rules of court cases

7/27/2019 rules of court cases

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RULE 19

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 171805 May 30, 2011

PHILIPPINE NATIONAL BANK,Petitioner,

vs.

MERELO B. AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (deceased), represented by his heirs;

RAMON A. BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD (deceased), represented by

his heirs; and RICARDO GABUYA (deceased), represented by his heirs,Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 172021

MERELO B. AZNAR and MATIAS B. AZNAR III,Petitioners,

vs.

PHILIPPINE NATIONAL BANK,Respondent.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

Before the Court are two petitions for review on certiorari under Rule 45 of the Rules of Court

both seeking to annul and set aside the Decision1dated September 29, 2005 as well as the

Resolution2dated March 6, 2006 of the Court of Appeals in CA-G.R. CV No. 75744, entitled

"Merelo B. Aznar, Matias B. Aznar III, Jose L. Aznar (deceased) represented by his heirs, Ramon

A. Barcenilla (deceased) represented by his heirs, Rosario T. Barcenilla, Jose B. Enad (deceased)

represented by his heirs, and Ricardo Gabuya (deceased) represented by his heirs v. Philippine

National Bank, Jose Garrido and Register of Deeds of Cebu City."The September 29, 2005

Decision of the Court of Appeals set aside the Decision3dated November 18, 1998 of the

Regional Trial Court (RTC) of Cebu City, Branch 17, in Civil Case No. CEB-21511. Furthermore, it

ordered the Philippine National Bank (PNB) to pay Merelo B. Aznar; Matias B. Aznar III; Jose L.

Aznar (deceased), represented by his heirs; Ramon A. Barcenilla (deceased), represented by his

heirs; Rosario T. Barcenilla; Jose B. Enad (deceased), represented by his heirs; and Ricardo

Gabuya (deceased), represented by his heirs (Aznar, et al.), the amount of their lien based on

the Minutes of the Special Meeting of the Board of Directors4(Minutes) of the defunct Rural
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CONTRIBUTED SURPLUS

MERELO B. AZNAR P50,000.00

MATIAS B. AZNAR 50,000.00

JOSE L. AZNAR 27,720.00

RAMON A. BARCENILLA 25,000.00

ROSARIO T. BARCENILLA 25,000.00

JOSE B. ENAD 17,500.00

RICARDO GABUYA 17,500.00

212,720.00

x x x x

And that the respective contributions above-mentioned shall constitute as their lien or interest

on the property described above, if and when said property are titled in the name of RURAL

INSURANCE & SURETY CO., INC., subject to registration as their adverse claim in pursuance of

the Provisions of Land Registration Act, (Act No. 496, as amended) until such time their

respective contributions are refunded to them completely.

x x x x"

Thereafter, various subsequent annotations were made on the same titles, including the Notice

of Attachment and Writ of Execution both dated August 3, 1962 in favor of herein defendant

PNB, to wit:

On TCT No. 8921 for Lot 3597:

Entry No. 7416-V-4-D.B. Notice of Attachment By the Provincial Sheriff of Cebu, Civil Case

No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff, versus

Iluminada Gonzales, et al., Defendants", attaching all rights, interest and participation of the


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defendant Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of the two parcels of land

covered by T.C.T. Nos. 8921, Attachment No. 330 and 185.

Date of InstrumentAugust 3, 1962.

Date of InscriptionAugust 3, 1962, 3:00 P.M.

Entry No. 7417-V-4-D.B. Writ of Execution By the Court of First Instance of Manila,

commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to

make the sum of Seventy[-]One Thousand Three Hundred Pesos (P71,300.00) plus interest etc.,

in connection with Civil Case No. 47725, File No. T-8021.

Date of InstrumentJuly 21, 1962.


Entry No. 7512-V-4-D.B. Notice of Attachment By the Provincial Sheriff of Cebu, Civil Case

Nos. IV-74065, 73929, 74129, 72818, in the Municipal Court of the City of Manila, entitled "Jose

Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als., Defendants", attaching all

rights, interests and participation of the defendants, to the parcels of land covered by T.C.T.

Nos. 8921 & 8922 Attachment No. 186, File No. T-8921.

Date of the InstrumentAugust 16, 1962.


Entry No. 7513-V-4-D.B. Writ of Execution By the Municipal Court of the City of Manila,commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to

make the sum of Three Thousand Pesos (P3,000.00), with interest at 12% per annum from July

20, 1959, in connection with Civil Case Nos. IV-74065, 73929, 74613 annotated above.

File No. T-8921


Date of the InscriptionAugust 16, 1962, 2:50 P.M.

On TCT No. 8922 for Lot 7380:

(Same as the annotations on TCT 8921)

On TCT No. 24576 for Lot 1328 (Corrected to Lot 1323-c per court order):

Entry No. 1660-V-7-D.B. Notice of Attachment by the Provincial Sheriff of Cebu, Civil Case

No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff, versus,


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Iluminada Gonzales, et al., Defendants", attaching all rights, interest, and participation of the

defendants Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of the parcel of land

herein described.

Attachment No. 330 & 185.

Date of InstrumentAugust 3, 1962.


Entry No. 1661-V-7-D.B. Writ of Execution by the Court of First Instance of Manila

commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants to

make the sum of Seventy[-]One Thousand Three Hundred Pesos (P71,300.00), plus interest,

etc., in connection with Civil Case No. 47725.

File No. T-8921.

Date of the InstrumentJuly 21, 1962.

Date of the InscriptionAugust 3, 1962 3:00 P.M.

Entry No. 1861-V-7-D.B. - Notice of Attachment By the Provincial Sheriff of Cebu, Civil Case

Nos. IV-74065, 73929, 74129, 72613 & 72871, in the Municipal Court of the City of Manila,

entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als., Defendants",

attaching all rights, interest and participation of the defendants, to the parcel of land herein

described.

Attachment No. 186.

File No. T-8921.


Date of the InstriptionAugust 16, 1962 2:50 P.M.

Entry No. 1862-V-7-D.B. Writ of Execution by the Municipal Court of Manila, commanding

the Provincial Sheriff of Cebu, of the lands and buildings of the Defendants, to make the sum of

Three Thousand Pesos (P3,000.00), with interest at 12% per annum from July 20, 1959, in

connection with Civil Case Nos. IV-74065, 73929, 74129, 72613 & 72871 annotated above.

File No. T-8921.


Date of the InscriptionAugust 16, 1962 at 2:50 P.M.


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As a result, a Certificate of Sale was issued in favor of Philippine National Bank, being the lone

and highest bidder of the three (3) parcels of land known as Lot Nos. 3597 and 7380, covered

by T.C.T. Nos. 8921 and 8922, respectively, both situated at Talisay, Cebu, and Lot No. 1328-C

covered by T.C.T. No. 24576 situated at Cebu City, for the amount of Thirty-One Thousand Four

Hundred Thirty Pesos (P31,430.00). Thereafter, a Final Deed of Sale dated May 27, 1991 infavor of the Philippine National Bank was also issued and Transfer Certificate of Title No. 24576

for Lot 1328-C (corrected to 1323-C) was cancelled and a new certificate of title, TCT 119848

was issued in the name of PNB on August 26, 1991.

