ADVOCATES FOR TRUTH IN LENDING V. BSP [2013]

facts

"Advocates for Truth in Lending, Inc." (AFTIL) is a non-profit, non-stock corporation organized to engage in pro bono concerns and activities relating to money lending issues. It was incorporated on July 9, 2010,and a month later, it filed this petition, joined by its founder and president, Eduardo B. Olaguer, suing as a taxpayer and a citizen.

HISTORY OF CENTRAL BANK’S POWER TO FIX MAX INTEREST RATES

1.        R.A. No. 265, which created the Central Bank on June 15, 1948, empowered the CB-MB toset the maximum interest rates which banks may charge for all types of loans and other credit operations.

2.        The Usury Law was amended by P.D.1684, giving the CB-MB authority to prescribe different maximum rates of interest which may be imposed for a loan or renewal thereof or the forbearance of any money, goods or credits, provided that the changes are effected gradually and announced in advance. Section 1-a of Act No. 2655 now reads:

3.        In its Resolution No. 2224 dated December 3, 1982, the CB-MB issued CB Circular No. 905, Series of 1982, effective on January 1, 1983. It removed the ceilings on interest rates on loans or forbearance of any money, goods or credits:

Sec. 1.  The rate of interest, including commissions, premiums, fees and other charges, on a loan or forbearance of any money, goods, or credits, regardless of maturity and whether secured or unsecured, that may be charged or collected by any person, whether natural or juridical, shall  not be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended.

4.        R.A. No. 7653 establishing the BSP replaced the CB:

Sec. 135. Repealing Clause. — Except as may be provided for in Sections 46 and 132 of this Act, Republic Act No. 265, as amended, the provisions of any other law, special charters, rule or regulation issued pursuant to said Republic Act No. 265, as amended, or parts thereof, which may be inconsistent with the provisions of this Act are hereby repealed. Presidential Decree No. 1792 is likewise repealed.

Note: R.A. 7653 – the law that created BSP to replace CB – Note: this law did not retain the same provision as that of Section 109 in RA 265.

PETITIONER’S ARGUMENTS

·          To justify their skipping the hierarchy of courts petitioners contend the transcendental importance of their Petition:

a)        CB-MB statutory or constitutional authority to prescribe the maximum rates of interest for all kinds of credit transactions and forbearance of money, goods or credit beyond the limits prescribed in the Usury Law;

b)        If so, whether the CB-MB exceeded its authority when it issued CB Circular No. 905, which removed all interest ceilings and thus suspended Act No. 2655 as regards usurious interest rates;

c)        Whether under R.A. No. 7653, the new BSP-MB may continue to enforce CB Circular No. 905.

·          Petitioners contend that under Section 1-a of Act No. 2655, as amended by P.D. No. 1684, the CB-MB was authorized only to prescribe or set the maximum rates of interest for a loan or renewal thereof or for the forbearance of any money, goods or credits, and to change such rates whenever warranted by prevailing economic and social conditions, the changes to be effected gradually and on scheduled dates; that nothing in P.D. No. 1684 authorized the CB-MB to lift or suspend the limits of interest on all credit transactions, when it issued CB Circular No. 905. They further insist that under Section 109 of R.A. No. 265, the authority of the CB-MB was clearly only to fix the banks’ maximum rates of interest, but always within the limits prescribed by the Usury Law.

·          CB Circular No. 905, which was promulgated without the benefit of any prior public hearing, is void because it violated NCC 5 which provides that "Acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity."

·          weeks after the issuance of CB Circular No. 905, the benchmark 91-day Treasury bills shot up to 40% PA, as a result. The banks followed suit and re-priced their loans to rates which were even higher than those of the "Jobo" bills.

·          CB Circular No. 905 is also unconstitutional in light of the Bill of Rights, which commands that "no person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws."

·          R.A. No. 7653 did not re-enact a provision similar to Section 109 of RA 265, and therefore, in view of the repealing clause in Section 135 of R.A. No. 7653, the BSP-MB has been stripped of the power either to prescribe the maximum rates of interest which banks may charge for different kinds of loans and credit transactions, or to suspend Act No. 2655 and continue enforcing CB Circular No. 905.

Ruling

CB-MB merely suspended the effectivity of the Usury Law when it issued CB Circular No. 905.

In Medel v. CA, it was said that the circular did not repeal nor amend the Usury Law but simply suspended its effectivity; that a Circular cannot repeal a low; that by virtue of CB the Usury Law has been rendered ineffective; that the Usury has been legally non-existent in our jurisdiction and interest can now be charged as lender and borrow may agree upon.

Circular upheld the parties’ freedom of contract to agree freely on the rate of interest citing Art. 1306 under which the contracting parties may establish such stipulations, clauses terms and conditions as they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy.

BSP-MB has authority to enforce CB Circular No. 905.

RA 265 covered only banks while Section 1-a of the Usury Law, empowers the Monetary Board, BSP for that matter, to prescribe the maximum rate or rates of interest for all loans or renewals thereof or the forbearance of any money, good or credits …

The Usury Law is broader in scope than RA 265, now RA 7653, the later merely supplemented the former as it provided regulation for loans by banks and other financial institutions. RA 7653 was not unequivocally repealed by RA 765.

