G.R. No. 168696 - Calleja vs. Panday

Case Summary (G.R. No. 168696)

Key Dates

Relevant filings and actions: respondents filed the quo warranto petition on May 16, 2005; RTC, San Jose (Branch 58) issued an order transferring the case to RTC in Naga City on May 24, 2005; petitioner Tabora filed an Answer on June 8, 2005; RTC-Br. 58 issued the challenged order on July 13, 2005; petitioners elevated the matter to the Supreme Court by Rule 45 petition; petitioners later alleged an incident on January 12, 2006.

Applicable Law and Administrative Issuances (1987 Constitution applicable)

Statutes and rules invoked: Presidential Decree No. 902-A (PD 902-A); Republic Act No. 8799 (Securities Regulation Code), specifically Section 5.2 (transfer of SEC jurisdiction to courts); 1997 Rules of Civil Procedure, Rule 45 (appeal by petition for review) and Rule 66 (quo warranto); Interim Rules of Procedure Governing Intra-Corporate Controversies under R.A. No. 8799 (A.M. No. 01-2-04-SC); A.M. No. 00-11-03-SC (designation of RTC branches to hear former SEC matters); Administrative Circular No. 8-01 (supplemental, Jan. 23, 2001); A.M. No. 03-03-03-SC (designation/renaming as Special Commercial Courts).

Nature of the Complaint and Relief Sought in the Trial Court

Respondents alleged that from 1985 until May 2005 they served as board members and officers of St. John Hospital, Inc., and that petitioners, also incorporators and stockholders, forcibly usurped corporate powers with the aid of armed men. They filed a verified petition for quo warranto with damages and requests for mandatory and prohibitory injunctions and temporary restraining order.

RTC-Br. 58 Procedural Steps and Orders

RTC, San Jose (Branch 58) initially issued an order on May 24, 2005 transferring the case to the RTC in Naga City, reasoning that Rule 66 requires venue where respondents reside. The Executive Judge of the RTC in Naga City refused to receive the case folder, asserting improper venue is not a ground for transferring quo warranto to another administrative jurisdiction. RTC-Br. 58 subsequently served summons on petitioners and, after answers raising affirmative defenses (improper venue, lack of jurisdiction, wrong remedy of quo warranto) and memoranda, issued the July 13, 2005 order denying the motion to dismiss and remanding the case to RTC Branch 23 in Naga City, designated as a special court for former SEC matters.

Issues Presented to the Supreme Court

Petitioners raised two principal issues: (I) whether a branch of the Regional Trial Court lacking jurisdiction may remand a case to another co-equal court to cure defects of venue and jurisdiction; and (II) whether Administrative Circular No. 8-01 (effective March 1, 2001) applies to a case filed on May 16, 2005.

Respondents’ Position and Procedural Objections

Respondents argued the Rule 45 petition should be dismissed for lack of finality because the July 13, 2005 order was interlocutory, and that under A.M. No. 04-9-07-SC appeals of final orders under the Interim Rules should go to the Court of Appeals via Rule 43. They also contended the petition was intended to delay trial court proceedings.

Supreme Court’s Procedural Determination on the Proper Remedy

The Court acknowledged that Rule 45 ordinarily addresses appeals from final orders and that the July 13, 2005 order—denying dismissal and directing remand—was interlocutory and thus not normally reviewable under Rule 45. The Court cited precedents holding that denial of a motion to dismiss is interlocutory and is reviewable, if at all, on appeal from final judgment after trial. Nevertheless, because of the potential for recurrent violence between the parties and the importance of the jurisdictional question, the Supreme Court elected to overlook the technical procedural defect and resolve the merits to prevent further harm and unnecessary burden.

Classification of the Quo Warranto Petition and Governing Procedure

The Court determined that allegations that persons usurped corporate offices constitute an intra-corporate controversy. It reiterated that Rule 66 (1997 Rules) governs quo warranto against public offices and certain associations, but does not encompass quo warranto against persons who usurp offices in private corporations. Because RA 8799 transferred the SEC’s jurisdiction over intra-corporate matters to the courts of general jurisdiction, the Interim Rules governing intra-corporate controversies under RA 8799 (A.M. No. 01-2-04-SC) apply to the petition filed by respondents.

Venue and Designation of Special Courts for Former SEC Matters

The Interim Rules require that actions covered be commenced and tried in the Regional Trial Court which has jurisdiction over the principal office of the corporation. The Supreme Court’s designations (A.M. No. 00-11-03-SC and A.M. No. 03-03-03-SC) assigned specific RTC branches as Special Commercial Courts (formerly “special courts” for SEC matters) to hear cases formerly cognizable by the SEC, and directed filing in the official station of those designated courts. For Camarines Sur, the designated Special Commercial Court is the RTC in Naga City (Branc

Case Syllabus (G.R. No. 168696)