This prompted plaintiffs-appellees to file the instant complaint seeking the quieting of their

supposed title to the subject properties, declaratory relief, cancellation of TCT and

reconveyance with temporary restraining order and preliminary injunction. Plaintiffs alleged

that the subsequent annotations on the titles are subject to the prior annotation of their liens

and encumbrances. Plaintiffs further contended that the subsequent writs and processes

annotated on the titles are all null and void for want of valid service upon RISCO and on them,

as stockholders. They argued that the Final Deed of Sale and TCT No. 119848 are null and void

as these were issued only after 28 years and that any right which PNB may have over the

properties had long become stale.

Defendant PNB on the other hand countered that plaintiffs have no right of action for quieting

of title since the order of the court directing the issuance of titles to PNB had already become

final and executory and their validity cannot be attacked except in a direct proceeding for their

annulment. Defendant further asserted that plaintiffs, as mere stockholders of RISCO do not

have any legal or equitable right over the properties of the corporation. PNB posited that evenif plaintiffs monetary lien had not expired, their only recourse was to require the

reimbursement or refund of their contribution.51awphi1

Aznar, et al., filed a Manifestation and Motion for Judgment on the Pleadings6on October 5,

1998. Thus, the trial court rendered the November 18, 1998 Decision, which ruled against PNB

on the basis that there was an express trust created over the subject properties whereby RISCO

was the trustee and the stockholders, Aznar, et al., were the beneficiaries or the cestui que

trust. The dispositive portion of the said ruling reads:

WHEREFORE, judgment is hereby rendered as follows:

a) Declaring the Minutes of the Special Meeting of the Board of Directors of RISCO approved on

March 14, 1961 (Annex "E," Complaint) annotated on the titles to subject properties on May 15,

1962 as an express trust whereby RISCO was a mere trustee and the above-mentioned

stockholders as beneficiaries being the true and lawful owners of Lots 3597, 7380 and 1323;
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b) Declaring all the subsequent annotations of court writs and processes, to wit: Entry No.

7416-V-4-D.B., 7417-V-4-D.B., 7512-V-4-D.B., and 7513-V-4-D.B. in TCT No. 8921 for Lot 3597

and TCT No. 8922 for Lot 7380; Entry No. 1660-V-7-D.B., Entry No. 1661-V-7-D.B., Entry No.

1861-V-7-D.B., Entry No. 1862-V-7-D.B., Entry No. 4329-V-7-D.B., Entry No. 3761-V-7-D.B. and

Entry No. 26522 v. 34, D.B. on TCT No. 24576 for Lot 1323-C, and all other subsequentannotations thereon in favor of third persons, as null and void;

c) Directing the Register of Deeds of the Province of Cebu and/or the Register of Deeds of Cebu

City, as the case may be, to cancel all these annotations mentioned in paragraph b) above the

titles;

d) Directing the Register of Deeds of the Province of Cebu to cancel and/or annul TCTs Nos.

8921 and 8922 in the name of RISCO, and to issue another titles in the names of the plaintiffs;

and

e) Directing Philippine National Bank to reconvey TCT No. 119848 in favor of the plaintiffs.7

PNB appealed the adverse ruling to the Court of Appeals which, in its September 29, 2005

Decision, set aside the judgment of the trial court. Although the Court of Appeals agreed with

the trial court that a judgment on the pleadings was proper, the appellate court opined that the

monetary contributions made by Aznar, et al., to RISCO can only be characterized as a loan

secured by a lien on the subject lots, rather than an express trust. Thus, it directed PNB to pay

Aznar, et al., the amount of their contributions plus legal interest from the time of acquisition

of the property until finality of judgment.lawphilThe dispositive portion of the decision reads:

WHEREFORE, premises considered, the assailed Judgment is hereby SET ASIDE.

A new judgment is rendered ordering Philippine National Bank to pay plaintiffs-appellees the

amount of their lien based on the Minutes of the Special Meeting of the Board of Directors duly

annotated on the titles, plus legal interests from the time of appellants acquisition of the

subject properties until the finality of this judgment.

All other claims of the plaintiffs-appellees are hereby DISMISSED.8

Both parties moved for reconsideration but these were denied by the Court of Appeals. Hence,

each party filed with this Court their respective petitions for review on certiorari under Rule 45

of the Rules of Court, which were consolidated in a Resolution9dated October 2, 2006.

In PNBs petition, docketed as G.R. No. 171805, the following assignment of errors were raised:

I
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THE COURT OF APPEALS ERRED IN AFFIRMING THE FINDINGS OF THE TRIAL COURT THAT A

JUDGMENT ON THE PLEADINGS WAS WARRANTED DESPITE THE EXISTENCE OF GENUINE ISSUES

OF FACTS ALLEGED IN PETITIONER PNBS ANSWER.

II

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RIGHT OF RESPONDENTS

TO REFUND OR REPAYMENT OF THEIR CONTRIBUTIONS HAD NOT PRESCRIBED AND/OR THAT

THE MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF RISCO CONSTITUTED

AS AN EFFECTIVE ADVERSE CLAIM.

III

THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE DISMISSAL OF THE COMPLAINT ON

GROUNDS OF RES JUDICATA AND LACK OF CAUSE OF ACTION ALLEGED BY PETITIONER IN ITS

ANSWER.10

On the other hand, Aznar, et al.s petition, docketed as G.R. No. 172021, raised the following

issue:

THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE CONTRIBUTIONS MADE BY THE

STOCKHOLDERS OF RISCO WERE MERELY A LOAN SECURED BY THEIR LIEN OVER THE

PROPERTIES, SUBJECT TO REIMBURSEMENT OR REFUND, RATHER THAN AN EXPRESS TRUST.11

Anent the first issue raised in G.R. No. 171805, PNB argues that a judgment on the pleadings

was not proper because its Answer,

12

which it filed during the trial court proceedings of thiscase, tendered genuine issues of fact since it did not only deny material allegations in Aznar, et

al.s Complaint13

but also set up special and affirmative defenses. Furthermore, PNB maintains

that, by virtue of the trial courts judgment on the pleadings, i t was denied its right to present

evidence and, therefore, it was denied due process.

The contention is meritorious.

The legal basis for rendering a judgment on the pleadings can be found in Section 1, Rule 34 of

the Rules of Court which states that "[w]here an answer fails to tender an issue, or otherwise

admits the material allegations of the adverse partys pleading, the court may, on motion ofthat party, direct judgment on such pleading. x x x."

Judgment on the pleadings is, therefore, based exclusively upon the allegations appearing in

the pleadings of the parties and the annexes, if any, without consideration of any evidence

aliunde.14

However, when it appears that not all the material allegations of the complaint were

admitted in the answer for some of them were either denied or disputed, and the defendant
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458-V-7-D.B. inscribed on TCT No. 24576 on May

15, 1962 and per Entry No. 6966-V-4-D.B. on TCT

No. 8921 and TCT No. 8922 on May 15, 1962;

was thus not a claim adverse to the

ownership rights of the corporation;

12. That these writs and processes annotated onthe titles are all null and void for total want of

valid service upon RISCO and the above-named

stockholders considering that as early as

sometime in 1958, RISCO ceased operations as

earlier stated, and as early as May 15, 1962, the

liens and encumbrances of the above-named

stockholders were annotated in the titles of

subject properties;

11) Par. 12 is denied as in fact noticeto RISCO had been sent to its last

known address at Plaza Goite,

Manila;

13. That more particularly, the Final Deed of Sale

(Annex "G") and TCT No. 119848 are null and

void as these were issued only after 28 years and

5 months (in the case of the Final Deed of Sale)

and 28 years, 6 months and 29 days (in the case

of TCT 119848) from the invalid auction sale on

December 27, 1962, hence, any right, if any,

which PNB had over subject properties had long

become stale;