CB Circular 905 is essentially based on Section 1-a of the Usury Law and the Usury Law being broader in scope than the law that created the Central Bank was not deemed repealed when the law replacing CB with the Bangko Sentral was enacted despite the non-reenactment in the BSP Law of a provision in the CB Law which the petitioners purports to be the basis of Circular 905. Magulo ba? Hahaha. Basta the present set up is: The power of the BSP Monetary Board to determine interest rates emanates from the Usury Law [which was further specified by Circular 905].

Granting that the CB had power to "suspend" the Usury Law, the new BSP-MB did not retain this power of its predecessor, in view of Section 135 of R.A. No. 7653, which expressly repealed R.A. No. 265. The petitioners point out that R.A. No. 7653 did not reenact a provision similar to Section 109 of R.A. No. 265.

A closer perusal shows that Section 109 of R.A. No. 265 covered only loans extended by banks, whereas under Section 1-a of the Usury Law, as amended, the BSP-MB may prescribe the maximum rate or rates of interest for all loans or renewals thereof or the forbearance of any money, goods or credits, including those for loans of low priority such as consumer loans, as well as such loans made by pawnshops, finance companies and similar credit institutions. It even authorizes the BSP-MB to prescribe different maximum rate or rates for different types of borrowings, including deposits and deposit substitutes, or loans of financial intermediaries.

Act No. 2655, an earlier law, is much broader in scope, whereas R.A. No. 265, now R.A. No. 7653, merely supplemented it as it concerns loans by banks and other financial institutions. Had R.A. No. 7653 been intended to repeal Section 1-a of Act No. 2655, it would have so stated in unequivocal terms.

Moreover, the rule is settled that repeals by implication are not favored, because laws are presumed to be passed with deliberation and full knowledge of all laws existing pertaining to the subject.An implied repeal is predicated upon the condition that a substantial conflict or repugnancy is found between the new and prior laws. Thus, in the absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exists in the terms of the new and old laws. We find no such conflict between the provisions of Act 2655 and R.A. No. 7653.

#generalia specialibus non derogant

The lifting of the ceilings for interest rates does not authorize stipulations charging excessive, unconscionable, and iniquitous interest.

In Castro v. Tan, the Court held that the imposition of unconscionable interest is immoral and unjust. It is tantamount to a repugnant spoliation and an iniquitous deprivation of property repulsive to the common sense of man.

They are struck down for being contrary to morals, if not against the law, therefore deemed inexistent and void ab initio. However this nullity does not affect the lender’s right to recover the principal of the loan nor affect the other terms thereof.

PROCEDURAL MATTERS

The Petition is procedurally infirm.

The CB-MB was created to perform executive functions with respect to the establishment, operation or liquidation of banking and credit institutions. It does not perform judicial or quasi-judicial functions. Certainly, the issuance of CB Circular No. 905 was done in the exercise of an executive function. Certiorari will not lie in the instant case.

Petitioners have no locus standi to file the Petition

Locus standi is defined as "a right of appearance in a court of justice on a given question." In private suits, Section 2, Rule 3 of the 1997 Rules of Civil Procedure provides that "every action must be prosecuted or defended in the name of the real party in interest," who is "the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit." Succinctly put, a party’s standing is based on his own right to the relief sought.

Even in public interest cases such as this petition, the Court has generally adopted the "direct injury" test that the person who impugns the validity of a statute must have "a personal and substantial interest in the case such that he has sustained, or will sustain direct injury as a result." while petitioners assert a public right it is nonetheless required of them to make out a sufficient interest in the vindication of the public order and the securing of relief.

Petitioners also do not claim that public funds were being misused in the enforcement of CB Circular No. 905 which would have made the action a public one, "and justify relaxation of the requirement that an action must be prosecuted in the name of the real party-in-interest."

The Petition raises no issues of transcendental importance.

In Prof. David v. Pres. Macapagal-Arroyo,the Court summarized the requirements before taxpayers, voters, concerned citizens, and legislators can be accorded a standing to sue, viz:

(1) the cases involve constitutional issues;

(2) for taxpayers, there must be a claim of illegal disbursement of public funds or that the tax measure is unconstitutional;

(3) for voters, there must be a showing of obvious interest in the validity of the election law in question;

(4) for concerned citizens, there must be a showing that the issues raised are of transcendental importance which must be settled early; and

(5) for legislators, there must be a claim that the official action complained of infringes upon their prerogatives as legislators.

In CREBA v. ERC, guidelines as determinants on whether a matter is of transcendental importance, namely:

1.        the character of the funds or other assets involved in the case;

2.        the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government; and

3.        the lack of any other party with a more direct and specific interest in the questions being raised.

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SEAFDEC-AQD v. NLRC

NATURE

Petition for certiorari to annul and set aside the decision of the NLRC in holding SEAFDEC-AQDliable to pay Juvenal Lazaga  as separation pay.

FACTS

SEAFDEC-AQD is a department of an international organizationorganized through an agreement entered into by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country.

Lazaga was employed as Head of External Affairs Office with the same pay and benefits.SEAFDEC terminated his services due to financial constraints. SEAFDEC failed to pay his separation pay.

ISSUE/RULING

WON NLRC has jurisdiction over the SEAFDEC considering it is an international organization.

No, SEAFDEC-AQD is an international agency beyond the jurisdiction of public respondent NLRCand is immune from suit owing to its international character and the complaint is in effect a suit against the State which cannot be maintained without its consent.

Being an intergovernmental organization, it enjoys functional independence and freedom from control of the state in whose territory its office is located.

