Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. 72873 May 28, 1987

CARLOS ALONZO and CASIMIRA ALONZO, petitioners, vs.INTERMEDIATE APPELLATE COURT and TECLA PADUA, respondents.

Perpetuo L.B. Alonzo for petitioners.

Luis R. Reyes for private respondent.

CRUZ, J.:

The question is sometimes asked, in serious inquiry or in curious conjecture, whether we are a court of law or a court of justice. Do we apply the law even if it is unjust or do we administer justice even against the law? Thus queried, we do not equivocate. The answer is that we do neither because we are a court both of law and of justice. We apply the law with justice for that is our mission and purpose in the scheme of our Republic. This case is an illustration.

Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in 'the name of their deceased parents under OCT No. 10977 of the Registry of Deeds of Tarlac. 1

On March 15, 1963, one of them, Celestino Padua, transferred his undivided share of the herein petitioners for the sum of P550.00 by way of absolute sale. 2 One year later, on April 22, 1964, Eustaquia Padua, his sister, sold her own share to the same vendees, in an instrument denominated "Con Pacto de Retro Sale," for the sum of P 440.00. 3

By virtue of such agreements, the petitioners occupied, after the said sales, an area corresponding to two-fifths of the said lot, representing the portions sold to them. The vendees subsequently enclosed the same with a fence. In 1975, with their consent, their son Eduardo Alonzo and his wife built a semi-concrete house on a part of the enclosed area. 4

On February 25, 1976, Mariano Padua, one of the five coheirs, sought to redeem the area sold to the spouses Alonzo, but his complaint was dismissed when it appeared that he was an American citizen . 5 On May 27, 1977, however, Tecla Padua, another co-heir, filed her own complaint invoking the same right of redemption claimed by her brother. 6

The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not having been exercised within thirty days from notice of the sales in 1963 and 1964. Although there was no written notice, it was held that actual knowledge of the sales by the co-heirs satisfied the requirement of the law. 7

In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The other co-heirs, including Tecla Padua, lived on

the same lot, which consisted of only 604 square meters, including the portions sold to the petitioners . 8 Eustaquia herself, who had sold her portion, was staying in the same house with her sister Tecla, who later claimed redemption petition. 9 Moreover, the petitioners and the private respondents were close friends and neighbors whose children went to school together. 10

It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as they alleged, that the area occupied by the petitioners had merely been mortgaged by Celestino and Eustaquia. In the circumstances just narrated, it was impossible for Tecla not to know that the area occupied by the petitioners had been purchased by them from the other co-heirs. Especially significant was the erection thereon of the permanent semi-concrete structure by the petitioners' son, which was done without objection on her part or of any of the other co-heirs.

The only real question in this case, therefore, is the correct interpretation and application of the pertinent law as invoked, interestingly enough, by both the petitioners and the private respondents. This is Article 1088 of the Civil Code, providing as follows:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor.

In reversing the trial court, the respondent court ** declared that the notice required by the said article was written notice and that actual notice would not suffice as a substitute. Citing the same case of De Conejero v. Court of Appeals 11 applied by the trial court, the respondent court held that that decision, interpreting a like rule in Article 1623, stressed the need for written notice although no particular form was required.

Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-heirs with a copy of the deed of sale of the property subject to redemption would satisfy the requirement for written notice. "So long, therefore, as the latter (i.e., the redemptioner) is informed in writing of the sale and the particulars thereof," he declared, "the thirty days for redemption start running. "

In the earlier decision of Butte v. UY, 12 " the Court, speaking through the same learned jurist, emphasized that the written notice should be given by the vendor and not the vendees, conformably to a similar requirement under Article 1623, reading as follows:

Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendors, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners.

The right of redemption of co-owners excludes that of the adjoining owners.

As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of giving notice, and that notice must be deemed exclusive," the Court held that notice given by the vendees and not the vendor would not toll the running of the 30-day period.

The petition before us appears to be an illustration of the Holmes dictum that "hard cases make bad laws" as the petitioners obviously cannot argue against the fact that there was really no written notice given by the vendors to their co-heirs. Strictly applied and interpreted, Article 1088 can lead to only one conclusion, to wit, that in view of such deficiency, the 30 day period for redemption had not begun to run, much less expired in 1977.

But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its provisions the in tent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to cause injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to render justice.

Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may seem arbitrary when applied in a particular case because of its peculiar circumstances. In such a situation, we are not bound, because only of our nature and functions, to apply them just the same, in slavish obedience to their language. What we do instead is find a balance between the word and the will, that justice may be done even as the law is obeyed.

As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like robots to the literal command without regard to its cause and consequence. "Courts are apt to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again, "where these words import a policy that goes beyond them." 13 While we admittedly may not legislate, we nevertheless have the power to interpret the law in such a way as to reflect the will of the legislature. While we may not read into the law a purpose that is not there, we nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer not to "the letter that killeth" but to "the spirit that vivifieth," to give effect to the law maker's will.

The spirit, rather than the letter of a statute determines its construction, hence, a statute must be read according to its spirit or intent. For what is within the spirit is within the letter but although it is not within the letter thereof, and that which is within the letter but not within the spirit is not within the statute. Stated differently, a thing which is within the intent of the lawmaker is as much within the statute as if within the letter; and a thing which is within the letter of the statute is not within the statute unless within the intent of the lawmakers. 14

In requiring written notice, Article 1088 seeks to ensure that the redemptioner is properly notified of the sale and to indicate the date of such notice as the starting time of the 30-day period of redemption. Considering the shortness of the period, it is really necessary, as a general rule, to pinpoint the precise date it is supposed to begin, to obviate any problem of alleged delays, sometimes consisting of only a day or two.

The instant case presents no such problem because the right of redemption was invoked not days but years after the sales were made in 1963 and 1964. The complaint was filed by Tecla Padua in 1977, thirteen years after the first sale and fourteen years after the second sale. The delay invoked by the petitioners extends to more than a decade, assuming of course that there was a valid notice that tolled the running of the period of redemption.

Was there a valid notice? Granting that the law requires the notice to be written, would such notice be necessary in this case? Assuming there was a valid notice although it was not in writing. would there be any question that the 30-day period for redemption had expired long before the complaint was filed in 1977?

In the face of the established facts, we cannot accept the private respondents' pretense that they were unaware of the sales made by their brother and sister in 1963 and 1964. By requiring written proof of such notice, we would be closing our eyes to the obvious truth in favor of their palpably false claim of ignorance, thus exalting the letter of the law over its purpose. The purpose is clear enough: to make sure that the redemptioners are duly notified. We are satisfied that in this case the other brothers and sisters were actually informed, although not in writing, of the sales made in 1963 and 1964, and that such notice was sufficient.

Now, when did the 30-day period of redemption begin?

While we do not here declare that this period started from the dates of such sales in 1963 and 1964, we do say that sometime between those years and 1976, when the first complaint for redemption was filed, the other co-heirs were actually informed of the sale and that thereafter the 30-day period started running and ultimately expired. This could have happened any time during the interval of thirteen years, when none of the co-heirs made a move to redeem the properties sold. By 1977, in other words, when Tecla Padua filed her complaint, the right of redemption had already been extinguished because the period for its exercise had already expired.

The following doctrine is also worth noting:

While the general rule is, that to charge a party with laches in the assertion of an alleged right it is essential that he should have knowledge of the facts upon which he bases his claim, yet if the circumstances were such as should have induced inquiry, and the means of ascertaining the truth were readily available upon inquiry, but the party neglects to make it, he will be chargeable with laches, the same as if he had known the facts. 15

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among them, should enclose a portion of the inherited lot and build thereon a house of strong materials. This definitely was not the act of a temporary possessor or a mere mortgagee. This certainly looked like an act of ownership. Yet, given this unseemly situation, none of the co-heirs saw fit to object or at least inquire, to ascertain the facts, which were readily available. It took all of thirteen years before one of them chose to claim the right of redemption, but then it was already too late.

We realize that in arriving at our conclusion today, we are deviating from the strict letter of the law, which the respondent court understandably applied pursuant to existing jurisprudence. The said court acted properly as it had no competence to reverse the doctrines laid down by this Court in the above-cited cases. In fact, and this should be clearly stressed, we ourselves are not abandoning the De Conejero and Buttle doctrines. What we are doing simply is adopting an exception to the general rule, in view of the peculiar circumstances of this case.

The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them. And there is no doubt either that the 30-day period began and ended during the 14 years between the sales in question and the filing of the complaint for redemption in 1977, without the co-heirs exercising their right of redemption. These are the justifications for this exception.

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one his due." 16 That wish continues to motivate this Court when it assesses the facts and the law in every case brought to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we interpret the law in a way that will render justice, presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with justice. So we have done in this case.

WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial court is reinstated, without any pronouncement as to costs. It is so ordered.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. 94723 August 21, 1997

KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural Guardian, and Spouses FEDERICO N. SALVACION, JR., and EVELINA E. SALVACION, petitioners, vs.CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING CORPORATION and GREG BARTELLI y NORTHCOTT, respondents.

TORRES, JR., J.:

In our predisposition to discover the "original intent" of a statute, courts become the unfeeling pillars of the status quo. Ligle do we realize that statutes or even constitutions are bundles of compromises thrown our way by their framers. Unless we exercise vigilance, the statute may already be out of tune and irrelevant to our day.

The petition is for declaratory relief. It prays for the following reliefs:

a.) Immediately upon the filing of this petition, an Order be issued restraining the respondents from applying and enforcing Section 113 of Central Bank Circular No. 960;

b.) After hearing, judgment be rendered:

1.) Declaring the respective rights and duties of petitioners and respondents;

2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provisions of the Constitution, hence void; because its provision that "Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever

i.) has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in violation of substantive due process guaranteed by the Constitution;

ii.) has given foreign currency depositors an undue favor or a class privilege in violation of the equal protection clause of the Constitution;

iii.) has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank.

The antecedent facts:

On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and was able to rape the child once on February 4, and three times each day on February 5, 6, and 7, 1989. On February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the following items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account — China Banking Corp., US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the complainant.

On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli, Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803, 804, and 805 for four (4) counts of Rape. On the same day, petitioners filed with the Regional Trial Court of Makati Civil Case No. 89-3214 for damages with preliminary attachment against Greg Bartelli. On February 24, 1989, the day there was a scheduled hearing for Bartelli's petition for bail the latter escaped from jail.

On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of Warrant of Arrest and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y Northcott, the criminal cases were archived in an Order dated February 28, 1989.

Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989 granting the application of herein petitioners, for the issuance of the writ of preliminary attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in the amount of P100,000.00, a Writ of Preliminary Attachment was issued by the trial court on February 28, 1989.

On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic Act No. 1405 as its answer to the notice of garnishment served on it. On March 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply to China Banking Corporation saying that the garnishment did not violate the secrecy of bank deposits since the disclosure is merely incidental to a garnishment properly and legally made by virtue of a court order which has placed the subject deposits in custodia legis. In answer to this letter of the Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March 20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar deposits or defendant Greg Bartelli are exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body, whatsoever.

This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter dated April 25, 1989 on whether Section 113 of CB Circular No. 960 has any exception or whether said section has been repealed or amended since said section has rendered nugatory the substantive right of the plaintiff to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted to the plaintiff under Rule 57

of the Revised Rules of Court. The Central Bank responded as follows:

May 26, 1989

Ms. Erlinda S. Carolino12 Pres. Osmena AvenueSouth Admiral VillageParanaque, Metro Manila

Dear Ms. Carolino:

This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB Circular No. 960 (1983).

The cited provision is absolute in application. It does not admit of any exception, nor has the same been repealed nor amended.

The purpose of the law is to encourage dollar accounts within the country's banking system which would help in the development of the economy. There is no intention to render futile the basic rights of a person as was suggested in your subject letter. The law may be harsh as some perceive it, but it is still the law. Compliance is, therefore, enjoined.

Very truly yours,

(SGD) AGAPITO S. FAJARDODirector 1

Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for leave to serve summons by publication in the Civil Case No. 89-3214 entitled "Karen Salvacion, et al. vs. Greg Bartelli y Northcott." Summons with the complaint was a published in the Manila Times once a week for three consecutive weeks. Greg Bartelli failed to file his answer to the complaint and was declared in default on August 7, 1989. After hearing the case ex-parte, the court rendered judgment in favor of petitioners on March 29, 1990, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant, ordering the latter:

1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;

2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion the amount of P150,000.00 each or a total of P300,000.00 for both of them;

3. To pay plaintiffs exemplary damages of P100,000.00; and

4. To pay attorney's fees in an amount equivalent to 25% of the total amount of damages herein awarded;

5. To pay litigation expenses of P10,000.00; plus

6. Costs of the suit.

SO ORDERED.

The heinous acts of respondent Greg Bartelli which gave rise to the award were related in graphic detail by the trial court in its decision as follows:

The defendant in this case was originally detained in the municipal jail of Makati but was able to escape therefrom on February 24, 1989 as per report of the Jail Warden of Makati to the Presiding Judge, Honorable Manuel M. Cosico of the Regional Trial Court of Makati, Branch 136, where he was charged with four counts of Rape and Serious Illegal Detention (Crim. Cases Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel, summons was served upon defendant by publication in the Manila Times, a newspaper of general circulation as attested by the Advertising Manager of the Metro Media Times, Inc., the publisher of the said newspaper. Defendant, however, failed to file his answer to the complaint despite the lapse of the period of sixty (60) days from the last publication; hence, upon motion of the plaintiffs, through counsel, defendant was declared in default and plaintiffs were authorized to present their evidence ex parte.

In support of the complaint, plaintiffs presented as witnesses the minor Karen E. Salvacion, her father, Federico N. Salvacion, Jr., a certain Joseph Aguilar and a certain Liberato Madulio, who gave the following testimony:

Karen took her first year high school in St. Mary's Academy in Pasay City but has recently transferred to Arellano University for her second year.

In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema Square, with her friend Edna Tangile whiling away her free time. At about 3:30 p.m. while she was finishing her snack on a concrete bench in front of Plaza Fair, an American approached her. She was then alone because Edna Tangile had already left, and she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)

The American asked her name and introduced himself as Greg Bartelli. He sat beside her when he talked to her. He said he was a Math teacher and told her that he has a sister who is a nurse in New York. His sister allegedly has a daughter who is about Karen's age and who was with him

in his house along Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5)

The American asked Karen what was her favorite subject and she told him it's Pilipino. He then invited her to go with him to his house where she could teach Pilipino to his niece. He even gave her a stuffed toy to persuade her to teach his niece. (Id., pp. 5-6)

They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendant's house along Kalayaan Avenue. (Id., p. 6)

When they reached the apartment house, Karen noticed that defendant's alleged niece was not outside the house but defendant told her maybe his niece was inside. When Karen did not see the alleged niece inside the house, defendant told her maybe his niece was upstairs, and invited Karen to go upstairs. (Id., p. 7)

Upon entering the bedroom defendant suddenly locked the door. Karen became nervous because his niece was not there. Defendant got a piece of cotton cord and tied Karen's hands with it, and then he undressed her. Karen cried for help but defendant strangled her. He took a packing tape and he covered her mouth with it and he circled it around her head. (Id., p. 7)

Then, defendant suddenly pushed Karen towards the bed which was just near the door. He tied her feet and hands spread apart to the bed posts. He knelt in front of her and inserted his finger in her sex organ. She felt severe pain. She tried to shout but no sound could come out because there were tapes on her mouth. When defendant withdrew his finger it was full of blood and Karen felt more pain after the withdrawal of the finger. (Id., p. 8)

He then got a Johnson's Baby Oil and he applied it to his sex organ as well as to her sex organ. After that he forced his sex organ into her but he was not able to do so. While he was doing it, Karen found it difficult to breathe and she perspired a lot while feeling severe pain. She merely presumed that he was able to insert his sex organ a little, because she could not see. Karen could not recall how long the defendant was in that position. (Id. pp. 8-9)

After that, he stood up and went to the bathroom to wash. He also told Karen to take a shower and he untied her hands. Karen could only hear the sound of the water while the defendant, she presumed, was in the bathroom washing his sex organ. When she took a shower more blood came out from her. In the meantime, defendant changed the mattress because it was full of blood. After the shower, Karen was allowed by defendant to sleep. She

fell asleep because she got tired crying. The incident happened at about 4:00 p.m. Karen had no way of determining the exact time because defendant removed her watch. Defendant did not care to give her food before she went to sleep. Karen woke up at about 8:00 o'clock the following morning. (Id., pp. 9-10)

The following day, February 5, 1989, a Sunday, after a breakfast of biscuit and coke at about 8:30 to 9:00 a.m. defendant raped Karen while she was still bleeding. For lunch, they also took biscuit and coke. She was raped for the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for dinner which defendant had stored downstairs; it was he who cooked the rice that is why it looks like "lugaw". For the third time, Karen was raped again during the night. During those three times defendant succeeded in inserting his sex organ but she could not say whether the organ was inserted wholly.

Karen did not see any firearm or any bladed weapon. The defendant did not tie her hands and feet nor put a tape on her mouth anymore but she did not cry for help for fear that she might be killed; besides, all the windows and doors were closed. And even if she shouted for help, nobody would hear her. She was so afraid that if somebody would hear her and would be able to call the police, it was still possible that as she was still inside the house, defendant might kill her. Besides, the defendant did not leave that Sunday, ruling out her chance to call for help. At nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 12-14)

On February 6, 1989, Monday, Karen was raped three times, once in the morning for thirty minutes after a breakfast of biscuits; again in the afternoon; and again in the evening. At first, Karen did not know that there was a window because everything was covered by a carpet, until defendant opened the window for around fifteen minutes or less to let some air in, and she found that the window was covered by styrofoam and plywood. After that, he again closed the window with a hammer and he put the styrofoam, plywood, and carpet back. (Id., pp. 14-15)

That Monday evening, Karen had a chance to call for help, although defendant left but kept the door closed. She went to the bathroom and saw a small window covered by styrofoam and she also spotted a small hole. She stepped on the bowl and she cried for help through the hole. She cried: "Maawa no po kayo so akin. Tulungan n'yo akong makalabas dito. Kinidnap ako!" Somebody heard her. It was a woman, probably a neighbor, but she got angry and said she was "istorbo". Karen pleaded for help and the woman told her to sleep and she will call the

police. She finally fell asleep but no policeman came. (TSN, Aug. 15, 1989, pp. 15-16)

She woke up at 6:00 o'clock the following morning, and she saw defendant in bed, this time sleeping. She waited for him to wake up. When he woke up, he again got some food but he always kept the door locked. As usual, she was merely fed with biscuit and coke. On that day, February 7, 1989, she was again raped three times. The first at about 6:30 to 7:00 a.m., the second at about 8:30 — 9:00, and the third was after lunch at 12:00 noon. After he had raped her for the second time he left but only for a short while. Upon his return, he caught her shouting for help but he did not understand what she was shouting about. After she was raped the third time, he left the house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom and shouted for help. After shouting for about five minutes, she heard many voices. The voices were asking for her name and she gave her name as Karen Salvacion. After a while, she heard a voice of a woman saying they will just call the police. They were also telling her to change her clothes. She went from the bathroom to the room but she did not change her clothes being afraid that should the neighbors call for the police and the defendant see her in different clothes, he might kill her. At that time she was wearing a T-shirt of the American because the latter washed her dress. (Id., p. 16)

Afterwards, defendant arrived and he opened the door. He asked her if she had asked for help because there were many policemen outside and she denied it. He told her to change her clothes, and she did change to the one she was wearing on Saturday. He instructed her to tell the police that she left home and willingly; then he went downstairs but he locked the door. She could hear people conversing but she could not understand what they were saying. (Id., p. 19)

When she heard the voices of many people who were conversing downstairs, she knocked repeatedly at the door as hard as she could. She heard somebody going upstairs and when the door was opened, she saw a policeman. The policeman asked her name and the reason why she was there. She told him she was kidnapped. Downstairs, he saw about five policemen in uniform and the defendant was talking to them. "Nakikipag-areglo po sa mga pulis," Karen added. "The policeman told him to just explain at the precinct. (Id., p. 20)

They went out of the house and she saw some of her neighbors in front of the house. They rode the car of a certain person she called Kuya Boy together with defendant, the policeman, and two of her neighbors whom she called Kuya Bong Lacson and one Ate Nita. They were

brought to Sub-Station I and there she was investigated by a policeman. At about 2:00 a.m., her father arrived, followed by her mother together with some of their neighbors. Then they were brought to the second floor of the police headquarters. (Id., p. 21)

At the headquarters, she was asked several questions by the investigator. The written statement she gave to the police was marked as Exhibit A. Then they proceeded to the National Bureau of Investigation together with the investigator and her parents. At the NBI, a doctor, a medico-legal officer, examined her private parts. It was already 3:00 in the early morning of the following day when they reached the NBI. (TSN, Aug. 15, 1989, p. 22) The findings of the medico-legal officer has been marked as Exhibit B.

She was studying at the St. Mary's Academy in Pasay City at the time of the incident but she subsequently transferred to Apolinario Mabini, Arellano University, situated along Taft Avenue, because she was ashamed to be the subject of conversation in the school. She first applied for transfer to Jose Abad Santos, Arellano University along Taft Avenue near the Light Rail Transit Station but she was denied admission after she told the school the true reason for her transfer. The reason for their denial was that they might be implicated in the case. (TSN, Aug. 15, 1989, p. 46)

xxx xxx xxx

After the incident, Karen has changed a lot. She does not play with her brother and sister anymore, and she is always in a state of shock; she has been absent-minded and is ashamed even to go out of the house. (TSN, Sept. 12, 1989, p. 10) She appears to be restless or sad, (Id., p. 11) The father prays for P500,000.00 moral damages for Karen for this shocking experience which probably, she would always recall until she reaches old age, and he is not sure if she could ever recover from this experience. (TSN, Sept. 24, 1989, pp. 10-11)

Pursuant to an Order granting leave to publish notice of decision, said notice was published in the Manila Bulletin once a week for three consecutive weeks. After the lapse of fifteen (15) days from the date of the last publication of the notice of judgment and the decision of the trial court had become final, petitioners tried to execute on Bartelli's dollar deposit with China Banking Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular No. 960.

Thus, petitioners decided to seek relief from this Court.

The issues raised and the arguments articulated by the parties boil down to two:

May this Court entertain the instant petition despite the fact that original jurisdiction in petitions for declaratory relief rests with the lower court? Should Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a foreign transient?

Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960 providing that "Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever." should be adjudged as unconstitutional on the grounds that: 1.) it has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in violation of substantive due process guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue favor or a class privilege in violation of the equal protection clause of the Constitution; 3.) it has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank; and 4.) The Monetary Board, in issuing Section 113 of Central Bank Circular No. 960 has exceeded its delegated quasi-legislative power when it took away: a.) the plaintiffs substantive right to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted by Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to have the judgment credit satisfied by way of the writ of execution out of the bank deposit of the judgment debtor as granted to the judgment creditor by Rule 39 of the Revised Rules of Court, which is beyond its power to do so.

On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed its power or authority because the subject Section is copied verbatim from a portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that grants exemption from attachment or garnishment to foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it does not violate the substantive due process guaranteed by the Constitution because a.) it was based on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular methods of procedure; and d.) it applies to all members of a class.

Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits from attachment, garnishment or any other order or process of any court, is to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines; that another reason is to encourage the inflow of foreign currency deposits into the banking institutions thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly contributing to the economic development of the country; that the subject section is being enforced according to the regular methods of procedure; and that it applies to all foreign currency deposits made by any person and therefore does not violate the equal protection clause of the Constitution.

Respondent Central Bank further avers that the questioned provision is needed to promote the public interest and the general welfare; that the State cannot just stand idly by while a considerable segment of the society suffers from economic distress; that the

State had to take some measures to encourage economic development; and that in so doing persons and property may be subjected to some kinds of restraints or burdens to secure the general welfare or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the Revised Rules of Court provide that some properties are exempted from execution/attachment especially provided by law and R.A. No. 6426 as amended is such a law, in that it specifically provides, among others, that foreign currency deposits shall be exempted from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.

For its part, respondent China Banking Corporation, aside from giving reasons similar to that of respondent Central Bank, also stated that respondent China Bank is not unmindful of the inhuman sufferings experienced by the minor Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is only too willing to release the dollar deposit of Bartelli which may perhaps partly mitigate the sufferings petitioner has undergone; but it is restrained from doing so in view of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that despite the harsh effect of these laws on petitioners, CBC has no other alternative but to follow the same.

This Court finds the petition to be partly meritorious.

Petitioner deserves to receive the damages awarded to her by the court. But this petition for declaratory relief can only be entertained and treated as a petition for mandamus to require respondents to honor and comply with the writ of execution in Civil Case No. 89-3214.

This Court has no original and exclusive jurisdiction over a petition for declaratory relief. 2 However, exceptions to this rule have been recognized. Thus, where the petition has far-reaching implications and raises questions that should be resolved, it may be treated as one for mandamus. 3

Here is a child, a 12-year old girl, who in her belief that all Americans are good and in her gesture of kindness by teaching his alleged niece the Filipino language as requested by the American, trustingly went with said stranger to his apartment, and there she was raped by said American tourist Greg Bartelli. Not once, but ten times. She was detained therein for four (4) days. This American tourist was able to escape from the jail and avoid punishment. On the other hand, the child, having received a favorable judgment in the Civil Case for damages in the amount of more than P1,000,000.00, which amount could alleviate the humiliation, anxiety, and besmirched reputation she had suffered and may continue to suffer for a long, long time; and knowing that this person who had wronged her has the money, could not, however get the award of damages because of this unreasonable law. This questioned law, therefore makes futile the favorable judgment and award of damages that she and her parents fully deserve. As stated by the trial court in its decision,

Indeed, after hearing the testimony of Karen, the Court believes that it was undoubtedly a shocking and traumatic experience she had undergone which could haunt her mind for a long, long time, the mere recall of which could make her feel so humiliated, as in fact she had been actually humiliated once when she was refused admission at the Abad Santos High

School, Arellano University, where she sought to transfer from another school, simply because the school authorities of the said High School learned about what happened to her and allegedly feared that they might be implicated in the case.

xxx xxx xxx

The reason for imposing exemplary or corrective damages is due to the wanton and bestial manner defendant had committed the acts of rape during a period of serious illegal detention of his hapless victim, the minor Karen Salvacion whose only fault was in her being so naive and credulous to believe easily that defendant, an American national, could not have such a bestial desire on her nor capable of committing such a heinous crime. Being only 12 years old when that unfortunate incident happened, she has never heard of an old Filipino adage that in every forest there is asnake, . . . . 4

If Karen's sad fate had happened to anybody's own kin, it would be difficult for him to fathom how the incentive for foreign currency deposit could be more important than his child's rights to said award of damages; in this case, the victim's claim for damages from this alien who had the gall to wrong a child of tender years of a country where he is a mere visitor. This further illustrates the flaw in the questioned provisions.

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's economy was in a shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But the realities of the present times show that the country has recovered economically; and even if not, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law may be good when enacted. The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the case before us.

It has thus been said that —

But I also know, 5 that laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths are disclosed and manners and opinions change with the change of circumstances, institutions must advance also, and keep pace with the times. . . We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to remain ever under the regimen of their barbarous ancestors.

In his Comment, the Solicitor General correctly opined, thus:

The present petition has far-reaching implications on the right of a national to obtain redress for a wrong committed by an alien who takes refuge under a law and regulation

promulgated for a purpose which does not contemplate the application thereof envisaged by the alien. More specifically, the petition raises the question whether the protection against attachment, garnishment or other court process accorded to foreign currency deposits by PD No. 1246 and CB Circular No. 960 applies when the deposit does not come from a lender or investor but from a mere transient or tourist who is not expected to maintain the deposit in the bank for long.

The resolution of this question is important for the protection of nationals who are victimized in the forum by foreigners who are merely passing through.

xxx xxx xxx

. . . Respondents China Banking Corporation and Central Bank of the Philippines refused to honor the writ of execution issued in Civil Case No. 89-3214 on the strength of the following provision of Central Bank Circular No. 960:

Sec. 113. Exemption from attachment. — Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.

Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426:

Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall promulgate such rules and regulations as may be necessary to carry out the provisions of this Act which shall take effect after the publication of such rules and regulations in the Official Gazette and in a newspaper of national circulation for at least once a week for three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing the rights of depositors, the rules and regulations at the time the deposit was made shall govern.

The aforecited Section 113 was copied from Section 8 of Republic Act NO. 6426, as amended by P.D. 1246, thus:

Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign currency deposits authorized under this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative or any other entity whether public or private: Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.

The purpose of PD 1246 in according protection against attachment, garnishment and other court process to foreign currency deposits is stated in its whereases, viz.:

WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No. 1035, certain Philippine banking institutions and branches of foreign banks are authorized to accept deposits in foreign currency;

WHEREAS, under the provisions of Presidential Decree No. 1034 authorizing the establishment of an offshore banking system in the Philippines, offshore banking units are also authorized to receive foreign currency deposits in certain cases;

WHEREAS, in order to assure the development and speedy

growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines, certain incentives were provided for under the two Systems such as confidentiality of deposits subject to certain exceptions and tax exemptions on the interest income of depositors who are nonresidents and are not engaged in trade or business in the Philippines;

WHEREAS, making absolute the protective cloak of confidentiality over such foreign currency deposits, exempting such deposits from tax, and guaranteeing the vested rights of depositors would better encourage the inflow of foreign currency deposits into the banking institutions authorized to accept such deposits in the Philippines thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly contributing to the economic development of the country;

Thus, one of the principal purposes of the protection accorded to foreign currency deposits is "to assure the development and speedy growth of the Foreign Currency Deposit system and the Offshore Banking in the Philippines" (3rd Whereas).

The Offshore Banking System was established by PD No. 1034. In turn, the purposes of PD No. 1034 are as follows:

WHEREAS, conditions conducive to the establishment of an offshore banking system, such as political stability, a growing economy and adequate communication facilities, among others, exist in the Philippines;

WHEREAS, it is in the interest of developing countries to have as wide access as possible to the sources of capital funds for economic development;

WHEREAS, an offshore banking system based in the Philippines will be advantageous and beneficial to the country by increasing our links with foreign lenders, facilitating the flow of desired investments into the Philippines, creating employment opportunities and expertise in international finance, and contributing to the national development effort.

WHEREAS, the geographical location, physical and human resources, and other positive factors provide the Philippines with the clear potential to develop as another financial center in Asia;

On the other hand, the Foreign Currency Deposit system was created by PD. No. 1035. Its purposes are as follows:

WHEREAS, the establishment of an offshore banking system in the Philippines has been authorized under a separate decree;

WHEREAS, a number of local commercial banks, as depository bank under the Foreign Currency Deposit Act (RA No. 6426), have the resources and managerial competence to more actively engage in foreign exchange transactions and participate in the grant of foreign currency loans to resident corporations and firms;

WHEREAS, it is timely to expand the foreign currency lending authority of the said depository banks under RA 6426 and apply to their transactions the same taxes as would be applicable to transaction of the proposed offshore banking units;

It is evident from the above [Whereas clauses] that the Offshore Banking System and the Foreign Currency Deposit System were designed to draw deposits from foreign lenders and investors (Vide second Whereas of PD No. 1034; third Whereas of PD

No. 1035). It is these deposits that are induced by the two laws and given protection and incentives by them.

Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of deposit encouraged by PD Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor stays only for a few days in the country and, therefore, will maintain his deposit in the bank only for a short time.

Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with respondent China Banking Corporation only for safekeeping during his temporary stay in the Philippines.

For the reasons stated above, the Solicitor General thus submits that the dollar deposit of respondent Greg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment, garnishment or other court processes. 6

In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that "in case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. "Ninguno non deue enriquecerse tortizeramente con dano de otro." Simply stated, when the statute is silent or ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377).

It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent.

Call it what it may — but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor? Shielding or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of a crime? This situation calls for fairness against legal tyranny.

We definitely cannot have both ways and rest in the belief that we have served the ends of justice.

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it amends Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case No. 89-3214, "Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the dollar deposit

of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 191475 December 11, 2013

PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC CARPET MANUFACTURING CORPORATION, MR. PATRICIO LIM and MR. DAVID LIM, Petitioners, vs.IGNACIO B. TAGYAMON,PABLITO L. LUNA, FE B. BADA YOS, GRACE B. MARCOS, ROGELIO C. NEMIS, ROBERTO B. ILAO, ANICIA D. DELA CRUZ and CYNTHIA L. COMANDAO, Respondents.

D E C I S I O N

PERALTA, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of Appeals (CA)Decision1 dated July 7, 2009 and Resolution2 dated February 26, 2010 in CA-G.R. SP No. 105236. The assailed decision granted the petition for certiorari filed by respondents Ignacio B. Tagyamon (Tagyamon), Pablito I. Luna (Luna), Fe B. Badayos (Badayos), Grace B. Marcos (Marcos), Rogelio C. Nemis (Nemis), Roberto B. Ilao (Ilao), Anicia D. Dela Cruz (Dela Cruz), and Cynthia L. Comandao (Comandao), the dispositive portion of which reads:

WHEREFORE, the petition is GRANTED. The private respondent is hereby ordered to reinstate the petitioners with full backwages less the amounts they received as separation pays. In case reinstatement would no longer be feasible because the positions previously held no longer exist, the private respondent shall pay them backwages plus, in lieu of reinstatement, separation pays equal to one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher. In addition, the private respondent is hereby ordered to pay the petitioners moral damages in the amount of P20,000.00 each.

SO ORDERED.3

The Facts

Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation registered in the Philippines engaged in the business of manufacturing wool and yarn carpets and rugs.4 Respondents were its regular and permanent employees, but were affected by petitioner’s retrenchment and voluntary retirement programs.

On March 15, 2004, Tagyamon,5 Luna,6 Badayos,7 Dela Cruz,8 and Comandao9 received a uniformly worded Memorandum of dismissal, to wit:

This is to inform you that in view of a slump in the market demand for our products due to the un-competitiveness of our price, the company is constrained to reduce the number of its workforce. The long-term effects of September 11 and the war in the Middle East have greatly affected the viability of our business and we are left with no recourse but to reorganize and downsize our organizational structure.

We wish to inform you that we are implementing a retrenchment program in accordance with Article 283 of the Labor Code of the Philippines, as amended, and its implementing rules and regulations.

In this connection, we regret to advise you that you are one of those affected by the said exercise, and your employment shall be terminated effective at the close of working hours on April 15, 2004.

Accordingly, you shall be paid your separation pay as mandated by law. You will no longer be required to report for work during the 30-day notice period in order to give you more time to look for alternative employment. However, you will be paid the salary corresponding to the said period. We shall process your clearance and other documents and you may claim the payables due you on March 31, 2004.

Thank you for your services and good luck to your future endeavors.10

As to Marcos, Ilao, and Nemis, they claimed that they were dismissed effective March 31, 2004, together with fifteen (15) other employees on the ground of lack of market/slump in demand.11 PCMC, however, claimed that they availed of the company’s voluntary retirement program and, in fact, voluntarily executed their respective Deeds of Release, Waiver, and Quitclaim.12

Claiming that they were aggrieved by PCMC’s decision to terminate their employment, respondents filed separate complaints for illegal dismissal against PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim and Mr. David Lim. These cases were later consolidated. Respondents primarily relied on the Supreme Court’s decision inPhilippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (Philcea case),13 as to the validity of the company’s retrenchment program. They further explained that PCMC did not, in fact, suffer losses shown by its acts prior to and subsequent to their termination.14 They also insisted that their acceptance of separation pay and signing of quitclaim is not a bar to the pursuit of illegal dismissal case.15

PCMC, for its part, defended its decision to terminate the services of respondents being a necessary management prerogative. It pointed out that as an employer, it had no obligation to keep in its employ more workers than are necessary for the operation of his business. Thus, there was an authorized cause for dismissal. Petitioners also stressed that respondents belatedly filed their complaint as they allowed almost three years to pass making the principle of laches applicable. Considering that respondents accepted their separation pay and voluntarily executed deeds of release, waiver and quitclaim, PCMC invoked the principle of estoppel on the part of respondents to question their separation from the service. Finally, as to Marcos, Ilao and Nemis, PCMC emphasized that they were not dismissed

from employment, but in fact they voluntarily retired from employment to take advantage of the company’s program.16

On August 23, 2007, Labor Arbiter (LA) Donato G. Quinto, Jr. rendered a Decision dismissing the complaint for lack of merit.17 The LA found no flaw in respondents’ termination as they voluntarily opted to retire and were subsequently re-employed on a contractual basis then regularized, terminated from employment and were paid separation benefits.18 In view of respondents’ belated filing of the complaint, the LA concluded that such action is a mere afterthought designed primarily for respondents to collect more money, taking advantage of the 2006 Supreme Court decision.19

On appeal, the National Labor Relations Commission (NLRC) sustained the LA decision.20 In addition to the LA ratiocination, the NLRC emphasized the application of the principle of laches for respondents’ inaction for an unreasonable period.