12) Par. 13 is denied for no law

requires the final deed of sale to be

executed immediately after the end

of the redemption period. Moreover,

another court of competent

jurisdiction has already ruled that

PNB was entitled to a final deed of

sale;

14. That plaintiffs continue to have possession of

subject properties and of their corresponding

titles, but they never received any process

concerning the petition filed by PNB to have TCT

24576 over Lot 1323-C surrendered and/or

cancelled;

13) Par. 14 is denied as plaintiffs are

not in actual possession of the land

and if they were, their possession

was as trustee for the creditors of

RISCO like PNB;

15. That there is a cloud created on theaforementioned titles of RISCO by reason of the

annotate writs, processes and proceedings

caused by Jose Garrido and PNB which were

apparently valid or effective, but which are in

truth and in fact invalid and ineffective, and

14) Par. 15 is denied as the courtorders directing the issuance of titles

to PNB in lieu of TCT 24576 and TCT

8922 are valid judgments which

cannot be set aside in a collateral

proceeding like the instant case.18
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As a consequence thereof, a corporation has a personality separate and distinct from those of

its stockholders and other corporations to which it may be connected.24

Thus, we had

previously ruled in Magsaysay-Labrador v. Court of Appeals25

that the interest of the

stockholders over the properties of the corporation is merely inchoate and therefore does not

entitle them to intervene in litigation involving corporate property, to wit:

Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent, remote,

conjectural, consequential and collateral. At the very least, their interest is purely inchoate, or

in sheer expectancy of a right in the management of the corporation and to share in the profits

thereof and in the properties and assets thereof on dissolution, after payment of the corporate

debts and obligations.

While a share of stock represents a proportionate or aliquot interest in the property of the

corporation, it does not vest the owner thereof with any legal right or title to any of the

property, his interest in the corporate property being equitable or beneficial in nature.Shareholders are in no legal sense the owners of corporate property, which is owned by the

corporation as a distinct legal person.26

In the case at bar, there is no allegation, much less any proof, that the corporate existence of

RISCO has ceased and the corporate property has been liquidated and distributed to the

stockholders. The records only indicate that, as per Securities and Exchange Commission (SEC)

Certification27

dated June 18, 1997, the SEC merely suspended RISCOs Certificate of

Registration beginning on September 5, 1988 due to its non-submission of SEC required reports

and its failure to operate for a continuous period of at least five years.

Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the properties

at issue in this case on the strength of the Minutes which, at most, is merely evidence of a loan

agreement between them and the company. There is no indication or even a suggestion that

the ownership of said properties were transferred to them which would require no less that the

said properties be registered under their names. For this reason, the complaint should be

dismissed since Aznar, et al., have no cause to seek a quieting of title over the subject

properties.

At most, what Aznar, et al., had was merely a right to be repaid the amount loaned to RISCO.

Unfortunately, the right to seek repayment or reimbursement of their contributions used to

purchase the subject properties is already barred by prescription.

Section 1, Rule 9 of the Rules of Court provides that when it appears from the pleadings or the

evidence on record that the action is already barred by the statute of limitations, the court shall

dismiss the claim, to wit:
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Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed

waived. However, when it appears from the pleadings or the evidence on record that the court

has no jurisdiction over the subject matter, that there is another action pending between the

same parties for the same cause, or that the action is barred by a prior judgment or by statute

of limitations, the court shall dismiss the claim. (Emphasis supplied.)

In Feliciano v. Canoza,28

we held:

We have ruled that trial courts have authority and discretion to dismiss an action on the ground

of prescription when the parties pleadings or other facts on record show it to be indeed time -

barred x x x; and it may do so on the basis of a motion to dismiss, or an answer which sets up

such ground as an affirmative defense; or even if the ground is alleged after judgment on the

merits, as in a motion for reconsideration; or even if the defense has not been asserted at all, as

where no statement thereof is found in the pleadings, or where a defendant has been declared

in default. What is essential only, to repeat, is that the facts demonstrating the lapse of theprescriptive period, be otherwise sufficiently and satisfactorily apparent on the record; either

in the averments of the plaintiffs complaint, or otherwise established by the

evidence.29

(Emphasis supplied.)

The pertinent Civil Code provision on prescription which is applicable to the issue at hand is

Article 1144(1), to wit:

The following actions must be brought within ten years from the time the right of action

accrues:

1. Upon a written contract;

2. Upon an obligation created by law;

3. Upon a judgment. (Emphasis supplied.)

Moreover, in Nielson & Co., Inc. v. Lepanto Consolidated Mining Co.,30

we held that the term

"written contract" includes the minutes of the meeting of the board of directors of a

corporation, which minutes were adopted by the parties although not signed by them, to wit:

Coming now to the question of prescription raised by defendant Lepanto, it is contended by thelatter that the period to be considered for the prescription of the claim regarding participation

in the profits is only four years, because the modification of the sharing embodied in the

management contract is merely verbal, no written document to that effect having been

presented. This contention is untenable. The modification appears in the minutes of the special

meeting of the Board of Directors of Lepanto held on August 21, 1940, it having been made

upon the authority of its President, and in said minutes the terms of modification had been
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specified. This is sufficient to have the agreement considered, for the purpose of applying the

statute of limitations, as a written contract even if the minutes were not signed by the parties

(3 A.L.R., 2d, p. 831). It has been held that a writing containing the terms of a contract if

adopted by two persons may constitute a contract in writing even if the same is not signed by

either of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says that an unsignedagreement the terms of which are embodied in a document unconditionally accepted by both

parties is a written contract (Corbin on Contracts, Vol. I, p. 85).31

Applied to the case at bar, the Minutes which was approved on March 14, 1961 is considered as

a written contract between Aznar, et al., and RISCO for the reimbursement of the contributions

of the former. As such, the former had a period of ten (10) years from 1961 within which to

enforce the said written contract. However, it does not appear that Aznar, et al., filed any

action for reimbursement or refund of their contributions against RISCO or even against PNB.

Instead the suit that Aznar, et al., brought before the trial court only on January 28, 1998 was

one to quiet title over the properties purchased by RISCO with their contributions. It is

unmistakable that their right of action to claim for refund or payment of their contributions had

long prescribed. Thus, it was reversible error for the Court of Appeals to order PNB to pay

Aznar, et al., the amount of their liens based on the Minutes with legal interests from the time

of PNBs acquisition of the subject properties.

In view of the foregoing, it is unnecessary for the Court to pass upon the other issues raised by

the parties.

WHEREFORE, the petition of Aznar, et al., in G.R. No. 172021 is DENIED for lack of merit. The

petition of PNB in G.R. No. 171805 is GRANTED. The Complaint, docketed as Civil Case No. CEB-

21511, filed by Aznar, et al., is hereby DISMISSED. No costs.

SO ORDERED.


SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 160727 June 26, 2007

UNION BANK OF THE PHILIPPINES,petitioner,

vs.

DANILO L. CONCEPCION,respondent.

D E C I S I O N
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GARCIA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner Union Bank of the

Philippines (Union Bank) assails and seeks the setting aside of the Decision1dated July 22, 2003

of the Court of Appeals (CA) in CA-G.R. SP No. 75355, as effectively reiterated in its

Resolution2of November 7, 2003 denying the petitioners motion for reconsideration.