In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical personality independent of the municipal law of the State where they are situated. As such"they must be deemed to possess a species of international personality of their own." (Salonga and Yap, Public International Law, 83 [1956 ed.])

WON seafdec is barred by estoppel

Estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a tribunal not vested with appropriate jurisdiction is null and void.

Jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which it stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in Sibonghanoy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel. (Calimlim vs. Ramirez) 

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Abbain v. Chua

facts

March 12, 1958. Chua commenced suit  for"forcible entry and illegal, detainer" against HatibAbbain at the Peace Court of Bongao, Sulu. He averred that he is the owner of a piece of land (4 ha) located in Bongao, Sulu. That his tenant (defendant) and have been always dividing the fruits or copra harvested therefrom on fifty-fifty basis. But the defendant "by means of force, strategy and stealth unlawfully entered and still occupies the land in question after I have repeatedly demanded of him to vacate the premises due to his failure to give the 50% share of the harvest.

Peace court ruled in favor of the plaintiff claiming that the action was an ejectment proceeding and not based on a tenancy agreement.

issue/ruling

WON the Court of Agrarian Relations (not Peace Court of Sulu) has jurisdiction.

Yes, Chua's complaint positively avers that Abbain is his tenant and that he seeks ejectment of HatibAbbain "due to his non-compliance of our agreement of giving his share of the harvests he made."

The Justice of the Peace Court had no jurisdiction over the The case should have been dismissed when it became all the more evident that a landlord-tenant relationship existed.

Section 21 of RA 1199 "Agricultural Tenancy Act of the Philippines", which reads:

 Sec. 21. Ejectment; violation; jurisdiction. — All cases involving the dispossession of a tenant by the land-holder or by a third party and/or the settlement and disposition of disputes arising from the relationship of land-holder and tenant… shall be under the original and exclusive jurisdiction of Court of Agrarian Relations.

RA 1267 (creating the first Court of Agrarian Relations):

Sec. 7. Jurisdiction of the Court. — The Court shall have original and exclusive jurisdiction over the entire Philippines, to consider, investigate, decide, and settle all questions, matters, controversies or disputes involving all those relationships established by law which determine the varying rights of persons in the cultivation and use of agricultural land where one of the parties works the land: . . . .

Such exclusive authority is not divested by a mere averment on the part of the tenant that he asserts ownership over the land, "since the law does not exclude from the jurisdiction" of the Court of Agrarian Relations, "cases in which a tenant claims ownership over the land given to him for cultivation by the landlord." 

effects of lack of jurisdiction

The judgment of the Justice of the Peace Court is not merely a voidable judgment. It is void on its face.

Even after the time for appeal or review had elapsed, appellant could bringsuch an action. Such a judgment is held to be "a dead limb on the judicial tree, which should be lopped off or wholly disregarded as the circumstances require." 

Mr. Justice Street:  "Where a judgment or judicial order is void in this sense it may be said to be a lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head."

Gomez vs. Concepcion: "A void judgment is in legal effect no judgment. By it no rights are divested. From it no rights can be obtained. Being worthless in itself, all proceedings founded upon it are equally worthless. It neither binds nor bars any one. All acts performed under it and all claims flowing out of it are void. The parties attempting to enforce it may be responsible as trespassers. The purchaser at a sale by virtue of its authority finds himself without title and without redress."

Since the judgment here on its face is void ab initio, the limited periods for relief from judgment in Rule 38 are inapplicable. That judgment is vulnerable to attack "in any way and at any time, even when no appeal has been taken." 

dispositive

Decision of the Justice of the Peace Court of Bongao, Suluis annulled.

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MANILA RAILROAD CO. V. ATTORNEY-GENERAL [1911]

NATURE

Appeal from a judgment of the CFI Tarlac dismissing the action before it on motion of the plaintiff upon the ground that the court had no jurisdiction of the subject matter of the controversy.

FACTS

On Dec 1907, Manila Railroad Co. began an action in CFI Tarlac for the condemnation of 69,910 sq. m. real estate located in Tarlac. This is for construction of a railroad line "from Paniqui to Tayug in Tarlac,"

Before beginning the action, Mla Railroad had caused to be made a thorough search in the Office of the Registry of Property and of the Tax where the lands sought to be condemned were located and to whom they belonged. As a result of such investigations, it alleged that the lands in question were located in Tarlac.

After filing and duly serving the complaint, the plaintiff, pending final determination of the action, took possession of and occupied the lands described in the complaint, building its line and putting the same in operation.

On Oct 4, Mla Railroad gave notice to the defendants that on Oct. 9, a motion would be made to the court to dismiss the action upon the ground that the court had no jurisdiction of the subject matter, it having just been ascertained by the plaintiff that the land sought to be condemned was situated in the Province of Nueva Ecija, instead of the Province of Tarlac, as alleged in the complaint. This motion was heard and, after due consideration, the trial court dismissed the action upon the ground presented by the plaintiff.

ISSUES/RULING

WON CFI Tarlac has power and authority to take cognizance of condemnation of real estate located in another province

YES, Sections 55 and 56[1] of Act No. 136 of the Philippine Commission confer perfect and complete jurisdiction upon the CFI of these Islands with respect to real estate. Such jurisdiction is not made to depend upon locality. There is no suggestion of limitation. The jurisdiction is universal. It is nowhere provided, that a CFI of one province, regularly sitting in said province, may not under certain conditions take cognizance of an action arising in another province or of an action relating to real estate located outside of the boundaries of the province to which it may at the time be assigned.

