LACK OF JURlSDlCTlON OVER THE PERSON

Amigo vs. CA
Challenged in the petition for review on certiorari is the
decision of the Court of Appeals rendered on l2 November
l99l
[l]
dismissing the petition to annul the writs of execution
and demolition issued by the Regional Trial Court of Davao
City, Branch l 0,
[2]
in the implementation of its final judgment
of eviction against herein petitioners in Civil Case No. l0363.
Petitioners Lolita Amigo and Estelita vda. de Salinas leased in
l96l from Mercedes lnigo, a parcel of land, also known
as Lot 502-C-9, Psd-l0752, located along Leon Garcia St.,
Agdao District, Davao City, registered in the lessor's name
under TCT No. T-5454. Petitioners constructed their houses
on the lot. Mercedes lnigo later sold and transferred her
ownership of the land to Juan Bosquit and herein private
respondent Jesus Wee Eng. TCT No. T-5454 was cancelled
and another title, TCT No. l3659, was issued on 28 May
l964 jointly in the names of the two vendees.
On l7 December l966, Bosquit and Wee entered into a dee4
of exchange with the City Government of Davao. Bosquit and
Wee exchanged a portion of their Lot 502-C-9 for also a
portion of Lot No. 502- C-il under TCT No. T-5788 in the name
of the city. The transaction was authorized and approved by
the City Council of Davao.
[3]
ln order to delineate the portion of Lot 502-C-9 ceded to the
city government, Bosquit and Wee caused the preparation of
plan Psd-i l-00025 8 subdividing the property into Lot 502-C-
9-A and Lot 502-C-9-B. For its part, the city government
caused the subdivision of Lot 502-C-ll into Lot 502-C-ll-A
and Lot 502-C-ll-B. ln consonance with the agreement, TCT
No. T-l3659 held by Bosquit and Wee was cancelled and in
lieu thereof, two separate certificates of title were issued: TCT
No. 46656 in the name of the City Government of Davao
covering Lot 502-C-9-A, and TCT No. 46657 in the names of
Bosquit and Wee corresponding to Lot 502-C-9-B. ln turn, TCT
No. T-5788 in the name of the city government, was cancelled
and two separate titles were issued: TCT No. T-5l826 in the
names of Bosquit and Wee for Lot 502-C-ll-A and TCT No. T-
5l827 in the name of the city government over Lot 502-C-i l-
B.
On 0l October l969, Bosquit and Wee instituted an action for
unlawful detainer against petitioners before the City Court of
Davao (Civil Case No. l56l-A). After almost seven years, or
on l9 July l976, the city court finally dismissed the action on
the technicality that the plaintiffs did not observe the required
l5-day period from the sending of the letter of demand before
filing the action, the letter having been sent instead on l9
September l969 or only twelve days before the filing of the
action.
[4]
On 25 October l976, Bosquit sold his rights and interests over
Lots 502-C-9-B and 502-C-i l-A to Wee. The titles over the
property were thereupon cancelled and TCT No. T-5304l and
TCT No. T-53042 were issued solely in the name of Wee.
On 22 July l977, Wee, herein private respondent, filed a
complaint (docketed Civil Case No. l0363) against petitioners
in the then Court of First lnstance of Davao, Branch lll, for
recovery of the real property in question. On 08 September
l978, after the petitioners had filed their answer, the court
appointed Orville 0. Bueno, a duly licensed geodetic engineer,
its commissioner to conduct a relocation survey of the
boundaries of the land. ln his report, dated 27 November
l978, Bueno stated that -
"x x x portions of about two-thirds (2/3) of the houses of Lolita
Amigo and that of Estelita Vda. de Salinas is inside of Lot 502-
C-9-B, Psd-i l-000258, covered by TCT No. T-5304l, issued in
the name of Jesus Wee Eng; the remaining one-third of it lies
on the road widening and the creek respectively."
[5]
Whereupon, private respondent sought an amendment of his
complaint which was allowed by the lower court on l3
November l979.
[6]
As so amended, the complaint prayed not
only for the recovery of real property and damages but also for
an abatement of nuisance
[7]
over the portion of the
improvements introduced by petitioners that encroached on
the sidewalk of Leon Garcia Street.
ln their amended answer, petitioners denied the material
allegations of the amended complaint. Petitioners stressed
that their houses stood neither on private respondent's land
nor on the sidewalk or shoulders of Leon Garcia Street but
along the banks of the Agdao Creek.
Parenthetically, in l982, during the pendency of Civil Case No.
l0363, petitioners Amigo and Salinas were designated
census-beneficiaries of their respective areas (Tag No. 82-A-
0342 and Tag No. 82-A-034l)
[8]
under a so-called City
of Davao RCDP-NHA Agreement.
After a full reception of the evidence, the trial court, on 23
September l983, rendered its decision which held:
"WHEREFORE, in view of the foregoing, judgment is hereby
rendered in favor of the plaintiff:
"UNDER THE FlRST CA USE OF ACTlON
"l. Ordering the defendants to vacate the portions of land
occupied by them as appearing in the Commissioner's Report
(Exhibits 'C' and 'D') and to deliver the same to the plaintiff;
and
"2. To pay the.plaintiff the amount of THlRTY (P30. 00)
PESOS each per month for the use of plaintiff's land, to be
reckoned from the date of judicial demand on July 22, l977
until defendants shall have vacated the premises in question.
"UNDER THE SECOND CA USE OF ACTlON
"l. The defendants are hereby ordered to demolish the
portions of their houses constructed on the road widening
of Leon Garcia Street which constitute a nuisanceper se;
"2. To pay plaintiff the amount of TWO THOUSAND
(P2,000.00) PESOS for and as attorney's fees; and
"3. To pay costs.
"All other claims and counterclaims are hereby DlSMlSSED.
"SO ORDERED."
[9]
Petitioners appealed the decision to the Court of Appeals (AC-
G.R. CV No. 02405). ln its resolution of 29 November l984,
however, the appellate court dismissed the appeal for the
failure of petitioners to file an appeal brief.
[l0]
A petition for
relief from the order of dismissal was denied by the appellate
court, in a resolution of 09 July l985, for having been filed
beyond the reglementary period)'
[ll]
ln due time, private respondent moved for execution of the
judgment. The lower court, in its order of 28 October l988,
granted the motion and ordered the issuance of the
corresponding writ.
[l2]
An omnibus motion to quash the writ of
execution
[l3]
filed by petitioners was denied by said court on 27
January l989.
[l4]
Private respondent, forthwith moved for a
special order of demolition which the court granted on l3
March l989.
[l5]
Meanwhile, on 02 March l989, petitioners filed with the Court
of Appeals an action (docketed CA-G.R. SP No. l6979) for the
annulment of the trial court's decision of 23 September l983,
as well as all orders and proceedings subsequent thereto,
including the various writs of execution and demolition.
[l6]
Petitioners contended that the judgment rendered by the
lower court was void for want of jurisdiction.
On 08 March l989, the Court of Appeals granted petitioners'
prayer for a temporary restraining order.
[l7]
The restraining
order was lifted when, on l2 November l99l, the appellate
court ultimately dismissed the petition.
[l8]
Petitioners instituted the instant petition for review
on certiorari raising several questions:
l. Whether or not the court a quo acquired jurisdiction over the
subject matter and their person in the case at bench;
2. Whether or not the Court of Appeals erred when it failed to
consider the badges of fraud in the exchange of lots between
private respondent and the City Government of Davao;
3. Whether or not their status as lessees in the disputed lot
was affected by the said swapping or exchange of lots; and
4. Whether or not they are entitled to the so-called "right of
first refusal" under Section 6 of P.D. No. l4l7 and as such
cannot be evicted from the disputed lot.
We deny the petition.
The Court must remind the parties that the case brought up to
the Court of Appeals is an extraordinary action that has sought
to annul the writs of execution and demolition issued under
and by virtue of a final judgment that is alleged to be void for
want of jurisdiction. The petition should not thus be used as a
stratagem to once again reopen the entire controversy, and
make a complete farce of a duly promulgated decision that has
long become final and executory, such as by allowing matters
outside the question fjurisdiction to be here litigated anew.
Accordingly, this ponencia must and shall only deal with
the first of the above-enumerated issues raised in the instant
petition.
Petitioners maintain that the judgment of the trial court is void
for being coram non judice. Jurisdiction over the subject matter
of a case is conferred by law
[l9]
and determined by the
allegations of the complaint. lt should hardly be of any
consequence that the merits of the case are later found to veer
away from the claims asseverated by the plaintiff. The suit
below is aimed at recovering real property, an action clearly
well within the jurisdiction of the Regional Trial Court.