The records, which include a copy of this Courts Decision dated May 19, 1998 in G.R. No.

131729 entitled "Union Bank of the Philippines v. Court of Appeals et al., respondents,"3yield

the following material facts:

On September 16, 1997, the EYCO Group of Companies4(EYCO or EYCO Group) filed with the

Securities and Exchange Commission (SEC) a PETITION5for the declaration of suspension of

payment, appointment of a rehabilitation receiver/committee and approval of rehabilitation

plan with an alternative prayer for liquidation and dissolution of corporations (Petition for

Suspension of Payment, hereinafter). In it, EYCO depicted the Groups composite corporations

as having a combined assets that are more than enough to pay off all their debts, but

nonetheless unable to pay them as they fall due. Joining EYCO as co-petitioners were Eulogio

Yutingco and two other individuals holding controlling interests in the composite corporations

(collectively, the Yutingcos).

Finding the petition, docketed as SEC Case No. 09-97-5764, to be sufficient in form and

substance, the SEC Hearing Panel, by an order of September 19, 1997, directed the suspension

of all actions, claims and proceedings against EYCO, et al. pending before any court, tribunal,

board or office6

(the Suspension Order). At the same time, the Panel set the petition forhearing.

Meanwhile, a consortium of private banks which had granted credit facilities to EYCO, among

them, Union Bank, convened to map out their collective collection options. The formation of a

management committee (ManCom) to represent the creditor banks was agreed upon in that

meeting.

Subsequently, Union Bank decided to break away from the consortium and, without notifying

its members, filed a slew of civil cases against EYCO, et al. Of relevance is the first, a complaint

for a sum of money instituted on September 23, 1997 before the Regional Trial Court (RTC) ofMakati City, against four (4) members of the EYCO Group and spouses Eulogio and Bee Kuan

Yutingco, as sureties of the corporate obligations, with application for preliminary attachment.

This complaint,7docketed as Civil Case No. 97-2184, eventually ended up in Branch 148 of the

court. The next day, the Makati RTC issued the desired writ of preliminary

attachment,8pursuant to which levy on attachment was annotated on the titles, i.e., TCT Nos.

V-481929and V-48193

10of the Registry of Deeds of Valenzuela City, of two parcels of land
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under the name of Nikon Plaza, Inc. and EYCO Properties, Inc., respectively. Also attached, per

herein respondent Danilo L. Concepcion (Concepcion, for brevity), without denial from the

petitioner, is a parcel of land covered by TCT No. V-49678 of the same registry allegedly held by

the Yutingcos in trust for Nikon Industrial Corporation.11

On October 22, 1997, Union Bank moved, on jurisdictional ground, for the dismissal of SEC Case

No. 09-97-5764. On the same date, EYCO submitted its rehabilitation plan.

In January 1998, the SEC Hearing Panel appointed the regular members of the newly created

ManCom for EYCO.

Meanwhile, Union Bank, without awaiting for the SECs ruling on its motion to dismiss SEC Case

No. 09-97-5764, filed with the CA a petition for certiorari to nullify what it tagged as the

precipitate September 19, 1997 SEC suspension order12

and its creation of the ManCom. In the

same petition, docketed as CA-G.R. SP No. 45774, Union Bank alleged that the jurisdiction over

the basic petition for declaration of suspension of payment pertains to the RTC under Act No.

1956, as amended, or the Insolvency Law.

On December 22, 1997, in CA-G.R. SP No. 45774, the CA rendered judgment declaring Union

Bank guilty of forum shopping and accordingly dismissed its petition for certiorari. This Court, in

its Decision13

dated May 19, 1998 in G.R. No. 131729, in turn affirmed that of the CA, but

proceeded further to declare the SEC as possessed of jurisdiction over EY COs petition for

suspension of payments filed pursuant to Section 5(d) of Presidential Decree (P.D.) No. 902-A,

but not insofar as the Yutingcos petition was concerned. With respect to the Yutingcos, the

Court held that the SECs jurisdiction on matters of suspension of payments is confined only tothose initiated by corporate entities, as the aforecited section does not allow an individual to

file, or join in, the corresponding petition. In line with the rule on misjoinder of parties, the

Court directed the SEC to drop the individual petitioners from the petition for suspension of

payment.

Conformably with this Courts Decision aforementioned, the Makati RTC issued, in Civil Case

No. 97-2184, an Order14

dated August 17, 1998 thereunder indefinitely suspending the

proceedings in that collection suit until further orders. The fallo of the RTCs order reads:

WHEREFORE, the complaint filed by the plaintiff *Union Bank] against defendant-corporation*EYCO 4+ is hereby INDEFINITELY SUSPENDED until further Orders from this Court in view of

the existing petition for Suspension of Payment before the [SEC]. On the other hand, the

defendants motion to dismiss complaint against the individual-defendants, namely: Spouses

Eulogio and Bee Kuan Yutingco, is hereby DENIED for lack of merit.
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regard that the collection proceedings were suspended "until further Orders from this

Court"20

and the RTC of Makati has yet to issue the suspension-lifting order. The Makati RTC

denied the motion on December 16, 2002.

Earlier, however, Union Bank presented evidence ex parte, on the basis of which the Makati

RTC rendered, on December 27, 2002, partial judgment21ordering EYCO to pay the bank P400

million plus interests and attorneys fees.

Via a petition for certiorari and prohibition before the CA, Concepcion challenged the RTCs

partial judgment aforementioned and its earlier order denying the motion to intervene. His

recourse was docketed as CA-G.R. SP No. 75355.

The appellate court eventually issued the herein assailed Decision22

reversing the Makati RTCs

impugned issuances and allowing Concepcion to intervene, thus:

WHEREFORE, foregoing premises considered, the petition is GRANTED. The assailed orders andpartial judgment are hereby ANNULLED and SET ASIDE. Public respondent [RTC Judge Oscar

Pimentel, Branch 148, Makati City] is ordered to allow petitioner [Concepcion] to intervene in

Civil Case No. 97-2184.

SO ORDERED.

Following the denial of its motion for reconsideration,23

Union Bank has interposed this petition

ascribing to the CA the following errors:

1. In ruling in favor of respondent Concepcions right to intervene in Civil Case No. 97 -2184pending in the lower court despite his lack of legal interest in the matter in litigation.

2. In ruling in favor of respondent Concepcions right to intervene in said Civil Case No. 97-2184

despite his lack of legal personality, his appointment by the SEC as liquidator of EYCO being null

and void for lack of jurisdiction; and

3. In giving due course to respondent Concepcions petition for certiorari under Rule 65 of the

1997 Rules of Civil Procedure despite its being the improper remedy.

We DENY.

As the Court distinctly notes, the petitioner does not assail the CAs judgment insofar as it

nullified the RTCs partial judgment or its default order. As thus couched, the petition

particularly sets its sight on that part of the appellate courts ruling allowing respondent

Concepcion to intervene in Civil Case No. 97-2184. Of the three errors assigned, the more

critical relates to the challenged validity of the respondents appointment by the SEC as
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liquidator of the EYCO Group, his right to intervene predicated as it is on his being such

liquidator.

It is the petitioners posture, following the Makati RTCs line, that the respondents

appointment as liquidator of EYCO was invalid for lack of jurisdiction on the part of SEC to

preside, in first place, over EYCOs liquidation and dissolution. Pressing on, the petitioner states

that EYCO is already insolvent and insolvency proceedings fall under the jurisdiction of regular

courts under the Insolvency Law (Act No. 1956, as amended) in relation to the pertinent

provision of R.A. No. 8799, otherwise known as the Securities Regulation Code.