Still undaunted, respondents elevated the matter to the CA in a petition for certiorari. In reversing the earlier decisions of the LA and the NLRC, the CA refused to apply the principle of laches, because the case was instituted prior to the expiration of the prescriptive period set by law which is four years. It stressed that said principle cannot be invoked earlier than the expiration of the prescriptive period.21 Citing the Court’s decision in the Philcea case, the CA applied the doctrine of stare decisis, in view of the similar factual circumstances of the cases. As to Ilao, Nemis and Marcos, while acknowledging their voluntary resignation, the CA found the same not a bar to the illegal dismissal case because they did so on the mistaken belief that PCMC was losing money.22 With the foregoing findings, the CA ordered that respondents be reinstated with full backwages less the amounts they received as separation pay. In case of impossibility of reinstatement, the CA ordered PCMC to pay respondents backwages and in lieu of reinstatement, separation pay equal to one month pay or ½ month pay for every year of service whichever is higher, plus moral damages.23

The Issues

Aggrieved, petitioners come before the Court in this petition for review on certiorari based on this ground, to wit:

IN RENDERING ITS DISPUTED DECISION AND RESOLUTION, THE COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND/OR ESTABLISHED JURISPRUDENCE.

a) Res Judicata should not be followed if to follow it is to perpetuate error (Philippine Trust Co., and Smith Bell & Co. vs. Mitchell, 59 Phil. 30, 36 (1933). The (Supreme) Court is not precluded from rectifying errors of judgment if blind and stubborn adherence to the doctrine of immutability of final judgments would involve the sacrifice of justice for technicality (Heirs of Maura So vs. Obliosca, G.R. No. 147082, January 28, 2008, 542 SCRA 406)

b) Not all waivers and quitclaims are invalid as against public policy. Waivers that represent a voluntary and reasonable settlement of the laborer’s claims are legitimate and should be respected by the Court as the law between the parties (Gamogamo vs. PNOC Shipping and Transport Corp., G.R. No. 141707, May 2, 2002;Alcasero vs. NLRC, 288 SCRA 129) Where the persons making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as valid and binding undertaking

(Periquet vs. NLRC, 186 SCRA 724 [1990]; Magsalin vs. Coca Cola Bottlers Phils., Inc. vs. National Organization of Working Men (N.O.W.M.], G.R. No. 148492, May 2, 2003).24

Petitioners contend that the Philcea case decided by this Court and relied upon by the CA in the assailed decision was based on erroneous factual findings, inapplicable financial statement, as well as erroneous analysis of such financial statements.25 They, thus, implore the Court to revisit the cited case in order to dispense with substantial justice.26 They explain that the Court made conclusions based on erroneous information. Petitioners also insist that the doctrines of res judicata and law of the case are not applicable, considering that this case does not involve the same parties as the Philcea case.27 They likewise point out that not all respondents were involuntarily separated on the ground of redundancy as some of them voluntarily availed of the company’s Voluntary Separation Program.28 They further contend that respondents are guilty not only of laches but also of estoppel in view of their inaction for an unreasonable length of time to assail the alleged illegal dismissal and in voluntarily executing a release, quitclaim and waiver.29

The Court’s Ruling

Laches

Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it.30 It has been repeatedly31 held by the Court that:

x x x Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts of law not courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing legal right. x x x Courts exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them. InZabat Jr. v. Court of Appeals x x x, this Court was more emphatic in upholding the rules of procedure. We said therein:

As for equity which has been aptly described as a "justice outside legality," this is applied only in the absence of, and never against, statutory law or, as in this case, judicial rules of procedure. Aequetas nunguam contravenit legis. The pertinent positive rules being present here, they should preempt and prevail over all abstract arguments based only on equity.

Thus, where the claim was filed within the [four-year] statutory period, recovery therefore cannot be barred by laches. Courts should never apply the doctrine of laches earlier than the expiration of time limited for the commencement of actions at law."32

An action for reinstatement by reason of illegal dismissal is one based on an injury to the complainants’ rights which should be brought within four years from the time of their dismissal pursuant to Article 114633 of the Civil Code. Respondents’ complaint filed almost 3 years after their alleged illegal dismissal was still well within the prescriptive period. Laches cannot, therefore, be invoked yet.34 To be sure, laches may be applied only upon the most convincing evidence of deliberate inaction, for the rights of laborers are protected under the social justice provisions of the Constitution and under the Civil Code.35

Stare Decisis

The main issue sought to be determined in this case is the validity of respondents’ dismissal from employment. Petitioners contend that they either voluntarily retired from the service or terminated from employment based on an authorized cause. The LA and the NLRC are one in saying that the dismissal was legal. The CA, however, no longer discussed the validity of the ground of termination. Rather, it applied the Court’s decision in the Philcea case where the same ground was thoroughly discussed. In other words, the appellate court applied the doctrine of stare decisis and reached the same conclusion as the earlier case.

Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same, even though the parties may be different.36 Where the facts are essentially different, however, stare decisis does not apply, for a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variant is introduced.37

The question, therefore, is whether the factual circumstances of this present case are substantially the same as the Philcea case.

We answer in the affirmative.

This case and the Philcea case involve the same period which is March to April 2004; the issuance of Memorandum to employees informing them of the implementation of the cost reduction program; the implementation of the voluntary retirement program and retrenchment program, except that this case involves different employees; the execution of deeds of release, waiver, and quitclaim, and the acceptance of separation pay by the affected employees.

The illegality of the basis of the implementation of both voluntary retirement and retrenchment programs of petitioners had been thoroughly ruled upon by the Court in the Philcea case. It discussed the requisites of both retrenchment and redundancy as authorized causes of termination and that petitioners failed to substantiate them. In ascertaining the bases of the termination of employees, it took into consideration petitioners’ claim of business losses; the purchase of machinery and equipment after the termination, the declaration of cash dividends to stockholders, the hiring of 100 new employees after the retrenchment, and the authorization of full blast overtime work for six hours daily. These, said the Court, are inconsistent with petitioners’ claim that there was a slump in the demand for its products which compelled them to implement the termination programs. In arriving at its conclusions, the Court took note of petitioners’ net sales, gross and net profits, as well as net income. The Court, thus, reached the conclusion that the retrenchment effected by PCMC is invalid due to a substantive defect. We quote hereunder the Court’s pronouncement in the Philcea case, to wit:

Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union.

Contrary to the claim of respondents that the Corporation was experiencing business losses, respondent Corporation, in fact,

amassed substantial earnings from 1999 to 2003. It found no need to appropriate its retained earnings except on March 23, 2001, when it appropriated P60,000,000.00 to increase production capacity. x x x

x x x x

The evidence on record belies the P22,820,151.00 net income loss in 2004 as projected by the SOLE. On March 29, 2004, the Board of Directors approved the appropriation of P20,000,000.00 to purchase machinery to improve its facilities, and declared cash dividends to stockholders at P30.00 per share. x x x

x x x x

It bears stressing that the appropriation of P20,000,000.00 by the respondent Corporation on September 16, 2004 was made barely five months after the 77 Union members were dismissed on the ground that respondent Corporation was suffering from "chronic depression." Cash dividends were likewise declared on March 29, 2004, barely two weeks after it implemented its "retrenchment program."

If respondent Corporation were to be believed that it had to retrench employees due to the debilitating slump in demand for its products resulting in severe losses, how could it justify the purchase of P20,000,000.00 worth of machinery and equipment? There is likewise no justification for the hiring of more than 100 new employees, more than the number of those who were retrenched, as well as the order authorizing full blast overtime work for six hours daily. All these are inconsistent with the intransigent claim that respondent Corporation was impelled to retrench its employees precisely because of low demand for its products and other external causes.

x x x x

That respondents acted in bad faith in retrenching the 77 members of petitioner is buttressed by the fact that Diaz issued his Memorandum announcing the cost-reduction program on March 9, 2004, after receipt of the February 10, 2004 letter of the Union president which included the proposal for additional benefits and wage increases to be incorporated in the CBA for the ensuing year. Petitioner and its members had no inkling, before February 10, 2004, that respondent Corporation would terminate their employment. Moreover, respondent Corporation failed to exhaust all other means to avoid further losses without retrenching its employees, such as utilizing the latter's respective forced vacation leaves. Respondents also failed to use fair and reasonable criteria in implementing the retrenchment program, and instead chose to retrench 77 of the members of petitioner out of the dismissed 88 employees. Worse, respondent Corporation hired new employees and even rehired the others who had been "retrenched."

As shown by the SGV & Co. Audit Report, as of year end December 31, 2003, respondent Corporation increased its net sales by more than P8,000,000.00. Respondents failed to prove that there was a drastic or severe decrease in the product sales or that it suffered severe business losses within an interval of three (3) months from January 2004 to March 9, 2004 when Diaz issued said Memorandum. Such claim of a depressed market as of March 9, 2004 was only a pretext to retaliate against petitioner Union and thereby frustrate its demands for more monetary benefits and, at the same time, justify the dismissal of the 77 Union members.

x x x x

In contrast, in this case, the retrenchment effected by respondent Corporation is invalid due to a substantive defect, non-compliance with the substantial requirements to effect a valid retrenchment; it necessarily follows that the termination of the employment of petitioner Union's members on such ground is, likewise, illegal. As such, they (petitioner Union's members) are entitled to reinstatement with full backwages.38

We find no reason to depart from the above conclusions which are based on the Court’s examination of the evidence presented by the parties therein. As the respondents here were similarly situated as the union members in the Philcea case, and considering that the questioned dismissal from the service was based on the same grounds under the same circumstances, there is no need to relitigate the issues presented herein. In short, we adopt the Court’s earlier findings that there was no valid ground to terminate the employees.

A closer look at petitioners’ arguments would show that they want the Court to re-examine our decision in thePhilcea case allegedly on the ground that the conclusions therein were based on erroneous interpretation of the evidence presented.

Indeed, in Abaria v. National Labor Relations Commission,39 although the Court was confronted with the same issue of the legality of a strike that has already been determined in a previous case, the Court refused to apply the doctrine of stare decisis insofar as the award of backwages was concerned because of the clear erroneous application of the law. We held therein that the Court abandons or overrules precedents whenever it realizes that it erred in the prior decision.40 The Court’s pronouncement in that case is instructive:

The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular case override the great benefits derived by our judicial system from the doctrine of stare decisis, the Court is justified in setting it aside. For the Court, as the highest court of the land, may be guided but is not controlled by precedent. Thus, the Court, especially with a new membership, is not obliged to follow blindly a particular decision that it determines, after re-examination, to call for a rectification.41

The Abaria case, however, is not applicable in this case.1âwphi1 There is no reason to abandon the Court’s ruling in thePhilcea case.

Do we apply the aforesaid decision to all the respondents herein? Again, we answer in the affirmative.

Just like the union members in the Philcea case, respondents Tagyamon, Luna, Badayos, Dela Cruz, and Comandao received similarly worded memorandum of dismissal effective April 15, 2004 based on the same ground of slump in the market demand for the company’s products. As such, they are similarly situated in all aspects as the union members. With respect to respondents Marcos, Nemis and Ilao, although they applied for voluntary retirement, the same was not accepted by petitioner. Instead, it issued notice of termination dated March 6, 2004 to these same employees.42 And while it is true that petitioner paid them separation pay, the payment was in the nature of separation and not retirement pay. In other words, payment was made because of the implementation of the retrenchment program and not because of retirement.43 As their application for availing of the company’s voluntary retirement

program was based on the wrong premise, the intent to retire was not clearly established, or rather that the retirement is involuntary. Thus, they shall be considered discharged from employment.44 Consequently, they shall be treated as if they are in the same footing as the other respondents herein and the union members in the Philcea case.

Waivers, Releases and Quitclaims

"As a rule, deeds of release and quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel."45 To excuse respondents from complying with the terms of their waivers, they must locate their case within any of three narrow grounds: (1) the employer used fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right recognized by law.46 The instant case falls under the first situation.

As the ground for termination of employment was illegal, the quitclaims are deemed illegal as the employees’ consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities.47 The circumstances show that petitioner’s misrepresentation led its employees, specifically respondents herein, to believe that the company was suffering losses which necessitated the implementation of the voluntary retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver and quitclaim.48

It can safely be concluded that economic necessity constrained respondents to accept petitioners’ monetary offer and sign the deeds of release, waiver and quitclaim. That respondents are supervisors and not rank-and-file employees does not make them less susceptible to financial offers, faced as they were with the prospect of unemployment. The Court has allowed supervisory employees to seek payment of benefits and a manager to sue for illegal dismissal even though, for a consideration, they executed deeds of quitclaims releasing their employers from liability.49

x x x There is no nexus between intelligence, or even the position which the employee held in the company when it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a release and quitclaim. A lowly employee or a sales manager, as in the present case, who is confronted with the same dilemma of whether [to sign] a release and quitclaim and accept what the company offers them, or [to refuse] to sign and walk out without receiving anything, may do succumb to the same pressure, being very well aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal battle starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the probability of not immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange of some amount of money which may be way below what he may be entitled to based on company practice and policy or by law.50

The amounts already received by respondents as consideration for signing the releases and quitclaims should be deducted from their respective monetary awards.51

WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals Decision dated July 7, 2009 and Resolution dated February 26, 2010 in CA-G.R. SP No. 105236 are AFFIRMED.

SO ORDERED.

SECOND DIVISION

ARMAND NOCUM and THE PHILIPPINE DAILY INQUIRER, INC.,P e t i t i o n e r s,

- versus - LUCIO TAN,R e s p o n d e n t.

G.R. No. 145022 Present: PUNO,Chairman,AUSTRIA-MARTINEZ,CALLEJO, SR.TINGA, andCHICO-NAZARIO, JJ. Promulgated: September 23, 2005

X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X D E C I S I O N CHICO-NAZARIO, J.:

Assailed in a Petition for Review on Certiorari under Rule 45 of the

1997 Rules of Civil Procedure are the decision[1] of the Court of

Appeals dated 19 April 2000 that affirmed the order of the Regional

Trial Court (RTC) of Makati City, Branch 56, in Civil Case No. 98-2288,

dated 19 April 1999, admitting respondent Lucio Tans Amended

Complaint for Damages for the alleged malicious and defamatory

imputations against him in two (2) articles of the Philippine Daily

Inquirer, and its Resolution[2] dated 15 September 2000 denying

petitioners Armand Nocum and The Philippine Daily Inquirer, Inc.s

motion for reconsideration.

The antecedents are summarized by the Court of Appeals.

On September 27, 1998, Lucio Tan filed

a complaint against reporter Armand Nocum, Capt. Florendo Umali, ALPAP and Inquirer with the Regional Trial Court of Makati, docketed as Civil Case No. 98-2288, seeking moral and exemplary damages for the alleged malicious and defamatory imputations contained in a news article. INQUIRER and NOCUM filed their joint answer, dated October 27, 1998, wherein they alleged that: (1) the complaint failed to state a cause of action; (2) the defamatory statements alleged in the complaint were general conclusions without factual premises; (3) the questioned news report constituted fair and true report on the matters of public interest concerning a public figure and therefore, was privileged in nature; and (4) malice on their part was negated by the publication in the same article of plaintiffs or PALs side of the dispute with the pilots union. ALPAP and UMALI likewise filed their joint answer, dated October 31, 1998, and alleged therein that: (1) the complaint stated no cause of action; (2) venue was improperly laid; and (3) plaintiff Lucio Tan was not a real party in interest. It appeared that the complaint failed to state the residence of the complainant at the time of the alleged commission of the offense and the place where the libelous article was printed and first published.

Thus, the Regional Trial Court of Makati issued an Order dated February 10, 1999, dismissing the complaint without prejudice on the ground of improper venue.

Aggrieved by the dismissal of the complaint, respondent Lucio Tan filed an Omnibus Motion dated February 24, 1999, seeking reconsideration of the dismissal and admission of the amended complaint. In par. 2.01.1 of the amended complaint, it is alleged that This article was printed and first published in the City of Makati (p. 53, Rollo,CA-G.R. SP No. 55192), and in par. 2.04.1, that This caricature was printed and first published in the City of Makati (p. 55, id.).

The lower court, after having the case dismissed for improper venue, admitted the amended complaint and deemed set aside the

previous order of dismissal, supra, stating,inter alia, that:

The mistake or deficiency in the original complaint appears now to have been cured in the Amended Complaint which can still be properly admitted, pursuant to Rule 10 of the 1997 Rules of Civil Procedure, inasmuch as the Order of dismissal is not yet final. Besides, there is no substantial amendment in the Amended Complaint which would affect the defendants defenses and their Answers. The Amendment is merely formal, contrary to the contention of the defendants that it is substantial.

Dissatisfied, petitioners, together with defendants Capt. Florendo

Umali and the Airline Pilots Association of the Philippines, Inc.

(ALPAP),appealed the RTC decision to the Court of Appeals. Two

petitions for certiorari were filed, one filed by petitioners which was

docketed as CA-G.R. SP No. 55192, and the other by defendants

Umali and ALPAP which was docketed as CA-G.R. SP No. 54894. The

two petitions were consolidated.

On 19 April 2000, the Court of Appeals rendered its decision the

dispositive portion of which reads:

WHEREFORE, premises considered, the

petition is hereby DENIED DUE COURSE and DISMISSED for lack of merit. The Order of the court a quo is hereby AFFIRMED.

The motions for reconsideration filed by petitioners and by

defendants Umali and ALPAP were likewise denied in a resolution

dated 15 September 2000.

Both petitioners and defendants Umali and ALPAP

appealed to this Court. Under consideration is the petition for

review filed by petitioners.

On 11 December 2000, the Court required respondent Tan

to comment on the petition filed by petitioners.[3]

Respondent filed his comment on 22 January 2001[4] to

which petitioners filed a reply on 26 April 2001.[5]

In a Manifestation filed on 19 February 2001, respondent

stated that the petition[6] filed by defendants Umali and ALPAP has

already been denied by the Court in a resolution dated 17 January

2001.[7]

On 20 August 2003, the Court resolved to give due course

to the petition and required the parties to submit their respective

memoranda within thirty (30) days from notice.[8] Both petitioners

and respondent complied.[9]

Petitioners assigned the following as errors:

A. THE COURT OF APPEALS ERRED IN RULING

(1) THAT THE LOWER COURT HAD JURISDICTION OVER THE CASE (ON THE BASIS OF THE ORIGINAL COMPLAINT) NOTWITHSTANDING THE FACT THAT THE LOWER COURT HAD EARLIER DISMISSED THE ORIGINAL COMPLAINT FOR ITS FAILURE TO CONFER JURISDICTION UPON THJE COURT; AND (2) THAT THE AMENDED COMPLAINT WAS PROPERLY ALLOWED OR ADMITTED BECAUSE THELOWER COURT WAS NEVER DIVESTED OF JURISDICTION OVER THE CASE;

B. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE ORIGINAL COMPLAINT OF RESPONDENT WAS AMENDED PURPOSELY TO CONFER UPON THE LOWER COURT JURISDICTION OVER THE CASE.[10]

Petitioners state that Article 360 of the Revised Penal Code

vests jurisdiction over all civil and criminal complaints for libel on the

RTC of the place: (1) where the libelous article was printed and first

published; or (2) where the complainant, if a private person, resides;

or (3) where the complainant, if a public official, holds office. They

argue that since the original complaint only contained the office

address of respondent and not the latters actual residence or the

place where the allegedly offending news reports were printed and

first published, the original complaint, by reason of the deficiencies

in its allegations, failed to confer jurisdiction on the lower court.

The question to be resolved is: Did the lower court acquire

jurisdiction over the civil case upon the filing of the original

complaint for damages?

We rule in the affirmative.

It is settled that jurisdiction is conferred by law based on

the facts alleged in the complaint since the latter comprises a

concise statement of the ultimate facts constituting the plaintiff's

causes of action.[11] In the case at bar, after examining the original

complaint, we find that the RTC acquired jurisdiction over the case

when the case was filed before it. From the allegations thereof,

respondents cause of action is for damages arising from libel, the

jurisdiction of which is vested with the RTC. Article 360 of the

Revised Penal Code provides that it is a Court of First Instance[12] that

is specifically designated to try a libel case.[13]

Petitioners are confusing jurisdiction with venue. A former

colleague, the Hon. Florenz D. Regalado,[14] differentiated jurisdiction

and venue as follows: (a) Jurisdiction is the authority to hear and

determine a case; venue is the place where the case is to be heard

or tried; (b) Jurisdiction is a matter of substantive law; venue, of

procedural law; (c) Jurisdiction establishes a relation between the

court and the subject matter; venue, a relation between plaintiff and

defendant, or petitioner and respondent; and, (d) Jurisdiction is

fixed by law and cannot be conferred by the parties; venue may be

conferred by the act or agreement of the parties.

In the case at bar, the additional allegations in the Amended

Complaint that the article and the caricature were printed and first

published in the City of Makati referred only to the question of

venue and not jurisdiction. These additional allegations would

neither confer jurisdiction on the RTC nor would respondents failure

to include the same in the original complaint divest the lower court

of its jurisdiction over the case. Respondents failure to allege these

allegations gave the lower court the power, upon motion by a party,

to dismiss the complaint on the ground that venue was not properly

laid.

In Laquian v. Baltazar,[15] this Court construed the term

jurisdiction in Article 360 of the Revised Penal Code as referring to

the place where actions for libel shall be filed or venue.

In Escribano v. Avila,[16] pursuant to Republic Act No. 4363,

[17] we laid down the following rules on the venue of the criminal and

civil actions in written defamations.

1. General rule: The action may be filed in the Court of First Instance of the province or city where the libelous article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense. 2. If the offended party is a public officer with office in Manila at the time the offense was committed, the venue is Manila or the city or province where the libelous article is printed and first published. 3. Where an offended party is a public official with office outside of Manila, the venue is the province or the city where he held office at the time of the commission of the offense or where the libelous article is printed and first published. 4. If an offended party is a private person, the venue is his place of residence at the time of the commission of the offense or where the libelous article is printed and first published. The common feature of the foregoing rules is that whether the offended party is a public officer or a private person, he has always the option to file the action in the Court of First Instance of the province or city where the libelous article is printed or first published.

We further restated[18] the rules on venue in Article 360 as

follows:

1. Whether the offended party is a

public official or a private person, the criminal action may be filed in the Court of First Instance of the province or city where the libelous article is printed and first published.

2. If the offended party is a private

individual, the criminal action may also be filed in the Court of First Instance of the province where he actually resided at the time of the commission of the offense.

3. If the offended party is a public

officer whose office is in Manila at the time of the commission of the offense, the action may be filed in the Court of First Instance of Manila.

4. If the offended party is a public officer holding office outside of Manila, the action may be filed in the Court of First Instance of the province or city where he held office at the time of the commission of the offense.

We fully agree with the Court of Appeals when it ruled:

We note that the amended complaint

or amendment to the complaint was not intended to vest jurisdiction to the lower court, where originally it had none. The amendment was merely to establish the proper venue for the action. It is a well-established rule that venue has nothing to do with jurisdiction, except in criminal actions. Assuming that venue were properly laid in the court where the action was instituted, that would be procedural, not a jurisdictional impediment. In fact, in civil cases, venue may be waived.

Consequently, by dismissing the case on the ground of improper venue, the lower court had jurisdiction over the case. Apparently, the herein petitioners recognized this jurisdiction by filing their answers to the complaint, albeit, questioning the propriety of venue, instead of a motion to dismiss.

. . .

We so hold that dismissal of the

complaint by the lower court was proper considering that the complaint, indeed, on its face, failed to allege neither the residence of the complainant nor the place where the libelous article was printed and first published. Nevertheless, before the finality of the dismissal, the same may still be amended as in fact the amended complaint was admitted, in view of the court a quos jurisdiction, of which it was never divested. In so doing, the court acted properly and without any grave abuse of discretion.[19]

It is elementary that objections to venue in CIVIL ACTIONS

arising from libel may be waived since they do not involve a question

of jurisdiction. The laying of venue is procedural rather than

substantive, relating as it does to jurisdiction of the court over the

person rather than the subject matter. Venue relates to trial and not

to jurisdiction.[20] It is a procedural, not a jurisdictional, matter. It

relates to the place of trial or geographical location in which an

action or proceeding should be brought and not to the jurisdiction of

the court.[21] It is meant to provide convenience to the parties, rather

than restrict their access to the courts as it relates to the place of

trial.[22] In contrast, in CRIMINAL ACTIONS, it is fundamental that

venue is jurisdictional it being an essential element of jurisdiction.[23]

Petitioners argument that the lower court has no

jurisdiction over the case because respondent failed to allege the

place where the libelous articles were printed and first published

would have been tenable if the case filed were a criminal case. The

failure of the original complaint to contain such information would

be fatal because this fact involves the issue of venue which goes into

the territorial jurisdiction of the court. This is not to be because the

case before us is a civil action where venue is not jurisdictional.

The cases[24] cited by petitioners are not applicable here.

These cases involve amendments on complaints that confer

jurisdiction on courts over which they originally had none. This is not

true in the case at bar. As discussed above, the RTC acquired

jurisdiction over the subject matter upon the filing of the original

complaint. It did not lose jurisdiction over the same when it

dismissed it on the ground of improper venue. The amendment

merely laid down the proper venue of the case.

WHEREFORE, the foregoing considered, the decision of the

Court of Appeals dated 19 April 2000 is AFFIRMED in toto. No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 201199 October 16, 2013

STEEL CORPORATION OF THE PHILIPPINES, Petitioner, vs.MAPFRE INSULAR INSURANCECORPORATIQN, NEW INDIAASSURANCE COMPANY LIMITED, PHILIPPINE CHARTER INSURANCECORPORATION, MALAYAN INSURANCECO., INC., and ASIA INSURANCE CO., INC., and ASIA INSURANCE PHIL. CORP., Respondents.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition1 for review on certiorari under _Rule 45 of the Rules of Court. Petitioner Steel Corporation of the Philippines (SCP) challenges the 8 February 2012 Decision2 and 27 March 2012 Resolution3 of the Court of Appeals in CA-G.R. SP No. 1 19760. The Court of Appeals declared void the 1 June 2011 Order4 of the Regional Trial Court (RTC), acting as rehabilitation court, Fourth Judicial Region, Branch 3, Batangas City, in SP. PROC. No. 06-7993.

The facts

SCP is a domestic corporation engaged in the manufacture and distribution of cold-rolled and galvanized steel sheets and coils. It obtained loans from several creditors and, as security, mortgaged its assets in their favor. The creditors appointed Bank of the Philippine Islands (BPI) as their trustee. On 17 December 1997, SCP and BPI entered into a Mortgage Trust Indenture (MTI) requiring SCP to insure all of its assets until the loans are fully paid. Under the MTI, the insurance policies were to be made payable to BPI.

During the course of its business, SCP suffered financial difficulties. On 11 September 2006, one of the creditors, Equitable PCI Bank, Inc., now known as Banco de Oro-EPCI, Inc., filed with the RTC a petition to have SCP placed under corporate rehabilitation. On 12 September 2006, the RTC issued a stay order to defer all claims against SCP and appointed Atty. Santiago T. Gabionza, Jr. as rehabilitation receiver. On 3 December 2007, the RTC rendered a Decision approving the modified rehabilitation plan.

Under Collective Master Policy No. UCPB Gem HOF075089, SCP insured against material damage and business interruption its assets located in Barangay Munting Tubig, Balayan, Batangas, for the period 19 August2007 to 19 August 2008. On 8 June 2008, a fire broke out at SCP’s plant damaging its machineries. Invoking its right under the MTI, BPI demanded and received from the insurers $450,000 insurance proceeds.

On 13 October 2009, SCP filed with the RTC a motion to direct BPI to turn over the $450,000 insurance proceeds in order for SCP to repair and replace the damaged machineries. On 5 January 2010, the RTC issued an Order directing BPI to release the insurance proceeds directly to the contractors and suppliers who will undertake the repairs and replacements of the damaged machineries. BPI filed with the Court of Appeals a petition for certiorari under Rule 65 of the Rules of Court and, in its 28 September 2010Decision,5 the Court of Appeals affirmed the RTC’s 5 January 2010 Order. However, in its 3 October 2012 Amended Decision,6 the Court of Appeals reversed itself and set aside the RTC’s 5 January 2010 Order. SCP filed with the Court a petition for review on certiorari under Rule 45 and, in its 16 September 2013 Resolution,7 the Court denied the petition. The Court held that:

After a judicious review of the records, the Court resolves to DENY the instant petition and AFFIRM the October 3, 2012 Amended Decision and July 2, 2013 Resolution of the Court of Appeals (CA) in CA- G.R. SP No. 113078 for failure of Steel Corporation of the Philippines(petitioner) to show that the CA committed any reversible error in holding Bank of the Philippine Islands (respondent) entitled to receive and hold in trust the subject insurance proceeds. Section 4.04, sub-paragraph (f) of the Mortgage Trust Indenture Agreement between the parties expressly stipulated that respondent shall receive the insurance proceeds in case the risk or risks covered by the said policy occur and it may be released, applied, and/or paid to petitioner to procure replacement equipment and/or machinery only upon written notice to the creditors, who shall issue a Deed of Undertaking. No such compliance was shown. It is hornbook that a contract is the law between the parties and the obligation arising therefrom should be complied with in good faith. Moreover, the rehabilitation proceedings were already terminated by the CA (which decisions are immediately executory), hence, petitioner’s justification for release of the insurance proceeds in its favor, i.e., to replace the burnt machineries, is not feasible at this time.

Besides, the petition suffers from procedural defect in that it lacked copy of the Regional Trial Court Order as well as relevant pleadings thereto, as required under Section 4(d), Rule 45 of the Rules of Court.

SO ORDERED.8

Under Industrial All Risks Insurance Policy No. F-369430, SCP insured with respondents Mapfre Insular Insurance Corporation, New India Assurance Company Limited, Philippine Charter Insurance Corporation, Malayan Insurance Co., Inc., and Asia Insurance Phil. Corp. (respondent insurers) against material damage and business interruption its assets located in Barangay Munting Tubig for the period 19 August 2009 to 19 August 2010. On 7December 2009, a fire again broke out at SCP’s plant damaging its cold rolling mill and other machineries.

On 17 December 2010, SCP filed with the RTC a motion to direct respondent insurers to pay insurance proceeds in the amounts of $28,000,000 property damage and $8,000,000 business interruption.

During the 21 January 2011 hearing of SCP’s 17 December 2010motion, respondent insurers entered a special appearance solely for the purpose of questioning the RTC’s jurisdiction over the insurance claim. On7 February 2011, respondent insurers filed with the RTC an opposition ad cautelam praying that SCP’s 17 December 2010 motion be denied.

In a letter dated 22 March 2011, respondent insurers denied liability on SCP’s insurance claim because (1) SCP failed to comply with the terms of the policies; (2) SCP defrauded the respondent insurers; (3) the gross over-insurance of the cold rolling mill constitutes prima facie proof of arson;(4) SCP failed to show the actual damage sustained by its machineries;(5) SCP failed to commence the repair and replacement of the damaged machineries within 12 months; (6) SCP’s negligence caused the fire; and (7) since SCP’s claim for property damage is non-compensable, its claim for business interruption is also non-compensable. In their ad cautelam opposition dated 24 March 2011, respondent insurers prayed that SCP’s17 December 2010 motion be denied because (1) the amount of the claim for property damage was increased from $28,000,000 to $30,000,000; (2) the RTC lacked jurisdiction; (3) the RTC’s 5 January 2010 Order directing BPIto release the insurance proceeds directly to the contractors and suppliers who will undertake the repairs and replacements of SCP’s damaged machineries did not apply; and (4) respondent insurers already denied SCP’s insurance claim.

On 25 March and 8 April 2011, the RTC issued an Order directing (1) SCP to formally manifest its amenability to the repair and replacement of the damaged machineries instead of payment of insurance proceeds; (2) SCP and respondent insurers to file their memoranda; and (3) the creditors to file their respective comments.

The RTC’s Ruling

In its 1 June 2011 Order, the RTC granted SCP’s 17 December 2010motion and directed respondent insurers to pay SCP $33,882,393 property damage and $8,000,000 business interruption. The RTC held that:

At the outset, this Court notes that SCP’s manufacturing operations have suffered from two separate fire incidents: one which damaged the ABB roll on June 8, 2008, and the other which damaged the entire Cold Rolling Mill (CRM) on December 7, 2009. The claim for the first fire incident was partially paid by the insurers but the proceeds were withheld by BPI as MTI Trustee. Thus, feeling aggrieved, SCP was forced to file a Motion to Direct Trustee to Release Insurance Proceeds to SCP which was granted by the previous judge, (over and above the objections of BPI which argued that this Court had no jurisdiction over the matter) through his Order dated January 5, 2010 x x x.

This Court, in resolving the instant motion, is inclined to agree with the previous judge’s order and so upholds that it has jurisdiction over the insurance claims filed by SCP in these rehabilitation proceedings.

x x x.

In a resolution dated September 28, 2010, the Court of Appeals (BPI vs. Hon. Albert A. Kalalo, C.A.-G.R. SP No. 113078) confirmed this Court’s authority and jurisdiction to take cognizance of the insurance matter in the same rehabilitation proceedings. The appellate court made it very clear that this court’s jurisdiction includes the necessary and usual incidental powers that are essential to effectuate SCP’s rehabilitation. x x x.

The argument that this Court cannot possibly pass upon the insurance claim of SCP because it is only acting as a rehabilitation court cannot hold water. The mere fact that this Court by raffle has

been designated as a rehabilitation court in view of the inhibition of RTC Branches 2 and 4 does not mean that it has lost its powers or authority as a court of general jurisdiction. x x x.

x x x x

It is not true that the second panel of insurers are not "affected parties" and therefore cannot be deemed covered by the in rem nature of the rehabilitation proceedings. It is apt to note that the second panel of insurers unequivocably admitted, in par. 21 of their Opposition, that "the panel of insurers are aware that any proceeding initiated under the Rules on Corporate Rehabilitation shall be considered in rem and that jurisdiction over all persons affected by the proceedings shall be considered acquired upon publication of the notice of the commencement of the proceedings in any newspaper of general circulation in the Philippines as required by the Rules."

The panel of insurers’ argument that they are not "affected parties" in the rehabilitation proceedings because they do not hold any asset belonging to SCP ["]which should be reflected in its audited financial statements" was sufficiently rebutted by SCP when the latter argued that the insurers, holding as they do, sums of money, recovery of which is sought by SCP, as the insured, are parts of the assets of its estate (Bank of the Philippine Islands vs. Posadas, 56 Phil. 215, 230). They are sums of money redounding to the benefit of its estate (i.e. assets) as an insured (Heirs of Loreto Maramag vs. Heirs of Maramag, et al., 586 SCRA 774,787). Thus, the fact that SCP, as insured, is claiming the proceeds of insurance policies issued to it, makes the insurers affected parties covered by the instant rehabilitation proceedings.

The panel of insurers further contend, that the claim "may not be resolved summarily as the same requires a full-blown trial" such that it may be considered a complaint and therefore this Court did not acquire jurisdiction over the res because of the non-payment of docket fees. Contrary to this line of reasoning however, it should be pointed out that the Interim Rules of Procedure on Corporate Rehabilitation clearly recognizes the right of the parties affected by the proceedings to file their opposition (Rule 3, Secs. 6, 10 and 20). The rehabilitation judge can hold clarificatory hearings if there is a need to clarify certain questions arising from such opposition. In short, the right to oppose (together with the corresponding right to be heard on the opposition) does not necessarily mean that a "full-blown trial" should be conducted. The instant proceedings does [sic] not automatically become "adversarial" (as compared to "summary" proceedings) necessitating "full-blown trial" just because the insurers have conveyed their intent to oppose (which they did) the claim.

As the insurers themselves admit in par. 37 of their Opposition adversarial proceedings simply means that it is "one having opposing parties, contested as distinguished from an ex-parte application, one of which the party seeking relief has given legal warning to the other party and afforded the latter an opportunity to contest it" (Republic of the Philippines vs. Valencia, 141 SCRA 462[,] 1986). It is very clear that the insurers have all the opportunity in these proceedings to oppose even without the necessity of a "full-blown hearing."

And since the subject motion for payment of the insurance claim does not necessarily entail full-blown hearings despite it being an adversarial motion (i.e. contested), the argument of the insurers that it is a complaint that must be resolved in an original, separate,

full-blown proceedings, independently of the instant case which is summary in nature, and necessarily must comply with Sec. 141 of the Revised Rules of Court regarding the payment of filing fees "upon filing of the pleading or other application which initiates an action or proceeding" does not hold water and is fallacious.

x x x x

As to the corollary issue of the rightful payee of the insurance proceeds, this Court hereby rules that contrary to the creditors’ argument that the proceeds of the insurance claims should be given to the MTIT trustee pursuant to the MTI, it is appropriate for this Court to emphasize what the appellate court in BPI vs. Hon. Kalalo, has said – that although it is beyond dispute that the provisions of the MTI continue to bind the parties, the MTI’s binding effect should be qualified. Pursuant to the provision of the Interim Rules and in deference to the purpose of rehabilitation proceedings, "the Mortgage Trust Indenture would be binding only insofar as it does not conflict with the provisions of the rehabilitation plan undertaken by the private respondent as well as if it does not hinder the corporate rehabilitation of private respondent itself". In deciding who has the better right to receive the disputed insurance proceeds, the Court of Appeals said that "utmost regard must be had to the restoration of herein private respondent to a position of successful operation and solvency."

x x x x

It is not true as contended by the second panel of insurers that there are distinctions between the instant motion (for the second fire) from the first motion (for the first fire) which had already been ruled in favor of SCP by the previous judge. The factual circumstances under the first motion and the present one are similar or analogous even if not entirely identical. Both motions refer to disputed insurance claims arising from losses covered by existing policies issued to SCP. Both have been disputed or opposed either by the MTI Trustee or by the insurers themselves. Thus, both motions should be resolved in the same manner in order to maintain consistency and stability in this Court’s judicial pronouncements.

This Court agrees with SCP when it argues that the creditors should realize that if they insist on being paid the cash proceeds of the claim or if the proceeds are to be given to the MTI trustee, the said act may not only constitute a violation of the Stay Order (since it is virtually a satisfaction/enforcement/collection of their money claims) but it would also result in SCP not being able to restart normal operations which would adversely affect its rehabilitation. Hence, this Court mandates the second panel of insurers to pay the insurance claims of SCP or in lieu thereof, replace or reinstate the CRM.

