THIRD DIVISION

[G.R. No. 156264. September 30, 2004.]

ALLIED DOMECQ PHIL., INC. , petitioner, vs . HON. SESINANDO E.

VILLON of the Regional Trial Court of Manila, Branch 23; CLARK
LIBERTY WAREHOUSE, INC., BUREAU OF CUSTOMS and/or
DISTRICT COLLECTORS OF CUSTOMS, PORT OF MANILA and CLARK
SPECIAL ECONOMIC ZONE, and BUREAU OF FOOD AND DRUGS
(BFAD) and/or DIRECTOR OF BFAD , respondents.

DECISION

SANDOVAL-GUTIERREZ , J : p

Before us is a petition for review on certiorari assailing the Decision 1 of the Court of
Appeals dated May 27, 2002 and Resolution 2 dated November 29, 2002 in CA-G.R. SP No.
63802 which dismissed the special civil action for certiorari led by Allied Domecq,
Philippines Inc. (ADPI), herein petitioner, for want of jurisdiction.
The factual background of this case is as follows:
On May 8, 1996, petitioner ADPI entered into an exclusive distributorship agreement
with Pedro Domecq, S.A., a corporation organized and existing under the laws of Spain,
engaged in the manufacture of wine and brandy. Under the said agreement, Pedro
Domecq, S.A. granted petitioner the sole and exclusive right to import and distribute in the
Philippines various Pedro Domecq, S.A. products including "Fundador" brandy until May 17,
2000. Upon its expiration, the agreement is deemed automatically extended for an
indefinite period of time.
Petitioner then applied for a Certi cate of Registration with the Bureau of Food and
Drugs (BFAD), pursuant to Department of Health Administrative Order No. 17, series of
1979, requiring all imported food products to be registered with the BFAD prior to their
distribution in the local markets.
On June 2, 1998, BFAD wrote then Director Quintin L. Kintanar of the Bureau of
Customs, requesting that entry of imported shipments of "Fundador" brandy should not be
allowed in the Philippines, unless the importer presents a valid Certi cate of Registration
issued by the BFAD. The Bureau of Customs granted petitioner's request and on July 13,
1998, issued Customs Memorandum Circular No. 228-098. HESCcA

On April 12, 1999, Clark Liberty Warehouse, Inc. (Clark Liberty), herein private
respondent, a duly licensed duty-free shop operating in the Clark Special Economic Zone,
imported 800 cases or a total of 9,420 bottles of "Fundador" brandy.
Since the importation by respondent Clark Liberty was not covered by the BFAD
Certi cate of Product Registration, the Bureau of Customs seized and impounded the
shipment pursuant to Customs Memorandum Circular No. 228-98, in relation to Sections
101 (K) and 2530 of the Tariff and Customs Code. The imported brandy then became the
subject of seizure proceedings before the District Collector of Customs of the Port of
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 Manila, docketed as S.I. No. 99-140.
Petitioner then led a motion to intervene in S.I. No. 99-140 alleging, among others,
that it sustained damages caused by respondent Clark Liberty's illegal importation.
However, the Bureau of Customs District Collector failed to resolve the motion.
On September 15, 1999, petitioner sent respondent Clark Liberty a letter demanding
that the latter cease and desist from importing, distributing, selling, or marketing
"Fundador" brandy in the Philippines. Petitioner also demanded that Clark Liberty refrain
from claiming the seized shipment and participating in the seizure proceedings. Clark
Liberty, however, refused to heed petitioner's demands.
On October 8, 1999, petitioner led with the Regional Trial Court (RTC) of Manila a
complaint for injunction and damages with prayer for the issuance of a temporary
restraining order (TRO) and a writ of preliminary injunction. The complaint was ra ed to
Branch 23 of the Manila RTC, docketed therein as Civil Case No. 99-95337.
On August 15, 2000, after hearing petitioner's application for TRO and injunctive
relief, the RTC issued an Order denying the same. The trial court held that petitioner failed
to prove that respondent Clark Liberty engaged in unfair competition as there is no
showing that it "employed deceit or otherwise committed acts constituting bad faith;" 3
that the bottles of "Fundador" brandy imported by respondent are the "ones imported by
plaintiff" 4 and that these bottles "are not genuine, defective, or of poor quality." 5
Petitioner led a motion for reconsideration but was denied by the RTC in its Order
dated December 28, 2000.
On March 16, 2001, petitioner led with the Court of Appeals a special civil action
for certiorari, docketed as CA-G.R. SP No. 63802.
On May 27, 2002, the Court of Appeals issued its assailed Decision dismissing the
petition for lack of jurisdiction. Its ratiocination is quoted as follows: SAHaTc

