04 Calleja vs. Panday (Tan)

04 CALLEJA v.
PANDAY AUTHOR: TAN

G.R. No. 168696; Feb. 28, 2006 Notes: Did not include matters not relevant to the
TOPIC: QUO WARRANTO topic. The Court ultimately granted the petition for
PONENTE: AUSTRIA-MARTINEZ, J. review on certiorari and dismissed the quo
warranto petition because RTC-Br. 58 had no
jurisdiction over the case so it had no authority to
remand the case to RTC-Br. 23. What it should have
done was to dismiss the case on the ground of lack
of jurisdiction.
CASE LAW/ DOCTRINE: Rule 66 is limited to actions of quo warranto against persons who usurp a
public office, position or franchise; public officers who forfeit their office; and associations which act as
corporations without being legally incorporated, while [a]ctions of quo warranto against corporations,
or against persons who usurp an office in a corporation is governed by The Interim Rules of Procedure
Governing Intra-Corporate Controversies Under R.A. No. 8799.
EMERGENCY RECIT: Respodents filed a petition for quo warranto with the RTC-BR. 58, alleging that
they were members of the BOD of St. John Hospital and that the petitioners, who are incorporators and
stockholders of the same, usurped their powers. RTC-Br. 58 noted that the case involves an intra-
corporate dispute over which it has no jurisdiction. However, it did not dismiss the case. Rather, it
remanded the case to RTC-Br. 23, the court specially designated by the SC to try and decide cases in
involving intra-corporate disputes. Petitioners filed with the SC a petition for review on certiorari under
Rule 45. SC took cognizance of the case despite Rule 45 being an improper remedy. It held that Rule 66
is limited to actions of quo warranto against persons who usurp a public office, position or franchise;
public officers who forfeit their office; and associations which act as corporations without being legally
incorporated. It is, therefore, The Interim Rules of Procedure Governing Intra-Corporate Controversies
Under R.A. No. 8799 (Interim Rules) which applies to the petition for quo warranto filed by respondents
before the trial court since what is being questioned is the authority of herein petitioners to assume the
office and act as the board of directors and officers of St. John Hospital, Incorporated. SC ultimately
granted the petition for review and dismissed the quo warranto petition because RTC-Br. 58 has no
authority to remand the case to RTC-Br. 23. It should have dismissed the case on the ground of lack of
jurisdiction.
FACTS:
On May 16, 2005, respondents filed a petition with the Regional Trial Court of San Jose, Camarines
Sur Branch 58 (RTC-Br. 58) for quo warranto with Damages and Prayer for Mandatory and Prohibitory
Injunction, Damages and Issuance of Temporary Restraining Order against herein petitioners.
Respondents alleged that from 1985 up to the filing of the petition with the trial court, they had been
members of the board of directors and officers of St. John Hospital, Incorporated, but sometime in
May 2005, petitioners, who are also among the incorporators and stockholders of said corporation,
forcibly and with the aid of armed men usurped the powers which supposedly belonged to
respondents.
RTC-Br. 58 issued an Order transferring the case to the Regional Trial Court in Naga City. According to
RTC-Br. 58, since the verified petition showed petitioners therein (herein respondents) to be residents
of Naga City, then pursuant to Section 7, Rule 66 of the 1997 Rules of Civil Procedure, the action for
quo warranto should be brought in the Regional Trial Court exercising jurisdiction over the territorial
area where the respondents or any of the respondents resides.
However, the Executive Judge of RTC, Naga City refused to receive the case folder of the subject case
for quo warranto, stating that improper venue is not a ground for transferring a quo warranto case to
another administrative jurisdiction.
The RTC-Br. 58 then proceeded to issue and serve summons on herein petitioners (respondents
below). Petitioner Tabora filed his Answer dated June 8, 2005, raising therein the affirmative defenses
of (1) improper venue, (2) lack of jurisdiction, and (3) wrong remedy of quo warranto. Thereafter, the
other petitioners also filed their Answer, also raising the same affirmative defenses.
All the parties were then required to submit their respective memoranda.
RTC-Br. 58 issued the assailed Order.
1. It is undisputed that the plaintiffs cause of action involves controversies arising out of intra-
corporate relations, between and among stockholders, members or associates of the St. John
Hospital Inc. which originally under PD 902-A was within the original and exclusive jurisdiction
of the SEC.However, under RA 8799 (SRC), the Commissions jurisdiction over all cases
enumerated in Section 5, Presidential Decree 902-A were transferred []to the Court of
general jurisdiction or the appropriate Regional Trial Court with a proviso that the Supreme
Court in the exercise of its authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over these cases. Accordingly, in the Province of Camarines Sur,
(Naga City) RTC Branch 23 presided by the Hon. Pablo M. Paqueo, Jr. was designated as
special court (Section 1, A.M. No. 00-11-03-SC) Supplemental Administrative Circular No. 8-
01 was then issued by the Supreme Court which directed that all SEC cases originally
assigned or transmitted to the regular Regional Trial Court shall be transferred to branches of
the Regional Trial Court specially designated to hear such cases in accordance with A.M. No.
00-11-03-SC.
2. MTD was denied. (hindi ko alam kung saan galling to kasi wala naman sa facts na nag file ng
MTD yung petitioners)
3. Case was remanded to the RTC-BR 23
Petitioners no longer moved for reconsideration of the foregoing Order and, instead, immediately
elevated the case to this Court via a petition for review on certiorari under Rule 45.
ISSUE(S): WON the case falls under Rule 66.
HELD: NO
RATIO:
In this case, the basic issue of which court has jurisdiction over cases previously cognizable by the
SEC under Section 5, Presidential Decree No. 902-A (P.D. No. 902-A), and the propensity of the parties
to resort to violence behoove the Court to look beyond petitioners technical lapse of filing a petition
for review on certiorari instead of filing a petition for certiorari under Rule 65 with the proper court.
Thus, the Court shall proceed to resolve the case on its merits.
It should be noted that allegations in a complaint for quo warranto that certain persons usurped the
offices, powers and functions of duly elected members of the board, trustees and/or officers make
out a case for an intra-corporate controversy.
Prior to the enactment of R.A. No. 8799, the Court, adopting Justice Jose Y. Ferias view, declared in
Unilongo v. Court of Appeals, Rule 66 of the 1997 Rules of Civil Procedure is limited to actions of quo
warranto against persons who usurp a public office, position or franchise; public officers who forfeit
their office; and associations which act as corporations without being legally incorporated, while
[a]ctions of quo warranto against corporations, or against persons who usurp an office in a

