as of 30 June 2000
cases is nothing new. For instance, pursuant to the provisions until finally disposed. (Emphasis supplied)
of R.A. No. 6657 or the Comprehensive Agrarian Reform Law,
the Supreme Court has assigned certain RTC branches to hear The legal attribution of Regional Trial Court as courts of
and decide cases under Sections 56 and 57 of R.A. No. 6657. general Jurisdiction sterns from Section 19 (6) Chapter II or
The RTC exercising jurisdiction over an intra-corporate dispute Batas Pambansa Bilang (BP) 129, known as "The Judiciary
can be likened to an RTC exercising its probate jurisdiction or Reorganization Act of 1980:"
sitting as a special agrarian court. The designation of the SCCs
as such has not in any way limited their jurisdiction to hear and Section 19. Jurisdiction in civil cases. ~ Regional Trial Courts
decide cases of all nature, whether civil, criminal or special shall exercise exclusive original jurisdiction:
proceedings.13 x x x x

In Manuel Luis C. Gonzales and Francis Alfartin D. Gonzales v. (6) In all cases not within the exclusive jurisdiction of any court,
GJH Land, Inc. (formerly known as SJ Land Inc.), Chang Hwan tribunal, person or body exercising judicial or quasijudicial
Jang a.k.a. Steve Jang, Sang Rak Kim, Mariechu N. Yap and functions: ....
Atty. Roberto P. Mallari II,14 the Court en bane, voting 12-1, 15
explained why transfer of jurisdiction over cases enumerated As enunciated in Durisol Philippines, Inc. v. CA:
in Section 5 of P.D. 902-A was made to the RTCs in general, and
not only in favor of particular RTC branches (Special The regional trial court, formerly the court of first instance, is
Commercial Courts), to wit: a court of general jurisdiction. All cases, the jurisdiction over
which is not specifically provided for by law to be within the
As a basic premise, let it be emphasized that a court's jurisdiction of any other court, fall under the jurisdiction of the
acquisition of jurisdiction over a particular case's subject regional trial court.
matter is different from incidents pertaining to the exercise of
its jurisdiction. Jurisdiction over the subject matter of a case To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was
is conferred by law, whereas a court's exercise of jurisdiction, intentionally used by the legislature to particularize the fact
unless provided by the law itself is governed by the Rules of that the phrase "the Courts of general jurisdiction" is
Court or by the orders issued from time to time by the Court. equivalent to the phrase "the appropriate Regional Trial
In Lozada v. Bracewell, it was recently held that the matter of Court." In other words, the jurisdiction of the SEC over the
whether the RTC resolves an issue in the exercise of its cases enumerated under Section 5 PD 902-A was transferred
general jurisdiction or of its limited jurisdiction as a special to the courts of general jurisdiction, that is to say (or,
otherwise known as), the proper Regional Trial Courts. This
interpretation is supported by San Miguel Corp. v. Municipal Inc. (now, allegedly [as claimed by respondent
Council, wherein the Court held that: Baculio], the "New PPI Corp.").

[T]he word "or" may be used as the equivalent of "that is to 8.1 Petitioner's ownership of both the two (2) lots and
say" and gives that which precedes it the same significance as the building (except only the units specifically owned
that which follows it. It is not always disjunctive and is by unit owners) is undisputable, as can be clearly
sometimes interpretative or expository of the preceding word. gleaned in the following provisions of the Master
Further, as may be gleaned from the following excerpt of the Deed with Declaration of Restrictions ("Master
Congressional deliberations: Deed"), as well as the Amended By-laws of petitioner
Concorde Condominium, Inc.
Senator [Raul S.] Roco: x x x x

x x x x The first major departure is as regards the Securities and 8.4 At any rate, considering that the condominium
Exchange Commission. The Securities and Exchange corporation (herein petitioner) had already been
Commission has been authorized under this proposal to established or incorporated many years ago, and that
reorganize itself. As an administrative agency, we the Developer (or any subsequent transferor) had
strengthened it and at the same time we take away the quasi- already sold the units in the building to the present
judicial functions. The quasi-judicial functions are not given unit owners/members, it therefore follows that
back to the court of general jurisdiction – The Regional Trial Developer had thereby lost its beneficial ownership
Court, except for two categories of cases. over Lots 1 and 2 in favor of herein petitioner.

In the case of corporate disputes, only those that are now 9. Unfortunately, PPI, as developer and engaging in
submitted for final determination of the SEC will remain with unsound real estate business practice, altered the
the SEC. So, all those cases, both memos of the plaintiff and condominium plan to segregate a lot (Lot 2) from the
the defendant, that have been submitted for resolution will common areas and fraudulently cause the issuance
continue. At the same time cases involving rehabilitation, of a separate title thereof in the name of PPI.
bankruptcy, suspension of payments and receiverships that
were filed before June 30, 2000 will continue with the SEC. In 10. CCI has questioned said fraudulent act of PPI in
other words, we are avoiding the possibility, upon approval of Housing and Land Use Regulatory Board (HLURB)
this bill, of people filing cases with the SEC, in manner of Case No. REM-050500-10982 entitled "Concorde
speaking, to select their court. Condominium, [ncorporated vs. Pulp and Paper, Inc.
x x x (Emphasis supplied) ct al." The same case was elevated on appeal to the
HLURB Board of Commissioners in a case entitled
Therefore, one must be disabused of the notion that the "Concorde Condominium, Incorporated, complainant
transfer of jurisdiction was made only in favor of particular RTC vs. Pulp and Paper, Inc., ct al., respondents, vs.
branches, and not the RTCs in general. Landmark Philippines Incorporated, et al.,
Intervenors." In both cases, the HLURB ruled in favor
Having clearly settled that as courts of general jurisdiction, the of CCI.
designated Special Commercial Courts and the regular RTCs
are both conferred by law the power to hear and decide civil 11. PPI did not anymore appeal the aforementioned
cases in which the subject of the litigation is incapable of decision of the HLURB Board of Commissioners to the
pecuniary estimation, such as an action for injunction, the Office of the President, hence. the decision as against
Court will now examine the material allegations in the petition PPI is already final and executory.
for injunction with damages, in order to determine whether x x x x
Branch 149 of the Makati RTC has jurisdiction over the subject
matter of the case. 12. Although HLURB has already decided that CCI or all
the unit owners have vested rights over the subject
In its petition for injunction with damages, Concorde lots, recent events have compelled petitioner to
Condominium, Inc. (CCI), by itself and comprising the unit urgently seek from this Honorable Court the reliefs
owners of Concorde Condominium Building, alleged that: prayed for in the instant case, such as the immediate
issuance of a temporary restraining order (TRO)
8. CCI is the duly constituted Corporation or and/or writ of preliminary injunction against
Association which owns the common areas in the respondents.
project that comprises: (a) Lot 1 where the x x x x
condominium stands and Lot 2 which serves as the
parking lot for the benefit of the unit owners; and (b) 14. At present, a certain Augusto H. Baculio (respondent
Concorde Condominium Building ("the building") herein}, by himself and on behalf of New PPI Corp.,
that was developed by Pulp and Paper Distributors, deliberately, actively and with patent bad faith
misrepresents and misleads the public and certain occupancy permits even if the period of sixty (60)
government offices/agencies that the lot where the building days to comply has not yet lapsed.
stands and the lot which serves as parking area arc owned by x x x x
New PPI Corp.
x x x x 16. Moreover, sometime in November 2011, petitioner and
its unit owners noted that security guards from Asian Security
14.1 In a letter dated 31 January 2011, respondent and Investigation Agency have stationed themselves on
Augusto Baculio, on behalf of New PPI Corp., rotation basis 7 days a week/24 hours a day, within the
representing themselves as owners of the above- perimeter of the building. Upon inquiry of one of the
mentioned lots, requested from the Makati Fire administration personnel, it was discovered that they were
Station that the building be subjected to ocular hired by respondent August H. Baculio/New PPl Corp.