We are not persuaded.

As it were, the underlying petition24

EYCO filed with and over which the SEC assumed

jurisdiction was one for declaration of suspension of payment, appointment of a rehabilitation

receiver/committee, approval of rehabilitation plan with alternative prayer for liquidation and

dissolution. That the SEC, along the way, ordained EYCOs liquidation and dissolution did not,

without more, strip the SEC of jurisdiction over the liquidation process. Albeit jurisdiction over a

petition to declare a corporation in a state of insolvency strictly lies with regular courts, the SEC

possessed, during the period material, ample power under P.D. No. 902-A,25

as amended, to

declare a corporation insolvent as an incident of and in continuation of its already acquired

jurisdiction over the petition to be declared in the state of suspension of payments in the two

instances provided in Section 5(d) thereof.26

Said Section 5(d)27

vests the SEC with exclusive and

original jurisdiction over petitions for suspension of payments which may either be: (a) a simple

petition for suspension of payments based on the provisions of the Insolvency Law, i.e., the

petitioning corporation has sufficient assets to cover all its debts, but foresees the impossibility

of meeting the obligations as they fall due, or (b) a similar petition filed by an insolvent

corporation accompanied by a prayer for the creation of a management committee and/or

rehabilitation receiver based on the provisions of P.D. No. 902-A, as amended by P.D. No.

1758.28

In the case at bench, EYCOs petition for suspension of payment was, at bottom, a mix of both

situations adverted to above. For, while EYCO, in the said petition, alleged being solvent but

illiquid, it nonetheless pleaded for the constitution of a rehabilitation receiver/committee, with

an alternative prayer for liquidation, if warranted. Clearly then, the SEC has, from the start,jurisdiction over EYCOs petition for suspension of payment, such jurisdiction, following

Ching,29

continuing for purposes of liquidation after it (SEC) declared EYCO insolvent. The SEC

appeared to be aware of the continuity angle as it even ordered the remand to the SEC Hearing

Panel of SEC Case No. 09-97-5764 for purposes of liquidating and dissolving the EYCO Group.
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If the SEC contextually retained jurisdiction over the liquidation of EYCO, is it not but logical

then that it has competence to appoint the respondent or any qualified individual for that

matteras liquidator?

And lest it be overlooked, the Court had, in G.R. No. 131729, already rejected the petitioners

thesis about the SECs purported lack of jurisdiction over EYCOs suspension of payment case

owing to its supervening insolvency. Therein, the Court stated:

We are of course aware of the argument *of+ petitioner *Union Bank+ that the petition of

*EYCO+ should be entirely dismissed and taken out of the SECs jurisdiction on account of the

alleged insolvency of [the latter]. In this regard, petitioner theorizes that [EYCO has] already

become insolvent when [the composite corporations] allegedly disposed of a substantial

portion of their properties hence suspension of payments with the SEC is not the proper

remedy.

Such argument does not persuade us. Petitioners allegations of *EYCOs+ supposed

insolvency are hardly of any consequence to the assumption of jurisdiction by the SEC over

the nature or subject matter of the petition for suspension of payments. Aside from the fact

that these allegations are evidentiary in nature , we have likewise consistently ruled that what

determines the nature of an action, as well as which court or body has jurisdiction over it, are

the allegations of the complaint, or a petition as in this case, and the character of the relief

sought. That the merits of the case after due proceedings are later found to veer away from the

claims asserted by EYCO in its petition, as when it is shown later that it is actually insolvent and

may not be entitled to suspension of payments, does not divest the SEC at all of its jurisdiction

already acquired as its inception . (Words in brackets and emphasis added.)

The Court is certainly aware of the transfer, effected by R.A. No. 8799, to the RTC of the SECs

jurisdiction defined under Section 5(d) of P.D. No. 902-A.30

Such transfer, however, did not, as

the petitioner and the RTC posit, divest the SEC of its jurisdiction over SEC Case No. 09-97-5764,

given that it had already issued, as early as September 19, 1998, the suspension order after it

found the petition for suspension filed on September 16, 1998 to be sufficient in form and

substance. Subsection 5.2 of R.A. No. 8799 prescribing the jurisdiction transfer and the rules on

transition provides as follows:

5.2. The *Securities and Exchange+ Commissions jurisdiction over all cases enumerated under

Section 5 of [P.D.] No. 902-A is hereby transferred to the appropriate [RTC]: Provided that the

Supreme Court may designatethe [RTC] branches that shall exercise jurisdiction over these

cases. xxx The Commission shall retain jurisdiction over pending suspension of

payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Words in bracket

and emphasis added.)
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Just like the CA, the Court has no doubt about the respondent, as the duly-appointed liquidator

of EYCOs remaining assets, having a legal interest in the matter litigated in Civil Case No. 97-

2184. This is particularly true with respect to the parcels of land covered by the writ of

attachment which, in the implementation of the SEC-approved Liquidation Plan for EYCO, had

been conveyed to the respondent

40

in trust for the benefit of creditors, EYCOs stockholdersand other persons in interest. At the very least, the respondent, as liquidator-trustee, is so

situated as to be affected by the distribution or disposition of the attached properties which

were under threat of being levied on execution and sold at public auction. Respondent would

be unfaithful to his trust if he does take a bona fide effort to intervene in Civil Case No. 97-2184

to thwart the attempt of the petitioner to collect unpaid loans ahead of other legitimate

creditors similarly situated. Under the SEC Rules of Procedure on Corporate Recovery pursuant

to which the SEC appointed the respondent to liquidate the remaining assets of EYCO, the

liquidator is empowered and duty bound to "*R+epresent the debtor in any case filed by or

against the debtor in any tribunal" and "[B]ring any action on behalf of the debtor to collect,

recover or preserve any of its assets, or to resist or defend against any claim."41

Any suggestion that allowing intervention would unduly delay the final closure of the collection

case cannot be accepted. Far from unnecessarily prolonging or complicating the case, the

desired intervention, if allowed, would possibly enable the court in one single action and

judgment to protect the collective interests of the creditors of the EYCO Group that are

seriously threatened by the imminent exclusion of certain properties from the pool of assets

that should legally, if not ideally, be equitably distributed among them. Disallowing intervention

would pave the way for the petitioner to seize the proceedings before the Makati RTC to work

entirely in its favor. Such course of action trifles with the entire liquidation process. And any

decision rendered therein would unlikely be left undisturbed by other legitimate but unpaid

creditors whose interest in the attached properties can hardly be disputed.

Moreover, the claim of the respondent over the attached properties could not possibly be

better threshed out in a separate but subsequent proceedings given that he had already

secured titles over them.

The third and last issue turns on the propriety of certiorari as a recourse to the denial of a

motion for intervention. The correct remedy, according to the petitioner, is an appeal under

Rule 45 of the Rules of Court, an order denying intervention being final in character, not merely

interlocutory. Petitioner thus faults the CA for allowing respondent Concepcions petition for

certiorari under Rule 65 of the Rules as a vehicle to impugn the denial of his motion for

intervention. It stresses that the availability of appeal proscribes recourse to the special civil

action of certiorari.

We are not convinced.
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Petitioners statement of the rule on the availability of the extraordinary writ of certiorari under

the premises is impeccable. So too is its citation of supporting jurisprudence. Petitioner

conveniently forgot, however, to include in its formulation settled exceptions to and

qualifications of the rule, even as it glossed over another holding that intervention is merely

accessory to the principal action and, as such, is an interlocutory proceeding dependent on thecase between the original parties.

