G.R. No. 175723               February 4, 2014

THE CITY OF MANILA, represented by MAYOR JOSE L. ATIENZA, JR., and MS. LIBERTY M. TOLEDO, in her capacity as the City Treasurer of Manila, Petitioners, vs.HON. CARIDAD H. GRECIA-CUERDO, in her capacity as Presiding Judge of the Regional Trial Court, Branch 112, Pasay City; SM MART, INC.; SM PRIME HOLDINGS, INC.; STAR APPLIANCES CENTER; SUPERVALUE, INC.; ACE HARDWARE PHILIPPINES, INC.; WATSON PERSONAL CARE STORES, PHILS., INC.; JOLLIMART PHILS., CORP.; SURPLUS MARKETING CORPORATION and SIGNATURE LINES, Respondents.

D E C I S I O N

PERALTA, J.:

Before the Court is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to reverse and set aside the Resolutions dated April 6, 2006 and November 29, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 87948.

The antecedents of the case, as summarized by the CA, are as follows:

The record shows that petitioner City of Manila, through its treasurer, petitioner Liberty Toledo, assessed taxes for the taxable period from January to December 2002 against private respondents SM Mart, Inc., SM Prime Holdings, Inc., Star Appliances Center, Supervalue, Inc., Ace Hardware Philippines, Inc., Watsons Personal Care Stores Phils., Inc., Jollimart Philippines Corp., Surplus Marketing Corp. and Signature Lines. In addition to the taxes purportedly due from private respondents pursuant to Section 14, 15, 16, 17 of the Revised Revenue Code of Manila (RRCM), said assessment covered the local business taxes petitioners were authorized to collect under Section 21 of the same Code. Because payment of the taxes assessed was a precondition for the issuance of their business permits, private respondents were constrained to pay the P19,316,458.77 assessment under protest.

On January 24, 2004, private respondents filed [with the Regional Trial Court of Pasay City] the complaint denominated as one for "Refund or Recovery of Illegally and/or Erroneously-Collected Local Business Tax, Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction" which was docketed as Civil Case No. 04-0019-CFM before public respondent's sala [at Branch 112]. In the amended complaint they filed on February 16, 2004, private respondents alleged that, in relation to Section 21 thereof, Sections 14, 15, 16, 17, 18, 19 and 20 of the RRCM were violative of the limitations and guidelines under Section 143 (h) of Republic Act. No. 7160 [Local Government Code] on double taxation. They further averred that petitioner city's Ordinance No. 8011 which amended pertinent portions of the RRCM had already been declared to be illegal and unconstitutional by the Department of Justice.

In its Order dated July 9, 2004, the RTC granted private respondents' application for a writ of preliminary injunction.

Petitioners filed a Motion for Reconsideration but the RTC denied it in its Order dated October 15, 2004.

Petitioners then filed a special civil action for certiorari with the CA assailing the July 9, 2004 and October 15, 2004 Orders of the RTC.

In its Resolution promulgated on April 6, 2006, the CA dismissed petitioners' petition for certiorari holding that it has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction over private respondents' complaint for tax refund, which was filed with the RTC, is vested in the Court of Tax Appeals (CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA 9282), it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should, likewise, be filed with the CTA.

Petitioners filed a Motion for Reconsideration, but the CA denied it in its Resolution dated November 29, 2006.

Hence, the present petition raising the following issues:

I- Whether or not the Honorable Court of Appeals gravely erred in dismissing the case for lack of jurisdiction.

II- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting to lack or excess of jurisdiction in enjoining by issuing a Writ of Injunction the petitioners, their agents and/or authorized representatives from implementing Section 21 of the Revised Revenue Code of Manila, as amended, against private respondents.

III- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting to lack or excess of jurisdiction in issuing the Writ of Injunction despite failure of private respondents to make a written claim for tax credit or refund with the City Treasurer of Manila.

IV- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting to lack or excess of jurisdiction considering that under Section 21 of the Manila Revenue Code, as amended, they are mere collecting agents of the City Government.

V- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting to lack or excess of jurisdiction in issuing the Writ of Injunction because petitioner City of Manila and its constituents would result to greater damage and prejudice thereof. (sic)

Without first resolving the above issues, this Court finds that the instant petition should be denied for being moot and academic.

Upon perusal of the original records of the instant case, this Court discovered that a Decision in the main case had already been rendered by the RTC on August 13, 2007, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, this Court hereby renders JUDGMENT in favor of the plaintiff and against the defendant to grant a tax refund or credit for taxes paid pursuant to Section 21 of the Revenue Code of the City of Manila as amended for the year 2002 in the following amounts:

To plaintiff SM Mart, Inc. - P 11,462,525.02

To plaintiff SM Prime Holdings, Inc. - 3,118,104.63To plaintiff Star Appliances Center - 2,152,316.54To plaintiff Supervalue, Inc. - 1,362,750.34To plaintiff Ace Hardware Phils., Inc. - 419,689.04To plaintiff Watsons Personal Care Health - 231,453.62

Stores Phils., Inc.To plaintiff Jollimart Phils., Corp. - 140,908.54To plaintiff Surplus Marketing Corp. - 220,204.70To plaintiff Signature Mktg. Corp. - 94,906.34

TOTAL: - P 19,316,458.77

Defendants are further enjoined from collecting taxes under Section 21, Revenue Code of Manila from herein plaintiff.

SO ORDERED.

The parties did not inform the Court but based on the records, the above Decision had already become final and executory per the Certificate of Finality issued by the same trial court on October 20, 2008. In fact, a Writ of Execution was issued by the RTC on November 25, 2009. In view of the foregoing, it clearly appears that the issues raised in the present petition, which merely involve the incident on the preliminary injunction issued by the RTC, have already become moot and academic considering that the trial court, in its decision on the merits in the main case, has already ruled in favor of respondents and that the same decision is now final and executory. Well entrenched is the rule that where the issues have become moot and academic, there is no justiciable controversy, thereby rendering the resolution of the same of no practical use or value.

In any case, the Court finds it necessary to resolve the issue on jurisdiction raised by petitioners owing to its significance and for future guidance of both bench and bar. It is a settled principle that courts will decide a question otherwise moot and academic if it is capable of repetition, yet evading review.

However, before proceeding, to resolve the question on jurisdiction, the Court deems it proper to likewise address a procedural error which petitioners committed.

Petitioners availed of the wrong remedy when they filed the instant special civil action for certiorari under Rule 65 of the Rules of Court in assailing the Resolutions of the CA which dismissed their petition filed with the said court and their motion for reconsideration of such dismissal. There is no dispute that the assailed Resolutions of the CA are in the nature of a final order as they disposed of the petition completely. It is settled that in cases where an assailed judgment or order is considered final, the remedy of the aggrieved party is appeal. Hence, in the instant case, petitioner should have filed a petition for review on certiorari under Rule 45, which is a continuation of the appellate process over the original case.

Petitioners should be reminded of the equally-settled rule that a special civil action for certiorari under Rule 65 is an original or independent action based on grave abuse of discretion amounting to lack or excess of jurisdiction and it will lie only if there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. As such, it cannot be a substitute for a lost appeal.

Nonetheless, in accordance with the liberal spirit pervading the Rules of Court and in the interest of substantial justice, this Court has, before, treated a petition for certiorari as a petition for review on certiorari, particularly (1) if the petition for certiorari was filed within the reglementary period within which to file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when there is sufficient reason to justify the relaxation of the rules. Considering that the present petition was filed within the 15-day reglementary period for filing a petition for review on certiorari under Rule 45, that an error of judgment is averred, and because of the significance of the issue on jurisdiction, the Court deems it proper

and justified to relax the rules and, thus, treat the instant petition for certiorari as a petition for review on certiorari.

Having disposed of the procedural aspect, we now turn to the central issue in this case. The basic question posed before this Court is whether or not the CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case.

This Court rules in the affirmative.

On June 16, 1954, Congress enacted Republic Act No. 1125 (RA 1125) creating the CTA and giving to the said court jurisdiction over the following:

(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;

(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected fines, forfeitures or other penalties imposed in relation thereto; or other matters arising under the Customs Law or other law or part of law administered by the Bureau of Customs; and

(3) Decisions of provincial or City Boards of Assessment Appeals in cases involving the assessment and taxation of real property or other matters arising under the Assessment Law, including rules and regulations relative thereto.

On March 30, 2004, the Legislature passed into law Republic Act No. 9282 (RA 9282) amending RA 1125 by expanding the jurisdiction of the CTA, enlarging its membership and elevating its rank to the level of a collegiate court with special jurisdiction. Pertinent portions of the amendatory act provides thus:

Sec. 7. Jurisdiction. - The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue;

2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;

3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction;

4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs;

5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial or city board of assessment appeals;

6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from decisions of the Commissioner of Customs which are adverse to the Government under Section 2315 of the Tariff and Customs Code;

7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or article, and the Secretary of Agriculture in the case of agricultural product, commodity or article, involving dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No. 8800, where either party may appeal the decision to impose or not to impose said duties.

b. Jurisdiction over cases involving criminal offenses as herein provided:

1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue or the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this paragraph where the principal amount of taxes and fees,

exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA shall be appellate. Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action will be recognized.

2. Exclusive appellate jurisdiction in criminal offenses:

a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases originally decided by them, in their respected territorial jurisdiction.

b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.

c. Jurisdiction over tax collection cases as herein provided:

1. Exclusive original jurisdiction in tax collection cases involving final and executory assessments for taxes, fees, charges and penalties: Provides, however, that collection cases where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court.

2. Exclusive appellate jurisdiction in tax collection cases:

a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection cases originally decided by them, in their respective territorial jurisdiction.

b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction.

A perusal of the above provisions would show that, while it is clearly stated that the CTA has exclusive appellate jurisdiction over decisions, orders or resolutions of the RTCs in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction, there is no categorical statement under RA 1125 as well as the amendatory RA 9282, which provides that th e CTA has jurisdiction over petitions for certiorari assailing interlocutory orders issued by the RTC in local tax cases filed before it.

The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise of original jurisdiction which must be expressly conferred by the Constitution or by law and cannot be implied from the mere existence of appellate jurisdiction. Thus, in the cases of Pimentel v. COMELEC, Garcia v. De Jesus, Veloria v. COMELEC, Department of Agrarian Reform Adjudication Board v. Lubrica, and Garcia v. Sandiganbayan, this Court has ruled against the jurisdiction of courts or tribunals over petitions for certiorari on the ground that there is no law which expressly gives these tribunals such power. It must be observed, however, that with the exception of Garcia v. Sandiganbayan, these rulings pertain not to regular courts but to tribunals exercising quasi-judicial powers. With respect to the Sandiganbayan, Republic Act No. 8249 now provides that the special criminal court has exclusive original jurisdiction over petitions for the issuance of the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of its appellate jurisdiction.

In the same manner, Section 5 (1), Article VIII of the 1987 Constitution grants power to the Supreme Court, in the exercise of its original jurisdiction, to issue writs of certiorari, prohibition and mandamus. With respect to the Court of Appeals, Section 9 (1) of Batas Pambansa Blg. 129 (BP 129) gives the appellate court, also in the exercise of its original jurisdiction, the power to issue, among others, a writ of certiorari,whether or not in aid of its appellate jurisdiction. As to Regional Trial Courts, the power to issue a writ of certiorari, in the exercise of their original jurisdiction, is provided under Section 21 of BP 129.

The foregoing notwithstanding, while there is no express grant of such power, with respect to the CTA, Section 1, Article VIII of the 1987 Constitution provides, nonetheless, that judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law and that judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA includes that of determining whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with jurisdiction to issue writs of certiorari in these cases.

Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed

tax cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power as is deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as partial, not total.

Consistent with the above pronouncement, this Court has held as early as the case of J.M. Tuason & Co., Inc. v. Jaramillo, et al. that "if a case may be appealed to a particular court or judicial tribunal or body, then said court or judicial tribunal or body has jurisdiction to issue the extraordinary writ of certiorari, in aid of its appellate jurisdiction." This principle was affirmed in De Jesus v. Court of Appeals, where the Court stated that "a court may issue a writ of certiorari in aid of its appellate jurisdiction if said court has jurisdiction to review, by appeal or writ of error, the final orders or decisions of the lower court." The rulings in J.M. Tuason and De Jesus were reiterated in the more recent cases of Galang, Jr. v. Geronimo and Bulilis v. Nuez.

Furthermore, Section 6, Rule 135 of the present Rules of Court provides that when by law, jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer.

If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the same subject matter – precisely the split-jurisdiction situation which is anathema to the orderly administration of justice.35 The Court cannot accept that such was the legislative motive, especially considering that the law expressly confers on the CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial review over local tax cases without mention of any other court that may exercise such power. Thus, the Court agrees with the ruling of the CA that since appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should, likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court decides an appeal in the main case while another court rules on an incident in the very same case.

Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against interlocutory orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial court in the same case. It is more in consonance with logic and legal soundness to conclude that the grant of appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries with it the power to issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with, and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisions of the RTC, in order to have complete supervision over the acts of the latter.

A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it effectively, to make all orders that will preserve the subject of the action, and to give effect to the final determination of the appeal. It carries with it the power to protect that jurisdiction and to make the decisions of the court thereunder effective. The court, in aid of its appellate jurisdiction, has authority to control all auxiliary and incidental matters necessary to the efficient and proper exercise of that jurisdiction.1âwphi1 For this purpose, it may, when necessary, prohibit or restrain the performance of any act which might interfere with the proper exercise of its rightful jurisdiction in cases pending before it.

Lastly, it would not be amiss to point out that a court which is endowed with a particular jurisdiction should have powers which are necessary to enable it to act effectively within such jurisdiction. These should be regarded as powers which are inherent in its jurisdiction and the court must possess them in order to enforce its rules of practice and to suppress any abuses of its process and to defeat any attempted thwarting of such process.

In this regard, Section 1 of RA 9282 states that the CTA shall be of the same level as the CA and shall possess all the inherent powers of a court of justice.

Indeed, courts possess certain inherent powers which may be said to be implied from a general grant of jurisdiction, in addition to those expressly conferred on them. These inherent powers are such powers as are necessary for the ordinary and efficient exercise of jurisdiction; or are essential to the existence, dignity and functions of the courts, as well as to the due administration of justice; or are directly appropriate, convenient and suitable to the execution of their granted powers; and include the power to maintain the court's jurisdiction and render it effective in behalf of the litigants.

Thus, this Court has held that "while a court may be expressly granted the incidental powers necessary to effectuate its jurisdiction, a grant of jurisdiction, in the absence of prohibitive legislation, implies the necessary and usual incidental powers essential to effectuate it, and, subject to existing laws and constitutional provisions, every regularly constituted court has power to do all things that are reasonably necessary for the administration of justice within the scope of its jurisdiction and for the enforcement of its judgments and mandates." Hence, demands, matters or questions ancillary or incidental to, or growing out of, the main action, and coming within the above principles, may be taken cognizance of by the court and determined, since such jurisdiction is in aid of its authority over the principal matter, even though the court may thus be called on to consider and decide matters which, as original causes of action, would not be within its cognizance.

Based on the foregoing disquisitions, it can be reasonably concluded that the authority of the CTA to take cognizance of petitions for certiorari questioning interlocutory orders issued by the RTC in a local tax case

is included in the powers granted by the Constitution as well as inherent in the exercise of its appellate jurisdiction.

Finally, it would bear to point out that this Court is not abandoning the rule that, insofar as quasi-judicial tribunals are concerned, the authority to issue writs of certiorari must still be expressly conferred by the Constitution or by law and cannot be implied from the mere existence of their appellate jurisdiction. This doctrine remains as it applies only to quasi-judicial bodies.

WHEREFORE, the petition is DENIED.

SO ORDERED.

DIOSDADO M. PERALTAAssociate Justice

NATURE:This is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to reverse and set aside the Resolutions1 dated April 6, 2006 and November 29, 2006 of the Court of Appeals.

FACTS:Petitioner City of Manila, through its treasurer, petitioner Liberty Toledo, assessed taxes for the taxable period from January to December 2002 against the private respondents. In addition to the taxes purportedly due from private respondents pursuant to Section 14, 15, 16, 17 of the Revised Revenue Code of Manila (RRCM), said assessment covered the local business taxes. Private respondents were constrained to pay the P 19,316,458.77 assessment under protest.

On January 24, 2004, private respondents filed before the RTC of Pasay City the complaint denominated as one for “Refund or Recovery of Illegally and/or Erroneously–Collected Local Business Tax, Prohibition with Prayer to Issue TRO and Writ of Preliminary InjunctionThe RTC granted private respondents’ application for a writ of preliminary injunction.

Petitioners filed a Motion for Reconsideration4 but the RTC denied. Petitioners then filed a special civil action for certiorari with the CA but the CA dismissed petitioners’ petition for certiorari holding that it has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction over private respondents’ complaint for tax refund, which was filed with the RTC, is vested in the Court of Tax Appeals (CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA 9282) , it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should, likewise, be filed with the CTA.

Petitioners filed a Motion for Reconsideration,7 but the CA denied it in its Resolution hence, this petition

ISSUE: Whether or not the CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case.

HELD:The CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case. In order for any appellate court to effectively exercise its appellate jurisdiction, it must have the authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power as is deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as partial, not total.

Consistent with the above pronouncement, the Court has held as early as the case of J.M. Tuason & Co., Inc. v. Jaramillo, et al. [118 Phil. 1022 (1963)] that “if a case may be appealed to a particular court or judicial tribunal or body, then said court or judicial tribunal or body has jurisdiction to issue the extraordinary writ of certiorari, in aid of its appellate jurisdiction.” This principle was affirmed in De Jesus v. Court of Appeals (G.R. No. 101630, August 24, 1992) where the Court stated that “a court may issue a writ of certiorari in aid of its appellate jurisdiction if said court has jurisdiction to review, by appeal or writ of error, the final orders or decisions of the lower court.

FALLO: petition is denied

G.R. No. 173946, June 19, 2013

BOSTON EQUITY RESOURCES, INC., Petitioner, v. COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.

D E C I S I O N

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1) the Decision,1

dated 28 February 2006 and (2) the Resolution,2 dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586. The challenged decision granted herein respondent’s petition for certiorari upon a finding that the trial court committed grave abuse of discretion in denying respondent’s motion to dismiss the complaint against her.3 Based on this finding, the Court of Appeals reversed and set aside the Orders, dated 8 November 20044 and 22 December 2004,5 respectively, of the Regional Trial Court (RTC) of Manila, Branch 24.

The Facts

On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the issuance of a writ of preliminary attachment against the spouses Manuel and Lolita Toledo. Herein respondent filed an Answer dated 19 March 1998 but on 7 May 1998, she filed a Motion for Leave to Admit Amended Answer in which she alleged, among others, that her husband and co-defendant, Manuel Toledo (Manuel), is already dead. The death certificate of Manuel states "13 July 1995" as the date of death. As a result, petitioner filed a motion, dated 5 August 1999, to require respondent to disclose the heirs of Manuel. In compliance with the verbal order of the court during the 11 October 1999 hearing of the case, respondent submitted the required names and addresses of the heirs. Petitioner then filed a Motion for Substitution, dated 18 January 2000, praying that Manuel be substituted by his children as party-defendants. It appears that this motion was granted by the trial court in an Order dated 9 October 2000.

Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing, among others, the dates of hearing of the case.

The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence and its exhibits were thereafter admitted.

On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of the parties. On 24 September 2004, counsel for herein respondent was given a period of fifteen days within which to file a demurrer to evidence. However, on 7 October 2004, respondent instead filed a motion to dismiss the complaint, citing the following as grounds: (1) that the complaint failed to implead an indispensable party or a real party in interest; hence, the case must be dismissed for failure to state a cause of action; (2) that the trial court did not acquire jurisdiction over the person of Manuel pursuant to Section 5, Rule 86 of the Revised Rules of Court; (3) that the trial court erred in ordering the substitution of the deceased Manuel by his heirs; and (4) that the court must also dismiss the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of Court.

The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been filed out of time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "[W]ithin the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made x x x." Respondent’s motion for reconsideration of the order of denial was likewise denied on the ground that "defendants’ attack on the jurisdiction of this Court is now barred by estoppel by laches" since respondent failed to raise the issue despite several chances to do so.

Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the trial court seriously erred and gravely abused its discretion in denying her motion to dismiss despite discovery, during the trial of the case, of evidence that would constitute a ground for dismissal of the case.

The Court of Appeals granted the petition based on the following grounds:

It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the latter voluntarily appeared or submitted to the court or by coercive process issued by the court to him, x x x. In

this case, it is undisputed that when [petitioner] Boston filed the complaint on December 24, 1997, defendant Manuel S. Toledo was already dead, x x x. Such being the case, the court a quo could not have acquired jurisdiction over the person of defendant Manuel S. Toledo.

x x x the court a quo’s denial of [respondent’s] motion to dismiss was based on its finding that [respondent’s] attack on the jurisdiction of the court was already barred by laches as [respondent] failed to raise the said ground in its [sic] amended answer and during the pre-trial, despite her active participation in the proceedings.

However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on appeal. By timely raising the issue on jurisdiction in her motion to dismiss x x x [respondent] is not estopped [from] raising the question on jurisdiction. Moreover, when issue on jurisdiction was raised by [respondent], the court a quo had not yet decided the case, hence, there is no basis for the court a quo to invoke estoppel to justify its denial of the motion for reconsideration; It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was already dead. The complaint should have impleaded the estate of Manuel S. Toledo as defendant, not only the wife, considering that the estate of Manuel S. Toledo is an indispensable party, which stands to be benefited or be injured in the outcome of the case. x x x

x x x x

[Respondent’s] motion to dismiss the complaint should have been granted by public respondent judge as the same was in order. Considering that the obligation of Manuel S. Toledo is solidary with another debtor, x x x, the claim x x x should be filed against the estate of Manuel S. Toledo, in conformity with the provision of Section 6, Rule 86 of the Rules of Court, x x x.

The Court of Appeals denied petitioner’s motion for reconsideration. Hence, this petition.

The Issues

Petitioner claims that the Court of Appeals erred in not holding that:

1. Respondent is already estopped from questioning the trial court’s jurisdiction;

2. Petitioner never failed to implead an indispensable party as the estate of Manuel is not an indispensable party;

3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not warranting the dismissal of the case before the lower court; and

4. Since the estate of Manuel is not an indispensable party, it is not necessary that petitioner file its claim against the estate of Manuel.

In essence, what is at issue here is the correctness of the trial court’s orders denying respondent’s motion to dismiss.

The Ruling of the Court

We find merit in the petition.

Motion to dismiss filed out of time

To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of respondent. Well settled is the rule that the special civil action for certiorari is not the proper remedy to assail the denial by the trial court of a motion to dismiss. The order of the trial court denying a motion to dismiss is merely interlocutory, as it neither terminates nor finally disposes of a case and still leaves something to be done by the court before a case is finally decided on the merits. Therefore, "the proper remedy in such a case is to appeal after a decision has been rendered."

As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher Education:

A writ of certiorari is not intended to correct every controversial interlocutory ruling; it is resorted only to correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within its jurisdiction and to relieve persons from arbitrary acts – acts which courts or judges have no power or authority in law to perform. It is not designed to correct erroneous findings and conclusions made by the courts.

Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of discretion in denying respondent’s motion to dismiss. It, in fact, acted correctly when it issued the questioned orders as respondent’s motion to dismiss was filed SIX YEARS AND FIVE MONTHS AFTER SHE FILED HER AMENDED ANSWER. This circumstance alone already warranted the outright dismissal of the motion for having been filed in clear contravention of the express mandate of Section 1, Rule 16, of the Revised Rules of Court. Under this provision, a motion to dismiss shall be filed within the time for but before the filing of an answer to the complaint or pleading asserting a claim.

More importantly, respondent’s motion to dismiss was filed after petitioner has completed the presentation of its evidence in the trial court, giving credence to petitioner’s and the trial court’s conclusion that the filing of the motion to dismiss was a mere ploy on the part of respondent to delay the prompt resolution of the case against her.

Also worth mentioning is the fact that respondent’s motion to dismiss under consideration herein is not the first motion to dismiss she filed in the trial court. It appears that she had filed an earlier motion to dismiss on the sole ground of the unenforceability of petitioner’s claim under the Statute of Frauds, which motion was denied by the trial court. More telling is the following narration of the trial court in its Order denying respondent’s motion for reconsideration of the denial of her motion to dismiss:

As can be gleaned from the records, with the admission of plaintiff’s exhibits, reception of defendants’ evidence was set on March 31, and April 23, 2004 x x x . On motion of the defendant[s], the hearing on March 31, 2004 was cancelled.

On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum to one Gina M. Madulid, to appear and testify for the defendants on April 23, 2004. Reception of defendants’ evidence was again deferred to May 26, June 2 and June 30, 2004, x x x.

On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad testificandum to the said Gina Madulid. On May 26, 2004, reception of defendants [sic] evidence was cancelled upon the agreement of the parties. On July 28, 2004, in the absence of defendants’ witness, hearing was reset to September 24 and October 8, 2004 x x x.

On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to file a demurrer to evidence. On October 7, 2004, defendants filed instead a Motion to Dismiss x x x.

Respondent’s act of filing multiple motions, such as the first and earlier motion to dismiss and then the motion to dismiss at issue here, as well as several motions for postponement, lends credibility to the position taken by petitioner, which is shared by the trial court, that respondent is deliberately impeding the early disposition of this case.  The filing of the second motion to dismiss was, therefore, "not only improper but also dilatory." Thus, the trial court, "far from deviating or straying off course from established jurisprudence on [the] matter, x x x had in fact faithfully observed the law and legal precedents in this case." The Court of Appeals, therefore, erred not only in entertaining respondent’s petition for certiorari, it likewise erred in ruling that the trial court committed grave abuse of discretion when it denied respondent’s motion to dismiss.

