Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-!"#$ Octobe% & !$#
TEO'ORO (EGA& plaintiff-appellee&
)s.
T*E SAN CARLOS M+LL+NG CO.& LT'.& ,efen,ant-appellant.
-ishe%& 'e.itt& Pe%/ins& 0 B%a,1& 2ohn R. Mc-ie& 2%.& 2esus T%ini,a,& an, Po.ell 0 *ill
fo% appellant.
R. Nolan an, -e%ia 0 La O fo% appellee.

ROMUAL'E3& 2.4
This action is fo% the %eco)e%1 of 5&$"$ /ilos of cent%ifu6al su6a%& o% its )alue&
P7&"& plus the pa18ent of P"99 ,a8a6es an, the costs.
The ,efen,ants file, an ans.e%& an, set up t.o special ,efenses& the fi%st of
.hich is at the sa8e ti8e a counte%clai8.
The Cou%t of -i%st +nstance of Occi,ental Ne6%os that t%ie, the case& %en,e%e,
:u,68ent& the ,ispositi)e pa%t of .hich is as follo.s4
B1 )i%tue of these consi,e%ations& the cou%t is of opinion that .ith %espect to the
co8plaint& the plaintiff 8ust be hel, to ha)e a bette% %i6ht to the possession of the
5&$"$ /ilos of cent%ifu6al su6a% 8anufactu%e, in the ,efen,ants; cent%al an, the latte%
is sentence, to ,eli)e% the8 to the plaintiff& an, in ,efault& the sellin6 p%ice the%eof&
a8ountin6 to P"&$<!.97 ,eposite, in the office of the cle%/ of the cou%t. Plaintiff;s clai8
fo% ,a8a6es is ,enie,& because it has not been sho.n that the ,efen,ant cause, the
plaintiff an1 ,a8a6es. Plaintiff is absol)e, f%o8 ,efen,ant;s counte%clai8 an, ,ecla%e,
not boun, to pa1 the such clai8e, the%ein. Plaintiff is also absol)e, f%o8 the
counte%clai8 of P!&999& fo% ,a8a6es& it not ha)in6 been p%o)e, that an1 ,a8a6es
.e%e cause, an, suffe%e, b1 ,efen,ant& since the .%it of attach8ent issue, in this
case .as le6al an, p%ope%. =ithout p%onounce8ent as to costs.
So o%,e%e,.
The ,efen,ant co8pan1 appeale, f%o8 this :u,68ent& an, alle6es that the
lo.e% cou%t e%%e, in ha)in6 hel, itself .ith :u%is,iction to ta/e co6ni>ance of an, %en,e%
:u,68ent in the cause? in hol,in6 that the ,efen,ant .as boun, to suppl1 ca%s
6%atuitousl1 to the plaintiff fo% the cane? in not o%,e%in6 the plaintiff to pa1 to the
,efen,ant the su8 of P&<77 fo% the ca%s use, b1 hi8& .ith ille6al inte%est on sai, su8
f%o8 the filin6 of the counte%clai8& an, the costs& an, that sai, :u,68ent is cont%a%1 to
the .ei6ht of the e)i,ence an, the la..
The fi%st assi6n8ent of e%%o% is base, on clause 5 of the Mill;s co)enants an,
clause !# of the Plante%;s Co)enant as the1 appea% in E@hibit A& .hich is the sa8e
inst%u8ent as E@hibit !.
Sai, clauses a%e as follo.s4
5. That it Athe Mill B Pa%t1 of the fi%st pa%tC .ill sub8it an, all ,iffe%ences that
8a1 a%ise bet.een the Mill an, the Plante%s to the ,ecision of a%bit%ato%s& t.o of .ho8
shall be chosen b1 the Mill an, t.o b1 the Plante%s& .ho in case of inabilit1 to a6%ee
shall select a fifth a%bit%ato%& an, to %espect an, abi,e b1 the ,ecision of sai,
a%bit%ato%s& o% an1 th%ee of the8& as the case 8a1 be.
@ @ @ @ @ @ @ @ @
!#. That the1 Athe Plante%s--Pa%ties of the secon, pa%tC .ill sub8it an1 an, all
,iffe%ences that 8a1 a%ise bet.een the pa%ties of the fi%st pa%t an, the pa%ties of the
secon, pa%t of the ,ecision of a%bit%ato%s& t.o of .ho8 shall be chosen b1 the sai,
pa%ties of the fi%st pa%t an, t.o b1 the sai, pa%t1 of the secon, pa%t& .ho in case of
inabilit1 to a6%ee& shall select a fifth a%bit%ato%& an, .ill %espect an, abi,e b1 the
,ecision of sai, a%bit%ato%s& o% an1 th%ee of the8& as the case 8a1 be.
+t is an a,8itte, fact that the ,iffe%ences .hich a%ose bet.een the pa%ties& an,
.hich a%e the sub:ect of the p%esent liti6ation ha)e not been sub8itte, to the
a%bit%ation p%o)i,e, fo% in the abo)e Duote, clauses.
'efen,ant conten,s that as such stipulations on a%bit%ation a%e )ali,& the1
constitute a con,ition p%ece,ent& to .hich the plaintiff shoul, ha)e %eso%te, befo%e
appl1in6 to the cou%ts& as he p%e8atu%el1 ,i,.
The ,efen,ant is %i6ht in conten,in6 that such co)enants on a%bit%ation a%e )ali,&
but the1 a%e not fo% the %eason a ba% to :u,icial action& in )ie. of the .a1 the1 a%e
e@p%esse,4
An a6%ee8ent to sub8it to a%bit%ation& not consu88ate, b1 an a.a%,& is no ba%
to suit at la. o% in eDuit1 conce%nin6 the sub:ect 8atte% sub8itte,. An, the %ule applies
both in %espect of a6%ee8ents to sub8it e@istin6 ,iffe%ences an, a6%ee8ents to sub8it
,iffe%ences .hich 8a1 a%ise in the futu%e. A" C. 2.& #.C
An, in )ie. of the te%8s in .hich the sai, co)enants on a%bit%ation a%e
e@p%esse,& it cannot be hel, that in a6%eein6 on this point& the pa%ties p%opose, to
establish the a%bit%ation as a con,ition p%ece,ent to :u,icial action& because these
clauses Duote, ,o not c%eate such a con,ition eithe% e@p%essl1 o% b1 necessa%1
infe%ence.
Sub8ission as Con,ition P%ece,ent to Suit. B Clauses in insu%ance an, othe%
cont%acts p%o)i,in6 fo% a%bit%ation in case of ,isa6%ee8ent a%e )e%1 si8ila%& an, the
Duestion .hethe% sub8ission to a%bit%ation is a con,ition p%ece,ent to a suit upon the
cont%act ,epen,s upon the lan6ua6e e8plo1e, in each pa%ticula% stipulation. =he%e b1
the sa8e a6%ee8ent .hich c%eates the liabilit1& the asce%tain8ent of ce%tain facts b1
a%bit%ato%s is e@p%essl1 8a,e a con,ition p%ece,ent to a %i6ht of action the%eon& suit
cannot be b%ou6ht until the a.a%, is 8a,e. But the cou%ts 6ene%all1 .ill not const%ue
an a%bit%ation clause as oustin6 the8 of thei% :u%is,iction unless such const%uction is
ine)itable& an, conseDuentl1 .hen the a%bit%ation clause is not 8a,e a con,ition
p%ece,ent b1 e@p%ess .o%,s o% necessa%1 i8plication& it .ill be const%ue, as 8e%el1
collate%al to the liabilit1 clause& an, so no ba% to an action in the cou%ts .ithout an
a.a%,. A R. C. L.& 57& 575.C
Neithe% ,oes not %ecip%ocal co)enant No. E of sai, cont%act E@hibit A e@p%essl1
o% i8plie,l1 establish the a%bit%ation as a con,ition p%ece,ent. Sai, %ecip%ocal co)enant
No. E %ea,s4
E. Sub:ect to the p%o)isions as to a%bit%ation& he%einbefo%e appea%in6& it is
8utuall1 a6%ee, that the cou%ts of the Cit1 of +loilo shall ha)e :u%is,iction of an1 an, all
:u,icial p%ocee,in6s that 8a1 a%ise out of the cont%actual %elations he%ein bet.een the
pa%t1 of the fi%st an, the pa%t is of the secon, pa%t.
The e@p%ession Fsub:ect to the p%o)isions as to a%bit%ation& he%einbefo%e
appea%in6F ,oes not ,ecla%e such to be a con,ition p%ece,ent. This ph%ase ,oes not
%ea, Fsub:ect to the a%bit%ation&F but Fsub:ect to the p%o)isions as to a%bit%ation
he%einbefo%e appea%in6.F An,& .hich a%e these Fp%o)isions as to a%bit%ation
he%einbefo%e appea%in6GF Un,oubte,l1 clauses 5 an, !# Duote, abo)e& .hich ,o not
8a/e a%bit%ation a con,ition p%ece,ent.
=e fin, no 8e%it in the fi%st assi6n8ent of e%%o%.
The secon, %aises the 8ost i8po%tant Duestion in this cont%o)e%s1& to .it4
=hethe% o% not the ,efen,ant .as obli6e, to suppl1 the plaintiff .hich ca%s 6%atuitousl1
fo% cane.