Procedural and Factual Antecedents

On May 16, 2005, respondents filed a verified petition with the Regional Trial Court of San Jose, Camarines Sur (RTC‑Br. 58) for quo warranto with damages and prayer for mandatory and prohibitory injunction, damages, and issuance of temporary restraining order against the petitioners herein.
Respondents alleged they had been members of the board of directors and officers of St. John Hospital, Incorporated from 1985 up to the filing of the petition, and that sometime in May 2005 petitioners, who were incorporators and stockholders, forcibly and with the aid of armed men usurped the powers which supposedly belonged to respondents.
On May 24, 2005, RTC‑Br. 58 issued an Order attempting to transfer the case to the Regional Trial Court in Naga City, on the ground that the verified petition showed respondents (petitioners in this appeal) to be residents of Naga City and hence, under Section 7, Rule 66 of the 1997 Rules of Civil Procedure, the action should be brought where respondents reside.
The Executive Judge of the RTC in Naga City refused to receive the case folder, stating that improper venue was not a ground for transferring a quo warranto case to another administrative jurisdiction.
RTC‑Br. 58 then proceeded to issue and serve summons on the petitioners. Petitioners filed Answers dated June 8, 2005 and thereafter, raising the affirmative defenses of (1) improper venue, (2) lack of jurisdiction, and (3) wrong remedy of quo warranto.
Parties were required to submit memoranda. On July 13, 2005, RTC‑Br. 58 issued the assailed Order denying the Motion to Dismiss and remanding the case to RTC Branch 23, Naga City, designated as a special court to try and decide intra‑corporate controversies under R.A. No. 8799 and related administrative issuances.

RTC‑Br. 58 Order: Rationale and Disposition

RTC‑Br. 58 characterized the plaintiffs’ (respondents’) cause of action as an intra‑corporate controversy arising out of relations among stockholders, members or associates of St. John Hospital, Inc., a matter originally under the exclusive jurisdiction of the Securities and Exchange Commission (SEC) under Section 5, P.D. No. 902‑A.
The trial court recounted that R.A. No. 8799 transferred the Commission’s jurisdiction over such cases to the courts of general jurisdiction or appropriate Regional Trial Courts, with the proviso that the Supreme Court may designate RTC branches to exercise jurisdiction over these cases.
The Order cited A.M. No. 00‑11‑03‑SC (promulgated November 21, 2000, effective December 15, 2000) which designated certain RTC branches as “special courts” to try SEC cases in their territorial jurisdiction, identifying RTC Branch 23, Naga City as the designated branch for Camarines Sur.
The Order also noted supplemental Administrative Circular No. 8‑01 (effective March 1, 2001) directing the transfer of SEC cases originally assigned or transmitted to regular RTCs to the specially designated branches.
The Order observed that under A.M. No. 01‑2‑04‑SC (Interim Rules of Procedure for Intra‑Corporate Controversies) a Motion to Dismiss was among the prohibited pleadings (citing Section 8) and therefore denied the Motion to Dismiss.
Accordingly, RTC‑Br. 58 remanded the case to RTC Branch 23, Naga City, cancelled the hearing on the prayer for TRO and preliminary injunction, and left for the court of competent jurisdiction the question whether quo warranto was the proper remedy.

Petitioners’ procedural action before the Supreme Court and issues raised

Petitioners did not move for reconsideration of the RTC Order but immediately elevated the case to the Supreme Court by filing a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure.
The petition raised two principal issues:
- Whether 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 defects in venue and jurisdiction; and
- Whether Administrative Circular No. 8‑01 dated January 23, 2001 (effective March 1, 2001) could be applied in the present case filed on May 16, 2005.

Respondents’ opposition and procedural objections in the Supreme Court

In their Comment, respondents argued the petition should be denied or dismissed on procedural grounds:
- The Order dated July 13, 2005 was interlocutory, not final, and therefore not reviewable under Rule 45 which governs appeals from judgments or final orders.
- A petition for review under Rule 45 was the wrong remedy under A.M. No. 04‑9‑07‑SC, which provided that decisions and final orders under the Interim Rules of Procedure Governing Intra‑Corporate Controversies are appealable to the Court of Appeals by petition for review under Rule 43.
- The petition was allegedly intended merely to delay trial court proceedings, and the court receiving the case (Branch 21) had granted relief to hold proceedings in view of the pending petition before the Supreme Court.
Petitioners later filed an Urgent Motion to Restore Status Quo Ante alleging that on January 12, 2006 respondent Jose Pierre Panday, with the aid of 14 armed men, assaulted St. John Hospital premises in Naga City and took hospital collections estimated at P400,000.00.

Supreme Court’s procedural determination to decide merits despite wrong remedy

The Court observed petitioners chose an incorrect remedy by invoking Rule 45 because that rule generally governs appeals from judgments or final orders, and the July 13, 2005 Order was interlocutory.
The July 13 Order was characterized as a denial of petitioners’ prayer in their Answer for dismissal; it did not dispose of the case on the merits and therefore ordinarily could not be reviewed via Rule 45.
The Court cited the hornbook principle and precedent (Bangko Silangan Development Bank v. Court of Appeals; Tolentino v. Natanauan) that an order denying a motion to dismiss is interlocutory and reviewable only after final judgment.
Nonetheless, because of the prospect of continuing violence betw