Procedure does not alter or change that power or authority; it simply directs the manner in which it shall be fully and justly exercised. To be sure, in certain cases, if that power is not exercised in conformity with the provisions of the procedural law, purely, the court attempting to exercise it loses the power to exercise it legally. This does not mean that it loses jurisdiction of the subject matter. It means simply that he may thereby lose jurisdiction of the person or that the judgment may thereby be rendered defective for lack of something essential to sustain it.

As to the subject matter, nothing can change the jurisdiction of the court over diminish it or dictate when it shall attach or when it shall be removed. That is a matter of legislative enactment which none but the legislature may change. On the other hand, the jurisdiction of the court over the person is, in some instances, made to defend on the consent or objection, on the acts or omissions of the parties or any of them. Jurisdiction over the person, however, may be conferred by consent, expressly or impliedly given, or it may, by an objection, be prevented from attaching or removed after it has attached.

WON Sec. 377[2] of the Code of Civil Procedure and Act. No. 1258[3] are applicable and so the CFI has no jurisdiction

NO, the terms of section 377 providing that actions affecting real property shall be brought in the province where the land involved in the suit, or some part thereof, is located, do not affect the jurisdiction of CFI over the land itself but relate simply to the personal rights of parties as to the place of trial.

 That it had jurisdiction of the persons of all the parties is indisputable. That jurisdiction was obtained not only by the usual course of practice - that is, by the process of the court - but also by consent expressly given, is apparent. The plaintiff submitted itself to the jurisdiction by beginning the action. The defendants are now in this court asking that the action be not dismissed but continued. They are not only nor objecting to the jurisdiction of the court but, rather, are here on this appeal for the purpose of maintaining that very jurisdiction over them. Nor is the plaintiff in any position to asked for favors. It is clearly guilty of gross negligence in the allegations of its complaint, if the land does not lie in Tarlac as it now asserts.

DISTINGUISHED FROM VENUE

The question of venue does not relate to jurisdiction of the court over the subject matter, it simply granting to the defendant certain rights and privileges as against the plaintiff relative to the place of trial, which rights and privileges he might waive expressly or by implication.

Venue becomes merely a matter of method, of convenience to the parties litigant. If their interests are best subserved by bringing in the Court Instance of the city of Manila an action affecting lands in the Province of Ilocos Norte, there is no controlling reason why such a course should not be followed. The matter is, under the law, entirely within the control of either party. The plaintiff's interests select the venue. If such selection is not in accordance with section 377, the defendant may make timely objection and, as a result, the venue is changed to meet the requirements of the law.

Section 377 of the Code of Civil Procedure is not applicable to actions by railroad corporations to condemn lands; and that, while with the consent of defendants express or implied the venue may be laid and the action tried in any province selected by the plaintiff nevertheless the defendants whose lands lie in one province, or any one of such defendants, may, by timely application to the court, require the venue as to their, or, if one defendant, his, lands to be changed to the province where their or his lands lie. In such case the action as to all of the defendants not objecting would continue in the province where originally begun. It would be severed as to the objecting defendants and ordered continued before the court of the appropriate province or provinces. While we are of that opinion and so hold it can not affect the decision in the case before us for the reason that the defendants are not objecting to the venue and are not asking for a change thereof. They have not only expressly submitted themselves to the jurisdiction of the court but are here asking that that jurisdiction be maintained against the efforts of the plaintiff to remove it.

Disposition

The judgment must be REVERSED and the case REMANDED to the trial court with direction to proceed with the action according to law.

Supporting american jurisprudence

First National Bank of Charlotte vs. Morgan (132 U.S., 141):

The exemption of national banks from suits in State courts in counties other than the county in which the association was located was a personal privilege which could be waived.

This exemption of national banking associations from suits in State courts, (aside from principal office) wasprescribed for the convenience of those institutions. However, the defendant did notchoose to claim immunity from suit in that court. It made defense upon the merits, and, having been unsuccessful, and in the latter tribunal, for the first time, claimed the immunity granted to it by Congress.

Ex parte Schollenberger (96 U.S., 369):

The Act of Congress prescribing the place where a person may be sued is not one affecting the general jurisdiction of the courts. It is rather in the nature of a personal exemption in favor of a defendant, and it is one which he may waive. Here, the defendant companies have provided that they can be found in a district other than that in which they reside, if a particular mode of proceeding is adopted, and they have been so found.

St. Louis and San Francisco Railway Co. vs. McBride (141 U.S., 127):

The right to insist upon suit only in the one district is a personal privilege which he may waive, and he does waive it by pleading to the merits.

Chouteau vs. Allen (70 Mo., 290):

Though the suit was brought in the county in which the plaintiff resided, and service had upon the defendant in the county of his residence, unless a plea in abatement to the jurisdiction of the court over the person of the defendant, was interposed in the first instance, the objection on the score of lack of jurisdiction could not subsequently be successfully raised.

It is not meant to convey the idea that the mere failure to plead to the jurisdiction of the court would have the effect to confer jurisdiction where none existed before; for it is well settled that even consent of parties cannot confer jurisdiction. But all circuit courts have a general jurisdiction over the foreclosure of mortgages.