The Cent%al& of cou%se& boun, itself acco%,in6 to the cont%act e@hibit A in clause
5 of the FCo)enant b1 Mill&F as follo.s4
5. That it .ill const%uct an, the%eafte% 8aintain an, ope%ate ,u%in6 the te%8
of this a6%ee8ent a stea8 o% 8oto% %ail.a1& o% both& fo% plantation use in t%anspo%tin6
su6a% cane& su6a% an, fe%tili>e%& as nea% the cente% of the can an,s as to contou% of the
lan,s .ill pe%8it pa1in6 ,ue attention to 6%a,es an, cu%)es? that it .ill also const%uct
b%anch lines at such points as 8a1 be necessa%1 .he%e the p%esent plantations a%e of
such shape that the 8ain line cannot %un app%o@i8atel1 th%ou6h the cente% of sai,
plantations& f%ee of cha%6e to the Plante%s& an, .ill p%ope%l1 eDuip sai, %ail.a1 .ith
loco8oti)es o% 8oto%s an, ca%s& an, .ill fu%the% const%uct a b%anch line f%o8 the 8ain
%ail.a1 line& 8ill an, .a%ehouses to the befo%e 8entione, .ha%f an, .ill fu%the%
const%uct 1a%, acco8o,ations nea% the su6a% 8ill. All stea8 loco8oti)es shall be
p%o)i,e, .hich effecti)e spa%/ a%%este%s. The %ail.a1 shall be const%ucte, upon
suitable an, p%ope%l1 locate, %i6ht-of-.a1& th%ou6h all plantations so as to 6i)e& as fa%
as p%acticable& to each plantations eDual benefit the%eof? sai, %i6ht-of-.a1 to b t.o an,
one-half 8ete%s in .i,th on eithe% sai, f%o8 the cente% of t%ac/ on both 8ain line an,
s.itches an, b%anches.
B1 this co)enant& the ,efen,ant& the ,efen,ant boun, itself to const%uct b%anch
lines of the %ail.a1 at such points on the estate as 8i6ht be necessa%1& but sai, clause
No. 5 can ha%,l1 be const%ue, to bin, the ,efen,ant to 6%atuitousl1 suppl1 the plaintiff
1
.ith ca%s to t%anspo%t cane f%o8 his fiel,s to the b%anch lines a6%ee, upon on its
estate.
But on Ma%ch !<& !$!7& the ,efen,ant co8pan1& th%ou6h its 8ana6e% M%. -. 2.
Bell& a,,%esse, the follo.in6 co88unication to the plaintiff4
'EAR S+R4 +n %epl1 to 1ou%s of Ma%ch !"th.
Heste%,a1 + t%ie, to co8e out to San Antonio to see 1ou but the %ail.a1 .as full
of ca%s of San 2ose an, + coul, not 6et b1 .ith 81 ca%. + .ill t%1 a6ain as soon as +
finish shippin6 su6a%. The stea8e% is e@pecte, to,a1.
+ ha, a s.itch built in the bi6 cut on San Antonio fo% loa,in6 1ou% cane nea% the
boun,a%1 of Santa C%u>. .ill not this sufficientG =e ha)e no anothe% s.itch he%e an, +
hope 1ou can 6et alon6 .ith the 5 1ou no. ha)e.
So8e of the plante%s a%e no. usin6 sho%t s.itches 8a,e of !7-lb. po%table
t%ac/. These can be place, on the 8ain line at an1 place an, ca%s %un off into the fiel,
an, loa,e,. + thin/ one on 1ou% hacien,a .oul, %epa1 1ou in one season.
The %ain %eco%, can .ait.
Since%el1 1ou%s&
SAN CARLOS M+LL+NG CO.& LT'. AS6,.C -.2. BELL
FMana6e%F
+t is su66este, to the plaintiff in this lette% that he install a !7-lb. %ail po%table
t%ac/ s.itch& to be use, in connection .ith the 8ain line& so the ca%s 8a1 %un on it. +t is
not su66este, that he pu%chase ca%s& an, the lette% i8plies that the ca%s 8entione,
the%ein belon6 to the ,efen,ant.
As a %esult of this su66estion& the plaintiff bou6ht a po%table t%ac/ .hich cost hi8
about P!9&999& an, afte% the t%ac/ .as lai,& the ,efen,ant be6an to use it .ithout
co88ent o% ob:ection f%o8 the latte%& no% pa18ent of an1 in,e8nit1 fo% o)e% fou% 1ea%s.
=ith this lette% E@hibit '& an, its con,uct in %e6a%, to the sa8e& the ,efen,ant
,elibe%atel1 an, intentionall1 in,uce, the plaintiff to belie)e that b1 the latte%
pu%chasin6 the sai, po%table t%ac/& the ,efen,ant .oul, allo. the f%ee use of its ca%s
upon sai, t%ac/& thus in,ucin6 the plaintiff to act in %eliance on such belief& that is& to
pu%chase such po%table t%ac/& as in fact he ,i, an, lai, it an, use, it .ithout pa18ent&
the ca%s belon6in6 to the ,efen,ant.
This is an estoppel& an, ,efen,ant cannot be pe%8itte, to 6ainsa1 its o.n acts
an, a6%ee8ent.
The ,efen,ant cannot no. ,e8an, pa18ent of the plaintiff fo% such use of the
ca%s. An, this is so& not because the fact of ha)in6 supplie, the8 .as an act of pu%e
libe%alit1& to .hich ha)in6 once sta%te, it& the ,efen,ant .as fo%e)e% boun,& .hich
.oul, be un%easonable& but because the act of p%o)i,in6 such ca%s .as& un,e% the
ci%cu8stances of the case& of co8pliance of an obli6ation to .hich ,efen,ant is boun,
on account of ha)in6 in,uce, the plaintiff to belie)e& an, to act an, incu% e@penses on
the st%en6ht of this belief.
The Duestion of .hethe% o% not the plaintiff .as un,e% the necessit1 of fi%st
sho.in6 a coope%ati)e spi%it an, con,uct& ,oes not affect the %i6ht .hich he thus
acDui%e, of usin6 the ca%s in Duestion 6%atuitousl1.
=e ,o not fin, sufficient %eason to suppo%t the secon, assi6n8ent of e%%o%.
The point %aise, in the thi%, assi6n8ent of e%%o% is a conseDuence of the
secon,. +f the plaintiff .as entitle,& as .e ha)e sai,& to use the ca%s 6%atuitousl1& the
,efen,ant has no %i6ht to ,e8an, an1 pa18ent f%o8 hi8 fo% the use of sai, ca%s.
The othe% assi6n8ents of e%%o% a%e conseDuences of the p%ece,in6 ones.
=e fin, nothin6 in the %eco%, to se%)e as a le6al an, sufficient ba% to plaintiff;s
action a6ainst the ,efen,ant fo% the ,eli)e%1 of the su6a% in Duestion& o% its )alue. A
,iscussion as to the %etention of this ,eposit to appl1 upon .hat is ,ue b1 %eason
the%eof 8a,e in the :u,68ent appeale, f%o8& is he%e necessa%1. The pa%ties ,o not
%aise this Duestion in the p%esent instance. -u%the%8o%e& it has not been p%o)en that
the plaintiff o.es the ,efen,ant an1thin6 b1 %eason of such ,eposit.
The :u,68ent appeale, f%o8 is he%eb1 affi%8e, .ith the costs of this instance
a6ainst the appellant. So o%,e%e,.
Republic of the Philippines
SUPREME COURT
Manila
T*+R' '+(+S+ON
G.R. No. !5$E5 No)e8be% <& 999
CAL+-ORN+A AN' *A=A++AN SUGAR COMPANH? PAC+-+C GUL- MAR+NE& +NC.?
an, C.-. S*ARP 0 COMPANH& petitione%s&
)s.
P+ONEER +NSURANCE AN' SURETH CORPORAT+ON& %espon,ent.
' E C + S + O N
PANGAN+BAN& 2.4
Un,e% the p%e-!$$E Rules of Cou%t& a p%eli8ina%1 hea%in6 on affi%8ati)e ,efenses 8a1
be allo.e, .hen a 8otion to ,is8iss has not been file, o% .hen& ha)in6 been file,& it
has not been ,enie, uncon,itionall1. *ence& if its %esolution has 8e%el1 been ,efe%%e,&
the 6%oun,s it in)o/es 8a1 still be %aise, as affi%8ati)e ,efenses& an, a p%eli8ina%1
hea%in6 the%eon allo.e,.
The Case
Befo%e us is a Petition fo% Re)ie. on Ce%tio%a%i un,e% Rule #" of the Rules of Cou%t&
assailin6 the 2anua%1 !& !$$$ 'ecision of the Cou%t of Appeals! ACAC in CA-GR SP
No. 55E5& as .ell as the 2ul1 7& !$$$ CA Resolution ,en1in6 %econsi,e%ation. The
challen6e, 'ecision& .hich sustaine, the O%,e%s5 of the Re6ional T%ial Cou%t of
Ma/ati Cit1& ,ispose, as follo.s4
F=*ERE-ORE& Ithe%e bein6J no 6%a)e abuse of ,isc%etion on the pa%t of public
%espon,ent& the instant petition is he%eb1 '+SM+SSE'.F# Ae8phasis in the o%i6inalC
The -acts
The facts& as su88a%i>e, b1 the CA& a%e as follo.s4
FOn No)e8be% E& !$$9& the )essel M( FSUGAR +SLAN'ERF a%%i)e, at the po%t of
Manila ca%%1in6 a ca%6o of so1bean 8eal in bul/ consi6ne, to se)e%al consi6nees& one
of .hich .as the Met%o Manila -ee, Mille%s Association AMet%o fo% IbJ%e)it1C.
'ischa%6in6 of ca%6o f%o8 )essel to ba%6es co88ence, on No)e8be% 59& !$$9. -%o8
the ba%6es& the ca%6o .as alle6e,l1 offloa,e,& %eba66e, an, %eloa,e, on consi6neeKs
,eli)e%1 t%uc/s. Respon,ent& ho.e)e%& clai8s that .hen the ca%6o I.asJ .ei6he, on a
license, t%uc/ scale a sho%ta6e of "".9"! 8et%ic tons )alue, at P!&7!&!E!.!7 .as
,isco)e%e,. The abo)e-8entione, ship8ent .as insu%e, .ith p%i)ate %espon,ent
a6ainst all %is/ in the a8ount of P!$&$E7&#9#.99. 'ue to the alle6e, %efusal of
petitione%s to settle thei% %especti)e liabilities& %espon,ent& as insu%e%& pai, the
consi6nee Met%o Manila -ee, Mille%Ks Association. On Ma%ch 7& !$$& as alle6e,
sub%o6ee of Met%o& p%i)ate %espon,ent file, a co8plaint fo% ,a8a6es a6ainst he%ein
petitione%s. =ithin the %e6le8enta%1 pe%io, to file an Ans.e%& petitione%s file, a Motion
to 'is8iss the co8plaint on the 6%oun, that %espon,entKs clai8 is p%e8atu%e& the sa8e
bein6 a%bit%able. P%i)ate %espon,ent file, its Opposition the%eto an, petitione%s file,
thei% Repl1 to Opposition.