"[I]t is an admitted fact respondent Clark Liberty is one of the duly licensed
and authorized duty free shops at the Clark Special Economic Zone since 1998
which sells imported grocery items including liquors, appliances, household
wares, etc. and is exclusively regulated by the Clark Development Corporation,
created by Republic Act No. 7227, known as the 'Bases Conversion and
Development Act of 1992.' It is therefore a juridical creation of Republic Act No.
7227 in relation to Executive Order No. 62 and Presidential Proclamation No. 163,
creating the Clark Special Economic Zone, under the exclusive jurisdiction,
authority and regulation of the Clark Development Corporation. As such juridical
creation, this Court has no jurisdiction to determine whether or not petitioner is
entitled to the issuance of an injunctive relief since such authority and jurisdiction
belong the Honorable Supreme Court in accordance with Section 21 of Republic
Act No. 7227." 6

Hence, the instant petition for review anchored on the following grounds:
"I

THE FORMER THIRTEENTH DIVISION OF THE COURT OF APPEALS COMMITTED

SERIOUS AND REVERSIBLE ERRORS IN LAW IN DISMISSING THE PETITION FOR
CERTIORARI IN CA-G.R. SP NO. 63802 UNDER RULE 65 OF THE 1997 RULES ON
CIVIL PROCEDURE FOR LACK OF JURISDICTION.
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 II

THE FORMER THIRTEENTH DIVISION OF THE COURT OF APPEALS COMMITTED

GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION BY NOT LOOKING INTO THE MERITS OF THE CASE AND IN NOT
RESOLVING WHETHER OR NOT PETITION IS ENTITLED TO THE INJUNCTION
RELIEF PRAYED FOR IN ITS PETITION.
ECTSDa

III

IN DISMISSING THE PETITION IN CA-G.R. SP NO. 63802, THE HONORABLE

COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE NOT
THEREFORE DETERMINED BY THE SUPREME COURT OR HAS DECIDED IT IN A
WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISIONS
OF THIS HONORABLE SUPREME COURT." 7

Petitioner submits that the Appellate Court gravely abused its discretion in holding
that under Section 21 of Republic Act No. 7227, only the Supreme Court can issue a writ of
preliminary injunction. Petitioner contends that its cause of action has nothing to do with
the implementation of the projects for the conversion of the military reservation into
alternative productive uses governed by the said law. Since jurisdiction is conferred by law,
the Court of Appeals cannot diminish its own jurisdiction under Batas Pambansa Blg . 129 ,
as amended.
The Solicitor General and respondent Clark Liberty counter that the Court of Appeals
was correct in dismissing the petition before it for lack of jurisdiction. They point out that
in the proceedings before the trial court, petitioner admitted that Clark Liberty is a
registered enterprise of the Clark Special Economic Zone, thus subject to the operation of
R.A. 7227. Under Section 21 of this law, only the Supreme Court has jurisdiction to grant
injunctive relief to enjoin the implementation of the projects for the conversion into
alternative productive uses of the military reservation.
The pivotal issue, therefore, is whether the Court of Appeals gravely abused its
discretion in holding that it has no jurisdiction over CA-G.R. SP No. 63802 pursuant to
Section 21 of Republic Act 7227.
Jurisdiction is the authority to hear and determine a cause. 8 Jurisdiction over the
subject matter is the power to hear and determine the general class to which the
proceedings in question belong. 9 Jurisdiction over the subject matter is conferred by law
and not by the consent or acquiescence of any or all of the parties or by erroneous belief
of the court that it exists. 1 0 Basic is the rule that jurisdiction over the subject matter is
determined by the cause or causes of action as alleged in the complaint. 1 1 But where the
actual issues are evident from the records of the case, then jurisdiction over the subject
matter need not depend upon the literal averments in the complaint, but on the law as
applied to established facts. 1 2
Here, in order to determine whether the court a quo has jurisdiction over petitioner's
complaint for injunction, we have to interpret the law as applied to the established facts.
There is no question that respondent Clark Liberty is a registered enterprise of the Clark
Special Economic Zone and is primarily regulated by R.A. No. 7227, otherwise known as
the Bases Conversion and Development Act of 1992. ECaAHS