[20]
lncidentally, petitioners' assertion that the litigated lots
belong in ownership to the city government and not to private
respondent is not borne out by the evidence on record. On the
contrary, it appears that private respondent has been, and still
is; the registered owner of both Lot 502-C-9-B and Lot 502-C-i
l-A, respectively, under TCT No. T-5304l and TCT No. T-
53042.
[2l]
Neither may petitioners feign absence ofjurisdiction over their
persons. Jurisdiction over the person of the defendant in a civil
action is acquired either by his voluntary appearance in court
and his submission to its authority or by service of summons.
[22]
ln this case, by their filing of an answer and later an
amended answer, petitioners must be deemed to have
formally and effectively appeared before the lower court. As
early as l9l8, the essence of voluntary appearance has been
explained by this Court; thus, in Flores v. Zurito!
[23]
we have
said:
"A voluntary appearance is a waiver of the necessity of a
formal notice. An appearance in whatever form, without
expressly objecting to the jurisdiction of the court over the
person, is a submission to the jurisdiction of the court over the
person. While the formal method of entering an appearance in
a cause pending in the courts is to deliver to the clerk a written
direction ordering him to enter the appearance of the person
who subscribes it, an appearance ma" e made " simpl"
filing a formal motion! or plea or ans#er. This formal method of
appearance is not necessary." (ltalics supplied.)
Unlike the question ofjurisdiction over the subject matter which
may be invoked at any stage of the proceedings (even on
appeal), the issue ofjurisdiction over the person of the
defendant, however, as has been so held lately in $a %aval
&rug Corporation v. Court of 'ppeals!
[24]
must be seasonably
raised, and it can well be pleaded in a motion to dismiss or by
way of an affirmative defense in an answer. The records bear
out the fact that petitioners have allowed the issue
ofjurisdiction to pass unquestioned until the rendition of the
judgment. lt is now too late in the day for petitioners to assail
the jurisdiction of the lower court over their person, a
somersault that neither law nor policy will sanction.
[25]
WHEREFORE, the instant petition for review on certiorari is
hereby DENlED for lack of merit and the questioned decision
of the Court of Appeals is AFFlRMED. Costs against
petitioners.
SO ORDERED
LA NAVAL DRUG CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS n! WILSON C.
"AO, respon!ents.
FACTS#
Respondent Yao, owner of a commercial building
which is leased to petitioner under a contract of lease
executed. But later the petitioner and respondent Yao
disagreed on the rental rate, their disagreement were
submitted to arbitration, respondent Yao appointed Domingo
Alamarez, Jr. as his arbitrator, while petitioner chose Atty.
Casiano Sabile as its arbitrator. The confirmation of the
appointment of Aurelio Tupang, as third arbitrator, was held in
abeyance because petitioner instructed Atty. Sabile to defer
the same until its Board of Directors could convene and
approve Tupang's appointment. Respondent Yao prayed that
after summary hearing to proceed with the arbitration in
accordance with Contract of Lease and the applicable
provisions of the Arbitration law, by appointing and confirming
the appointment of the Third Arbitrator; and that the Board of
Three Arbitrators be ordered to immediately convene and
resolve the controversy before it.
The respondent court announced that the two
arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator.
And ordered the parties to submit their position papers on the
issue as to whether or not respondent Yao's claim for
damages may be litigated upon in the summary proceeding for
enforcement of arbitration agreement. ln moving for
reconsideration of the said Order, petitioner argued that in
Special Case No. 6024, the respondent court sits as a special
court exercising limited jurisdiction and is not competent to act
on respondent Yao's claim for damages, which poses an issue
litigable in an ordinary civil action. But the respondent court
was not persuaded by petitioner's submission. lt denied the
motion for reconsideration.
While the appellate court has agreed with petitioner
that, under Section 6 of Republic Act No. 876, a court, acting
within the limits of its special jurisdiction, may in this case
solely determine the issue of whether the litigants should
proceed or not to arbitration, it, however, considered petitioner
in estoppel from questioning the competence of the court to
additionally hear and decide in the summary proceedings
private respondent's claim for damages, it (petitioner) having
itself filed similarly its own counterclaim with the court a quo.
ISSUES#
l. Whether or not the court it has jurisdiction over the
person
2. Whether or not the court a quo has jurisdiction over the
subject matter.
HELD#
(l) Jurisdiction over the person must be seasonably
raised, i.e., that it is pleaded in a motion to dismiss or
by way of an affirmative defense in an answer.
Voluntary appearance shall be deemed a waiver of this
defense. The assertion, however, of affirmative
defenses shall not be constructed as an estoppel or as
a waiver of such defense.
(2) Where the court itself clearly has no jurisdiction over
the subject matter or the nature of the action, the
invocation of this defense may be done at any time. lt
is neither for the courts nor the parties to violate or
disregard that rule, let alone to confer that jurisdiction,
this matter being legislative in character. Barring highly
meritorious and exceptional circumstances, such as
hereinbefore exemplified, neither estoppel nor waiver
shall apply. The court must then refrain from taking up
the claims of the contending parties for damages,
which, upon the other hand, may be ventilated in
separate regular proceedings at an opportune time and
venue.
lLOCOS SUR ELECTRlC v NLRC
This is a petition for certiorari questioning the jurisdiction of the
National Labor Relations Commission over termination cases
involving employees of electric cooperatives.
Briefly, the facts of the case are as follows:
Engr. Egdon Sabio was employed as Manager of the
Engineering Department of llocos Sur Electric Cooperative
(lSECO), herein petitioner, in May l982. He was relieved of
his duties on June l0, l989 and was dismissed on July l,
l989 pursuant to lSECO's Board Resolution No. 63 s. l989
dated July l9, l989.
lt appears that on June 8, l989, Sabio wrote to the lSECO
Board of Directors, thru its President, Atty. Manuel Agpalo,
about the expenses incurred by Acting General Manager, Atty.
Efren Bautista, in the total amount of Pl3l,788.79 from May
l988 to May l989 for his travel to the office of the National
Electrification Administration (NEA) and places outside the
area serviced by the cooperative. Sabio revealed that in one
year, Bautista was away for two hundred twenty (220) days,
while in contrast the previous Acting General Manager,
Genaro Cada, who stayed out of the cooperative for not more
than thirty (30) days for the same length of time spent not
more than ten thousand pesos (Pl0,000.00).
$
On June 9, l989, Bautista summoned Sabio to his office and
asked him to file a letter of irrevocable resignation with the
assurance that separation benefits will be granted to him.
Bautista also suggested to Sabio to apply as Acting General
Manager of Abra Electric Cooperative. When asked why he
made such request, Bautista could not give any satisfactory
answer. Bautista also offered Sabio a one-month vacation
leave with pay but Sabio refused the offer. Bautista made
known that the resignation letter or the application for leave
must be in before 9:00 in the morning of June l0. With or
without the letter of resignation or application for leave, Sabio
was told, he would be terminated just the same.
lnstead of filing either, Sabio on June l0, l989 sent a letter of
apology
%
to Bautista with copies furnished to the Board of
Directors, Department Managers and Sub-Area Managers, but
maintaining that he had not violated any of the cooperative's
rules and regulations.
&
However, on that same day Sabio
received Memo No. 47-80 from Bautista, relieving him from his
position as Engineering Manager without giving any reason.
'
On June l6, l989; Bautista issued Memo No. 55-89 requiring
Sabio to explain in writing within 24 hours upon receipt why he
should not be separated from the service for grave and serious
misconduct for committing the following acts:
l. Unauthorized assumption of authority and power to relay
massage through the Radio Operator when such authority is
exclusively reposed to (sic), the General Manager or his duly
authorized representative for confidentiality of communication.
2. Unauthorized assumption of power and authority by
requesting NEA for my replacement of another NEA Manager
with the caliber of Engr. Genaro O. Cada, when such authority
is exclusively reposed and vested to (sic) the Board of
Directors as a corporate body for corporate action which
authority you arrogated upon yourself without authority.
3. Your alleged solicitation of signatures to the petition for my
replacement with another NEA Manager, personally or thru,
linemen from personnel of Main Office and sub-officers during
office hours, hampering the operation of their respective
offices, causing confusion and diversion among rank and file,
factionalism among supervisors, endangering the positive
gains of the coop as proven by the 25% system loss for the
months of March, April and May, which ultimately and finally
will lead to the downfall and disintegration of lSECO as in the
part (sic), of which you are very well aware of, and part of the
confusion; leading to the disconnection of lSECO by NPC and
depriving the coop employees of the benefits they are now
receiving/enjoying.
4. Your failure to coordinate with NPC on the higher contracted
energy and demand for power allocating to NPC when NPC
deferred its operation for one month causing NPC to penalize
lSECO in the amount of Pl39,000.00 for failure to use the
higher contracted energy and demand allocation for NPC.