FOn No)e8be% !!& !$$& Ithe RTCJ issue, an O%,e% ,efe%%in6 the hea%in6 on the
Motion to 'is8iss until the t%ial an, ,i%ectin6 petitione%s to file thei% Ans.e%. Petitione%s
then 8o)e, to %econsi,e% sai, O%,e% .hich .as& ho.e)e%& ,enie, b1 Ithe RTCJ on the
6%oun, that the %eason %elie, upon b1 he%ein petitione%s in its Motion to 'is8iss an,
Motion fo% Reconsi,e%ation I.asJ a 8atte% of ,efense .hich the1 8ust p%o)e .ith thei%
e)i,ence.
FOn Au6ust 9& !$$5& petitione%s file, thei% Ans.e% .ith Counte%clai8 an, C%ossclai8
alle6in6 the%ein that plaintiff& he%ein %espon,ent& ,i, not co8pl1 .ith the a%bit%ation
clause of the cha%te% pa%t1? hence& the co8plaint .as alle6e,l1 p%e8atu%el1 file,. The
t%ial cou%t set the case fo% p%e-t%ial on No)e8be% 7& !$$5.
FOn No)e8be% !" an, !7& !$$5& petitione%s file, a Motion to 'efe% P%e-T%ial an,
Motion to Set fo% P%eli8ina%1 *ea%in6 the Affi%8ati)e 'efense of Lac/ of Cause of
Action fo% -ailu%e to co8pl1 .ith A%bit%ation Clause& %especti)el1. P%i)ate %espon,ent
,i, not file an Opposition to the sai, Motion to Set fo% P%eli8ina%1 *ea%in6. On
'ece8be% <& !$$5& Ithe RTCJ issue, an O%,e% ,en1in6 the Motion to Set fo%
P%eli8ina%1 *ea%in6. On -eb%ua%1 & !$$# petitione%s file, a Motion fo%
Reconsi,e%ation of the O%,e% ,ate, 'ece8be% <& !$$5. On -eb%ua%1 !!& !$$#& Ithe
RTCJ issue, an O%,e% ,en1in6 petitione%sK Motion fo% Reconsi,e%ation. *ence& the
instant petition.F"
2
Rulin6 of the Cou%t of Appeals
Affi%8in6 the t%ial cou%t& the CA hel, that petitione%s cannot %el1 on Section "& Rule !77
of the p%e-!$$E Rules of Cou%t&E because a Motion to 'is8iss ha, p%e)iousl1 been
file,. -u%the%& it %ule, that the a%bit%ation clause p%o)i,e, in the cha%te% pa%t1 ,i, not
bin, %espon,ent. +t %easone, as follo.s4
FPetitione%s a%6ue that Ithe RTCJ co88itte, 6%a)e abuse of ,isc%etion a8ountin6 to
lac/ o% e@cess of :u%is,iction in ,en1in6 the p%eli8ina%1 hea%in6 of the affi%8ati)e
,efense of lac/ of cause of action fo% failu%e to co8pl1 .ith the a%bit%ation clause.
FPetitione%s& in so filin6 the Motion to Set fo% P%eli8ina%1 *ea%in6 the Affi%8ati)e
'efense of Lac/ of Cause of Action fo% -ailu%e to Co8pl1 .ith A%bit%ation Clause&
p%e8ise, thei% alle6e, %i6ht to a p%eli8ina%1 hea%in6 on the p%o)ision of Section "& Rule
!7 of the Ol, Rules of Cou%t .hich p%o)i,eIsJ4
LSec. ". Plea,in6 6%oun,s as affi%8ati)e ,efenses. An1 of the 6%oun,s fo% ,is8issal
p%o)i,e, fo% in this %ule& e@cept i8p%ope% )enue& 8a1 be plea,e, as an affi%8ati)e
,efense an, a p%eli8ina%1 hea%in6 8a1 be ha, the%eon as if a 8otion to ,is8iss ha,
been file,.K
FPetitione%sK %eliance on sai, p%o)ision is 8isplace,. The abo)e-8entione, p%o)ision
conte8plates a situation .he%e no 8otion to ,is8iss is file,. +f a 8otion to ,is8iss has
been file,& as in the case at ba%& Section "& Rule !7 of the Ol, Rules of Cou%t .ill not
co8e into pla1. -u%the%8o%e& the sa8e p%o)ision 6i)es the :u,6e ,isc%etion .hethe% to
set fo% p%eli8ina%1 hea%in6 the 6%oun,s fo% affi%8ati)e ,efenses. Respon,ent :u,6e
,efe%%e, the hea%in6 an, ,ete%8ination of the Motion to 'is8iss until the t%ial since the
6%oun, %elie, upon b1 petitione%s the%ein ,i, not appea% to be in,ubitable. Petitione%s
then file, thei% Ans.e% as o%,e%e, b1 the Cou%t a6ain %aisin6 as an affi%8ati)e ,efense
lac/ of cause of action fo% failu%e to co8pl1 .ith ItheJ a%bit%ation clause& p%a1in6 fo% the
,is8issal of the co8plaint a6ainst the8& an, filin6 afte%.a%,s a Motion to Set fo%
P%eli8ina%1 *ea%in6 the Affi%8ati)e 'efense of lac/ of Cause of Action. +n effect&
petitione%s a%e as/in6 the t%ial cou%t to set asi,e its O%,e% ,en1in6 the Motion to
'is8iss an, O%,e% ,en1in6 the Motion fo% Reconsi,e%ation the%eof.
FPetitione%s cannot ,o this.
FThe %e8e,1 of the a66%ie)e, pa%t1 in a ,enie, 8otion to ,is8iss is to file an ans.e%
an, inte%pose as ,efense o% ,efenses& the ob:ection o% ob:ections %aise, b1 hi8 in sai,
8otion to ,is8iss& then p%ocee, to t%ial an,& in case of a,)e%se ,ecision& to ele)ate the
enti%e case b1 appeal in ,ue cou%se. Petitione%s coul, also %eso%t to the e@t%ao%,ina%1
le6al %e8e,ies of ce%tio%a%i& p%ohibition an, 8an,a8us to Duestion the ,enial of the
8otion to ,is8iss. As co%%ectl1 %ule, b1 the t%ial cou%t in its O%,e% ,ate, 2une 59& !$$5&
,en1in6 the Motion fo% Reconsi,e%ation of the O%,e% ,ate, No)e8be% !!& !$$
A,en1in6 the Motion to 'is8issC the 6%oun, %elie, upon b1 petitione%s is a 8atte% of
,efense .hich petitione%s 8ust p%o)e .ith thei% e)i,ence at the t%ial.
FPetitione%s in as/in6 the lo.e% cou%t to set the case fo% p%eli8ina%1 hea%in6 fu%the%
a%6ue that this .oul, 6i)e the cou%t an, the pa%ties a sho%te% ti8e to %esol)e the 8atte%
an, the case .ithout a full blo.n t%ial. *o.e)e%& petitione%s fail to %eali>e that the1
the8sel)es a%e ,ela1in6 the ,ete%8ination an, %esolution of the issues in)ol)e, b1
%eso%tin6 to an i8p%ope% %e8e,1.
FOn the issue %aise, b1 petitione%s that p%i)ate %espon,entKs clai8 is p%e8atu%e fo%
failu%e to co8pl1 .ith ItheJ a%bit%ation clause& .e hol, that the %i6ht of the %espon,ent
as sub%o6ee& in filin6 the co8plaint a6ainst he%ein petitions is not ,epen,ent upon the
cha%te% pa%t1 %elie, upon b1 petitione%s? no% ,oes it 6%o. out of an1 p%i)it1 cont%act o%
upon .%itten assi6n8ent of clai8. +t acc%ues si8pl1 upon pa18ent of the insu%ance
clai8 b1 %espon,ent as insu%e% to the insu%e,. This .as the p%onounce8ent b1 the
Sup%e8e Cou%t in the case of Pan Mala1an +nsu%ance Co%p. )s. Cou%t of Appeals !<#
SCRA "#& to .it4
LPa18ent b1 the insu%e% to the insu%e, ope%ates as an eDuitable assi6n8ent to the
fo%8e% of all the %e8e,ies .hich the latte% 8a1 ha)e a6ainst the thi%, pa%t1 .hose
ne6li6ence o% .%on6ful AsicC cause, the loss. The %i6ht of sub%o6ation is not ,epen,ent
upon& no% ,oes it 6%o. out of& an1 p%i)it1 cont%act o% upon .%itten assi6n8ent of clai8.
+t acc%ues si8pl1 upon pa18ent of the insu%ance clai8 b1 the insu%e%.KF<
*ence& this %ecou%se.$
The +ssues
+n thei% Me8o%an,u8& petitione%s sub8it the follo.in6 issues fo% ou% consi,e%ation4!9
F!. =hethe% o% not insu%e%& as sub%o6ee of the consi6nee& is boun, b1 the cha%te% pa%t1
.hich is inco%po%ate, an, %efe%%e, to in the bill of la,in6.
. =hethe% o% not the 8otion to ,is8iss shoul, be 6%ante, on the 6%oun, that a
con,ition p%ece,ent has not been co8plie, .ith& base, on the a%bit%ation clause
inco%po%ate, in the bill of la,in6.
5. =hethe% o% not the Cou%t of Appeals e%%e, in hol,in6 that the t%ial cou%t ,i, not
co88it 6%a)e abuse of ,isc%etion in ,en1in6 petitione%sK 8otion fo% p%eli8ina%1 hea%in6.
#. =hethe% o% not the t%ial cou%t can ,efe% the %esolution of a 8otion to ,is8iss on the
6%oun, that the 6%oun, %elie, upon is in,ubitable.