The underlying purpose of the Legislature in enacting R.A. No. 7227 is provided by
Section 2, thus:
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 "SEC. 2. Declaration of Policies. — It is hereby declared the policy of
the Government to accelerate the sound and balanced conversion into alternative
productive uses of the Clark and Subic military reservations and their extensions
(John Hay Station, Wallace Air Station, O'Donnell Transmitter Station, San Miguel
Naval Communications Station and Capas Relay station), to raise funds by the
sale of portions of Metro Manila military camps and to apply said funds for the
development and conversion to productive civilian use of the lands covered under
the 1947 Military Bases Agreement between the Philippines and the United States
of America, as amended.

It is likewise the declared policy of the Government to enhance the bene ts

to be derived from said properties in order to promote the economic and social
development of Central Luzon in particular and the country in general."

Republic Act No. 7227 goes on further to provide that:

"SEC. 4. Purposes of the Conversion Authority. — The Conversion
authority shall have the following purposes:
xxx xxx xxx
(c) To encourage the active participation of the private sector in
transforming the Clark and Subic military reservations and their extensions into
other productive uses;"

The establishment, registration, and operation of respondent Clark Liberty and the
other enterprises within the Clark Special Economic Zone are projects (involving the
private sector) which convert Clark Air Base, a military reservation, "into productive uses."
In this connection, Section 21 of R.A. No. 7227 provides:
"SEC. 21. Injunction and Restraining Order. — The implementation of
the projects for the conversion into alternative productive uses of the military
reservations are urgent and necessary and shall not be restrained or enjoined
except by an order issued by the Supreme Court of the Philippines."

Verily, the Court of Appeals did not err when it dismissed CA-G.R. SP No. 63802 for
want of jurisdiction.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals
dated May 27, 2002 and its Resolution dated November 29, 2002, in CA-G.R. SP No. 63802
are AFFIRMED. Costs against petitioner.
SO ORDERED. HCSEcI

Panganiban, Corona and Carpio Morales, JJ ., concur.

Footnotes

1. Rollo at 10–16. Penned by Associate Justice Mercedes Gozo-Dadole and concurred in by

Associate Justices Salvador J. Valdez, Jr., and Amelita G. Tolentino.

2. Id. at 19.
3. Id. at 143.

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 4. Id.
5. Id.
6. Id. at 64–65.
7. Id. at 42.
8. US vs. Limsiongco, 41 Phil. 94, 101 (1920); Herrera vs. Baretto and Joaquin, 25 Phil. 245,
251 (1913).
9. Reyes vs. Diaz, 73 Phil. 484, 487 (1941).
10. People vs. Jose de Martinez, 76 Phil. 599, 601 (1946).
11. Dionisio vs. Sioson Puerto, G.R. No. 39452, October 31, 1974, 60 SCRA 471, 477.
12. Leoquinco vs. Canada Dry Bottling Co. of the Phil., Inc., Employees Association, G.R.
No. 28621, February 22, 1971, 37 SCRA 535, 548.

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