(
On June 24, l989, Sabio submitted his answer denying all the
charges against him. On June 30, l989 Bautista placed him
under preventive suspension without pay effective July l,
l989, which prompted Sabio to file a complaint for illegal
suspension and a claim for representation/travel allowances
before the Labor Arbiter. On July l3, l989 Bautista issued
Office Memo No. 69-89, creating an ad (oc committee; to
investigate the case against Sabio. Thereafter, the ad
(oc committee submitted a report of its investigation
containing the following conclusions and recommendations to
wit:
C)%C$*+,)%+ :
ln view of the foregoing the ADHOC Committee finds that:
l. Engr. Egdon Sabio is guilty of No. 2, of Vl of the Rules and
Regulations governing the conduct. of employees for willfully
ordering his subordinate, Mr. Onofre Habon (Annex l) to type
a petition for the ouster of AGM Bautista for his allegedly being
extravagant a charge which he failed to substantiate.
2. Egdon Sabio did indeed solicit signatures of employees to a
petition for the ouster of the AGM, as shown and verified by
the execution of affidavits of at least 6 employees (annex 2)
which act is inimical to the smooth operation of the cooperative
as it promotes divisiveness among the employees;
3. Egdon Sabio ordered the radio operator to transmit a radio
message quoted as follows:
From: lSECO Concerned employees
To: NEA Administrator
Please send another GM with a caliber of GM Cada. Present
GM is gastador.
EGDON SABlO
Although such message is not in the possession of the Radio
Operator, an affidavit to this effect has been executed (Annex
3). The actuation is corroborated by Egdon Sabio himself
when he sent a letter of Apology addressed to AGM Bautista
(Annex 9). Premises above-stated, Egdon Sabio is also guilty
of Board Policy No. 3-3 dated November 3, l974 specifically
"and all other acts prejudicial to the interest and welfare of the
coop and such other grounds as provided by existing laws"
(Annex l4).
4. For gross negligence of duty, for failure to coordinate with
the National Power Corporation on the anticipated lean period,
causing the Coop to lose Pl39-T which it could have been
avoided if proper representation was made earlier (see letter
of Engr. Cu undated). All these factors contribute to loss of
trust and confidence on Egdon Sabio which is punishable by
dismissal as per labor laws.
5. Egdon Sabio is also guilty of No. 2 of Vl of the Rules and
Regulations governing the conduct of employees for airing
publicly over station DWRS derogatory remarks and malicious
accusations against AGM Bautista, his superior. Especially
that the informations being fed to media are incorrect.
RECOMMENDATlON:
Human considerations taken into account, it would best serve
the best interest of cooperative if Egdon Sabio be DlSMlSSED
if only to serve as a precedent and/or stern warning to all
employees especially from among the staff, not to indulge
themselves in any act which could be detrimental to the
welfare of the coop by using their influence or their
subordinates to attain their personal ambitions or whatever
purposes regardless of whether they have valid grounds or
none at all.
)
On July 27, l989, Bautista recommended to the lSECO Board
of Directors the approval of the report and recommendation of
the ad (oc committee. On July 29, l989, the Board adopted
the recommendation of the ad (oc committee and passed
Resolution No. 63 s. l989, terminating the services of Sabio
retroactive July l, l989.
*
Consequently, Sabio filed a
complaint for illegal dismissal with claim for damages against
petitioner with respondent National Labor Relations
Commission (NLRC), docketed as NLRC Case No. RAB-l-07-
l050-89, which was assigned to Labor Arbiter Amado T.
Adquilen of the Regional Arbitration Branch, DOLE, for
compulsory arbitration.
On January 8, l990, the Labor Arbiter, after considering the
evidence on record, held in his decision dated January 8,
l990
+
that Sabio was illegally and unjustly dismissed without
due process of law.
The dispositive portion of the decision reads:
WHEREFORE, with all the foregoing considerations whereby
order the respondents llocos Sur Electric Cooperative, lnc,
(lSECO) and/or AGM Efren Bautista as follows:
l. To reinstate complainant Engr. Egdon Sabio to his former
position as lSECO engineering Department Manager, without
loss of seniority rights and to pay him full backwages in the
amount of THlRTY THREE THOUSAND TWENTY PESOS
(P33,020.00) plus medical, rice allowances, l989 l3th month
pay balance as well as all other benefits/
bonuses customarily granted to employees by lSECO as a
matter of company policy and established practice; and
2. To pay complainant THlRTY THOUSAND PESOS
(P30,000.00) as moral and exemplary damages.
SO ORDERED.
Petitioners appealed to the National Labor Relations
Commission which, in a resolution promulgated June 26,
l990
,
dismissed the appeal for having been filed out of time.
The NLRC found that petitioners received a copy of the Labor
Arbiter's decision on January 20, l990 but interposed their
appeal only on January l, l990 which was beyond the ten-day
period prescribed by the Revised Rules of the NLRC,
specifically Rule Vlll section l(a). A motion for reconsideration
was, likewise, denied by the NLRC in its resolution of
November l6, l990.
$-
A notice of appeal to the President was
filed. This was merely noted by the Commission on June 24,
l99l, a petition for the issuance of a writ of execution was
submitted by Sabio. Upon computation of the exact amount to
be awarded to Sabio, the Executive Labor Arbiter issued a writ
of execution dated April l3, l992, to wit:
WHEREFORE, let writ of execution issue in order to effect the
following:
l. The reinstatement aspect of the decision of the Labor
Arbiter dated January 8, l990; and
2. The payment of the monetary award due the complainant in
the total amount of P74,487.50, as, also decreed in said
decision.
SO ORDERED.
$$
Thus, this petition which raises the following issues:
l. Whether or not the NLRC has jurisdiction over the case of
Engr. Egdon A. Sabio.
2. Whether or not Engr. Egdon A. Sabio was dismissed by the
Board of Directors of lSECO in accordance with law.
The petition is devoid of merit.
Presidential Decree No. 269, as amended by P.D. l645, relied
upon by petitioners, does not apply in this case. Said Decree
pertains to NEA 's exercise of its power of supervision and
control over electric cooperative.
Thus, Section l0, of P.D. 269, as amended, provides:
Enforcement Powers and Remedies. ,n t(e e-ercise of its
po#er of supervision and control over electric cooperatives
and other borrower, supervised or controlled entities, the NEA
is empowered to issue orders, rules and regulations and motu
propio or upon petition of third parties, to conduct
investigations, referenda and other similar actions in all
matters affecting said electric cooperatives and other
borrower, or supervised or controlled entities.
lf the electric cooperative concerned or other similar entity fails
after due notice to comply, with NEA orders, rules and
regulations and/or decisions or with any of the terms of the
Loan Agreement, the NEA Board of Administrators may avail
of any or all of the following remedies:
xxx xxx xxx
(e) Take preventive and/or disciplinary measures including
suspension and/or removal and replacement of any or all the
members of the Board of Directors, officers or employees of
the Cooperative, other borrower institutions or supervised
controlled entities as the NEA Board of Administrator may
deem fit and necessary and to take any other remedial
measures as the law or the Loan Agreement may provide.
(Emphasis supplied.)
lt is clear from the aforequoted provision of P.D. 269, as
amended by P.D. l645 that only the power of supervision and
control over electric cooperatives and other borrowers,
supervised or controlled, is given to the NEA. There is nothing
said law which provides that the NEA administration has the
power to hear and decide termination cases of employees in
electric cooperatives. That authority is vested in the Labor
Arbiter.
ln the present case, there is no dispute that Sabio is an
employee of lSECO whose services as manager of the
Engineering Department of lSECO were terminated. The
dismissal arose from a purely labor dispute which falls within
the original and exclusive jurisdiction of the Labor Arbiters and
the NLRC. Thus, Section. 2l7 of the Labor Code provides:
Art. 2l7. Jurisdiction of Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code the Labor
Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or
non-agricultural:
l. Unfair labor practice cases;
2. Termination of disputes;
xxx xxx xxx
Moreover, the NLRC 's jurisdiction was only raised for the first
time in this petition. Petitioners did not question the jurisdiction
of the Labor Arbiter either in a motion to dismiss or in their
answer. ln fact, petitioners participated in the proceedings
before the Labor Arbiter, as well as in the NLRC to which they
appealed the Labor Arbiter's decision. lt has been consistently
held by this Court that while jurisdiction may be assailed at any
stage, a party's active participation in the proceedings before a
court without jurisdiction will estop such party from assailing
such lack of it.
$%
lt is an undesirable practice of a party
participating in the proceedings and submitting his case for
decision and then accepting the judgment only if favorable,
and attacking it for lack of jurisdiction, when adverse.