42

It is true that certiorari may not be resorted to when appeal is available as a remedy. However,

it is also true that the Court has allowed the issuance of a writ of certiorari when appeal does

not afford a speedy and adequate remedy in the ordinary course of law. As in the past, the

Court has ruled that the availability of an appeal does not foreclose recourse to the ordinary

remedies or certiorari or prohibition where appeal is not adequate, equally beneficial,

expeditious and sufficient.43

Stated a bit differently, certiorari may be availed of where an

appeal would be slow, inadequate and insufficient. The determination as to what exactly

constitutes plain, speedy and adequate remedy rests on judicial discretion and depends on the

particular circumstances of each case.

In the case at bar, the CA did not commit any reversible error in allowing the petition for

certiorari filed by the respondent. As it were, the respondent was able to convince the CA of

the urgency of his cause and that an appeal from the denial of the motion for intervention

would not constitute speedy and adequate remedy, thus necessitating the resort to the

extraordinary remedy of certiorari. And in an instance justifying the invocation of the remedy of

certiorari, it would appear too that the CA found the RTC to have exercised its judicial authority

in an oppressive manner,

44

so much so that the CA stated the apt observation that: "In the firstplace, it [RTC] should not have taken cognizance of the case when it was notified of the pending

petition [for suspension of payments] before the SEC at the time the complaint was filed."45

Certainly not lost on the Court is an obvious reality: the Makati RTC virtually interfered with and

invalidated the appointment made by the SEC when it has no jurisdiction over the latter.

WHEREFORE, the instant petition is DENIED and the impugned Decision and Resolution of the

Court of Appeals dated July 22, 2003 and November 7, 2003, respectively, are AFFIRMED.

Costs against the petitioner.

SO ORDERED.


SUPREME COURT

Manila
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SECOND DIVISION

G.R. No. 137489 May 29, 2002

COOPERATIVE DEVELOPMENT AUTHORITY, petitioner,

vs.DOLEFIL AGRARIAN REFORM BENEFICIARIES COOPERATIVE, INC., ESMERALDO A. DUBLIN,

ALICIA SAVAREZ, EDNA URETA, ET AL., respondents.

DE LEON, JR., J.:

At the core of the instant petition for review on certiorari of the Decision1 of the Court of

Appeals, 13th

Division, in CA-G.R. SP. No. 47933 promulgated on September 9, 1998 and its

Resolution2dated February 9, 1999 is the issue of whether or not petitioner Cooperative

Development Authority (CDA for brevity) is vested with quasi-judicial authority to adjudicate

intra-cooperative disputes.

The record shows that sometime in the later part of 1997, the CDA received from certain

members of the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. (DARBCI for brevity), an

agrarian reform cooperative that owns 8,860 hectares of land in Polomolok, South Cotabato,

several complaints alleging mismanagement and/or misappropriation of funds of DARBCI by the

then incumbent officers and members of the board of directors of the cooperative, some of

whom are herein private respondents.

Acting on the complaints docketed as CDA-CO Case No. 97-011, CDA Executive Director

Candelario L. Verzosa, Jr. issued an order3dated December 8, 1997 directing the privaterespondents to file their answer within ten (10) days from receipt thereof.

Before the private respondents could file their answer, however, CDA Administrator Alberto P.

Zingapan issued on December 15, 1997 an order,4upon the motion of the complainants in CDA-

CO Case No. 97-011, freezing the funds of DARBCI and creating a management committee to

manage the affairs of the said cooperative.

On December 18, 1991, the private respondents filed a Petition for Certiorari5with a prayer for

preliminary injunction, damages and attorneys fees against the CDA and its officers namely:

Candelario L. Verzosa, Jr. and Alberto P. Zingapan, including the DOLE Philippines Inc. before

the Regional Trial Court (RTC for brevity) of Polomolok, South Cotabato, Branch 39. The petition

which was docketed as SP Civil Case No. 25, primarily questioned the jurisdiction of the CDA to

resolve the complaints against the private respondents, specifically with respect to the

authority of the CDA to issue the "freeze order" and to create a management committee that

would run the affairs of DARBCI.


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subsequent oath-taking of the officers elected therein, and all actions taken during the said

meeting, being in blatant defiance of a valid restraining order issued by this Court, to be NULL

AND VOIDAB INITIOAND OF NO LEGAL FORCE AND EFFECT.

FURTHERMORE, the private respondents are hereby given thirty (30) days from receipt of this

Resolution within which to explain in writing why they should not be held in contempt of this

Court for having openly defied the restraining order dated 10 July 1998. The Hon. Jose C.

Medina of the CDA is given a like period to explain in writing why he should not be cited in

contempt for having administered the oath of the "Board of Officers" pending the effectivity of

the restraining order. The respondent Arcadio S. Lozada, Administrator of the CDA, is likewise

given the same period to explain why he should not be held in contempt for issuing a resolution

on 21 July 1998 validating the proceedings of the assembly, and another resolution on 28

August 1998 confirming the election of the officers thereof.

SO ORDERED.

Hence, the instant petition19

for review which raises the following assignments of error:

I

THE HONORABLE COURT OF APPEALS, IN NULLIFYING THE ORDERS AND RESOLUTIONS OF THE

COOPERATIVE DEVELOPMENT AUTHORITY IN CDA CO CASE NO. 97-011, DECIDED A QUESTION

OF SUBSTANCE THAT IS NOT IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THE

SUPREME COURT.

II

THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE RULE ON FORUM-

SHOPPING.

III

THE HONORABLE COURT OF APPEALS ERRED IN RENDERING A DECISION ON THE BASIS OF PURE

CONJECTURES AND SURMISES AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE

OF JUDICIAL PROCEEDINGS WHICH CALL FOR AN EXERCISE OF THIS HONORABLE COURTS

SUPERVISION.

Petitioner CDA claims that it is vested with quasi-judicial authority to adjudicate cooperative

disputes in view of its powers, functions and responsibilities under Section 3 of Republic Act No.

6939.20

The quasi-judicial nature of its powers and functions was confirmed by the Department

of Justice, through the then Acting Secretary of Justice Demetrio G. Demetria, in DOJ Opinion


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No. 10, Series of 1995, which was issued in response to a query of the then Chairman Edna E.

Aberina of the CDA, to wit:

Applying the foregoing, the express powers of the CDA to cancel certificates of registration of

cooperatives for non-compliance with administrative requirements or in cases of voluntary

dissolution under Section 3(g), and to mandate and conciliate disputes within a cooperative or

between cooperatives under Section 8 of R.A. No. 6939, may be deemed quasi-judicial in

nature.

The reason is that in the performance of its functions such as cancellation of certificate of

registration, it is necessary to establish non-compliance or violation of administrative

requirement. To do so, there arises an indispensable need to hold hearings, investigate or

ascertain facts that possibly constitute non-compliance or violation and, based on the facts

investigated or ascertained, it becomes incumbent upon the CDA to use its official discretion

whether or not to cancel a cooperatives certificate of registration, thus, clearly revealing thequasi-judicial nature of the said function. When the CDA acts as a conciliatory body pursuant to

Section 8 of R.A. No. 6939, it in effect performs the functions of an arbitrator. Arbitrators are by

the nature of their functions act in quasi-judicial capacity xxx.