On whether or not respondent is estopped fromquestioning the jurisdiction of the trial court

At the outset, it must be here stated that, as the succeeding discussions will demonstrate, jurisdiction over the person of Manuel should not be an issue in this case. A protracted discourse on jurisdiction is, nevertheless, demanded by the fact that jurisdiction has been raised as an issue from the lower court, to the Court of Appeals and, finally, before this Court. For the sake of clarity, and in order to finally settle the controversy and fully dispose of all the issues in this case, it was deemed imperative to resolve the issue of jurisdiction.

1. Aspects of Jurisdiction

Petitioner calls attention to the fact that respondent’s motion to dismiss questioning the trial court’s jurisdiction was filed more than six years after her amended answer was filed. According to petitioner, respondent had several opportunities, at various stages of the proceedings, to assail the trial court’s jurisdiction but never did so for six straight years.  Citing the doctrine laid down in the case of Tijam, et al. v. Sibonghanoy, et al. petitioner claimed that respondent’s failure to raise the question of jurisdiction at an earlier stage bars her from later questioning it, especially since she actively participated in the proceedings conducted by the trial court.

Petitioner’s argument is misplaced, in that, it failed to consider that the concept of jurisdiction has several aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the parties; (3) jurisdiction over the issues of the case; and (4) in cases involving property, jurisdiction over the res or the thing which is the subject of the litigation.

The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches is jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner, the issue involved was the authority of the then Court of First Instance to hear a case for the collection of a sum of money in the amount of P1,908.00 which amount was, at that time, within the exclusive original jurisdiction of the municipal courts.

In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the jurisdiction of the trial court over the subject matter of the case. Accordingly, in Spouses Gonzaga v. Court of Appeals, the issue for consideration was the authority of the regional trial court to hear and decide an action for reformation of contract and damages involving a subdivision lot, it being argued therein that jurisdiction is vested in the Housing and Land Use Regulatory Board pursuant to PD 957 (The Subdivision and Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC, Legaspi City, petitioners argued that the respondent municipal trial court had no jurisdiction over the complaint for ejectment because the issue of ownership was raised in the pleadings. Finally, in People v. Casuga,34 accused-appellant claimed that the crime of grave slander, of which she was charged, falls within the concurrent jurisdiction of municipal courts or city courts and the then courts of first instance, and that the judgment of the court of first instance, to which she had appealed the municipal court's conviction, should be deemed null and void

for want of jurisdiction as her appeal should have been filed with the Court of Appeals or the Supreme Court.

In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts concerned over the subject matter of the case based on estoppel by laches, declaring that parties cannot be allowed to belatedly adopt an inconsistent posture by attacking the jurisdiction of a court to which they submitted their cause voluntarily.35

Here, what respondent was questioning in her motion to dismiss before the trial court was that court’s jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by laches finds no application in this case. Instead, the principles relating to jurisdiction over the person of the parties are pertinent herein.

The Rules of Court provide:

RULE 9EFFECT OF FAILURE TO PLEAD

Section 1. Defenses and objections not pleaded. — 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.

RULE 15MOTIONS

Sec. 8. Omnibus motion. — Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived.

Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even if not alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject matter. x x x Lack of jurisdiction over the subject matter can always be raised anytime, even for the first time on appeal, since jurisdictional issues cannot be waived x x x subject, however, to the principle of estoppel by laches."

Since the defense of lack of jurisdiction over the person of a party to a case is not one of those defenses which are not deemed waived under Section 1 of Rule 9, such defense must be invoked when an answer or a motion to dismiss is filed in order to prevent a waiver of the defense. If the objection is not raised either in a motion to dismiss or in the answer, the objection to the jurisdiction over the person of the plaintiff or the defendant is deemed waived by virtue of the first sentence of the above-quoted Section 1 of   Rule 9 of the Rules of Court.

The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its questioned decision, stating that "issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on appeal" and that, therefore, respondent timely raised the issue in her motion to dismiss and is, consequently, not estopped from raising the question of jurisdiction. As the question of jurisdiction involved here is that over the person of the defendant Manuel, the same is deemed waived if not raised in the answer or a motion to dismiss. In any case, respondent cannot claim the defense since "lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence."

2. Jurisdiction over the person of a defendant is acquired through a valid service of summons; trial court did not acquire jurisdiction over the person of Manuel Toledo

In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A defendant is informed of a case against him when he receives summons. "Summons is a writ by which the defendant is notified of the action brought against him.  Service of such writ is the means by which the court acquires jurisdiction over his person."

In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since there was no valid service of summons upon him, precisely because he was already dead even before the complaint against him and his wife was filed in the trial court. The issues presented in this case are similar to those in the case of Sarsaba v. Vda. de Te.

In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally dismissed from employment and ordering the payment of his monetary claims. To satisfy the claim, a truck in the possession of Sereno’s employer was levied upon by a sheriff of the NLRC, accompanied by Sereno and his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for recovery of motor vehicle and damages, with prayer for the delivery of the truck pendente lite was eventually filed against Sarsaba, Sereno, the NLRC sheriff and the NLRC by the registered owner of the truck. After his motion to dismiss was denied by the trial court, petitioner Sarsaba filed his answer. Later on, however, he filed an omnibus motion to dismiss citing, as one of the grounds, lack of jurisdiction over one of the principal defendants, in view of the fact that Sereno was already dead when the complaint for recovery of possession was filed.

Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one of the issues submitted for resolution in both cases is similar: whether or not a case, where one of the named defendants was already dead at the time of its filing, should be dismissed so that the claim may be pursued instead in the proceedings for the settlement of the estate of the deceased defendant. The petitioner in the Sarsaba Case claimed, as did respondent herein, that since one of the defendants died

before summons was served on him, the trial court should have dismissed the complaint against all the defendants and the claim should be filed against the estate of the deceased defendant. The petitioner in Sarsaba, therefore, prayed that the complaint be dismissed, not only against Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction over the person of Sereno. This is exactly the same prayer made by respondent herein in her motion to dismiss.

The Court, in the Sarsaba Case, resolved the issue in this wise:x x x We cannot countenance petitioner’s argument that the complaint against the other defendants should have been dismissed, considering that the RTC never acquired jurisdiction over the person of Sereno. The court’s failure to acquire jurisdiction over one’s person is a defense which is personal to the person claiming it. Obviously, it is now impossible for Sereno to invoke the same in view of his death. Neither can petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case dismissed against all of the defendants. Failure to serve summons on Sereno’s person will not be a cause for the dismissal of the complaint against the other defendants, considering that they have been served with copies of the summons and complaints and have long submitted their respective responsive pleadings. In fact, the other defendants in the complaint were given the chance to raise all possible defenses and objections personal to them in their respective motions to dismiss and their subsequent answers.

Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno only.

Based on the foregoing pronouncements, there is no basis for dismissing the complaint against respondent herein. Thus, as already emphasized above, the trial court correctly denied her motion to dismiss.

On whether or not the estate of ManuelToledo is an indispensable party

Rule 3, Section 7 of the 1997 Rules of Court states:

SEC. 7. Compulsory joinder of indispensable parties. — Parties-in-interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.

An indispensable party is one who has such an interest in the controversy or subject matter of a case that a final adjudication cannot be made in his or her absence, without injuring or affecting that interest. He or she is a party who has not only an interest in the subject matter of the controversy, but "an interest of such nature that a final decree cannot be made without affecting [that] interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the parties already before the court which is effective, complete or equitable." Further, an indispensable party is one who must be included in an action before it may properly proceed.

On the other hand, a "person is not an indispensable party if his interest in the controversy or subject matter is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them. Also, a person is not an indispensable party if his presence would merely permit complete relief between him or her and those already parties to the action, or if he or she has no interest in the subject matter of the action." It is not a sufficient reason to declare a person to be an indispensable party simply because his or her presence will avoid multiple litigations.

Applying the foregoing pronouncements to the case at bar, it is clear that the estate of Manuel is not an indispensable party to the collection case, for the simple reason that the obligation of Manuel and his wife, respondent herein, is solidary.

The contract between petitioner, on the one hand and respondent and respondent’s husband, on the other, states:

FOR VALUE RECEIVED, I/We jointly and severally (in solemn) promise to pay BOSTON EQUITY RESOURCES, INC. x x x the sum of PESOS: [ONE MILLION FOUR HUNDRED (P1,400,000.00)] x x x.47

The provisions and stipulations of the contract were then followed by the respective signatures of respondent as "MAKER" and her husband as "CO-MAKER."48 Thus, pursuant to Article 1216 of the Civil Code, petitioner may collect the entire amount of the obligation from respondent only. The aforementioned provision states: "The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected."

In other words, the collection case can proceed and the demands of petitioner can be satisfied by respondent only, even without impleading the estate of Manuel. Consequently, the estate of Manuel is not an indispensable party to petitioner’s complaint for sum of money.

However, the Court of Appeals, agreeing with the contention of respondent, held that the claim of petitioner should have been filed against the estate of Manuel in accordance with Sections 5 and 6 of Rule 86 of the Rules of Court. The aforementioned provisions provide:

SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for money against the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise, they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. x x x.

SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary with another debtor, the claim shall be filed against the decedent as if he were the only debtor, without prejudice to the right of the estate to recover contribution from the other debtor. x x x.

The Court of Appeals erred in its interpretation of the above-quoted provisions.

In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the Revised Rules of Court, which latter provision has been retained in the present Rules of Court without any revisions, the Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v. Villarama, et. al., held:

Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken, this Court held that where two persons are bound in solidum for the same debt and one of them dies, the whole indebtedness can be proved against the estate of the latter, the decedent’s liability being absolute and primary;  x x x. It is evident from the foregoing that Section 6 of Rule 87 provides the procedure should the creditor desire to go against the deceased debtor, but there is certainly nothing in the said provision making compliance with such procedure a condition precedent before an ordinary action against the surviving solidary debtors, should the creditor choose to demand payment from the latter, could be entertained to the extent that failure to observe the same would deprive the court jurisdiction to take cognizance of the action against the surviving debtors. Upon the other hand, the Civil Code expressly allows the creditor to proceed against any one of the solidary debtors or some or all of them simultaneously. There is, therefore, nothing improper in the creditor’s filing of an action against the surviving solidary debtors alone, instead of instituting a proceeding for the settlement of the estate of the deceased debtor wherein his claim could be filed.

The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v. Asuncion where the Supreme Court pronounced:

A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein prevents a creditor from proceeding against the surviving solidary debtors. Said provision merely sets up the procedure in enforcing collection in case a creditor chooses to pursue his claim against the estate of the deceased solidary debtor. The rule has been set forth that a creditor (in a solidary obligation) has the option whether to file or not to file a claim against the estate of the solidary debtor. x x x

x x x x

It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter. Said provision gives the creditor the right to "proceed against anyone of the solidary debtors or some or all of them simultaneously." The choice is undoubtedly left to the solidary creditor to determine against whom he will enforce collection. In case of the death of one of the solidary debtors, he (the creditor) may, if he so chooses, proceed against the surviving solidary debtors without necessity of filing a claim in the estate of the deceased debtors. It is not mandatory for him to have the case dismissed as against the surviving debtors and file its claim against the estate of the deceased solidary debtor, x x x. For to require the creditor to proceed against the estate, making it a condition precedent for any collection action against the surviving debtors to prosper, would deprive him of his substantive rights provided by Article 1216 of the New Civil Code.

As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were applied literally, Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of Court, petitioner has no choice but to proceed against the estate of [the deceased debtor] only. Obviously, this provision diminishes the [creditor’s] right under the New Civil Code to proceed against any one, some or all of the solidary debtors. Such a construction is not sanctioned by principle, which is too well settled to require citation, that a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of Court cannot be made to prevail over Article 1216 of the New Civil Code, the former being merely procedural, while the latter, substantive.

Based on the foregoing, the estate of Manuel is not an indispensable party and the case can proceed as against respondent only. That petitioner opted to collect from respondent and not from the estate of Manuel is evidenced by its opposition to respondent’s motion to dismiss asserting that the case, as against her, should be dismissed so that petitioner can proceed against the estate of Manuel.

On whether or not the inclusion of Manuel asparty defendant is a misjoinder of party

Section 11 of Rule 3 of the Rules of Court states that "[n]either misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately."

Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the capacity to sue or be sued in the event that the claim by or against the misjoined party is pursued in a separate case. In this case, therefore, the inclusion of Manuel in the complaint cannot be considered a misjoinder, as in fact, the action would have proceeded against him had he been alive at the time the collection case was filed by petitioner. This being the case, the remedy provided by Section 11 of Rule 3 does not obtain here. The name of Manuel as party-defendant cannot simply be dropped from the case. Instead, the procedure taken by the Court in Sarsaba v. Vda. de Te,52 whose facts, as mentioned earlier, resemble

those of this case, should be followed herein.  There, the Supreme Court agreed with the trial court when it resolved the issue of jurisdiction over the person of the deceased Sereno in this wise:

As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of Patricio Sereno since there was indeed no valid service of summons insofar as Patricio Sereno is concerned. Patricio Sereno died before the summons, together with a copy of the complaint and its annexes, could be served upon him.