$&
Petitioners also claim that the dismissal of Sabio was an
exercise of management prerogative under Article 283 of the
Labor Code. We do not agree.
Well settled is the rule that the employer's prerogative/power
to dismiss an employee must not be exercised arbitrarily and
without just cause, otherwise the constitutional guarantee of
security of tenure would be rendered nugatory.
$'
Moreover, it
must be done without abuse of discretion.
$(
ln the case, at bench records show that petitioner Bautista
acted with grave abuse of discretion in having Sabio
dismissed. After Sabio denounced the excessive expenditures
of Bautista for one year and his (Bautista) absences totaling
220 days for the same period, he was called by Bautista
himself who told him to resign and when asked for the reason
why he was being asked to do so, Bautista was not able to
answer and instead gave another option to Sabio, that is for
Sabio to take a vacation leave. Failing to convince Sabio,
Bautista informed him that he would be terminated just the
same.
$)
lt should be noted that the ad (oc committee which
recommended the dismissal of Sabio was composed of
Bautista's men and, in fact, two of them executed affidavits in
favor of Bautista.
$*
The factual circumstances clearly demonstrate that petitioners
arbitrarily exercised their prerogative in dismissing Sabio.
Article 283 of the Labor Code on which the dismissal of Sabio
was claimed to have been anchored states:
Art. 283. Closure of establishments and reduction of
personnel. The employer may also terminate the
employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or
the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and
Employment (now Department of Labor and Employment) at
least one (l) month before the intended date thereof. . . .
(Emphasis supplied)
Here, the instances when the employer may validly terminate
the employment of an employee in the exercise of
management prerogative are not present. Petitioners claim
that the position of Sabio as Manager of the Engineering
Department was already deleted or abolished. However, the
memorandum dated January l5, l990
$+
which contained the
recommendations for reorganization and replacement of
lSECO personnel did not satisfactorily explain or give a
credible justification why the Engineering Department was
abolished. As correctly observed by the Solicitor General,
there was merely a change in nomenclature from "Engineering
Department" to "Technical Services Department" while the
classifications of the other departments, namely
Administrative, Finance and Member Services were retained.
As there was no evidence presented to show that the
abolishment of the Engineering Department was due to the
installation of labor saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the
establishment, then said deletion of the position of Sabio
cannot be said to be a proper exercise of management
prerogative. Thus, the dismissal of Sabio was illegal. On this
point, we quote with favor the findings of the Labor Arbiter:
On the first issue, we find complainant illegally and unjustly
dismissed and without due process of law. Gleaned from the
facts presented and the evidence adduced, respondents
anchored the dismissal of complainant on the alleged overt
(sic) acts of unauthorized assumption of authority and power
to relay message through the Radio Operator when such
authority is exclusively reposed to the General Manager or his
duly authorized representative for confidentiality of information;
unauthorized assumption of power and authority by requesting
NEA for the replacement of respondent AGM Bautista when
such authority is exclusively repose and vested to the Board of
Directors as a corporate body for a corporate action which
complainant arrogated unto himself without authority; alleged
solicitation of signatures to the petition for the replacement of
AGM Bautista, personally or thru linemen from Personnel of
Main Office and Sub-Offices during office hours, hampering
the operation of their respective offices, causing confusion and
diversion among rank and file employees, factionalism among
supervisors, endangering the positive gains of the cooperative
as proven by the 25% system loss for the months March, April
and May which ultimately and finally will lead to the downfall
and disintegration of lSECO and as part of the confusion; lead
to the disconnection of lSECO by the National Power
Corporation and depriving the cooperative employees of the
benefits they are now enjoying; and the alleged failure of
complainant to coordinate with the NPC on the higher
contracted energy and demand for power allocation to NPC
when National Tobacco Corporation deferred its operation for
one month causing the NPC to penalize lSECO in the amount
of Pl39,000.00 for failure to use the higher contracted energy
and demand allocation for National Tobacco Corporation. All
these accusations were ably refuted by complainant and the
record is bereft of any substantial evidence to show
complainant's alleged offenses. lndeed, nowhere in the record
shows that complainant sent unauthorized messages or
communication duly signed by him and relayed through the
radio operator to the NEA or to any other agency. Nor is there
any showing that Engr. Sabio prepared any letter/request or
petition for the replacement of respondent Bautista as lSECO
Acting General Manager. What is clear and revealing though,
and respondent admits, is that AGM Bautista called the
complainant to his office on June 9, l989, a day after
complainant wrote Atty. Manuel Agpalo, President of the
lSECO Board of Directors about the expenses of AGM
Bautista in the amount of Pl3l,788.79 covering the period
May l988 to May l989 and his absences totalling two
hundred-twenty (220) days as compared to the expenses of
the previous Acting General Manager Genaro O. Cada which
is only Pl0,000.00 more or less covering the same span of
time. On this occasion, AGM Bautista tried to convince the
complainant to resign so he could paid (sic) all his separation
benefits or that complainant may apply as Acting General
Manager of the Abra Electric Cooperative. But when
complainant inquired as to the reason why he is being asked
to resign, respondent Bautista cannot give an answer and
again presented another option to complainant for the latter to
file his vacation leave immediately or on or before l0:00
o'clock in the morning of the following day (June l0, l989).
And failing to convince complainant either to resign or file his
vacation leave, AGM Bautista informed complainant that he
(Bautista) will terminate him just the same. These acts of
respondent Bautista, taken together, clearly manifest and
indubitably show his desire to ease out complainant from his
job. And true enough, he carried out his scheme and
succeeded in having complainant eventually terminated by
issuing his Office Order to that effect in succession firstly,
by relieving complainant thru Memorandum No. 47-89, dated
June l0, l989, immediately and directing him to turn over all
the documents and accountabilities in his (complainant)
possession to the designated OlC, Engr. Fred R. Jacob. The
said relief memo does not contain any reason why
complainant is being relieved from his job; secondly, by
placing complainant under preventive suspension effective
July l, l989 for 30 days as per Official Order No. l43-89
dated June 29, l989 on the sole ground that complainant's
explanation in compliance to Memo No. 55-89 dated June l6,
l989 is allegedly satisfactory; thirdly, creating an 'd .oc thru
Office Memo No. 68-89 dated July l3, l989 to investigate
complainant which is composed of his chosen men two (2) of
whom, before being named as members of the 'd
.oc Committee, executed affidavits in favor of AGM Bautista.
Hesitantly, complainant did not submit himself to the 'd
.oc Committee for it is evident that the body cannot act
objectively on his case. While AGM Bautista may be clothed
with the authority to create the same and appoint members
thereto, fairness demand and prudence dictates that the
members composing the investigating body should be free
from any cloud of doubt of being partial, nay, subservient to
the appointing authority and biased against the person under
investigation. This is not so in this case. As heretofore
mentioned, two members had previously executed their written
support in favor of AGM Bautista which they have coupled with
their strongly worded subsequent recommendation for the
ouster of complainant after their "e--parte" investigation which
ended with their verdict thus . . . "regardless of whether they
have valid grounds or none at all." A perusal of this portion of
the 'd .ocCommittee's recommendation, read together with
the rest of the committee's disposition and taking into account
all the attendant circumstances of the issue, they have delved
upon, creates an impression that within the lSECO, even
legitimate grievances from employees as what complainant did
in this instant case, seemingly cannot be tolerated. lt is too
clear that the main reason complainant earned the ire and
disgust of respondent AGM Bautista is his courage in bringing
to the attention of the lSECO Board of Directors what he
believed as extravagance on the part of respondent Acting
General Manager and his absences from his lSECO office for
220 days covering the period May 26, l988 to May 25, l989
and spending the amount of Pl3l,732,79 as compared to the
expenses and absences of the former Acting General
Manager who spent no more than Pl0,000.00 and stayed out
of his lSECO office for not more than 30-days covering almost
the same period of time in comparison. Clearly, the
complainant was acting in good faith and merely exercising his
bounden duty, as he puts it in his letter of apology and
explanation, to protect the interest of the cooperative of which
he is a member-consumer and incidentally its employee.
$,
Finally, the findings of fact of the Labor Arbiter that Sabio was
illegally dismissed by lSECO Board of Directors were based
on substantial evidence. ln certiorari proceedings under Rule
65 of the Rules of Court, judicial review by this Court does not
go so far as to evaluate the sufficiency of evidence upon which
the Labor Arbiter and the NLRC based their determinations,
the inquiry being limited essentially to whether or not said
public respondents had acted without or in excess of its
jurisdiction or with grave abuse of discretion.