". =hethe% o% not the petitione%s ha)e %eso%te, to an i8p%ope% %e8e,1 .hich 8a/es
the8 %esponsible fo% ,ela1in6 the case.F
+n the 8ain& the t.o p%incipal 8atte%s befo%e us a%e4 A!C the ,enial of petitione%sK Motion
fo% P%eli8ina%1 *ea%in6 an, AC the p%op%iet1 of the CA %ulin6 %e6a%,in6 the a%bit%ation
clause.
The Cou%tKs Rulin6
The Petition is 8e%ito%ious.
-i%st +ssue4 P%eli8ina%1 *ea%in6 of Affi%8ati)e 'efense
At the outset& .e 8ust e8phasi>e that the c%u@ of the p%esent cont%o)e%s1 is the t%ial
cou%tKs O%,e% ,en1in6 petitione%Ks Motion to Set fo% P%eli8ina%1 *ea%in6 the affi%8ati)e
,efense of lac/ of cause of action. Not Duestione, he%e is the sai, cou%tKs O%,e%
hol,in6 in abe1ance the hea%in6 of petitione%Ks Motion to 'is8iss.
Affi%8ati)e 'efense Ma1 Be Raise,
Still in effect .hen the case .as befo%e the t%ial cou%t& Section "& Rule !7 of the p%e-
!$$E Rules of Cou%t& %ea,s4
FSec. ". Plea,in6 6%oun,s as affi%8ati)e ,efenses. - An1 of the 6%oun,s fo% ,is8issal
p%o)i,e, fo% in this Rule& e@cept i8p%ope% )enue& 8a1 be plea,e, as an affi%8ati)e
,efense& an, a p%eli8ina%1 hea%in6 8a1 be ha, the%eon as if a 8otion to ,is8iss ha,
been file,.F
Respon,ent a%6ues that the abo)e p%o)ision cannot be applie,& because petitione%s
ha)e al%ea,1 file, a Motion to 'is8iss.
=e ,isa6%ee. Respon,ent %elies on the a8en,8ents int%o,uce, in the !$$E Rules on
Ci)il P%oce,u%e AF!$$E RulesFC& but i6no%es eDuall1 %ele)ant p%o)isions the%eof& as .ell
as the clea% inten,8ent of the p%e-!$$E Rules. T%ue& Section 7& Rule !7 of the !$$E
Rules&!! specificall1 p%o)i,es that a p%eli8ina%1 hea%in6 on the affi%8ati)e ,efenses
8a1 be allo.e, onl1 .hen no 8otion to ,is8iss has been file,. Section 7& ho.e)e%&
8ust be )ie.e, in the li6ht of Section 5 of the sa8e Rule&! .hich %eDui%es cou%ts to
%esol)e a 8otion to ,is8iss an, p%ohibits the8 f%o8 ,efe%%in6 its %esolution on the
6%oun, of in,ubitabilit1. Clea%l1 then& Section 7 ,isallo.s a p%eli8ina%1 hea%in6 of
affi%8ati)e ,efenses once a 8otion to ,is8iss has been file, because such ,efense
shoul, ha)e al%ea,1 been %esol)e,. +n the p%esent case& ho.e)e%& the t%ial cou%t ,i,
not cate6o%icall1 %esol)e petitione%sK Motion to 'is8iss& but 8e%el1 ,efe%%e, %esolution
the%eof.!5
+n,ee,& the p%esent Rules a%e consistent .ith Section "& Rule !7 of the p%e-!$$E Rules
of Cou%t& because both p%esuppose that no 8otion to ,is8iss ha, been file,? o% in the
case of the p%e-!$$E Rules& if one has been file,& it has not been uncon,itionall1
,enie,.!# *ence& the 6%oun, in)o/e, 8a1 still be plea,e, as an affi%8ati)e ,efense
e)en if the ,efen,antKs Motion to 'is8iss has been file, but not ,efinitel1 %esol)e,& o%
if it has been ,efe%%e, as it coul, be un,e% the p%e-!$$E Rules.!"
'enial of the Motion fo% a P%eli8ina%1 *ea%in6 =as a G%a)e Abuse of 'isc%etion
The 8o%e c%ucial Duestion that .e 8ust settle he%e is .hethe% the t%ial cou%t co88itte,
6%a)e abuse of ,isc%etion .hen it ,enie, petitione%sK Motion fo% a P%eli8ina%1 *ea%in6
on thei% affi%8ati)e ,efense of lac/ of cause of action. Un,eniabl1& a p%eli8ina%1
hea%in6 is not 8an,ato%1& but sub:ect to the ,isc%etion of the t%ial cou%t.!7 +n the li6ht of
the ci%cu8stances in this case& thou6h& .e fin, that the lo.e% cou%t co88itte, 6%a)e
abuse of ,isc%etion in %efusin6 to 6%ant the Motion.
=e note that the t%ial cou%t ,efe%%e, the %esolution of petitione%sK Motion to 'is8iss
because of a sin6le issue. +t .as appa%entl1 unsu%e .hethe% the cha%te% pa%t1 that the
bill of la,in6 %efe%%e, to .as in,ee, the Balti8o%e Be%th G%ain Cha%te% Pa%t1 sub8itte,
b1 petitione%s.!M.phi!
3
Consi,e%in6 that the%e .as onl1 one Duestion& .hich 8a1 e)en be ,ee8e, to be the
)e%1 touchstone of the .hole case& the t%ial cou%t ha, no co6ent %eason to ,en1 the
Motion fo% P%eli8ina%1 *ea%in6. +n,ee,& it co88itte, 6%a)e abuse of ,isc%etion .hen it
,enie, a p%eli8ina%1 hea%in6 on a si8ple issue of fact that coul, ha)e possibl1 settle,
the enti%e case. (e%il1& .he%e a p%eli8ina%1 hea%in6 appea%s to suffice& the%e is no
%eason to 6o on to t%ial. One %eason .h1 ,oc/ets of t%ial cou%ts a%e clo66e, is the
un%easonable %efusal to use a p%ocess o% p%oce,u%e& li/e a 8otion to ,is8iss& .hich is
,esi6ne, to abb%e)iate the %esolution of a case.
Secon, +ssue4 The A%bit%ation Clause
The CA also e%%e, .hen it hel, that the a%bit%ation clause .as not bin,in6 on
%espon,ent. =e %eite%ate that the c%u@ of this case is .hethe% the t%ial cou%t co88itte,
6%a)e abuse of ,isc%etion in ,en1in6 the afo%ecite, Motion. The%e .as neithe% nee,
no% %eason to %ule on the applicabilit1 of the a%bit%ation clause.
Be that as it 8a1& .e fin, the CAKs %easonin6 on this point fault1. Citin6 Pan Mala1an
+nsu%ance Co%po%ation ). CA&!E it %ule, that the %i6ht of %espon,ent insu%ance co8pan1
as sub%o6ee .as not base, on the cha%te% pa%t1 o% an1 othe% cont%act? %athe%& it
acc%ue, upon the pa18ent of the insu%ance clai8 b1 p%i)ate %espon,ent to the insu%e,
consi6nee. The%e .as nothin6 in Pan Mala1an& ho.e)e%& that p%ohibite, the
applicabilit1 of the a%bit%ation clause to the sub%o6ee. That case 8e%el1 ,iscusse,&
inte% alia& the acc%ual of the %i6ht of sub%o6ation an, the le6al basis the%efo%.!< This
issue is co8pletel1 ,iffe%ent f%o8 that of the conseDuences of such sub%o6ation? that
is& the %i6hts that the insu%e% acDui%es f%o8 the insu%e, upon pa18ent of the in,e8nit1.
=*ERE-ORE& the Petition is GRANTE' an, the appeale, 'ecision is he%eb1
RE(ERSE'. The case is REMAN'E' to the t%ial cou%t fo% p%eli8ina%1 hea%in6 on
petitione%sK affi%8ati)e ,efense. No costs.
SO OR'ERE'.
Republic of the Philippines
SUPREME COURT
Manila
-+RST '+(+S+ON

G.R. No. !9E$!< 2une !#& !$$#
ASSOC+ATE' BANN& petitione%&
)s.
*ON. COURT O- APPEALS& *ON. MAR+NA L. BU3ON& as P%esi,in6 2u,6e of RTC&
Oue>on Cit1& MM& B%. $!& (+S+TAC+ON SERRA -LORES RTC& Oue>on Cit1& MM& B%.
$!& MA. ASUNC+ON -LORES& P*+L+PP+NE COMMERC+AL +NTERNAT+ONAL BANN&
-AR EAST BANN 0 TRUST CO.& SECUR+TH BANN 0 TRUST CO. an, C+THTRUST
BANN+NG CORPORAT+ON& %espon,ents.
Soluta& Leoni,as& Ma%ifosDue& Balce& Santia6o 0 A6uila La. Office fo% petitione%.
Recto% La. Office fo% %espon,ent -lo%es.
Bal6os an, Pe%e> La. Office fo% %espon,ent PC+B.
'u8a%aos& O%acion& Pan6aniban 0 Associates fo% %espon,ent -EBTC.
Cauton& Bana%es& Ca%pio& +shi.ata an, Associates fo% %espon,ent SBTC.
Gon>a6a& Sone:a an, Gale La. Offices fo% %espon,ent Cit1t%ust.

NAPUNAN& 2.4
This is a petition fo% %e)ie. on ce%tio%a%i see/in6 the %e)e%sal of the ,ecision of the
Cou%t of Appeals on No)e8be% !<& !$$ affi%8in6 in toto the O%,e% of the Re6ional
T%ial Cou%t of Oue>on Cit1& B%anch $! ,is8issin6 the petitione%Ks thi%,-pa%t1 co8plaint
a6ainst p%i)ate %espon,ent ban/s fo% lac/ of :u%is,iction.