WHEREFORE, premised and predicated on the foregoing, the Court hereby orders the following:

1. Grant SCP’s unopposed Urgent Motion (to Withdraw Motion to Admit Supplemental Motion dated December 2, 2009) dated September 9, 2010;

2. Order the second panel of insurers to already pay the additional business interruption claim of US$8 million plus interest at the rate provided by Sec. 243 of the Insurance Code (for the second fire); and

3. Order the second panel of insurers to pay to SCP the total sum of US$33,882,393.00, plus interest at the rate provided by Sec. 243of the Insurance Code inclusive of the value of its CRM or in lieu thereof, replace or reinstate the CRM.

SO ORDERED.9

Respondent insurers filed with the Court of Appeals a petition10 for certiorari under Rule 65 of the Rules of Court raising mainly as issue that the RTC lacked jurisdiction over SCP’s insurance claim and over respondent insurers.

The Court of Appeals’ Ruling

In its 8 February 2012 Decision, the Court of Appeals declared void the RTC’s 1 June 2011 Order. The Court of Appeals held that:

x x x The present petition for certiorari under Rule 65, 1997Rules of Civil Procedure is an appropriate remedy, as it assails the very jurisdiction of the trial court in granting private respondent’s insurance claims which were raised through a mere "Motion to Pay" in the rehabilitation proceedings. It is basic that a special civil action for certiorari is intended for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is to keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of jurisdiction.

x x x x

Notably, even in the proceedings below, petitioners questioned the trial court’s jurisdiction to resolve private respondent’s "Motion to Pay. "As the trial court noted in its Order dated June 1, 2011, during the hearing on private respondent’s "Motion to Pay" on January 21, 2011, petitioners entered a very special appearance solely for the purpose of questioning the trial court’s jurisdiction. Record also bears that petitioners assailed the trial court’s jurisdiction during the hearing on private respondent’s "Motion to Resolve Critical Pending Incidents," dated March 25, 2011, and in pleadings filed before the trial court, to wit: (i) "Insurers’ Opposition Ad Cautelam

(To: ‘Motion to Direct Insurers to Pay Insurance Proceeds to Insured Steel Corporation of the Philippines’ dated December 17, 2010)"; (ii) "Comment Ad Cautelam (On Steel Corporation of the Philippines’ ‘Comment on the Opposition Ad Cautelam dated January 20,2011’)"; (iii) "Insurers’ Ad Cautelam Opposition versus Honorable Court’s Assumption of Jurisdiction and/or Summary Resolution of Motion in Movant’s Favor"; and (iv) "Insurers’ Memorandum (on Issue of Jurisdiction)."

There is no denying that the subject matter of private respondent’s "Motion to Pay" comprised of its insurance claims for (i) business interruption in the amount of US$8 million, and (ii) property loss in the amount of US$28 million. Said insurance claims cannot be considered as "claims" within the jurisdiction of the trial court functioning as a rehabilitation court. Rehabilitation courts only have limited jurisdiction over the claims by creditors against the distressed company, not on the claims of said distressed company against its debtors. The interim rules define claim as referring to all claims or demands, of whatever nature or character against a debtor or its property, whether for money or otherwise.

Even under the new Rules of Procedure on Corporate Rehabilitation, claim is defined under Section 1, Rule 2 as "all claims or demands of whatever nature or character against a debtor or its property, whether for money or otherwise." This is also the definition of a claim under Republic Act No. 10142. Section 4(c) thereof reads:

"(c) Claim shall refer to all claims or demands of whatever nature or character against the debtor or its property, whether for money or otherwise, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, including, but not limited to[:] (1) all claims of the government, whether national or local, including taxes, tariffs and customs duties; and (2) claims against directors and officers of the debtor arising from the acts done in the discharge of their functions falling within the scope of their authority: Provided, That, this inclusion does not prohibit the creditors or third parties from filing cases against the directors and officers acting in their personal capacities."

Contrary to the trial court’s finding, petitioners cannot be considered as "affected parties" within the purview of Section 1, Rule 3 of the Interim Rules on Corporate Rehabilitation. As explained in

Metropolitan Waterworks and Sewerage System vs. Daway, the provision, being merely a logical consequence of filing an in rem petition for rehabilitation, shall only cover the distressed company’s creditors and those other persons holding the assets belonging to the debtor under rehabilitation that would be material to the rehabilitation proceedings. As the Supreme Court explained in said case:

"The public respondent relied on Sec. 1, Rule 3 of the Interim Rules on Corporate Rehabilitation to support its jurisdiction over the Irrevocable Standby Letter of Credit and the banks that issued it. The section reads in part ‘that jurisdiction over those affected by the proceedings is considered acquired upon the publication of the notice of commencement of proceedings in a newspaper of general circulation’ and goes further to define rehabilitation as anin rem proceeding. This provision is a logical consequence of the in rem nature of the proceedings, where jurisdiction is acquired by publication and where it is necessary that the assets of the debtor come within the court’s jurisdiction to secure the same for the benefit of creditors. The reference to ‘all those affected by the proceedings’ covers creditors or such other persons or entities holding assets belonging to the debtor under rehabilitation which should be reflected in its audited financial statements. The banks do not hold any assets of respondent Maynilad that would be material to the rehabilitation proceedings nor is Maynilad liable to the banks at this point."

In essence, private respondent’s "Motion to Pay" is a collection suit; hence, it must be filed in a separate proceeding and the corresponding docket fees must be paid. Too basic to require further elucidation is the settled doctrine that a court acquires jurisdiction over a case only upon the payment of the prescribed fees. Here, the filing of the "Motion to Pay" in the rehabilitation court was a circumvention of the basic and indispensable requirement of payment of docket fees.

x x x x

There is also no gainsaying that the trial court had not validly acquired jurisdiction over the persons of petitioners. Jurisdiction

over the person of a party defendant is acquired upon the service of summons in the manner required by law or, otherwise, by his voluntary appearance. Petitioners were not served with summons. Their appearance before the trial court cannot be considered as voluntary appearance since the same was done precisely to question the jurisdiction of the trial court. It is well-settled that a party who makes a special appearance in court challenging the jurisdiction of said court based on the ground of invalidity of summons, among others, cannot be considered to have submitted himself to the jurisdiction of the court.

In fine, the Court finds that the trial court committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Order dated June 1, 2011. Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.

WHEREFORE, the trial court’s Order dated June 1, 2011 is declared NULL and VOID. Respondents and all persons acting on their behalf are PERMANENTLY ENJOINED from implementing the said Order dated June 1, 2011 and all related issuances, if any, in SP Proc. No.06-7993.

SO ORDERED.11

SCP filed a motion for reconsideration, which the Court of Appeals denied in its 27 March 2012 Resolution.1âwphi1Hence, the present petition.

The Issues

SCP raises mainly as issues that the Court of Appeals erred when it entertained respondent insurers’ petition for certiorari filed under Rule 65 of the Rules of Court, and when it held that the RTC acted with grave abuse of discretion amounting to lack or excess of jurisdiction:

FIRST REASON

THE COURT OF APPEALS ERRED WHEN, AFTER EXPRESSLY SAYING THAT "IT IS THE MANDATE OF THE COURTTO APPLY RELEVANT DECISIONS MATERIAL TO THERE SOLUTION OF QUESTIONS BEFORE IT", NEVERTHELESS REFUSED TO FOLLOW AND APPLY CHINA BANKING CORPORATION VS. CEBU PRINTING AND PACKAGING CORPORATION x x x UPON THE RESPONDENTS AND, INSTEAD, SUSTAINED A REMEDY WHICH WAS NOT ONLY WRONG BUTAL SO COULD NOT HAVE BEEN VALIDLY AVAILED OF BY THE RESPONDENTS FOR THE REVERSAL AND NULLIFICATION OF THE ORDER OF THE REHABILITATION COURT OF BATANGAS DIRECTING THE RESPONDENTS TO PAY TO THE PETITIONER THE PROCEEDS OF INSURANCE POLICIES ISSUED BY THEM AND/OR TO REPLACE THE COLD ROLLING MILL OF THE PETITIONER WHICH WAS LOST AS A CONSEQUENCE OF THERISK INSURED AGAINST.

SECOND REASON

THE COURT OF APPEALS ERRED WHEN IT DID NOT CONSIDER THE STATUS OF THE PROCEEDINGS UNDER WHICH THE REHABILITATION

COURT EXERCISED ITS JURISDICTION AND, INSTEAD, FOUND THE SAID COURT AS WITHOUTJURISDICTION TO DIRECT THE RESPONDENTS AS INSURERS TO PAY THE INSURANCE PROCEEDS DUE FROM THEM AND/OR REPLACE THE COLD ROLLING MILL OF THE PETITIONER SOTHAT IT COULD CONTINUE TO REHABILITATE ITSELF IN A MANNER AS WOULD SERVE THE POLICIES ON CORPORATE REHABILITATION AS MANDATED BY P.D. NO. 902-A AND THE IN TERIM RULES OF PROCEDURE ON CORPORATE REHABILITATION.12

The Court’s Ruling

The petition is unmeritorious.

SCP claims that respondent insurers availed of the improper remedy when they filed with the Court of Appeals a petition for certiorari under Rule65 of the Rules of Court, instead of a petition for review under Rule 43.Thus, the Court of Appeals erred when it did not dismiss respondent insurers’ petition, applying China Banking Corporation v. Cebu Printingand Packaging Corporation.13

The Court disagrees. A petition for certiorari under Rule 65 is the proper remedy when the issue raised involves errors of jurisdiction. On the other hand, a petition for review under Rule 43 is the proper remedy when the issue raised involves errors of judgment. In ABS-CBN Broadcasting Corp. v. World Interactive Network Systems Japan Co., Ltd.,14 the Court held that:

Proper issues that may be raised in a petition for review under Rule43 pertain to errors of fact, law or mixed questions of fact and law. While a petition for certiorari under Rule 65 should only limit itself to errors of jurisdiction, that is, grave abuse of discretion amounting to a lack or excess of jurisdiction.15

In Suyat, Jr. v. Torres,16 the Court held that:

In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to resolving only errors of jurisdiction. x x x Certiorari will issue only to correct errors of jurisdiction. It is not a remedy to correct errors of judgment. An error of judgment is one in which the court may commit in the exercise of its jurisdiction, and which error is reversible only by appeal. Error of jurisdiction is one where the act complained was issued by the court without or in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari. Certiorari will not be issued to cure errors by the trial court or quasi- judicial body in its appreciation of the evidence of the parties, and its conclusions anchored on the said findings, and its conclusions of law. As long as the court acts within its jurisdiction, any alleged errors committed in the exercise of its discretion will amount to nothing more than mere errors of judgment, correctible by an appeal or a petition for review under Rule 43 of the Rules of Court.17

China Banking Corporation is inapplicable because the issue in that case is different from the issue raised by respondent insurers in CA-G.R. SP No. 119760. In China Banking Corporation, the issue involved errors of judgment. In particular, Cebu Printing and Packaging Corporation (CPPC) questioned the rehabilitation court’s findings of fact and law in its 30 April 2002 Order denying due course to the petition for corporate rehabilitation. CPPC never questioned the rehabilitation court’s jurisdiction. Since the issue involved errors of judgment, the proper remedy, as held in China Banking Corporation, was to file a petition for review under Rule 43. In the present case,

the issue raised by respondent insurers in CA-G.R. SP No. 119760 involved errors of jurisdiction. Respondent insurers questioned the RTC’s jurisdiction over the subject matter of SCP’s insurance claim and over the persons of respondent insurers. Since the issue involved errors of jurisdiction, the proper remedy was to file a petition for certiorari under Rule 65.

SCP claims that the RTC has jurisdiction over the subject matter of the insurance claim. Thus, the Court of Appeals erred when it held that the RTC acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the 1 June 2011 Order.

The Court disagrees. The RTC, acting as rehabilitation court, has no jurisdiction over the subject matter of the insurance claim of SCP against respondent insurers. SCP must file a separate action for collection where respondent insurers can properly thresh out their defenses. SCP cannot simply file with the RTC a motion to direct respondent insurers to pay insurance proceeds. Section 3 of Republic Act No. 1014218 states that rehabilitation proceedings are "summary and non-adversarial" in nature. They do not include adjudication of claims that require full trial on the merits, like SCP’s insurance claim against respondent insurers. In Advent Capital and Finance Corporation v. Alcantara,19 the Court held that:

Ultimately, the issue is what court has jurisdiction to hear and adjudicate the conflicting claims of the parties over the dividends that Belson held in trust for their owners. Certainly, not the rehabilitation court which has not been given the power to resolve ownership disputes between Advent Capital and third parties. x x x.

Advent Capital must file a separate action for collection to recover the trust fees that it allegedly earned and, with the trial court’s authorization if warranted, put the money in escrow for payment to whoever it belongs. Having failed to collect the trust fees at the end of each calendar quarter as stated in the contract, all it had against the Alcantaras was a claim for payment which is proper subject for an ordinary action for collection. It cannot enforce its money claim by simply filing a motion in the rehabilitation case for delivery of money belonging to the Alcantaras but in the possession of a third party.

Rehabilitation proceedings are summary and non-adversarial in nature, and do not contemplate adjudication of claims that must be threshed out in ordinary court proceedings. Adversarial proceedings similar to that in ordinary courts are inconsistent with the commercial nature of a rehabilitation case. The latter must be resolved quickly and expeditiously for the sake of the corporate debtor, its creditors and other interested parties. Thus, the Interim Rules "incorporate the concept of prohibited pleadings, affidavit evidence in lieu of oral testimony, clarificatory hearings instead of the traditional approach of receiving evidence, and the grant of authority to the court to decide the case, or any incident, on the basis of affidavits and documentary evidence."

Here,

Advent Capital’s claim is disputed and requires a full trial on the merits. It must be resolved in a separate action where the Alcantaras’ claim and defenses may also be presented and heard.20 (Emphases supplied)

The Court agrees with the ruling of the Court of Appeals that the jurisdiction of the rehabilitation courts is over claims against the

debtor that is under rehabilitation, not over claims by the debtor against its own debtors or against third parties. In its 8 February 2012 Decision, the Court of Appeals held that:

x x x Said insurance claims cannot be considered as "claims" within the jurisdiction of the trial court functioning as a rehabilitation court. Rehabilitation courts only have limited jurisdiction over the claims by creditors against the distressed company, not on the claims of said distressed company against its debtors. The interim rules define claim as referring to all claims or demands, of whatever nature or character against a debtor or its property, whether for money or otherwise.

Even under the new Rules of Procedure on Corporate Rehabilitation, claim is defined under Section 1, Rule 2 as "all claims or demands of whatever nature or character against a debtor or its property, whether for money or otherwise." This is also the definition of a claim under Republic Act No. 10142. Section 4(c) thereof reads:

"(c) Claim shall refer to all claims or demands of whatever nature or character against the debtor or its property, whether for money or otherwise, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, including, but not limited to: (1) all claims of the government, whether national or local, including taxes, tariffs and customs duties; and (2) claims against directors and officers of the debtor arising from the acts done in the discharge of their functions falling within the scope of their authority: Provided, That, this inclusion does not prohibit the creditors or third parties from filing cases against the directors and officers acting in their personal capacities."21 (Emphasis supplied)

Respondent insurers are not claiming or demanding any money or property from SCP. In other words, respondent insurers are not creditors of SCP. Respondent insurers are contingent debtors of SCP because they may possibly be, subject to proof during trial, liable to SCP. Thus, the RTC has no jurisdiction over the insurance claim of SCP against respondent insurers. SCP must file a separate action against respondent insurers to recover whatever claim it may have against them. WHEREFORE, the petition is DENIED. The Court AFFIRMS the8 February 2012 Decision and 27 March 2012 Resolution of the Court of Appeals in CA-G.R. SP No.119760.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-11584 April 28, 1958

MANUEL ARANETA and JOSE L. UY, plaintiffs-appellants, vs.COMMONWEALTH INSURANCE CO., ET AL., defendants-appellees.

Gianson, Uy and Calma, and Ledesma, Puno, Guytingco and Associates for appellants.Ozaeta, Lichauco and Picazo for appellees.

REYES, J.B.L., J.:

Defendant-appellee Commonwealth Insurance Co. is a domestic corporation engaged in the insurance and bonding business. On April 2, 1949, said corporation issued a shipments of scrap steel on said vessel, and a surety bond, with appellants Manuel Araneta and Jose L. Uy as principals and the corporation as surety, in favor of the De la Rama Steamship Co., Inc., to secure the payment, within twenty days from the departure of the vessel S.S. "Doña Aurora" from Manila to Formosa on April 12, 1949, of the balance due on the freight of certain amount not exceeding P20,000. Plaintiffs-appellants Araneta and Uy in turn executed, together with Messrs. Cathay Co. and Ang Lam and Sons Co., an indemnity agreement in favor of the appellee corporation binding themselves to indemnify the latter for any such sums as, it might be made to pay to the De la Rama Steamship Co. under the aforementioned surety bond.

Plaintiffs-appellants Araneta and Uy failed to pay the balance of the freight charges due on the shipment in question, and upon demand by the De la Rama Steamship Co., the appellee corporation paid to it the sum of P15,000 on May 1, 1949. After such payment, the guarantors Cathay Co. and Ang Lam and Sons Co. reimbursed or indemnified the appellee corporation the sum of P12,000, on condition, however, that both Cathay Co. and Ang Lam and Sons Co., would not be liable anymore for the payment of the uncollected balance of P3,000.

Having thus released the guarantors from the balance of its credit of P3,000, the appellee corporation filed suit against appellants Manuel Araneta and Jose L. Uy for the payment of the uncollected balance of P3,000 (Civil Case No. 12276 of the Court of First Instance of Manila). After trial, the court, through Judge Bienvenido A. Tan, rendered judgment in favor of the plaintiff corporation and against defendants Araneta and Uy, "ordering said defendants to pay jointly and severally to plaintiff the sum of P3,000 plus P600 as attorney's fees, and the costs". Defendants Araneta and Uy did not appeal from this judgment but instead filed a special civil action in the Court of Appeals for the issuance of a writ of certiorari to annul the judgment (C.A.-G.R. No. 1144-R), but said action was, however, dismissed by the appellate court on the ground that appeal was the proper remedy.

The judgment in Civil Case No. 12276, therefore, became final and executory and on July 23, 1954, the court, with Judge Edilberto Barot presiding, issued a writ of execution. To restrain the execution, defendants Araneta and Uy filed on July 21, 1955 the present complaint for injunction, also in the Court of First Instance of Manila, alleging that the decision of Judge Bienvenido A. Tan in Civil Case, No. 12276 is a nullity and asking that execution thereof be enjoined. After trial, the court below, presided over by Judge Bonifacio Isip, dismissed the complaint injunction on the ground of res judicata, from which dismissal plaintiffs Araneta and Uy appealed to this court.

There is clearly no merit in the appeal.

In the first place, Judge Isip of the lower court did well in refusing to enjoin a writ of execution issued by a judge of another branch of the same court. "It is settled by an overwhelming weight of authority

that no court has power to interfere by injunction with the judgments or decree of a court of concurrent or coordinate jurisdiction having equal power to grant the relief sought by injunction. . . . The various branches of the Court of First Instance of Manila are in a sense coordinate courts and to allow them to interfere with each other's judgments or decrees by injunctions would obviously lead to confusion and might seriously hinder the administration of justice." (Cabigaovs. Del Rosario, 44 Phil., 182; See also Philippine National Bank vs. Javellana, 92 Phil., 525; 49 Off. Gaz., 124; Montesa vs. Manila Cordage Company, 92 Phil., 25; 48 Off.Gaz., [9], 3063; Ongsingco vs. Hon. Bienvenido A. Tan, 97 Phil., 330).

In the second place, appellants base their claim of the allege nullity of the decision of Judge Bienvenido A. Tan in Civil Case No. 12276 in that Judge Tan committed error in ordering them to pay the appellee corporation the sum of P3,000, knowing that said corporation had released appellants' co-guarantors from liability for said amount, and under Art. 2078 of the Civil Code, a release made by the creditor in favor of one of the guarantors, without the consent of the others, benefits all the extent of the share of the guarantor to whom it has been granted. This supposed error attributed to Judge Tan is not an error of jurisdiction, but, if at all, an error of judgement (because appellants were the principal debtors whose obligation was guaranteed by the Commonwealth Insurance Co., and were liable to it by virtue of its payment to the creditor) or of such application of the law. Not being jurisdictional, such an error, even if committed, does not render the decision in Civil Case No. 12276 void. Where the court has jurisdiction, over the parties and the subject-matter, and the court commits the error of judgment in the exercise of its jurisdiction, said errors are mere errors of judgment, correctible and reviewable only by appeal, and if no appeal is taken, the decision, erroneous or not, becomes final and executory, and is valid and binding upon the parties (Vicente vs. Lucas, 95 Phil., 716; Daquis vs. Bustos, 94 Phil., 913; 50 Off. Gaz. No. 5, 1964).

There is no question that Judge Tan had jurisdiction over the parties and the subject-matter in Civil Case No. 12276. If appellants had believe that his judgment therein was erroneous, they should have sought its review by appeal. Appellants did not appeal from the decision, hence it became final and executory, and is now fully binding upon them. At the present stage, therefore, it is already too late to have said judgment corrected and modified. As the lower court correctly held, appellants' present complaint is barred by res judicata.

The decision appealed from is, therefore affirmed, and the present appeal dismissed, with costs against appellants Manuel Araneta and Jose L. Uy. So ordered.

Republic of the PhilippinesSupreme CourtManila

EN BANC

ATTY. TOMAS ONG CABILI,Complainant, - versus - JUDGE RASAD G. BALINDONG, Acting Presiding Judge, RTC, Branch 8, Marawi City,Respondent.

A.M. No. RTJ-10-2225(formerly A.M. OCA I.P.I. No. 09-3182-RTJ)

Present:

CORONA, C.J.,CARPIO,VELASCO, JR.,LEONARDO-DE CASTRO,BRION,

PERALTA,BERSAMIN,DEL CASTILLO,ABAD,VILLARAMA, JR.,PEREZ,MENDOZA,

SERENO,* andREYES,** JJ.

Promulgated: September 6, 2011

x-----------------------------------------------------------------------------------------

x

D E C I S I O N

PER CURIAM:

We resolve the administrative complaint against

respondent Acting Presiding Judge Rasad G. Balindong of the

Regional Trial Court (RTC) of Marawi City, Branch 8, forGross

Ignorance of the Law, Grave Abuse of Authority, Abuse of Discretion,

and/or Grave Misconduct Prejudicial to the Interest of the Judicial

Service.[1]

The Factual Antecedents

The antecedent facts, gathered from the records, are

summarized below.

Civil Case No. 06-2954[2] is an action for damages in Branch

6 of the Iligan City RTC against the Mindanao State University

(MSU), et al., arising from a vehicular accident that caused the death

of Jesus Ledesma and physical injuries to several others.

On November 29, 1997, the Iligan City RTC rendered a

Decision, holding the MSU liable for damages amounting

to P2,726,189.90. The Court of Appeals (CA) affirmed the Iligan City

RTC decision and the CA decision subsequently lapsed to finality.

On January 19, 2009, Entry of Judgment was made.[3]

On March 10, 2009, the Iligan City RTC issued a writ of

execution.[4] The MSU, however, failed to comply with the writ; thus,

on March 24, 2009, Sheriff Gerard Peter Gaje served a Notice of

Garnishment on the MSUs depository bank, the Land Bank of the

Philippines (LBP), Marawi City Branch.[5]

The Office of the Solicitor General opposed the motion for

execution, albeit belatedly, in behalf of MSU.[6] The Iligan City

RTC denied the opposition in itsMarch 31, 2009 Order. The MSU

responded to the denial by filing on April 1, 2009 a petition with the

Marawi City RTC, for prohibition and mandamus with an application

for the issuance of a temporary restraining order (TRO) and/or

preliminary injunction against the LBP and Sheriff Gaje.[7] The

petition of MSU was raffled to the RTC, Marawi City, Branch 8,

presided by respondent Judge.

The respondent Judge set the hearing for the application

for the issuance of a TRO on April 8, 2009.[8] After this hearing, the

respondent Judge issued a TRO restraining Sheriff Gaje from

garnishing P2,726,189.90 from MSUs LBP-Marawi City Branch

account.[9]

On April 17, 2009, the respondent Judge conducted a

hearing on the application for the issuance of a writ of preliminary

injunction. Thereafter, he required MSU to file a memorandum in

support of its application for the issuance of a writ of preliminary

injunction.[10] On April 21, 2009, Sheriff Gaje moved to dismiss the

case on the ground of lack of jurisdiction.[11] The respondent Judge

thereafter granted the motion and dismissed the case.[12]

On May 8, 2009, complainant Atty. Tomas Ong Cabili,

counsel of the private plaintiffs in Civil Case No. 06-2954, filed the

complaint charging the respondent Judge withGross Ignorance of

the Law, Grave Abuse of Authority, Abuse of Discretion, and/or

Grave Misconduct Prejudicial to the Interest of the Judicial

Service for interfering with the order of a co-equal court, Branch 6 of

the Iligan City RTC, by issuing the TRO to enjoin Sheriff Gaje from

garnishing P2,726,189.90 from MSUs LBP-Marawi City Branch

account.[13]

The respondent Judge denied that he interfered with the

order of Branch 6 of the Iligan City RTC.[14] He explained that he

merely gave the parties the opportunity to be heard and eventually

dismissed the petition for lack of jurisdiction.[15]

In its December 3, 2009 Report, the Office of the Court

Administrator (OCA) found the respondent Judge guilty of gross

ignorance of the law for violating the elementary rule of non-

interference with the proceedings of a court of co-equal jurisdiction.

[16] It recommended a fine of P40,000.00, noting that this is the

respondent Judges second offense.[17]

The Court resolved to re-docket the complaint as a regular

administrative matter and to require the parties to manifest

whether they were willing to submit the case for resolution on the

basis of the pleadings/records on file.[18]

Atty. Tomas Ong Cabili complied through his manifestation of April

19, 2010,[19] stating that he learned from reliable sources that the

respondent Judge is basically a good Judge, and an admonition will

probably

suffice as reminder to respondent not to repeat the same mistake in

the future.[20] The respondent Judge filed his manifestation

onSeptember 28, 2010.[21]

The Courts Ruling

The Court finds the OCAs recommendation well-taken.

The doctrine of judicial stability or non-interference in the regular

orders or judgments of a co-equal court is an elementary principle in

the administration of justice:[22] no court can interfere by injunction

with the judgments or orders of another court of concurrent

jurisdiction having the power to grant the relief sought by the

injunction.[23] The rationale for the rule is founded on the concept of

jurisdiction: a court that acquires jurisdiction over the case and

renders judgment therein has jurisdiction over its judgment, to the

exclusion of all other coordinate courts, for its execution and over all

its incidents, and to control, in furtherance of justice, the conduct of

ministerial officers acting in connection with this judgment.[24]

Thus, we have repeatedly held that a case where an

execution order has been issued is considered as still pending, so

that all the proceedings on the execution are still proceedings in the

suit.[25] A court which issued a writ of execution has the inherent

power, for the advancement of justice, to correct errors of its

ministerial officers and to control its own processes.[26] To hold

otherwise would be to divide the jurisdiction of the appropriate

forum in the resolution of incidents arising in execution proceedings.

Splitting of jurisdiction is obnoxious to the orderly administration of

justice.[27]

Jurisprudence shows that a violation of this rule warrants

the imposition of administrative sanctions.

In Aquino, Sr. v. Valenciano,[28] the judge committed grave

abuse of discretion for issuing a TRO that interfered with or

frustrated the implementation of an order of another court of co-

equal jurisdiction. In Yau v. The Manila Banking Corporation,[29] the

Court held that undue interference by one in the proceedings and

processes of another is prohibited by law.

In Coronado v. Rojas,[30] the judge was found liable for

gross ignorance of the law when he proceeded to enjoin the final

and executory decision of the Housing and Land Use Regulatory

Board (HLURB) on the pretext that the temporary injunction and the

writ of injunction he issued were not directed against the HLURBs

writ of execution, but only against the manner of its execution. The

Court noted that the judge cannot feign ignorance that the effect of

the injunctive writ was to freeze the enforcement of the writ of

execution, thus frustrating the lawful order of the HLURB, a co-equal

body.[31]

In Heirs of Simeon Piedad v. Estrera,[32] the Court penalized

two judges for issuing a TRO against the execution of a demolition

order issued by another co-equal court. The Court stressed that

when the respondents-judges acted on the application for the

issuance of a TRO, they were aware that they were acting on

matters pertaining to a co-equal court, namely, Branch 9 of the Cebu

City RTC, which was already exercising jurisdiction over the subject

matter in Civil Case No. 435-T. Nonetheless, respondent-judgesstill

opted to interfere with the order of a co-equal and coordinate court

of concurrent jurisdiction, in blatant disregard of the doctrine of

judicial stability, a well-established axiom in adjective law. [33]

To be sure, the law and the rules are not unaware that an

issuing court may violate the law in issuing a writ of execution and

have recognized that there should be a remedy against this

violation. The remedy, however, is not the resort to another co-

equal body but to a higher court with authority to nullify the action

of the issuing court. This is precisely the judicial power that the 1987

Constitution, under Article VIII, Section 1, paragraph 2,[34] speaks of

and which this Court has operationalized through a petition

forcertiorari, under Rule 65 of the Rules of Court.[35]

In the present case, the respondent Judge clearly ignored

the principle of judicial stability by issuing a TRO to temporarily

restrain[36] Sheriff Gaje from enforcing the writ of execution issued

by a co-equal court, Branch 6 of the Iligan City RTC, and from

pursuing the garnishment of the amount of P2,726,189.90 from

MSUs account with the LBP, Marawi City Branch. The respondent

Judge was aware that he was acting on matters pertaining to the

execution phase of a final decision of a co-equal and coordinate

court since he even quoted MSUs allegations in his April 8, 2009

Order.[37]

The respondent Judge should have refrained from acting

on the petition because Branch 6 of the Iligan City RTC retains

jurisdiction to rule on any question on the enforcement of the writ

of execution. Section 16, Rule 39 of the Rules of Court (terceria),

cited in the course of the Courts deliberations, finds no application

to this case since this provision applies to claims made by a third

person, other than the judgment obligor or his agent;[38] a third-party

claimant of a property under execution may file a claim with another

court[39] which, in the exercise of its own jurisdiction, may issue a

temporary restraining order. In this case, the petition for injunction

before the respondent Judge was filed by MSU itself, the judgment

obligor. If Sheriff Gaje committed any irregularity or exceeded his

authority in the enforcement of the writ, the proper recourse for

MSU was to file a motion with, or an application for relief from, the

same court which issued the decision, not from any other court,

[40] or to elevate the matter to the CA on a petition for certiorari.[41] In

this case, MSU filed the proper motion with the Iligan City RTC (the

issuing court), but, upon denial, proceeded to seek recourse through

another co-equal court presided over by the respondent Judge.

It is not a viable legal position to claim that a TRO against a

writ of execution is issued against an erring sheriff, not against the

issuing Judge. A TRO enjoining the enforceability of a writ addresses

the writ itself, not merely the executing sheriff. The duty of a sheriff

in enforcing writs is ministerial and not discretionary.[42] As already

mentioned above, the appropriate action is to assail the

implementation of the writ before the issuing court in whose behalf

the sheriff acts, and, upon failure, to seek redress through a higher

judicial body. Significantly, MSU did file its opposition before the

issuing court Iligan City RTC which denied this opposition.

That the respondent Judge subsequently rectified his error

by eventually dismissing the petition before him for lack of

jurisdiction is not a defense that the respondent Judge can use.

[43] His lack of familiarity with the rules in interfering with the acts of

a co-equal court undermines public confidence in the judiciary

through his demonstrated incompetence. In this case, he impressed

upon the Iligan public that the kind of interference he exhibited can

be done, even if only temporarily, i.e., that an official act of the Iligan

City RTC can be thwarted by going to the Marawi City RTC although

they are co-equal courts. That the complaining lawyer, Atty. Tomas

Ong Cabili, subsequently reversed course and manifested that the

respondent Judge is basically a good Judge,[44] and should only be

reprimanded, cannot affect the respondent Judges liability. This

liability and the commensurate penalty do not depend on the

complainants personal opinion but on the facts he alleged and

proved, and on the applicable law and jurisprudence.

When the law is sufficiently basic, a judge owes it to his

office to know and to simply apply it. Anything less would be

constitutive of gross ignorance of the law.[45]

Under A.M. No. 01-8-10-SC or the Amendment to Rule 140 of the

Rules of Court Re: Discipline of Justices and Judges, gross ignorance

of the law is a serious charge, punishable by a fine of more

than P20,000.00, but not exceeding P40,000.00, suspension from

office without salary and other benefits for more than three (3) but

not exceeding six (6) months, or dismissal from the service.

Considering the attendant circumstances of this case, the Court after

prolonged deliberations holds that a fine of P30,000.00 is the

appropriate penalty. This imposition is an act of leniency as we can,

if we so hold, rule for the maximum fine of P40,000.00 or for

suspension since this is the respondent Judges second offense.

WHEREFORE, premises considered, respondent Judge Rasad G.

Balindong, Acting Presiding Judge, Regional Trial Court, Branch 8,

Marawi City, is hereby FOUND GUILTY of Gross Ignorance of the Law

and FINED in the amount of P30,000.00, with a stern WARNING that

a repetition of the same will be dealt with more severely.

SO ORDERED.

Republic of the PhilippinesSupreme CourtManila SECOND DIVISION

ROSITO BAGUNU,Petitioner, - versus - SPOUSES FRANCISCO AGGABAO & ROSENDA ACERIT,Respondents.

G.R. No. 186487 Present:

CARPIO, J., Chairperson,BRION,PERALTA,*

BERSAMIN,** andSERENO, JJ.

Promulgated: August 15, 2011

x----------------------------------------------------------------------------------------- x

R E S O L U T I O N

BRION, J.:

We resolve the motion for reconsideration[1] filed by Rosito

Bagunu (petitioner) to reverse our April 13, 2009 Resolution[2] which

denied his petition for review oncertiorari for lack of merit.

FACTUAL ANTECEDENTS R.L.O. Claim No. 937/DENR Case No. 5177

The present controversy stemmed from a protest filed by

the spouses Francisco Aggabao and Rosenda Acerit (respondents)

against the petitioners free patent application over a parcel of

unregistered land located in Caniogan, Sto. Tomas, Isabela (subject

land), pending before the Department of Environment and Natural

Resources, Region II, Tuguegarao City, Cagayan (DENR Regional

Office).

The subject land was previously owned by Marcos Binag,

who later sold it (first sale) to Felicisimo Bautista (Bautista). In 1959,

Bautista, in turn, sold the subject land (second sale) to Atty. Samson

Binag.

On December 12, 1961, Atty. Binag applied for a free

patent[3] over the subject land with the Bureau of Lands (now Lands

Management Bureau).[4] On November 24, 1987, Atty. Binag sold the

subject land (third sale) to the petitioner,[5] who substituted for Atty.

Binag as the free patent applicant. The parties deed of sale states

that the land sold to the petitioner is the same lot subject of Atty.

Binags pending free patent application.[6]

The deeds evidencing the successive sale of the subject

land, the Bureau of Lands survey,[7] and the free patent applications

uniformly identified the subject land as Lot322. The deeds covering

the second and third sale also uniformly identified the boundaries of

the subject land.[8]

On December 28, 1992, the respondents filed a protest

against the petitioners free patent application. The respondents

asserted ownership over Lot 322 based on the Deeds of Extrajudicial

Settlement with Sale, dated June 23, 1971 and April 15, 1979,

executed in their favor by the heirs of one Rafael Bautista.[9]

The Office of the Regional Executive Director of the DENR

conducted an ocular inspection and formal investigation. The DENR

Regional Office found out that the petitioner actually occupies and

cultivates the area in dispute including the area purchased by [the

respondents].[10]

On July 10, 1998, the DENR Regional Office ruled that the

petitioner wrongfully included Lot 322 in his free patent application

since this lot belongs to the respondents. The DENR Regional Office

ordered:

1. [The respondents to] file their appropriate public land application covering Lot No. 322, Pls-541-D xxx;

2. [The petitioners free patent application] be amended by excluding Lot No. 322, Pls-541-D, as included in Lot No. 258;

3. [A] relocation survey xxx to determine the

exact area as indicated in [the parties] respective technical description of x x x Lot Nos. 258 and 322, Pls-541-D.[11]

The petitioner moved for reconsideration. The DENR

Regional Office denied the motion ruling that in determining the

identity of a lot, the boundaries and not the lot number assigned to

it - are controlling. Since the boundaries indicated in the deed of sale

in the petitioners favor correspond to the boundaries of Lot 258,

what the petitioner acquired was Lot 258, notwithstanding the

erroneous description of the lot sold as Lot322.[12]

On appeal, the DENR Secretary affirmed[13] the ruling of the

DENR Regional Office. After noting the differences in the boundaries

stated in the parties respective Deeds of Sale, the DENR Secretary

concluded that the land claimed by the petitioner is, in fact, distinct

from that claimed by the respondents. The DENR Secretary ruled

that based on the parties respective deeds of sale, the Subdivision

Plan of the lot sold to the petitioner and Atty. Binags affidavit -

claiming that the designation of Lot 322 in the Deed of Sale in the

petitioners favor is erroneous - what the petitioner really acquired

was Lot 258 and not Lot 322.[14] The petitioner appealed to the Court

of Appeals (CA).