%-
More
importantly, this Court is bound by the findings of fact there
being no showing that either the Labor Arbiter or the NLRC
gravely abused its discretion or otherwise acted without
jurisdiction or in excess of the same.
%$
WHEREFORE, premises considered, the petition is hereby
DlSMlSSED for lack of merit.
SO ORDERED.

An!. v. A/!i et 0
This is an appeal praying for the reversal of the orders of the
RTC Q.C. Maintaining that the RTC and not the
SEChas jurisdiction over his complaint, petitioner argues that
the court a quo should not have dismissed Civil Case filed by
himagainst the respondents.. He asserts that the complaint is
based not so much on plaintiff's attempted removal but rather
onthe manner of his removal and the consequent effects
thereof.
F1ts#
Before the RTC of Q.C., Andaya filed an action for lnjunction
and Damages with Restraining Orders and/or
Preliminarylnjunction against Abadia et al, alleging that the
latter acting in concerts and pursuant to an illegal and
nefarious scheme tooust petitioner from his then positions as
President and General Manager of the AFPSLAl, with grave
abuse of authority andin gross and deliberate violation of the
norms of human relations and of petitioner's right to due
process, illegally,maliciously and with evident bad faith,
convened a meeting of the AFPSLAl Board of Directors and
illegally reorganized themanagement of AFPSLAl by ousting
and removing, without just and lawful cause, petitioner from
his positions therein,causing petitioner moral and exemplary
damages.The Court ruled that it has no jurisdiction on
corporate matters. Hence this appeal
Iss2e#

Whether
the RTC and not the SEC has jurisdiction over the petitioner's
complaint

R20in3#
The allegations against herein respondents in the amended
complaint unquestionably reveal intra-corporate
controversiescleverly concealed, although unsuccessfully, by
use of civil law terms and phrases. The amended complaint
impleads hereinrespondents who, in their capacity as directors
of AFPSLAl, allegedly convened an illegal meeting and voted
for thereorganization of management resulting in petitioner's
ouster as corporate officer. While it may be said that the
samecorporate acts also give rise to civil liability for damages,
it does not follow that the case is necessarily taken out of
the jurisdiction of the SEC as it may award damages which
can be considered consequential in the exercise of its
adjudicativepowers. Besides, incidental issues that properly
fall within the authority of a tribunal may also be considered by
it to avoidmultiplicity of actions. Consequently, in intra-
corporate matters such as those affecting the corporation, its
directors,trustees, officers, shareholders, the issue of
consequential damages may just as well be resolved and
adjudicated by theSEC.Moreover, mere allegations of violation
of the provisions of the Civil Code on human relations do not
necessarily call for theapplication of the provisions of the Civil
Code in place of AFPSLAl By-Laws.
PENDENTlA LlTlS
Andersons Group vs. CA
Petitioner, The Andresons Group, lnc., questions the
decision[l] of the Court of Appeals which set aside the two
orders of the Regional Trial Court of Kalookan City, Branch
l22 which denied private respondents' Motion to Dismiss
petitioner's complaint on the ground of lis pendens.
The facts, as found by the Court of Appeals, show that private
respondent Willy Denate entered into an agency agreement
with petitioner as its commission agent for the sale of distilled
spirits (wines and liquors) in Davao City, three Davao
provinces and North Cotabato.
On November l8, l99l, private respondents filed a civil action
for collection of sum of money against petitioner before the
Regional Trial Court of Davao City, docketed as Civil Case No.
2l, 06l-9l. ln the complaint, private respondent Willie Denate
alleged that he was entitled to the amount of P882,l07.95,
representing commissions from petitioner but that the latter
had maliciously failed and refused to pay the same.
A month later, or on December l9, l99l, petitioner likewise
filed a complaint for collection of sum of money with damages
and prayer for the issuance of a writ of preliminary attachment
against private respondent with the Regional Trial Court of
Kalookan City, Branch 22, docketed as Civil Case No. C-
l52l4. Petitioner alleged in the complaint that private
respondent still owed it the sum of Pl,6l8,467.98 after
deducting commissions and remittances.
On February 5, l992, private respondent filed a Motion to
Dismiss Civil Case No. C-l52l4 with the Kalookan RTC on the
ground that there was another action pending between the
same parties for the same cause of action, citing the case
earlier filed with the RTC of Davao City.
On February l4, l992, petitioner filed its opposition to the
Motion to Dismiss on the ground that the RTC of Davao had
not acquired jurisdiction over it.
On April 24, l992, the RTC of Kalookan City issued the
questioned order, the decretal portion of which states:
"The Court finds the instant motion without merit.
Admittedly, the Davao case involves the same parties, and
involves substantial identity in the case of action and reliefs
sought, as in the instant case.
Perusal of the record in this case, however, shows that
jurisdiction over the parties has already been acquired by this
Court, as herein defendants received their summons as early
as January 8, l992, and the plaintiff's prayer for issuance of a
writ of preliminary attachment has been set for hearing last
January 2l, l992, but which hearing was cancelled until
further notice because of the filing of the instant motion to
dismiss by the defendants herein on February l7, l992, after
asking for extension of time to file their responsive pleading.
Clearly, the instant case has been in progress as early as
January of this year. On the other hand, the summons in the
Davao case has not yet been served as of April 2l, l992, the
date of the hearing of the instant motion, so much so that the
said Davao Court has not yet acquired jurisdiction over the
parties."
On May 29, l992, private respondents filed a Motion for
Reconsideration, which was denied by the trial court on July l,
l992. The case was then elevated to the Court of Appeals
which set aside the order of the trial court.
Hence, this petition.
The sole issue set for resolution before the Court is: Should
the action in the Kalookan RTC be dismissed on the ground
of lis pendens?
We hold in the affirmative.
$is pendens as a ground for the dismissal of a civil action
refers to that situation wherein another action is pending
between the same parties for the same cause of action.[2] To
constitute the defense of lis pendens, it must appear that not
only are the parties in the two actions the same but there is
substantial identity in the cause of action and relief sought.[3]
Further, it is required that the identity be such that any
judgment which may be rendered in the other would,
regardless of which party is successful, amount to res
judicata on the case on hand.[4]
All these requisites are present in the instant case. The parties
in the Davao and Caloocan cases are the same. They are
suing each other for sums of money which arose from their
contract of agency. As observed by the appellate court, the
relief prayed for is based on the same facts and there is
identity of rights asserted. Any judgment rendered in one case
would amount tores judicata in the other.
ln conceptualizing lis pendens, we have said that
like resjudicata as a doctrine, litis pendentia is a sanction of
public policy against multiplicity of suits.[5] The principle upon
which a plea of another action pending is sustained is that the
latter action is deemed unnecessary and vexatious.[6]
Petitioner asserts that the Davao Court had not yet acquired
jurisdiction over the parties as the summons had not been
served as of April 2l, l992 and it claims that pendency of a
case, as contemplated by the law on lis pendens, presupposes
a valid service of summons.
This argument is untenable. A civil action is commenced by
filing a complaint with the court.[7] The phraseology adopted in
the Rules of Court merely states that another action pending
between the same parties for the same cause is a ground for
motion to dismiss. As worded, the rule does not contemplate
that there be a prior pending action, since it is enough that
there is a pending action.[8] Neither is it required that the party
be served with summons before lis pendens should apply.
ln Salacup v. Maddela,[9] we said:
"The rule of lis pendens refers to another action. An action
starts only upon the filing of a complaint in court.
The fact that when appellant brought the present case, it did
not know of the filing of a previous case against it by
appellees, and it received the summons and a copy of the
complaint only after it had filed its own action against them, is
immaterial. Suffice it to state that the fact is, at the time it
brought the present case, there was already another pending
action between the same parties seeking to assert identical
rights with identical prayers for relief based on the same facts,
the decision in which would be res judicata herein."
lt must be emphasized that the rule on litis pendentia does not
require that the later case should yield to the earlier.[l0] The
criterion used in determining which case should be abated is
which is the more appropriate action[ll] or which court would
be "in a better position to serve the interests of justice."[l2]
Applying these criteria, and considering that both cases
involve a sum of money collected in and around Davao, the
Davao Court would be in a better position to hear and try the
case, as the witnesses and evidence would be coming from
said area.
WHEREFORE, the decision of the Court of Appeals is hereby
AFFlRMED. Costs against petitioner.
SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ.,
concur.
NO CAUSE OF ACTlON
SAN LOREN4O DEVELOP5ENT CORPORATION,
petitioner,
vs.
COURT OF APPEALS, PABLO S. BABASANTA, SPS.
5IGUEL LU n! PACITA 4AVALLA LU, respondents
G.R. No. $%'%'% 6n2r. %$, %--(
FACTS
On 20 August l986, the Spouses Lu purportedly sold
two parcels of land to respondent Pablo Babasanta, for
the price of fifteen pesos (Pl5.00) per square meter.
