MA. LUTGARDA P. CALLEJA, JOAQUIN M. CALLEJA, JR., JADELSON PETER P. CALLEJA, MA. JESSICA T. FLORES, MERCIE C. TIPONES AND PERFECTO NIXON C. TABORA, PETITIONERS, VS. JOSE PIERRE …

Calleja versus Panday

The Case

This is a petition for review on certiorari brought by Ma. Lutgarda Calleja and her co-petitioners against Jose Pierre Panday and the other private respondents. The dispute began as a petition for quo warranto with damages and a prayer for injunctive relief, filed to challenge the petitioners' assumption of the offices of board of directors and officers of St. John Hospital, Incorporated. The case matters because it fixes two things every examinee must know: first, that a quo warranto against persons who usurp an office in a private corporation is an intra-corporate controversy governed by the Interim Rules, not by Rule 66; and second, that only the branch of the Regional Trial Court designated as a Special Commercial Court may take cognizance of it, so that a regular branch that was never designated has no power even to remand the case to the proper court.

Procedural History

The respondents filed their petition for quo warranto with the Regional Trial Court of San Jose, Camarines Sur, Branch 58. That court issued an order transferring the case to the Regional Trial Court in Naga City, on the view that venue in quo warranto lies where the respondent resides. The Executive Judge of the Naga City court refused to receive the case folder, holding that improper venue is not a ground for transferring a quo warranto case to another administrative jurisdiction. Branch 58 then proceeded to serve summons, and the petitioners filed their answers raising improper venue, lack of jurisdiction, and the wrong remedy of quo warranto. On July 13, 2005, Branch 58 issued the assailed order denying the motion to dismiss, cancelling the scheduled injunction hearing, and remanding the case to Branch 23 of the Regional Trial Court of Naga City as the designated special court. The petitioners did not move for reconsideration; they went straight to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

From 1985 until the filing of the petition in May 2005, the respondents claimed to have been members of the board of directors and officers of St. John Hospital, Incorporated. Sometime in May 2005, the petitioners, who are also incorporators and stockholders of the same corporation, allegedly usurped those powers forcibly and with the aid of armed men. The respondents thereupon filed a petition for quo warranto with damages and a prayer for a temporary restraining order before the Regional Trial Court of San Jose, Camarines Sur.

Branch 58 first tried to pass the case to the Naga City court on venue grounds, but the Naga City Executive Judge refused to accept it. Branch 58 then took cognizance of the case, received the answers, and on July 13, 2005 denied the motion to dismiss and remanded the case to Branch 23 of the Naga City court as the special court for intra-corporate controversies.

While the petition was pending, the petitioners filed an urgent motion to restore the status quo ante, alleging that the respondent Jose Pierre Panday, with the aid of fourteen armed men, assaulted the hospital premises and took daily collections estimated at 400,000 pesos. This allegation of violence moved the Court to look past the petitioners' technical error and resolve the case on the merits.

Issues

• Whether or not a branch of the Regional Trial Court which has no jurisdiction to try and decide a case has authority to remand the same to another co-equal court in order to cure the defects of venue and jurisdiction.
• Whether or not Administrative Circular No. 8-01 dated January 23, 2001, which took effect on March 1, 2001, may be applied in the present case which was filed on May 16, 2005.

Applicable Provisions

Section 5.2 of Republic Act No. 8799, the Securities Regulation Code, provides:

5.2. The Commission's 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.

This is the source of the transfer of the old Securities and Exchange Commission cases, including quo warranto against corporate officers, to the Regional Trial Courts, with the Supreme Court empowered to designate the branches.

Section 1 of Rule 66 of the 1997 Rules of Civil Procedure provides:

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.

This shows that Rule 66 reaches only public office, and so cannot govern a quo warranto against an officer of a private corporation.

Section 1, paragraph (a), of the Interim Rules of Procedure Governing Intra-Corporate Controversies Under Republic Act No. 8799 provides:

Section 1. (a) Cases covered. These Rules shall govern the procedure to be observed in civil cases involving the following: (2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates, and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; (3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations.

This is the rule that actually governs the respondents' petition, because what is questioned is the authority of the petitioners to assume office in the corporation.

Section 5 of the same Interim Rules provides:

Section 5. Venue. All actions covered by these Rules shall be commenced and tried in the Regional Trial Court which has jurisdiction over the principal office of the corporation, partnership, or association concerned.

This fixes the place of filing at the court covering the principal office, which in this case is Goa, Camarines Sur.

Ruling

On the first issue, the Court held that Branch 58 had no authority to remand the case. The allegations of the petition made out an intra-corporate controversy, and under Republic Act No. 8799 and the administrative issuances of the Court, Branch 58 was never designated as a Special Commercial Court and was never vested with jurisdiction over cases formerly cognizable by the Securities and Exchange Commission. The only action it could take was to dismiss the petition for lack of jurisdiction, so that the issues could be expeditiously heard by the tribunal clothed with jurisdiction. The Court also held that Rule 66 does not apply, since the present rule covers only usurpation of a public office, and it is the Interim Rules that govern.

On the second issue, the Court held that Administrative Circular No. 8-01 did not authorize the transfer. By the time the petition was filed in 2005, the later administrative issuance designating Special Commercial Courts had long been in effect, and it required that such cases be filed with the Office of the Clerk of Court in the official station of the designated Special Commercial Court. Since the principal office of the corporation is in Goa, Camarines Sur, and the official station of the designated court is Naga City, the petition should have been filed there. Filing it with the San Jose court was clearly erroneous.

The Court first noted that the petitioners chose the wrong remedy, since Rule 45 governs appeals from judgments or final orders, and an order denying a motion to dismiss is merely interlocutory. In the interest of arresting the perpetuation of an apparent error and because of the propensity of the parties to resort to violence, the Court treated the petition as a special civil action for certiorari and resolved it on the merits.

Doctrine

A petition for quo warranto against persons who usurp an office in a private corporation is an intra-corporate controversy. It is governed by the Interim Rules of Procedure Governing Intra-Corporate Controversies, not by Rule 66, which now reaches only public office, position, or franchise. Under Section 5.2 of Republic Act No. 8799, jurisdiction over these cases is transferred to the Regional Trial Courts, and only the branch designated by the Supreme Court as a Special Commercial Court may exercise it. Venue lies in the court with jurisdiction over the principal office of the corporation. A branch that was never designated has no jurisdiction and no power to remand the case to a co-equal court; its only course is to dismiss the petition for lack of jurisdiction.

Disposition

The petition was given due course and granted; the July 13, 2005 order of the San Jose court was set aside as null and void, and the petition for quo warranto was ordered dismissed.

Remember This

Memorize this line: a regular branch that was never designated as a Special Commercial Court has no jurisdiction over an intra-corporate quo warranto and may only dismiss, never remand. Examiners use this case to test jurisdiction over intra-corporate controversies, the venue rule tied to the principal office, and the distinction between Rule 66 quo warranto against public office and the Interim Rules.