De La Vega vs. Keague (64 Texas, 205):

Every district court in the State has cognizance of such suits; the requirement as to the county in which the suit may be brought is a mere personal privilege granted to the parties, which may be waived like any other privilege of this character.

Supporting spanish jurisprudence

He who by his own acts submits himself to the jurisdiction of a court shall not thereafter be permitted to question such jurisdiction. (Judgment of December 30, 1893, 29 Civ. Jur., 64.)

According to article 305 (of the Ley de Enjuiciamiento Civil) the plaintiff shall be presumed to have tacitly submitted himself to the jurisdiction of the court by the mere act of filing his complaint therein, and in the case of the defendant where the latter after appearing in the action takes any step therein other than to object to such jurisdiction. (Judgment of September 21, 1878, 40 Civ. Jur., 232.)

In order that a tacit submission based upon the mere act filing the complaint may be valid the court must be one of ordinary jurisdiction as provided in article 4 of the Ley de Ebjuiciamiento Civil. (Judgment of August 27, 1864, 10 Civ. Jur., 14.)

Supporting english jurisprudence

The Earl of Halsbury's Laws of England (vol. 1, p. 50):

The old distinction between 'local' and 'transitory' actions, though of far less importance than it was before the passing of the judicature acts, must still be borne in mind in connection with actions relating to land situate outside the local jurisdiction of our courts. 'Transitory' actions were those in which the facts in issue between the parties had no necessary connection with a particular locality, e.g., contract, etc.; whilst "local" actions were those in which there was such a connection, e.g., disputes as to the title to, or trespasses to, land.

In the case of local actions the plaintiff was bound to lay the venue truly, i.e., in the county (originally in the actual hundred) in which the land in question lay. In the case, however of a transitory action, he might lay it wherever he pleased, subject to the power of the court to alter it in a proper case. Local venues have now been abolished, and, therefore, so far as actions relating to land in England are concerned, the distinction may be disregarded.

It is, however, important from another point of view, viz, that of jurisdiction as distinct from procedure. In the case of real actions relating to land in the colonies or foreign countries the English courts had, even before the judicature acts, no jurisdiction; and, therefore, the removal by those acts of a difficulty of procedure viz, the rule as to local venue which might have stood in the way, if they had and wished to exercise jurisdiction, did not in any way confer jurisdiction in such cases.

The lack of jurisdiction still exists, and our courts refuse to adjudicate upon claims of title to foreign land in proceedings founded on an alleged invasion of the proprietary rights attached thereto, and to award damages founded on that adjudication; in other words, an action for trespass to, or for recovery of, foreign land can not be maintained in England, at any rate if the defendant chooses to put in issue the ownership of such land.

existing ph jurisprudence not applicable

Serrano vs. Chanco (5 Phil. Rep., 431)

The matter before the court was the jurisdiction of the CFI over the actions and proceedings relating to the settlement of the estates of deceased persons. The determination of that question required the consideration of section 602 of the code of Civil Procedure rather than section 377. The argument of the court touching the last-named section, is inapplicable. #peaches

Molina vs. De la Riva (6 Phil. Rep., 12)

The issue was WON an agreement between parties to submit themselves to the jurisdiction of a particular court to the exclusion of the court provided by law as the appropriate court in the premises could be enforced.

Molina vs. De la Riva (7 Phil. Rep., 302)

The court was not discussing or deciding the question WON an action could be maintained in the CFI Manila to foreclose a mortgage on real estate located in Albay; but, rather, whether or not an action could be maintained in the CFI of the city of Manila to foreclose a mortgage on personal property located in the Province of Albay. The remark of the court that perhaps the former action could not be maintained was not intended to be decisive and was not thought at the time to be an indication of what the decision of the court might be if that precise case were presented to it with full argument and citation of authorities.

Castano vs. Lobingier (9 Phil. Rep., 310)

Jurisdiction of the CFI to issue a writ of prohibition against a justice of the peace holding his court outside the province in which the CFI was sitting at the time of issuing the writ. The determination of the question presented different considerations and different provisions of law from those which rule the decision of the case at bar.

Special laws relating to the condemnation of land by railroad companies

Act No. 1258, SEC. 3. Whenever a railroad corporation is authorized by law, to exercise the power of eminent domain and has not obtained by agreement with the owners thereof the lands necessary for its purposes as authorized by law, it may in its complaintshall be instituted in the CFI of the province where the lands is situated.

These special laws contain nothing which in any way indicates an intention of the legislature to alter the nature or extent of the jurisdiction of CFIs granted by Act No. 136. As we said in discussing the provisions of section 377 of theCode of Civil Procedure, we can not hold that jurisdiction to be limited unless by express provision or clear intendment.

We have thus far drawn an analogy between section 377 of the code of Civil Procedure and section 3 of Act No. 1258, asserting that neither the one nor the other was intended to restrict, much less deprive, the CFIs of the jurisdiction over lands in the Philippine Islands conferred upon them by Act No. 136.

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[1]SEC. 55. Jurisdiction of Courts of First Instance. The jurisdiction of Courts of First Instance shall be of two kinds: 1. Original; and 2. Appellate.

SEC. 56. Its original jurisdiction.  Courts of First Instance shall have original jurisdiction:

2. In all civil actions which involve the title to or possession of real property, or any interest therein, or the legality of any tax, impost, or assessment, except actions of forcible entry into, and detainer of lands or buildings, original jurisdiction of which is by this Act conferred upon courts of justice of the peace.