However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein, does not render the action DISMISSIBLE, considering that the three (3) other defendants, x x x, were validly served with summons and the case with respect to the answering defendants may still proceed independently. Be it recalled that the three (3) answering defendants have previously filed a Motion to Dismiss the Complaint which was denied by the Court.

Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a claim against the estate of Patricio Sereno, but the case with respect to the three (3) other accused [sic] will proceed.

As a result, the case, as against Manuel, must be dismissed.

In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of the Rules of Court, which states that: [o]nly natural or juridical persons, or entities authorized by law may be parties in a civil action." Applying this provision of law, the Court, in the case of Ventura v. Militante, held:

Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of justice, the plaintiff must have an actual legal existence, that is, he, she or it must be a person in law and possessed of a legal entity as either a natural or an artificial person, and no suit can be lawfully prosecuted save in the name of such a person.

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he institutes a judicial proceeding, to name the proper party defendant to his cause of action. In a suit or proceeding in personam of an adversary character, the court can acquire no jurisdiction for the purpose of trial or judgment until a party defendant who actually or legally exists and is legally capable of being sued, is brought before it. It has even been held that the question of the legal personality of a party defendant is a question of substance going to the jurisdiction of the court and not one of procedure.

The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving spouse Ms. Sulpicia Ventura" as the defendant. Petitioner moved to dismiss the same on the ground that the defendant as named in the complaint had no legal personality. We agree.

x x x. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a party defendant in a court action.

Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law, the complaint may be dismissed on the ground that the pleading asserting the claim states no cause of action or for failure to state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of Court, because a complaint cannot possibly state a cause of action against one who cannot be a party to a civil action.

Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the dismissal of the case as against him, thus did the trial court err when it ordered the substitution of Manuel by his heirs. Substitution is proper only where the party to be substituted died during the pendency of the case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which states:

Death of party;duty of counsel. — Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. x x x

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator x x x.

The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice.

Here, since Manuel was already dead at the time of the filing of the complaint, the court never acquired jurisdiction over his person and, in effect, there was no party to be substituted.

WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the Resolution dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586 are REVERSED and SET ASIDE. The Orders of the Regional Trial Court dated 8 November 2004 and 22 December 2004, respectively, in Civil Case No. 97-86672, are REINSTATED. The Regional Trial Court, Branch 24, Manila is hereby DIRECTED to proceed with the trial of Civil Case No. 97-86672 against respondent Lolita G. Toledo only, in accordance with the above pronouncements of the Court, and to decide the case with dispatch.

SO ORDERED. Carpio, (Chairperson), Brion, Del Castillo, and Villarama, Jr.,* JJ., concur.

(Estopple)

G.R. No. 198755               June 5, 2013

ALBERTO PAT-OG, SR., Petitioner, vs.CIVIL SERVICE COMMISSION, Respondent.

D E C I S I O N

MENDOZA, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which seeks to set aside the April 6, 2011 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 101700, affirming the April 11, 2007 Decision2 of the Civil Service Commission (CSC), which ordered the dismissal of petitioner Alberto Pat-og, Sr. (Pat-og) from the service for grave misconduct.

The Facts

On September 13, 2003, Robert Bang-on (Bang-on), then a 14-year old second year high school student of the Antadao National High School in Sagada, Mountain Province, tiled an affidavit-complaint against Pat-og, a third year high school teacher of the same school, before the Civil Service Commission-Cordillera Administrative Region (CSC-CAR).

Bang-on alleged that on the morning of August 26, 2003, he attended his class at the basketball court of the school, where Pat-og and his third year students were also holding a separate class; that he and some of his classmates joined Pat-og’s third year students who were practicing basketball shots; that Pat-og later instructed them to form two lines; that thinking that three lines were to be formed, he stayed in between the two lines; that Pat-og then held his right arm and punched his stomach without warning for failing to follow instructions; and that as a result, he suffered stomach pain for several days and was confined in a hospital from September 10-12, 2003, as evidenced by a medico-legal certificate, which stated that he sustained a contusion hematoma in the hypogastric area.

Regarding the same incident, Bang-on filed a criminal case against Pat-og for the crime of Less Serious Physical Injury with the Regional Trial Court (RTC) of Bontoc, Mountain Province.

Taking cognizance of the administrative case, the CSC-CAR directed Pat-og to file his counter-affidavit. He denied the charges hurled against him and claimed that when he was conducting his Music, Arts, Physical Education and Health (MAPEH) class, composed of third year students, he instructed the girls to play volleyball and the boys to play basketball; that he later directed the boys to form two lines; that after the boys failed to follow his repeated instructions, he scolded them in a loud voice and wrested the ball from them; that while approaching them, he noticed that there were male students who were not members of his class who had joined the shooting practice; that one of those male students was Bang-on, who was supposed to be having his own MAPEH class under another teacher; that he then glared at them, continued scolding them and dismissed the class for their failure to follow instructions; and that he offered the sworn statement of other students to prove that he did not box Bang-on.

On June 1, 2004, the CSC-CAR found the existence of a prima faciecase for misconduct and formally charged Pat-og.

While the proceedings of the administrative case were ongoing, the RTC rendered its judgment in the criminal case and found Pat-og guilty of the offense of slight physical injury. He was meted the penalty of imprisonment from eleven (11) to twenty (20) days. Following his application for probation, the decision became final and executory and judgment was entered.

Meanwhile, in the administrative case, a pre-hearing conference was conducted after repeated postponement by Pat-og. With the approval of the CSC-CAR, the prosecution submitted its position paper in lieu of a formal presentation of evidence and formally offered its evidence, which included the decision in the criminal case. It offered the affidavits of Raymund Atuban, a classmate of Bang-on; and James Domanog, a third year high school student, who both witnessed Pat-og hit Bang-on in the stomach.

For his defense, Pat-og offered the testimonies of his witnesses - Emiliano Dontongan (Dontongan), a teacher in another school, who alleged that he was a member of the Municipal Council for the Protection of Children, and that, in such capacity, he investigated the incident and came to the conclusion that it did not happen at all; and Ernest Kimmot, who testified that he was in the basketball court at the time but did not see such incident. Pat-og also presented the affidavits of thirteen other witnesses to prove that he did not punch Bang-on.

Ruling of the CSC-CAR

In its Decision,3 dated September 19, 2006, the CSC-CAR found Pat-og guilty and disposed as follows:

WHEREFORE, all premises told, respondent Alberto Pat-og, Sr., Teacher Antadao National High School, is hereby found guilty of Simple Misconduct.

Under the Uniform Rules on Administrative Cases in the Civil Service, the imposable penalty on the first offense of Simple Misconduct is suspension of one (1) month and one (1) day to six (6) months.

Due to seriousness of the resulting injury to the fragile body of the minor victim, the CSC-CAR hereby imposed upon respondent the maximum penalty attached to the offense which is six months suspension without pay.

The CSC-CAR gave greater weight to the version posited by the prosecution, finding that a blow was indeed inflicted by Pat-og on Bang-on. It found that Pat-og had a motive for doing so - his students’ failure to follow his repeated instructions which angered him. Nevertheless, the CSCCAR ruled that a motive was not necessary to establish guilt if the perpetrator of the offense was positively identified. The positive identification of Pat-og was duly proven by the corroborative testimonies of the prosecution witnesses, who were found to be credible and disinterested. The testimony of defense witness, Dontongan, was not given credence considering that the students he interviewed for his investigation claimed that Pat-og was not even angry at the time of the incident, contrary to the latter’s own admission.

The CSC-CAR held that the actions of Pat-og clearly transgressed the proper norms of conduct required of a public official, and the gravity of the offense was further magnified by the seriousness of the injury of Bang-on which required a healing period of more than ten (10) days. It pointed out that, being his teacher, Pat-og’s substitute parental authority did not give him license to physically chastise a misbehaving student. The CSC-CAR added that the fact that Pat-og applied for probation in the criminal case, instead of filing an appeal, further convinced it of his guilt.

The CSC-CAR believed that the act committed by Pat-og was sufficient to find him guilty of Grave Misconduct. It, however, found the corresponding penalty of dismissal from the service too harsh under the circumstances. Thus, it adjudged petitioner guilty of Simple Misconduct and imposed the maximum penalty of suspension for six (6) months.

On December 11, 2006, the motion for reconsideration filed by Pat-og was denied for lack of merit.4

The Ruling of the CSC

In its Resolution,5 dated April 11, 2007, the CSC dismissed Pat-og’s appeal and affirmed with modification the decision of the CSC-CAR as follows:

WHEREFORE, foregoing premises considered, the instant appeal is hereby DISMISSED. The decision of the CSC-CAR is affirmed with the modification that Alberto Pat-og, Sr., is adjudged guilty of grave misconduct, for which he is meted out the penalty of dismissal from the service with all its accessory penalties of cancellation of eligibilities, perpetual disqualification from reemployment in the government service, and forfeiture of retirement benefits.6

After evaluating the records, the CSC sustained the CSC-CAR’s conclusion that there existed substantial evidence to sustain the finding that Pat-og did punch Bang-on in the stomach. It gave greater weight to the positive statements of Bang-on and his witnesses over the bare denial of Patog. It also highlighted the fact that Pat-og failed to adduce evidence of any ill motive on the part of Bang-on in filing the administrative case against him. It likewise gave credence to the medico-legal certificate showing that Bang-on suffered a hematoma contusion in his hypogastric area.

The CSC ruled that the affidavits of Bang-on’s witnesses were not bereft of evidentiary value even if Pat-og was not afforded a chance to cross-examine the witnesses of Bang-on. It is of no moment because the cross- examination of witnesses is not an indispensable requirement of administrative due process.

The CSC noted that Pat-og did not question but, instead, fully acquiesced in his conviction in the criminal case for slight physical injury, which was based on the same set of facts and circumstances, and involved the same parties and issues. It, thus, considered his prior criminal conviction as evidence against him in the administrative case.

Finding that his act of punching his student displayed a flagrant and wanton disregard of the dignity of a person, reminiscent of corporal punishment that had since been outlawed for being harsh, unjust, and cruel, the CSC upgraded Pat-og’s offense from Simple Misconduct to Grave Misconduct and ordered his dismissal from the service.

Pat-og filed a motion for reconsideration, questioning for the first time the jurisdiction of CSC over the case. He contended that administrative charges against a public school teacher should have been initially heard by a committee to be constituted pursuant to the Magna Carta for Public School Teachers.

On November 5, 2007, the CSC denied his motion for reconsideration.7 It ruled that Pat-og was estopped from challenging its jurisdiction considering that he actively participated in the administrative proceedings against him, raising the issue of jurisdiction only after his appeal was dismissed by the CSC.

Ruling of the Court of Appeals

In its assailed April 6, 2011 Decision,8 the CA affirmed the resolutions of the CSC. It agreed that Pat-og was estopped from questioning the jurisdiction of the CSC as the records clearly showed that he actively participated in the proceedings. It was of the view that Pat-og was not denied due process when he failed to cross-examine Bang-on and his witnesses because he was given the opportunity to be heard and present his evidence before the CSC-CAR and the CSC.

The CA also held that the CSC committed no error in taking into account the conviction of Pat-og in the criminal case. It stated that his conviction was not the sole basis of the CSC for his dismissal from the service because there was substantial evidence proving that Pat-og had indeed hit Bang-on.

In its assailed Resolution,9 dated September 13, 2011, the CA denied the motion for reconsideration filed by Pat-og.

Hence, the present petition with the following

Assignment of Errors

WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED THE SUPREME PENALTY OF DISMISSAL FROM SERVICE WITH FORFEITURE OF RETIREMENT BENEFITS AGAINST THE PETITIONER WITHOUT CONSIDERING PETITIONER’S LONG YEARS OF GOVERNMENT SERVICE?

WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT RULED THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE CIVIL SERVICE COMMISSION TO HEAR AND DECIDE THE ADMINISTRATIVE CASE AGAINST HIM?

WHETHER OR NOT RESPONDENT COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE APPEAL DESPITE LACK OF SUBSTANTIAL EVIDENCE?

On Jurisdiction

Pat-og contends that Section 9 of Republic Act (R.A.) No. 4670, otherwise known as the Magna Carta for Public School Teachers, provides that administrative charges against a public school teacher shall be heard initially by a committee constituted under said section. As no committee was ever formed, the petitioner posits that he was denied due process and that the CSC did not have the jurisdiction to hear and decide his administrative case. He further argues that notwithstanding the fact that the issue of jurisdiction was raised for the first time on appeal, the rule remains that estoppel does not confer jurisdiction on a tribunal that has no jurisdiction over the cause of action or subject matter of the case.