COURT OF APPEALS RULING

The CA affirmed the ruling of the DENR Secretary. Applying

the doctrine of primary jurisdiction, the CA ruled that since

questions on the identity of a land require a technical determination

by the appropriate administrative body, the findings of fact of the

DENR Regional Office, as affirmed by the DENR Secretary, are

entitled to great respect, if not finality.[15] The petitioner assails this

ruling before the Court.

Civil Case No. 751

In the meantime, on November 22, 1994 (or during the

pendency of the respondents protest), Atty. Binag filed a complaint

for reformation of instruments, covering the second and third sale,

against Bautista and the petitioner (the civil case) with the Cabagan,

Isabela Regional Trial Court (RTC). Atty. Binag alleged that while the

deeds evidencing the successive sale of the subject land correctly

identified the boundaries of the land sold, the deeds, nevertheless,

erroneously identified the subject land as Lot 322, instead

of Lot 258.[16]

On December 9, 1994, the petitioner and Bautista filed a

motion to dismiss with the RTC, citing the pendency of the land

protest before the Bureau of Lands. The RTC held in abeyance its

resolution on the motion to dismiss.[17]

After obtaining a favorable ruling from the DENR Regional

Office, the respondents joined Atty. Binag in the civil case by filing a

complaint-in-intervention against the petitioner. The complaint-in-

intervention captioned the respondents causes of action as one for

Quieting of Title, Reivindicacion and Damages.[18] The respondents

alleged that the petitioners claim over Lot 322 is a cloud on their

title and ownership of Lot 322. The respondents also alleged that

they were in peaceful, continuous, public and adverse possession of

Lot 322 from the time they fully acquired it in 1979 until sometime

in August of 1992, when the petitioner, through stealth and strategy,

ejected them from Lot 322 after transferring his possession

from Lot 258.[19] The respondents asked the RTC to declare them as

owners of Lot 322.

After the CA affirmed the DENR Secretarys favorable

resolution on the respondents protest, the respondents asked the

RTC to suspend the civil case or, alternatively, to adopt the DENR

Secretarys ruling.[20] In their prayer, the respondents asked the RTC

to: 1. [Adopt] the findings of the DENR as

affirmed by the Court of Appeals xxx thus, the cause of action xxx for reformation of contracts be granted;

2. [Order the petitioner] to vacate Lot 322 xxx and his [Free Patent Application] be amended to exclude Lot 322 xxx.

3. [Set the case] for hearing to receive evidence on the claim of the [respondents] for damages[.]

THE PETITION

The petitioner argues that the CA erred in affirming the

DENR Secretarys jurisdiction to resolve the parties conflicting claims

of ownership over Lot 322, notwithstanding that the same issue is

pending with the RTC. By ruling that the petitioner bought Lot 258

(and not Lot 322) from Atty. Binag and for adjudicating Lot 322 to

the respondents, the DENR effectively reformed contracts and

determined claims of ownership over a real property matters

beyond the DENRs competence to determine.

The petitioner faults the CA for applying the doctrine of

primary jurisdiction since the issue of who has a better right

over Lot 322 does not involve the specialized technical expertise of

the DENR. On the contrary, the issue involves interpretation of

contracts, appreciation of evidence and the application of the

pertinent Civil Code provisions, which are matters within the

competence of the courts.

The petitioner claims that the DENR Secretarys factual

finding, as affirmed by the CA, is contrary to the evidence. The

petitioner asserts that the Deed of Sale in his favor clearly identified

the property sold as Lot 322, which was the same land Atty. Binag

identified in his free patent application; that the area of Lot 322, as

previously determined in a survey caused by the vendor himself

(Atty. Binag), tallies with the area stated in the deed in his favor; that

he has been in possession of Lot 322 since 1987, when it was sold to

him; and that his present possession and cultivation of Lot 322 were

confirmed by the DENR Regional Office during its ocular

investigation.

The petitioner also invites our attention to the incredulity

of the respondents claim of ownership over Lot 322, based on Atty.

Binags testimony during the hearing on the respondents protest.

According to the petitioner, the respondents could not have

expressed interest in buying Lot 322 from Atty. Binag had they

already acquired Lot 322 from the heirs of one Rafael Bautista. The

petitioner adds that as early as 1979, the respondents were already

aware of Atty. Binags free patent application over Lot 322. Yet, they

filed their protest to the free patent application only in 1992 when

the petitioner had already substituted Atty. Binag. The petitioner

claims that the respondents inaction is inconsistent with their claim

of ownership.

Lastly, the petitioner contests the adjudication of Lot 322

in the respondents favor by claiming that the respondents presented

no sufficient evidence to prove their (or their predecessor-in-

interests) title.

In our April 13, 2009 Resolution, we denied the petition for

failure to sufficiently show any reversible error in the assailed CA

Decision and for raising substantially factual issues. The petitioner

moved for reconsideration, confining his arguments to the issue of

jurisdiction and the consequent applicability of the primary

jurisdiction doctrine.

THE RULING

We deny the motion for reconsideration.

Questions of fact generally barred under Rule 45

The main thrust of the petitioners arguments refers to the

alleged error of the DENR and the CA in identifying the parcel of land

that the petitioner bought an error that adversely affected his right

to apply for a free patent over the subject land. In his motion for

reconsideration, the petitioner apparently took a cue from our April

13, 2009Resolution, denying his petition, since his present motion

limitedly argues against the DENRs jurisdiction and the CAs

application of the doctrine of primary jurisdiction.

The petitioner correctly recognized the settled rule that

questions of fact are generally barred under a Rule 45 petition. In

the present case, the identity of Lots 258 and 322 is a central factual

issue. The determination of the identity of these lots involves the

task of delineating their actual boundaries in accordance with the

parties respective deeds of sale and survey plan, among others.

While there are instances where the Court departs from the general

rule on the reviewable issues under Rule 45, the petitioner did not

even attempt to show that his case falls within the recognized

exceptions.[21] On top of this legal reality, the findings and decision of

the Director of Lands[22] on questions of fact, when approved by the

DENR Secretary, are generally conclusive on the courts,[23] and even

on this Court, when these factual findings are affirmed by the

appellate court. We shall consequently confine our discussions to

the petitioners twin legal issues.

The determination of the identity of a public land is within the DENRs exclusive jurisdiction to manage and dispose of lands of the public domain

The petitioner insists that under the law[24] actions

incapable of pecuniary estimation, to which a suit for reformation of

contracts belong, and those involving ownership of real property fall

within the exclusive jurisdiction of the Regional Trial Court. Since

these actions are already pending before the RTC, the DENR

Secretary overstepped his authority in excluding Lot 322 from the

petitioners free patent application and ordering the respondents to

apply for a free patent over the same lot.

In an action for reformation of contract, the court

determines whether the parties written agreement reflects their

true intention.[25] In the present case, this intention refers to

the identity of the land covered by the second and third sale. On the

other hand, in a reivindicatory action, the court resolves the issue of

ownership of real property and the plaintiffs entitlement to recover

its full possession. In this action, the plaintiff is required to prove not

only his ownership, but also the identity of the real property he

seeks to recover.[26]

While these actions ordinarily fall within the exclusive

jurisdiction of the RTC, the courts jurisdiction to resolve

controversies involving ownership of real property extends only to

private lands. In the present case, neither party has asserted private

ownership over Lot 322. The respondents acknowledged the public

character of Lot 322 by mainly relying on the administrative findings

of the DENR in their complaint-in-intervention, instead of asserting

their own private ownership of the property. For his part, the

petitioners act of applying for a free patent with the Bureau of Lands

is an acknowledgment that the land covered by his application is a

public land[27] whose management and disposition belong to the

DENR Secretary, with the assistance of the Bureau of Lands. Section

4, Chapter 1, Title XIV of Executive Order No. 292[28] reads: Section 4. Powers and Functions. - The Department [of Environment and Natural Resources] shall: x x x (4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral resources and, in the process of exercising such control, impose appropriate taxes, fees, charges, rentals and any such form of levy and collect such revenues for the exploration, development, utilization or gathering of such resources; x x x

(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public domain and serve as the sole agency responsible for classification, sub-classification, surveying and titling of lands in consultation with appropriate agencies[.] (Underscoring supplied.)

Under Section 14(f) of Executive Order No. 192,[29] the

Director of the Lands Management Bureau has the duty, among

others, to assist the DENR Secretary in carrying out the provisions of

Commonwealth Act No. 141 (C.A. No. 141)[30] by having direct

executive control of the survey, classification, lease, sale or any

other forms of concession or disposition and management of the

lands of the public domain.

As the CA correctly pointed out, the present case stemmed

from the protest filed by the respondents against the petitioners

free patent application. In resolving this protest, the DENR, through

the Bureau of Lands, had to resolve the issue of identity of the lot

claimed by both parties. This issue of identity of the land requires a

technical determination by the Bureau of Lands, as the

administrative agency with direct control over the disposition and

management of lands of the public domain. The DENR, on the other

hand, in the exercise of its jurisdiction to manage and dispose of

public lands, must likewise determine the applicantsentitlement (or

lack of it) to a free patent. (Incidentally, the DENR Regional Office

still has to determine the respondents entitlement to the issuance of

a free patent[31] in their favor since it merely ordered the exclusion

of Lot 322 from the petitioners own application.) Thus, it is the DENR

which determines the respective rights of rival claimants to alienable

and disposable public lands; courts have no jurisdiction to intrude on

matters properly falling within the powers of the DENR Secretary

and the Director of Lands,[32] unless grave abuse of discretion exists.

After the DENR assumed jurisdiction over Lot 322,

pursuant to its mandate, the RTC must defer the exercise of its

jurisdiction on related issues on the same matter properly within its

jurisdiction,[33] such as the distinct cause of action for reformation of

contracts involving the same property. Note that the contracts refer

to the same property, identified as Lot 322, - which the DENR

Regional Office, DENR Secretary and the CA found to actually pertain

to Lot 258. When an administrative agency or body is conferred

quasi-judicial functions, all controversies relating to the subject

matter pertaining to its specialization are deemed to be included

within its jurisdiction since the law does not sanction a split of

jurisdiction[34]

The argument that only courts of justice can adjudicate claims resoluble under the provisions of the Civil Code is out of step with the fast-changing times. There are hundreds of administrative bodies now performing this function by virtue of a valid authorization from the legislature. This quasi-judicial function, as it is called, is exercised by them as an incident of the principal power entrusted to them of regulating certain activities falling under their particular expertise.[35]

The DENR has primary jurisdiction to resolve conflicting claims of title over public lands

The petitioner argues that the CA erred in applying the

doctrine of primary jurisdiction, claiming that the issue (of who has a

better right over Lot 322) does not require the specialized technical

expertise of the DENR. He posits that the issue, in fact, involves

interpretation of contracts, appreciation of evidence and application

of the pertinent Civil Code provisions, which are all within the

competence of regular courts.

We disagree.

Under the doctrine of primary jurisdiction, courts must

refrain from determining a controversy involving a question which is

within the jurisdiction of the administrative tribunal prior to its

resolution by the latter, where the question demands the exercise of

sound administrative discretion requiring the special knowledge,

experience and services of the administrative tribunal to determine

technical and intricate matters of fact[36]

In recent years, it has been the

jurisprudential trend to apply [the doctrine of primary jurisdiction] to cases involving matters that demand the special competence of administrative agencies[. It may occur that the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in character. However, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction.] It applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body, in such case the judicial process is suspended pending referral of such issues to the administrative body for its view.[37]

The application of the doctrine of primary

jurisdiction, however, does not call for the dismissal of the case below. It need only be suspended until after the matters within the competence of [the Lands Management Bureau] are threshed out and determined. Thereby, the principal purpose behind the doctrine of primary jurisdiction is salutarily served.[38] (Emphases added.)

The resolution of conflicting claims of ownership over real

property is within the regular courts area of competence and,

concededly, this issue is judicial in character. However, regular

courts would have no power to conclusively resolve this issue of

ownership given the public character of the land, since under C.A.

No. 141, in relation to Executive Order No. 192,[39] the disposition

and management of public lands fall within the exclusive jurisdiction

of the Director of Lands, subject to review by the DENR Secretary.[40]

While the powers given to the DENR, through the Bureau

of Lands, to alienate and dispose of public land do not divest regular

courts of jurisdiction over possessoryactions instituted by occupants

or applicants (to protect their respective possessions and

occupations),[41] the respondents complaint-in-intervention does not

simply raise the issue of possession whether de jure or de facto but

likewise raised the issue of ownership as basis to recover possession.

Particularly, the respondents prayed for declaration of ownership

of Lot 322. Ineluctably, the RTC would have to defer its ruling on the

respondents reivindicatory action pending final determination by the

DENR, through the Lands Management Bureau, of the respondents

entitlement to a free patent, following the doctrine of primary

jurisdiction.

Undoubtedly, the DENR Secretarys exclusion of Lot 322

from the petitioners free patent application and his consequent

directive for the respondents to apply for the same lot are within the

DENR Secretarys exercise of sound administrative discretion. In the

oft-cited case of Vicente Villaflor, etc. v. CA, et al,[42] which involves

the decisions of the Director of Lands and the then Minister of

Natural Resources, we stressed that the rationale underlying the

doctrine of primary jurisdiction applies to questions on the identity

of the disputed public land since this matter requires a technical

determination by the Bureau of Lands. Since this issue precludes

prior judicial determination, the courts must stand aside even when

they apparently have statutory power to proceed, in recognition of

the primary jurisdiction of the administrative agency.

WHEREFORE, we hereby DENY the motion for

reconsideration. No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-21450 April 15, 1968

SERAFIN TIJAM, ET AL., plaintiffs-appellees, vs.MAGDALENO SIBONGHANOY alias GAVINO SIBONGHANOY and LUCIA BAGUIO, defendants, MANILA SURETY AND FIDELITY CO., INC. (CEBU BRANCH) bonding company and defendant-appellant.

F. S. Urot and G. A. Uriate for plaintiffs-appellees.Carlos J. Cuizon for defendants Gavino Sibonghanoy and Lucia Baguio.Villaluz Law Office, Velasco Law Office, Pages and Soberano for defendant-appellant Manila Surety and Fidelity Company, Inc.

DIZON, J.:

On July 19, 1948 — barely one month after the effectivity of Republic Act No. 296 known as the Judiciary Act of 1948 — the spouses Serafin Tijam and Felicitas Tagalog commenced Civil Case No. R-660 in the Court of First Instance of Cebu against the spouses Magdaleno Sibonghanoy and Lucia Baguio to recover from them the sum of P1,908.00, with legal interest thereon from the date of the filing of the complaint until the whole obligation is paid, plus costs. As prayed for in the complaint, a writ of attachment was issued by the court against defendants' properties, but the same was soon dissolved upon the filing of a counter-bond by defendants and the Manila Surety and Fidelity Co., Inc. hereinafter referred to as the Surety, on the 31st of the same month.

After being duly served with summons the defendants filed their answer in which, after making some admissions and denials of the material averments of the complaint, they interposed a counterclaim. This counterclaim was answered by the plaintiffs.

After trial upon the issues thus joined, the Court rendered judgment in favor of the plaintiffs and, after the same had become final and executory, upon motion of the latter, the Court issued a writ of execution against the defendants.The writ having been returned unsatisfied, the plaintiffs moved for the issuance of a writ of execution against the Surety's bond (Rec. on Appeal, pp. 46-49), against which the Surety filed a written opposition (Id. pp. 49) upon two grounds, namely, (1) Failure to prosecute and (2) Absence of a demand upon the Surety for the payment of the amount due under the judgment. Upon these grounds the Surety prayed the Court not only to deny the motion for execution against its counter-bond but also the following affirmative relief : "to relieve the herein bonding company of its liability, if any, under the bond in question" (Id. p. 54) The Court denied this motion on the ground solely that no previous demand had been made on the Surety for the satisfaction of the judgment. Thereafter the necessary demand was made, and upon failure of the Surety to satisfy the judgment, the plaintiffs filed a second motion for execution against the counterbond. On the date set for the hearing thereon, the Court, upon motion of the Surety's counsel, granted the latter a period of five days within which to answer the motion. Upon its failure to file such answer, the Court granted the motion for execution and the corresponding writ was issued.

Subsequently, the Surety moved to quash the writ on the ground that the same was issued without the required summary hearing provided for in Section 17 of Rule 59 of the Rules of Court. As the Court denied the motion, the Surety appealed to the Court of

Appeals from such order of denial and from the one denying its motion for reconsideration (Id. p. 97). Its record on appeal was then printed as required by the Rules, and in due time it filed its brief raising therein no other question but the ones covered by the following assignment of errors:

I. That the Honorable Court a quo erred in issuing its order dated November 2, 1957, by holding the incident as submitted for resolution, without a summary hearing and compliance with the other mandatory requirements provided for in Section 17, Rule 59 of the Rules of Court.

II. That the Honorable Court a quo erred in ordering the issuance of execution against the herein bonding company-appellant.

III. That the Honorable Court a quo erred in denying the motion to quash the writ of execution filed by the herein bonding company-appellant as well as its subsequent motion for reconsideration, and/or in not quashing or setting aside the writ of execution.

Not one of the assignment of errors — it is obvious — raises the question of lack of jurisdiction, neither directly nor indirectly.

Although the appellees failed to file their brief, the Court of Appeals, on December 11, 1962, decided the case affirming the orders appealed from.

On January 8, 1963 — five days after the Surety received notice of the decision, it filed a motion asking for extension of time within which to file a motion for reconsideration. The Court of Appeals granted the motion in its resolution of January 10 of the same year. Two days later the Surety filed a pleading entitled MOTION TO DISMISS, alleging substantially that appellees action was filed in the Court of First Instance of Cebu on July 19, 1948 for the recovery of the sum of P1,908.00 only; that a month before that date Republic Act No. 296, otherwise known as the Judiciary Act of 1948, had already become effective, Section 88 of which placed within the original exclusive jurisdiction of inferior courts all civil actions where the value of the subject-matter or the amount of the demand does not exceed P2,000.00, exclusive of interest and costs; that the Court of First Instance therefore had no jurisdiction to try and decide the case. Upon these premises the Surety's motion prayed the Court of Appeals to set aside its decision and to dismiss the case. By resolution of January 16, 1963 the Court of Appeals required the appellees to answer the motion to dismiss, but they failed to do so. Whereupon, on May 20 of the same year, the Court resolved to set aside its decision and to certify the case to Us. The pertinent portions of its resolution read as follows:

It would indeed appear from the record that the action at bar, which is a suit for collection of money in the sum of exactly P1,908.00 exclusive of interest, was originally instituted in the Court of First Instance of Cebu on July 19, 1948. But about a month prior to the filing of the complaint, more specifically on June 17, 1948, the Judiciary Act of 1948 took effect, depriving the Court of First Instance of original jurisdiction over cases in which the demand, exclusive of interest, is not more than P2,000.00. (Secs. 44[c] and 86[b], R.A. No. 296.)

We believe, therefore, that the point raised in appellant's motion is an important one which merits serious consideration. As stated, the complaint was filed on July 19, 1948. This case therefore has been pending now for almost 15 years, and throughout the entire proceeding appellant never raised the question of jurisdiction until after receipt of this Court's adverse decision.

There are three cases decided by the Honorable Supreme Court which may be worthy of consideration in connection with this case, namely: Tyson Tan, et al. vs. Filipinas Compañia de Seguros, et al., G.R. No. L-10096, March 23, 1956; Pindangan Agricultural Co., Inc. vs. Jose P. Dans, etc., et al., G.R. No.L-14591, September 26, 1962; and Alfredo Montelibano, et al. vs. Bacolod-Murcia Milling Co., Inc., G.R. No. L-15092, September 29, 1962, wherein the Honorable Supreme Court frowned upon the 'undesirable practice' of appellants submitting their case for decision and then accepting the judgment, if favorable, but attacking it for lack of jurisdiction when adverse.

Considering, however, that the Supreme Court has the "exclusive" appellate jurisdiction over "all cases in which the jurisdiction of any inferior court is in issue" (See. 1, Par. 3[3], Judiciary Act of 1948, as amended), we have no choice but to certify, as we hereby do certify, this case to the Supreme Court.1äwphï1.ñët

ACCORDINGLY, pursuant to Section 31 of the Judiciary Act of 1948 as amended, let the record of this case be forwarded to the Supreme Court.

It is an undisputed fact that the action commenced by appellees in the Court of First Instance of Cebu against the Sibonghanoy spouses was for the recovery of the sum of P1,908.00 only — an amount within the original exclusive jurisdiction of inferior courts in accordance with the provisions of the Judiciary Act of 1948 which had taken effect about a month prior to the date when the action was commenced. True also is the rule that jurisdiction over the subject matter is conferred upon the courts exclusively by law, and as the lack of it affects the very authority of the court to take cognizance of the case, the objection may be raised at any stage of the proceedings. However, considering the facts and circumstances of the present case — which shall forthwith be set forth — We are of the opinion that the Surety is now barred by laches from invoking this plea at this late hour for the purpose of annuling everything done heretofore in the case with its active participation.

As already stated, the action was commenced in the Court of First Instance of Cebu on July 19, 1948, that is, almost fifteen years before the Surety filed its motion to dismiss on January 12, 1963 raising the question of lack of jurisdiction for the first time.

It must be remembered that although the action, originally, was exclusively against the Sibonghanoy spouses the Surety became a quasi-party therein since July 31, 1948 when it filed a counter-bond for the dissolution of the writ of attachment issued by the court of origin (Record on Appeal, pp. 15-19). Since then, it acquired certain rights and assumed specific obligations in connection with the pending case, in accordance with sections 12 and 17, Rule 57, Rules of Court (Bautista vs. Joaquin, 46 Phil. 885; Kimpang & Co. vs. Javier, 65 Phil. 170).

Upon the filing of the first motion for execution against the counter-bond the Surety not only filed a written opposition thereto praying for its denial but also asked for an additional affirmative relief — that it be relieved of its liability under the counter-bond upon the grounds relied upon in support of its opposition — lack of jurisdiction of the court a quo not being one of them.

Then, at the hearing on the second motion for execution against the counter-bond, the Surety appeared, through counsel, to ask for time within which to file an answer or opposition thereto. This motion was granted, but instead of such answer or opposition, the Surety filed the motion to dismiss mentioned heretofore.

A party may be estopped or barred from raising a question in different ways and for different reasons. Thus we speak of estoppel in pais, or estoppel by deed or by record, and of estoppel by laches.

Laches, in a general sense is failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.

The doctrine of laches or of "stale demands" is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted.

It has been held that a party can not invoke the jurisdiction of a court to sure affirmative relief against his opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). In the case just cited, by way of explaining the rule, it was further said that the question whether the court had jurisdiction either of the subject-matter of the action or of the parties was not important in such cases because the party is barred from such conduct not because the judgment or order of the court is valid and conclusive as an adjudication, but for the reason that such a practice can not be tolerated — obviously for reasons of public policy.

Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse decision on the merits, it is too late for the loser to question the jurisdiction or power of the court (Pease vs. Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35 L. Ed. 659). And in Littleton vs. Burgess, 16 Wyo. 58, the Court said that it is not right for a party who has affirmed and invoked the jurisdiction of a court in a particular matter to secure an affirmative relief, to afterwards deny that same jurisdiction to escape a penalty.

Upon this same principle is what We said in the three cases mentioned in the resolution of the Court of Appeals of May 20, 1963 (supra) — to the effect that we frown upon the "undesirable practice" of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse — as well as in Pindañgan etc. vs. Dans, et al., G.R. L-14591, September 26, 1962; Montelibano, et al., vs. Bacolod-Murcia Milling Co., Inc., G.R. L-15092; Young Men Labor

Union etc. vs. The Court of Industrial Relation et al., G.R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100 Phil. p. 277.

The facts of this case show that from the time the Surety became a quasi-party on July 31, 1948, it could have raised the question of the lack of jurisdiction of the Court of First Instance of Cebu to take cognizance of the present action by reason of the sum of money involved which, according to the law then in force, was within the original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at several stages of the proceedings in the court a quo as well as in the Court of Appeals, it invoked the jurisdiction of said courts to obtain affirmative relief and submitted its case for a final adjudication on the merits. It was only after an adverse decision was rendered by the Court of Appeals that it finally woke up to raise the question of jurisdiction. Were we to sanction such conduct on its part, We would in effect be declaring as useless all the proceedings had in the present case since it was commenced on July 19, 1948 and compel the judgment creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent but revolting.

Coming now to the merits of the appeal: after going over the entire record, We have become persuaded that We can do nothing better than to quote in toto, with approval, the decision rendered by the Court of Appeals on December 11, 1962 as follows:

In Civil Case No. R-660 of the Court of First Instance of Cebu, which was a suit for collection of a sum of money, a writ of attachment was issued against defendants' properties. The attachment, however, was subsequently discharged under Section 12 of Rule 59 upon the filing by defendants of a bond subscribed by Manila Surety & Fidelity Co., Inc.

After trial, judgment was rendered in favor of plaintiffs.

The writ of execution against defendants having been returned totally unsatisfied, plaintiffs moved, under Section 17 of Rule 59, for issuance of writ of execution against Manila Surety & Fidelity Co., Inc. to enforce the obligation of the bond. But the motion was, upon the surety's opposition, denied on the ground that there was "no showing that a demand had been made, by the plaintiffs to the bonding company for payment of the amount due under the judgment" (Record on Appeal, p. 60).

Hence, plaintiffs made the necessary demand upon the surety for satisfaction of the judgment, and upon the latter's failure to pay the amount due, plaintiffs again filed a motion dated October 31, 1957, for issuance of writ of execution against the surety, with notice of hearing on November 2, 1957. On October 31, 1957, the surety received copy of said motion and notice of hearing.

It appears that when the motion was called on November 2, 1957, the surety's counsel asked that he be given time within which to answer the motion, and so an order was issued in open court, as follows:1äwphï1.ñët

As prayed for, Atty. Jose P. Soberano, Jr., counsel for the Manila Surety & Fidelity Co., Inc., Cebu Branch, is given until Wednesday, November 6,

1957, to file his answer to the motion for the issuance of a writ of execution dated October 30, 1957 of the plaintiffs, after which this incident shall be deemed submitted for resolution.

SO ORDERED.

Given in open court, this 2nd day of November, 1957, at Cebu City, Philippines.

(Sgd.) JOSE M. MENDOZA Judge

(Record on Appeal, pp. 64-65, emphasis ours)

Since the surety's counsel failed to file any answer or objection within the period given him, the court, on December 7, 1957, issued an order granting plaintiffs' motion for execution against the surety; and on December 12, 1957, the corresponding writ of execution was issued.

On December 24, 1957, the surety filed a motion to quash the writ of execution on the ground that the same was "issued without the requirements of Section 17, Rule 59 of the Rules of Court having been complied with," more specifically, that the same was issued without the required "summary hearing". This motion was denied by order of February 10, 1958.

On February 25, 1958, the surety filed a motion for reconsideration of the above-stated order of denial; which motion was likewise denied by order of March 26, 1958.

From the above-stated orders of February 10, 1958 and March 26, 1958 — denying the surety's motion to quash the writ of execution and motion for reconsideration, respectively — the surety has interposed the appeal on hand.

The surety insists that the lower court should have granted its motion to quash the writ of execution because the same was issued without the summary hearing required by Section 17 of Rule 59, which reads;

"Sec. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned unsatisfied in whole or in part, the surety or sureties on any bond given pursuant to the provisions of this role to secure the payment of the judgment shall become finally charged on such bond, and bound to pay to the plaintiff upon demand the amount due under the judgment, which amount may be recovered from such surety or sureties after notice and summary hearing in the same action." (Emphasis ours)

Summary hearing is "not intended to be carried on in the formal manner in which ordinary actions are prosecuted" (83 C.J.S. 792). It is, rather, a procedure by which a question is resolved "with dispatch, with the least possible delay, and in preference to ordinary legal and regular

judicial proceedings" (Ibid, p. 790). What is essential is that "the defendant is notified or summoned to appear and is given an opportunity to hear what is urged upon him, and to interpose a defense, after which follows an adjudication of the rights of the parties" (Ibid., pp. 793-794); and as to the extent and latitude of the hearing, the same will naturally lie upon the discretion of the court, depending upon the attending circumstances and the nature of the incident up for consideration.

In the case at bar, the surety had been notified of the plaintiffs' motion for execution and of the date when the same would be submitted for consideration. In fact, the surety's counsel was present in court when the motion was called, and it was upon his request that the court a quo gave him a period of four days within which to file an answer. Yet he allowed that period to lapse without filing an answer or objection. The surety cannot now, therefore, complain that it was deprived of its day in court.

It is argued that the surety's counsel did not file an answer to the motion "for the simple reason that all its defenses can be set up during the hearing of the motion even if the same are not reduced to writing" (Appellant's brief, p. 4). There is obviously no merit in this pretense because, as stated above, the record will show that when the motion was called, what the surety's counsel did was to ask that he be allowed and given time to file an answer. Moreover, it was stated in the order given in open court upon request of the surety's counsel that after the four-day period within which to file an answer, "the incident shall be deemed submitted for resolution"; and counsel apparently agreed, as the order was issued upon his instance and he interposed no objection thereto.

It is also urged that although according to Section 17 of Rule 59, supra, there is no need for a separate action, there must, however, be a separate judgment against the surety in order to hold it liable on the bond (Appellant's Brief, p. 15). Not so, in our opinion. A bond filed for discharge of attachment is, per Section 12 of Rule 59, "to secure the payment to the plaintiff of any judgment he may recover in the action," and stands "in place of the property so released". Hence, after the judgment for the plaintiff has become executory and the execution is "returned unsatisfied" (Sec. 17, Rule 59), as in this case, the liability of the bond automatically attaches and, in failure of the surety to satisfy the judgment against the defendant despite demand therefor, writ of execution may issue against the surety to enforce the obligation of the bond.

UPON ALL THE FOREGOING, the orders appealed from are hereby affirmed, with costs against the appellant Manila Surety and Fidelity Company, Inc.

EN BANC

[G.R. Nos. L-62831-32. July 31, 1986.]

PHILIPPINE NATIONAL BANK, Petitioner, v. HON. INTERMEDIATE APPELLATE COURT and SPS. TEODORO and VICTORIA FLORENDO, Respondents.

Diaz, Del Rosario, Ilao & Basa Law Office for Petitioner.

Luis F. de Castro for Private Respondents.

D E C I S I O N

GUTIERREZ, JR., J.:

These petitions ask for the review of the Court of Appeals’ decisions in CA-G.R. No. 13913-CAR entitled Teodoro N. Florendo and Victoria B. Florendo, plaintiffs-appellants v. Land Bank of the Philippines, Et Al., defendants-appellees, Philippine National Bank, Et. Al. defendants-appellants and CA-G.R. No. 13689-SP, entitled Philippine National Bank, petitioner-appellant v. Hon. Court of Agrarian Relations (12th Regional District, Branch IV, Dumaguete City), Et. Al.

The subject matter of both cases was the decision of the Court of Agrarian Relations in CAR Case No. 494 for specific performance and damages filed by spouses Teodoro N. Florendo and Victoria B. Florendo against the Land Bank of the Philippines and the Philippine National Bank and some officers of the two government banks.

Plaintiffs-spouses Teodoro N. Florendo and Victoria B. Florendo are the registered owners of three parcels of land covered by OCT No. S-V-97, TCT No.F-T-11 and TCT No.MT-98 of the Register of Deeds, Negros Oriental. These properties were mortgaged with the Philippine National Bank to secure a loan obtained by the Florendos.

Upon the promulgation of Presidential Decree No. 27, the property covered by OCT-S-V-97 was subjected to operation land transfer of the land reform program. This parcel of land was, therefore, redistributed to 31 tenants. The value of the land was assessed at P148,716.48. The Florendos were paid under Section 80 of Republic Act 3844 as amended by Section 7 of Presidential Decree 251. Pursuant to this law, the Land Bank on August 9, 1979 remitted to the Philippine National Bank P94,500.00 in bonds and a check in the amount of P332.31 for a total of P94,832.31 to pay the outstanding obligation of the Florendos so that the lot covered by OCT No. S-V-97 could be released to the Land Bank and the "assignment of rights" could be accomplished by the Florendos.

The Philippine National Bank, however, notified the Florendos, that of the total Land Bank bonds of P94,500.00 the bank was willing to accept only P15,500.00 at face value and the balance of P79,400.00 at a 40% discount for a total discount of P31,600.00 thus crediting the Florendos with a total sum of P53,232.31. Included in said amount was the Land Bank check of P332.31. The Philippine National Bank stated that it had a policy of accepting Land Bank bonds on a one to one basis only in so far as property subjected to the agrarian land reform was concerned. All others were accepted at a discounted rate.

The Florendos, in a letter dated October 25, 1979, expressed their non-conformity with the Philippine National Bank’s policy. The Philippine National Bank maintained its stand and refused to approve for registration with the Register of Deeds of Negros

Oriental the "Assignment of Rights" and the release of lot No. S-V-97 to the Land Bank.

After trial on the merits, the trial court rendered a decision, the dispositive portion of which reads:chanrob1es virtual 1aw library

WHEREFORE, judgment is hereby rendered as follows:chanrob1es virtual 1aw library

1. Declaring plaintiff’s loan and or indebtedness with the defendant PNB secured by OCT S-V-97; TCT T-H-98 and TCT F-T-11 to have been duly paid and satisfied as of August, 1979;

2. Declaring the plaintiffs entitled to the release of all the above-mentioned collaterals held by the defendant PNB;

3. Declaring the Land Bank bonds worth P94,832.31 and check in the amount of P332.31 as full satisfaction of plaintiffs account with the PNB;

4. Ordering the defendant PNB to deliver and release unto the plaintiffs OCT S-V-97, TCT T-H-98 and TCT F-T-11 held by them as securities for the plaintiffs loan;

5. Ordering defendant Land Bank to settle and pay the accounts of the herein plaintiffs with the Development Bank of the Philippines from the remaining balance of the value of the subject property;

6. Dismissing all other claims of plaintiffs for lack of evidence; and

7. Dismissing the counterclaim of defendant PNB for lack of merit. No pronouncement as to COSTS.

The Florendos and the Philippine National Bank appealed the lower court’s decision to the Court of Appeals where the case was docketed as CA-G.R. No. 13913-CAR.

In the meantime upon motion of the Florendos, the trial court ordered the issuance of a writ of execution to enforce the decision. Consequently, the Philippine National Bank filed a petition forcertiorari with preliminary prohibitory injunction to stay the execution and enforcement of the court’s decision during the pendency of the appeal. This petition was docketed as CA-G.R. No. 13913-CAR. The Court of Appeals then issued the prayed for restraining order.

In its joint decision of the two cases, the Court of Appeals affirmed the judgment. The temporary restraining order earlier issued by the court was lifted to enable the immediate enforcement of the writ of execution issued in CAR Case No. 494 by the Court of Agrarian Relations.

On January 12, 1983, we issued a temporary restraining order enjoining the Sheriff of the Court of Agrarian Relations, Dumaguete City from enforcing or implementing the writ of execution issued by the Court of Agrarian Relations dated January 5, 1982 and/or the decision of the respondent Court of Appeals in CA-G.R. No. 13913-CAR and CA-G.R. No. 13689-SP until otherwise ordered by us.

The Philippine National Bank (PNB) alleges that the respondent Court of Appeals erred in not finding that:chanrob1es virtual 1aw library

A

SECTION 80 OF THE AGRARIAN REFORM CODE, AS AMENDED, DOES NOT APPLY TO LANDS NOT SUBJECTED TO P.D. NO. 27 AND THEREFORE NOT COVERED BY AGRARIAN REFORM, IN WHICH CASE, ACCEPTANCE OF LAND BANK BONDS AS PAYMENTS IS NOT COMPULSORY.

B

P.D. NO. 694 (PNB CHARTER) INSTEAD APPLIES TO LANDS OR TO THAT PORTION OF THE MORTGAGE LIEN/ENCUMBRANCE NOT SUBJECTED TO AGRARIAN REFORM, PARTICULARLY SECTION 80 OF THE AGRARIAN REFORM CODE, IN WHICH CASE, PNB MAY VALIDLY DETERMINE THE MANNER AND CONDITIONS IN WHICH LAND BANK BONDS MAY BE ACCEPTED AS PAYMENTS.

C

EVEN IF THE LAND BANK BONDS IN QUESTION WERE TAKEN BY PNB FULLY AT THEIR FACE VALUE, PRIVATE RESPONDENTS WOULD STILL REMAIN INDEBTED TO PNB.

D

SINCE PRIVATE RESPONDENT’s LOAN WITH PNB REMAINS UNPAID, THE LATTER IS IN NO POSITION TO DISCHARGE OR RELEASE THE MORTGAGE CONSTITUTED ON OCT-S-V-97, MUCH LESS ON THE TWO OTHER TITLES.

E

COURT OF AGRARIAN RELATIONS IS WITHOUT JURISDICTION OVER SUBJECT MATTER OF THE CASE INSOFAR AS THE LANDS NOT SUBJECTED TO P.D. NO. 27 ARE CONCERNED. SAID LANDS ARE NOT COVERED BY AGRARIAN REFORM.

The issues raised above are as follows: (1) whether or not the Court of Agrarian Relations had jurisdiction over CAR Case No. 494; (2) whether or not Section 80, Republic Act 3844 as amended by Presidential Decree 251 applies to lands not covered by Presidential Decree No. 27; and (3) whether or not the Land Bank bonds of P94,500.00 and the Land Bank check of P332.31 remitted to the PNB are sufficient to pay the full outstanding obligation of the Florendos to the PNB.