[2]SEC. 377. Venue of actions. Actions to confirm title to real estate, or to secure a partition of real estate, or to cancel clouds, or remove doubts from the title to real estate, or to obtain possession of real estate, or to recover damages for injuries to real estate, or to establish any interest, right, or title in or to real estate, or actions for the condemnation of real estate for public use, shall be brought in the province were the lands, or some part thereof, is situated; actions against executors, administrators, and guardians touching the performance of their official duties, and actions for account and settlement by them, and actions for the distribution of the estates of deceased persons among the heirs and distributes, and actions for the payment of legacies, shall be brought in the province in which the will was admitted to probate, or letters of administration were granted, or the guardian was appointed. And all actions not herein otherwise provided for may be brought in any province where the defendant or any necessary party defendant may reside or be found, or in any province where the plaintiff, except in cases were other special provision is made in this Code. In case neither the plaintiff nor the defendant resides within the Philippine Islands and the action is brought to seize or obtain title to property of the defendant within the Philippine Islands and the action is brought to seize or obtain title to property of the defendant within the Philippine Islands, the action shall be brought in the province where the property which the plaintiff seeks to seize or to obtain title to is situated or is found: Provided, that in an action for the foreclosure of a mortgage upon real estate, when the service upon the defendant is not personal, but is by publication, in accordance with law, the action must be brought in the province where the land lies. And in all cases process may issue from the court in which an action or special proceeding is pending, to be enforced in any province to bring in defendants peaches and to enforce all orders and decrees of the court. Thefailure of a defendant to object to the venue of the action at the time of entering his appearance in the action shall be deemed a waiver on his part of all objection to the place or tribunal in which the action is brought, except in the actions referred to in the first sixteen lines of this section relating to real estate, and actions against executors, administrators, and guardians, and for the distribution of estates and payment of legacies.

[3]Special law covering rail roads

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METROBANK AND SOLIDBANK CORPORATION, V. PEREZ [2010]

Solidbank Corporation (Solidbank) forged a 15 yrlease contract(1998 – 2013) with Bernardita H. Perez represented by her attorney-in-fact Patria H. Perezover two parcels of land in Sta. Maria, Bulacan. Solidbank was to, as it did, construct a one-storey building specifically suited for bank premises.

Solidbank was later acquired by Metrobank. Metrobank sent a notice of termination of the lease contract effective September 30, 2002.Respondent, objecting to the termination, filed a complaint for breach of contract and damages against herein petitioners Solidbank and Metrobank before the RTC of Malolos, Bulacan praying thatpetitioners be ordered to pay her “the would be unrealized income for the ensuing idle months of the said building.”

Metrobank: lease contract did not prohibit pre-termination by the parties.

Metrobank was declared to have waived its right to present evidence after its counsel incurred several unexcused absences.

rtc ruling

1. amount of P212,322.60 as unrealized income before the filing of the case (Sept. 2002 to Feb. 2003);

2. amount of P2,013,753.03 as unrealized (income) after the filing of the case up to present (March 2003 to March 2006);

3. unrealized income for the ensuing idle months of said building amounting to P7,126,494.30 (covering April 2006 until expiration of the contract of lease);

4. P200,000.00 as moral damages;

5. P100,000.00 as exemplary damages;

6. P100,000.00 as attorney’s fees and

7. To pay plaintiff as litigation expenses.

ca ruling

Metrobank challengedthe trial court’s award of “unrealized income for the ensuing idle months” despite respondent’s failure to pay docket fees thereon to thus render the complaint dismissible for lack of jurisdiction.

CA affirmed the trial court.Respondent admitted that the filing fees she paid did not cover her prayer for unrealized income for the ensuing idle months, for “at the time of filing and payment[,] the period that the building would be idle could not yet be determined.”

Perez could not have been certain at the time she filed theComplaint that Metrobank would no longer return to the Leased Property. It would have been speculative to allege in herComplaint any unrealized income for the remaining period of the Lease Contract considering that the possibility of Metrobank reconsidering its decision to terminate the said Lease Contract and returning to the Leased Property at some future time was not definitively foreclosed when the Complaint was filed.

Perez was thus justified in just making a general prayer for the court a quo to award unrealized income for the “ensuing idle months” of the Leased Property. #peaches

issue

WON the RTC has jurisdiction for failure to pay docket fees for the “unrealized income for the ensuing idle months”

ruling

Manchester Development Corporation v. CAthe Court held that a pleading which does not specify in the prayer the amount sought shall not be admitted or shall be expunged, and that a court acquires jurisdiction only upon payment of the prescribed docket fee. This rule was relaxed in Sun Insurance Office, Ltd. v. Asuncion:

Plainly, while the payment of prescribed docket fee is a jurisdictional requirement, even its non-payment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable prescriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules prescribing such payment. Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no intention to defraud the government, the Manchester rule does not apply.

Metrobank takes exception to the application of Sun Insurance Office to the present case because, by its claim, respondent deliberately concealed the insufficient payment of docket fees.

The ensuing months in which the leased premises would be rendered vacant could not be determined at the time of the filing of the complaint.