The quasi-judicial nature of the foregoing functions is bolstered by the provisions of Sections

3(o) of R.A. No. 6939 which grants CDA on (sic) the exercise of other functions as may be

necessary to implement the provisions of cooperative laws, the power to summarily punish for

direct contempt any person guilty of misconduct in the presence thereof who seriously

interrupts any hearing or inquiry with a fine or imprisonment prescribed therein, a power

usually granted to make effective the exercise of quasi-judicial functions.21

Likewise, the Office of the President, through the then Deputy Executive Secretary, Hon.

Leonardo A. Quisumbing, espoused the same view in the case ofAlberto Ang, et al. v. The Board

of Directors, Metro Valenzuela Transport Services Cooperative, Inc., O.P. Case No. 51111, when

it declared and ruled that:

Concededly, Section 3(o) of R.A. No. 6939 and Article 35(4) of R.A. 6938, may not be relied upon

by the CDA as authority to resolve internal conflicts of cooperatives, they being general

provisions. Nevertheless, this does not preclude the CDA from resolving the instant case. The

assumption of jurisdiction by the CDA on matters which partake of cooperative disputes is a

logical, necessary and direct consequence of its authority to register cooperatives. Before a

cooperative can acquire juridical personality, registration thereof is a condition sine qua non,

and until and unless the CDA issues a certificate of registration under its official seal, any

cooperative for that matter cannot be considered as having been legally constituted. To our

mind, the grant of this power impliedly carries with it the visitorial power to entertain


30/84

cooperative conflicts, a lesser power compared to its authority to cancel registration certificates

when, in its opinion, the cooperative fails to comply with some administrative requirements

(Sec. 2(g), R.A. No. 6939). Evidently, respondents-appellants claim that the CDA is limited to

conciliation and mediation proceedings is bereft of legal basis. Simply stated, the CDA, in the

exercise of such other function and in keeping with the mandate of the law, could render thedecisions and/or resolutions as long as they pertain to the internal affairs of the public service

cooperative, such as the rights and privileges of its members, the rules and procedures for

meetings of the general assembly, Board of Directors and committees, election and

qualifications of officers, directors and committee members, and allocation and distribution of

surpluses.22

The petitioner avers that when an administrative agency is conferred with quasi-judicial powers

and functions, such as the CDA, all controversies relating to the subject matter pertaining to its

specialization are deemed to be covered within the jurisdiction of said administrative agency.

The courts will not interfere in matters which are addressed to the sound discretion of

government agencies entrusted with the regulation of activities undertaken upon their special

technical knowledge and training.

The petitioner added that the decision in the case ofCANORECO v. Hon. Ruben D.

Torres,23

affirmed the adjudicatory powers and functions of CDA contrary to the view held by

the Court of Appeals, when the Supreme Court upheld therein the ruling of the CDA annulling

the election of therein respondents Norberto Ochoa, et al. as officers of the Camarines Norte

Electric Cooperative.

Petitioner CDA also claims that herein private respondents are guilty of forum-shopping by

filing cases in three (3) different fora seeking the same relief. Petitioner pointed out that private

respondents originally filed a petition with a prayer for preliminary injunction dated December

17, 1997 before the RTC of Polomolok, South Cotabato which was docketed as SP Civil Case No.

25. Subsequently, the same private respondents filed another petition with a prayer for

preliminary injunction with the Court of Appeals, 13th

Division, docketed as CA-G.R. SP No.

47933. Thereafter, Investa, also represented by the same counsel of private respondents, Atty.

Reni Dublin, filed another case with the RTC of Polomolok, South Cotabato, docketed as SP Civil

Case No. 28, likewise praying, among others, for the issuance of preliminary injunction and an

application for a temporary restraining order. In effect, petitioner was confronted with three (3)

TROs issued in three (3) separate actions enjoining it from enforcing its orders and resolutions

in CDA-CO Case No. 97-011.

In their Comment,24

private respondents contend that the instant petition for review

on certiorarifiled by CDA Administrator Alberto Zingapan should be dismissed and struck down


31/84

as a mere scrap of paper for lack of authority to file the same from the Office of the Solicitor

General and for having been filed without approval from the Board of Administrators of CDA.

The private respondents also contend that, contrary to the claim of the petitioner, the powers,

functions and responsibilities of the CDA show that it was merely granted regulatory or

supervisory powers over cooperatives in addition to its authority to mediate and conciliate

between parties involving the settlement of cooperative disputes.

Private respondents denied that they are guilty of forum-shopping. They clarified that the case

filed with the RTC of Polomolok, South Cotabato, Branch 39, docketed as SP Civil Case No. 25,

was a petition for certiorari. On the other hand, the case that they filed with the Court of

Appeals, 13th Division, docketed therein as CA-G.R. SP No. 47933, was a petition for prohibition

to stop the holding of a special general assembly and the election of a new set of DARBCI

officers on June 14, 1998 as ordered by the petitioner CDA on May 26, 1998, which events have

not yet occurred at the time the petition for certiorariwas filed by the private respondents withthe RTC of Polomolok, South Cotabato, Branch 39.

Private respondents also denied that the filing by Investa of the petition for the declaration of

nullity of the orders and resolutions of petitioner CDA, with a prayer for temporary restraining

order with the RTC of Polomolok, South Cotabato, docketed therein as SP Civil Case No. 28,

constituted forum-shopping on their part. They pointed out that Investa has a separate juridical

personality from DARBCI and that, contrary to the claim of petitioner CDA, the former is not

represented by the lawyer of the private respondents.

By way of reply,25

petitioner claims that Atty. Rogelio P. Madriaga was properly deputized,among other lawyers, as Special Attorney by the Office of the Solicitor General to represent the

CDA in the instant petition pursuant to the letter26

of Assistant Solicitor General Carlos N.

Ortega addressed to CDA Chairman Jose C. Medina, Jr. dated April 8, 1999. Likewise, the filing

of the instant petition was an official act of CDA Administrator Alberto P. Zingapan who was

duly appointed by the CDA Board of Administrators as chairman of the Oversight Committee on

Legal Matters per Resolution No. 201, S-1998.27

Meanwhile, on March 26, 1999, certain persons alleging to be incumbent officers and members

of the board of directors of DARBCI filed a motion to intervene in the instant petition which was

granted by this Court per its Resolution dated July 7, 1999.28In the same resolution, this Court

required both petitioner CDA and the private respondents in this case to file their respective

comments to the petition-in-intervention within ten (10) days from notice, but both parties

failed to comply to do so up to the present.

We note that the instant petition for review on certiorari suffers from a basic infirmity for lack

of the requisite imprimatur from the Office of the Solicitor General, hence, it is dismissible on


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that ground. The general rule is that only the Solicitor General can bring or defend actions on

behalf of the Republic of the Philippines and that actions filed in the name of the Republic, or

its agencies and instrumentalities for that matter, if not initiated by the Solicitor General, will

be summarily dismissed.29

The authority of the Office of the Solicitor General to represent the Republic of the Philippines,

its agencies and instrumentalities, is embodied under Section 35(1), Chapter 12, Title III, Book

IV of the Administrative Code of 1987 which provides that:

SEC. 35. Powers and Functions.The Office of the Solicitor General shall represent the

Government of the Philippines, its agencies and instrumentalities and its officials and agents in

any litigation, proceeding, investigation or matter requiring the services of lawyers. When

authorized by the President or head of the office concerned, it shall also represent government

owned or controlled corporations. The Office of the Solicitor General shall constitute the law

office of the Government and, as such, shall discharge duties requiring the services of lawyers.It shall have the following specific powers and functions:

(1) Represent the Government in the Supreme Court and the Court of Appeals in all criminal

proceedings; represent the Government and its officers in the Supreme Court, Court of

Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the

Government or any officer thereof in his official capacity is a party.