The issue of jurisdiction was first raised in the Court of Appeals. In the Court of Agrarian Relations, the PNB filed an answer setting up its special and affirmative defenses with counterclaim. The PNB through its counsel and representative actively participated in all the hearings. In fact, the parties agreed upon the issues of the case and the PNB never raised the issue on the alleged lack of jurisdiction of the Court of Agrarian Relations.

On this score alone, the PNB is precluded from raising for the first time on appeal the issue of lack of jurisdiction of the Court of Agrarian Relations over C.A.R. Case No. 494. As we held in Royales v. Intermediate Appellate Court (127 SCRA 470) citing the earlier case of Tijam v. Sibonghanoy (23 SCRA 29):chanrob1es virtual 1aw library

While petitioners could have prevented the trial court from

exercising jurisdiction over the case by seasonably taking exception thereto, they instead invoked the very same jurisdiction by filing an answer and seeking affirmative relief from it. What is more, they participated in the trial of the case by cross-examining respondent Planas. Upon this premise, petitioners cannot now be allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the court to which they had submitted themselves voluntarily.

More important, however, is that the Court of Agrarian Relation had jurisdiction over C.A.R. No. 494. The main issue raised in the case was whether or not the PNB should apply the face value of the Land Bank bonds to the outstanding obligation of the Florendos in consonance with Presidential Decree No. 251. It is to be recalled that while the PNB loan of the Florendos was secured by the mortgage of three lots, only one of the lots was placed under the land reform program and subjected to operation land transfer. Following the rule that a mortgage obligation is indivisible and that it cannot be divided among the different lots which are mortgaged to secure it (Gonzales v. GSIS, 107 SCRA 492), the inevitable effect of the placing of only one lot under the land reform program is that all the lots mortgaged, without distinction, are subject to the jurisdiction of the Court of Agrarian Relations. This is specially true in this case because the mode of payment chosen by the Florendos under Presidential Decree No. 251 subjects not only the loan value but also the outstanding balance of the obligation to settlement with Land Bank bonds. (Gonzales v. GSIS supra) The case, therefore, clearly falls under Section 12(b) of Presidential Decree No. 946 (Reorganizing the Court of Agrarian Relations, Streamlining their Procedures and For Other Purposes) which provides:chanrob1es virtual 1aw library

Section 12. Jurisdiction over Subject Matter. — The Court of Agrarian Relations shall have original and exclusive jurisdiction over.

x x x

(b) Questions involving rights granted and obligations imposed by laws, Presidential Decrees, Orders, Instructions, Rules and Regulations issued and promulgated in relation to the agrarian reform program.

The issue raised in relation to Section 80, Republic Act 3844 as amended by Presidential Decree 251 stems from the PNB’s refusal to apply the Land Bank bonds worth P94,500.00 at face value to the entire outstanding obligation of the Florendos to the former.

Section 80, Republic Act 3844, as amended provides for the modes of payment through the Land Bank of lands placed under the land reform program. The pertinent portion reads:jgc:chanrobles.com.ph

"Section 80. Modes of payment. — The Bank shall finance the acquisition of farm lots under any of the following modes of settlement:chanrob1es virtual 1aw library

x x x

"In the event there is an existing lien or encumbrance on the land in favor of any Government lending institution at the time of acquisition by the Bank, the landowner shall be paid the net value of the land (i.e., the value of the land determined under Proclamation (sic) No. 27 minus the outstanding balance/s of the obligation/s secured by the lien/s or encumbrance/s), and the outstanding

balance/s of the obligations to the lending institutions/s shall be paid by the Land Bank in Land Bank bonds or other securities; existing charters of those institutions to the contrary notwithstanding. A similar settlement may be negotiated by the Land Bank in the case of obligations secured by liens or encumbrances in favor of private parties or institutions. (Emphasis supplied)"

The PNB maintains that under this provision the Land Bank bond payments should be applied at face value only to that extent of the proportionate loan value of the collateral subjected to Presidential Decree No. 27 and the balance of the bonds, if any, should be accepted as payments to release the mortgage on the lands not covered by the land reform program at market value or market price pursuant to the PNB Charter.

Under this premise, the PNB submits that the Land Bank bonds worth P94,500.00 should be applied to the outstanding obligation of the Florendos as follows: (1) P15,500.00 (loan value of the land placed under PD 27) at face value and the remaining (2) P79,000.00 at a discount of 40% reducing its value to only P47,400.00.

The posture taken by PNB is not well-taken. This issue has been squarely resolved in the case of Gonzales v. GSIS, earlier cited. The spouses Gonzales obtained a housing loan of P80,000.00 from the respondent GSIS repayable in installments within fifteen years with interest using as collaterals residential lots and two parcels of agricultural land. The Gonzaleses were able to pay only a few monthly installments leaving an unpaid obligation of P135,884.82, including accumulated interest. The mortgaged agricultural lands were placed under the land reform program. The Land Bank took over and tried to pay the GSIS by remitting P23,505.00 in cash and P93,500.00 in Land Bank bonds. The GSIS refused acceptance unless the payment in bonds was to be discounted. The Gonzales spouses, therefore, filed a case to compel the GSIS to accept the Land Bank bonds at their face value as payment for their outstanding housing loan.

The GSIS’ refusal to apply the Land Bank bonds at face value to the outstanding obligation of the Gonzales spouses was premised on the argument that the GSIS is not compelled to accept Land Bank bonds for the discharge of existing encumbrances on lands given as security to the GSIS but not acquired by the Land Bank under Presidential Decree No. 27. Like the PNB in the instant petition, the GSIS asserted that their Land Bank bonds payments should be applied at face value only to that portion of the loan secured by the land covered by Presidential Decree No. 27.

In resolving the issue, we ruled:chanrob1es virtual 1aw library

We find the foregoing asseverations self-serving and in contravention of Presidential Decree No. 251, which ordains that "the outstanding balance of the obligations to the lending institution/s shall be paid by the Land Bank in Land Bank bonds or other securities." (Emphasis supplied). It is clear then that it is not only the loan value but the outstanding balance of the obligation that has to be settled with Land Bank bonds, and as discussed above, at their par or face value.

The fact that only one agricultural land of the four securities was placed under land reform should make no difference. Although it may be conceded that the obligation of the petitioners is, in a sense, divisible because it can be settled partially according to current practice, it does not render the mortgage of four (4) parcels of land also divisible. Generally, the divisibility of the principal obligation is

not affected by the indivisibility of the mortgage. The mortgage obligation is indivisible; that is, it cannot be divided among the different lots. A real estate mortgage voluntarily constituted by the debtor on two or more parcels of land is one and indivisible. Each and every parcel under mortgage answers for the totality of the debt. Being indivisible, the full value of the one parcel being paid for by the Land Bank should be applied in full to the outstanding loan obligation without any discounting. (Gonzales v. GSIS, 107 SCRA 492, 501-502).

The P94,500.00 Land Bank bonds remitted by the Land Bank to the PNB to pay the Florendos’ obligation should, therefore, be applied at their face value.

The PNB, however, insists that the P94,500.00 bonds even if applied at face value and the Land Bank check worth P332.31 would not be sufficient to pay the outstanding obligation of the Florendos which, according to its computation, was P152,499.29 as of July 10, 1979.

The record is clear that at the time the Land Bank remitted the P94,500.00 bonds and the check worth P332.31, the outstanding obligation of the Florendos to the PNB as agreed upon by both banks was only P94,832.31. In fact that PNB insistence that after the discounting of P94,500.00, there would still be an excess of more than P30,000.00 on the outstanding obligation of the Florendos was based on the reason behind their refusal to surrender the titles of the mortgaged properties. Thus, Atty. Remollo, the PNB representative testified:chanrob1es virtual 1aw library

ATTY. REMOLLO:chanrob1es virtual 1aw library

The trouble is the plaintiff is asking for the release of the property. Assuming for the sake of argument that we will accept the bond who will pay the excess? The excess is more than P30,000.00? (TSN, June 24, 1980, p. 13).

The more than P30,000.00 alleged excess was based on the P94,500.00 land bank bonds being valued by PNB at only P63.232.31. Adding the check worth P332.31 would yield the amount of P63,564.32 thus leaving an excess of P31,267.69, from Florendo’s outstanding obligation of P94,832.31.

The Court of Appeals did not err, in rejecting the unilateral computation of the PNB on the amount of the Florendos’ total obligation.

Considering the foregoing, we rule that the P94,500.00 bonds and the check worth P332.31 remitted by the Land Bank totally discharge the outstanding obligation of the Florendos to the PNB.

On the other hand, the Florendos challenge the decision of the then Court of Appeals on two grounds, namely, (1) the denial of their claim to moral and exemplary damages and (2) the failure of the appellate court to order the Land Bank to pay their indebtedness to the Development Bank of the Philippines (DBP) and release to them their torrens title (OCT-Q-V-22) over another parcel of land free from all liens and encumbrances. The challenge is not well taken.

We agree with the appellate court about there being no clear evidence that the named officers of the two banks acted in a wanton or willful manner in their dealings with Teodoro Florendo which would warrant the award for moral and exemplary damages.

On the second issue, we rule that the Land Bank has no responsibility to pay the Florendos’ outstanding obligation to the

DBP. The DBP loan was a separate transaction and has nothing to do with the PNB loan. Moreover, the loan of the Florendos’ with the DBP was secured by a parcel of land different from those mortgaged with the PNB. The DBP is not a party in these two petitions.

It is to be noted, however, that the then Court of Appeals "affirmed in full" the decision of the Court of Agrarian Relations. Paragraph 5 of the dispositive portion of the decision of the lower court states:chanrob1es virtual 1aw library

WHEREFORE, judgment is hereby rendered as follows:chanrob1es virtual 1aw library

x x x

5. Ordering the defendant Land Bank to settle and pay the amounts of the herein plaintiffs with the Development Bank of the Philippines from the remaining balance of subject property.

x x x

Considering our findings on this matter, this part of the decision of the lower court affirmed by the then Court of Appeals should be deleted.

WHEREFORE, the instant petitions are DISMISSED for lack of merit. The questioned decision of the then Court of Appeals is MODIFIED in that Number 5 of the dispositive portion of the decision of the Court of Agrarian Relations which was affirmed by the then Court of Appeals is hereby DELETED. The decision is AFFIRMED in all other respects. The temporary restraining order we issued dated January 5, 1982 is DISSOLVED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. No. 169370 April 14, 2008

EUSTACIO ATWEL, LUCIA PILPIL and MANUEL MELGAZO, petitioners, vs.CONCEPCION PROGRESSIVE ASSOCIATION, INC.,**, respondent.

D E C I S I O N

CORONA, J.:

The present petition under Rule 45 of the Rules of Court assails the decision1 of the Court of Appeals (CA), dated March 17, 2005 in CA-G.R. SP No. 85170, declaring petitioners Eustacio Atwel,2 Lucia Pilpil and Manuel Melgazo estopped from questioning the jurisdiction of Branch 8 of the Regional Trial Court (RTC) of Tacloban City as a special commercial court under Republic Act (RA) No. 8799.3

The facts follow.

In 1948, then Assemblyman Emiliano Melgazo4 founded and organized Concepcion Progressive Association (CPA) in Hilongos, Leyte. The organization aimed to provide livelihood to and generate income for his supporters.

In 1968, after his election as CPA president, Emiliano Melgazo bought a parcel of land in behalf of the association. The property was later on converted into a wet market where agricultural, livestock and other farm products were sold. It also housed a cockpit and an area for various forms of amusement. The income generated from the property, mostly rentals from the wet market, was paid to CPA.

When Emiliano Melgazo died, his son, petitioner Manuel Melgazo, succeeded him as CPA president and administrator of the property. On the other hand, petitioners Atwel and Pilpil were elected as CPA vice-president and treasurer, respectively.

In 1997, while CPA was in the process of registering as a stock corporation, its other elected officers and members formed their own group and registered themselves in the Securities and Exchange Commission (SEC) as officers and members of respondent Concepcion Progressive Association, Inc. (CPAI). Petitioners were not listed either as officers or members of CPAI. Later, CPAI objected to petitioners' collection of rentals from the wet market vendors.

In 2000, CPAI filed a case in the SEC for mandatory injunction.5 With the passage of RA 8799, the case was transferred to Branch 24 of the Southern Leyte RTC and subsequently, to Branch 8 of the Tacloban City RTC. Both were special commercial courts.

In the complaint, CPAI alleged that it was the owner of the property and petitioners, without authority, were collecting rentals from the wet market vendors.

In their answer, petitioners refuted CPAI's claim saying that it was preposterous and impossible for the latter to have acquired ownership over the property in 1968 when it was only in 1997 that it was incorporated and registered with the SEC. Petitioners added that since the property was purchased using the money of petitioner Manuel Melgazo's father (the late Emiliano Melgazo), it belonged to the latter.

On June 9, 2004, the special commercial court ruled that the deed of sale covering the property was in the name of CPA, not Emiliano Melgazo:

The terms and language of said Deed is unmistakable that the vendee is [CPA], through Emiliano Melgazo, and Emiliano Melgazo signed said Deed "for and [in] behalf of the CPA"...there is therefore no doubt as to who the vendee is. It is [CPA] and not Emiliano Melgazo. As such, it is [CPA] who is the owner of said property and not [petitioner] Manuel Melgazo... [Petitioners] contend that the money used in the purchase of [the property] was Emiliano Melgazo['s]. This Court is not persuaded and to rule otherwise...will be a contravention [to] the Parole Evidence Rule.6

In the dispositive portion of the decision, the court, however, considered CPA to be one and the same as CPAI:

WHEREFORE, premises considered, this Court finds for [CPAI] and against [petitioners] and the latter are hereby directed to cease and desist from collecting the vendor's fee for and [on] behalf of [CPAI] and to account what they have collected from October 1996 up to the present and [turn over] the same to the proper officer.

SO ORDERED.7

Aggrieved, petitioners went to the CA and contested the jurisdiction of the special commercial court over the case. According to them, they were not CPAI members, hence the case did not involve an intra-corporate dispute "between and among members" so as to warrant the special commercial court's jurisdiction over it. CPAI, on the other hand, argued that petitioners were already in estoppel as they had participated actively in the court proceedings.

In its assailed decision of March 17, 2005, although the CA found that the special commercial court should not have tried the case since there was no intra-corporate dispute among CPAI members or officers, it nonetheless held that petitioners were already barred from questioning the court's jurisdiction based on the doctrine of estoppel. Quoting this Court's ruling in Tijam v. Sibonghanoy,8 the CA held:

An examination of the record of the case will show that [CPAI] admitted in its Pre-Trial Brief and Amended Pre-Trial Brief that petitioners are not its members. The fact that petitioners are admittedly not members of [CPAI], then, [the special commercial court] should not have taken cognizance of the case as [it] exercises special and limited jurisdiction under R.A. No. 8799. However, as correctly argued and pointed out by [CPAI], the acts of the petitioners, through their counsel, in participating in the trial of the case...show that they themselves consider the trial court to have jurisdiction over the case.9

xxx xxx xxx

...[I]n the case of Tijam v. Sibonghanoy, the Supreme Court categorically that:

"The rule is that the jurisdiction over the subject matter is conferred upon the courts exclusively by law, and as the lack of it affects the very authority of the court to take cognizance of the case, the objection may be raised at any stage of the proceedings. However, considering the facts and the circumstances of the present case, a party may be barred by laches from invoking this plea for the first time on appeal for the purpose of annulling everything done in the case with the active participation of said party invoking the plea."

Hence, we agree with [CPAI] that petitioners, after actively participating in the trial of the case, can no longer be allowed to impugn the jurisdiction of the court...10

xxx xxx xxx

WHEREFORE, based on the foregoing premises, judgment is hereby rendered by us DISMISSING the petition filed in this case and AFFIRMING the DECISION dated June 9, 2004 of the [special commercial court] of Tacloban City, Branch 8 in SEC Case No. 2001-07-110.

SO ORDERED.11

Petitioners filed a motion for reconsideration but it was denied by the CA.12 Hence, this petition.

Petitioners essentially argue that estoppel cannot apply because a court's jurisdiction is conferred exclusively by the Constitution or by law, not by the parties' agreement or by estoppel.

We agree.

Originally, Section 5 of Presidential Decree (PD) 902-A13 conferred on the SEC original and exclusive jurisdiction over the following:

(1) Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association;

(2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; 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;

(4) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payment in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities but is under the management of a rehabilitation receiver or management committee...(emphasis supplied)

Upon the enactment of RA 8799 in 2000, the jurisdiction of the SEC over intra-corporate controversies and other cases enumerated in Section 5 of PD 902-A was transferred to the courts of general jurisdiction. Under this authority, Branch 8 of the Tacloban City RTC, acting as a special commercial court, deemed the mandatory injunction case filed by CPAI an intra-corporate dispute falling under subparagraph (2) of the aforecited provision as it involved the officers and members thereof.

To determine whether a case involves an intra-corporate controversy to be heard and decided by the RTC, two elements must concur:

(1) the status or relationship of the parties and

(2) the nature of the question that is subject of their controversy.14

The first element requires that the controversy must arise out of intra-corporate or partnership relations: (a) between any or all of the parties and the corporation, partnership or association of which they are stockholders, members or associates; (b) between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates and (c) between such corporation, partnership or association and the State insofar as it concerns their individual franchises. On the other hand, the second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation.15 If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.16

In the case at bar, these elements are not present. The records reveal that petitioners were never officers nor members of CPAI. CPAI itself admitted this in its pleadings. In fact, petitioners were the only remaining members of CPA which, obviously, was not the CPAI that was registered in the SEC.

Moreover, the issue in this case does not concern the regulation of CPAI (or even CPA). The determination as to who is the true owner of the disputed property entitled to the income generated therefrom is civil in nature and should be threshed out in a regular court. Cases of this nature are cognizable by the RTC under BP 129.17Therefore, the conflict among the parties here was outside the jurisdiction of the special commercial court.

But did the doctrine of estoppel bar petitioners from questioning the jurisdiction of the special commercial court? No.

In Lozon v. NLRC,18 this Court came up with a clear rule on when jurisdiction by estoppel applies and when it does not:

The operation of estoppel on the question of jurisdiction seemingly depends on whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist as a matter of law, and may not be conferred by the consent of the parties or by estoppel." However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position – that the lower court had jurisdiction.... (emphasis supplied)

The ruling was reiterated in Metromedia Times Corporation [(Metromedia)] v. Pastorin,19 where we reversed the CA ruling that Metromedia was already estopped from questioning the jurisdiction of the labor arbiter (LA) after it participated in the proceedings before him. There, an illegal dismissal case was filed by an employee against Metromedia alleging that his transfer to another department20 was tantamount to constructive dismissal. Realizing the issue was properly cognizable by a voluntary arbitrator, Metromedia assailed the LA's jurisdiction in the NLRC and the CA.

The CA, also citing Tijam,21 ruled erroneously that Metromedia was already barred from questioning the LA's jurisdiction.

We likewise held in Metromedia that Tijam provided an exceptional circumstance. To void the trial court's decision in Tijam for lack of jurisdiction was not only unfair but patently revolting considering that the question on jurisdiction was raised only after 15 years of tedious litigation.22 We said:

The notion that the defense of lack of jurisdiction may be waived by estoppel on the party invoking the same most prominently emerged in Tijam v. Sibonghanoy....[H]owever, Tijam represented an exceptional case wherein the party invoking the lack of jurisdiction only did so after fifteen (15) years, and at a stage where the case was already elevated to the Court of Appeals.

In Calimlim v. Ramirez,23 which we extensively quoted in Metromedia, we spoke of Tijam in this sense:

A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that jurisdiction is a matter of law and may not be conferred by consent or agreement of the parties....[T]his doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of [Tijam v.]Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in [Tijam v.]Sibonghanoy which justified the departure from the accepted doctrine of non-waivability of objection to jurisdiction has been ignored and instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling [therein] not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.

The rule remains that estoppel does not confer jurisdiction on a tribunal that has none over the cause of action or subject matter of the case.24 Unfortunately for CPAI, no exceptional circumstance appears in this case to warrant divergence from the rule. Jurisdiction by estoppel is not available here.

Consequently, CPAI cannot be permitted to wrest from petitioners (as the remaining CPA officers) the administration of the disputed property until after the parties' rights are clearly adjudicated in the proper courts. It is neither fair nor legal to bind a party to the result of a suit or proceeding in a court with no jurisdiction.25 The decision of a tribunal not vested with the appropriate jurisdiction is null and void.26

WHEREFORE, the petition is hereby GRANTED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 85170 is REVERSED and SET ASIDE. Accordingly, SEC Case No. 2001-07-110 is DISMISSED for lack of jurisdiction.

SO ORDERED.

Republic of the PhilippinesSupreme CourtManila

SECOND DIVISION

REPUBLIC OF THE PHILIPPINES,Petitioner, - versus - BANTIGUE POINT DEVELOPMENT CORPORATION,Respondent.

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D E C I S I O N

SERENO, J.:

This Rule 45 Petition requires this Court to address the issue of the

proper scope of the delegated jurisdiction of municipal trial courts in

land registration cases. Petitioner Republic of the Philippines

(Republic) assails the Decision of the Court of Appeals (CA)[1] in CA-

G.R. CV No. 70349, which affirmed the Decision of the Municipal

Trial Court (MTC) of San Juan, Batangas[2] in LRC Case No. N-98-20,

LRA Record No. 68329, granting respondent Bantigue Point

Development Corporations (Corporation) application for original

registration of a parcel of land. Since only questions of law have

been raised, petitioner need not have filed a Motion for

Reconsideration of the assailed CA Decision before filing this Petition

for Review.

The Facts

On 17 July 1997, respondent Bantigue Point Development

Corporation filed with the Regional Trial Court (RTC) of Rosario,

Batangas an application for original registration of title over a parcel

of land with an assessed value of ₱4,330, ₱1,920 and ₱8,670, or a

total assessed value of ₱14,920 for the entire property, more

particularly described as Lot 8060 of Cad 453-D, San Juan Cadastre,

with an area of more or less 10,732 square meters, located at

Barangay Barualte, San Juan, Batangas. [3]

On 18 July 1997, the RTC issued an Order setting the case for initial

hearing on 22 October 1997.[4] On 7 August 1997, it issued a second

Order setting the initial hearing on 4 November 1997.[5]

Petitioner Republic filed its Opposition to the application for

registration on 8 January 1998 while the records were still with the

RTC.[6]

On 31 March 1998, the RTC Clerk of Court transmitted motu

proprio the records of the case to the MTC of San Juan, because the

assessed value of the property was allegedly less than ₱100,000.[7]

Thereafter, the MTC entered an Order of General Default[8] and

commenced with the reception of evidence.[9] Among the

documents presented by respondent in support of its application are

Tax Declarations,[10] a Deed of Absolute Sale in its favor,[11] and a

Certification from the Department of Environment and Natural

Resources (DENR) Community Environment and Natural Resources

Office (CENRO) of Batangas City that the lot in question is within the

alienable and disposable zone.[12] Thereafter, it awarded the land to

respondent Corporation.[13]

Acting on an appeal filed by the Republic,[14] the CA ruled that since

the former had actively participated in the proceedings before the

lower court, but failed to raise the jurisdictional challenge therein,

petitioner is thereby estopped from questioning the jurisdiction of

the lower court on appeal.[15] The CA further found that respondent

Corporation had sufficiently established the latters registrable title

over the subject property after having proven open, continuous,

exclusive and notorious possession and occupation of the subject

land by itself and its predecessors-in-interest even before the

outbreak of World War II.[16]

Dissatisfied with the CAs ruling, petitioner Republic filed this instant

Rule 45 Petition and raised the following arguments in support of its

appeal:

I.

THE REPUBLIC CANNOT BE ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE MUNICIPAL TRIAL COURT OVER THE APPLICATION FOR ORIGINAL REGISTRATION OF LAND TITLE EVEN FOR THE FIRST TIME ON APPEAL II. THE MUNICIPAL TRIAL COURT FAILED TO ACQUIRE JURISDICTION OVER THE APPLICATION FOR ORIGINAL REGISTRATION OF LAND TITLE.[17]

The Courts Ruling

We uphold the jurisdiction of the MTC, but remand the case to the

court a quo for further proceedings in order to determine if the

property in question forms part of the alienable and disposable land

of the public domain.

IThe Republic is not estopped from raising the issue of jurisdiction in this case.

At the outset, we rule that petitioner Republic is not estopped from

questioning the jurisdiction of the lower court, even if the former

raised the jurisdictional question only on appeal. The rule is settled

that lack of jurisdiction over the subject matter may be raised at any

stage of the proceedings.[18] Jurisdiction over the subject matter is

conferred only by the Constitution or the law.[19] It cannot be

acquired through a waiver or enlarged by the omission of the parties

or conferred by the acquiescence of the court.[20]Consequently,

questions of jurisdiction may be cognizable even if raised for the first

time on appeal.[21]

The ruling of the Court of Appeals that a party may be estopped

from raising such [jurisdictional] question if he has actively taken

part in the very proceeding which he questions, belatedly objecting

to the courts jurisdiction in the event that the judgment or order

subsequently rendered is adverse to him[22] is based on the doctrine

of estoppel by laches. We are aware of that doctrine first enunciated

by this Court in Tijam v. Sibonghanoy.[23] In Tijam, the party-litigant

actively participated in the proceedings before the lower court and

filed pleadings therein. Only 15 years thereafter, and after receiving

an adverse Decision on the merits from the appellate court, did the

party-litigant question the lower courts jurisdiction. Considering the

unique facts in that case, we held that estoppel by laches had

already precluded the party-litigant from raising the question of lack

of jurisdiction on appeal. In Figueroa v. People,[24] we cautioned

that Tijam must be construed as an exception to the general rule

and applied only in the most exceptional cases whose factual milieu

is similar to that in the latter case.

The facts are starkly different in this case, making the

exceptional rule in Tijam inapplicable. Here, petitioner Republic filed

its Opposition to the application for registration when the records

were still with the RTC.[25] At that point, petitioner could not have

questioned the delegated jurisdiction of the MTC, simply because

the case was not yet with that court. When the records were

transferred to the MTC, petitioner neither filed pleadings nor

requested affirmative relief from that court. On appeal, petitioner

immediately raised the jurisdictional question in its Brief.[26] Clearly,

the exceptional doctrine of estoppel by laches is inapplicable to the

instant appeal.

Laches has been defined as the failure or neglect, for an

unreasonable and unexplained length of time, to do that which, by

exercising due diligence, could or should have been done earlier; it is

negligence or omission to assert a right within a reasonable time,

warranting the presumption that the party entitled to assert it either

has abandoned or declined to assert it.[27] In this case, petitioner

Republic has not displayed such unreasonable failure or neglect that

would lead us to conclude that it has abandoned or declined to

assert its right to question the lower court's jurisdiction.

IIThe Municipal Trial Court properly acquired jurisdiction over the case.

In assailing the jurisdiction of the lower courts, petitioner Republic

raised two points of contention: (a) the period for setting the date

and hour of the initial hearing; and (b) the value of the land to be

registered.

First, petitioner argued that the lower court failed to

acquire jurisdiction over the application, because the RTC set the

date and hour of the initial hearing beyond the 90-day period

provided under the Property Registration Decree.[28]

We disagree.

The Property Registration Decree provides:

Sec. 23. Notice of initial hearing, publication, etc. - The court shall, within five days from filing of the application, issue an order setting the date and hour of the initial hearing which shall not be earlier than forty-five days nor later than ninety days from the date of the order. x x x.

In this case, the application for original registration was filed on 17

July 1997.[29] On 18 July 1997, or a day after the filing of the

application, the RTC immediately issued an Order setting the case

for initial hearing on 22 October 1997, which was 96 days from the

Order.[30] While the date set by the RTC was beyond the 90-day

period provided for in Section 23, this fact did not affect the

jurisdiction of the trial court. In Republic v. Manna Properties, Inc.,

[31] petitioner Republic therein contended that there was failure to

comply with the jurisdictional requirements for original registration,

because there were 125 days between the Order setting the date of

the initial hearing and the initial hearing itself. We ruled that the

lapse of time between the issuance of the Order setting the date of

initial hearing and the date of the initial hearing itself was not fatal

to the application.Thus, we held:

x x x [A] party to an action has no control over the Administrator or the Clerk of Court acting as a land court; he has no right to meddle unduly with the business of such official

in the performance of his duties. A party cannot intervene in matters within the exclusive power of the trial court. No fault is attributable to such party if the trial court errs on matters within its sole power. It is unfair to punish an applicant for an act or omission over which the applicant has neither responsibility nor control, especially if the applicant has complied with all the requirements of the law.[32]

Indeed, it would be the height of injustice to penalize

respondent Corporation by dismissing its application for registration

on account of events beyond its control.

Moreover, since the RTC issued a second Order on 7 August 1997

setting the initial hearing on 4 November 1997,[33] within the 90-day

period provided by law, petitioner Republic argued that the

jurisdictional defect was still not cured, as the second Order was

issued more than five days from the filing of the application, again

contrary to the prescribed period under the Property Registration

Decree.[34]

Petitioner is incorrect.

The RTCs failure to issue the Order setting the date and hour of the

initial hearing within five days from the filing of the application for

registration, as provided in the Property Registration Decree, did not

affect the courts its jurisdiction. Observance of the five-day period

was merely directory, and failure to issue the Order within that

period did not deprive the RTC of its jurisdiction over the case. To

rule that compliance with the five-day period is mandatory would

make jurisdiction over the subject matter dependent upon the trial

court. Jurisdiction over the subject matter is conferred only by the

Constitution or the law.[35] It cannot be contingent upon the action or

inaction of the court.

This does not mean that courts may disregard the statutory periods

with impunity. We cannot assume that the law deliberately meant

the provision to become meaningless and to be treated as a dead

letter.[36] However, the records of this case do not show such blatant

disregard for the law. In fact, the RTC immediately set the case for

initial hearing a day after the filing of the application for registration,

[37] except that it had to issue a second Order because the initial

hearing had been set beyond the 90-day period provided by law.

Second, petitioner contended[38] that since the selling price

of the property based on the Deed of Sale annexed to respondents

application for original registration was₱160,000,[39] the MTC did not

have jurisdiction over the case. Under Section 34 of the Judiciary

Reorganization Act, as amended,[40] the MTCs delegated jurisdiction

to try cadastral and land registration cases is limited to lands, the

value of which should not exceed ₱100,000.

We are not persuaded.

The delegated jurisdiction of the MTC over cadastral and land

registration cases is indeed set forth in the Judiciary Reorganization

Act, which provides:

Sec. 34. Delegated Jurisdiction in Cadastral and Land Registration Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts may be assigned by the Supreme Court to hear and determine cadastral or land registration cases covering lots where there is no controversy or opposition, or contested lots where the value of which does not exceed One hundred thousand pesos (₱100,000.00), such value to be ascertained by the affidavit of the claimant or by agreement of the respective claimants if there are more than one, or from the corresponding tax declaration of the real property. Their decision in these cases shall be appealable in the same manner as decisions of the Regional Trial Courts. (As amended by R.A. No. 7691) (Emphasis supplied.)

Thus, the MTC has delegated jurisdiction in cadastral and land

registration cases in two instances: first, where there is no

controversy or opposition; or, second, over contested lots, the value

of which does not exceed ₱100,000.

The case at bar does not fall under the first instance, because

petitioner opposed respondent Corporations application for

registration on 8 January 1998.[41]

However, the MTC had jurisdiction under the second instance,

because the value of the lot in this case does not exceed ₱100,000.

Contrary to petitioners contention, the value of the land should not

be determined with reference to its selling price. Rather, Section 34

of the Judiciary Reorganization Act provides that the value of the

property sought to be registered may be ascertained in three

ways: first, by the affidavit of the claimant; second, by agreement of

the respective claimants, if there are more than one; or, third, from

the corresponding tax declaration of the real property.[42]

In this case, the value of the property cannot be determined using

the first method, because the records are bereft of any affidavit

executed by respondent as to the value of the property. Likewise,

valuation cannot be done through the second method, because this

method finds application only where there are multiple claimants

who agree on and make a joint submission as to the value of the

property. Here, only respondent Bantigue Point Development

Corporation claims the property.

The value of the property must therefore be ascertained with

reference to the corresponding Tax Declarations submitted by

respondent Corporation together with its application for

registration. From the records, we find that the assessed value of

the property is ₱4,330, ₱1,920 and ₱8,670, or a total assessed value

of ₱14,920 for the entire property.[43]Based on these Tax

Declarations, it is evident that the total value of the land in question

does not exceed ₱100,000. Clearly, the MTC may exercise its

delegated jurisdiction under the Judiciary Reorganization Act, as

amended.

IIIA certification from the CENRO is not sufficient proof that the property in question is alienable and disposable land of the public domain.

Even as we affirm the propriety of the MTCs exercise of its

delegated jurisdiction, we find that the lower court erred in granting

respondent Corporations application for original registration in the

absence of sufficient proof that the property in question was

alienable and disposable land of the public domain.

The Regalian doctrine dictates that all lands of the public

domain belong to the State.[44] The applicant for land registration has

the burden of overcoming the presumption of State ownership by

establishing through incontrovertible evidence that the land sought

to be registered is alienable or disposable based on a positive act of

the government.[45] We held in Republic v. T.A.N. Properties, Inc. that

a CENRO certification is insufficient to prove the alienable and

disposable character of the land sought to be registered.[46] The

applicant must also show sufficient proof that the DENR Secretary

has approved the land classification and released the land in

question as alienable and disposable.[47]

Thus, the present rule is that an application for original

registration must be accompanied by (1) a CENRO or

PENRO[48] Certification; and (2) a copy of the original classification

approved by the DENR Secretary and certified as a true copy by the

legal custodian of the official records.[49]

Here, respondent Corporation only presented a CENRO

certification in support of its application.[50] Clearly, this falls short of

the requirements for original registration.

We therefore remand this case to the court a quo for

reception of further evidence to prove that the property in question

forms part of the alienable and disposable land of the public

domain. If respondent Bantigue Point Development Corporation

presents a certified true copy of the original classification approved

by the DENR Secretary, the application for original registration

should be granted. If it fails to present sufficient proof that the land

in question is alienable and disposable based on a positive act of the

government, the application should be denied.

WHEREFORE, premises considered, the instant Petition for Review

is DENIED. Let this case be REMANDED to the Municipal Trial Court

of San Juan, Batangas, for reception of evidence to prove that the

property sought to be registered is alienable and disposable land of

the public domain.

SO ORDERED.

FIRST DIVISION

ATTY. RESTITUTO G. CUDIAMAT, ERLINDA P. CUDIAMAT[1] and CORAZON D. CUDIAMAT,Petitioners, - versus - BATANGAS SAVINGS AND LOAN BANK, INC., and THE REGISTER OF DEEDS, NASUGBU, BATANGAS,

Respondents.

G.R. No. 182403 Present: PUNO,CARPIO MORALES,LEONARDO-DE CASTRO,BERSAMIN, andVILLARAMA, JR., Promulgated:

March 9, 2010x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N

CARPIO MORALES, J.:

Petitioner Atty. Restituto Cudiamat and his brother Perfecto were

the registered co-owners of a 320 square meter parcel of land (the

property) in Balayan, Batangas, covered by TCT No. T-37889 of the

Register of Deeds of Nasugbu, Batangas. Restituto, who resided in

Ozamiz City with his wife, entrusted the custody of the title to who

was residing in Balayan.

In 1979, Perfecto, without the knowledge and consent of

Restituto, obtained a loan from respondent Batangas Savings and

Loan Bank, Inc. (the bank). To secure the payment of the loan,

Perfecto mortgaged the property for the purpose of which he

presented a Special Power of Attorney (SPA) purportedly executed

by Restituto, with the marital consent of his wife-herein co-

petitioner Erlinda Cudiamat.

On June 19, 1991, Restituto was informed, via

letter[2] dated June 7, 1991 from the bank, that the property was

foreclosed. He thus, by letter[3] dated June 25, 1991, informed the

bank that he had no participation in the execution of the mortgage

and that he never authorized Perfecto for the purpose.

In the meantime, Perfecto died in 1990. In 1998, as

Perfectos widow petitioner Corazon was being evicted from the

property, she and her co-petitioner-spouses Restituto and Erlinda

filed on August 9, 1999 before the Regional Trial Court (RTC) of

Balayan a complaint[4] for quieting of title with damages against the

bank and the Register of Deeds of Nasugbu, docketed as Civil Case

No. 3618, assailing the mortgage as being null and void as they did

not authorize the encumbrance of the property.

In its Answer to the complaint, the bank, maintaining the

validity of the mortgage, alleged that it had in fact secured a title in

its name, TCT No. T-48405, after Perfecto failed to redeem the

mortgage; that the Balayan RTC had no jurisdiction over the case as

the bank had been placed under receivership and under liquidation

by the Philippine Deposit Insurance Corporation (PDIC); that PDIC

filed before the RTC of Nasugbu a petition for assistance in the

liquidation of the bank which was docketed as SP No. 576; and that

jurisdiction to adjudicate disputed claims against it is lodged with

the liquidation court-RTC Nasugbu.

By Decision of January 17, 2006,[5] Branch 9 of the Balayan RTC

rendered judgment, in the complaint for quieting of title, in favor of

the plaintiffs-herein petitioners. It ordered respondent Register of

Deeds of Nasugbu to cancel the encumbrance annotated on TCT No.

T-37889, and to cancel TCT No. T-48405 issued in the name of the

bank and reinstate the former title. It also directed the bank to

return the property to petitioner spouses Restituto and Erlinda and

to pay P20,000 to all the petitioners to defray the costs of suit.