inspection, x x x. x x x x
x x x x
16.5 The presence of respondent security agency and
14.3 On 12 August 2011, respondent Augusto H. its security guards within the perimeter of the
Baculio, with the same misrepresentation, sent building poses threat to and sows serious fear and
another letter to respondent Supt. Ricardo C. anxiety to the unit owners. Thus, they should be
Perdigon, City Fire Marshal of Makati requesting for ordered to leave the premises.
verification or inspection of Concorde, x x x
x x x x 17. Respondent Baculio and New PPI Corp.'s misleading,
false, baseless and unauthorized acts of claiming ownership
14.4 Worth noting in the aforementioned letter of over the subject lots and building arc clear violation of the
respondent Baculio dated 12 August 2011 x x x is that, rights of petitioner and its unit owners to maintain their
not only did he misrepresent that he or New PPI Corp. undisturbed ownership, possession and peaceful enjoyment
owns the two lots, but he likewise openly of their property. Hence, should be immediately estopped,
misrepresented that he owns the building, x x x and restrained and permanently en.joined.
even requested "xxx to address its 'demolition' as the
Concorde is already 40 years old." 18. Moreover, respondents Baculio and New PPI Corp., by
x x x x deceit and misrepresentation, are surreptitiously attempting
to dispossess petitioner of Concorde building to the extent of
14.7 In a letter dated 07 September 2011, respondent using the instrumentality of the government to achieve this
Supt. Ricardo C. Perdigon forwarded or elevated to purpose.
respondent F/C Supt. Santiago E. Laguna, Regional
Director of the Bureau of Fire Protection – NCR the 19. Worse, respondent Baculio and New PPI Corp. by writing
matter about Concorde Condominium Building. letters to Makati City Engineering Department, are pushing for
x x x x the demolition of the building which they do not even own.

14.8 On 21 October 2011, CCI sent a letter to 20. Surprisingly, respondent Engr. Nelson B. Morales has
respondent F/C Supt. Santiago E. Laguna, informing been responding to and acting upon the above-mentioned
the latter of the misrepresentations of respondents letters being sent by respondent Baculio despite the latter
Augusto Baculio and New PPI Corp. being a mere impostor and has no legal personality
x x x x whatsoever with regard to the matters concerning the lots
and Concorde Condominium Building.
14.9 The misrepresentation of respondents Baculio x x x x
and New PPJ Corp. did not stop there. On 17
November 2011, Mr. Baculio requested from Meralco 20.9 It is therefore necessary that respondent Engr.
for the cutting off of electricity in Concorde Nelson Morales be enjoined frorr1 entertaining and
Condominium Building, apparently with the acting upon the letters of respondent Baculio.
misrepresentation that he owns the building.
x x x x 20.10 Respondent En gr. Morales should he
immediately restrained from implementing the
14.14 Moreover, on 7 March 2012, one of the unit revocation of petitioner's building and occupancy
owners in the building, Sister Lioba Tiamson, OSB, permit.
sought the assistance and intervention of Honorable
Mayor Jejomar Erwin S. Binay, Jr. when Concorde 20.11 Respondent Engr. Morales should also be
received a letter dated 17 February 2012 from immediately restrained from ordering the possible
respondent Engr. Nelson B. Morales informing demolition of the building, as the building is
Concorde of the revocation of the building and
 structurally sound and stable, and docs not pose any of building and occupancy permits, and the fire safety issues of
safety risks to occupants and passers-by. the same building.
x x x x
Applying the relationship test18and the nature of the
21. Respondents Supt. Ricardo C. Perdigon and F/C Supt. controversy test19in determining whether a dispute constitutes
Santiago E. Laguna have likewise been responding to and an intra-corporate controversy, as enunciated in Medical Plaza
acting upon the above-mentioned letters being sent by Makati Condominium Corporation v. Cullen,20the Court agrees
respondent Baculio despite the latter being a mere impostor with Branch 149 that Civil Case No. 12-309 for injunction with
and has no legal personality whatsoever with regard to damages is an ordinary civil case, and not an intra-corporate
matters concerning the building. controversy.

22. Moreover, respondents Supt. Ricardo C. Pcnligon and F/C A careful review of the allegations in the petition for injunction
Supt. Santiago E. Laguna unjustifiably refused, and with damages indicates no intra-corporate relations exists
continuously refuses to issue the necessary permit for the between the opposing parties, namely (1) petitioner
contractor xxx engaged by petitioner to be able to commence condominium corporation, by itself and comprising all its unit
with the installation of a fire sprinkler system and to correct owners, on the one hand, and (2) respondent New PPI
other fire safety deficiencies in the building. Corporation which BaCLllio claims to be the owner of the
subject properties, together with the respondents Building
22. l Thus, it is certainly ironic that the Bureau of Fire Official and City Fire Marshal of Makati City, the Regional
Protection headed by said respondents x x x issued compliance Director of the Bureau of Fire Protection, and the private
order on petitioner to correct fire safety deficiencies, and yet, security agency, on the other hand. Moreover, the petition
they refused to issue the necessary work permit to the deals with the conflicting claims of ownership over the lots
contractor hired by petitioner. where Concorde Condominium Building stands and the
parking lot for unit owners, which were developed by Pulp and
22.2 Hence, respondents Supt. Perdigon and F/C Paper Distributors, Inc. (now claimed by respondent Baculio as
Supt. Laguna should be directed to issue the the New PPI Corporation), as well as the purported violations
necessary permit to the contractor engaged by of the National Building Code which resulted in the revocation
petitioner.16 or the building and occupancy permits by the Building Official
of Makati City. Clearly, as the suit between petitioner and
The concept of an action for injunction, as an ordinary civil respondents neither arises from an intra-corporate
action, was discussed in BPI v. Hong, et al.7as follows: relationship nor does it pertain to the enforcement of their
correlative rights and obligations under the Corporation Code,
An action for injunction is a suit which has for its purpose the and the internal and intra-corporate regulatory rules of the
enjoinment of the defendant, perpetually or for a particular corporation, Branch 149 correctly found that the subject
time, from the commission or continuance of a specific act, or matter of the petition is in the nature or an ordinary civil
his compulsion to continue performance of a particular act. It action.
has an independent existence, and is distinct from the ancillary
remedy of preliminary injunction which cannot exist except The Court is mindful of the recent guideline laid down in the
only as a part or an incident of an independent action or recent case of Manuel Luis C. Gonzales and Francis Martin D.
proceeding. In an action for injunction, the auxiliary remedy of Gonzales v. GJH Land, Inc. (formerly known as SJ land Inc.),
preliminary iajunction, prohibitory or mandatory, may issue. Chang flwan Jang a.k.a. Steve Jang, Sang Rak Kim, Mariechu N
Yap and Atty. Roberto P. Mallari II,21 to wit:
There is no doubt that the petition filed before the RTC is an
action for injunction, as can be gleaned from the allegations For further guidance, the Court finds it apt to point
made and reliefs sought by petitioner, namely: (1) to enjoin out that the same principles apply to the inverse
respondents Baculio and New PPI Corporation from situation of ordinary civil cases filed before the proper
misrepresenting to the public, as well as to private and RTCs but wrongly rafiled to its branches designated as
government offices/agencies, that they are the owners of the Special Commercial Courts. In such a scenario, the
disputed lots and Concorde Condominium Building, and from ordinary civil case should then be referred to the
pushing for the demolition of the building which they do not Executive Judge for re-docketing as an ordinary civil
even own; (2) to prevent respondent Asian Security and case; thereafter, the Executive Judge should then
Investigation Agency from deploying its security guards within order the raffling of the case to all branches of the
the perimeter of the said building; and (3) to restrain same RTC, subject to limitations under existing
respondents Engr. Morales, Supt. Perdigon and F/C Supt. internal rules, and the payment of the correct docket
Laguna from responding to and acting upon the letters being fees in case of any difference. Unlike the limited
sent by Bactllio, who is a mere impostor and has no legal assignment/raffling of a commercial case only to
personality with regard to matters concerning the revocation branches designated as Special Commercial Courts in
the scenarios stated above, the re-raffling of an
 ordinary civil case in this instance to all courts is further ORDERED to resolve the case with reasonable
permissible due to the fact that a particular branch dispatch.
which has been designated as a Special Commercial This Decision is immediately executory.