National Steel Corporation v. CA:

Although the payment of the proper docket fees is a jurisdictional requirement, the trial courtmay allow the plaintiff in an action to pay the same within a reasonable time before the expiration of the applicable prescriptive or reglementary period. If the plaintiff fails to comply with this requirement, the defendant should timely raise the issue of jurisdiction or else he would be considered in estoppel. In the latter case, the balance between the appropriate docket fees and the amount actually paid by the plaintiff will be considered a lien on any award he may obtain in his favor.

Metrobank raised the issue of jurisdiction only before the appellate court after it and its co-petitioner participated in the proceedings before the trial court. While lack of jurisdiction may be raised at any time, a party may be held in estoppel if, as in the present case, it has actively taken part in the proceedings being questioned.

balance between the actual fees and the correct filing fees

Respondent is still liable for the balance between the actual fees paid and the correct payable filing fees to include an assessment on the award of unrealized income, following Section 2 of Rule 141 which provides:

SEC. 2. Fees in lien. – Where the court in its final judgment awards a claim not alleged, or a relief different from, or more than that claimed in the pleading, the party concerned shall pay the additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk of court shall assess and collect the corresponding fee

and jurisprudence, viz:

The exception contemplated as to claims not specified or to claims although specified are left for determination of the court is limited only to any damages that may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount thereof.

moral and exemplary damages and attorney’s fees.

Respondent’s witness-attorney-in-fact testified only on the existence of the lease agreement and unrealized income due to pre-termination.

MD deleted: no record that the the claimant that emotional and mental sufferings were actually experienced.

AF deleted: not mentioned in the TC decision except for the the dispositive portion.

Petition partly GRANTED. The Clerk of Court of the RTC is ordered to reassess, determine and collect additional fees that should be paid by respondent within 15provided the applicable prescriptive or reglementary period has not yet expired, which additional fees shall constitute a lien on the judgment in satisfaction of said lien. The award of moral and exemplary damages and attorney’s fees is DELETED.

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MONSANTO V. DE GUZMAN [2014]

doctrine

“Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with jurisdiction over the subject matter.”

nature

Petition for Review on Certiorari

facts

Flordelis B. Menzon, Regional Director of the Home Development Mutual Fund (Pag-IBIG), requested the intervention of Judge Sinforiano A. Monsanto of the RTC of Catbalogan, Samar on the alleged anomalous auction sale conducted by Sheriff De Guzman. 

According to Pag-IBIG, De Guzman previously acceded to its request to move the date of the auction sale to January 20, 2004; however, to its surprise, the sale proceeded as originally scheduled on January 15, 2004.  Pag-IBIG also claimed that the winning bid of Leoncio Lim in the amount of P500K was grossly disadvantageous to the government considering that the outstanding loan obligations of the mortgagor, Eduardo Monsanto (Eduardo), was more than the bid amount

Judge Monsanto refrained from acting on the letter considering that Eduardo is his relative; instead he re-assigned the same to Judge Sibanah E. Usman.

Judge Usman declared that Atty. Cesar Lee argued on behalf of Pag-IBIG; and that Pascual Monsanto appeared on behalf of Eduardo.  However, Judge Usman noted that no formal petition or complaint was actually filed which presents a judicial issue; moreover, the acts complained of partake of administrative matter.  Consequently, Judge Usman referred the matter to the Office of the Court Administrator (OCA) for further action.

Pascual filed with the OCAa Motion to Lift Writ of Execution and Notice to Vacate.  Pascual alleged that De Guzmanissued a Notice to Vacate; that the same is being enforced with grave threats and harassment; that the protest of Pag-IBIG remains pending with and unresolved by OCA; that the trial court did not transmit the records of the case to the OCA; that the winning bid of P500K submitted by Leoncio is disadvantangeous to the government; that Eduardo’s loan with Pag-IBIG is being proposed for restructuring; and that the writ of execution and notice to vacate would gravely prejudice their rights.  Pascual thus prayed that:

·          An order be issued lifting the Writ of Execution and the Notice to Vacate;

·          An order be issued enjoining or restraining the subject Sheriff from enforcing the said Notice to vacate; and

·          Court officials or personnel above mentioned be made to explain respecting the handling of the case

OCA directed Judge Usman to:

(1)      conduct an investigation on the missing records of ‘Home Development Mutual Fund (Pag-IBIG) vs. Eduardo Monsanto’ and to report thereon within THIRTY (30) days from notice; and

(2)      take action on (a) Items A and B of the ‘Motion to Lift Writ of Execution and Notice to Vacate’ and (b) the letter of Home Development Mutual Fund dated 18 February 2004, a copy of which is annexed to the ‘Motion to Lift Writ of Execution and Notice to Vacate’, herewith attached.

Judge Usman notified Pag-IBIG, Eduardo, and Leoncio of a hearing scheduled on June 14, 2005.¹⁴  This time, the case was captioned as “Home Development Mutual Fund (Pag-IBIG Fund), mortgagee, v. Eduardo Monsanto, mortgagor.”

Pag-IBIG informed the trial court that the loan of Eduardo had been restructured and that Eduardo had commenced paying monthly amortizations; that as a result of the restructuring, Pag-IBIG is withdrawing its Petition for Extra-judicial Foreclosure; and that it is no longer interested in pursuing an administrative action against De Guzman.

Leoncio opposed Pag-IBIG’s manifestation.Leoncio filed with Branch 27 a Manifestation withEx-Parte Motion for Issuance of Writ of Possession claiming that the reglementary period had elapsed without Eduardo redeeming the subject property; as such, he is already entitled to the issuance of a writ of possession.