Babasanta made a downpayment of (P50,000.00) as
evidenced by a memorandum receipt issued by Pacita
Lu of the same date.
Babasanta wrote a letter to Pacita Lu to demand the
execution of a final deed of sale in his favor so that he
could effect full payment of the purchase price. ln
response, Pacita Lu wrote a letter to Babasanta
wherein she reminded Babasanta that when the
balance of the purchase price became due, he
requested for a reduction of the price and when she
refused, Babasanta backed out of the sale
herein petitioner San Lorenzo Development
Corporation (SLDC) filed a /otion for ,ntervention.
SLDC alleged that it had legal interest in the subject
matter under litigation because on 3 May l989, the two
parcels of land involved had been sold to it in a Deed
of Absolute Sale with Mortgage. lt alleged that it was a
buyer in good faith and for value and therefore it had a
better right over the property in litigation
Respondent Babasanta, however, argued that SLDC
could not have acquired ownership of the property
because it failed to comply with the requirement of
registration of the sale in good faith. He emphasized
that at the time SLDC registered the sale in its favor on
30 June l990, there was already a notice of lis
pendens annotated on the titles of the property made
as early as 2 June l989. Hence, petitioner's
registration of the sale did not confer upon it any right.
ISSUE#
Did the registration of the sale after the annotation of the
notice of lis pendens obliterate the effects of delivery and
possession in good faith which admittedly had occurred prior
to SLDC's knowledge of the transaction in favor of Babasanta?
HELD#NO
lt must be stressed that as early as ll February l989,
the Spouses Lu executed the )ption to 0u" in favor of
SLDC upon receiving P3l6,l60.00 as option money
from SLDC. After SLDC had paid more than one half of
the agreed purchase price, the Spouses Lu
subsequently executed on 3 May l989 a &eed of
'solute +ale in favor or SLDC. At t7e ti8e /ot7
!ee!s 9ere e:e12te!, SLDC 7! no ;no90e!3e o<
t7e prior trns1tion o< t7e Spo2ses L2 9it7
B/snt. Simply stated, from the time of
execution of the first deed up to the moment of
transfer and delivery of possession of the lands to
SLDC, it had acted in good faith and the
subsequent annotation of lis pendens has no effect
at all on the consummated sale between SLDC and
the Spouses Lu.
A purchaser in good faith is one who buys property of
another #it(out notice that some other person has a
right to, or interest in, such property and pays a full and
fair price for the same at the time of such purchase, or
efore (e (as notice of the claim or interest of some
other person in the property.
We rule that SLDC qualifies as a buyer in good faith
since there is no evidence extant in the records that it
had knowledge of the prior transaction in favor of
Babasanta. At the time of the sale of the property to
SLDC, the vendors were still the registered owners of
the property and were in fact in possession of the
lands.
ln assailing knowledge of the transaction between him
and the Spouses Lu, Babasanta apparently relies on
the principle of constructive notice incorporated in
Section 52 of the Property Registration Decree (P.D.
No. l529) which reads, thus:
Se1. (%. Constr21tive noti1e 2pon re3istrtion. 1 2ver"
conve"ance! mortgage! lease! lien! attac(ment! order!
judgment! instrument or entr" affecting registered land s(all! if
registered! filed! or entered in t(e office of t(e 3egister of
&eeds for t(e province or cit" #(ere t(e land to #(ic( it
relates lies! e constructive notice to all persons from t(e time
of suc( registering! filing! or entering.
However, the constructive notice operates as such by
the express wording of Section 52 from the time of the
registration of the notice of lis pendens which in this
case was effected only on 2 June l989, at which time
the sale in favor of SLDC had long been consummated
insofar as the obligation of the Spouses Lu to transfer
ownership over the property to SLDC is concerned.
CALALANG v lAC
This is a petition for review on certiorari which seeks to
reverse, nullify and set aside: (a) the June 28, l985
decision
$
of the lntermediate Appellate Court (now Court of
Appeals) in AC-G.R. No. CV 04384 entitled "Heirs of Erlinda
Gruta vs. Ferdinand Calalang, et al." setting aside the decision
of the trial court in Civil Case No. 83-l80l9 (for damages)
between the same parties. The trial court had dismissed the
case on the ground of lack of cause of action but the Court of
Appeals ordered the case to be remanded to the lower court
for further proceedings; and (b) the resolution dated April 28,
l986 denying the motion for reconsideration.
As gathered from the records, the facts of the case are as
follows:
Erlinda Gruta, l5 years old, from the province of Samar, was
employed as househelper in the household of petitioners
spouses Dr. Fidel Calalang and Dra. Maria Gener Calalang
and their son Ferdinand Calalang, in Bulacan (3ollo, pp. 357;
393).
On October 3l, l98l, Erlinda Gruta died of malathion
poisoning. Ferdinand Calalang, son of the spouses Calalang,
who brought Erlinda first to the Calalang's Clinic and then to
Jose Reyes Memorial Hospital where she died, was charged
with murder for allegedly poisoning her (3ollo, pp. l64; 393).
The case was investigated by the National Bureau of
lnvestigation (NBl). Then the case was referred to the Office of
the Provincial Fiscal, Malolos, Bulacan, for preliminary
investigation (3ollo, p. l64).
When the parents of the deceased arrived from Samar and
after obtaining the Necropsy Report from the NBl, a complaint
for Murder was filed against Ferdinand Calalang with the
Provincial Fiscal of Malolos, Bulacan. Complainant Juanita
Gruta, mother of the deceased, presented the sworn
statement of Dolores Ayuste, the aunt of the deceased maid
who was summoned during the incident and who was able to
see her before she died, the death certificate and the necropsy
report (3ollo, p. 393).
Respondent Ferdinand Calalang never appeared nor
presented his counter affidavit, instead his mother Maria
Gener Calalang presented a counter affidavit and two
affidavits of her maids who saw the deceased take a lethal
dose of malathion and the report of Pat. Bernabe (3ollo, p.
394).
After clarificatory questioning, the parties submitted their
memoranda and later the lnvestigating Fiscal Liberato Reyes
dismissed the complaint on the ground of failure to prove
a prima facie case of the offense charged (3ollo, Annex "F" of
request, pp. 74-80). Complainant Juanita Gruta did not file a
motion for reconsideration nor appeal to the Ministry (now
Department) of Justice.
On June 8, l983, nearly two (2) years after the death of
Erlinda Gruta and over a year after the resolution of the
Assistant Fiscal dated May 27, l982, dismissing the murder
charge, a complaint for damages was filed by the private
respondents against Ferdinand Calalang impleading the
spouses Calalang docketed as Civil Case No. 83-l80l9 in the
Regional Trial Court of Manila on the claim that they are jointly
and severally liable (3ollo, Annex "A", pp. 42-45; l63) for
actual and compensatory damages in the amount of
P50,000.00 for moral damages; P72,000.00 for loss of
earnings; and finally P30,000.00 for attorney's fees aside from
incidental expenses of Pl0,000.00 (3ollo, Annex "A", p. 44).
Plaintiffs, the heirs of Erlinda Gruta, Rogelio Gruta and Juanita
Gruta in their own rights and co-heirs of the late Erlinda Gruta,
are all with capacity to sue and be sued and are residents of
6l7 Carbajal Street, Binondo, Manila; while defendants are
likewise with capacity to sue and be sued and are residents of
4l A. Fernando St., Valenzuela, Metro Manila, where they all
may be served with summons, writs and other court
processes;
Erlinda Gruta is a l5 year old girl and one of the children of
Rogelio Gruta and Juanita Gruta;
Erlinda Gruta is now demise, she died on October 3l, l98l at
Jose Reyes Memorial Hospital of poisoning, per necropsy
report of the NBl.
Erlinda Gruta at that time of her death was a domestic helper
or servant of Dra. Maria G. Calalang, of Marulas, Valenzuela,
Metro Manila, receiving a salary wage of P200.00 a month;
On October 30, l98l, she was poisoned by defendant
Ferdinand Calalang, son of the other defendants Spouses
Calalang, resulting in her death on October 3l, l98l;
The case was investigated by the NBl, after which the case
was referred to the fiscal's office for preliminary investigation;
Subsequently later, a case of Murder by poisoning was filed
against defendant Ferdinand Calalang with the fiscal's office of
Bulacan, which was however dismissed on the alleged ground
of failure to prove a prima facie case of the offense charged;
As a resulting consequences of the death of Erlinda Gruta, the
parents and relatives suffered actual and compensatory
damages in the amount of P50,000.00 more or less, resulting
from burial expenses and others;
Also as a result of the death of Erlinda Gruta, the parents and
relatives suffered mental anguish, wounded feelings, anxiety
and shock and for which plaintiff demand P50,000.00 in Moral
Damages from defendants jointly and solidarily;
The parents of the late Erlinda Gruta, who received the
meager salary of P200.00 a month, lost such earning as a
direct result of her untimely death, which if computed to the
age of 30 years old, the parents would be deprived of at least
P72,000.00 in earnings;
ln prosecuting this case, plaintiffs obligated themselves to pay
their lawyer the sum of P 30,000.00 contingent attorney's fee
and will probably incur consequential expenses and costs to
the tune of Pl0,000.00 more or less.