Court does not shed the RTC's general jurisdiction SO ORDERED.
over ordinary civil cases under the imprimatur of
statutory law, i.e., Batas Pambansa Bilang (BP 129).
To restate, the designation of Special Commercial
Court was merely intended as a procedural tool to
expedite the resolution of commercial cases in line G.R. No. 199601, November 23, 2015
with the court's exercise of jurisdiction. This PHILIPPINE COMMERCIAL INTERNATIONAL BANK (NOW
designation was not made by statute but only by an BDO UNIBANK, INC., Petitioner, v. JOSEPHINE D.
internal Supreme Court rule under its authority to GOMEZ, Respondent.
promulgate rules governing matters of procedure and
its constitutional mandate to supervise the D E C I S I O N
administration of all courts and the personnel thereof BRION, J.:
Certainly, an internal rule promulgated by the Court
cannot go beyond the commanding statute. But as a We resolve the petition for review on certiorari under Rule 45
more fundamental reason, the designation of Special of the Rules of Court1 filed by Philippine Commercial
Commercial Courts is, to stress, merely an incident International Bank (PCIB) assailing the May 23, 2011
related to the court's exercise of jurisdiction, which, decision2 and the December 7, 2011 resolution3 of the Court of
as first discussed, is distinct from the concept of Appeals (CA) in CA-G.R. CV No. 68288. The CA affirmed the
jurisdiction over the subject matter. The RTC's May 25, 1999 decision of the Regional Trial Court of Makati
general jurisdiction over ordinary civil cases is City, Branch 145 (RTC) in toto.
therefore not abdicated by an internal rule
streamlining court procedure.22 FACTUAL ANTECEDENTS

It is apt to note, however, that the foregoing guideline applies Josephine D. Gomez (Josephine) was a teller at the Domestic
only in a situation where the ordinary civil case filed before the Airport Branch of the PCIB when a certain Colin R. Harrington
proper RTCs was "wrongly raffled" to its branches designated opened Savings Account No. 373-28010-6 with said branch in
as Special Commercial Courts, which situation does not obtain January 1985.
in this case. Here, no clear and convincing evidence is shown
to overturn the legal presumption that official duty has been The following day, Harrington presented two (2) genuine bank
regularly performed when the Clerk of Court of the Makati RTC drafts dated January 3, 1985, issued by the Bank of New
docketed the petition for injunction with damages as an Zealand. The first draft was in the sum of US$724.57 payable
ordinary civil case - not as a commercial case - and, to "C.R. Harrington," while the second draft was in the sum of
consequently, raffled it among all branches of the same RTC, US$2,004.76 payable to "Servants C/C.R. Harrington."
and eventually assigned it to Branch 149. To recall, the
designation of the said branch as a Special Commercial Court The PCIB, on the other hand, alleged that it was a certain
by no means diminished its power as a court of general Sophia La'O, as a representative of Harrington, who presented
jurisdiction to hear and decide cases of all nature, whether the bank drafts for deposit.
civil, criminal or special proceedings. There is no question,
therefore, that the Makati RTC, Branch 149 erred in dismissing Upon receipt of the bank drafts, Josephine asked her
the petition for injunction with damages, which is clearly an immediate supervisor, Eleanor Flores, whether the drafts
ordinary civil case. As a court of general jurisdiction, it still has payable to "Servants C/C.R. Harrington" were acceptable for
jurisdiction over the subject matter thereof. deposit to the savings account of Harrington. When Flores
answered in the affirmative, and after receiving from the
In view of the above discussion, the Court finds no necessity to bank's foreign exchange supervision a Philippine Currency
delve into the other contentions raised by the parties, as they conversion of the amounts reflected in the drafts, Josephine
should be properly addressed by the Makati RTC, Branch 149 received the deposit slip. Thereafter, the deposits were duly
which has jurisdiction over the subject matter of the petition entered in Harrington's savings account.
for injunction with damages.
On two (2) separate dates, a certain individual representing
WHEREFORE, the petition for review himself as Harrington withdrew the sums of P45,000.00 and
on certiorari is GRANTED. The Order dated June 28, 2012 and P5,600.00. Subsequently, the bank discovered that the person
Resolution dated September 20, 2012 issued by the Regional who made the withdrawals was an impostor. Thus, the bank
Trial Court ofMakati City, Branch 149, in Civil Case No. 12-309, had to pay Harrington P50,600.00 representing the amounts
are hereby REVERSED and SET ASIDE. Civil Case No. l 2-309 of the bank drafts in his name.
is REINSTATED in the docket of the same branch which is
The PCIB issued a memorandum asking Josephine to explain On appeal, the PCIB argued that the RTC had no jurisdiction
why no disciplinary action should be taken against her for over the case because it was a labor dispute, which the labor
having accepted the bank drafts for deposits. Josephine tribunals are more competent to resolve. It also maintained
reasoned that being a new teller she was not yet fully oriented that there was no factual or legal basis for the RTC to make it
with the various aspects of the job. She further alleged that she liable for damages and to pay Josephine.
had asked the approval of her immediate supervisor prior to
receiving the deposits. In its May 23, 2011 decision, the CA affirmed the May 25, 1999
RTC decision. It held that the PCIB was estopped from
On November 14, 1985, the PCIB deducted the amount of P- questioning the jurisdiction of the RTC because it had filed an
423.38 from Josephine's salary. Josephine wrote the PCIB to answer with counterclaims and even initiated a separate case
ask why the deduction was made. before a different branch of the RTC. It upheld the RTC's
findings and conclusion in awarding damages and attorney's
After due investigation on the matter, the PCIB issued another fees to Josephine because there was no reason to disturb
memorandum finding Josephine grossly negligent and liable them.
for performing acts in violation of established operating
procedures. The memorandum required Josephine to pay the The CA, subsequently, denied the PCIB's motion for
amount of P-50,600.00 through deductions in her salary, reconsideration on December 7, 2011; hence, the PCIB filed
allowance, bonuses, and profit sharing until the amount is fully the present petition.
paid.
First, the PCIB contends that the CA gravely erred in ruling that
Josephine wrote the PCIB to ask for the basis of its findings that its actions were in total and wanton disregard of Articles 19
she was grossly negligent and liable to pay the amount of and 21 of the Civil Code because the courts a quo summarily
P50,600.00. During trial, the RTC found that the PCIB did not imputed bad faith on how it had treated Josephine.
even respond to this letter. PCIB, however, alleged that it had
replied to Josephine's letter, and explained that she was Second, the PCIB maintains that the CA gravely erred in
afforded due process and the deductions made prior to awarding moral damages and attorney's fees to Josephine
January 15, 1986, were merely a withholding pending the absent any basis for it while averring that bad faith cannot be
investigation. presumed and that Josephine had failed to prove it with clear
and convincing evidence.
The PCIB also admitted that as early as January 15, 1986, it had
started to deduct the amount of P 200.00 from Josephine's OUR RULING
salary as well as 50% of her bonuses and profit sharing.
We DENY the present petition for lack of merit.
On February 10, 1986, Josephine filed a complaint for damages
with prayer for preliminary injunction before the RTC of The civil courts have jurisdiction
Makati City. She claimed that the PCIB had abused its right by over a case when the cause of action
gradually deducting from her salary the amount the bank had does not have a reasonable causal
to pay Harrington. connection from the employer-employee
relationship.