The facts of the case& as foun, b1 both the t%ial cou%t an, the Cou%t of Appeals a%e
un,ispute,4
+n a co8plaint fo% (iolation of the Ne6otiable +nst%u8ent La. an, 'a8a6es& plaintiffs !
see/ the %eco)e%1 of the a8ount of P$99&$!5.79 .hich ,efen,ant ban/ cha%6e,
a6ainst thei% cu%%ent account b1 )i%tue of the si@teen A!7C chec/s ,%a.n b1 the8
,espite the appa%ent alte%ations the%ein .ith %espect to the na8e of the pa1ee& that is&
the na8e -ilipinas Shell .as e%ase, an, substitute, .ith E)e% T%a,in6 an, 'BL
T%a,in6 b1 thei% supe%)iso% 2e%e8ias Cab%e%a& .ithout thei% /no.le,6e an, consent.
Ans.e%in6 the co8plaint& ,efen,ant ban/ clai8e, that the sub:ect chec/s appea%e, to
ha)e been %e6ula%l1 issue, an, f%ee f%o8 an1 i%%e6ula%it1 .hich .oul, e@cite o% a%ouse
an1 suspicion o% .a%%ant thei% ,ishono% .hen the sa8e .e%e ne6otiate, an, hono%e,
b1 it? that it obse%)e, an, e@e%cise, the %eDui%e, ,ili6ence& ca%e an, the p%esc%ibe,
stan,a%, )e%ification p%oce,u%es befo%e finall1 acceptin6 an, hono%in6 the sub:ect
chec/s an, that the p%o@i8ate cause of plaintiffsK loss& if an1& .as thei% o.n la@it1&
ne6li6ence an, lac/ of cont%ol& ,ue ca%e an, ,ili6ence in the con,uct of thei% business
affai%s.
=ith lea)e of cou%t& ,efen,ant ban/ file, a Thi%,-Pa%t1 Co8plaint a6ainst Philippine
Co88e%cial +nte%national Ban/& -a% East Ban/ 0 T%ust Co8pan1& Secu%it1 Ban/ an,
T%ust Co8pan1 an, Cit1t%ust Ban/in6 Co%po%ation fo% %ei8bu%se8ent& cont%ibution&
in,e8nit1 f%o8 sai, thi%,-pa%t1 ,efen,ants fo% bein6 the collectin6 ban/s of the sub:ect
chec/s an, b1 )i%tue of thei% ban/ 6ua%antee fo% all chec/s sent fo% clea%in6 to the
Philippine Clea%in6 *ouse Co%po%ation APC*CC& as p%o)i,e, fo% in Section !E& APC*CC&
as p%o)i,e, fo% in Section !E& PC*C Clea%in6 *ouse Rules an, Re6ulations.
+n its Ans.e% to the Thi%,-Pa%t1 Co8plaint& Cit1t%ust Ban/in6 Co%po%ation a)e%%e, that
the sub:ect chec/s appea%e, to be co8plete an, %e6ula% on thei% face .ith no
in,ication that an o%i6inal pa1eeKs na8e .as e%ase, an, supe%i8pose, .ith anothe%?
that plaintiffsK fault an, ne6li6ence in failin6 to e@a8ine thei% 8onthl1 ban/ state8ents&
to6ethe% .ith the %etu%ne, chec/s an, thei% o.n chec/ stubs& put the8 un,e% estoppel
an, cannot %eco)e% the p%ocee,s of the chec/s a6ainst it& an innocent thi%,-pa%t1& an,
plaintiff 8ust suffe% the loss as thei% ne6li6ence .as the p%o@i8ate cause the%eof? an,
that thi%, pa%t1 plaintiff is ba%%e, f%o8 %eco)e%in6 f%o8 it base on the p%o)isions of
Sections 9 an, ! of the Philippine Clea%in6 Rules an, Re6ulations.
Philippine Co88e%cial +nte%national Ban/ alle6e, that the sub:ect chec/ .as co8plete
an, %e6ula% on its face an, .as pai, b1 it onl1 upon p%esent8ent to the ,%a.ee ban/
fo% clea%in6 .ho& upon e@a8ination the%eof& foun, the sa8e to be co8plete an,
%e6ula% on its face? that it .as onl1 afte% sai, chec/ .as clea%e, b1 thi%,-pa%t1 plaintiff
fo% pa18ent that it allo.e, the pa1ee to .ith,%a. the p%ocee,s of the chec/ f%o8 its
account? that the cause of action of the thi%,-pa%t1 plaintiff is ba%%e, b1 estoppel an,Po%
laches fo% its failu%e to %etu%n the chec/ to it .ithin the pe%io, p%o)i,e, fo% un,e%
Clea%in6 *ouse Rules an, Re6ulations? that this Cou%t has no :u%is,iction o)e% the suit
as it an, thi%,-pa%t1 plaintiff a%e 8e8be%s of the Philippine Clea%in6 *ouse an, boun,
b1 the Rules an, Re6ulations the%eof p%o)i,in6 fo% a%bit%ation.
A Motion To 'is8iss .as file, b1 Secu%it1 Ban/ an, T%ust Co8pan1 on the 6%oun,s
that thi%,-pa%t1 plaintiff faile, to %eso%t to a%bit%ation as p%o)i,e, fo% in Section 57 of the
Clea%in6 *ouse Rules an, Re6ulations of the Philippine Clea%in6 *ouse Co%po%ation&
an, that it .as %elease, f%o8 an1 liabilit1 .ith the acceptance b1 thi%,-pa%t1 plaintiff of
the sub:ect chec/.
The %eco%, ,oes not sho. of an1 Ans.e% to the Thi%,-Pa%t1 Co8plaint ha)in6 been
file, b1 -a% East Ban/ 0 T%ust Co8pan1& althou6h a FRepl1 To -EBTC Ans.e%F .as
file, b1 thi%,-pa%t1 plaintiff.
On the othe% han,& thi%,-pa%t1 plaintiff 8aintains that this Cou%t has :u%is,iction o)e% the
suit as the p%o)isions of the Clea%in6 *ouse Rules an, Re6ulations a%e applicable onl1
if the suit o% action is bet.een pa%ticipatin6 8e8be% ban/s& .he%eas the plaintiffs a%e
p%i)ate pe%sons an, the thi%,-pa%t1 co8plaint bet.een pa%ticipatin6 8e8be% ban/s is
onl1 a conseDuence of the o%i6inal action initiate, b1 the plaintiffs. 5
The t%ial cou%t ,is8isse, the thi%,-pa%t1 co8plaint fo% lac/ of :u%is,iction citin6 Section
57 of the Clea%in6 *ouse Rules an, Re6ulations of the PC*C p%o)i,in6 fo% settle8ent
of ,isputes an, cont%o)e%sies in)ol)in6 an1 chec/ o% ite8 clea%e, th%ou6h the bo,1
.ith the PC*C. +t %ule, B citin6 the A%bit%ation Rules of P%oce,u%e B that the ,ecision
o% a.a%, of the PC*C th%ou6h its a%bit%ation co88itteePa%bit%ato% is appealable onl1 on
Duestions of la. to an1 of the Re6ional T%ial Cou%ts in the National Capital Re6ion
.he%e the hea, office of an1 of the pa%ties is locate,. #
On the plaintiffsK contention that :u%is,iction )ests .ith the cou%t onl1 if the suit o% action
is bet.een pa%ticipatin6 8e8be% ban/s .ithout the in)ol)e8ent of p%i)ate pa%ties the
t%ial cou%t hel,4
The thi%,-pa%t1 co8plaint conce%nin6 a ,ispute o% cont%o)e%s1 a8on6 clea%in6
pa%ticipants in)ol)in6 the sub:ect chec/s clea%e, th%ou6h PC*C is actuall1
in,epen,ent of& sepa%ate an, ,istinct f%o8 the plaintiffKs co8plaint. . . .
@@@ @@@ @@@
4
As the plaintiffs a%e not pa%ties to the thi%, pa%t1 co8plaint& the p%o)isions of the
clea%in6 house %ules an, %e6ulations on a%bit%ation a%e& the%efo%e& applicable to Thi%,-
Pa%t1 plaintiff an, thi%, pa%t1 ,efen,ant. ConseDuentl1 this cou%t has no :u%is,iction
o)e% the thi%, pa%t1 co8plaint. "
Afte% the t%ial cou%t ,enie, plaintiffs Motion fo% Reconsi,e%ation& 7 petitione% appeale,
to the Cou%t of Appeals .hich p%o8ul6ate, the challen6e, ,ecision on No)e8be% !<&
!$$ ,is8issin6 the petition fo% lac/ of 8e%it.
Un,aunte,& petitione% is no. befo%e this Cou%t see/in6 a %e)ie. of %espon,ent cou%tKs
,ecision on a lone assi6n8ent of e%%o%4
RESPON'ENT COURT O- APPEALS ERRE' +N *OL'+NG T*AT PET+T+ONER
'RA=EE BANNKS T*+R' PARTH COMPLA+NT AGA+NST PR+(ATE RESPON'ENT
COLLECT+NG BANNS -ALL =+T*+N T*E 2UR+S'+CT+ON O- T*E PC*C AN' NOT
T*E REGULAR COURT.
=e fin, no 8e%it in the petition.