The Court cannot sustain his position.

The petitioner’s argument that the administrative case against him can only proceed under R.A. No. 4670 is misplaced.

In Puse v. Santos-Puse,10 it was held that the CSC, the Department of Education (DepEd) and the Board of Professional Teachers-Professional Regulatory Commission (PRC) have concurrent jurisdiction over administrative cases against public school teachers.

Under Article IX-B of the 1987 Constitution, the CSC is the body charged with the establishment and administration of a career civil service which embraces all branches and agencies of the government.11

Executive Order (E.O.) No. 292 (the Administrative Code of 1987)12 and Presidential Decree (P.D.) No. 807 (the Civil Service Decree of the Philippines)13 expressly provide that the CSC has the power to hear and decide administrative disciplinary cases instituted with it or brought to it on appeal. Thus, the CSC, as the central personnel agency of the government, has the inherent power to supervise and discipline all members of the civil service, including public school teachers.

Indeed, under Section 9 of R.A. No. 4670, the jurisdiction over administrative cases of public school teachers is lodged with the investigating committee constituted therein.14 Also, under Section 23 of R.A. No. 7836 (the Philippine Teachers Professionalization Act of 1994), the Board of Professional Teachers is given the power, after due notice and hearing, to suspend or revoke the certificate of registration of a professional teacher for causes enumerated therein.15

Concurrent jurisdiction is that which is possessed over the same parties or subject matter at the same time by two or more separate tribunals. When the law bestows upon a government body the jurisdiction to hear and decide cases involving specific matters, it is to be presumed that such jurisdiction is exclusive unless it be proved that another body is likewise vested with the same jurisdiction, in which case, both bodies have concurrent jurisdiction over the matter.16

Where concurrent jurisdiction exists in several tribunals, the body that first takes cognizance of the complaint shall exercise jurisdiction to the exclusion of the others. In this case, it was CSC which first acquired jurisdiction over the case because the complaint was filed before it. Thus, it had the authority to proceed and decide the case to the exclusion of the DepEd and the Board of Professional Teachers.17

In CSC v. Alfonso,18 it was held that special laws, such as R.A. No. 4670, do not divest the CSC of its inherent power to supervise and discipline all members of the civil service, including public school teachers. Pat-og, as a public school teacher, is first and foremost, a civil servant accountable to the people and answerable to the CSC for complaints lodged against him as a public servant. To hold that R.A. No. 4670 divests the CSC of its power to discipline public school teachers would negate the very purpose for which the CSC was established and would impliedly amend the Constitution itself.

To further drive home the point, it was ruled in CSC v. Macud19 that R.A. No. 4670, in imposing a separate set of procedural requirements in connection with administrative proceedings against public school teachers, should be construed to refer only to the specific procedure to be followed in administrative investigations conducted by the DepEd. By no means, then, did R.A. No. 4670 confer an exclusive disciplinary authority over public school teachers on the DepEd.

At any rate, granting that the CSC was without jurisdiction, the petitioner is indeed estopped from raising the issue. Although the rule states that a jurisdictional question may be raised at any time, such rule admits of the exception where, as in this case, estoppel has supervened.20 Here, instead of opposing the CSC’s exercise of jurisdiction, the petitioner invoked the same by actively participating in the proceedings before the CSC-CAR and by even filing his appeal before the CSC itself; only raising the issue of jurisdiction later in his motion for reconsideration after the CSC denied his appeal. This Court has time and again frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment only if favorable, but attacking it for lack of jurisdiction when adverse.21

On Administrative Due Process

On due process, Pat-og asserts that the affidavits of the complainant and his witnesses are of questionable veracity having been subscribed in Bontoc, which is nearly 30 kilometers from the residences of the parties. Furthermore, he claimed that considering that the said affiants never testified, he was never afforded the opportunity to cross-examine them. Therefore, their affidavits were mere hearsay and insufficient to prove his guilt.

The petitioner does not persuade.

The essence of due process is simply to be heard, or as applied to administrative proceedings, a fair and reasonable opportunity to explain one’s side, or an opportunity to seek a reconsideration of the action or ruling complained of.22 Administrative due process cannot be fully equated with due process in its strict judicial sense. In administrative proceedings, a formal or trial-type hearing is not always necessary23 and technical rules of procedure are not strictly applied. Hence, the right to cross-examine is not an indispensable aspect of administrative due process.24 The petitioner cannot, therefore, argue that the affidavit of Bang-on and his witnesses are hearsay and insufficient to prove his guilt.

At any rate, having actively participated in the proceedings before the CSC-CAR, the CSC, and the CA, the petitioner was apparently afforded every opportunity to explain his side and seek reconsideration of the ruling against him.

As to the issue of the veracity of the affidavits, such is a question of fact which cannot now be raised before the Court under Rule 45 of the Rules of Court. The CSC-CAR, the CSC and the CA did not, therefore, err in giving credence to the affidavits of the complainants and his witnesses, and in consequently ruling that there was substantial evidence to support the finding of misconduct on the part of the petitioner.

On the Penalty

Assuming that he did box Bang-on, Pat-og argues that there is no substantial evidence to prove that he did so with a clear intent to violate the law or in flagrant disregard of the established rule, as required for a finding of grave misconduct. He insists that he was not motivated by bad faith or ill will because he acted in the belief that, as a teacher, he was exercising authority over Bang-on in loco parentis, and was, accordingly, within his rights to discipline his student. Citing his 33 years in the government service without any adverse record against him and the fact that he is at the edge of retirement, being already 62 years old, the petitioner prays that, in the name of substantial and compassionate justice, the CSC-CAR’s finding of simple misconduct and the concomitant penalty of suspension should be upheld, instead of dismissal.

The Court agrees in part.

Misconduct means intentional wrongdoing or deliberate violation of a rule of law or standard of behavior. To constitute an administrative offense, misconduct should relate to or be connected with the performance of the official functions and duties of a public officer. In grave misconduct, as distinguished from simple misconduct, the elements of corruption, clear intent to violate the law or t1agrant disregard of an established rule must be manifest.25

Teachers are duly licensed professionals who must not only be competent in the practice of their noble profession, but must also possess dignity and a reputation with high moral values. They must strictly adhere to, observe, and practice the set of ethical and moral principles, standards, and values laid down in the Code of Ethics of Professional Teachers, which apply to all teachers in schools in the Philippines, whether public or private, as provided in the preamble of the said Code.26 Section 8 of Article VIII of the same Code expressly provides that "a teacher shall not inflict corporal punishment on offending learners."

Clearly then, petitioner cannot argue that in punching Bang-on, he was exercising his right as a teacher in loco parentis to discipline his student. It is beyond cavil that the petitioner, as a public school teacher, deliberately violated his Code of Ethics. Such violation is a flagrant disregard for the established rule contained in the said Code tantamount to grave misconduct.

Under Section 52(A)(2) of Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, the penalty for grave misconduct is dismissal from the service, which carries with it the cancellation of eligibility, forfeiture of retirement benefits and perpetual disqualification from reemployment in the government service.27 This penalty must, however, be tempered with compassion as there was sut1icient provocation on the part of Bang-on. Considering further the mitigating circumstances that the petitioner has been in the government service for 33 years, that this is his first offense and that he is at the cusp of retirement, the Court finds the penalty of suspension for six months as appropriate under the circumstances.

WHEREFORE, the Court PARTIALLY GRANTS the petition and MODIFIES the April 6, 2011 Decision of the Court of Appeals in CA-G.R. SP No. 101700. Accordingly, Alberto Pat-og, Sr. is found GUlLTY of Grave Misconduct, but the penalty is reduced from dismissal from the service to SUSPENSION for SIX MONTHS.

SO ORDERED.

JOSE CATRAL MENDOZAAssociate Justice

(on Venue)

G.R. No. 166920             February 19, 2007

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, Petitioners, vs.KLAUS K. SCHONFELD, Respondent.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76563. The CA decision reversed the Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00 dismissing the complaint of respondent Klaus K. Schonfeld.

The antecedent facts are as follows:

Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia, Canada. He had been a consultant in the field of environmental engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to engage in the business of providing specialty and technical services both in and out of the Philippines.2 It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as well as in other countries where PCIJ had business.

In 1997, PCIJ decided to engage in consultancy services for water and sanitation in the Philippines. In October 1997, respondent was employed by PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department. However, PCIJ assigned him as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ.

On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract.3 He then sent a copy to Henrichsen. The letter of employment reads:

Section 21 of the General Conditions of Employment

21 Arbitration

Any question of interpretation, understanding or fulfillment of the conditions of employment, as well as any question arising between the Employee and the Company which is in consequence of or connected with his employment with the Company and which can not be settled amicably, is to be finally settled, binding to both parties through written submissions, by the Court of Arbitration in London.5

Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident alien.

As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE). It appended respondent’s contract of employment to the application.

On February 26, 1999, the DOLE granted the application and issued the Permit to respondent.

Respondent received his compensation from PPI for the following periods: February to June 1998, November to December 1998, and January to August 1999. He was also reimbursed by PPI for the expenses he incurred in connection with his work as sector manager. He reported for work in Manila except for occasional assignments abroad, and received instructions from Henrichsen.7

On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines.8 However, on July 24, 1999, Henrichsen, by electronic mail,9 requested respondent to stay put in his job after August 5, 1999, until such time that he would be able to report on certain projects and discuss all the opportunities he had developed.10 Respondent continued his work with PPI until the end of business hours on October 1, 1999.

Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest.

On December 5, 2000, respondent filed a Complaint11 for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as NLRC-NCR Case No. 30-12-04787-00.

In his Complaint, respondent alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision to close one of its departments, which resulted in his dismissal; and they failed to notify him that his employment was terminated after August 4, 1999. Respondent also claimed for separation pay and other unpaid benefits. He alleged that the company acted in bad faith and disregarded his rights. He prayed for the following reliefs:

1. Judgment be rendered in his favor ordering the respondents to reinstate complainant to his former position without loss of seniority and other privileges and benefits, and to pay his full backwages from the time compensation was with held (sic) from him up to the time of his actual reinstatement. In the alternative, if reinstatement is no longer feasible, respondents must pay the complainant full backwages, and separation pay equivalent to one month pay for every year of service, or in the amount of US$16,400.00 as separation pay;

2. Judgment be rendered ordering the respondents to pay the outstanding monetary obligation to complainant in the amount of US$10,131.76 representing the balance of unpaid salaries, leave pay, cost of his air travel and shipment of goods from Manila to Canada; and

3. Judgment be rendered ordering the respondent company to pay the complainant damages in the amount of no less than US $10,000.00 and to pay 10% of the total monetary award as attorney’s fees, and costs.

Other reliefs just and equitable under the premises are, likewise, prayed for.12

Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It averred that respondent was a Canadian citizen, a transient expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office in Tokyo, Japan. Since respondent’s cause of action was based on his letter of employment executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus, the complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer any justification for filing his complaint against PPI before the NLRC in the Philippines. Moreover, under Section 12 of the General Conditions of Employment appended to the letter of employment dated January 7, 1998, complainant and PCIJ had agreed that any employment-related dispute should be brought before the London Court of Arbitration. Since even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts have no jurisdiction.13

Respondent opposed the Motion, contending that he was employed by PPI to work in the Philippines under contract separate from his January 7, 1998 contract of employment with PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it is inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two corporations have separate and distinct personalities; and he received orders and instructions from Henrichsen who was the president of PPI. He further insisted that the principles of forum non conveniens and lex loci contractus do not apply, and that although he is a Canadian citizen, Philippine Labor Laws apply in this case.

Respondent adduced in evidence the following contract of employment dated January 9, 1998 which he had entered into with Henrichsen:

According to respondent, the material allegations of the complaint, not petitioners’ defenses, determine which quasi-judicial body has jurisdiction. Section 21 of the Arbitration Clause in the General Conditions of Employment does not provide for an exclusive venue where the complaint against PPI for violation of the Philippine Labor Laws may be filed. Respondent pointed out that PPI had adopted two inconsistent positions: it was first alleged that he should have filed his complaint in Tokyo, Japan; and it later insisted that the complaint should have been filed in the London Court of Arbitration.15

In their reply, petitioners claimed that respondent’s employer was PCIJ, which had exercised supervision and control over him, and not PPI. Respondent was dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in Japan.16 The letter of employment dated January 9, 1998 which respondent relies upon did not bear his (respondent’s) signature nor that of Henrichsen.

On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners’ Motion to Dismiss. The dispositive portion reads:

WHEREFORE, finding merit in respondents’ Motion to Dismiss, the same is hereby granted. The instant complaint filed by the complainant is dismissed for lack of merit.

SO ORDERED.17

The Labor Arbiter found, among others, that the January 7, 1998 contract of employment between respondent and PCIJ was controlling; the Philippines was only the "duty station" where Schonfeld was required to work under the General Conditions of Employment. PCIJ remained respondent’s employer despite his having been sent to the Philippines. Since the parties had agreed that any differences regarding employer-employee relationship should be submitted to the jurisdiction of the court of arbitration in London, this agreement is controlling.