corporation, fall under the jurisdiction of the Securities and Exchange Commission and are governed
by its rules. (P.D. No. 902-A as amended).
However, R.A. No. 8799 was passed and Section 5.2 thereof provides as follows:
5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. x x x
Therefore, actions of quo warranto against persons who usurp an office in a corporation, which were
formerly cognizable by the Securities and Exchange Commission under PD 902-A, have been
transferred to the courts of general jurisdiction. But, this does not change the fact that Rule 66 of the
1997 Rules of Civil Procedure does not apply to quo warranto cases against persons who usurp an
office in a private corporation. Presently, Section 1(a) of Rule 66 reads thus:
Section 1. Action by Government against individuals.An action for the usurpation of a public
office, position or franchise may be commenced by a verified petition brought in the name of the
Republic of the Philippines against
(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or
franchise;
xxxx
As explained in the Unilongo case, Section 1(a) of Rule 66 of the present Rules no longer contains the
phrase or an office in a corporation created by authority of law which was found in the old Rules.
Clearly, the present Rule 66 only applies to actions of quo warranto against persons who usurp a
public office, position or franchise; public officers who forfeit their office; and associations which act
as corporations without being legally incorporated despite the passage of R.A. No. 8799.
It is, therefore, The Interim Rules of Procedure Governing Intra-Corporate Controversies Under R.A.
No. 8799 (Interim Rules) which applies to the petition for quo warranto filed by respondents before
the trial court since what is being questioned is the authority of herein petitioners to assume the
office and act as the board of directors and officers of St. John Hospital, Incorporated.

04 Calleja vs. Panday (Tan)

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04 CALLEJA v.

PANDAY AUTHOR: TAN

ISSUE(S): WON the case falls under Rule 66.

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