The PCIB filed its answer with counterclaims and a separate
complaint with the RTC of Makati City, which was raffled to Although the PCIB opted not to raise the issue before this
Branch 149. Court, we find it prudent and imperative to justify why the RTC
had jurisdiction to take cognizance of Josephine's complaint
In its May 25, 1999 decision, the RTC rendered judgment in despite the fact that her cause of action arose because her
favor of Josephine and ordered the PCIB to pay her actual employer arbitrarily deducted from her salary - an act
damages in the amount of P5,006.00 plus 12% interest from expressly prohibited by our labor laws.4
filing of the complaint; moral damages in the amount of PI
50,000.00; and attorney's fees in the amount of P-50,000.00. Article 224 [217] of the Labor Code provides that the Labor
Arbiters have original and exclusive jurisdiction to hear and
The RTC considered the PCIB's manner of deducting from the decide claims for actual, moral, exemplary, and other forms of
salary and allowance of Josephine as having been rendered in damages arising from employer-employee relations. The
bad faith and contrary to morals, good custom, and public legislative intent appears clear to allow Labor Arbiters to
policy. This was borne out by the fact that the PCIB had already award to an employee not only the reliefs provided by our
deducted from her salary before Josephine received the labor laws, but also moral and other forms of damages
memorandum finding her liable for the P50,600.00. In governed by the Civil Code. Specifically, we have mentioned,
addition, while there were other individuals involved in this in fact, that a complaint for damages under Articles 19, 20, and
incident, it appeared that it was only Josephine who was made 21 of the Civil Code would not suffice to keep the case without
solely responsible. the jurisdictional boundaries of our labor courts -especially
when the claim for damages is interwoven with a labor a preexisting employee-employer relation, his
dispute.5 complaint is grounded not on his dismissal per se as
in fact he does not ask for reinstatement or
Nevertheless, when the cause of action has no reasonable backwages, but on the manner of his dismissal and
connection with any of the claims provided for in Article 224 the consequent effects of such dismissal.
of the Labor Code, jurisdiction over the action is with the x x x
regular courts. 6 Here, since Josephine's cause of action is
based on a quasi-delict or tort under Article 19 in relation to The "right" of the respondents to dismiss Quisaba
Article 21 of the Civil Code, the civil courts (not the labor should not be confused with the manner in which the
tribunals) have jurisdiction over the subject matter of this case. right was exercised and the effects flowing
therefrom. If the dismissal was done anti-socially or
To be sure, the case of Singapore Airlines Ltd. v. Ernani Cruz oppressively, as the complaint alleges, then the
Paño is enlightening: respondents violated article 1701 of the Civil Code
which prohibits acts of oppression by either capital or
Upon the facts and issues involved, jurisdiction over labor against the other, and article 21, which makes a
the present controversy must be held to belong to the person liable for damages if he willfully causes loss or
civil courts. While seemingly petitioner's claim for injury to another in a manner that is contrary to
damages arises from employer-employee relations, morals, good customs or public policy, the sanction
and the latest amendment to Article 217 of the Labor for which, by way of moral damages, is provided in
Code under PD No. 1691 and BP Big. 130 provides that article 2219, no. 10. (Cf. Phil. Refining Co. v. Garcia, L-
all other claims arising from employer-employee 21962, Sept. 27, 1966, 18 SCRA 107).8
relationship are cognizable by Labor Arbiters, in
essence, petitioner's claim for damages is grounded From the foregoing, the case at bar is intrinsically concerned
on the "wanton failure and refusal" without just cause with a civil dispute because it has something to do with
of private respondent Cruz to report for duty despite Josephine's right under Article 19 of the Civil Code, and does
repeated notices served upon him of the disapproval not involve an existing employer-employee relation within the
of his application for leave of absence without pay. meaning of Article 224 of the Labor Code. Josephine's
This, coupled with the further averment that Cruz complaint was, therefore, properly filed with and exclusively
"maliciously and with bad faith" violated the terms cognizable by the RTC.
and conditions of the conversion training course
agreement to the damage of petitioner removes the Questions on whether there was a
present controversy from the coverage of the Labor preponderance of evidence to justify the
Code and brings it within the purview of Civil Law. award of damages or whether there was
a causal connection between the given
Clearly, the complaint was anchored not on the set of facts and the damage suffered by
abandonment per se by private respondent Cruz of the private complainant are questions of fact.
his job as the latter was not required in the Complaint
to report back to work but The Court's jurisdiction under a Rule 45 review is limited to
on the manner and consequent effects of such reviewing perceived errors of law, which the lower courts may
abandonment of work translated in terms of the have committed. The resolution of factual issues is the
damages which petitioner had to suffer.7 [emphasis function of the lower courts whose findings, when aptly
and underscoring supplied] supported by evidence, bind this Court. This is especially true
when the CA affirms the RTC's findings. While this Court, under
In the present case, Josephine filed a civil complaint for established exceptional circumstances, had deviated from the
damages against the PCIB based on how her employer quickly above rule, we do not find this case to be under any of the
concluded that she was negligent and hence arbitrarily started exceptions.
to deduct from her salary. Clearly, without having to dwell on
the merits of the case, Josephine opted to invoke the Essentially, what the PCIB seeks is a relief from the Court on
jurisdiction of our civil courts because her right to fair the issue of the propriety of the award of damages. On this
treatment was violated. point alone, the petition must fail, as a Rule 45 petition bars us
from the consideration of factual issues, especially when both
The discussion in Quisaba v. Sta. Ines-Melale Veneer & the RTC and the CA were consistent with their rulings.
Plywood, Inc. is just as relevant as it is illuminating on the
present case, to wit: Nevertheless, we still affirm the assailed CA rulings even if we
were to disregard these established doctrinal rules.
Although the acts complained of seemingly appear to
constitute "matters involving employee-employer Article 19 of the Civil Code provides that every person in the
relations" as Quisaba's dismissal was the severance of exercise of his rights and in the performance of his duties must
act with justice, give everyone his due, and observe honesty the above discussion, we find the award of moral damages and
and good faith. The principle embodied in this provision is attorney's fees in Josephine's favor proper.
more commonly known as the "abuse of right principle." The
legal sanctions for violations of this fundamental principle are WHEREFORE, the petition for review on certiorari
found in Articles 209 and 2110 of the Civil Code. We explained is DENIED and consequently, the May 23, 2011 decision and
how these two provisions correlate with each other in GF the December 7, 2011 resolution of the Court of Appeals in CA-
Equity, Inc. v. Valenzona: G.R. CV No. 68288 are AFFIRMED in toto.

[Article 19], known to contain what is commonly SO ORDERED.
referred to as the principle of abuse of rights, sets
certain standards which must be observed not only in
the exercise of one's rights but also in the
performance of one's duties. These standards are the
following: to act with justice; to give everyone his
due; and to observe honesty and good faith. The law, G.R. No. 181284
therefore, recognizes a primordial limitation on all LOLOY UNDURAN, BARANGAY CAPTAIN ROMEO PACANA,
rights; that in their exercise, the norms of human NESTOR MACAPAYAG, RUPERTO DOGIA, JIMMY TALINO,
conduct set forth in Article 19 must be observed. A ERMELITO ANGEL, PETOY BESTO, VICTORINO ANGEL, RUEL
right, though by itself legal because recognized or BOLING, JERMY ANGEL, BERTING SULOD, RIO BESTO,
granted by law as such, may nevertheless become BENDIJO SIMBALAN, and MARK BRAZIL, Petitioners
the source of some illegality. When a right is vs.
exercised in a manner which does not conform with RAMON ABERASTURI, CRISTINA C. LOPEZ, CESAR LOPEZ JR.,
the norms enshrined in Article 19 and results in DIONISIO A. LOPEZ, MERCEDES L. GASTON, AGNES H. LOPEZ,
damage to another, a legal wrong is thereby EUSEBIO S. LOPEZ, JOSE MARIA S. LOPEZ, ANTON B.
committed for which the wrongdoer must be held ABERASTURI, MA. RAISSA A. VELEZ, ZOILO ANTONIO A.
responsible. But while Article 19 lays down a rule of VELEZ, CRISTINA ABERASTURI, EDUARDO LOPEZ JR.,
conduct for the government of human' relations and ROSARIO S. LOPEZ, JUAN S. LOPEZ, CESAR ANTHONY R.
for the maintenance of social order, it does not LOPEZ, VENANCIO L. GASTON, ROSEMARIE S. LOPEZ, JAY A.
provide a remedy for its violation. Generally, an ASUNCION, NICOLO ABERASTURI, LISA A. ASUNCION, INEZ
action for damages under either Article 20 or Article A. VERAY, HERNAN A. ASUNCION, ASUNCION LOPEZ,
21 would be proper.11 [Emphasis supplied] THOMAS A. VELEZ, LUIS ENRIQUE VELEZ, ANTONIO H.