On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the latter’s decision in toto.18

Respondent then filed a petition for certiorari under Rule 65 with the CA where he raised the following arguments:

I

WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE LABOR ARBITER’S DECISION CONSIDERING THAT:

A. PETITIONER’S TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE INSTANT CASE; AND

B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE ARBITRATION BRANCH OF THE NLRC AND NOT THE COURT OF ARBITRATION IN LONDON.

II

WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING THAT PETITIONER’S TERMINATION FROM EMPLOYMENT IS ILLEGAL:

A. THE CLOSURE OF RESPONDENT COMPANY’S WATER AND SANITATION SECTOR WAS NOT BONA FIDE.

B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT COMPANY’S WATER AND SANITATION SECTOR WAS JUSTIFIABLE, PETITIONER’S DISMISSAL WAS INEFFECTUAL AS THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) AND PETITIONER WAS NOT NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE.19

Respondent averred that the absence or existence of a written contract of employment is not decisive of whether he is an employee of PPI. He maintained that PPI, through its president Henrichsen, directed his work/duties as Sector Manager of PPI; proof of this was his letter-proposal to the Development Bank of the Philippines for PPI to provide consultancy services for the Construction Supervision of the Water Supply and Sanitation component of the World Bank-Assisted LGU Urban Water and Sanitation Project.20 He emphasized that as gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an employee of PPI. It was PPI president Henrichsen who terminated his employment; PPI also paid his salary and reimbursed his expenses related to transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment because the two corporations have separate and distinct personalities.

The CA found the petition meritorious. Applying the four-fold test21 of determining an employer-employee relationship, the CA declared that respondent was an employee of PPI. On the issue of venue, the appellate court declared that, even under the January 7, 1998 contract of employment, the parties were not precluded from bringing a case related thereto in other venues. While there was, indeed, an agreement that issues between the parties were to be resolved in the London Court of Arbitration, the venue is not exclusive, since there is no stipulation that the complaint cannot be filed in any other forum other than in the Philippines.

On November 25, 2004, the CA rendered its decision granting the petition, the decretal portion of which reads:

WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the Labor Arbiter a quo for disposition of the case on the merits.

SO ORDERED.22

A motion for the reconsideration of the above decision was filed by PPI and Henrichsen, which the appellate court denied for lack of merit.23

In the present recourse, PPI and Henrichsen, as petitioners, raise the following issues:

I

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND WAS MERELY "SECONDED" TO PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN MANILA.

II

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR ARBITER A QUO HAS JURISDICTION OVER RESPONDENT’S CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM "SHALL BE FINALLY SETTLED BY THE COURT OF ARBITRATION IN LONDON."24

Petitioners fault the CA for reversing the findings of the Labor Arbiter and the NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the NLRC, are conclusive on the CA. They maintain that it is not within the province of the appellate court in a petition for certiorari to review the facts and evidence on record since there was no conflict in the factual findings and conclusions of the lower tribunals. Petitioners assert that such findings and conclusions, having been made by agencies with expertise on the subject matter, should be deemed binding and conclusive. They contend that it was the PCIJ which employed respondent as an employee; it merely seconded him to petitioner PPI in the Philippines, and assigned him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never the employer of respondent.

Petitioners assert that the January 9, 1998 letter of employment which respondent presented to prove his employment with petitioner PPI is of doubtful authenticity since it was unsigned by the purported parties. They insist that PCIJ paid respondent’s salaries and only coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control over respondent’s work, and had the responsibilities of monitoring the "daily administration" of respondent. Respondent cannot rely on the pay slips, expenses claim forms, and reimbursement memoranda to prove that he was an employee of petitioner PPI because these documents are of doubtful authenticity.

Petitioners further contend that, although Henrichsen was both a director of PCIJ and president of PPI, it was he who signed the termination letter of respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJ’s letterhead was used to inform him that his employment was terminated. Petitioners further assert that all work instructions came from PCIJ and that petitioner PPI only served as a "conduit." Respondent’s Alien Employment Permit stating that petitioner PPI was his employer is but a necessary consequence of his being "seconded" thereto. It is not sufficient proof that petitioner PPI is respondent’s employer. The entry was only made to comply with the DOLE requirements.

There being no evidence that petitioner PPI is the employer of respondent, the Labor Arbiter has no jurisdiction over respondent’s complaint.

Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring their claim that the principles of forum non conveniens and lex loci contractus are applicable. They also point out that the principal office, officers and staff of PCIJ are stationed in Tokyo, Japan; and the contract of employment of respondent was executed in Tokyo, Japan.

Moreover, under Section 21 of the General Conditions for Employment incorporated in respondent’s January 7, 1998 letter of employment, the dispute between respondent and PCIJ should be settled by the court of arbitration of London. Petitioners claim that the words used therein are sufficient to show the exclusive and restrictive nature of the stipulation on venue.

Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers and employers, while the Labor Code of the Philippines applies only to Filipino employers and Philippine-based employers and their employees, not to PCIJ. In fine, the jurisdictions of the NLRC and Labor Arbiter do not extend to foreign workers who executed employment agreements with foreign employers abroad, although "seconded" to the Philippines.25

In his Comment,26 respondent maintains that petitioners raised factual issues in their petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The finding of the CA that he had been an employee of petitioner PPI and not of PCIJ is buttressed by his documentary evidence which both the Labor Arbiter and the NLRC ignored; they erroneously opted to dismiss his complaint on the basis of the letter of employment and Section 21 of the General Conditions of Employment. In contrast, the CA took into account the evidence on record and applied case law correctly.

The petition is denied for lack of merit.

It must be stressed that in resolving a petition for certiorari, the CA is not proscribed from reviewing the evidence on record. Under Section 9 of Batas Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to pass upon the evidence, if and when necessary, to resolve factual issues.27 If it appears that the Labor Arbiter and the NLRC misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been properly appreciated, the factual findings of such tribunals cannot be given great respect and finality.28

Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence which respondent appended to his pleadings showing that he was an employee of petitioner PPI; they merely focused on the January 7, 1998 letter of employment and Section 21 of the General Conditions of Employment.

Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In said application, PPI averred that respondent is its employee. To show that this was the case, PPI appended a copy of respondent’s employment contract. The DOLE then granted the application of PPI and issued the permit.

It bears stressing that under the Omnibus Rules Implementing the Labor Code, one of the requirements for the issuance of an employment permit is the employment contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules provides:

SECTION 1. Coverage. – This rule shall apply to all aliens employed or seeking employment in the Philippines and the present or prospective employers.

SECTION 2. Submission of list. – All employers employing foreign nationals, whether resident or non-resident, shall submit a list of nationals to the Bureau indicating their names, citizenship, foreign and local address, nature of employment and status of stay in the Philippines.

SECTION 3. Registration of resident aliens. – All employed resident aliens shall register with the Bureau under such guidelines as may be issued by it.

SECTION 4. Employment permit required for entry. – No alien seeking employment, whether as a resident or non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be allowed to be employed upon presentation of a duly approved employment permit.

SECTION 5. Requirements for employment permit applicants. – The application for an employment permit shall be accompanied by the following:

(a) Curriculum vitae duly signed by the applicant indicating his educational background, his work experience and other data showing that he possesses technical skills in his trade or profession.

(b) Contract of employment between the employer and the principal which shall embody the following, among others:

1. That the non-resident alien worker shall comply with all applicable laws and rules and regulations of the Philippines;

2. That the non-resident alien worker and the employer shall bind themselves to train at least two (2) Filipino understudies for a period to be determined by the Minister; and

3. That he shall not engage in any gainful employment other than that for which he was issued a permit.

(c) A designation by the employer of at least two (2) understudies for every alien worker. Such understudies must be the most ranking regular employees in the section or department for which the expatriates are being hired to insure the actual transfer of technology.

Under Section 6 of the Rule, the DOLE may issue an alien employment permit based only on the following:

(a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;

(b) Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is competent and willing to do the job for which the services of the applicant are desired;

(c) His assessment as to whether or not the employment of the applicant will redound to the national interest;

(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;

(e) The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be employed in preferred areas of investments or in accordance with the imperative of economic development.

Thus, as claimed by respondent, he had an employment contract with petitioner PPI; otherwise, petitioner PPI would not have filed an application for a Permit with the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI, had been the employer of respondent all along.

We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationship–that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end.29 We quote with approval the following ruling of the CA:

[T]here is, indeed, substantial evidence on record which would erase any doubt that the respondent company is the true employer of petitioner. In the case at bar, the power to control and supervise petitioner’s work performance devolved upon the respondent company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company. It is not the letterhead used by the company in the termination letter which controls, but the person who exercised the power to terminate the employee. It is also inconsequential if the second letter of employment executed in the Philippines was not signed by the petitioner. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four elements mentioned in the Mafinco case are all present.30

The settled rule on stipulations regarding venue, as held by this Court in the vintage case of Philippine Banking Corporation v. Tensuan,31 is that while they are considered valid and enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words. They should be considered merely as an agreement or additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. If the intention of the parties were to restrict venue, there must be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them.32

In the instant case, no restrictive words like "only," "solely," "exclusively in this court," "in no other court save —," "particularly," "nowhere else but/except —," or words of equal import were stated in the

contract.33 It cannot be said that the court of arbitration in London is an exclusive venue to bring forth any complaint arising out of the employment contract.

Petitioners contend that respondent should have filed his Complaint in his place of permanent residence, or where the PCIJ holds its principal office, at the place where the contract of employment was signed, in London as stated in their contract. By enumerating possible venues where respondent could have filed his complaint, however, petitioners themselves admitted that the provision on venue in the employment contract is indeed merely permissive.

Petitioners’ insistence on the application of the principle of forum non conveniens must be rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does not warrant the application of the principle for the following reasons:

First. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the complaint.34

Second. The propriety of dismissing a case based on this principle requires a factual determination; hence, it is properly considered as defense.35

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,36 this Court held that:

x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision. x x x

Admittedly, all the foregoing requisites are present in this case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor Arbiter for disposition of the case on the merits. Cost against petitioners.

SO ORDERED.

ROMEO J. CALLEJO, SR. Associate Justice

REFUGIA V. CA (REMEDIAL)

Issue: Whether the MTC, as well as the RTC, in the exercise of its appellate jurisdiction, have jurisdiction to resolve the issue of ownership in an action for unlawful detainer where the issue of possession cannot be resolved without deciding the question of ownership.

As the law on forcible entry and unlawful detainer cases now stands, even where the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the MTCs, nevertheless have the undoubted competence to resolve the issue of ownership albeit only to determine the issue of possession as set forth in Section 33(2) of BP 129.

In the case at bar, petitioners failed to show that they were legally entitled to continue occupying the unit in question. On the considerations detailed, we agree with the position of respondent CA that petitioners would in effect be occupying the premises by mere tolerance. A person who occupies the land of another at the latter's tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate the same upon demand, failing which a summary action for ejectment is the proper remedy against him. The status of petitioners is analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy continued by tolerance of the owner.

G.R. No. 200804, January 22, 2014, A.L. ANG NETWORK, INC., Petitioner, vs. EMMA MONDEJAR, accompanied by her husband, EFREN MONDEJAR, Respondent.

A. L. ANG NETWORK, a water-service provider for Regent Pearls Subdivision, field a small-claims case in the amount of P23,111.71 against Emma, one of the residents of the corporation. According to the company, Emma owes the amount as unpaid bills for water service From June, 2002 to September, 2005. In her defense, Emma claimed having religiously paid her water bills from April, 1998 up to February, 2003, at the flat rate of P75.00 monthly. The company unilaterally charged unreasonable and excessive adjustments without prior notice to the homeowners, resulting in her being billed excessive amounts for a household of 3 persons.

The MTC rendered a Decision that since the company was only awarded a Certificate of Public Convenience by the NWRB on August, 2003, then it can only charge Emma with the flat rate of P75,000 from June, 2002 to August, 2003. Since Emma paid the company P1,685.99, then Emma does not owe anything to the company. In the absence of evidence showing the when the company started imposing the NWRB-approved rate, then the flat rate of P75.00 per moth should also be imposed from August 8, 2003 to September, 2005. Since Emma paid P300.00 for the period, Emma was ordered to pay the balance of P1,200 at 6% interest per annum from August, 2010.

Aggrieved, the company filed a petition for certiorari with the RTC to contest the MTCC decision, which the RTC denied, holding that the company is trying to circumvent the final and unappealable nature of decisions in small-claims cases, thus the company elevated the case to the Supreme Court.

“Section 23 of the Rule of Procedure for Small Claims Cases states that:

SEC. 23. Decision. — After the hearing, the court shall render its decision on the same day, based on the facts established by the evidence (Form 13-SCC). The decision shall immediately be entered by the Clerk of Court in the court docket for civil cases and a copy thereof forthwith served on the parties.