The import of the above-quoted provision of the Administrative Code of 1987 is to impose upon

the Office of the Solicitor General the duty to appear as counsel for the Government, its

agencies and instrumentalites and its officials and agents before the Supreme Court, the Courtof Appeals, and all other courts and tribunals in any litigation, proceeding, investigation or

matter requiring the services of a lawyer. Its mandatory character was emphasized by this

Court in the case of Gonzales v. Chavez,30

thus:

It is patent that the intent of the lawmaker was to give the designated official, the Solicitor

General, in this case, the unequivocal mandate to appear for the government in legal

proceedings. Spread out in the laws creating the office is the discernible intent which may be

gathered from the term "shall", which is invariably employed, from Act No. 136 (1901) to the

more recent Executive Order No. 292 (1987).

xxx xxx xxx

The decision of this Court as early as 1910 with respect to the duties of the Attorney-General

well applies to the Solicitor General under the facts of the present case. The Court then

declared:


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In this jurisdiction, it is the duty of the Attorney General to perform the duties imposed upon

him by law and he shall prosecute all causes, civil and criminal, to which the Government of

the Philippine Islands, or any officer thereof, in his official capacity, is a party xxx.

xxx xxx xxx

The Court is firmly convinced that considering the spirit and the letter of the law, there can be

no other logical interpretation of Sec. 35 of the Administrative Code than that it is, indeed,

mandatory upon the OSG to "represent the Government of the Philippines, its agencies and

instrumentalities and its officials and agents in any litigation, proceeding, investigation or

matter requiring the services of a lawyer."

As an exception to the general rule, the Solicitor General, in providing legal representation for

the government, is empowered under Section 35(8), Chapter 12, Title III, Book IV of the

Administrative Code of 1987 to "deputize legal officers of government departments, bureaus,

agencies and offices to assist the Solicitor General and appear or represent the Government in

cases involving their respective offices, brought before the courts and exercise supervision and

control over such legal officers with respect to such cases."

Petitioner claims that its counsel of record, Atty. Rogelio P. Madriaga, was deputized by the

Solicitor General to represent the CDA in the instant petition. To prove its claim, the petitioner

attached to its Reply to the Comment dated January 31, 2000, a photocopy of the alleged

deputation letter31

from the Office of the Solicitor General signed by Hon. Carlos N. Ortega,

Assistant Solicitor General, addressed to CDA Chairman Jose C. Medina, Jr.

A close scrutiny of the alleged deputation letter from the Office of the Solicitor General shows,

however, that said counsel for the petitioner was only "authorized to appear as counsel in all

civil cases in the lower courts (RTCs and MTCs) wherein the CDA is a party-litigant". Likewise,

the same letter appears to be dated April 8, 1999 while the Petition for Review on Certiorari

filed by the petitioner was dated February 26, 1999. Clearly then, when the petition was filed

with this Court on March 3, 1999, Atty. Rogelio P. Madriaga was not yet deputized by the Office

of the Solicitor General to represent the CDA.

Even on the assumption that the alleged letter from the Office of the Solicitor General was

intended to validate or ratify the authority of counsel to represent the petitioner in this case,the same contains certain conditions, one of which is that petitioner "shall submit to the

Solicitor General, for review, approvaland signature, all important pleadings and motions,

including motions to withdraw complaints or appeals, as well as compromise agreements."

Significantly, one of the major pleadings filed subsequently by the petitioner in this case

namely, the Reply to the Respondents Comment on the Petition dated January 31, 2000, does

not have any indication that the same was previously submitted to the Office of the Solicitor


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General for review or approval, much less bear the requisite signature of the Solicitor General

as required in the alleged deputation letter.

Nonetheless, in view of the novelty of the main issue raised in this petition concerning the

nature and scope of jurisdiction of the CDA in the settlement of cooperative disputes as well as

the long standing legal battle involving the management of DARBCI between two (2) opposing

factions that inevitably threatens the very existence of one of the countrys major cooperatives,

this Court has decided to act on and determine the merits of the instant petition.

Section 3 of R.A. No. 6939 enumerates the powers, functions and responsibilities of the CDA,

thus:

SEC. 3. Powers, Functions and Responsibilities.The Authority shall have the following powers,

functions and responsibilities:

(a) Formulate, adopt and implement integrated and comprehensive plans and programs oncooperative development consistent with the national policy on cooperatives and the overall

socio-economic development plan of the Government;

(b) Develop and conduct management and training programs upon request of cooperatives that

will provide members of cooperatives with the entrepreneurial capabilities, managerial

expertise, and technical skills required for the efficient operation of their cooperatives and

inculcate in them the true spirit of cooperativism and provide, when necessary, technical and

professional assistance to ensure the viability and growth of cooperatives with special concern

for agrarian reform, fishery and economically depressed sectors;

(c) Support the voluntary organization and consensual development of activities that promote

cooperative movements and provide assistance to wards upgrading managerial and technical

expertise upon request of the cooperatives concerned;

(d) Coordinate the effects of the local government units and the private sector in the

promotion, organization, and development of cooperatives;

(e) Register all cooperatives and their federations and unions, including their division, merger,

consolidation, dissolution or liquidation. It shall also register the transfer of all or substantially

all of their assets and liabilities and such other matters as may be required by the Authority;

(f) Require all cooperatives, their federations and unions to submit their annual financial

statements, duly audited by certified public accountants, and general information sheets;


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a cooperative or between cooperatives" however, with a restriction "that if no mediation or

conciliation succeeds within three (3) months from request thereof, a certificate of non-

resolution shall be issued by the commission prior to the filing of appropriate action before the

proper courts". Being an administrative agency, the CDA has only such powers as are expressly

granted to it by law and those which are necessarily implied in the exercise thereof.

33

Petitioner CDA, however, insists that its authority to conduct hearings or inquiries and the

express grant to it of contempt powers under Section 3, paragraphs (g) and (o) of R. A. No.

6939, respectively, necessarily vests upon the CDA quasi-judicial authority to adjudicate

cooperative disputes. A review of the records of the deliberations by both chambers of

Congress prior to the enactment of R.A. No. 6939 provides a definitive answer that the CDA is

not vested with quasi-judicial authority to adjudicate cooperative disputes. During the house

deliberations on the then House Bill No. 10787, the following exchange transpired:

MR. AQUINO (A.). The response of the sponsor is not quite clear to this humble Representation.Let me just point out other provisions under this particular section, which to the mind of this

humble Representation appear to provide this proposed Authority with certain quasi-judicial

functions. Would I be correct in this interpretation of paragraphs (f) and (g) under this section

which state that among the powers of the Authority are:

To administer the dissolution, disposal of assets and settlement of liabilities of any cooperative

that has been found to be inoperable, inactive or defunct.

To make appropriate action on cooperatives found to be in violation of any provision

It appears to the mind of this humble Representation that the proposed Authority may be

called upon to adjudicate in these particular instances. Is it therefore vested with quasi-judicial

authority?

MR. ROMUALDO. No, Mr. Speaker. We have to resort to the co

Documents

rules of court cases