LOPEZ, CHARLES H. LOPEZ, ANA L. ZAYCO, PILAR L. QUIROS,
Both the RTC and the CA found the acts of the PCIB were in CRISTINA L. PICAZO, RENATO SANTOS, GERALDINE AGUIRRE,
clear violation of Article 19 of the Civil Code and held the PCIB MARIA CARMENCITA T. LOPEZ, and as represented by
liable for damages. While the PCIB has a right to penalize attorney-in-fact RAMON ABERASTURI, Respondents
employees for acts of negligence, the right must not be
exercised unjustly and illegally. In the instant case, the PCIB D E C I S I O N
made deductions on Josephine's salary even if the PERALTA, J.:
investigation was still pending. Belatedly, the PCIB issued a
memorandum finding Josephine grossly negligent and This is a petition for review on certiorari1 assailing the
requiring her to pay the amount which the bank erroneously Decision2 dated August 17, 2006 of the Court of Appeals (CA)
paid to Harrington's impostor. When Josephine asked for legal in CA-G.R. SP No. 00204-MIN, and the Resolution3 dated July 4,
and factual basis for the finding of negligence, the PCIB refused 2007, which denied petitioners' motion for reconsideration.
to give any. Moreover, the PCIB continued to make deductions
on Josephine's salary, allowances, and bonuses. Petitioners, except for Mark Brazil and Nestor Macapayag, are
members of the Miarayon, Lapok, Lirongan, Talaandig Tribal
The trial court and the CA also noted that while Josephine was Association (MILALITTRA), or Talaandig tribe, who claimed to
penalized, other employees of the bank involved in the subject have been living since birth on the land located at Barangay
transactions were not. It was Josephine who was made solely Miarayon, Talakag, Bukidnon, Mindanao, which they inherited
responsible for the loss without giving any basis therefor. It from their forefathers.
was emphasized that the subject deposit could not have been
received by the bank and entered in Harrington's savings On the other hand, respondents, represented by attorney-in-
account without the participation of the other bank fact Ramon Aberasturi, claimed to be the lawful owners and
employees. The PCIB could have exercised prudence before possessor of an unregistered parcel of agricultural land (Lot
taking oppressive actions against Josephine. No. 7367 Cad 630-D), with an area of 105.7361 hectares, which
appears to be located within the ancestral domain of the
All told, we find nothing in the record which would warrant the Talaandig tribe.
reversal of the position held by the RTC and the CA. Based on
On March 3, 2004, respondents filed a Petition for Accion On August 25, 2004, petitioners filed another Motion to Refer
Reivindicatoria, with Prayer for the Issuance of a Temporary the Case to the RHO-NCIP and Motion to Dismiss the Amended
Restraining Order or Preliminary Prohibitory Injunction with Complaint.
Damages4 (original complaint for accion reivindicatoria)
against petitioners before the Regional Trial Court of Manolo On September 14, 2004, respondents filed their Opposition
Fortich, Bukidnon (RTC). Docketed as Civil Case No. 04-03-01, and Motion for Judgment by Default.
the petition was raffled off to Branch 11.
On February 14, 2005, the RTC issued an Order6 resolving all
On March 20, 2004, petitioners Macapayag and Brazil filed pending incidents before it, the dispositive portion of which
their Answer, alleging that respondents have no cause of reads:
action against them. On March 23, 2004, the rest of the
petitioners filed their Motion to Dismiss, alleging that the RTC WHEREFORE, premises considered, defendant's
had no jurisdiction over the case. Petitioners alleged that with [herein petitioners’] motion to refer the case to the
the advent of Republic Act No. (RA) 8371, otherwise known as RHO-NCIP and its manifestation for an ocular
the Indigenous Peoples' Rights Act (IPRA), they, together with inspection are hereby denied for being bereft of
the rest of the tribe members, assisted the National merit. Further, defendants [petitioners], except
Commission on Indigenous Peoples (NCIP) in the processing, Macapayag and Brazil, are hereby declared in default
validation, and delineation of their Ancestral Domain claim in for their failure to file their Answer to the Amended
May 2003. On July 25, 2003, Certificate of Ancestral Domain Complaint. Accordingly, let this case, as against
Title (CADT) No. R-10-TAL-0703-0010 was issued by virtue of defendants Macapayag and Brazil, be called for pre-
NCIP En Banc Resolution No. 08-02003 to the Talaandig tribe trial and ex-parte presentation of evidence as against
over its ancestral domain in Talakag, Bukidnon, containing an the rest of defendants [petitioners] on May 2, 2005 at
area of 11,105.5657 hectares. On October 30, 2003, President 9:00 o'clock in the morning. Furthermore, the
Gloria Macapagal Arroyo awarded the said CADT to the injunctive writ prayed for by the plaintiffs is hereby
Talaandig tribe. As awardees of a CADT, petitioners argued GRANTED for being meritorious. Accordingly,
that NCIP has exclusive and original jurisdiction over the case, defendants [petitioners], their agents and privies, or
as the subject matter concerns a dispute and controversy over any other or all persons acting for and in their
an ancestral land/domain of Indigenous Cultural Communities behalves, are hereby ordered to observe, maintain
(ICCs)/Indigenous Peoples (IPs). and preserve the status quo subject of the action
and/or the relation between the parties in order to
On July 1, 2004, the NCIP through Atty. Melanie Pimentel, filed protect the rights of the plaintiffs while the case is
a Motion to Refer the Case to the Regional Hearing Office- pending in court and to cease and desist from
National Commission on Indigenous Peoples (RHO-NCIP), performing any acts that in one way or another
alleging that the RTC had no jurisdiction over the subject contravene the tenor of this order, while awaiting
matter. final determination of the instant suit or until further
orders of this court. Furthermore, to answer for
On July 5, 2004, respondents filed a Motion to Amend and whatever damage that defendants [petitioners] may
Supplement Complaint from Accion Reivindicatoria to one for sustain by reason of this injunction order if the court
"Injunction, Damages, and Other Relief," with the attached should finally decide that plaintiffs [respondents] are
Amended and Supplemental Complaint5 (amended complaint not entitled to the relief it prayed for, plaintiffs
for injunction). On July 30, 2004, petitioners filed an [respondents] are hereby directed to put up a bond in
Opposition thereto. the amount of ONE HUNDRED THOUSAND PESOS
(₱100,000.00) executed in favor of the party
On August 1, 2004, petitioners filed a Motion to Dismiss the enjoined.
Amended and Supplemental Complaint, alleging that the RTC SO ORDERED.7
had no jurisdiction over the subject matter of the case and to
issue a writ of injunction therein. On April 12, 2005, petitioners filed before the Court of Appeals
a Petition for Certiorari and Prohibition with Prayer for
On August 10, 2004, the RTC issued an Order granting the Preliminary Injunction and Issuance of a Temporary
Motion to Amend and Supplement Complaint, and declared Restraining Order.
petitioners’ Motion to Refer the Case to the RHO-NCIP and
Motion to Dismiss moot and academic as a consequence of the On August 17, 2006, the CA rendered a Decision affirming the
grant of the said motion to amend and supplement complaint. RTC's February 14, 2005 Order, which in turn denied the
On August 17, 2004, petitioners filed a Manifestation praying referral of the case to the NCIP, the dispositive portion of
for an ocular inspection of the disputed land to determine the which states:
last, actual, peaceable, uncontested status of the area.