The Clea%in6 *ouse Rules an, Re6ulations on A%bit%ation of the Philippine Clea%in6
*ouse Co%po%ation a%e clea%l1 applicable to petitione% an, p%i)ate %espon,ents& thi%,
pa%t1 plaintiff an, ,efen,ants& %especti)el1& in the cou%t belo.. Petitione% Associate,
Ban/Ks thi%, pa%t1 co8plaint in the t%ial cou%t .as one fo% %ei8bu%se8ent& cont%ibution
an, in,e8nit1 a6ainst the Philippine Co88e%cial an, +n,ust%ial Ban/ APC+BC& the -a%
East Ban/ an, T%ust& Co. A-EBTCC& Secu%it1 Ban/ an, T%ust Co. ASBTCC& an, the
Cit1T%ust Ban/in6 Co%po%ation ACTBCC& in connection .ith petitione%Ks ha)in6 hono%e,
si@teen chec/s .hich sai, %espon,ent ban/s suppose,l1 en,o%se, to the fo%8e% fo%
collection in !$<$. Un,e% the %ules an, %e6ulations of the Philippine Clea%in6 *ouse
Co%po%ation APC*CC& the 8e%e act of pa%ticipation of the pa%ties conce%ne, in its
ope%ations in effect a8ounts to a 8anifestation of a6%ee8ent b1 the pa%ties to abi,e b1
its %ules an, %e6ulations. E As a conseDuence of such pa%ticipation& a pa%t1 cannot
in)o/e the :u%is,iction of the cou%ts o)e% ,isputes an, cont%o)e%sies .hich fall un,e%
the PC*C Rules an, Re6ulations .ithout fi%st 6oin6 th%ou6h the a%bit%ation p%ocesses
lai, out b1 the bo,1. Since clai8s %elatin6 to the %e6ula%it1 of chec/s clea%e, b1
ban/in6 institutions a%e a8on6 those clai8s .hich shoul, fi%st be sub8itte, fo%
%esolution b1 the PC*CKs A%bit%ation Co88ittee& petitione% Associate, Ban/& ha)in6
)olunta%il1 boun, itself to abi,e b1 such %ules an, %e6ulations& is estoppe, f%o8
see/in6 %elief f%o8 the Re6ional T%ial Cou%t on the coattails of a p%i)ate clai8 an, in
the 6uise of a thi%, pa%t1 co8plaint .ithout fi%st ha)in6 obtaine, a ,ecision a,)e%se to
its clai8 f%o8 the sai, bo,1. +t cannot b1pass the a%bit%ation p%ocess on the basis of its
a)e%8ent that its thi%, pa%t1 co8plaint is ine@t%icabl1 lin/e, to the o%i6inal co8plaint in
the Re6ional T%ial Cou%t.
Un,e% its A%ticles of +nco%po%ation& the PC*C p%o)i,es Fan effecti)e& con)enient&
efficient& econo8ical an, %ele)ant e@chan6e an, facilitate se%)ice li8ite, to chec/
p%ocessin6 an, so%tin6 b1 .a1 of assistin6 8e8be% ban/s& entities in clea%in6 chec/s
an, othe% clea%in6 ite8s as ,efine, an, e@istin6 in futu%e Cent%al Ban/ of the
Philippines Ci%cula%s& 8e8o%an,a& ci%cula% lette%s %ules an, %e6ulations an, policies in
pu%suance of Section !9E of RA 7".F Pu%suant to its function in)ol)in6 the clea%in6 of
chec/s an, othe% clea%in6 ite8s& the PC*C has a,opte, %ules an, %e6ulations
,esi6ne, to p%o)i,e 8e8be% ban/s .ith a p%oce,u%e .he%eb1 ,isputes in)ol)in6 the
clea%ance of chec/s an, othe% ne6otiable inst%u8ents un,e%6o a p%ocess of a%bit%ation
p%io% to sub8ission to the cou%ts belo.. This p%oce,u%e not onl1 ensu%es a unifo%8it1 of
%ulin6s %elatin6 to factual ,isputes in)ol)in6 chec/s an, othe% ne6otiable inst%u8ents
but also p%o)i,es a 8echanis8 fo% settlin6 8ino% ,isputes a8on6 pa%ticipatin6 an,
8e8be% ban/s .hich .oul, othe%.ise 6o ,i%ectl1 to the t%ial cou%ts. =hile the PC*C
Rules an, Re6ulations allo. appeal to the Re6ional T%ial Cou%ts onl1 on Duestions of
la.& this ,oes not p%eclu,e ou% lo.e% cou%ts f%o8 ,ealin6 .ith Duestions of fact al%ea,1
,eci,e, b1 the PC*C a%bit%ation .hen .a%%ante, an, app%op%iate.
+n Banco ,e O%o Sa)in6s an, Mo%t6a6e Ban/s )s. EDuitable Ban/in6 Co%po%ation <
this Cou%t ha, the occasion to %ule on the )ali,it1 of these %ules as .ell as the
:u%is,iction of the PC*C as a fo%u8 fo% %esol)in6 ,isputes an, cont%o)e%sies in)ol)in6
chec/s an, othe% clea%in6 ite8s .hen it hel, that Fthe pa%ticipation of t.o ban/s. . . in
the Clea%in6 Ope%ations of the PC*C A.asC a 8anifestation of its sub8ission to its
:u%is,iction.F $
The applicable PC*C p%o)isions on the Duestion of :u%is,iction p%o)i,e4
Sec. 5 B AGREEMENT TO T*ESE RULES
+t is the 6ene%al a6%ee8ent an, un,e%stan,in6& that an1 pa%ticipant in the PC*C M+CR
clea%in6 ope%ations& b1 the 8e%e act of pa%ticipation& the%eb1 8anifests its a6%ee8ent
to these Rules an, Re6ulations& an, its subseDuent a8en,8ents.
@@@ @@@ @@@
Sec. 57 B ARB+TRAT+ON
57.! An1 ,ispute o% cont%o)e%s1 bet.een t.o o% 8o%e clea%in6 pa%ticipants
in)ol)in6 an1 chec/Pite8 clea%e, th%u PC*C shall be sub8itte, to the A%bit%ation
Co88ittee& upon .%itten co8plaint of an1 in)ol)e, pa%ticipant b1 filin6 the sa8e .ith
the PC*C se%)in6 the sa8e upon the othe% pa%t1 o% pa%ties& .ho shall .ithin fifteen
A!"C ,a1s afte% %eceipt the%eof& file .ith the A%bit%ation Co88ittee its .%itten ans.e% to
such .%itten co8plaint an, also .ithin the sa8e pe%io, se%)e the sa8e upon the
co8plainin6 pa%ticipant. This pe%io, of fifteen A!"C ,a1s 8a1 be e@ten,e, b1 the
Co88ittee not 8o%e than once fo% anothe% pe%io, of fifteen A!"C ,a1s& but upon
a6%ee8ent in .%itin6 of the co8plainin6 pa%t1& sai, e@tension 8a1 be fo% such pe%io,
as the latte% 8a1 a6%ee to.
Section 57.7 is e)en 8o%e e8phatic4
57.7 The fact that a ban/ pa%ticipates in the clea%in6 ope%ations of PC*C shall
be ,ee8e, its .%itten an, subsc%ibe, consent to the bin,in6 effect of this a%bit%ation
a6%ee8ent as if it ha, ,one so in acco%,ance .ith Section # of the Republic Act No.
<E7 othe%.ise /no.n as the A%bit%ation La..
Thus& not onl1 ,o the pa%ties 8anifest b1 8e%e pa%ticipation thei% consent to these
%ules& but such pa%ticipation is ,ee8e, Athei%C .%itten an, subsc%ibe, consent to the
bin,in6 effect of a%bit%ation a6%ee8ents un,e% the PC*C %ules. Mo%eo)e%& a pa%ticipant
sub:ect to the Clea%in6 *ouse Rules an, Re6ulations of the PC*C 8a1 6o on appeal
to an1 of the Re6ional T%ial Cou%ts in the National Capital Re6ion .he%e the hea,
office of an1 of the pa%ties is locate, onl1 afte% a ,ecision o% a.a%, has been %en,e%e,
b1 the a%bit%ation co88ittee o% a%bit%ato% on Duestions of la.. !9
Clea%l1 the%efo%e& petitione% Associate, Ban/& b1 its )olunta%1 pa%ticipation an, its
consent to the a%bit%ation %ules cannot 6o ,i%ectl1 to the Re6ional T%ial Cou%t .hen it
fin,s it con)enient to ,o so. The :u%is,iction of the PC*C un,e% the %ules an,
%e6ulations is clea%& un,eniable an, is pa%ticula%l1 applicable to all the pa%ties in the
thi%, pa%t1 co8plaint un,e% thei% obli6ation to fi%st see/ %e,%ess of thei% ,isputes an,
6%ie)ances .ith the PC*C befo%e 6oin6 to the t%ial cou%t.
-inall1& the contention that the thi%, pa%t1 co8plaint shoul, not ha)e been ,is8isse,
fo% bein6 a necessa%1 an, insepa%able offshoot of the 8ain case o)e% .hich the cou%t
a Duo ha, al%ea,1 e@e%cise, :u%is,iction 8isses the fun,a8ental point about such
plea,in6. A thi%, pa%t1 co8plaint is a 8e%e p%oce,u%al ,e)ice .hich un,e% the Rules of
Cou%t is allo.e, onl1 .ith the cou%tKs pe%8ission. +t is an action Factuall1 in,epen,ent
of& sepa%ate an, ,istinct f%o8 the plaintiffsK co8plaintF AsCuch that& .e%e it not fo% the
Rules of Cou%t& it .oul, be necessa%1 to file the action sepa%atel1 f%o8 the o%i6inal
co8plaint b1 the ,efen,ant a6ainst the thi%, pa%t1. !!
+N (+E= O- T*E -OREGO+NG& the petition is 'EN+E' fo% lac/ of 8e%it. =ith costs
a6ainst petitione%.
SO OR'ERE'.
Republic of the Philippines
SUPREME COURT
Manila
T*+R' '+(+S+ON
G.R. No. $$9# Septe8be% 7& !$$#
BLOOM-+EL' ACA'EMH AN' RO'OL-O 2. LAGERA& petitione%s&
)s.
T*E *ONORABLE COURT O- APPEALS& BLOOM-+EL' ACA'EMH PARENTS
A'(+SORH ASSOC+AT+ON& +NC. ABAPAAC& %ep%esente, b1 its (ice-P%esi,ent&
Mena%,o Bo%,eos? an, The *on. SAL(A'OR P. 'E GU3MAN& 2R.& P%esi,in6 2u,6e of
the Re6ional T%ial Cou%t& National Capital 2u,icial Re6ion& B%anch !#& Ma/ati& Met%o
Manila& %espon,ents.
(illa%an>a 0 C%u> fo% petitione%s.
San Buena)entu%a& Re1es& Mo%ale,a ASAREMC La. Offices fo% p%i)ate %espon,ent.

(+TUG& 2.4
5
This petition fo% %e)ie. on ce%tio%a%i see/s to %e)e%se the ,ecision of the Cou%t of
Appeals ,is8issin6& in CA-G.R. SP. No. 9<#7& the special ci)il action fo% ce%tio%a%i that
has assaile, a .%it of p%eli8ina%1 in:unction issue, b1 the cou%t a Duo.