WHEREFORE, after hearing, judgment issue:
l. Ordering defendants to jointly and severally pay plaintiffs
the sum of P50,000.00 as actual or compensatory damages;
2. Ordering defendants to jointly and severally pay plaintiffs
the sum of P 50,000.00 as Moral Damages;
3. Ordering defendants to jointly and severally pay P72,000.00
as loss of earnings to the plaintiffs;
4. Ordering defendants to jointly and several pay plaintiff the
sum of P40,000.00 for attorney's fee and consequential
expenses and costs;
5. Praying for such other reliefs which are just and equitable
under the premises. (pp. 42-45, 3ollo)
On August 2, l983, petitioners filed their Answer with
Affirmative Defenses and Counterclaim (Annex "B"). As the
issues were joined, petitioners submitted a Request for
Admission (Annex "C"), under Rule 26. Private respondents,
however, filed an Opposition to the Motion for Admission (p.
l23, CA's Original Record) which was not resolved by the trial
court.
On February 27, l984, a preliminary hearing was conducted
by the trial court on the affirmative defenses of the defendants.
Thereafter, on March 30, l984, Hon. Judge Antonio M.
Martinez, RTC-Manila, Branch 20, issued an Order dismissing
the case, the dispositive portion of which reads:
WHEREFORE, finding merit to the prayer for dismissal of the
case at bar on the ground of lack of cause of action, based on
the affirmative defenses in the answer, this complaint should
be, as it is hereby, DlSMlSSED.
No pronouncement as to cost.
SO ORDERED.
(3ollo, Annex "D", p. 84)
However, on appeal, the lntermediate Appellate Court
rendered its decision dated June 28, l986, reversing the order
of the lower court, the dispositive portion of which reads:
WHEREFORE, the order of the trial court dismissing this case,
dated March 30, l984, is hereby SET ASlDE and the original
records are ordered remanded to the court below for further
proceedings. With costs against the defendants-appellees.
SO ORDERED.
(3ollo, Annex "G", p. l74)
A motion for reconsideration was filed by petitioners on August
l, l985 (3ollo, Annex "H", pp. l75-20l) and a resolution was
rendered on April 28, l986, denying the motion for
reconsideration (3ollo, Annex "M", pp. 24l-245).
Hence, this petition.
Under Section 5, Rule l6 "Any of the grounds for dismissal
provided for in this rule, except improper venue, may be
pleaded as an affirmative defense, and preliminary hearing
may be had thereon as if a motion to dismiss had been Med."
This is to save the expense involved in the preparation and
trial when the case can be otherwise disposed of. The
preliminary hearing should be conducted as ordinary hearings:
the parties should be allowed to present evidence and the
evidence recorded (Asejo vs. Leonosa, 78 Phil. 467), except
when the affirmative defense is based on par. g., Section l,
Rule l6 "that the complaint states no cause of action." ln
determining sufficiency of cause of action, only the facts
alleged in the complaint should be considered. (De Jesus, et
al., vs. Belarmino, et al., 95 Phil. 365; Dimayuga vs.
Dimayuga, 96 Phil. 859).
lt is a well-settled rule that in a motion to dismiss based on the
failure of the complaint to state a cause of action, the question
submitted for determination is sufficiency of allegation in the
complaint itself. The sufficiency of the cause of action must
appear on the face of the complaint itself in order to sustain a
dismissal on the ground. (Clavano vs. Genato, 80 SCRA 2l7).
This rule applies when the only affirmative defense is the
failure of the complaint to state a cause of action. lt does not
apply when the grounds relied upon by way of affirmative
defenses state other matters. Thus the trial court, in the case
at bar, did not commit any error in conducting a preliminary
hearing on the affirmative defenses of herein petitioners.
The finding of lAC that there was no preliminary hearing (tsn.,
February 27, l984) has no basis that can be verified from the
records. The trial court set the case for preliminary hearing on
February 27, l984 as per Order dated February 3, l984: and
the records bear "minutes" of the preliminary hearing
conducted on February 27, l987. The rule that the findings of
fact of the Court of Appeals (formerly lAC) are entitled to great
respect is not inflexible. They are subject to some established
exceptions. (Layugan vs. lAC, l67 SCRA 363). And one of
these exceptions is when judgment is based on
misapprehension of facts (Castillo vs. CA., G.R. No. 4854l,
August 2l, l989). lAC relied solely on the statement of the
Clerk of Court that "this case was decided on the basis of
pleadings, memorandum, motion for reconsideration and
opposition. No oral or documentary evidence was presented"
(Decision of lAC, p. 3; 3ollo, Annex "G", p. l63) without going
to the records of the case.
A perusal of the preliminary hearing indicates that the cause of
action of respondents (plaintiffs in the Civil Case) is based on
the crime of murder allegedly committed by Ferdinand
Calalang.
Court
So you are basing your claim on the murder case?
Atty. Aguilar
Yes, your Honor.
(tsn., February 27,l984, p. l2)
The alleged ambiguity of the cause of action in the complaint
was clarified by the admission of the respondents' counsel.
Thus, the trial court concluded:
Court
So you are basing this case on the murder case. That is what l
want to make clear (in) this case, and l wanted to have all the
facts clear because your complaint, based on par. 7, states:
subsequently, later, a case of murder by poisoning was filed
against defendant Ferdinand Calalang with the fiscal's office of
Bulacan, which was however dismissed on the alleged ground
of failure to prove a prima facie case of the offense charged;
and then on par. 8, states that as a resulting consequence of
the death of Erlinda Gruta, her parents and relatives suffered
actual and compensatory damages to the tune of P50,000
more or less, resulting from burial expenses and others; loss
of income in the amount of P72,000 and in the total amount
more or less P220,000. So we may now have a clear case,
that is whether or not it is a murder case which lead to the
filing of civil case for damages. (tsn., February 27,l984, pp.
l2-l3)
Since the only cause of action of the case is based on the
criminal act, there is no reason to implead the Calalang
spouses. ln their Memorandum in Support of Affirmative
Defenses, the Calalang spouses reiterated that:
. . . the complaint does not show any legal, statutory basis as
to why and under what law are they being included as
defendants since the complaint admits that Ferdinand
Calalang has the capacity to sue; t(e trut( is (e Ferdinand
Calalang4 is of age . . . . (Emphasis supplied) (Memorandum in
Support of Affirmative Defenses, p. l; 3ollo, p. l35)
Thus, We find merit in the finding of the trial court that:
. . . There is no valid legal ground for impleading the spouses
Dr. and Mrs. Maria Calalang. The complaint shows that except
for the fact that the spouses Calalang are said to be the
employer of the deceased Erlinda Gruta; and, that the other
defendant Ferdinand Calalang is their son, there is nothing in
the complaint which would connect them to the untimely death
of Erlinda Gruta. . . .
lt is further observed that the complaint alleges that all of the
defendants (Ferdinand Calalang and spouses Calalang) are
said to have the "capacity to sue and be sued." Therefore, if
Ferdinand Calalang has the "capacity to sue and be sued,"
then the spouses Calalang can no longer be held civilly liable
for any of his misdeeds, if any. . . . There being no legal
ground to implead the defendants-spouses Calalang, the case
against them should be dismissed. (Order, p. 2; 3ollo, Annex
"D", p. 82)
A close scrutiny of the Order of Dismissal of the Regional Trial
Court indicates that the present case was not dismissed solely
on the ground that the complaint failed to state a cause of
action, but also on the ground that there is no valid cause of
action against Ferdinand Calalang, upon considering the
"pleadings, memorandum, motion for reconsideration and
opposition" therein.
Generally, the basis of civil liability from crime is the
fundamental postulate of our law that "every person criminally
liable for a felony is also civilly liable" (Art. l00, Revised Penal
Code). ln other words, criminal liability will give rise to civil
liability only if the same felonious act or omission results in
damage or injury to another and is the direct and proximate
cause thereof (Banal vs. Tadeo, Jr., l56 SCRA 325)
ln the case at bar, counsel for private respondents admitted
that his complaint for damages is based on the commission of
the crime. Stress must be made, however, that under
circumstances, it is a fundamental rule that the facts upon
which the civil liability might arise must exist to warrant the
filing of a civil action.