WHEREFORE, in view of the foregoing, the petition is
hereby partly GRANTED. The assailed Order dated
 February 14, 2005 is hereby AFFIRMED with damages was clearly meant to oust the NCIP of its jurisdiction
MODIFICATION that the order of default against over the case and confer it on the RTC by concealing the real
petitioners, except Macapayag and Brazil, is hereby issue in the case, which is the parties' conflicting claims over
LIFTED. the 105.7361-hectare land in Miarayon, Talakag Bukidnon.
SO ORDERED.8 According to petitioners, the cause of action in the complaint
for accion reivindicatoria is the claim of ownership and
The CA ruled that the RTC correctly granted the amendment of recovery of possession of the said land which is undisputedly
the complaint and properly refused to refer the case to the found within the Talaandig tribe's ancestral domain covered by
RHO-NCIP. Based on the allegations of both original complaint CADT No. R10-TAL-0703-0010; hence, a claim within the
[accion reivindicatoria] and amended complaint [injunction], exclusive and original jurisdiction of the NCIP. Petitioners
the CA found that the subject matter of both complaints is well contend that respondents amended the complaint to one for
within the jurisdiction of the RTC. The CA noted that the only injunction to downplay the real issue which is the dispute over
substantial amendment made was with regard to the nature a land that is within the Talaandig tribe's ancestral domain, and
of the action which originally was one of accion reivindicatoria mainly capitalized on the acts complained of, such as
and then changed to one for damages. And except for some harassment, threats, acts of terrorism, among others,
amendments as to petitioners' alleged violent acts and the supposedly committed against respondents.
prayer for declaration of their title to the subject property, the
rest of the amended complaint was basically the same as the On the third issue, petitioners fault the CA in ruling that
original one, including the reliefs prayed for by respondents. whether the complaint is one for Injunction or Accion
Anent the writ of preliminary injunction, the CA held that the Reivindicatoria, the RTC has jurisdiction because nowhere in
RTC's assailed February 14, 2005 Order is self-explanatory as respondents' original and amended complaints is it stated that
to why the issuance of the same was proper considering the petitioners were members of the ICCs or IPs and that the
circumstances of the case. disputed property was part of their ancestral domain.
Petitioners take exception to the rule that jurisdiction over the
On July 4, 2007, the CA denied petitioners' motion for subject matter is determined by the allegations of the
reconsideration of its August 17, 2006 Decision. complaint, as strict adherence thereto would open the
floodgates to the unscrupulous practice of litigants divesting
Hence, this appeal on certiorari raising the following issues: the NCIP of jurisdiction by crafting their complaints in such a
I. THE COURT OF APPEALS ERRED IN AFFIRMING THE way as would confer jurisdiction on their court of choice.
JURISDICTION OF THE COURT A QUO OVER A Petitioners contend that the literal averments of the complaint
COMPLAINT FOR INJUNCTION INVOLVING AN are not determinative of the jurisdiction over the subject
ANCESTRAL DOMAIN OF THE TALAANDIGS. matter where the actual issues are evidenced by subsequent
pleadings; in certain cases, the real nature and character of the
II. THE COURT OF APPEALS ERRED IN AFFIRMING THE pleadings and issues are not merely found in the complaint,
RESOLUTION OF THE COURT A QUO ALLOWING THE but also in the subsequent pleadings submitted by both
AMENDMENT OF THE COMPLAINT, THE SOLE parties. Petitioners stress that although the complaint banners
PURPOSE OF WHICH IS TO CONFER JURISDICTION ON the subject matter as one for injunction, the pleadings of
THE LOWER COURT. respondents show that the subject matter is the conflicting
ownership claims over the land. In fact, petitioners point out
III. THE COURT OF APPEALS ERRED IN RESOLVING that the records of the case show that various pieces of
THAT EVIDENCE MUST BE PRESENTED BEFORE THE evidence have been presented to prove that the dispute
REGIONAL TRIAL COURT WHEN IN THE ORIGINAL involves conflicting claims over a land covered by a CADT.
ACTION FOR SPECIAL CIVIL ACTION FOR CERTIORARI
BEFORE IT, THE COURT A QUO HAS ADMITTED THAT For their part, respondents contend that petitioners do not
A CADT WAS ISSUED IN FAVOR OF PETITIONERS.9 have legal capacity or standing and locus standi to file this
petition, since they failed to make prima facie showing that
On the first issue, petitioners contend that the RTC has no they are members of IPs/ICCs, or that they were authorized to
jurisdiction over Civil Case No. 04-03-0 for Injunction, Damages represent the Talaandig tribe. Respondents insist that based
and other Relief, because the 105.7361-hectare land claimed on the allegations in their amended complaint for injunction
by respondents is undisputedly within the ancestral domain of and damages, the RTC has jurisdiction over the subject matter
the Talaandig tribe over which a CADT has already been issued. which is a purely personal action and incapable of pecuniary
Petitioners insist that, even granting that the case is purely a estimation. Respondents assert that the real issue is whether
personal action, the NCIP has exclusive and original jurisdiction or not petitioners are guilty of wrongful acts of violence,
over it as it concerns a claim and dispute involving rights of terrorism, destruction, intimidation, harassment, etc., to
ICCs/IPs over their ancestral domain. justify a permanent injunction and hold the latter liable for
damages. Respondents also point out that petitioners cannot
On the second issue, petitioners argue that the amendment of invoke protection under the IPRA 8731, because the conflict
the complaint from accion reivindicatoria to injunction with does not involve an ancestral domain and they (respondents)
are not IPs so the condition precedent before bringing a Under Section 19 of B.P. 129, as amended (Judiciary
dispute before the NCIP cannot be satisfied, i.e., exhaustion of Reorganization Act of 1980), the RTC shall exercise exclusive
remedies under customary laws by the parties. original jurisdiction in all civil actions in which the subject of
the litigation is incapable of pecuniary estimation, and in all
The petition has no merit. civil actions which involve title to, possession of, real property
or any interest therein where the assessed value of the
On the procedural issue raised by respondents, the Court property or interest therein exceeds Twenty Thousand Pesos
disagrees with their contention that petitioners do not have (₱20,000.00) or, in civil actions in Metro Manila, where such
legal capacity or standing and locus standi to file the petition, assessed value exceeds Fifty Thousand Pesos (₱50,000.00).
for failure to show that they are members of IPs/ICCs, or that
they are authorized to represent the Talaandig tribe. On the other hand, the NCIP's jurisdiction is defined under
Section 66 of the IPRA as follows:
Locus standi is defined as a right of appearance in a court of
justice on a given question. In private suits, standing is Sec. 66. Jurisdiction of the NCIP. − The NCIP, through its
governed by the "real parties in interest" rule found in Section regional offices, shall have jurisdiction over all claims and
2,10 Rule 3 of the Rules of Court. Such concept of real party-in- disputes involving rights of ICCs/IPs; Provided, however, That
interest is adapted in Section 2,11 Rule VI of the 2014 Revised no such dispute shall be brought to the NCIP unless the parties
Rules of Procedure before the NCIP. That petitioners are the have exhausted all remedies provided under their customary
real parties in interest can be gleaned from the Entry of laws. For this purpose, a certification shall be issued by the
Appearance with Council of Elders/Leaders who participated in the attempt to
settle the dispute that the same has not been resolved, which
Motion to Refer the Case to the Regional Hearing Office of the certification shall be a condition precedent to the filing of a
NCIP12 filed by the NCIP Special Transition Team-Quick petition with the NCIP.16
Response Unit (STRAT-QRU). The STRAT-QRU counsels alleged
therein that the respondents' complaint for recovery of On the matter of NCIP's jurisdiction and of procedures for
ownership (accion reinvidicatoria) sought to recover an enforcement of rights, NCIP Administrative Order No. 1, 1998,
unregistered real property situated in Miarayon, Bukidnon, the Implementing Rules and Regulations (NCIP-IRR) of the
from petitioners, all of whom are, with the exception of Nestor IPRA, Rule IX, Section 1 states:
Macapayag and Mark Brazil, member-beneficiaries of CADT
No. R10-TAL-0703-0010 issued by the NCIP in the name of the Section 1. Primacy of Customary Law. - All conflicts
Talaandig Indigenous Peoples, located at Talakag, Province of related to the ancestral domain and lands, involving
Bukidnon. In support of their allegation, petitioners presented ICCs/IPs, such as but not limited to the conflicting
a certification13 that the disputed land is within the area claims and boundary disputes, shall be resolved by
covered by the same CADT, and the NCIP List of Beneficiaries the concerned parties through the application of
of Talaandig Ancestral Domain of Miarayon, Lirongan, Lapok, customary laws in the area where the disputed
San Miguel, Talakag, Bukidnon.14 In contrast, respondents ancestral domain or land is located.