The bank appealed to the Court of Appeals, contending,

inter alia, that the Balayan RTC had no jurisdiction over petitioners

complaint for quieting of title.

By the assailed Decision of December 21, 2007,[6] the appellate

court, ruling in favor of the bank, dismissed petitioners complaint for

quieting of title, without prejudice to the right of petitioners to take

up their claims with the Nasugbu RTC sitting as a liquidation court.

To the appellate court, the Balayan RTC, as a court of

general jurisdiction, should have deferred to the Nasugbu RTC which

sits as a liquidation court, given that the bank was already under

receivership when petitioners filed the complaint for quieting of

title.

Petitioners Motion for Reconsideration having been

denied by the appellate court by Resolution of March 27, 2008, they

filed the present petition for review on certiorari.

Assailing the appellate courts ruling that the Balayan RTC

had no jurisdiction over their complaint, petitioners argue that their

complaint was filed earlier than PDICs petition for assistance in the

liquidation; and that the bank is now estopped from questioning the

jurisdiction of the Balayan RTC because it actively participated in the

proceedings thereat.

The petition is impressed with merit.

Estoppel bars the bank from raising the issue of lack of

jurisdiction of the Balayan RTC.

In Lozon v. NLRC,[7] the Court came up with a clear rule on

when jurisdiction by estoppel applies and when it does not:

The operation of estoppel on the question of jurisdiction seemingly depends on whether the lower court actually had jurisdiction or not. If it had no jurisdiction , but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same must exist as a matter of law, and may not be conferred by the consent of the parties or by estoppel. However, if the lower court had jurisdiction , and the case was heard and decided upon a given theory, such, for instance, as that the court had nojurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position that the lower court had jurisdiction (underscoring supplied)

The ruling was echoed in Metromedia Times Corporation v. Pastorin.

[8]

In the present case, the Balayan RTC, sitting as a court of

general jurisdiction, had jurisdiction over the complaint for quieting

of title filed by petitioners on August 9, 1999. The Nasugbu RTC, as a

liquidation court, assumed jurisdiction over the claims against the

bank only on May 25, 2000, when PDICs petition for assistance in the

liquidation was raffled thereat and given due course.

While it is well-settled that lack of jurisdiction on the

subject matter can be raised at any time and is not lost by estoppel

by laches, the present case is an exception. To compel petitioners to

re-file and relitigate their claims before the Nasugbu RTC when the

parties had already been given the opportunity to present their

respective evidence in a full-blown trial before the Balayan RTC

which had, in fact, decided petitioners complaint (about two years

before the appellate court rendered the assailed decision) would be

an exercise in futility and would unjustly burden petitioners.

The Court, in Valenzuela v. Court of Appeals,[9] held that as

a general rule, if there is a judicial liquidation of an insolvent bank,

all claims against the bank should be filed in the liquidation

proceeding. The Court in Valenzuela, however, after considering the

circumstances attendant to the case, held that the general rule

should not be applied if to order the aggrieved party to refile or

relitigate its case before the litigation court would be an exercise in

futility. Among the circumstances the Court considered in that case

is the fact that the claimants were poor and the disputed parcel of

land was their only property, and the parties claims and defenses

were properly ventilated in and considered by the judicial court.

In the present case, the Court finds that analogous

considerations exist to warrant the application

of Valenzuela. Petitioner Restituto was 78 years old at the time the

petition was filed in this Court, and his co-petitioner-wife Erlinda

died[10] during the pendency of the case. And, except for co-

petitioner Corazon, Restituto is a resident of Ozamis City.To compel

him to appear and relitigate the case in the liquidation court-

Nasugbu RTC when the issues to be raised before it are the same as

those already exhaustively passed upon and decided by the Balayan

RTC would be superfluous.

WHEREFORE, the petition is GRANTED. The Decision of

December 21, 2007 and Resolution dated March 27, 2008 of the

Court of Appeals are SET ASIDE. The Decision dated January 17, 2006

of the Regional Trial Court of Balayan, Batangas, Branch 9

is REINSTATED.

SO ORDERED.

Republic of the Philippines

Supreme CourtManila FIRST DIVISION

CITY OF DUMAGUETE, herein Represented by City Mayor, Agustin R. Perdices,

Petitioner,

- versus -

PHILIPPINE PORTS AUTHORITY,

Respondent.

G.R. No. 168973 Present:

CORONA,

Chairperson,

LEONARDO-DE CASTRO,

BERSAMIN,

DEL CASTILLO, and

VILLARAMA,

Promulgated:

August 24, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review under Rule 45 of the

Rules of Court assailing the Decision[1] dated March 4, 2005 and

Resolution[2] dated June 6, 2005 of the Court Appeals in CA-G.R. SP

No. 64379, which granted the Petition for Certiorari and Prohibition

of respondent Philippine Ports Authority and set aside the Orders

dated December 7, 2000 and February 20, 2001 of the Regional Trial

Court (RTC), Branch 44 of the City of Dumaguete in LRC Case No. N-

201.

The antecedent facts are as follows:

On October 14, 1998, petitioner City of Dumaguete,

through Mayor Felipe Antonio B. Remollo (Remollo), filed before the

RTC an Application for Original Registration of Title over a parcel of

land with improvements, located at Barangay Looc, City of

Dumaguete (subject property), under the Property Registration

Decree. The application was docketed as LRC Case No. N-201.

Petitioner alleged in support of its application:

1. That the applicant, City of

Dumaguete through its Honorable Mayor Felipe Antonio B. Remollo, is the owner of the land subject of this application with all improvements and buildings comprising the Engineers Compound where it is now situated and has been in continuous occupation and possession of the same for more than 30 years or from the year 1960 (Affidavit of Ownership executed by Felipe Antonio G. Remollo, the City Mayor, dated August 21, 1998 herein attached as ANNEX A). The said land consist of 5,410 square meters and is situated and bounded and described as shown on the plan (true and photostatic copies of the original plan marked Psu-07-006805 approved by the Regional Technical Director of the [Department of Environment and Natural Resources] DENR, Regional Office, Cebu City herein attached as ANNEX B) and technical descriptions attached hereto (technical description attached as ANNEX C) and made a part hereof;

2. That said land at the last

assessment for taxation was assessed at P676,250, Philippine currency, with market value of P1,352,500.00, Philippine currency. (Declaration of Real Property with the assessed and market values attached as ANNEX D);

3. That to the best of my

knowledge and belief, there is no mortgage or encumbrance of any kind whatsoever affecting

said land, nor another person having any estate or interest therein, legal or equitable, in possession, remainder, reversion or expectancy;

4. That the land was acquired

by possessory title in open, continuous, adverse occupation and possession in the concept of owner for more than thirty years since 1960 (please refer to ANNEX A);

5. That the land is adjoined

by the following: NorthWestNorthEastSouthEast All along line 1-2-3-4-5-6-7-8-9-10 by

Flores Avenue, City Road and the Dumaguete Port Road

SouthWest along line 10-1 by Plan Msi-V-20453

x x x x 8. That the land included is bounded

on the West by Flores Avenue and on the North by the City Road, all public highways and on the East by the Dumaguete Port Road, a private road made part of the Port Zone.[3]

In an Order[4] dated October 23, 1998, the RTC noted that:

A perusal of the records of the case

shows that the annexes lack the following copies:

a) two blue print copies of

the approved plan;

b) two copies of the technical description of the lot sought to be registered;

c) two copies of the

Surveyors certificate;

d) a certificate in quadruplicate of the City Assessor of the assessed value of the land;

e) all original muniments of

title in the possession of the applicant which prove ownership of the land;

f) two copies of the

petition/application.

Further, the application did not state the number of the lot sought to be registered, the number of parcels applied for, the

improvements found thereon, and indicate whether it claims a portion of the road which serves as a boundary line.

All these must be alleged in the

petition so that the Court will know the nature of the property.

The RTC explained that the extra copies submitted by

petitioner shall be forwarded by the RTC Clerk of Court to the Land

Registration Commission (LRC) in Manila for comment. Only

thereafter would the RTC set the application for hearing.

Petitioner filed its Compliance[5] with the above-mentioned

Order, submitting additional copies of the required documents and

clarifying thus:

1. The approved plan does not state

the number of lot sought to be registered because it is a public land, thus, only PSU-07-006805 appears on the plan which is being applied for registration;

2. Only one (1) parcel of land is applied for by petitioners which consist of five thousand four hundred ten (5,410) square meters, more or less;

3. The City Engineers Building within the City Engineers compound are the only improvement found thereon; and

4. Petitioners do not claim any portion of the road which serves as a boundary line.

The RTC accordingly set the initial hearing of LRC Case No.

N-201 on April 12, 1999, and sent notices to the parties.

The Republic of the Philippines, represented by the

Director of Lands, and respondent, represented by the Office of the

Government Corporate Counsel, filed separate Oppositions [6] to the

application for registration of petitioner. Both the Republic and

respondent averred that petitioner may not register the subject

property in its name since petitioner had never been in open,

continuous, exclusive, and notorious possession of the said property

for at least 30 years immediately preceding the filing of the

application; and the subject property remains to be a portion of the

public domain which belongs to the Republic.

After several postponements of the scheduled hearings,

petitioner presented the testimony of its first witness, Engineer

Rilthe P. Dorado (Engr. Dorado), on January 14, 2000. Engr. Dorados

examination on the witness stand was terminated on April 7,

2000. The presentation of the other witnesses of petitioner was then

scheduled to continue onJune 2, 2000.[7]

However, before the next hearing, respondent filed a

Motion to Dismiss,[8] seeking the dismissal of LRC Case No. N-201 on

the ground that the RTC lacked jurisdiction to hear and decide the

case. Respondent argued that Section 14(1) of Presidential Decree

No. 1529, otherwise known as the Property Registration Decree,

refers only to alienable and disposable lands of the public domain

under a bona fide claim of ownership. The subject property in LRC

Case No. N-201 is not alienable and disposable, since it is a

foreshore land, as explicitly testified to by petitioners own witness,

Engr. Dorado. A foreshore land is not registerable. This was precisely

the reason why, respondent points out, that the subject property

was included in Presidential Proclamation No. 1232 (delineating the

territorial boundaries of the Dumaguete Port Zone), so that the

same would be administered and managed by the State, through

respondent, for the benefit of the people.

In its Terse Opposition to Oppositors Motion to Dismiss,

petitioner claimed that the subject property was a swamp reclaimed

about 40 years ago, which it occupied openly, continuously,

exclusively, and notoriously under a bona fide claim of

ownership. The technical description and approved plan of the

subject property showed that the said property was not bounded by

any part of the sea. Petitioner invoked Republic Act No. 1899,

[9] which authorizes chartered cities and municipalities to undertake

and carry out, at their own expense, the reclamation of foreshore

lands bordering them; and grants said chartered cities and

municipalities ownership over the reclaimed lands. Presidential

Proclamation No. 1232 is immaterial to the present application for

registration because it merely authorizes respondent to administer

and manage the Dumaguete Port Zone and does not confer upon

respondent ownership of the subject property.[10]

Respondent filed a Reply/Rejoinder (To Applicants

Opposition to Oppositors Motion to Dismiss), [11] asserting that there

are no factual or legal basis for the claim of petitioner that the

subject property is reclaimed land. Petitioner sought the original

registration of its title over the subject property acquired through

alleged continuous possession for 30 years under Section 14(1) of

the Property Registration Decree, and not through the reclamation

of the said property at its own expense under Republic Act No.

1899. The present claim of petitioner that the subject property is

reclaimed land should not be allowed for it would improperly

change the earlier theory in support of the application for

registration. Respondent reiterated that the subject property is

foreshore land which cannot be registered; and that Presidential

Proclamation No. 1232 is very material to LRC Case No. N-201

because it confirms that areas within the Dumaguete Port Zone,

including the subject property, are not alienable and disposable

lands of the public domain.

On September 7, 2000, the RTC issued an Order[12] granting

the Motion to Dismiss of respondent based on the following

ratiocination:

The Court agrees with [herein

respondent] Philippine Ports Authority that the basis of the [herein petitioners] application for original registration of the subject lot is Section 14 of the Presidential Decree No. 1529, otherwise known as the Property Registration Decree. A circumspect scrutiny of said Section readily shows that it refers to alienable and disposable lands of the public domain as proper subjects of registration, provided the applicant has met the other requirements such as open, continuous, exclusive and notorious possession for at least thirty (30) years under a bona fide claim of ownership.

It having been shown by [petitioners]

own evidence that the lot subject of the application for original registration is a foreshore land, and therefore not registerable (Dizon, et al. vs. Bayona, et al., 98 SCRA 942, 944), the application must be denied.

Again as correctly argued by

[respondent], [petitioners] reliance on Republic Act 1899 which authorizes all municipalities and chartered cities to undertake and carry out the reclamation by dredging, filling or other means of any foreshore lands bordering them and

which confers ownership on them of the lands so reclaimed, is misplaced, as such has never been alleged in the application. It is fundamental that a party cannot prove what it has not alleged in his complaint or application, as in this case.

The admission by Engr. Dorado that

there is no formal declaration from the executive branch of government or law passed by Congress that the land in question is no longer needed for public use or special industries x x x further militates against the application.

Moreover, the authority granted to

municipalities and chartered cities to undertake and carry out at their own expense the reclamation by dredging, filling, or other means, of any foreshore lands bordering them is for the purpose of establishing, providing, constructing, maintaining, and repairing proper and adequate docking and harbor facilities as such municipalities and chartered cities may determine in consultation with the Secretary of Finance and the Secretary of Public Works and Communications.

By its own evidence, [petitioner] has

utilized the subject property allegedly reclaimed by it as Office of the City Engineer and not as docking and harboring facilities. [Petitioner] has failed to show that such reclamation was undertaken by it in consultation with the Secretary of Finance and the Secretary of Public Works and Communications.[13]

The RTC decreed in the end that the instant application for

original registration is dismissed for lack of merit.[14]

In its Motion for Reconsideration[15] and Supplemental

Motion for Reconsideration,[16] petitioner contended that the

dismissal of its application was premature and tantamount to a

denial of its right to due process. It has yet to present evidence to

prove factual matters in support of its application, such as the

subject property already being alienable and disposable at the time

it was occupied and possessed by petitioner.

Petitioner also pointed out that its witness, Engr. Dorado,

testified only as to the physical status of the land in question at the

time when the cadastral survey of Dumaguete was made sometime

in 1916.[17] In fact, Engr. Dorado expressly testified that the subject

property was part of the shore or foreshore a long time ago[;][18] and

he did not testify at all that the subject property was a foreshore lot

at the time petitioner occupied and possessed the same. The

physical state of the subject property had already changed since

1916. It is now within the alienable and disposable area as per the

Land Classification Map No. 674, Project No. 1-D, BL C-6, certified on

July 3, 1927, of the Bureau of Lands, now Land Management Sector

of the Department of Environment and Natural Resources[,][19] as

verified and certified by the Chief of the Map Projection Section,

Land Management Sector, DENR Regional Office in Cebu City, who

has yet to take the witness stand before the RTC.

Petitioner insisted that the RTC should continue with the

hearing of LRC Case No. N-201 and allow petitioner to present

evidence that the subject property is reclaimed land. Petitioner

sufficiently alleged in its application for registration that it has been

in open, continuous, exclusive, and notorious possession of the

[subject property] for more than thirty (30) years under a bona

fide claim of ownership.[20] In support of such allegation, petitioner

must necessarily prove that the subject property was previously a

swampy area, which had to be filled or reclaimed before the

construction of the City Engineers Office building thereon.

Respondent based its Opposition (To Applicants Motion

for Reconsideration dated September 28, 2000)[21] and Opposition

(To Applicants Supplemental Motion for Reconsideration)[22] on

technical and substantive grounds.

According to respondent, the Motion for Reconsideration

of petitioner violated Sections 4 (Hearing of motion), 5 (Notice of

hearing), and 6 (Proof of service necessary), Rule 15 of the Rules of

Court. Petitioner did not set its Motion for Reconsideration for

hearing even when the said Motion could not be considered as non-

litigable. The RTC could not hear the motion for reconsideration ex

parte as they are prejudicial to the rights of respondent. Petitioner

also failed to comply with Section 11, Rule 13 of the Rules of Court

when it did not attach to the Motion for Reconsideration a written

explanation why it did not resort to personal service of the said

Motion. Thus, respondent averred that the Motion for

Reconsideration of petitioner should be treated as a mere scrap of

paper with no legal effect. It did not interrupt the reglementary

period to appeal and the RTC Order dated September 7, 2000,

dismissing LRC Case No. N-201, had already attained

finality. Respondent also pointed out that the Supplemental Motion

for Reconsideration of petitioner suffered from the same fatal

defects as the original Motion for Reconsideration.

Respondent again posited that the subject property was

foreshore land belonging to the State and not subject to private

appropriation, unless the same had already been declared by the

executive or legislative department of the national government as

no longer needed for coast guard service, public use, or special

industries, and classified as alienable and disposable. Full- blown

trial in LRC Case No. N-201 was no longer necessary as the evidence

so far presented by petitioner had already established that the RTC

lacked jurisdiction over the subject matter of the case.

In its Order[23] dated November 16, 2000, the RTC initially

agreed with respondent that the Motion for Reconsideration of

petitioner violated Sections 4, 5, and 6, Rule 15 and Section 11, Rule

13 of the Rules of Court. Resultantly, the Motion for Reconsideration

of petitioner was considered as not filed and did not toll the running

of the period to file an appeal, rendering final and executory the

order of dismissal of LRC Case No. N-201.

However, after taking into consideration the Supplemental

Motion for Reconsideration of petitioner, the RTC issued another

Order[24] dated December 7, 2000, setting aside its Order

dated September 7, 2000 in the interest of justice and resolving to

have a full-blown proceeding to determine factual issues in LRC Case

No. N-201.

It was then the turn of respondent to file with the RTC a

Motion for Reconsideration[25] of the Order dated December 7,

2000. In an Order[26] dated February 20, 2001, the RTC denied the

motion of respondent and admitted the following:

A thorough review and perusal of the disputed order dated September 7, 2000 and December 7, 2000, whereby this Court dismissed [petitioners] petition for registration of Lot No. 1, Dumaguete Cadastre, and later set aside the Order of September 7, 2000, shows that there was honest mistake in declaring said lot 1, as a shoreline. Indeed, the adjoining lots are already titled and bounded by a City Road. It is not bounded by a sea. The Court wants to correct this error in its findings on the September 7, 2000 Order, that Lot No. 1 is situated on the shoreline ofDumaguete City. The Court simply committed an oversight on the petitioners evidence that the lot in question is a foreshore land x x x when in fact it is not. And it is for this reason that the court reconsidered and set aside said September 7, 2000 Order, to correct the same while it is true that said September 7, 2000 Order had attained its finality, yet this Court cannot in conscience allow injustice to perpetuate in this case and that hearing on the merits must proceed to determine the legality and truthfulness of its application for registration of title.

Respondent sought recourse from the Court of Appeals by

filing a Petition for Certiorari and Prohibition under Rule 65 of the

Rules of Court, docketed as CA-G.R. SP No. 64379. Respondent

challenged the RTC Orders dated December 7, 2000 and February

20, 2001 for having been issued by the RTC in grave abuse of

discretion amounting to lack or excess of jurisdiction. Respondent

reiterated that the RTC Order dated September 7, 2000, dismissing

LRC Case No. N-201 had already attained finality. The defects of the

Motion for Reconsideration of petitioner rendered the same as a

mere scrap of paper, which did not toll the running of the

prescriptive period to appeal the RTC Order datedSeptember 7,

2000.

The Court of Appeals, in its Decision dated March 4, 2005,

found merit in the Petition of respondent and set aside the RTC

Orders dated December 7, 2000 and February 20, 2001. The

appellate court, in its Resolution dated June 6, 2005, denied the

Motion for Reconsideration of petitioner.

Hence, petitioner comes before us via the instant Petition

for Review with the following assignment of error:

GROUND FOR THE APPEAL

Error of law: The March 4, 2005 decision of the Court of Appeals and its June 6, 2005 Resolution, erred on question of law in setting aside the Orders of the Regional Trial Court, Branch 44, dated December 7, 2000 and February 20, 2001. The said Orders of the trial court were made in order to determine factual issues and to correct its error in its findings on theSeptember 7, 2000 Order. Thus, the Court of Appeals decision is contrary to law, justice, equity and existing jurisprudence.[27]

Respondent insists on the strict application of Sections 4,

5, and 6, Rule 15 and Section 11, Rule 13 of the Rules of

Court. Violations of the said rules were fatal to the Motion for

Reconsideration and Supplemental Motion for Reconsideration of

the petitioner, and as a result, the RTC Order dated September 7,

2000, dismissing LRC Case No. N-201, had already become final and

executory and, thus, beyond the jurisdiction of the RTC to set

aside. Respondent urges us to reject the plea of petitioner for a

liberal application of the rules in the absence of a compelling reason

to do so.

We grant the Petition.

The grant of a petition for certiorari under Rule 65 of the

Rules of Court requires grave abuse of discretion amounting to lack

or excess of jurisdiction. Grave abuse of discretion exists where an

act is performed with a capricious or whimsical exercise of judgment

equivalent to lack of jurisdiction. The abuse of discretion must be

patent and gross as to amount to an evasion of positive duty or to a

virtual refusal to perform a duty enjoined by law, or to act at all in

contemplation of law, as where the power is exercised in an

arbitrary and despotic manner by reason of passion or personal

hostility.[28]

The Court of Appeals erred in granting the writ

of certiorari in favor of respondent. The RTC did not commit grave

abuse of discretion when, in its Orders dated December 7, 2000 and

February 20, 2001, it set aside the order of dismissal of LRC Case No.

N-201 and resolved to have a full-blown proceeding to determine

factual issues in said case.

Procedural rules were conceived to aid the attainment of

justice. If a stringent application of the rules would hinder rather

than serve the demands of substantial justice, the former must yield

to the latter.[29] In Basco v. Court of Appeals,[30] we allowed a liberal

application of technical rules of procedure, pertaining to the

requisites of a proper notice of hearing, upon consideration of the

importance of the subject matter of the controversy, as illustrated in

well-settled cases, to wit:

The liberal construction of the rules on notice of hearing is exemplified in Goldloop Properties, Inc. v. CA:

Admittedly, the filing of respondent-spouses' motion for reconsideration did not stop the running of the period of appeal because of the absence of a notice of hearing required in Secs. 3, 4 and 5, Rule 15, of the Rules of Court. As we have repeatedly held, a motion that does not contain a notice of hearing is a mere scrap of paper; it presents no question which merits the attention of the court. Being a mere scrap of paper, the trial court had no alternative but to disregard it. Such being the case, it was as if no motion for reconsideration was filed and, therefore, the reglementary period within which respondent-spouses should have filed an appeal expired on 23 November 1989.

But, where a rigid application of that rule will result in a manifest failure or miscarriage of justice, then the rule may be relaxed, especially if a party successfully shows that the alleged defect in the questioned final and executory judgment is not apparent on its face or from the recitals contained therein. Technicalities may thus be disregarded in order to resolve the case. After all, no party can even claim a vested right in technicalities. Litigations should, as much as possible, be decided on the merits and not on technicalities.

Hence, this Court should not easily allow a party to lose title and ownership over a party

worth P4,000,000.00 for a measly P650,000.00 without affording him ample opportunity to prove his claim that the transaction entered into was not in fact an absolute sale but one of mortgage. Such grave injustice must not be permitted to prevail on the anvil of technicalities.

Likewise, in Samoso v. CA, the Court ruled:

But time and again, the Court has stressed that the rules of procedure are not to be applied in a very strict and technical sense. The rules of procedure are used only to help secure not override substantial justice (National Waterworks & Sewerage System vs. Municipality of Libmanan, 97 SCRA 138 [1980]; Gregorio v. Court of Appeals, 72 SCRA 120 [1976]). The right to appeal should not be lightly disregarded by a stringent application of rules of procedure especially where the appeal is on its face meritorious and the interests of substantial justice would be served by permitting the appeal (Siguenza v. Court of Appeals, 137 SCRA 570 [1985]; Pacific Asia Overseas Shipping Corporation v. National Labor Relations Commission, et al., G.R. No. 76595, May 6, 1998). . . .

In the instant case, it is petitioner's life and liberty that is at stake. The trial court has sentenced him to suffer the penalty of reclusion perpetua and his conviction attained finality on the basis of mere technicality. It is but just, therefore, that petitioner be given the opportunity to defend himself and pursue his

appeal. To do otherwise would be tantamount to grave injustice. A relaxation of the procedural rules, considering the particular circumstances herein, is justified.[31] (Emphasis ours.)

In the case at bar, the Motion for Reconsideration and

Supplemental Motion for Reconsideration of petitioner, which

sought the reversal of RTC Order dated September 7, 2000

dismissing LRC Case No. N-201, cite meritorious grounds that justify

a liberal application of procedural rules.

The dismissal by the RTC of LRC Case No. N-201 for lack of

jurisdiction is patently erroneous.

Basic as a hornbook principle is that jurisdiction over the

subject matter of a case is conferred by law and determined by the

allegations in the complaint which comprise a concise statement of

the ultimate facts constituting the plaintiff's cause of action. The

nature of an action, as well as which court or body has jurisdiction

over it, is determined based on the allegations contained in the

complaint of the plaintiff, irrespective of whether or not the plaintiff

is entitled to recover upon all or some of the claims asserted

therein.The averments in the complaint and the character of the

relief sought are the ones to be consulted. Once vested by the

allegations in the complaint, jurisdiction also remains vested

irrespective of whether or not the plaintiff is entitled to recover

upon all or some of the claims asserted therein.[32]

As a necessary consequence, the jurisdiction of the court

cannot be made to depend upon the defenses set up in the answer

or upon the motion to dismiss; for otherwise, the question of

jurisdiction would almost entirely depend upon the defendant. What

determines the jurisdiction of the court is the nature of the action

pleaded as appearing from the allegations in the complaint. The

averments therein and the character of the relief sought are the

ones to be consulted.[33]

Under Act No. 496, otherwise known as the Land

Registration Act, as amended by Act No. 2347, jurisdiction over all

applications for registration of title to land was conferred upon the

Courts of First Instance (CFI) of the respective provinces in which the

land sought to be registered was situated. Jurisdiction over land

registration cases, as in ordinary actions, is acquired upon the filing

in court of the application for registration, and is retained up to the

end of the litigation.[34]

The land registration laws were updated and codified by

the Property Registration Decree, and under Section 17 thereof,

jurisdiction over an application for land registration was still vested

on the CFI of the province or city where the land was situated, viz:

SEC. 17. What and where to file. The application for land registration shall be filed with the Court of First Instance of the province or city where the land is situated. The applicant shall file together with the application all original muniments of titles or copies thereof and a survey plan of the land approved by the Bureau of Lands.

The Clerk of Court shall not accept any application unless it is shown that the applicant has furnished the Director of Lands with a copy of the application and all annexes.

Batas Pambansa Blg. 129, otherwise known as The

Judiciary Reorganization Act of 1980, created the RTC[35] in place of

the CFI. Presently, jurisdiction over an application for land

registration remains with the RTC where the land is situated, except

when such jurisdiction is delegated by the Supreme Court to the

Metropolitan Trial Court, Municipal Trial Courts, and Municipal

Circuit Trial Courts under certain circumstances.[36]

It is not disputed that the Application for Original

Registration of Title filed by petitioner before the RTC of the City

of Dumaguete conformed to Section 15 of the Property Registration

Decree, which prescribes the form and contents of such

applications. In its Application, petitioner prayed that its title to the

subject property, which it repeatedly alleged to have acquired

through continuous and adverse possession and occupation of the

said property for more than 30 years or since 1960, be placed under

the land registration laws. The allegations and prayer in the

Application of petitioner were sufficient to vest jurisdiction on the

RTC over the said Application upon the filing thereof.

Respondent sought the dismissal of LRC Case No. N-201 on

the ground of lack of jurisdiction, not because of the insufficiency of

the allegations and prayer therein, but because the evidence

presented by petitioner itself during the trial supposedly showed

that the subject property is a foreshore land, which is not alienable

and disposable. The RTC granted the Motion to Dismiss of

respondent in its Order dated September 7, 2000. The RTC went

beyond the allegations and prayer for relief in the Application for

Original Registration of petitioner, and already scrutinized and

weighed the testimony of Engr. Dorado, the only witness petitioner

was able to present.

As to whether or not the subject property is indeed

foreshore land is a factual issue which the RTC should resolve in the

exercise of its jurisdiction, after giving both parties the opportunity

to present their respective evidence at a full-blown trial. As we have

explained in the Estate of the Late Jesus S. Yujuico v. Republic[37]:

The plain import of Municipality of Antipolo is that a land registration court, the RTC at present, has no

jurisdiction over the subject matter of the application which respondent Republic claims is public land. This ruling needs elucidation.

Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by law. Consequently, the proper CFI (now the RTC) under Section 14 of PD 1529 (Property Registration Decree) has jurisdiction over applications for registration of title to land.

x x x x

Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land registration case filed by Fermina Castro, petitioners predecessor-in-interest, since jurisdiction over the subject matter is determined by the allegations of the initiatory pleading the application. Settled is the rule that the authority to decide a case and not the decision rendered therein is what makes up jurisdiction. When there is jurisdiction, the decision of all questions arising in the case is but an exercise of jurisdiction.

In our view, it was imprecise to state in Municipality of Antipolo that the Land Registration Court [has] no jurisdiction to entertain the application for registration of public property x x x for such court precisely has the jurisdiction to entertain land registration applications since that is conferred by PD 1529. The applicant in a land registration case usually claims the land subject matter of the application as his/her private property, as in the case of the application of Castro. Thus, the conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction over the subject matter of the application of Castro has no mooring. The land registration court initially has jurisdiction over the land applied for at the time of the filing of the application. After trial, the court, in the exercise of its jurisdiction, can determine whether the title to the land applied for is registerable and can be confirmed. In the event that the subject matter of the application turns out to be inalienable public land, then it has no jurisdiction to order the registration of the land

and perforce must dismiss the application. [38] (Emphasis ours.)

It is true that petitioner, as the applicant, has the burden

of proving that the subject property is alienable and disposable and

its title to the same is capable of registration.However, we stress

that the RTC, when it issued its Order dated September 7, 2000, had

so far heard only the testimony of Engr. Dorado, the first witness for

the petitioner.Petitioner was no longer afforded the opportunity to

present other witnesses and pieces of evidence in support of its

Application. The RTC Order dated September 7, 2000 already

declaring the subject property as inalienable public land, over which

the RTC has no jurisdiction to order registration was evidently

premature.

The RTC Order dated September 7, 2000 has not yet

become final and executory as petitioner was able to duly file a

Motion for Reconsideration and Supplemental Motion for

Reconsideration of the same, which the RTC eventually granted in its

Order dated December 7, 2000. Admittedly, said motions filed by

petitioner did not comply with certain rules of procedure. Ordinarily,

such non-compliance would have rendered said motions as mere

scraps of paper, considered as not having been filed at all, and

unable to toll the reglementary period for an appeal. However, we

find that the exceptional circumstances extant in the present case

warrant the liberal application of the rules.

Also, the Motion for Reconsideration and Supplemental

Motion for Reconsideration of the Order dated September 7, 2000

filed by petitioner did not comply with Section 11, Rule 13 of the

Rules of Court, for these did not include a written explanation why

service or filing thereof was not done personally. Nonetheless,

in Maceda v. Encarnacion de Guzman Vda. de Magpantay,

[39] citing Solar Team Entertainment, Inc. v. Ricafort,[40] and Musa v.

Amor,[41] we explained the rationale behind said rule and the

mandatory nature of the same, vis--vis the exercise of discretion by

the court in case of non-compliance therewith:

In Solar Team Entertainment, Inc. v. Ricafort, this Court, passing upon Section 11 of Rule 13 of the Rules of Court, held that a court has the discretion to consider a pleading or paper as not filed if said rule is not complied with.

Personal service and filing are preferred for obvious reasons. Plainly, such should expedite action or resolution on a pleading, motion or other paper; and conversely, minimize, if not eliminate, delays likely to be incurred if service or filing is done by mail, considering the inefficiency of the postal service. Likewise, personal service will do away with the practice of some lawyers who, wanting to appear clever, resort to the following less than ethical practices: (1) serving or filing pleadings by mail to catch opposing counsel off-guard, thus leaving the latter with little or no time to prepare, for instance, responsive pleadings or an opposition; or (2) upon receiving notice from the post office that the registered containing the pleading of or other paper from the adverse party may be claimed, unduly procrastinating before claiming the parcel, or, worse, not claiming it at all, thereby causing undue delay in the disposition of such pleading or other papers.

If only to underscore the mandatory nature of this innovation to our set of adjective rules

requiring personal service whenever practicable, Section 11 of Rule 13 then gives the court the discretion to consider a pleading or paper as not filed if the other modes of service or filing were not resorted to and no written explanation was made as to why personal service was not done in the first place. The exercise of discretion must, necessarily consider the practicability of personal service, for Section 11 itself begins with the clause whenever practicable.

We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil Procedure, personal service and filing is the general rule, and resort to other modes of service and filing, the exception. Henceforth, whenever personal service or filing is practicable, in the light of the circumstances of time, place and person, personal service or filing is mandatory. Only when personal service or filing is not practicable may resort to other modes be had, which must then be accompanied by a written explanation as to why personal service or filing was not practicable to begin with. In adjudging the plausibility of an explanation, a court shall likewise consider the importance of the subject matter of the case or the issues involved therein, and the prima facie merit of the pleading sought to be expunged for violation of Section 11.

In Musa v. Amor, this Court, on noting the impracticality of personal service, exercised

its discretion and liberally applied Section 11 of Rule 13:

As [Section 11, Rule 13 of the Rules of Court] requires, service and filing of pleadings must be done personally whenever practicable. The court notes that in the present case, personal service would not be practicable. Considering the distance between the Court of Appeals and Donsol, Sorsogon where the petition was posted, clearly, service by registered mail [sic] would have entailed considerable time, effort and expense. A written explanation why service was not done personally might have been superfluous. In any case, as the rule is so worded with the use of may, signifying permissiveness, a violation thereof gives the court discretion whether or not to consider the paper as not filed. While it is true that procedural rules are necessary to secure an orderly and speedy administration of justice, rigid application of Section 11, Rule 13 may be relaxed in this case in the interest of substantial justice.

In the case at bar, the address of respondents counsel is Lopez, Quezon, while petitioner Sonias counsels is Lucena City. Lopez, Quezon is 83 kilometers away from Lucena City. Such distance makes personal service impracticable. As in Musa v. Amor, a written explanation why service was not done personally might have been superfluous.[42] (Emphases supplied and citations omitted.)

Our ruling in the above-cited cases is relevant to the

instant case. Counsel for petitioner holds office in Dumaguete City,

Negros Oriental, in the Visayas; while counsel for respondent holds

office in Quezon City, Metro Manila, in Luzon. Given the

considerable distance between the offices of these two counsels,

personal service of pleadings and motions by one upon the other

was clearly not practicable and a written explanation as to why

personal service was not done would only be superfluous.[43] In

addition, we refer once more to the merits of the Motion for

Reconsideration and Supplemental Motion for Reconsideration of

the RTC Order dated September 7, 2000 filed by petitioner, which

justify the liberal interpretation of Section 11, Rule 13 of the Rules of

Court in this case.

Jurisprudence confirms that the requirements laid down in

Sections 4, 5, and 6, Rule 15 of the Rules of Court that the notice of

hearing shall be directed to the parties concerned, and shall state

the time and place for the hearing of the motion, are mandatory. If

not religiously complied with, they render the motion pro forma. As

such, the motion is a useless piece of paper that will not toll the

running of the prescriptive period.[44]

Yet, again, there were previous cases with peculiar

circumstances that had compelled us to liberally apply the rules on

notice of hearing and recognize substantial compliance with the

same. Once such case is Philippine National Bank v. Paneda,

[45] where we adjudged:

Thus, even if the Motion may be defective for failure to address the notice of hearing of said motion to the parties concerned, the defect was cured by the court's taking cognizance thereof and the fact that the adverse party was otherwise notified of the existence of said pleading. There is substantial compliance with the foregoing rules if a copy of the said motion for reconsideration was furnished to the counsel of herein private respondents.

In the present case, records reveal that the notices in the Motion were addressed to the

respective counsels of the private respondents and they were duly furnished with copies of the same as shown by the receipts signed by their staff or agents.

Consequently, the Court finds that the petitioner substantially complied with the pertinent provisions of the Rules of Court and existing jurisprudence on the requirements of motions and pleadings.[46] (Emphasis supplied.)

It was not refuted that petitioner furnished respondent

and respondent actually received copies of the Motion for

Reconsideration, as well as the Supplemental Motion for

Reconsideration of the RTC Order dated September 7, 2000 filed by

petitioner. As a result, respondent was able to file its Oppositions to

the said Motions. The RTC, in issuing its Order dated December 7,

2000, was able to consider the arguments presented by both

sides. Hence, there was substantial compliance by petitioner with

the rules on notice of hearing for its Motion for Reconsideration and

Supplemental Motion for Reconsideration of the RTC Order dated

September 7, 2000. Respondent cannot claim that it was deprived of

the opportunity to be heard on its opposition to said Motions.

In view of the foregoing circumstances, the RTC

judiciously, rather than abusively or arbitrarily, exercised its

discretion when it subsequently issued the Order dated December 7,

2000, setting aside its Order dated September 7, 2000 and

proceeding with the trial in LRC Case No. N-201.