=e a,opt& fo% pu%poses of this %e)ie.& the case an, factual settin6s %ecite, b1 the
appellate cou%t in its ,ecision. =e Duote4
The petition o%i6inate, in a co8plaint fo% in:unction file, on
Ap%il 7& !$$9 b1 p%i)ate %espon,ent& the association of pa%ents an, 6ua%,ians of
stu,ents en%olle, in petitione%. One of the ,efen,ants in the sai, case is petitione%
.hich is a non-stoc/& non-p%ofit e,ucational institution. =hat is bein6 ,ispute, befo%e
%espon,ent cou%t is the inc%ease in tuition fee. Mo%e pa%ticula%l1& the co8plaint alle6e,&
a8on6 othe% thin6s& that4
@@@ @@@ @@@
#. On the p%ete@t that the ope%ation& 8uch 8o%e the su%)i)al of ,efen,ant
e,ucational institution is in ,an6e% ,ue to the 8an,ato%1 inc%ease of the 8ini8u8
.a6e un,e% R.A. 7EE& .hich the fo%8e% is to co8pl1& the ,efen,ant Co%po%ation
,eci,e, to inc%ease its afo%esai, tuition fees un,e% the follo.in6 %ates4
-ROM TO +NCREASE +N
P Q
G%a,e + P7&!5" PE&#<" P!&5"9 .99
G%a,e ++ 7&!5" E&#<" !&5"9 .99
G%a,e +++ 7&5" E&7E" !&5"9 !.5#
G%a,e +( 7&5" E&7E" !&5"9 !.5#
G%a,e ( 7&5<9 E&E59 !&5"9 !.!7
G%a,e (+ 7&5<9 E&EE9 !&5"9 !.E$
*S !st 1ea% 7&E99 <&9"9 !&5"9 9.!"
*S n, 1ea% 7&E99 <&9"9 !&5"9 9.!"
BBB BBB BBB BBB
A)e%a6e 7&5<" E&E#9 !&5"" !.
RRRRRR RRRRRR RRRRRR RRRRRR
". The a8ount of the inc%ease constitutes a .hoppin6 !.Q a)e%a6e
inc%ease of the <$-$9 tuition fees an, that the sai, inc%ease .as 8a,e .ithout p%io%
consultation to the pa%ents .hich is a %eDui%e8ent befo%e an1 such inc%ease shoul, be
8a,e effecti)e?
7. The afo%esai, inc%eases .as not app%o)e, an, )i6o%ousl1 ob:ecte, to b1
the plaintiff as containe, in its lette%s to ,efen,ant Ro,olfo 2. La6e%a . . . *ono%able
+si,%o Ca%iSo in his capacit1 as the Sec%eta%1 of E,ucation& Cultu%e an, Spo%ts . . .
These t.o lette%s b%ou6ht to the attention of the ,efen,ants that the tuition fees
p%esentl1 bein6 cha%6e, b1 ,efen,ants Bloo8fiel, Aca,e81 a%e al%ea,1 a8on6 the
hi6hest in the co88unit1& e)en if co8pa%e, to 'ela Salle A1ala an, Eli>abeth Seton
.hich ha)e 8uch bette% school an, lib%a%1 facilities than the ,efen,ant& an, that the
p%opose, inc%ease is not onl1 unti8el1 but 6%ossl1 inapp%op%iate& an,& .o%se& .ithout
an1 )ali, basis al%ea,1& afte% both pa%ties a6%ee, on "9Q of the inc%ease .hich .as
i8ple8ente, an, pai, b1 the stu,ents ,u%in6 the school 1ea% .ith the clea%
un,e%stan,in6 that the othe% "9Q is .ai)e, b1 the ,efen,ant?
E. +n spite of the clea% sha%in6 b1 the plaintiff th%ou6h the afo%esai, lette%s of
the 6%oss inapp%op%iateness of the afo%esai, p%oposal inc%ease in tuition fees&
,efen,ants *ono%able +si,%o Ca%iSo& blin,l1 app%o)e, such p%oposal in its lette%
a,,%esse, to ,efen,ant Ro,olfo S. La6e%a ,ate, Ma%ch E& !$$9 . . .?
<. SubseDuentl1 plaintiff %ecei)e, f%o8 the ,efen,ant Bloo8fiel, Aca,e81
th%ou6h ,efen,ant Ro,olfo S. La6e%a a
lette% . . . ,e8an,in6 full pa18ent of the app%o)e, tuition fee inc%ease on o% befo%e
Ap%il 7& !$$9 in blatant isolation of the a6%ee8ent .ith the plaintiff that onl1 "9Q of the
inc%ease .ill be collecte,. As a 8atte% of fact& the plaintiff has al%ea,1 pai, the sai,
"9Q of the inc%ease?
$. The i8ple8entation of the afo%esai, app%o)al to inc%ease tuition fees& if
not %etaine, b1 this *ono%able Cou%t& .oul, .o%/ in:ustice to the he%ein plaintiff . . .
.hile inco%po%ato%s /eep hu6e p%ofits& b1 siphonin6 the8 to anothe% co%po%ation&
Ru,lin +nte%national& +nc. .hile the1 also o.ne, an, is no. as/in6 fo% inc%ease in the
%entals of the buil,in6s %et%oacti)el1 fo% th%ee A5C 1ea%s.
On the ,ate the co8plaint .as file,& %espon,ent cou%t issue, an o%,e% en:oinin6
petitione%s an, Sec%eta%1 Ca%iSo an,Po% thei% a6ents& %ep%esentati)es o% pe%sons actin6
in thei% behalf f%o8 i8ple8entin6 thei% afo%esai, inc%ease in tuition fees& an, not
.ithhol,in6 thei% %elease of the %epo%t ca%,s an,Po% othe% pape%s necessa%1 fo% the
stu,ents ,esi%in6 to t%ansfe% to othe% schools until fu%the% o%,e%s f%o8 %espon,ent
cou%t.
The application fo% in:unction .as set fo% hea%in6 on Ap%il !$& !$$9 at
499 p.8.
Ans.e% to the co8plaint .as file, b1 petitione%s on Ap%il !$& !$$9. On the sa8e ,ate&
%espon,ent cou%t con,ucte, the fi%st hea%in6 on the application fo% a .%it of p%eli8ina%1
in:unction .hich hea%in6 .as follo.e, b1 settin6s on Ap%il "& 7 an, E& !$$9.
Afte% petitione%s sub8itte, thei% co8plete set of e@hibits an, 8e8o%an,u8 in
opposition to the application fo% a .%it of p%eli8ina%1 in:unction& %espon,ent cou%t
issue, the ,ispute, o%,e% . . . !
The o%,e% of the cou%t a Duo& ,ate, 59 Ap%il !$$9& %efe%%e, to b1 the appellate cou%t
%ea,4
=*ERE-ORE& let a .%it of p%eli8ina%1 in:unction be issue, o%,e%in6 the ,efen,ants&
thei% a6ents& thei% %ep%esentati)es& an, all pe%sons actin6 un,e% the8 f%o8 collectin6
the secon, P7E".99 f%o8 the en%ollees& li8itin6 the8sel)es onl1 to the fi%st P7E".99
an,Po% f%o8 .ithhol,in6 o% %efusin6 the %elease of the %epo%t ca%,s an, othe% pape%s
necessa%1 fo% stu,ents t%ansfe%%in6 to othe% school& until fu%the% o%,e% f%o8 this cou%t&
upon the postin6 b1 the plaintiff of a bon, in the su8 of P99&999.99 con,itione, to
the pa18ent in fa)o% of the ,efen,ants of .hate)e% ,a8a6es the1 8a1 suffe% b1 )i%tue
of this in:unction shoul, it appea% that the plaintiff is not entitle, the%eto.
+n hol,in6 to be .ithout 8e%it the petition fo% ce%tio%a%i att%ibutin6 to the cou%t a Duo
6%a)e abuse of ,isc%etion in the issuance of the afo%eDuote, o%,e%& the appellate cou%t
%atiocinate, thusl14
+t is a .ell establishe, %ule that the 6%ant o% ,enial of an in:unction %ests upon the
soun, ,isc%etion of the cou%t& in the e@e%cise of .hich appellate cou%ts .ill not inte%fe%e
e@cept on a case of a clea% abuse ABelisle +n)est8ent an, -inance Co.& +nc. =. State
+n)est8ent *ouse? Ro,olfo )s. Alfonso& E7 Phil. "C. An, to :ustif1 the issuance of a
.%it of ce%tio%a%i it 8ust be sho.n that the abuse of ,isc%etion .as 6%a)e an, patent
an, that the ,isc%etion .as e@e%cise, a%bit%a%il1 o% ,espoticall1 ASo%iano& et al.& )s.
Atien>a& et al.& !E! SCRA <#C.
@@@ @@@ @@@
Ri6htl1 o% .%on6l1& %espon,ent :u,6e;s conclusion& .hich se%)e, as basis in issuin6 the
Duestione, .%it& .as %eache, onl1 afte% consi,e%in6 the facts ba%e, in the cou%se of
the hea%in6. +n othe% .o%,s& %espon,ent :u,6e .as 8e%el1 e@e%cisin6 his :u,68ent.
E%%o%s of :u,68ent a%e not .ithin the p%o)ince of a special ci)il action fo% ce%tio%a%i
APu%efoo,s Co%po%ation )s. NLRC& !E# SCRA #!"C.
One thin6 .e notice, about this petition is that the issues %aise, a%e factual in)ol)in6
as the1 ,o e%%o%s of :u,68ent on the pa%t of %espon,ent :u,6e. +n)a%iabl1& .e
encounte% the follo.in6 a%6u8ents4
. . . public %espon,ent 2u,6e ,e Gu>8an appea%s to ha)e been 8islea, b1 the p%i)ate
%espon,ent BAPAA;s clai8 that petitione% Bloo8fiel, Aca,e81 ,i, not con,uct the
%eDuisite consultation befo%e i8ple8entin6 the tuition fee inc%ease.