failed to submit any evidence to dispute petitioners' claim that
they are members of the Talaandig Tribe. Hence, respondents' All conflicts related to the ancestral domain or lands
contention that petitioners have no legal standing to file the where one of the parties is non-ICC/IP or where the
petition, is without merit. dispute could not be resolved through customary
law shall be heard and adjudicated in accordance
In resolving the pivotal issue of which between the RTC and the with the Rules on Pleadings, Practice and Procedure
NCIP has jurisdiction over the respondents' amended before the NCIP to be adopted hereafter.
complaint, foremost in the Court's mind is the principle in "that
jurisdiction over the subject matter of a case is conferred by All decisions of the NCIP may be brought on Appeal
law and determined by the allegations in the complaint which by Petition for Review to the Court of Appeals within
comprise a concise statement of the ultimate facts constituting fifteen (15) days from receipt of the Order or
the plaintiff's cause of action. The nature of an action, as well Decision.17
as which court or body has jurisdiction over it, is determined
based on the allegations contained in the complaint of the In line with Section 69 of the IPRA on the NCIP's quasi-judicial
plaintiff, irrespective of whether or not the plaintiff is entitled power to promulgate rules and regulations governing the
to recover upon all or some of the claims asserted therein. The hearing and disposition of cases filed before it, the NCIP issued
averments in the complaint and the character of the relief Administrative Circular No. 1-03 dated April 9, 2003, known as
sought are the ones to be consulted. Once vested by the the Rules on Pleadings, Practice and Procedure (NCIP Rules),
allegations in the complaint, jurisdiction also remains vested which reiterates its jurisdiction over claims and disputes
irrespective of whether or not the plaintiff is entitled to involving rights of ICCs/IPs and enumerates the actions that
recover upon all or some of the claims asserted therein."15 may be brought before it. Section 5, Rule III, of the NCIP Rules
provides for the jurisdiction of the NCIP-RHO:
 Section 13. Certification to File Action. - Upon the
Sec. 5. Jurisdiction of the NCIP. − The NCIP through its request of the proper party, members of the
Regional Hearing Offices shall exercise jurisdiction indigenous dispute settlement group or council of
over all claims and disputes involving rights of elders shall likewise issue a certification to file action
ICCs/IPs and all cases pertaining to the before the NCIP. In giving due regard to customary
implementation, enforcement, and interpretation of laws, the certification may be in any form so long as it
the IPRA 8371, including but not limited to the states in substance the failure of settlement
following: notwithstanding the efforts made under customary
law or traditional practices.
(1) Original and Exclusive Jurisdiction of the Regional
Hearing Officer (RHO): Section 14. Exceptions. - The certification shall not be
a. Cases involving disputes, controversies required in the following cases:
over ancestral lands/domains of ICCs/IPs;
a. Where one of the parties is a public or private
b. Cases involving violations of the corporation, partnership, association or juridical
requirement of free and prior and informed person or a public officer or employee and the
consent of ICC/IPs; dispute is in connection with the performance of his
official functions;
c. Actions for enforcement of decisions of
ICCs/IPs involving violations of customary b. Where one of the parties is non-IP/ICC or does not
laws or desecration of ceremonial sites, belong to the same IP/IC Community, except when
sacred places, or rituals; he voluntarily submits to the jurisdiction of the
Council of Elders/Leaders;
d. Actions for redemption/reconveyance
under Section 8(b) of R.A. 8371; and c. Where the relief sought for in the complaint or
petition seeks to prevent any grave, imminent and
e. Such other cases analogous to the irreparable damage or injury that may result if not
foregoing. acted upon immediately; and

(2) Original jurisdiction of the Regional Hearing d. Where the Council of Elders/Leaders refuse to issue
Officer: the necessary certification without justifiable
reasons.18
a. Cases affecting property rights, claims of
ownership, hereditary succession, and Having spelled out the jurisdictions conferred by law to the
settlement of land disputes, between and RTC and the NCIP over the subject matters of their respective
among ICCs/IPs that have not been settled cases, the Court now examines the allegations in the original
under customary laws; and and amended complaints to find out which tribunal may
properly exercise jurisdiction over this case.
b. Actions for damages arising out of any
violation of Republic Act No. 8371; In their original complaint for accion reivindicatoria,
respondents traced the provenance of their title over said land
(3) Exclusive and Original Jurisdiction of the to one Mamerto Decano, a Chieftain of Talaandig tribe, by
Commission: virtue of a Deed of Sale executed on July 27, 1957. They
averred that, together with their predecessor-in-interest, they
a. Petition for cancellation of Certificate have religiously paid the real estate taxes thereon since 1957
of Ancestral Domain Titles/Certificate and that they have been in physical, actual, open, prior,
of Ancestral Land Titles (CADTs/CALTs) notorious, continuous, public and adverse possession of said
alleged to have been fraudulently land in the concept of owners for more than 50 years, even
acquired by, and issued to, any person prior to June 12, 1945. They alleged that said land was declared
or community as provided for under alienable and disposable since August 3, 1927 per certification
Section 54 of R.A. 8371. Provided that of the Department of Environment and Natural Resources.
such action is filed within one (1) year They claimed that by means of fraud, stealth and surreptitious
from the date of registration. means, petitioners entered the said land, without permission
and against the consent of the landowners, caused damages
Anent the condition precedent to the filing of a petition with therein and harassed respondents by indiscriminately firing
the NCIP under Section 66 of the IPRA, Sections 13 and 14, Rule upon their farm workers. They added that petitioners continue
IV of the NCIP Rules pertinently provide: such harassment by means of armed men frequenting the

campsite and firing M-16 rifles at them during nighttime,
causing great fear and threat. Sec. 66. Jurisdiction of the NCIP. − The NCIP, through
its regional offices, shall have jurisdiction over all
Respondents prayed before the RTC for the following reliefs, claims and disputes involving rights of ICCs/IPs;
among others: (1) to cause the preliminary injunction to be Provided, however, That no such dispute shall be
made permanent for the respondents to enjoy possession of brought to the NCIP unless the parties have
their property, free from threats of physical harm, harassment exhausted all remedies provided under their
and undue obstruction caused by petitioners; (2) to order customary laws. For this purpose, a certification shall
petitioners to respect and not to harass, intimidate and cause be issued by the Council of Elders/Leaders who
trouble to the prior possession of respondents as the owners participated in the attempt to settle the dispute that
by virtue of right of title; (3) to order petitioners to pay moral the same has not been resolved, which certification
and exemplary damages, attorney's fees, appearance fees and shall be a condition precedent to the filing of a
costs of suit; and (4) to declare respondents' title as having petition with the NCIP.
become a vested right, and as such entitled to all right and
incident of an absolute owner. A careful review of Section 66 shows that the NCIP
shall have jurisdiction over claims and disputes
In their amended complaint for injunction and damages, on involving rights of ICCs/IPs only when they arise
the other hand, respondents further alleged that sometime in between or among parties belonging to the same
November 2003, petitioners harassed, intimidated, ICC/IP. This can be gathered from the qualifying
threatened, and fired high-powered rifles upon respondents' provision that "no such dispute shall be brought to
farm workers to drive them away from the land, without legal the NCIP unless the parties have exhausted all
or justifiable reason. They added that, despite having hired remedies provided under their customary laws. For
private security guards to secure and protect their property, this purpose, a certification shall be issued by the
these violent incidents were followed by more acts of violence, Council of Elders/Leaders who participated in the
lawlessness, harassment, terrorism to drive away respondents attempt to settle the dispute that the same has not
from the land which they claim to lawfully own and possess. been resolved, which certification shall be a condition
Respondents prayed before the RTC for the following reliefs: precedent to the filing of a petition with the NCIP."