On July 15, 2005, Decoroso D. Monsanto and Pascual moved to intervene in the case.Both claimed that they are co-owners and actual possessors of the subject property.

Ruling of the RTC – Branch 28

The public auction sale are in order.  The impugned Sheriff De Guzman had accordingly performed his functions.  There is no showing that he has abuse[d] his authority during the conduct of the public auction. 

Atty. Cesar E. Lee prayed that an order be issued directing de Guzmanto make the necessary notice to all concern[ed] of the fact that the mortgagee has restructured his loan with the mortgagor, and in effect, redeemed his obligation subject matter of this foreclosure proceeding.

De Guzman explained that even assuming that there was restructuring of the [mortgage] loan it is very clear that it was done after the lapse of the one (1) year redemption period and also there was no notice given to the Office of the Clerk of Court. 

Eduardo, Pascual, and Pag-IBIG filed MRs; however, the same were denied by the trial court in its August 30, 2005 Order. 

Ruling of the CA

No GAD on the part of the RTC and affirming its July 1, 2005 and August 30, 2005 Orders.

Petitioners’ Arguments

·          Pettionersargue that the ex parte motion for the issuance of a writ of possession should be under oath, and requires prior notice and hearing;

·          The mere filing of the sheriff’s certificate of sale with the Register of Deeds is not equivalent to registration as required in order for the one-year redemption period to commence;

·          PDNo. 1529 did not repeal Act No. 3135;

·          that the occupants of the subject property hold rights adverse to the mortgagor Eduardo; and that the extrajudicial foreclosure proceedings was attended by numerous irregularities.

Respondent Lim’s Arguments

·          Mere filing of the sheriff’s Certificate of Sale with the Samar Register of Deeds on March 5, 2004 was equivalent to the registration thereof;

·          Samar Registrar of Deeds assured him that mere receipt of the Certificate of Sale is tantamount to registration; he relied upon this representation and assurance in good faith; and that petitioners’ remedy is to file a separate case for recovery of ownership and possession.

issues/Ruling

The Petition is dismissed.

“Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with jurisdiction over the subject matter.”  Section 5, Rule 1 of the Rules of Court specifically provides that “[a] civil action is commenced by the filing of the original complaint in court.”  Moreover, “[e]very ordinary civil action must be based on a cause of action.”

No proper initiatory pleading was filed before the trial court.

No formal complaint or petition was filed in court.  The case was “commenced” through a letter of Pag-IBIG asking the intervention of Executive Judge Monsanto on the alleged anomalous foreclosure sale conducted by De Guzman.

Letter could not in any way be considered as a pleading.  Section 1, Rule 6 of the Rules of Court defines pleadings as “written statements of the respective claims and defenses of the parties submitted to the court for appropriate judgment.”

Pag-IBIG’s letter could not be considered as a formal complaint or petition”

·          the parties to the case were not identified pursuant to Section 1,Rule 3 and Section 1,Rule 7.  

·          so-called claim or cause of action was not properly mentioned or specified. 

·          letter miserably failed to comply with the requirements of Rule 7, Rules of Court.  The letter bore no caption; it was not even assigned a docket number; the parties were not properly identified; the allegations were not properly set forth; no particular relief is sought; in fact, only the intervention of Executive Judge Monsanto is requested;

·          it was not signed by a counsel; and

·          most of all, there is no verification or certification against forum-shopping.

Judge Usman of Branch 28 resolved the following incidents: (1) the motion for issuance of writ of possession filed by Leoncio; and (2) the motion to lift writ of execution and notice to vacate. 

However, the said Manifestation with Ex Parte Motion for Issuance of Writ of Possession was not even filed before Branch 28; in fact, it was submitted for consideration of Branch 27.  Moreover, the Motion to Lift Writ of Execution and Notice to Vacate was filed by Pascual before the OCA; the RTC Branches 27 and 28 of Catbalogan, Samar, were only furnished copies thereof.

Judge Usman proceeded to take cognizance of the case notwithstanding his prior observation that no formal petition or complaint was actually filed and which presents a judicial issue. 

Judge Usman opined that the acts complained of partake of administrative matter and thus referred the same to the OCA for further action. 

The letter of OCA directing Judge Usman to take action on the Motion to Lift Writ of Execution and Notice to Vacate could not be interpreted as vesting Judge Usman with the authority and jurisdiction to take cognizance of the matter. 

No payment of docket fees.

No docket fees were paid before the trial court.  Section 1, Rule 141 of the Rules of Court mandates that “[u]pon the filing of the pleading or other application which initiates an action or proceeding, the fees prescribed therefor shall be paid in full.”  “It is hornbook law that courts acquire jurisdiction over a case only upon payment of the prescribed docket fee.”

In Far East Bank and Trust Company v. Shemberg Marketing Corporation:

A court acquires jurisdiction over a case only upon the payment of the prescribed fees.  The importance of filing fees cannot be gainsaid for these are intended to take care of court expenses in the handling of cases in terms of costs of supplies, use of equipment, salaries and fringe benefits of personnel, and others, computed as to man-hours used in the handling of each case.  The non-payment or insufficient payment of docket fees can entail tremendous losses to government in general and to the judiciary in particular.

RTC Branch 28 did not acquire jurisdiction over the matter/case.  All the proceedings undertaken by the trial court are null and void, and without force and effect. 

Petition denied.

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