WHEREFORE, the instant Petition for Review of petitioner

City of Dumaguete is hereby GRANTED. The Decision dated March 4,

2005 and Resolution dated June 6, 2005 of the Court Appeals in CA-

G.R. SP No. 64379 are SET ASIDE, and the Orders dated December 7,

2000 and February 20, 2001 of Branch 44 of the Regional Trial Court

of the City of Dumaguete in LRC Case No. N-201

are REINSTATED. The said trial court is DIRECTED to proceed with

the hearing of LRC Case No. N-201 with dispatch.

SO ORDERED.

SECOND DIVISION

[G.R. No. 122806. June 19, 1997]

TIMES BROADCASTING NETWORK, represented by ALEX SY, petitioner, vs. COURT OF APPEALS and FILOMENO AROCHA, respondents.

D E C I S I O N

PUNO, J.:

This petition for review on certiorari was filed by Times Broadcasting Network, represented by its owner, Alex V. Sy, to reverse and set aside the Decision of the Court of Appeals dated August 24, 1995 in CA-G.R. SP No. 35450[1] and its Resolution dated November 15, 1995 denying petitioner's motion for reconsideration.

The records show that petitioner Times Broadcasting Network leased a portion of Hotel Arocha in Ozamis City owned by private respondent Filomeno Arocha. The subject of the lease consisted of two rooms with a total area of 7 meters by 11 meters, a terrace with an area of 25 square meters, and the rooftop of the four-storey building. The premises were to be used by petitioner to operate a radio station.[2]

In June 1993, petitioner began installing its equipment and apparatus in the leased premises. Petitioner, however, installed its radio antenna on the third floor rooftop of the hotel, instead of the fourth floor rooftop as stipulated in the contract.

On October 18, 1993, private respondent, through its counsel, Ferdinand S. Reyes, sent a letter to petitioner demanding payment of P2,500.00 as monthly rental for the use of the third floor rooftop, since the third floor rooftop is not covered by the lease.[3] Petitioner refused to pay. It claimed that the installation of its radio antenna on the third floor rooftop was with the permission of private respondent. It also averred that it is impossible for it to mount its antenna on the fourth floor rooftop because it is already occupied by the hotel's TV antenna.[4]

On January 10, 1994, private respondent Arocha filed before the Municipal Trial Court in Cities (MTCC) of Dipolog, Branch 1 a verified complaint for ejectment with payment of back rentals and damages against petitioner. The complaint prayed:

WHEREFORE, premised on the foregoing consideration, it is most respectfully prayed to this Honorable Court that, after hearing, judgment be rendered in favor of the plaintiff and against the defendant as follows:

a. Ordering the defendant to vacate the 3rd storey rooftop and remove his FM and VHF antennas and other

equipment, wirings and other peripherals, without causing further damage, and transfer it to the premises or area covered by the existing lease contract;

b. Ordering the defendant to pay a monthly rental of P 2,500 a month from the time he/it occupied the 3rd storey roof top until such time that it shall be actually vacated.

c. Ordering the defendant to pay to the plaintiff the amount of:

Moral damages P 5,000Exemplary damages P 5,000Docket, Sheriff Feesand other Litigationexpenses P 1,000Actual expenses/ P 10,000Damage and P 1,500Attorney's Fee P 10,000plus an appearance fee of P 500everytime this case will be called to (sic) a hearing.[5]

Petitioner moved to dismiss the complaint. It argued that the MTCC has no jurisdiction over the case because private respondent's cause of action is actually not for ejectment but for specific performance. Petitioner contended that private respondent's action was not simply for recovery of possession of the premises but was for compliance with the terms of the lease contract. Hence, petitioner asserted that it was the Regional Trial Court (RTC), not the MTCC, which had jurisdiction over the case.[6]

The MTCC denied the motion.[7] On May 23, 1994, it rendered a Decision[8] in favor of private respondent. It ordered petitioner to vacate the third floor rooftop and to pay a monthly rental of P 1,500.00 from May 1993 up to the time it vacates the third floor rooftop plus P 5,000.00 attorney's fees, thus:

ACCORDINGLY, judgment is hereby rendered ordering Defendant (Times)

1 - To vacate the 3rd storey rooftop and remove its FM and VHF antennas and other equipment, wirings and other peripherals, without causing further damage, and transfer it to the premises or area covered by the existing lease contract;

2 - To pay Plaintiff (Arocha) a monthly rental of One Thousand Five Hundred Pesos (P 1,500.00) from May, 1993 (Annex 4, supra-Times) when it installed its antennas aforesaid up to such time that it shall have vacated said 3rd storey of Plaintiff's (Arocha's) Hotel; and

3 - To pay Plaintiff (Arocha) the sum of Five Thousand Pesos (P 5,000.00) as attorney's fees.

Costs against Defendant. (Times.)

SO ORDERED.[9]

On appeal, the RTC reversed the Decision of the MTCC. It held that the issues raised in the parties' pleadings are not the proper subject of a summary action of forcible entry.[10] The dispositive portion of the Decision reads:

Wherefore and for all of the foregoing observations, the decision of the court a quo dated May 23, 1994, is reversed and another judgment hereby rendered dismissing the plaintiff's complaint dated January 7, 1994, with costs against the plaintiff.

SO ORDERED.[11]

Private respondent elevated the case to respondent Court of Appeals on a Petition for Review. In its Decision dated August 24, 1995, respondent court reversed the Decision of the RTC and reinstated the Decision of the MTCC.[12] Petitioner filed a Motion for Reconsideration but it was denied by respondent court in its Resolution dated November 15, 1995.[13]

Petitioner filed the instant petition on the following grounds:

1. The court a quo gravely abused its discretion and seriously erred in not dismissing the case for want of jurisdiction by the original court (MTCC) over the nature and subject of the case and has thus rendered a decision not in accord with law or with the applicable decisions of this Honorable Supreme Court.

2. The court a quo seriously erred and disregarded the law and prevailing jurisprudence when it found that there has been sufficient compliance with the requirements for an action of forcible entry to prosper.[14]

The issue to be resolved is whether the complaint filed by private respondent is one for ejectment or specific performance.

A reading of the allegations in the complaint shows that the action filed by private respondent was for ejectment and not for specific performance as asserted by petitioner. The complaint states:

1. Plaintiff is of legal age, Filipino, married, owner/proprietor of Hotel Arocha and a resident of Magsaysay Street, Miputak, Dipolog City where he may be served with court notices.

2. Defendant Alex Sy is likewise of legal age, Filipino, married and a (sic) the vice-president of the Times Broadcasting Network who is operating the radio station DXAQ-FM whose office, studio and transmitter are located at the 3rd floor of Hotel Arocha along Malvar corner Quezon Avenue, Dipolog City where it/he can be served with summons, notices and court processes.

3. The Plaintiff is the absolute owner of Hotel Arocha, a four-storey hotel in Dipolog City made of concrete materials.

4. The defendant, by virtue of a lease contract it entered into with the plaintiff, leased two rooms of the fourth storey of the plaintiff's hotel. The terms, conditions and stipulations of the lease contract dated April 22, 1993 are as follow:

x x x

5. That sometime in June or July 1993, the defendant began installing its equipment and apparatus in the leased premises of Arocha Hotel.

6. That without the knowledge, information and consent of the plaintiff, thru stealth and strategy, defendant mounted, installed,

utilized, planted and positioned its FM antenna and a VHF antenna on the 3rd floor rooftop of Hotel Arocha; not on the 4th storey rooftop as stipulated in the Contract of Lease.

7. That when the plaintiff came to know about the mounting and installation of the FM and VHF antenna in the 3rd storey rooftop, the antennas were already erected and used by the defendant in their broadcast operation.

8. That the plaintiff did not ask permission from the defendant when it/he used, occupy (sic) and utilized the rooftop of the hotel's 3rd storey.

9. That the rooftop of the 3rd storey of plaintiff's Hotel Arocha is not included among the leased premises to the defendant as evidenced by the lease contract itself.

10. That the installation, mounting, planting and positioning of the defendant's FM antenna on the rooftop of the hotel's 3rd storey is without a valid permit from the city engineering.

11. That on October 18, 1993, the plaintiff, thru his counsel, wrote the defendant a letter which says:

x x x

Dear Mr. Sy,

Our client, Hotel Arocha, thru our law office, wish to inform you that for utilizing their third storey rooftop as the mounting pad of your FM antenna and other radio equipment - they are charging you with a monthly rental of P 2,500.00 beginning the time you installed and mounted these antennas.

May we formally inform you also that the rooftop of the third floor of Hotel Arocha is not leased to you as of this moment. We would appreciate it very much if you can come to Dipolog City within this month so we can formulate the lease contract covering your FM antennas.

Hotel Arocha is expecting to receive your full payment for the use of the third floor rooftop within ten days from receipt of this notice and subsequently a contract of lease has to be entered into between Hotel Arocha and your company.

Failure on your part to pay the full rental for the use of the rooftop of the third floor of the hotel will compel us to resort to actions which we deem fit, proper and necessary.

May you give this matter your preferential attention.

Truly yours,

(Sgd.) Ferdinand S. Reyes

x x x

12. That a copy of this letter quoted above was sent to Mr. Alex Sy by registered mail on October 18, 1993. Another similar copy was sent to Ms. Melody Bernardo, station manager of the defendant in Dipolog City, thru the security guard, on the same date.

13. Evidencing receipt of the plaintiff's 18 October 1993 letter, the defendant answered, thru counsel, by stating that:

x x x

Dear Companero,

Your letter of October 18, 1993 addressed to Mr. Alex V. Sy, Vice-president of TIMES BROADCASTING NETWORK, was referred to us for appropriate reply.

Pending verification of the facts obtaining in the instant case, as well as the pertinent documents on hand, may we request that you defer whatever action you are contemplating to take in this what appears to be a mere misappreciation of the provisions of the Contract of Lease between our clients. For this purpose, we will be needing at least ten (10) days from your receipt hereof for us to be able to intelligently reply to you.

Thank you for your attention and kind consideration.

Very truly yours,

Jose Ramon R. Remollo

x x x

14. Granting the request of the defendant thru its/his counsel, plaintiff waited for ten days. After almost a month had lapsed and even up to now, defendant did not submit its reply as promised; nor did the defendant came (sic) to Dipolog City and met (sic) the plaintiff.

15. On December 6, 1993, plaintiff thru counsel, wrote the defendant another letter and delivered by personal service on same date.

x x x

Dear Mr. Sy,

Your company has failed to pay the monthly rental for using and utilizing the 3rd storey rooftop of Hotel Arocha as mounting pad of your FM and VHF antennas. This is despite the lapse of more than a month from the time you received the written demand of Hotel Arocha dated 18 October 1993.

From June 1993 to November 1993, your unpaid rental for the use of the hotel's 3rd storey rooftop already amounted to P 15,000 at P 2,500 a month.

Aside from your failure and refusal to pay the monthly rental, you also refused to heed our request that you come to Dipolog to execute a lease contract for utilizing the hotel's 3rd storey rooftop. We have already advised you in your previous letter that the 3rd storey rooftop of the hotel is not covered nor included in your present lease contract to occupy the fourth floor.

Please take notice that ten days from this date, our client expects to receive your monthly rental of P15,000 in full and within the same period of time, you are expected to come to Dipolog to execute the lease contact. Otherwise, the management of Hotel Arocha will be forced to institute the necessary court action and remove your FM and VHF antenna.

This time, we fervently hope that you will do your share to maintain a good business relationship with our client.

Very truly yours,

FERDINAND S. REYES

x x x

16. In answer to the 6 December 1993 letter of the plaintiff, defendant answered thru its legal counsel:

x x x

Dear Compaero,

The management of DX-AQ FM of the Times Broadcasting Network brought to the attention of the undersigned your letter of demand addressed to Mr. Alex V. Sy, stating among others the request to be paid the amount of P2,500.00 as monthly rental of the third floor rooftop occupied by the FM antenna of said lessee.

Much is the desire of my client to fulfill all his obligations arising from their contract, but it is sad to note that said term, subject-matter of your demand, is without the ambit of the latter (sic) and intent of the instrument. None of the terms, conditions, and stipulations thereof, express or implied, would warrant my client's acquiescence.

The installation of the antenna at bar at the 3rd floor roof top was with the consent and permission of your client beforehand. While it is correctly observed that the said area is not within the contemplation of the contract, but the same antenna cannot be relocated to the 4th floor roof top premises due to the existence of a TV antenna installed thereat presumably with your client's consent.

In the interest of goodwill, my client is willing to meet Mr. Felomino Arocha at any time and place at his convenience upon enough period of invitation to iron out gaps.

(sgd.) CRESENCIO PALPAGAN JR.

x x x

17. By way of reply, plaintiff answered the defendant's 6 December 1993 letter the following day:

x x x

Dear Mr. Sy and Atty. Palpagan,

In our letter dated December 6, 1993 addressed to Mr. Sy thru Ms. Melody Bernardo, we said: "that ten days from this date, our client expects to receive your monthly rental of P15,000 in full and within the same period of time, you are expected to come to Dipolog to execute the lease contract. Otherwise, the management of Hotel Arocha will be forced to institute the necessary court action and remove your FM and VHF antenna."

If the Times Broadcasting network is not willing to pay the monthly rental of P2,500 for the use of the hotel's 3rd storey rooftop and for Mr. Alex Sy to personally come to Dipolog within the period we have specified for the execution of the lease contract, we advise you to immediately remove your antenna so you will not be obliged to continue paying for its monthly rental which we are demanding.

Despite the long period of time we have given the management of Times Broadcasting to pay the rental and come to Dipolog to meet the management of Hotel Arocha about this matter, our client is quite displeased that the former has not exerted positive efforts to address their demand.

Please be informed also that the TV antenna was installed and mounted by your client in the absence of and without the consent and permission of Mr. Filomeno Arocha.

(sgd.) FERDINAND S. REYES

x x x

18. Until now, the defendant has not met with the plaintiff despite the pronouncement of its/his legal counsel that he is willing to me(e)t the latter "at any time and place at his convenience".

19. Nor has the defendant paid the back rentals demanded by the plaintiffs.

20. That the defendant - in promising to answer the plaintiff's letter and asking that he be given more time to prepare his "intelligent" answer which promise he did not fulfill, in failing to meet the plaintiff despite his assurance that he is willing to do so, and in doing the actionable wrong as alleged in the preceding paragraphs - did not act with justice nor did he observe honesty and good faith.

21. That as a result of what the plaintiff did in illegally occupying and covertly utilizing the 3rd storey rooftop of Hotel Arocha, the galvanized roofing was damaged causing water to drip and seep into the hotel rooms situated beneath.

22. That the dripping and seeping of water inside the hotel rooms in the third floor from the rooftop where the defendant mounted and installed his FM antennas has caused embarrassment and

humiliation to the plaintiff and his business establishment. As a result, a lot of the plaintiff's guests who have occupied the rooms in the 3rd floor have complained and criticized the hotel management.

23. That because of the disastrous and ugly water marks that dripped and seeped into the hotel rooms in the hotel's 3rd floor, the plaintiff was forced to make the necessary and immediate repairs and renovations to the damaged rooms so as not to destroy the prestige, goodwill and reputation of Hotel Arocha.

24. That aside from the damage done to the galvanized roofings caused by the defendant's illegal occupation and covert utilization of the 3rd storey rooftop as the mounting pad of his/its FM antenna, high voltage wires were sprawled in the galvanized roofing posing great danger that an electrocution or electrical grounding will occur.

25. That because of the failure and refusal of the defendant to pay the rentals as demanded by the plaintiff and to come to Dipolog to discuss the terms and conditions relative to the subsequent execution of a lease contract, plaintiff is compelled to file this case to protect his proprietary right, the safety of the hotel occupants and the goodwill and reputation of Hotel Arocha.

26. For filing this action, plaintiff was compelled to engage the services of a lawyer for P10,000 not including yet the appearance fee of P500 everytime this case will be called to hearing or trial.

27. As a result of the damage caused by the defendant's illegal occupation and covert utilization of the 3rd storey roof top of the hotel, the plaintiff incurred damages amounting to more or less P10,000 which amount were used to repair and renovate the damaged portion of the hotel rooms.

28. For the preparation of demand letters and notices to the defendant and previous consultation with the lawyer, plaintiff has already spent P1,500.00 as actual expenses.

29. For the inconvenience, tarnished business image, mental anguish and anxiety the plaintiff suffered, he is claiming moral damages in the reasonable amount of P5,000 and another P5,000 as exemplary damages to prevent other people from doing what the defendant did.

30. That the plaintiff has not filed or instituted any similar action in any court, tribunal or agency other than this.[15]

The nature of the action and the jurisdiction of courts are determined by the allegations in the complaint.[16] The aforequoted complaint shows that the plaintiff (herein private respondent) is the owner of the Hotel Arocha building in Ozamis City and that the defendant (herein petitioner), through stealth and strategy, and without any authority from the owner, used the third floor rooftop of the building as mounting pad of its radio antenna.

Rule 70 of the Revised Rules of Court provides:

SECTION 1. Who may institute proceedings, and when. -- Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a landlord, vendor, vendee, or other person against whom the possession of any land or building is unlawfully witheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal

representatives or assigns of any such landlord, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful deprivation or witholding of possession, bring an action in the proper inferior court against the person or persons unlawfully witholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs. The complaint must be verified.

The rule provides two kinds of action: forcible entry and unlawful detainer. In forcible entry, one is deprived of physical possession of land or building by means of force, intimidation, threat, strategy or stealth. In unlawful detainer, one lawfully witholds possession of thereof after the expiration or termination of his right to hold possession under any contract, express or implied.[17] The only issue in this case is physical possession, that is, who between the plaintiff and the defendant has a better right to possess the property in question.[18]

In the case at bar, private respondent was unlawfully deprived of the possession of the third floor rooftop of Hotel Arocha when petitioner used it as mounting pad for its antenna. Private respondent sought to recover physical possession thereof through an action for ejectment filed before the MTCC. Hence, the case properly falls within the jurisdiction of the MTCC.

IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and Resolution of the Court of Appeals are hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

SECOND DIVISION

[G.R. No. 140973. November 11, 2004]

JUSTINO LARESMA, petitioner, vs. ANTONIO P. ABELLANA, respondent.

D E C I S I O N

CALLEJO, SR., J.:

On May 24, 1994, respondent Antonio P. Abellana filed a Complaint with the Regional Trial Court (RTC) of Toledo, Cebu, Branch 29, against petitioner Justino Laresma, a farmer, for recovery of possession of Lot 4-E of subdivision plan psd. 271428, a parcel of agricultural land located in Tampa-an, Aloguinsan, Cebu. The lot had an area of 21,223 square meters covered by Transfer Certificate of Title (TCT) No. 47171. He alleged, inter alia, that since 1985, the petitioner had been a lessee of a certain Socorro Chiong, whose agricultural land adjoined his own; and that sometime in 1985, the petitioner, by means of threat, strategy, and stealth, took possession of his property and deprived him of its possession.[1] The respondent prayed that, after due proceedings, judgment be rendered in his favor, ordering the petitioner to vacate the property and pay him

actual damages, attorneys fees, and expenses of litigation.[2] Appended to the complaint was a contract of lease[3] executed by the petitioners wife, Praxedes Seguisabal Laresma, on March 1, 1977, over a parcel of land owned by Socorro Chiong covered by Tax Declaration No. 05561.

To support his complaint, the respondent presented his father, Teotimo Abellana, as witness. Teotimo testified that the petitioner married his maid, Praxedes Seguisabal, after which the couple resided in the property of Socorro Chiong,[4] which abutted the property of the petitioner and a portion of the property of the Spouses Vicente and Susana Paras. The petitioner thus became a tenant of Socorro Chiong. Teotimo further narrated that sometime in 1989 and 1990, the petitioner transferred his house to the property of his son, the respondent, in the process destroying coconut trees planted on the property to pave the way for the construction of the barangay hall. According to the witness, he reported the incident to the office of the chief of police and the barangay captain. However, the matter was not acted upon.[5]

Teotimo also testified that his son, the respondent, purchased the property from his uncle, Mariano Paras, who, in turn, bought the same from his parents, the Spouses Vicente and Susana Paras.[6] Based on the said sale, the Register of Deeds issued TCT No. 47171 over the property under the name of the respondent on April 2, 1980.[7] The respondent had since then declared the property for taxation purposes,[8] and paid the realty taxes therefor.[9] Teotimo declared that he requested Geodetic Engineer Lordeck Abella to relocate the property, and the engineer prepared a sketch plan showing that the said lot abutted the property of Socorro Chiong on the northeast and that of Agnes Abellana on the north.[10] He admitted that he and the respondent were informed that the property had been placed under the Operation Land Transfer (OLT), and that they refused to acknowledge the information.[11]

The respondents aunt, Socorro Chiong, testified that on October 14, 1972, she and Felicidad Paras Montecillo purchased from her parents, the Spouses Vicente and Susana Paras, a 19-hectare land in Tampa-an, Aloguinsan, Cebu, Lot 4-C of Psd. 271428 Lot 4-E, covered by Tax Declaration No. 009088.[12] Chiongs parents died in 1977. In an Order dated November 8, 1994, the Department of Agrarian Reform (DAR) affirmed the July 11, 1988 Ruling of the DAR Regional Director that the deed of sale over the property executed by her parents in her favor was valid; that the tenants therein, including Justino Laresma and his wife, were bound by the said sale; and that the tenanted portion of the property, including that portion leased to Praxedes Laresma, was outside the scope of the OLT.[13] She confirmed that the property of the respondent abutted her property on the north.[14]

In his answer to the complaint, the petitioner averred that the dispute between him and the respondent was agrarian in nature, within the exclusive jurisdiction of the DAR, involving as it did his right of possession covered by Certificate of Land Transfer (CLT) No. 0-031817 issued to his wife Praxedes. He alleged that the property titled in the name of the respondent consisted of a portion of that property owned by the Spouses Vicente and Susana Paras covered by Original Certificate of Title No. 780 which was placed under OLT under Presidential Decree No. 27. Being a beneficiary of the agrarian reform program of the government, his wife was issued CLT No. 0-031817 on July 13, 1982 over a portion of the property, Lot No. 00013, with an area of 0.1700 hectares. Since then, he and his wife became owners of the property and, as such, were entitled to the possession thereof.

The parties agreed to defer further proceedings for the conduct of an ocular inspection of the property to determine

whether Lot No. 00013 covered by CLT No. 0-031817 was, indeed, a part of Lot 4-E covered by TCT No. 47171. On January 13, 1995, the trial court issued an Order allowing the said inspection with Socorro Chiong in attendance.[15] The parties were advised to make a report on the same. The court designated its process server, Felix Navarro, as its representative during the inspection.[16] The Municipal Agrarian Reform Office, for its part, designated Municipal Agrarian Reform Technologist Alberto Epan as its representative.

On February 16, 1995, Epan inspected the property in the presence of the petitioner. The petitioner pointed to Epan eight of the ten OLT muniments. Epan also noticed that there were coconuts scattered on the property, that corn was planted in the plan area, and that the house of the respondent was in the property titled to the petitioner. On February 17, 1995, the parties respective counsels, including Navarro and Epan, inspected the property. Epan, thereafter, submitted his Report dated February 22, 1995,[17] with a sketch at the dorsal portion showing the respective locations of the property cultivated by the respondent, his house and the OLT muniments.[18] Navarro submitted a separate report on March 7, 1995,[19] where it was indicated that the parties had agreed that the house of the petitioner was located at the respondents property.

The petitioner denied being the tenant of the respondent. He testified and adduced evidence that he and his wife were married on September 23, 1953,[20] and, thereafter, resided in the property of the Spouses Paras[21] where he was a tenant.[22] He delivered one-half of the produce from the land to Susana Paras and kept the rest as his share. Shortly thereafter, the Spouses Paras sold a portion of the property to the respondent. Sometime in 1976 or 1977, the subject property was placed under the OLT.[23] The respondent and Roque Paras protested the inclusion of the property, which was, however, rejected.[24] The petitioner also testified that after the death of the Spouses Paras, he gave the share of the produce to the spouses daughter, Socorro Chiong.[25]

The petitioner further testified that on July 13, 1982, his wife was issued CLT No. 0-031817 over Lot No. 00013, the property he was cultivating. The lot had an area of 0.1700 hectares and was located at Tampa-an, Aloguinsan, Cebu. Because of lack of funds, his wife was able to make only partial payments of her amortizations for the property to the Land Bank of the Philippines for which she was issued receipts.[26] After CLT No. 0-031817 was issued to his wife, he kept all the produce from the land.

The petitioner also presented Felix Navarro and Alberto Epan who affirmed their respective reports on the conduct of the inspection on the property.

On October 30, 1998, the trial court rendered judgment in favor of the respondent and against the petitioner. The fallo of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff as against defendant declaring:

1 - That plaintiff as the lawful owner in fee simple of the entire real property covered by Transfer Certificate of Title No. 47171 [Exhibit D]; and, declaring further that plaintiff is entitled to recover possession thereof from defendant;

2 - That the occupation, use, and possession of defendant under the latters claim as bona fide tenant of plaintiff over the latters property is null and void ab initio in violation of aforecited

provision of the Code of Agrarian Reform, R.A. 3884;

3 - That defendant, his wife, Praxedes Laresma and their children and his agents or representative are hereby ordered to vacate and to surrender the entire possession, use, and occupation of said real property covered by TCT No. 47171 to and in favor of plaintiff;

4 - That defendant is hereby declared liable and ordered to pay plaintiff the sum of P70,000.00 as actual damages, the sum of P10,000.00 as attorneys fees, and P5,000.00 as costs of suit.

SO ORDERED.[27]

The court ruled that, as evidenced by the contract of lease executed by Praxedes Laresma and Socorro Chiong, the petitioner was the tenant of Chiong and not of the respondent. Thus, the court had jurisdiction over the case. The court rejected the reports of Epan and Navarro, and considered the same as barren of probative weight, considering that the said reports failed to take into account the technical descriptions of Lot 4-C owned by Chiong, Lot 4-E covered by TCT No. 47171, and Lot 00013 covered by CLT No. 0-031817.

Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court.

The petitioner points out that the property subject of the complaint is covered by a CLT issued by the DAR in the name of his wife. The petitioner avers that although the complaint of the respondent appeared to be one for the recovery of possession of the said property (accion publiciana), by claiming that the petitioner was the tenant of Socorro Chiong, the respondent indirectly attacked the said CLT. Hence, the action is within the exclusive jurisdiction of the Department of Agrarian Reform and Adjudication Board (DARAB) under Republic Act No. 6657. The petitioner asserts that, by declaring that the landholding was not legally possessed by him and that he was not a de jure tenant, the trial court thereby declared him as having forfeited his rights under the CLT. He was, thus, prevented from paying his monthly amortizations over the property to the Land Bank of the Philippines as required by law.

The petitioner further asserts that he was the agricultural tenant of the Spouses Paras, the original owners of the property. His right as a farmer subsisted, notwithstanding the transfer of the property of the deceased prior to October 21, 1972, which transfer was registered with the Register of Deeds only on December 21, 1977. He contends that since the landholding was already placed under the scope of OLT, the respondent merely stepped into the shoes of the Spouses Paras. Moreover, having become owners of the property on October 21, 1972, the petitioner and his wife were not obliged to pay damages to the respondent; as such, there was no factual basis for the award of actual damages in the amount of P70,000 in favor of the latter.

In his comment on the petition, the respondent avers that the threshold issue in this case is factual; hence, the remedy of the petitioner was to appeal the decision of the trial court to the Court of Appeals by a writ of error under Rule 41 of the Rules of Court. He contends that he did not, in his complaint, attack the CLT issued to Praxedes Laresma because the property covered by it is a portion of the property of Socorro Chiong, and not that of his property covered

by TCT No. 47171. He also posits that the said title is valid and insists that the petitioner had actual knowledge of the sale of the property to him. The petitioner cites the ruling of this Court in Antonio v. Estrella[28] to bolster his claim.

As gleaned from the petition, the comment thereon, and the memoranda of the parties, the issues for resolution are the following: (a) whether the action of the respondent in the trial court is in reality an indirect attack on the validity of CLT No. 0-031817 issued to Praxedes Laresma in the guise of an action for recovery of possession (accion publiciana) of the property covered by TCT No. 47171; (b) whether the RTC had jurisdiction over the action of the respondent; and (c) whether the petitioner is liable for damages in favor of the respondent.

On the first two issues, the petitioner avers that he and his wife Praxedes became owners of Lot No. 00013 by virtue of CLT No. 0-031817 which was awarded in the latters favor. As such, they are entitled to the possession of the lot. The petitioner contends that unless and until CLT No. 0-031817 is nullified in a direct action for the said purpose before the DARAB, they cannot be evicted from the said property. He posits that the action of the respondent against him in the RTC for recovery of possession of real property is, in reality, an indirect attack on the CLT issued to his wife which is proscribed by the ruling of this Court in Miranda v. Court of Appeals.[29] He asserts that the decision of the trial court declaring him in illegal possession of the property and not a de jure tenant of the respondent operates as an illegal forfeiture or cancellation of the CLT.

For his part, the respondent asserts that his complaint against the petitioner did not indirectly assail the CLT issued to the latters wife. He contends that his action was one for the recovery of his possession of a portion of his property Lot 4-E covered by TCT No. 47171, and not that of Lot No. 00013 covered by CLT No. 0-031817 which is a portion of Lot 4-C owned by his aunt Socorro Chiong. He notes that the petitioner himself admits that he has never been his agricultural tenant over his property. Consequently, the respondent concludes, the trial court correctly ruled that the dispute between him and the petitioner is civil in nature and within its exclusive jurisdiction.

We agree with the respondent that the DARAB had no jurisdiction over his action against the petitioner. The bone of contention of the parties and the decisive issue in the trial court was whether or not Lot No. 00013 covered by CLT No. 0-031817 is a portion of Lot 4-E covered by TCT No. 47171 under the name of the respondent. This is the reason why the parties agreed to have Lot No. 00013 resurveyed in relation to Lot 4-C owned by Socorro Chiong and to Lot 4-E titled in the name of the respondent. After a calibration of the evidence on record and the reports of Epan and Navarro, the trial court ruled that Lot No. 00013 formed part of Lot 4-C owned by Socorro Chiong and not of Lot 4-E titled in the name of the respondent:

Plaintiff unabashedly claims that defendant has never been his tenant over the formers property, Lot No. 4-E, but defendant claims otherwise. The evidence of plaintiff tends to establish that defendant is not his or has never been his tenant over his agricultural land, Lot 4-E, but defendant Justino Laresma is rather the tenant of Socorro Chiong over her property, Lot 4-C. In support of this contention that defendant is not plaintiffs own tenant but that of Socorro Chiong, plaintiff offered and adduced the contract of lease duly entered by and between Socorro Chiong and defendant [Exhibit B] in 1977 wherein it was clearly stipulated [that] Socorro Chiong as the agricultural lessor leased a portion of her land to

defendant, in the latters capacity as agricultural lessee of Lot 4-C with the obligation to pay Socorro Chiong rentals during the stipulated crop years.

This particular contract of lease [Exhibit B] does not show that plaintiff is a privy (sic) to it. It is (sic) goes to show that plaintiff is [not] bound by the terms and conditions thereof.

In the order of DAR under DARRO Adm. Case No. VII-98-88 dated November 8, 1994 [Exhibit A] which is actually a decision arising from the tenancy relationship between Socorro Chiong and defendant Justino Laresma, the DAR had expressly ruled that defendant is the tenant of Socorro Chiong of her property but limited to an actual area of 3.7316 hectares and excluding the area of 4.4905 [page 3, Decision] from the scope of the operation of Operation Land Transfer. It was further ruled therein that the landholding of Socorro Chiong was a part of the total landholding owned by her parents, Vicente N. Paras and Susana Paras, both deceased, which was, subsequently, sold by her parents to her as evidenced by a deed of sale dated October 14, 1972 [Exhibit C]. This deed of conveyance was affirmed by the DAR as validly executed between Socorro Chiong and defendant Justino Laresma because the latter had actual knowledge and recognition of the said transaction between Socorro and her deceased parents. This actual transfer of ownership of said parcel of land from Socorro Chiong[s] deceased parents to her was evidenced by the execution of the contract of lease between her and defendant on March 10, 1977 (sic) [Exhibit B].

But in the said ruling of the DFAR (sic), defendant has been expressly declared by DAR as a bona fide tenant of Socorro Chiong but his farmholding inside her property is limited to an actual area of 3.7316 hectares and excluding the area of 4.4905 [page 3, Decision] from the scope of the operation of Operation Land Transfer.

If defendant were (sic) truly a tenant of plaintiff, he would have also asked plaintiff or his predecessor-in-interest to execute that necessary contract of lease like the instrument, which Socorro Chiong executed in favor of defendant as her tenant. In the absence of said instrument to establish his tenancy over plaintiffs landholding, this Court cannot just presume the existence of an agricultural leasehold relationship between plaintiff and defendant.[30]

However, this Court cannot accept these ocular reports and the accompanying sketches thereof so as to correctly reflect the identity of defendants farmholding and to establish its exact location within the land of plaintiff in view of the absence of pertinent technical description of said farmholding in relation to the metes and bounds of plaintiffs land whose technical description is clearly mentioned in plaintiffs Transfer Certificate of Title No. 47171 [Exhibit D]. The said technical description of the defendants farmholding is required to clearly pinpoint its identity with its area and boundaries in relation to the titled property of plaintiff. Without said technical description, it is very difficult to identify defendants landholdings to be within plaintiffs real property.

In view of the absence of the above-mentioned indispensable requisites or any one of them in order to establish the existence of an agricultural leasehold relationship between plaintiff and defendant, as earlier mentioned, does not make defendant a de jure tenant under the Land Reform Program of the government under existing tenancy laws. [Caballes v. DAR, ibid.].[31]

The petitioner has not assailed the aforequoted findings of the trial court in the petition at bar; hence, he is bound by the said findings.

We agree with the ruling of the RTC that, as gleaned from the material averments of his complaint, the action of the respondent against the petitioner is not an agrarian dispute within the exclusive jurisdiction of the DARAB. The well-entrenched principle is that the jurisdiction of the court over the subject matter of the action is determined by the material allegations of the complaint and the law, irrespective of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein.[32] In Movers-Baseco Integrated Port Services, Inc. v. Cyborg Leasing Corporation,[33] we ruled that the jurisdiction of the court over the nature of the action and the subject matter thereof cannot be made to depend upon the defenses set up in the court or upon a motion to dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the defendant.[34] Once jurisdiction is vested, the same is retained up to the end of the litigation. We also held in Arcelona v. Court of Appeals [35] that, in American jurisprudence, the nullity of a decision arising from lack of jurisdiction may be determined from the record of the case, not necessarily from the face of the judgment only.

It must be stressed that the regular court does not lose its jurisdiction over an ejectment case by the simple expedient of a party raising as a defense therein the alleged existence of a tenancy relationship between the parties.[36] But it is the duty of the court to receive evidence to determine the allegations of tenancy.[37] If, after hearing, tenancy had, in fact, been shown to be the real issue, the court should dismiss the case for lack of jurisdiction.[38]

It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined by the material allegations of the complaint and the law at the time the action was commenced. Jurisdiction of the tribunal over the subject matter or nature of an action is conferred only by law and not by the consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or nature of an action.[39] Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, acquiescence, or even by express consent of the parties.[40] If the court has no jurisdiction over the nature of an action, it may dismiss the same ex mero motu or motu proprio. A decision of the court without jurisdiction is null and void; hence, it could never logically become final and executory. Such a judgment may be attacked directly or collaterally.

We agree with the ruling of the trial court that based on the material allegations of the respondents complaint and even on the admission of the petitioner, the latter had never been an agricultural tenant of the respondent. In fact, the respondent claimed that based on the CLT issued to his wife, they became the owner of the property covered therein. As such, the DARAB had no jurisdiction over the said action. The dispute between the respondent, as plaintiff, and the petitioner, as defendant, in the RTC involving the de jure possession of Lot 4-E covered by TCT No. 47171 is not an agrarian dispute. Decisive of the issue is our ruling in Heirs of the Late Herman Rey Santos v. Court of Appeals:[41]

Rule II, Section 1 of the Revised Rules of Procedure of the DARAB, provides:

Section 1. Primary, Original and Appellate Jurisdiction. The Agrarian Reform Adjudication Board shall have primary jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian Reform Program

under Republic Act No. 6657, Executive Order Nos. 229, 228, and 129-A, Republic Act No. 3844, as amended, by Republic Act No. 6389, P.D. No. 27, and other agrarian laws and their implementing rules and regulations. (Italics supplied)

Agrarian dispute is defined under Section 3(d) of Republic Act No. 6657 (CARP Law), as:

(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold, stewardship or, otherwise, over lands devoted to agriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired under this Act and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee.

Clearly, no agrarian dispute is involved in this case. In fact, both are contending parties for the ownership of the subject property.

In the case of Morta, Sr. v. Occidental, et al., this Court held:

For DARAB to have jurisdiction over a case, there must exist a tenancy relationship between the parties. In order for a tenancy agreement to take hold over a dispute, it would be essential to establish all its indispensable elements to wit: 1) that the parties are the landowner and the tenant or agricultural lessee; 2) that the subject matter of the relationship is an agricultural land; 3) that there is consent between the parties to the relationship; 4) that the purpose of the relationship is to bring about agricultural production; 5) that there is personal cultivation on the part of the tenant or agricultural lessee; and 6) that the harvest is shared between the landowner and the tenant or agricultural lessee. In Vda. de Tangub v. Court of Appeals (191 SCRA 885), we held that the jurisdiction of the Department of Agrarian Reform is limited to the following: a) adjudication of all matters involving implementation of agrarian reform; b) resolution of agrarian conflicts and land tenure-related problems; and c) approval and disapproval of the conversion, restructuring or readjustment of agricultural lands into residential, commercial, industrial, and other non-agricultural uses.