The decision shall be final and unappealable.

Considering the final nature of a small claims case decision under the above-stated rule, the remedy of appeal is not allowed, and the prevailing party may, thus, immediately move for its execution. Nevertheless, the proscription on appeals in small claims cases, similar to other proceedings where appeal is not an available remedy, does not preclude the aggrieved party from filing a petition for certiorari under Rule 65 of the Rules of Court.XXX”

x x x

“In this relation, it may not be amiss to placate the RTC’s apprehension that respondent’s recourse before it (was only filed to circumvent the non-appealable nature of [small claims cases], because it asks [the court] to supplant the decision of the lower [c]ourt with another decision directing the private respondent to pay the petitioner a bigger sum than what has been awarded.” Verily, a petition for certiorari, unlike an appeal, is an original action designed to correct only errors of jurisdiction and not of judgment. Owing to its nature, it is therefore incumbent upon petitioner to establish that jurisdictional errors tainted the MTCC

Decision. The RTC, in turn, could either grant or dismiss the petition based on an evaluation of whether or not the MTCC gravely abused its discretion by capriciously, whimsically, or arbitrarily disregarding evidence that is material to the controversy.”

G.R. No. 172623               March 3, 2010

COMMISSION ON APPOINTMENTS, represented herein by its Secretary HON. ARTURO L. TIU, Petitioner, vs.CELSO M. PALER,1 Respondent.

D E C I S I O N

CORONA, J.:

This is a petition for review under Rule 45 of the Rules of Court assailing the decision2 dated December 20, 2005 and resolution dated April 27, 2005 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 90360.

The facts are undisputed.

Respondent Celso M. Paler was a Supervising Legislative Staff Officer II (SG-24)3 with the Technical Support Service of the Commission on Appointments.4 On April 8, 2003, he submitted a request for vacation leave for 74 working days – from August 1, 2003 to November 14, 2003.5 In a memorandum dated April 22, 2003, Ramon C. Nghuatco, Director III of Technical Support Service, submitted to the Commission Secretary his comments/recommendation on Paler's application:

"1. The request to go on leave of Mr. Paler is contingent upon the completion of his various Committee assignments.

2. We have already acted favorably on his Leave Applications for 09 June 2003 - 30 July 2003, which may already cover his reasons enumerated under items 1-5.

3. Mr. Paler's Sick Leave Application shall require a medical certificate from the attending physician advising him of the need to undergo medical operation and the treatment and recuperation period therefor.

Mr. Paler's Application for Leave may be acted upon depending on the completion of his work load and submission of the medical certificate."6 (Emphasis supplied)

Since he already had an approved leave from June 9 to July 30, 2003, Paler left for the United States on June 8, 2003, without verifying whether his application for leave (for August 1 – November 14, 2003) was approved or denied.

In a letter dated September 16, 2003, the Commission Chairman informed Paler that he was being dropped from the roll of employees effective said date, due to his continuous 30-day absence without leave and in accordance with Section 63, Civil Service Commission (CSC) Memorandum Circular No. 14, s. 1999.7 Paler's son received the letter on September 23, 2003.8

Paler moved for reconsideration but this was denied on February 20, 2004, on the ground that it was filed beyond the 15-day reglementary period.9 The denial was received by Paler's son on March 18, 2004.

On appeal, the CSC reversed and set aside the Commission Chairman's decision dated September 16, 2003 per resolution 04-1214 dated November 9, 2004.10 The dispositive portion of the resolution read:

WHEREFORE, the appeal of Celso M. Paler is hereby GRANTED. Accordingly, the decision dated September 16, 2003 of Commission on Appointments Chairman Franklin M. Drilon dropping Celso M. Paler from the rolls; and the decision dated February 20, 2004 denying his motion for reconsideration are REVERSED and SET ASIDE. It is directed that Celso M. Paler be immediately reinstated as Committee Secretary of the

Commission on Appointments and shall be considered to be on leave with pay until the exhaustion of his vacation leave credits.

Quezon City, Nov. 09, 2004.11

The Commission filed a motion for reconsideration but this was denied by the CSC per resolution No. 050833 dated June 23, 2005.

This constrained petitioner to file with the CA a petition for review under Rule 43 of the Rules of Court.

Since Paler had in the meantime already reached the compulsory age of retirement on July 28, 2005 and was no longer entitled to reinstatement, the CA affirmed with modification CSC resolution 04-1214 dated November 9, 2004 and resolution No. 050833 dated June 23, 2005. The dispositive portion of the assailed decision dated December 20, 2005 provided:

WHEREFORE, the assailed Resolutions of the Civil Service Commission are AFFIRMED with the MODIFICATION that the order of reinstatement is DELETED. In lieu thereof, Paler should be awarded backwages, retirement benefits and other privileges that accrued to him from the time of his dismissal up to the date of his retirement.

SO ORDERED.12

Petitioner filed a motion for reconsideration but this was denied by the CA in the assailed resolution dated April 27, 2005.

Hence, this petition based on the following grounds:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN GIVING DUE COURSE TO THE APPEAL OF RESPONDENT PALER WITH THE RESPONDENT CIVIL SERVICE COMMISSION DESPITE THE FACT THAT IT WAS FILED OUT OF TIME.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE LEAVE APPLICATIONS OF RESPONDENT PALER WAS DEEMED APPROVED ON A MISTAKEN INTERPRETATION OF SEC. 49, RULE XVI OF THE OMNIBUS RULE ON LEAVE AS AMENDED.13

Petitioner's contentions are basically the same as those it presented to the CSC14 and the CA,15 viz.: (1) the CSC should not have entertained Paler's appeal since it was filed beyond the 15-day reglementary period; there were no meritorious reasons to relax the procedural rules, specially since there was bad faith and misrepresentation on Paler's part in filing staggered applications for leave; (2) the Commission Chairman's decision to drop Paler from the roll of employees was in accord with Section 63 of CSC Memorandum Circular No. 14, series of 1999 and (3) Paler's application for leave was not "deemed approved" as petitioner acted on his application by holding it in abeyance in view of the contingencies of his work and the submission of a medical certificate.16

In his comment, Paler, aside from arguing that the CA did not commit any error in sustaining the CSC resolutions, also assails Atty. Arturo L. Tiu's authority to file the petition and sign the verification and certification of non-forum shopping on behalf of the Commission Chairman.17

The CSC, represented by the Office of the Solicitor General (OSG), maintains the correctness of the CSC and CA judgments.

Issues

This petition involves both procedural and substantive issues.

On the procedural aspect, Paler questions the authority of the Commission Secretary to file the petition and sign the verification and certification of non-forum shopping in behalf of the Commission Chairman. On the other hand, the Commission disputes the CSC's grant of Paler's appeal despite having been filed beyond the reglementary period.

On the substantive aspect, was Paler's application for leave "deemed approved" within the purview of Section 49, Rule XVI of the Omnibus Rules on Leave?

Authority to File Petition

First, we tackle Atty. Tiu's authority to file the petition and sign the verification and certification of non-forum shopping.

The petitioner in this case is the Commission on Appointments, a government entity created by the Constitution, and headed by its Chairman.18 There was no need for the Chairman himself to sign the verification. Its representative, lawyer or any person who personally knew the truth of the facts alleged in the petition could sign the verification.19 With regard, however, to the certification of non-forum shopping, the established rule is that it must be executed by the plaintiff or any of the principal parties and not by counsel.20 In this case, Atty. Tiu failed to show that he was specifically authorized by the Chairman to sign the certification of non-forum shopping, much less file the petition in his behalf. There is nothing on record to prove such authority. Atty. Tiu did not even bother to controvert Paler’s allegation of his lack of authority. This renders the petition dismissible.21

Furthermore, the petition is bereft of merit as it merely restates the arguments presented before the CSC and CA. It does not advance any cogent reason that will convince this Court to deviate from the rulings of both tribunals.

The Issue of Late Filing

Section 72 of CSC Memorandum Circular No. 19, s. 1999,22 provides for the period of appeal for non-disciplinary actions, to wit:

Section 72. When and Where to File. - A decision or ruling of a department or agency may be appealed within fifteen (15) days from receipt thereof by the party adversely affected to the Civil Service Regional Office and finally, to the Commission Proper within the same period.

x x x

Paler's son received the letter from the Commission Chairman denying Paler’s motion for reconsideration on March 18, 2004. Thus, Paler’s had until April 2, 2004 within which to file his appeal with the CSC. It was filed, however, only on April 5, 2004.23 Nevertheless, the CSC entertained the appeal in the interest of substantial justice.24

We agree with the CSC. We uphold its decision to relax the procedural rules because Paler's appeal was meritorious. This is not the first time that the Court has upheld such exercise of discretion. In Rosales, Jr. v. Mijares25 involving Section 49(a) of the CSC Revised Rules of Procedure, the Court ruled:

On the contention of the petitioner that the appeal of the respondent to the CSC was made beyond the period therefor under Section 49(a) of the CSC Revised Rules of Procedure, the CSC correctly ruled that:

Movant claims that Mijares’ appeal was filed way beyond the reglementary period for filing appeals. He, thus, contends that the Commission should not have given due course to said appeal.

The Commission need not delve much on the dates when Mijares was separated from the service and when he assailed his separation. Suffice it to state that the Commission found his appeal meritorious.1avvphi1 This being the case, procedural rules need not be strictly observed. This principle was explained by in the case of Mauna vs. CSC, 232 SCRA 388, where the Supreme Court ruled, to wit:

"Assuming for the sake of argument that the petitioner’s appeal was filed out of time, it is within the power of this Court to temper rigid rules in favor of substantial justice. While it is desirable that the Rules of Court be faithfully and even meticulously observed, courts should not be so strict about procedural lapses that do not really impair the proper administration of justice. If the rules are intended to ensure the orderly conduct of litigation, it is because of the higher objective they seek which is the protection of substantive rights of the parties. As held by the Court in a number of cases:

x x x

It bears stressing that the case before the CSC involves the security of tenure of a public officer sacrosanctly protected by the Constitution. Public interest requires a resolution of the merits of the appeal instead of dismissing the same based on a strained and inordinate application of Section 49(a) of the CSC Revised Rules of Procedure.26 (Emphasis supplied)

Constantino-David v. Pangandaman-Gania27 likewise sustained the CSC when it modified an otherwise final and executory resolution and awarded backwages to the respondent, in the interest of justice and fair play. The Court stated –

No doubt, the Civil Service Commission was in the legitimate exercise of its mandate under Sec. 3, Rule I, of the Revised Uniform Rules on Administrative Cases in the Civil Service that "[a]dministrative investigations shall be conducted without necessarily adhering strictly to the technical rules of procedure and evidence applicable to judicial proceedings." This authority is consistent with its powers and functions to "[p]rescribe,

amend and enforce rules and regulations for carrying into effect the provisions of the Civil Service Law and other pertinent laws" being the central personnel agency of the Government.

Furthermore, there are special circumstances in accordance with the tenets of justice and fair play that warrant such liberal attitude on the part of the CSC and a compassionate like-minded discernment by this Court. x x x28

When substantial justice dictates it, procedural rules may be relaxed in order to arrive at a just disposition of a case. The purpose behind limiting the period of appeal is to avoid unreasonable delay in the administration of justice and to put an end to controversies. A one-day delay, as in this case, does not justify denial of the appeal where there is absolutely no indication of intent to delay justice on the part of Paler29 and the pleading is meritorious on its face.

Petitioner harps on Paler's alleged bad faith and misrepresentation in filing his previous applications for leave. However, as correctly found by the CSC and CA, the basis for Paler's dismissal was his continuous absence without leave, not bad faith and misrepresentation. The CSC even noted that Paler never misrepresented or misled petitioner as to where he was spending his vacation leave. He clearly stated in his application for leave dated April 17, 2003 that he was spending it not only in the Philippines but also in the U.S.30 According to the CA, "to utilize Paler's alleged misrepresentation in his previously approved applications for leave as basis for his separation from work, even in the absence of opportunity for him to controvert the matter, would constitute a violation of the fundamental requirements of fairness and equity and the constitutional guarantee of due process."31 The Court finds no reason to deviate from the findings of both the CSC and CA, given that they concur with each other and should be accorded great weight and respect.32

The CSC and CA were also correct in ruling that Paler could not be considered absent without leave (AWOL) for the period of August 1, 2003 to November 14, 2003.

Paler was dropped from the roll of employees pursuant to Section 63, Rule XVI of the Omnibus Rules on Leave:

An official or an employee who is continuously absent without approved leave for at least thirty (30) calendar days shall be considered on absence without official leave (AWOL) and shall be separated from the service or dropped from the rolls without prior notice. He shall, however, be informed, at his address appearing on his 201 files of his separation from the service, not later than five (5) days from its effectivity. (Emphasis and underscoring supplied)

AWOL means that the employee has left or abandoned his post for a continuous period of thirty (30) calendar days or more without any justifiable reason and notice to his employer.33

The bone of contention in this case is whether or not Paler had an approved leave.