. . . public %espon,ent 2u,6e ,e Gu>8an appea%s to ha)e been 8islea, b1 the p%i)ate
%espon,ent;s unt%uthful clai8.
+t 8ust e8phaticall1 be %eite%ate,& since so often it is o)e%loo/e,& the special ci)il
action fo% ce%tio%a%i is a %e8e,1 ,esi6ne, fo% the co%%ection of e%%o%s of :u%is,iction an,
not e%%o%s of :u,68ent. ConseDuentl1& an e%%o% of :u%is,iction is not cont%o)e%tible
th%ou6h the o%i6inal ci)il action of ce%tio%a%i APu%efoo,s Co%po%ation )s. NLRC& !E!
SCRA #!<C.
Anent the alle6ation that %espon,ent :u,6e ,is%e6a%,e, the fact that the p%i)ate
%espon,ent faile, to e@haust a)ailable a,8inist%ati)e %e8e,ies in assailin6 the
,ecision of the 'epa%t8ent of E,ucation Cultu%e an, Spo%ts app%o)in6 the tuition fee
6
inc%ease suffice it to state that the p%inciple %eDui%in6 the p%e)ious e@haustion of
a,8inist%ati)e %e8e,ies is not applicable .hen the %espon,ent is a ,epa%t8ent
sec%eta%1 .hose act as an alte%-e6o of the P%esi,ent bea%s the i8plie, o% assu8e,
app%o)al of the latte% AAni8os )s. Phil. (ete%ans Affai%s Office& !E# SCRA !#.C. 5
+n the he%ein petition fo% %e)ie. on ce%tio%a%i befo%e this Cou%t& petitione%s fo%8ulate the
sole issue of .hethe% o% not the cou%t a Duo has acte, .ithin its :u%is,iction in issuin6
the Duestione, o%,e% an,& in the affi%8ati)e& .hethe% o% not it has co88itte, 6%a)e
abuse of ,isc%etion specificall1 in 6%antin6 p%i)ate %espon,ent;s application fo% a .%it of
p%eli8ina%1 in:unction.
=e see 8e%it in the petition.
The pe%tinent p%o)isions of Republic Act No. 7E<& also co88onl1 /no.n as FAn Act
P%o)i,in6 Go)e%n8ent Assistance to Stu,ents an, Teache%s in P%i)ate E,ucation& An,
App%op%iatin6 -un,s The%efo%&F p%o)i,e4
Sec. $. -u%the% Assistance To Stu,ents in P%i)ate Colle6es an, Uni)e%sities. B . . . .
AbC -o% stu,ents en%olle, in schools cha%6in6 abo)e one thousan, fi)e
hun,%e, pesos AP!&"99.99C pe% 1ea% in tuition an, othe% fees ,u%in6 the school 1ea%
!$<<-!$<$ o% such a8ount in subseDuent 1ea%s as 8a1 be ,ete%8ine, f%o8 ti8e to
ti8e b1 the State Assistance Council& no assistance fo% tuition fees shall be 6%ante, b1
the Go)e%n8ent4 P%o)i,e,& ho.e)e%& That the schools conce%ne, 8a1 %aise thei%
tuition fees sub:ect to Section !9 he%eof.
@@@ @@@ @@@
Sec. !9. Consultation. B +n an1 p%opose, inc%ease in the %ate of tuition fee& the%e
shall be app%op%iate consultations con,ucte, b1 the school a,8inist%ation .ith the ,ul1
o%6ani>e, pa%ents an, teache%s associations an, facult1 associations .ith %espect to
secon,a%1 schools& an, .ith stu,ents 6o)e%n8ents o% councils& alu8ni an, facult1
associations .ith %espect to colle6es. -o% this pu%pose& au,ite, financial state8ents
shall be 8a,e a)ailable to autho%i>e, %ep%esentati)es of these secto%s. E)e%1 effo%t
shall be e@e%te, to %econcile possible ,iffe%ences. +n case of ,isa6%ee8ent& the alu8ni
association of the school o% an1 othe% i8pa%tial bo,1 of thei% choosin6 shall act as
a%bit%ato%.
@@@ @@@ @@@
Sec. !#. P%o6%a8 A,8inist%ationPRules an, Re6ulations. B The State Assistance
Council shall be %esponsible fo% polic1 6ui,ance an, ,i%ection& 8onito%in6 an,
e)aluation of ne. an, e@istin6 p%o6%a8s& an, the p%o8ul6ation of %ules an,
%e6ulations& .hile the 'epa%t8ent of E,ucation& Cultu%e an, Spo%ts shall be
%esponsible fo% the ,a1 to ,a1 a,8inist%ation an, p%o6%a8 i8ple8entation. Li/e.ise& it
8a1 en6a6e the se%)ices an, suppo%t of an1 Dualifie, 6o)e%n8ent o% p%i)ate entit1 fo%
its i8ple8entation. AE8phasis supplie,.C
P%i)ate %espon,ent file, .ith the cou%t a Duo an action& entitle, F+n:unction .ith
P%eli8ina%1 P%ohibito%1 +n:unction .ith P%a1e% fo% Te8po%a%1 Rest%ainin6 O%,e%F
A,oc/ete, Ci)il Case No. $9-$E!C& a6ainst petitione%s an, the Sec%eta%1 of E,ucation&
Cultu%e an, Spo%ts AF'ECSFC see/in6 to stop the i8ple8entation of the inc%ease in
tuition fees b1 petitione% school. P%i)ate %espon,ent asse%te, that the inc%ease .as
a,opte, .ithout the p%io%
consultation %eDui%e, b1 la. an, that& in an1 case& the app%o)e, inc%ease .as
e@o%bitant Aat !.QC. Petitione%s& on thei% pa%t& conten,e, that the pa%ties ,i,& in fact&
hol, consultations at .hich the .a6e inc%ease fo% teache%s 8an,ate, b1 Republic Act
7EE an, the %esultin6 inc%ease in tuition fees allo.e, b1 Republic Act No. 7E< .e%e
,iscusse, at len6th. The Solicito% Gene%al& ans.e%in6 the co8plaint fo% an, in behalf
of the 'ECS Sec%eta%1& atteste, to the app%o)al b1 'ECS of a fift1 pe%cent A"9QC
tuition fee inc%ease fo% the school 1ea% !$<$-!$$9.
The :u,icial action initiate, b1 p%i)ate %espon,ent befo%e the cou%t a Duo appea%s to us
to be an inapp%op%iate %ecou%se. +t %e8ains un,ispute, that the 'ECS Sec%eta%1 has&
in fact& ta/en co6ni>ance of the case fo% the tuition fee inc%ease an, has acco%,in6l1
acte, the%eon. =e can onl1 assu8e that in so ,oin6 the 'ECS Sec%eta%1 has ,ul1
passe, upon the %ele)ant le6al an, factual issues ,ealin6 on the p%op%iet1 of the
8atte%. +n the ,ecision p%ocess& the 'ECS Sec%eta%1 has )e%il1 acte, in a Duasi-:u,icial
capacit1. The %e8e,1 f%o8 that ,ecision is an appeal. Confo%8abl1 .ith Batas
Pa8bansa Bl6. !$& the e@clusi)e appellate :u%is,iction to Duestion that a,8inist%ati)e
action lies .ith the Cou%t of Appeals& not .ith the cou%t a Duo. +f .e .e%e to consi,e%&
upon the othe% han,& the case fo% in:unction file, .ith the cou%t a Duo to be a o%,ina%1
action solel1 a6ainst he%ein petitione% A.ith 'ECS bein6 then ,ee8e, to be 8e%el1 a
no8inal pa%t1C& it .oul, ha)e 8eant the cou%t;s ta/in6 co6ni>ance o)e% the case in
,is%e6a%, of the ,oct%ine of p%i8a%1 :u%is,iction. #
Neithe% can .e t%eat the case as a special ci)il action fo% ce%tio%a%i o% p%ohibition as the
co8plaint file, b1 p%i)ate %espon,ent .ith the cou%t a Duo& contains no alle6ation of
lac/& o% 6%a)e abuse in the e@e%cise& of :u%is,iction on the pa%t of 'ECS no% has the%e
been an1 fin,in6 8a,e to that effect b1 eithe% the cou%t a Duo o% the appellate cou%t
that coul, .a%%ant the e@t%ao%,ina%1 %e8e,1. A special ci)il action& eithe% fo% ce%tio%a%i
o% p%ohibition& can be 6%oun,e, onl1 on eithe% lac/ of :u%is,iction o% 6%a)e abuse of
,isc%etion. "
+n passin6& .e also obse%)e that the pa%ties ha)e both %e8aine, silent on the
p%o)isions of Republic Act No. 7E< to the effect that in case of ,isa6%ee8ent on
tuition fee inc%eases Ain this instance b1 he%ein p%i)ate pa%tiesC& the issue shoul, be
%esol)e, th%ou6h a%bit%ation. Althou6h the 8atte% has not been %aise, b1 the pa%ties& it
is an aspect& ne)e%theless& in ou% )ie.& that coul, ha)e .ell been e@plo%e, b1 the8
instea, of i88e,iatel1 in)o/in6& such as the1 appa%entl1 ,i,& the a,8inist%ati)e an,
:u,icial %elief to %esol)e the cont%o)e%s1.
All tol,& .e hol, that the cou%t a Duo has been be%eft of :u%is,iction in ta/in6
co6ni>ance of p%i)ate %espon,ent;s co8plaint. =e see no %eal :ustification& on the
basis of the factual an, case settin6s he%e obtainin6& to pe%8it a ,e)iation f%o8 the
lon6 stan,in6 %ule that the issue of :u%is,iction 8a1 be %aise, at an1 ti8e e)en on
appeal.
=*ERE-ORE& confo%8abl1 .ith ou% abo)e opinion& the instant petition is GRANTE'
an, the Duestione, o%,e%e, of the cou%t a Duo an, the ,ecision of the appellate cou%t
a%e SET AS+'E. No costs.
SO OR'ERE'.
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