Thus, "the acquittal of the accused from the criminal charge
will not necessarily extinguish the civil liability unlessthe Court
declares in the judgment that the fact from which the civil
liability might arise did not exist." (Tan vs. Standard Vacuum
Oil Co., et al., 97 Phil. 672). Similarly, "extinction of the penal
action does not carry with it the extinction of civil liability unless
the extinction proceeds from a declaration in a final judgment
that the fact from which the civil might arise did not exist." (De
Mesa vs. Priela, 24 SCRA 582; par. (b), Sec. 2, Rule lll,
Rules of Court)
Verily, the dismissal of this criminal case as found by lAC is
only by resolution of the provincial fiscal and does not proceed
from a declaration in a final judgment that the fact from which
the civil case might arise did not exist, so that said case may
be refiled anytime without the effect of double jeopardy. (3ollo,
p. l73). We held as early as the case of People v. Velez, 77
Phil. l026, that the dismissal of the information or the criminal
action (upon motion of the fiscal) does not affect the right of
the offended party to institute or continue the civil action
already instituted arising from the offense, because such
dismissal or extinction of the penal action does not carry with it
the extinction of the civil action. The reason most often given
for this holding is that the two proceedings are not between the
same parties. Different rules as to the competency of
witnesses and weight of evidence necessary to the findings in
the two proceedings also exist. ln a criminal action the State
must prove its case by evidence which shows the guilt of the
defendant beyond reasonable doubt, while in a civil action it is
sufficient for the plaintiff to sustain his cause by
preponderance of evidence only (Ocampo vs. Jenkins, l4 Phil.
68l). Therefore, the insufficiency of evidence to support a
murder charge does not imply that there is no sufficient
evidence to support the civil case based on the same alleged
act.
lt is highly speculative to conclude that the plaintiffs' cause of
action would stand or fall on the strength of the testimony of
Dolores Ayuste who was convicted of perjury on such alleged
testimony. A decision should be based on facts not on mere
speculations or beliefs.
Finally, the trial court dismissed the case against Ferdinand
Calalang motu proprio based on the ground that there is no
valid cause of action against him. This is not a ground for
dismissal of action under Rule l6; but the failure of the
complaint to state a cause of action. The pleadings,
memorandum and motion for reconsideration and opposition,
thereto, might show that there is no valid cause of action
against Ferdinand Calalang; still, the court is not allowed by
law to dismiss the case motu proprio. As long as there is a
cause of action in the complaint itself, procedural due process
demands that there must be a hearing on the merits with the
complaint as 5prima facieevidence of the facts therein
stated.5 (People vs. Dy, l58 SCRA lll). Therefore, the
plaintiffs should be given their day in court to vindicate their
claim to the fullest.
WHEREFORE, the appealed decision remanding this case to
the court a quo for further proceedings is hereby AFFlRMED
with the MODlFlCATlON that the case against Dr. and Mrs.
Fidel Calalang is hereby DlSMlSSED.
SO ORDERED.
PERPETUAL SAVlNGS BANK v FAJARDO and DEL MUNDO
(l954)
That the rights pleaded against the borrower corporation are
prima facie inconsistent with the rights pleaded against
respondents Fajardo and Del Mundo, is also clear: either the
borrower corporation alone is liable; or respondents Fajardo
and Del Mundo are alone liable in lieu of J.J. Mining; or
respondents Fajardo and Del Mundo are solidarily liable with
J.J. Mining.
Facts:
l. On 29 December l982, J.J. Mining and Exploration
Corporation ("J.J. Mining") executed and delivered to
Perpetual Savings Bank ("Bank") a promissory note in the
amount of P750,000.00 payable in one lump sum upon
maturity on 29 January l984, with interest at 23% per annum
(with penalty rate of 3% per month)
2. Jose Oro B. Fajardo and Emmanuel F. Del Mundo. officers
of J.J. Mining, facilitated the said transaction. Atty. Del Mundo
was apparently also counsel for J.J. Mining.
3. J.J. Mining did not pay the amount of the indebtedness
upon maturity and was sued.
4. Fajardo and Del Mundo were also sued in their personal
capacities for allegedly contracting the loan fully knowing that
the JJ Mining would be unable to pay the same upon maturity,
and/or that they used the proceeds of the loan for their own
personal benefit;
5. Defendant Jose Jalandoni is impleaded herein in his
personal capacity also as alternative Defendant, as the owner
of 94% of the subscribed capital stock of Defendant
Corporation and for using the proceeds thereof for his own
personal benefit fully knowing that the Defendant Corporation
was with inadequate capital to meet its debts.
6. Despite the fact that the paid up capital of JJ Mining was
only Pl00,000.00, it managed to borrow P750,000.00 from
Plaintiff Bank secured only by shares of stocks of Pamana
Mining Corp. also owned by Jalandoni;
7. Fajardo and Del Mundo filed a Motion to Dismiss on the
ground that the complaint had failed to state a cause of action
against them. The Bank filed an Opposition to the Motion to
Dismiss, invoking, among other things, Section l3, Rule 3 of
the Rules of Court, which provides that:
"Alternative defendants. Where the plaintiff is uncertain
against which of several persons he is entitled to relief, he may
join any or all of them as defendants in the alternative,
although a right to relief against one may be inconsistent with
a right to relief against the other."
RTC: ifo Bank. Denies Fajardo and Del Mundo's Motion to
Dismiss. Fajardo and Del Mundo appeals, after MR is denied.
SC: remands case to CA
CA: reverses TC's denial of Motion to Dismiss. Bank, as
liquidator, now appeals.
Relevant lssue:
WON the complaint filed in Civil Case No. l450l state a
cause of action against Respondents Fajardo and Del Mundo,
as distinguished from J.J. Mining, on whose behalf they had
purported to act?
NO.
Held/Ratio:
Relevant:
l. lf it be assumed that respondents Fajardo and Del Mundo
were properly authorized, and acted within the scope of their
authority, to sign for and in behalf of J.J. Mining for the said
loan, then it is J.J. Mining as maker of the note which is
directly liable to petitioner Bank for repayment of such loan,
and not Fajardo and DelMundo. After all, JJ Mining has a
personality separate and distinct from the persons who have
been duly authorized to represent the corporation in that
particular transaction.
2. On the other hand if Fajardo and Del Mundo somehow
acted in excess of their authority as agents or representatives
of J.J. Mining, then in principle Fajardo and Del Mundo would
be personally liable upon the promissory note, instead of the
borrower corporation. J.J. Mining as a separate juridical
person would not be so liable, unless it be shown that J.J.
Mining actually received all or part of the proceeds of the loan
and (presumably) benefited from such loan proceeds, and to
that extent, had impliedly ratified the transaction.
3. Thus, the complaint alleges two (2) distinguishable bases
for sustaining the suit.
Firstly, Fajardo and Del Mundo are being sued as tort-feasors
who contracted the loan although they allegedly knew that the
apparent principal obligor, J.J. Mining, would never be able to
pay the loan upon maturity. The cause of action here is
basically fraudulent inducement, concealment or
misrepresentation exercised upon petitioner Bank which was
misled into granting and releasing the loan. The second basis
for suing Fajardo and Del Mundo in their personal and
individual capacities is that they allegedly used the proceeds
of the loan for their own personal benefit, rather than for the
benefit of the borrower corporation.
4. ln respect of these twin, related, bases for personal liability
to the creditor, the Bank stated complaint that J.J. Mining had
"received value" "thru [respondents] Fajardo and Del Mundo."
Thus, the Bank has alleged that the proceeds of the loan were
delivered to the borrower corporation by delivering them to
respondents Fajardo and Del Mundo.
5. The state of mind of petitioner Bank whether it was
"uncertain" or whether it was "dead sure as night follows day"
against which of several defendants it is entitled to relief is,
of course, immaterial, except to the extent that such state of
mind is externalized by the allegations of the complaint.
Petitioner Bank, in paragraph l.6 in relation to paragraph 2.l
and 2.2 of its complaint, had pleaded, with sufficient clarity,
its claimed rights against alternative defendants: the borrower
corporation and respondents Fajardo and Del Mundo. That the
rights pleaded against the borrower corporation are prima
facie inconsistent with the rights pleaded against respondents
Fajardo and Del Mundo, is also clear: either the borrower
corporation alone is liable; or respondents Fajardo and Del
Mundo are alone liable in lieu of J.J. Mining; or respondents
Fajardo and Del Mundo are solidarily liable with J.J. Mining.