Section 49, Rule XVI of the Omnibus Rules on Leave requires that an application for leave should be acted upon within 5 working days from receipt, otherwise, such application is deemed approved.34 The CSC interpreted said provision in this wise –

It is explicit from the aforequoted rule that an application for leave of absence which had not been acted upon – either by approving or disapproving – by the head of agency or his/her authorized representative within five (5) working days from the date of its filing shall be deemed approved.35 (Italics supplied)

The CSC also ruled that "Section 49 calls for a specific action to be done by the head of the agency or his duly authorized representative on the application for leave filed which is either to approve or to deny the same."36

Being the central agency mandated to "prescribe, amend, and enforce rules and regulations for carrying into effect the provisions of the Civil Service Law and other pertinent laws," the CSC has the power to interpret its own rules and any phrase contained in them, with its interpretation significantly becoming part of the rules themselves.37 The Court has consistently yielded and accorded great respect to the interpretation by administrative agencies of their own rules unless there is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law.38

The CA added its own reading of Section 49 which the Court now sustains:

x x x The action contemplated therein connotes a clear and explicit exercise of discretion. It pertains to an absolute and unequivocal "approval" or "disapproval" of the request for leave and not one which is merely "recommendatory" in nature. If the rule were otherwise, the authority to act on the application for leave would not have been vested on the head of the agency or the CA [Commission on Appointments] Chairman's authorized representative. Needless to state, the purpose of the provision is for the applicant to be immediately informed of the status of his application, whether it has been approved or denied, so that he can act accordingly. x x x39

Clearly, Atty. Nghuatco's memorandum did not cover the action contemplated by Section 49. For one, it did not bear the imprimatur of the Commission Chairman (or his duly authorized representative) who was the proper party to grant or deny the application, as dictated by Section 52 of the Omnibus Rules on Leave.40 For another, it only submitted to the Commission Secretary Atty. Nghuatco's comments and/or recommendations on Paler's application. It was merely preliminary and did not propose any definitive action (i.e., approval or disapproval) on Paler's application, and simply recommended what action to take. It was obviously not controlling and the Chairman could have agreed or disagreed with the recommended action. In fact, the memorandum clearly provided that Paler's request was still to be referred to the Legal Service for comment,41 and that the application "(could) be acted upon depending on the completion of his work load and submission of the medical certificate."42 These circumstances plainly meant that further action was yet to be made on the application. And since there was no final approval or disapproval of Paler's application within 5 working days from receipt as required by Section 49, the application was deemed approved. Paler, therefore, could not be considered on AWOL.

All told, the CA committed no error in affirming, with modification, CSC Resolution Nos. 04-1214 dated November 9, 2004 and 050833 dated June 23, 2005.

WHEREFORE, the petition is DENIED.

No costs.

SO ORDERED.

RENATO C. CORONA

G.R. No. L-29534 February 28, 1977

BENGUET EXPLORATION, INC., petitioner, vs.DEPARTMENT OF AGRICULTURE & NATURAL RESOURCES and SOFIA V. REYES, respondents.

William H. Quasha & Associates for petitioner.

Office of the Solicitor General, for respondent DANR

S. Fangonil & Associates for private respondent.

 

FERNANDO, J:

A more extensive appraisal of the controlling doctrine on the status of a department head as an alter ego of the President, with particular reference to the broad competence enjoyed by the Secretary of Agriculture and Natural Resources in the disposition of the public lands and the wealth it contains, and a more careful reading of the specific provisions of the Mining Act, 1 not to mention the explicit recital in the order challenge that the purpose thereof is to accord a party the "formal hearing" thereby complying with the procedural due process requisite, ought to have cautioned against the filing of this certiorari petition against the Department of Agriculture and Natural Resources. Petitioner is, a domestic mining corporation engaged in the exploration and development of certain mineral claims. The records show that private respondent Sofia V. Reyes filed with the Bureau of Mines an adverse claim against petitioner's Lode Lease Application covering three mining claims in Benguet, Mountain Province. 2 That was countered by a motion to dismiss, alleging as one of three legal objections the failure of such adverse claim to comply with the mandatory requirements of Section 73 of the Mining Act. 3 The private respondent then submitted an opposition with the Bureau of Mines thereafter dismissing the adverse claim. 4 The matter was taken up on appeal to the Department of Agriculture and Natural Resources, private respondent maintaining the sufficiency of its adverse claim under the law, a point disputed by petitioner, as could have been expected. 5 At first, the action taken by respondent Department was the dismissal of such appeal, but on a second motion for reconsideration, an order was issued with its dispositive portion reading thus: "Order of the Director of Mines dated September 15, 1966, and the Decision and Order of this Office dated July 21, 1967 and December 11, 1967, respectively, should be, as hereby they are, set aside; and to abbreviate proceedings, Atty. [Romulo A. Redula] of this Office is hereby directed to conduct a formal hearing of this case. 6 Hence this certiorari petition.

As intimated at the outset, this petition lacks merit. It mast be dismissed.

1. Petitioner lost sight of the fundamental doctrine set forth in Villena v. Secretary of Interior, 7 decided in 1939, where Justice Laurel categorically declared that acts of a department head and the challenged order in this case came from the then Acting Secretary of Agriculture and Natural Resources, Isosceles Pascual, "performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive presumably the acts of the Chief Executive. 8 Not so long ago in Tecson v. Salas, 9 it was affirmed that as far as the power of control over all executive departments, bureaus and offices are concerned, "the Villena doctrine applies with undiminished force."10 Since then, two other decisions did reiterate such a principle. 11 Moreover, petitioner likewise did not take into account the doctrine announced by the leading case of Ortua v. Singson Encarnacion. 12 As stated by Justice Malcolm: "Accordingly, to paraphrase the authorities and decisions coming principally from the United States Supreme Court, we deduce the rule on the subject to be, that a decision rendered by the Director of Lands and approved by the Secretary of Agriculture and Commerce, upon a question of fact is conclusive and not subject to be reviewed by the courts, in the absence of a showing that such decision was rendered in consequence of fraud, imposition, or mistake, other than error of judgment in estimating the value or effect of evidence, regardless of whether or not it is consistent with the preponderance of the evidence, so long as there is some evidence upon which the finding in question could be made. 13 Here such a stage has not been reached. Precisely, the assailed order spoke of no "hearing on the merits, [therefore] it is but right and proper in the interest of justice that a formal hearing on the merits be conducted. 14 There is, therefore, an element of prematurity. That alone would have sufficed for the dismissal of this petition.

2. What appears to be the motivation behind this move of petitioner is to preclude the Secretary of Agriculture and Natural Resources from conducting his own inquiry. He would thus be denied the power accorded a bureau director. In Pinero Jr. v. Director of Lands 15 this Court, in an opinion by Justice Barredo, expressly referring to the Regalian doctrine, Pointed out that even a Torrens title is not a bar to the power of the Director of Lands to investigate an allegation of fraud that could have led to the issuance of a free patent. As stated by him "It is to the public interest that one who succeeds in fraudulently acquiring a title to a public land Should not be allowed to benefit therefrom, and the State should, therefore, have an ever-

existing authority, thru its duly authorized officers, to inquire into the circumstances surrounding the issuance of any such title, to the end that the Republic, thru the Solicitor General or any other officer who may be authorized by law, may file the corresponding action for the reversion of the land involved to the public domain, subject thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility of a title over land previously public is not a bar to an investigation by the Director of Lands as to how such title has been acquired, if the purpose of such investigation is to determine whether or not fraud had been committed in securing such title in order that the appropriate action for reversion may be filed by the Government." 16 If petitioner would prevail, such power of inquiry vested in a subordinate would be denied a department head. That is to disregard a well-settled concept in public law. What is more, that is to be insensible to another facet the jura regalia concept by virtue of which the Republic of the Philippines possessed of the attributes of imperium and dominium, acting through the Secretary of Agriculture and Natural Resources, is given the utmost latitude in ascertaining which party shall enjoy the privilege of exploiting the wealth that is found in its natural resources.17 If petitioner were to prevail, there would be an undue diminution of the broad competence conferred on the Secretary of Agriculture and Natural Resources, as recognized in a host of cases notable for their number and unanimity. 18

3. Petitioner would seek to weaken the force of the above authoritative doctrines as applied to it by the allegation that there is a failure to abide by the statutory requirements in the Mining Act, as amended by Republic Act No. 4388. Reference is made to Sections 61 and 73 as amended by Republic Act No. 4388. 19

The proviso in the former section which is relevant to the present controversy reads thus: "Provided, That the decision or order of the Director of Mines may be appealed to the Secretary of Agriculture and Natural Resources within thirty days from receipt of such decision or order. In case any one of the parties should disagree from the decision or order of the Secretary of Agriculture and Natural Resources, the matter may be taken to the Court of Appeals or the Supreme Court, as the case may be, within thirty days from the receipt of such decision or order, otherwise the said decision or order shall be final and binding upon the parties concerned. Findings of facts in the decision or order of the Director of Mines when affirmed by the Secretary of Agriculture and Natural Resources shall be final and conclusive, and the aggrieved party or parties desiring to appeal from such decision or order shall file in the Supreme Court a petition for review wherein only questions of law may be raised." What cannot be sufficiently stressed is that only upon the affirmance of the Secretary of Agriculture and Natural Resources does the findings of fact become conclusive, leaving only questions of law for this Court to decide. In the order complained of, the Acting Secretary of Agriculture and Natural Resources commendably sought to have a rational basis for the acceptance or rejection of the conclusion reached by the Director of Mines. What was objected to was that it could no longer be done as the matter had reached the stage of finality, such order coming only after a second motion for reconsideration. Petitioner would thus ignore the basic principle that unless the administrative procedure followed conforms with the requirement of procedural due process the actuation could be stigmatized as void, a hearing being deemed of the essence of such proceeding. As a matter of fact its absence would result in the loss of jurisdiction. As was state by Chief Justice Concepcion in' Vda. de Cuaycong v. Vda de Sengbenco, 20 acts whether of Congress or of the Executive, can deny due process only under pain of nullity, ... 21 As a matter of law, to accept petitioner's claim that in thus issuing such an order the Acting Secretary of Agriculture and Natural Resources failed to abide by the requirements of the law would be precisely to cast doubt on the validity of such sections of the Mining Act when all that was required by him was compliance with the requisite of a formal hearing. That would be to incur the vice of the construction given such sections being repugnant to the due process clause. Certainly, between two lines of interpretation, one of which would give it life and the other which would be fatal to its validity, the former should prevail. Thus petitioner's first two errors assigned, which could be summed up in the proposition that Secretary Pascual should not have passed upon the second motion for reconsideration are clearly without merit.

4. It is thus apparent that the third error assigned to the effect that the Department of Agriculture and Natural Resources acted in excess of its jurisdiction when it arrogated the function of hearing the adverse claims is even more bereft of support in law. The very provision of the Mining Act upon, as previously set forth, speaks of the findings of facts of the Director of Mines "when affirmed by the Secretary of Agriculture and Natural Resources being final and conclusive," in which case the aggrieved party may file a petition for review with this Court where only questions of law may be raised. 22 To sustain the contention of petitioner would be to run counter to what was held in the leading case of Ang Tibay v. Court of Industrial Relations. 23 Justice Laurel specifically spoke of "cardinal primary rights" embraced in "the fundamental and essential requirements of due process in trials and investigations of an administrative character. 24 Here precisely, vital and essential facts remained at issue. It was the considered judgment of the Acting Secretary of Agriculture and Natural Resources that a hearing should be held to ascertain the truth of the matter. As set forth in the challenged order: "It is but right and proper in the interest of justice that a formal hearing on the merits of this case be conducted.25 In a subsequent paragraph, such point of view was reiterated: "The reason for this ruling is that the proceedings before this Office is administrative in character, and, therefore, the parties to the case must be given all the opportunity to be heard. 26 Hence, the dispositive portion directing a certain Romulo A. Redula presumably of the staff of the Department of Agriculture and Natural Resources, "to conduct a formal hearing of this case and to submit his report relative thereto within thirty (30) days from the termination thereof. 27

Clearly, to repeat, the allegation in the last assignment of error that there was an arrogation of the Power on the part of respondent department is devoid of any legal justification. Moreover had Petitioner taken into consideration the aforesaid landmark opinion of Justice Laurel in Ang Tibay v. Court of Industrial Relations on the indispensability of complying with the due process requirement in an administrative proceeding, it would have noted that one of the doctrines relied upon by this Court in that case is an opinion of Chief Justice Hughes in Morgan v. United States. 28 It ought to be affirmed that in the two subsequent Morgan cases, the stress became even more emphatic on the indispensability of complying with the due process mandate, characterized as "the rudimentary requirements of fair play." 29 The relevance of the Morgan decisions should be evident, dealing as they do with the exercise of powers granted the Secretary of Agriculture of the United States.

WHEREFORE, the petition is dismissed for lack of merit.