(1) to order petitioners and their representatives, to stop and
refrain from committing acts of violence, destruction, assault The qualifying provision requires two conditions
and other forms of lawlessness and terrorism against before such disputes may be brought before the
respondents, and to maintain the peaceful possession and NCIP, namely: (1) exhaustion of remedies under
enjoyment of the 105-hectare land by respondents as an customary laws of the parties, and (2) compliance
attribute of ownership; (2) to declare petitioners to have with condition precedent through the said
committed acts of violence, harassment, intimidation, certification by the Council of Elders/Leaders. This is
destruction, assault and other forms of lawlessness against in recognition of the rights of ICCs/IPs to use their
respondents, and to permanently order petitioners to stop and own commonly accepted justice systems, conflict
refrain from committing similar acts; and (3) to hold resolution institutions, peace building processes or
petitioners jointly and severally liable to pay respondents mechanisms and other customary laws and practices
actual damages, moral damages, exemplary damages, within their respective communities, as may be
attorney's fees, litigation expenses and treble costs. compatible with the national legal system and with
internationally recognized human rights.19
After a perusal of the allegations and prayers in both original
and amended complaints, the Court notes that respondents Section 3 (f) of the IPRA defines customary laws as a
neither alleged therein that the parties are members of body of written and/or unwritten rules, usages,
ICCs/IPs nor that the case involves a dispute or controversy customs and practices traditionally and continually
over ancestral lands/domains of ICC/IPs. Rather, the recognized, accepted and observed by respective
allegations in respondents' original complaint make up for an ICCs/IPs. From this restrictive definition, it can be
accion reivindicatoria, a civil action which involves an interest gleaned that it is only when both parties to a case
in a real property with an assessed value of P683,760.00, while belong to the same ICC/IP that the abovesaid two
the allegations in their amended complaint make out a case for conditions can be complied with. If the parties to a
injunction, a civil action which is incapable of pecuniary case belong to different ICCs/IPs which are
estimation. The Court therefore finds that the CA correctly recognized to have their own separate and distinct
ruled that the subject matter of the amended complaint based customary laws and Council of Elders/Leaders, they
on allegations therein was within the jurisdiction of the RTC. will fail to meet the abovesaid two conditions. The
Meanwhile, contrary to petitioners' contention, the mere fact same holds true if one of such parties was a non-
that this case involves members of ICCs/IPs and their ancestral ICC/IP member who is neither bound by customary
land is not enough to for it to fall under the jurisdiction of the laws as contemplated by the IPRA nor governed by
NCIP under Section 66 of the IPRA, to wit: such council. Indeed, it would be violative of the
 principles of fair play and due process for those boundaries of ancestral domain claims, the
parties who do not belong to the same ICC/IP to be Ancestral Domains Office shall cause the
subjected to its customary laws and Council of contending parties to meet and assist them
Elders/Leaders. in coming up with a preliminary resolution of
the conflict, without prejudice to its full
Therefore, pursuant to Section 66 of the IPRA, the adjudication according to the section below.
NCIP shall have jurisdiction over claims and disputes x x x x
involving rights of ICCs/IPs only when they arise
between or among parties belonging to the same SECTION 62. Resolution of Conflicts. — In
ICC/IP. When such claims and disputes arise between cases of conflicting interest, where there are
or among parties who do not belong to the same adverse claims within the ancestral domains
ICC/IP, i.e., parties belonging to different ICC/IPs or as delineated in the survey plan, and which
where one of the parties is a non-ICC/IP, the case shall can not be resolved, the NCIP shall hear and
fall under the jurisdiction of the proper Courts of decide, after notice to the proper parties,
Justice, instead of the NCIP. In this case, while most the disputes arising from the delineation of
of the petitioners belong to Talaandig Tribe, such ancestral domains: Provided, That if
respondents do not belong to the same ICC/IP. Thus, the dispute is between and/or among
even if the real issue involves a dispute over land ICCs/IPs regarding the traditional
which appear to be located within the ancestral boundaries of their respective ancestral
domain of the Talaandig Tribe, it is not the NCIP but domains, customary process shall be
the RTC which shall have the power to hear, try and followed. The NCIP shall promulgate the
decide this case. necessary rules and regulations to carry out
its adjudicatory functions: Provided, further,
There are, however, exceptional cases where the That any decision, order, award or ruling of
NCIP shall still have jurisdiction over such claims and the NCIP on any ancestral domain dispute or
disputes even if the parties involved do not belong to on any matter pertaining to the application,
the same ICC/IP, viz.: implementation, enforcement and
interpretation of this Act may be brought for
1. Cases under Sections 52 and 62 of the IPRA which Petition for Review to the Court of Appeals
contemplate a situation where a dispute over an within fifteen (15) days from receipt of a
ancestral domain involving parties who do not belong copy thereof.20
to the same, but to different ICCs/IPs, to wit:
SECTION 52. Delineation Process. — The 2. Cases under Section 54 of the IPRA over fraudulent
identification and delineation of ancestral claims by parties who are not members of the same
domains shall be done in accordance with ICC/IP, to wit:
the following procedures:
x x x x SECTION 54. Fraudulent Claims. — The
Ancestral Domains Office may, upon written
h) Endorsement to NCIP. — Within fifteen request from the ICCs/IPs, review existing
(15) days from publication, and of the claims which have been fraudulently
inspection process, the Ancestral Domains acquired by any person or community. Any
Office shall prepare a report to the NCIP claim found to be fraudulently acquired by,
endorsing a favorable action upon a claim and issued to, any person or
that is deemed to have sufficient proof. community may be cancelled by the NCIP
However, if the proof is deemed insufficient, after due notice and hearing of all parties
the Ancestral Domains Office shall require concerned.21
the submission of additional evidence:
Provided, That the Ancestral Domains Office Considering the general rule that the jurisdiction of
shall reject any claim that is deemed the NCIP under Section 66 of the IPRA covers only
patently false or fraudulent after inspection disputes and claims between and among members of
and verification: Provided, further, That in the same ICCs/IPs involving their rights under the
case of rejection, the Ancestral Domains IPRA, as well as the basic administrative law principle
Office shall give the applicant due notice, that an administrative rule or regulation must
copy furnished all concerned, containing the conform, not contradict the provisions of the
grounds for denial. The denial shall be enabling law,22 the Court declares Rule IX, Section 1
appealable to the NCIP: Provided, of the IPRA-IRR23, Rule III, Section 524 and Rule IV,
furthermore, That in cases where there are Sections 13 and 14 of the NCIP Rules25 as null and
conflicting claims among ICCs/IPs on the void insofar as they expand the jurisdiction of the
 NCIP under Section 66 of the IPRA to include such
disputes where the parties do not belong to the same
ICC/IP. As the Court held in Paduran v.
DARAB,26 "[j]urisdiction over a subject matter is
conferred by the Constitution or the law and rules of
procedure yield to substantive law. Otherwise stated,
jurisdiction must exist as a matter of law.27 Only a
statute can confer jurisdiction on courts and
administrative agencies; rules of procedure
cannot.28 In the abovesaid exceptional cases where
one of the parties is a non-ICC/IP or does not belong
to the same ICC/IP, however, Rule IV, Section 14 of
the NCIP Rules validly dispenses with the requirement
of certification issued by the Council of
Elders/Leaders who participated in the failed attempt
to settle the dispute according to the customary laws
of the concerned ICC/IP.

WHEREFORE, the petition is DENIED and the Court of Appeals
Decision dated August 17, 2006, and its Resolution dated July
4, 2007, in CAG.R. SP No. 00204-MIN, are AFFIRMED.
SO ORDERED.