Petitioners and private respondent have no tenurial, leasehold, or any agrarian relations whatsoever that could have brought this controversy under the ambit of the agrarian reform laws. Consequently, the DARAB has no jurisdiction over the controversy and should not have taken cognizance of private respondents petition for injunction in the first place.[42]

However, we find and so hold that the RTC had no jurisdiction over the action of the respondent. In this case, the respondent filed his complaint against the petitioner on May 24, 1994. Hence, the jurisdiction of the regular court over the nature of this action is governed by Republic Act No. 7691, which took effect on April 15, 1994. Section 3 thereof amended Section 33 of Batas Pambansa (B.P.) Blg. 129, and reads:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. Metropolitan

Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots.

On the other hand, Section 1 of the Rule amending Section 19 of B.P. Blg. 129 reads:

SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdictions:

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) .

The actions envisaged in the aforequoted provisions are accion publiciana and reinvindicatoria. To determine which court has jurisdiction over the action, the complaint must allege the assessed value of the real property subject of the complaint or the interest thereon.In this case, the complaint of the respondent against the petitioner for recovery of possession of real property (accion publiciana) reads:

3. That plaintiff is the owner and possessor of Lot 4-E covered by TCT No. T-47171 of the Registry of Deeds of the Province of Cebu located at Tampa-an, Aloguinsan, Cebu;

4. That defendant is the tenant of the land of Socorro P. Chiong, which adjoins the parcel of land owned by the plaintiff as shown by a leasehold contract hereto attached as Annex A and made an integral part hereof;

5. That sometime in 1985, by means of threats, strategy, and stealth, the herein defendant took possession of the parcel of land owned by herein plaintiff, thus effectively depriving plaintiff of the possession thereof;

6. That the defendants, while illegally occupying the land of herein plaintiff, cut trees, and harvested the fruits of said land causing damages to the plaintiff in the amount of P50,000.00;

7. That despite demand, defendant has refused to vacate said land and return the possession thereof to herein plaintiff, thus compelling the plaintiff to file the present action;

8. In filing the present action, the plaintiff engaged the services of counsel for P10,000.00 and expects to incur expenses of litigation in the amount of P5,000.00.[43]

The complaint does not contain any allegation of the assessed value of Lot 4-E covered by TCT No. 47171. There is, thus, no

showing on the face of the complaint that the RTC had exclusive jurisdiction over the action of the respondent. Moreover, as gleaned from the receipt of realty tax payments issued to the respondent, the assessed value of the property in 1993 was P8,300.00.[44] Patently then, the Municipal Trial Court of Aloguinsan, Cebu, and not the Regional Trial Court of Toledo City, had exclusive jurisdiction over the action of the respondent.[45] Hence, all the proceedings in the RTC, including its decision, are null and void.

In light of the foregoing disquisitions of the court, there is no longer a need to still resolve the third issue.

WHEREFORE, the petition is GRANTED. The assailed decision of the Regional Trial Court of Toledo, Cebu City, Branch 29, in Civil Case No. T-466 is NULLIFIED for lack of jurisdiction of the trial court over the action of the respondent against the petitioner. No costs.

SO ORDERED.

FIRST DIVISION

ARTEMIO INIEGO,[1]

Petitioner,

- versus -

The HONORABLE JUDGE GUILLERMO G. PURGANAN, in his official capacity as Presiding Judge of the Regional Trial Court, Branch 42, City of Manila, and FOKKER C. SANTOS,

Respondents.

G. R. No. 166876

Present:

PANGANIBAN, C.J.Chairperson,YNARES-SANTIAGO,AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

Promulgated:

March 24, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CHICO-NAZARIO, J.:

For this Court to grant this petition for review

on certiorari under Rule 45 of the Rules of Court, petitioner has to

persuade us on two engaging questions of law. First, he has to

convince us that actions for damages based on quasi-delict are

actions that are capable of pecuniary estimation, and therefore

would fall under the jurisdiction of the municipal courts if the claim

does not exceed the jurisdictional amount of P400,000.00 in Metro

Manila. Second, he has to convince us that the moral and exemplary

damages claimed by the private respondent should be excluded

from the computation of the above-mentioned jurisdictional amount

because they arose from a cause of action other than the negligent

act of the defendant.

Petitioner urges us to reverse the 28 October 2004

Decision and 26 January 2005 Resolution of the Court of Appeals,

Eighth Division, in CA-G.R. SP No. 76206 denying due course to the

petition for certiorari filed by petitioner under Rule 65, elevating the

21 October 2002 Omnibus Order and the 21 January 2003 Order of

the Regional Trial Court (RTC), Branch 42, City of Manila. The

dispositive portion of the 28 October 2004 Decision of the Court of

Appeals reads:

WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED for lack of merit.[2]

The factual and procedural antecedents of this case are as follows:

On 1 March 2002, private respondent Fokker Santos filed a

complaint for quasi-delict and damages against Jimmy T. Pinion, the

driver of a truck involved in a traffic accident, and against

petitioner Artemio Iniego, as owner of the said truck and employer

of Pinion. The complaint stemmed from a vehicular accident that

happened on 11 December 1999, when a freight truck allegedly

being driven by Pinion hit private respondents jitney which private

respondent was driving at the time of the accident.

On 24 August 2002, private respondent filed a Motion

to Declare defendant in Default allegedly for failure of the latter to

file his answer within the final extended period. On 28 August 2002,

petitioner filed a Motion to Admit and a Motion to Dismiss the

complaint on the ground, among other things, that the RTC has no

jurisdiction over the cause of action of the case.

On 21 October 2002, public respondent Judge Guillermo

G. Purganan, acting as presiding judge of the RTC, Branch 42, Manila,

issued the assailed Omnibus Order denying the Motion to Dismiss of

the petitioner and the Motion to Declare Defendant in Default of the

private respondent. Pertinent portions of the Omnibus Order and

the dispositive portion thereof read:

In his opposition to the motion to declare him in default and his Motion to Admit defendant INIEGO alleged that he never received the Order dated 12 August 2002. But believing in good faith, without being presumptuous, that his 3rd Motion for additional Time to file or any appropriate [pleading] would be granted, he filed the aforesaid Motion received by the Court on 23 August 2002.

The explanation of defendant IEGO has

merit. The order dated 12 August 2002 was sent to a wrong address, thus defendant IEGO did not receive it. Since it was not received, he was not aware that the court would grant no further extension. The Motion to Admit Motion to Dismiss has to be granted and the Motion to declare Defendant IEGO [in default] has to be DENIED.

x x x x

The plaintiff opines that this court has exclusive jurisdiction because the cause of action is the claim for damages, which exceeds P400,000.00. The complaint prays for actual damages in the amount of P40,000.00, moral damages in the amount of P300,000.00, and exemplary damages in the amount of P150,000.00. Excluding attorneys fees in the

amount of P50,000.00, the total amount of damages being claimed is P490,000.00.

Proceeding on the assumption that the cause of action is the claim of (sic) for damages in the total amount of P490,000.00, this court has jurisdiction. But is the main cause of action the claim for damages?

This court is of the view that the main cause of action is not the claim for damages but quasi-delict. Damages are being claimed only as a result of the alleged fault or negligence of both defendants under Article 2176 of the Civil Code in the case of defendant Pinion and under Article 2180 also of the Civil Code in the case of defendant Iniego. But since fault or negligence (quasi-delicts) could not be the subject of pecuniary estimation, this court has exclusive jurisdiction.

x x x x

WHEREFORE, in view of all the foregoing, the motion to declare defendant Iniego in default and the said defendants motion to dismiss are denied.[3]

On 7 November 2002, petitioner filed a Motion for Reconsideration

of the Omnibus Order of 21 October 2002. On 21 January 2003,

public respondent issued an Order denying petitioners motion for

reconsideration. Pertinent portions of the 21 January 2003 Order are

reproduced hereunder:

What this court referred to in its Order sought to be reconsidered as not capable of pecuniary estimation is the CAUSE OF ACTION, which is quasi-delict and NOT the amount of damage prayed for.

x x x x

WHEREFORE, in view of the foregoing,

the motion for reconsideration is DENIED.[4]

Petitioner elevated the 21 October 2002 and 21 January 2003 Orders

of the RTC to the Court of Appeals on petition for certiorari under

Rule 65 of the Rules of Court. On 28 October 2004, the Court of

Appeals promulgated the assailed Decision, the dispositive portion

thereof reads:

WHEREFORE, the petition is DENIED DUE COURSE and dismissed for lack of merit.[5]

On 22 November 2004, petitioner moved for

reconsideration, which was denied by the Court of Appeals on 26

January 2005. Hence, this present petition.

Petitioner claims that actions for damages based on quasi-

delict are actions that are capable of pecuniary estimation; hence,

the jurisdiction in such cases falls upon either the municipal courts

(the Municipal Trial Courts, Metropolitan Trial Courts, Municipal

Trial Courts In Cities, And Municipal Circuit Trial Courts), or the

Regional Trial Courts, depending on the value of the damages

claimed.

Petitioner argues further that should this Court find

actions for damages capable of pecuniary estimation, then the total

amount of damages claimed by the private respondent must

exceed P400,000.00 in order that it may fall under the jurisdiction of

the RTC. Petitioner asserts, however, that the moral and exemplary

damages claimed by private respondent be excluded from the

computation of the total amount of damages for jurisdictional

purposes because the said moral and exemplary damages arose, not

from the quasi-delict, but from the petitioners refusal to pay the

actual damages.

I

Actions for damages based on quasi-delicts are primarily

and effectively actions for the recovery of a sum of money for the

damages suffered because of the defendants alleged tortious acts,

and are therefore capable of pecuniary estimation.

In a recent case,[6] we did affirm the jurisdiction of a

Municipal Circuit Trial Court in actions for damages based on quasi-

delict, although the ground used to challenge said jurisdiction was

an alleged forum shopping, and not the applicability of Section 19(1)

of Batas Pambansa Blg. 129.

According to respondent Judge, what he referred to in his

assailed Order as not capable of pecuniary estimation is the cause of

action, which is a quasi-delict, and not the amount of damage

prayed for.[7] From this, respondent Judge concluded that since fault

or negligence in quasi-delicts cannot be the subject of pecuniary

estimation, the RTC has jurisdiction. The Court of Appeals affirmed

respondent Judge in this respect.[8]

Respondent Judges observation is erroneous. It is crystal

clear from B.P. Blg. 129, as amended by Republic Act No. 7691, that

what must be determined to be capable or incapable of pecuniary

estimation is not the cause of action, but the subject matter of the

action.[9] A cause of action is the delict or wrongful act or omission

committed by the defendant in violation of the primary rights of the

plaintiff.[10] On the other hand, the subject matter of the action is the

physical facts, the thing real or personal, the money, lands, chattels,

and the like, in relation to which the suit is prosecuted, and not the

delict or wrong committed by the defendant.[11]

The case of Lapitan v. Scandia, Inc., et al.,[12] has guided this Court

time and again in determining whether the subject matter of the

action is capable of pecuniary estimation. InLapitan, the Court spoke

through the eminent Mr. Justice Jose B.L. Reyes:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance [now Regional Trial Courts] would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought like suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance [now Regional Trial Courts]. x x x.[13] (Emphasis supplied.)

Actions for damages based on quasi-delicts are primarily

and effectively actions for the recovery of a sum of money for the

damages suffered because of the defendants

alleged tortious acts. The damages claimed in such actions represent

the monetary equivalent of the injury caused to the plaintiff by the

defendant, which are thus sought to berecovered by the

plaintiff. This money claim is the principal relief sought, and is not

merely incidental thereto or a consequence thereof. It bears to point

out that the complaint filed by private respondent before the RTC

actually bears the caption for DAMAGES.

Fault or negligence, which the Court of Appeals claims

is not capable of pecuniary estimation, is not actionable by

itself. For such fault or negligence to be actionable, there must

be a resulting damage to a third person. The relief available to

the offended party in such cases is for the reparation,

restitution, or payment of such damage, without which any

alleged offended party has no cause of action or relief. The fault

or negligence of the defendant, therefore, is inextricably

intertwined with the claim for damages, and there can be no

action based on quasi-delict without a claim for damages.

We therefore rule that the subject matter of actions

for damages based on quasi-delict is capable of pecuniary

estimation.

II

The amount of damages claimed is within the jurisdiction

of the RTC, since it is the claim for all kinds of damages that is the

basis of determining the jurisdiction of courts, whether the claims

for damages arise from the same or from different causes of action.

Despite our concurrence in petitioners claim that actions

for damages based on quasi-delict are actions that are capable of

pecuniary estimation, we find that the total amount of damages

claimed by the private respondent nevertheless still exceeds the

jurisdictional limit of P400,000.00 and remains under the jurisdiction

of the RTC.

Petitioner argues that in actions for damages based on

quasi-delict, claims for damages arising from a different cause of

action (i.e., other than the fault or negligence of the defendant)

should not be included in the computation of the jurisdictional

amount. According to petitioner, the moral and exemplary damages

claimed by the respondents in the case at bar are not direct and

proximate consequences of the alleged negligent act. Petitioner

points out that the complaint itself stated that such moral and

exemplary damages arose from the alleged refusal of defendants to

honor the demand for damages, and therefore there is no

reasonable cause and effect between the fault or negligence of the

defendant and the claim for moral and exemplary damages.[14] If the

claims for moral and exemplary damages are not included in the

computation for purposes of determining jurisdiction, only the claim

for actual damages in the amount of P40,000.00 will be considered,

and the MeTC will have jurisdiction.

We cannot give credence to petitioners arguments. The

distinction he made between damages arising directly from injuries

in a quasi-delict and those arising from a refusal to admit liability for

a quasi-delict is more apparent than real, as the damages sought by

respondent originate from the same cause of action: the quasi-

delict. The fault or negligence of the employee and

the juris tantum presumption of negligence of his employer in his

selection and supervision are the seeds of the damages claimed,

without distinction.

Even assuming, for the sake of argument, that the

claims for moral and exemplary damages arose from a cause of

action other than the quasi-delict, their inclusion in the

computation of damages for jurisdictional purposes is still

proper. All claims for damages should be considered in

determining the jurisdiction of the court regardless of whether

they arose from a single cause of action or several causes of

action. Rule 2, Section 5, of the Rules of Court allows a party to

assert as many causes of action as he may have against the

opposing party. Subsection (d) of said section provides that

where the claims in all such joined causes of action are

principally for recovery of money, the aggregate amount

claimed shall be the test of jurisdiction.[15]

Hence, whether or not the different claims for damages

are based on a single cause of action or different causes of action, it

is the total amount thereof which shall govern.Jurisdiction in the

case at bar remains with the RTC, considering that the total amount

claimed, inclusive of the moral and exemplary damages claimed,

is P490,000.00.

In sum, actions for damages based on quasi-delicts are

actions that are capable of pecuniary estimation. As such, they fall

within the jurisdiction of either the RTC or the municipal courts,

depending on the amount of damages claimed. In this case, the

amount of damages claimed is within the jurisdiction of the RTC,

since it is the claim for all kinds of damages that is the basis of

determining the jurisdiction of courts, whether the claims for

damages arise from the same or from different causes of action.

WHEREFORE, the petition for review on certiorari is

hereby DENIED for lack of merit. The Decision and Resolution of the

Court of Appeals dated 28 October 2004and 26 January 2005,

respectively, are AFFIRMED insofar as they held that the Regional

Trial Court has jurisdiction. No costs.

SO ORDERED.

FIRST DIVISION

INSULAR SAVINGS BANK, G.R. No. 141818

Petitioner,Present:

Panganiban, C.J. (Chairperson),

- versus - Ynares-Santiago,

Austria-Martinez,

Callejo, Sr., and

Chico-Nazario, JJ.

FAR EAST BANK AND

TRUST COMPANY, Promulgated:

Respondent.

June 22, 2006

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari[1] assails the November 9, 1999

Order[2] of the Regional Trial Court of Makati City, Branch 135, in Civil

Case No. 92-145 which dismissed the petition for review for lack of

jurisdiction and its February 1, 2000 Order[3] denying reconsideration

thereof.

The antecedent facts are as follows:

On December 11, 1991, Far East Bank and Trust Company

(Respondent) filed a complaint against Home Bankers Trust and

Company (HBTC)[4] with the Philippine Clearing House Corporations

(PCHC) Arbitration Committee docketed as Arbicom Case No. 91-

069.[5] Respondent sought to recover from the petitioner, the sum of

P25,200,000.00 representing the total amount of the three checks

drawn and debited against its clearing account. HBTC sent these

checks to respondent for clearing by operation of the PCHC clearing

system. Thereafter, respondent dishonored the checks for

insufficiency of funds and returned the checks to HBTC. However,

the latter refused to accept them since the checks were returned by

respondent after the reglementary regional clearing period.[6]

Meanwhile, on January 17, 1992, before the termination

of the arbitration proceedings, respondent filed another complaint

but this time with the Regional Trial Court (RTC)

in Makati City docketed as Civil Case No. 92-145 for Sum of Money

and Damages with Preliminary Attachment. The complaint was filed

not only against HBTC but also against Robert Young, Eugene

Arriesgado and Victor Tancuan (collectively known as Defendants),

who were the president and depositors of HBTC respectively.

[7] Aware of the arbitration proceedings between respondent and

petitioner, the RTC, in an Omnibus Order dated April 30, 1992,

[8] suspended the proceedings in the case against all the defendants

pending the decision of the Arbitration Committee, to wit:

WHEREFORE, the Court hereby orders: (a) Home Bankers & Trust Co. to

produce and permit plaintiff to inspect, copy and/or photograph the checking account deposit ledger of Victor Tancuans Account No. 1803-00605-3;

(b) The Motions to Dismiss filed by all

defendants denied, for lack of merit; and

(c) Proceedings in this case against all defendants be suspended pending award/decision in the arbitration proceedings against Home Bankers and Trust Co.

SO ORDERED.[9] (Emphasis supplied)

The above Omnibus Order was amended by the trial court

in its October 1, 1992 Order,[10] the dispositive portion of which

reads as follows:

WHEREFORE, the Omnibus Order

dated 30 April 1992 is hereby reconsidered by deleting the phrase since the complaint also seeks exemplary damages, attorneys fees, litigation expenses and costs of suit against HBT, on page 4 thereof and par. C of its dispositive portion is amended to read:

(c) Procedings against Home Bankers

and Trust Co. are suspended pending award/decision in the arbitration proceedings while those against individual defendants be immediately reinstated and continued.

HBT and Tancuans separate Motions

for Reconsiderations are hereby denied, for lack of merit.

SO ORDERED.[11]

On February 2, 1998, the PCHC Arbitration Committee rendered its

decision in favor of respondent,[12] thus: IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff and against the defendant sentencing the latter to pay the plaintiff the sum of P25.2 million as principal. In view of the fact, however, that this amount was split between the plaintiff and the defendant in the course of the proceedings, the amount to be paid by the defendant to the plaintiff should only be P12,600,000.00 plus interest on this latter amount at the rate of 12% per annum from February 11, 1992, the date when the total amount of P25.2 Million was split between plaintiff and defendant up to the date of payment. In view of the facts found by the committee, no attorneys fees nor other damages are awarded. SO ORDERED.[13]

The motion for reconsideration filed by petitioner was denied by the

Arbitration Committee.[14] Consequently, to appeal the decision of

the Arbitration Committee in Arbicom Case No. 91-069, petitioner

filed a petition for review in the earlier case filed by respondent in

Branch 135 of the RTC of Makati and docketed as Civil Case No. 92-

145.[15] In an order dated January 20, 1999, the RTC directed both

petitioner and respondent to file their respective memoranda, after

which, said petition would be deemed submitted for resolution.[16]

Both parties filed several pleadings. On February 8, 1999,

respondent filed a Motion to Dismiss Petition for Review for Lack of

Jurisdiction,[17] which was opposed by the petitioner.[18] Respondent

then filed its Reply to the opposition,[19] to which petitioner filed a

Rejoinder.[20] On August 16, 1999, respondent submitted its

Surrejoinder.[21]

On November 9, 1999, the RTC rendered the assailed Order which

held, thus: Acting on plaintiff Far East Bank and Trust Companys Motion To Dismiss Petition For Review For Lack Of Jurisdiction, considering that the petition for review is a separate and distinct case, the same must comply with all the requirements for filing initiatory pleadings for civil actions before this Court so that since the commencement of the subject petition lacks the mandatory requirements provided for, except the payment of docket fees, for lack of jurisdiction, the petition for review is hereby dismissed. SO ORDERED.[22]

The RTC denied petitioners motion for reconsideration,[23] hence,

this petition on the sole ground, to wit: THE REGIONAL TRIAL COURT ERRED IN DISMISSING THE PETITION OF PETITIONER FOR LACK OF JURISDICTION ON THE GROUND THAT IT SHOULD HAVE BEEN DOCKETED AS A SEPARATE CASE.[24]

Petitioner contends that Civil Case No. 92-145 was merely

suspended to await the outcome of the arbitration case pending

before the PCHC. Thus, any petition questioning the decision of the

Arbitration Committee must be filed in Civil Case No. 92-145 and

should not be docketed as a separate action. Likewise, petitioner

avers that had it filed a separate action, this would have resulted in a

multiplicity of suits, which is abhorred in procedure.

Meanwhile respondent avers that the RTC correctly

dismissed the appeal from the award of private arbitrators since

there is no statutory basis for such appeal. Respondent argues that

petitioners claim that the parties by agreement had conferred on

the RTC appellate jurisdiction over decisions of private arbitrators is

erroneous because they cannot confer a non-existent jurisdiction on

the RTC or any court. Furthermore, the petition for review filed by

petitioner violated the rule on commencing an original action under

Section 5, Rule 1, and the raffle of cases under Section 2, Rule 20 of

the Rules of Court, when it filed the same in Branch 135 of the RTC

of Makati where there was already a pending original action, i.e.,

Civil Case No. 92-145.

The petition lacks merit.

The Philippine Clearing House Corporation was created to

facilitate the clearing of checks of member banks. Among these

member banks exists a compromissoire,[25] or an arbitration

agreement embedded in their contract wherein they consent that

any future dispute or controversy between its PCHC participants

involving any check would be submitted to the Arbitration

Committee for arbitration. Petitioner and respondent are members

of PCHC, thus they underwent arbitration proceedings.

The PCHC has its own Rules of Procedure for Arbitration

(PCHC Rules). However, this is governed by Republic Act No. 876,

also known as The Arbitration Law[26] and supplemented by the Rules

of Court.[27] Thus, we first thresh out the remedy of petition for

review availed of by the petitioner to appeal the order of the

Arbitration Committee.

Sections 23, 24 and 29 of The Arbitration Law, and Section

13 of the PCHC Rules, provide:

SEC. 23. Confirmation of award. At any time within one month after the award is made, any party to the controversy which was arbitrated may apply to the court having jurisdiction, as provided in Section 28, for an order confirming the award; and thereupon the court must grant such order unless the award is vacated, modified or corrected, as prescribed herein.Notice of such motion must be served upon the adverse party or his attorney as prescribed by law for the service of such notice upon an attorney in action in the same court. SEC. 24. Grounds for vacating award. In any one of the following cases, the court must make an order vacating the award upon the petition of any party to the controversy when such party proves affirmatively that in the arbitration proceedings:

(a) The award was procured by corruption, fraud or other undue means; or

(b) That there was evident partiality or corruption in the arbitrators or any of them; or

(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from disclosing such disqualification or of any other misbehavior by which the rights of any party have been materially prejudiced; or

(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made.

x x x x SEC. 25. Grounds for modifying or correcting award. In any one of the following cases, the court must make an order modifying or correcting the award, upon the application of any party to the controversy which was arbitrated:

(a) Where there was an evident

miscalculation of figures, or an evident mistake in the description of any person, thing or property referred to in the award; or

(b) Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted; or

(c) Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had been a commissioners report, the defect could have been amended or disregarded by the court.

The order may modify and correct the

award so as to effect the intent thereof and promote justice between the parties. SEC. 29. Appeals. An appeal may be taken from an order made in a proceeding under this Act, or from judgment entered upon an award through certiorari proceedings, but such appeals shall be limited to questions of law. The proceedings upon such an appeal, including the judgment thereon shall be governed by the Rules of Court insofar as they are applicable. AMENDED ARBITRATION RULES OF PROCEDURE OF PCHC Sec. 13. The findings of facts of the decision or award rendered by the Arbitration Committee or by the sole Arbitrator as the case may be shall be final and conclusive upon all the parties in said arbitration dispute. The decision or award of the Arbitration Committee or of the Sole Arbitrator or of the Board of Directors, as the case may be, shall be appealable only on questions of law to any of the Regional Trial Courts in the National Capital Region where the Head Office of any of the parties is located. The appellant shall perfect his appeal by filing a notice of appeal to the Arbitration Secretariat and filing a Petition with the Regional Trial Court of the National Capital Region for the review of the decision or award of the committee or sole arbitrator or of the Board of Directors, as the case may be, within a non-extendible period of fifteen (15) days from and after its receipt of the order denying or granting said motion for reconsideration or new trial had been filed, within a non-extendible period of fifteen (15) days from and after its receipt of the order denying or granting said motion for reconsideration or of the decision rendered after the new trial if one had been granted.

x x x x. (Emphasis supplied)

As provided in the PCHC Rules, the findings of facts of the

decision or award rendered by the Arbitration Committee shall be

final and conclusive upon all the parties in said arbitration dispute.

[28] Under Article 2044[29] of the New Civil Code, the validity of any

stipulation on the finality of the arbitrators award or decision is

recognized.However, where the conditions described in Articles

2038,[30] 2039[31] and 2040[32] applicable to both compromises and

arbitrations are obtaining, the arbitrators award may be annulled or

rescinded.[33] Consequently, the decision of the Arbitration

Committee is subject to judicial review.

Furthermore, petitioner had several judicial remedies

available at its disposal after the Arbitration Committee denied its

Motion for Reconsideration. It may petition the proper RTC to issue

an order vacating the award on the grounds provided for under

Section 24 of the Arbitration Law.[34] Petitioner likewise has the

option to file a petition for review under Rule 43 of the Rules of

Court with the Court of Appeals on questions of fact, of law, or

mixed questions of fact and law.[35] Lastly, petitioner may file a

petition for certiorari under Rule 65 of the Rules of Court on the

ground that the Arbitrator Committee acted without or in excess of

its jurisdiction or with grave abuse of discretion amounting to lack or

excess of jurisdiction. Since this case involves acts or omissions of a

quasi-judicial agency, the petition should be filed in and cognizable

only by the Court of Appeals.[36]

In this instance, petitioner did not avail of any of the

abovementioned remedies available to it. Instead it filed a petition

for review with the RTC where Civil Case No. 92-145 is pending

pursuant to Section 13 of the PCHC Rules to sustain its

action. Clearly, it erred in the procedure it chose for judicial review

of the arbitral award.

Having established that petitioner failed to avail of the

abovementioned remedies, we now discuss the issue of the

jurisdiction of the trial court with respect to the petition for review

filed by petitioner.

Jurisdiction is the authority to hear and determine a cause

- the right to act in a case.[37] Jurisdiction over the subject matter is

the power to hear and determine the general class to which the

proceedings in question belong. 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.[38]

In the instant case, petitioner and respondent have agreed

that the PCHC Rules would govern in case of controversy. However,

since the PCHC Rules came about only as a result of an agreement

between and among member banks of PCHC and not by law, it

cannot confer jurisdiction to the RTC. Thus, the portion of the PCHC

Rules granting jurisdiction to the RTC to review arbitral awards, only

on questions of law, cannot be given effect.

Consequently, the proper recourse of petitioner from the

denial of its motion for reconsideration by the Arbitration

Committee is to file either a motion to vacate the arbitral award

with the RTC, a petition for review with the Court of Appeals under

Rule 43 of the Rules of Court, or a petition for certiorari under Rule

65 of the Rules of Court. In the case at bar, petitioner filed a petition

for review with the RTC when the same should have been filed with

the Court of Appeals under Rule 43 of the Rules of Court. Thus, the

RTC of Makati did not err in dismissing the petition for review for

lack of jurisdiction but not on the ground that petitioner should have

filed a separate case from Civil Case No. 92-145 but on the necessity

of filing the correct petition in the proper court. It is immaterial

whether petitioner filed the petition for review in Civil Case No. 92-

145 as an appeal of the arbitral award or whether it filed a separate

case in the RTC, considering that the RTC will only have jurisdiction

over an arbitral award in cases of motions to vacate the

same. Otherwise, as elucidated herein, the Court of Appeals retains

jurisdiction in petitions for review or in petitions for

certiorari. Consequently, petitioners arguments, with respect to the

filing of separate action from Civil Case No. 92-145 resulting in a

multiplicity of suits, cannot be given due course.

Alternative dispute resolution methods or ADRs like

arbitration, mediation, negotiation and conciliation are encouraged

by the Supreme Court. By enabling parties to resolve their disputes

amicably, they provide solutions that are less time-consuming, less

tedious, less confrontational, and more productive of goodwill and

lasting relationships.[39] It must be borne in mind that arbitration

proceedings are mainly governed by the Arbitration Law and

suppletorily by the Rules of Court.

WHEREFORE, in light of the foregoing, the petition is DENIED. The

November 9, 1999 Order of the Regional Trial Court of Makati City,

Branch 135, in Civil Case No. 92-145 which dismissed the petition for

review for lack of jurisdiction and the February 1, 2000 Order

denying its reconsideration, are AFFIRMED.

SO ORDERED.

SECOND DIVISION

EDNA DIAGO LHUILLIER, G.R. No. 171092Petitioner, Present: CARPIO, J., Chairperson,- versus - BRION, DEL CASTILLO, ABAD, and PEREZ, JJ. BRITISH AIRWAYS, Promulgated:Respondent. March 15, 2010

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N DEL CASTILLO, J.:

Jurisdictio est potestas de publico introducta cum

necessitate juris dicendi. Jurisdiction is a power introduced for the public

good, on account of the necessity of dispensing justice.[1]

Factual Antecedents

On April 28, 2005, petitioner Edna Diago Lhuillier filed a

Complaint[2] for damages against respondent British Airways before the

Regional Trial Court (RTC) of Makati City. She alleged that on February 28,

2005, she took respondents flight 548 from London, United

Kingdom to Rome, Italy. Once on board, she allegedly requested

Julian Halliday (Halliday), one of the respondents flight attendants, to assist

her in placing her hand-carried luggage in the overhead

bin. However, Halliday allegedly refused to help and assist her, and even

sarcastically remarked that If I were to help all 300 passengers in this flight, I

would have a broken back!

Petitioner further alleged that when the plane was about to land

in Rome, Italy, another flight attendant, Nickolas Kerrigan (Kerrigan), singled

her out from among all the passengers in the business class section to

lecture on plane safety. Allegedly, Kerrigan made her appear to the other

passengers to be ignorant, uneducated, stupid, and in need of lecturing on

the safety rules and regulations of the plane. Affronted, petitioner assured

Kerrigan that she knew the planes safety regulations being a frequent

traveler. Thereupon, Kerrigan allegedly thrust his face a mere few

centimeters away from that of the petitioner and menacingly told her that

We dont like your attitude.

Upon arrival in Rome, petitioner complained to respondents

ground manager and demanded an apology. However, the latter declared

that the flight stewards were only doing their job.

Thus, petitioner filed the complaint for damages, praying that

respondent be ordered to pay P5 million as moral damages, P2 million as

nominal damages, P1 million as exemplary damages, P300,000.00 as

attorneys fees, P200,000.00 as litigation expenses, and cost of the suit.

On May 16, 2005, summons, together with a copy of the

complaint, was served on the respondent through Violeta Echevarria,

General Manager of Euro-Philippine Airline Services, Inc.[3]

On May 30, 2005, respondent, by way of special appearance

through counsel, filed a Motion to Dismiss[4] on grounds of lack of jurisdiction

over the case and over the person of the respondent. Respondent alleged

that only the courts of London, United Kingdom or Rome, Italy, have

jurisdiction over the complaint for damages pursuant to the Warsaw

Convention,[5]Article 28(1) of which provides:

An action for damages must be brought at the option of the plaintiff, either before the court of domicile of the carrier or his principal place of business, or where he has a place of business through which the contract has been made, or before the court of the place of destination.

Thus, since a) respondent is domiciled in London; b) respondents

principal place of business is in London; c) petitioner bought her ticket in Italy

(through Jeepney Travel S.A.S, in Rome);[6] and d) Rome, Italy is petitioners

place of destination, then it follows that the complaint should only be filed in

the proper courts of London, United Kingdom or Rome, Italy.

Likewise, it was alleged that the case must be dismissed for lack of

jurisdiction over the person of the respondent because the summons was

erroneously served on Euro-Philippine Airline Services, Inc. which is not its

resident agent in the Philippines.

On June 3, 2005, the trial court issued an Order requiring herein

petitioner to file her Comment/Opposition on the Motion to Dismiss within

10 days from notice thereof, and for respondent to file a Reply thereon.

[7] Instead of filing a Comment/Opposition, petitioner filed on June 27, 2005,

an Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint

and Issuance of Alias Summons.[8] Petitioner alleged that upon verification

with the Securities and Exchange Commission, she found out that the

resident agent of respondent in thePhilippines is Alonzo

Q. Ancheta. Subsequently, on September 9, 2005, petitioner filed a Motion

to Resolve Pending Incident and Opposition to Motion to Dismiss.[9]

Ruling of the Regional Trial Court

On October 14, 2005, the RTC of Makati City, Branch 132, issued

an Order[10] granting respondents Motion to Dismiss. It ruled that:

The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our Courts have to apply the principles of international law, and are bound by treaty stipulations entered into by thePhilippines which form part of the law of the land. One of this is the Warsaw Convention. Being a signatory thereto, the Philippines adheres to its stipulations and is bound by its provisions including the place where actions involving damages to plaintiff is to be instituted, as provided for under Article 28(1) thereof. The Court finds no justifiable reason to deviate from the indicated limitations as it will only run counter to the provisions of the Warsaw Convention. Said adherence is in consonance with the comity of nations and deviation from it can only be effected through proper denunciation as enunciated in the Santos case (ibid). Since the Philippines is not the place of domicile of the defendant nor is it the principal place of business, our courts are thus divested of jurisdiction over cases for damages. Neither was plaintiffs ticket issued in this country nor was her destination Manila but Rome in Italy. It bears stressing however, that referral to the court of proper jurisdiction does not constitute constructive denial of plaintiffs right to have access to our courts since the Warsaw Convention itself provided for jurisdiction over cases arising from international transportation. Said treaty stipulations must be complied with in good faith following the time honored principle of pacta sunt servanda. The resolution of the propriety of service of summons is rendered moot by the Courts want of jurisdiction over the instant case. WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and this case is hereby ordered DISMISSED.

Petitioner filed a Motion for Reconsideration but the motion was

denied in an Order[11] dated January 4, 2006.

Petitioner now comes directly before us on a Petition for Review

on Certiorari on pure questions of law, raising the following issues:

Issues

I. WHETHER

X X X PHILIPPINE COURTS HAVE JURISDICTION OVER A TORTIOUS CONDUCT COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.

II. WHETHER X X X RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER.

Petitioners Arguments

Petitioner argues that her cause of action arose not from the

contract of carriage, but from the tortious conduct committed by airline

personnel of respondent in violation of the provisions of the Civil Code on

Human Relations. Since her cause of action was not predicated on the

contract of carriage, petitioner asserts that she has the option to pursue this

case in this jurisdiction pursuant to Philippine laws.

Respondents Arguments

In contrast, respondent maintains that petitioners claim for

damages fell within the ambit of Article 28(1) of the Warsaw Convention. As

such, the same can only be filed before the courts of London, United

Kingdom or Rome, Italy.

Our Ruling

The petition is without merit.

The Warsaw Convention has the force and effect of law in this country.

It is settled that the Warsaw Convention has the force and effect of law in

this country. In Santos III v. Northwest Orient Airlines,[12] we held that:

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio Quirinoon October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto, to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the citizens thereof.

The Convention is thus a treaty

commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country.[13]

The Warsaw Convention applies because the air travel, where the alleged tortious conduct occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw Convention.

Article 1 of the Warsaw Convention provides:

1. This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.

2. For the purposes of this Convention the

expression "international carriage" means any carriage in which, according to the contract made by the parties, the place of departure and the place of destination,

whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to this Convention. A carriage without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is not deemed to be international for the purposes of this Convention. (Emphasis supplied)

Thus, when the place of departure and the place of destination in

a contract of carriage are situated within the territories of two High

Contracting Parties, said carriage is deemed an international carriage. The

High Contracting Parties referred to herein were the signatories to the

Warsaw Convention and those which subsequently adhered to it.[14]

In the case at bench, petitioners place of departure

was London, United Kingdom while her place of destination

was Rome, Italy.[15] Both the United Kingdom[16] and Italy[17] signed and

ratified the Warsaw Convention. As such, the transport of the petitioner is

deemed to be an international carriage within the contemplation of the

Warsaw Convention.

Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject matter of the action is governed by the provisions of the Warsaw Convention.

Under Article 28(1) of the Warsaw Convention, the plaintiff may

bring the action for damages before

1. the court where the carrier is domiciled;

2. the court where the carrier has its principal place of business;

3. the court where the carrier has an establishment by which the contract has been made; or

4. the court of the place of destination.

In this case, it is not disputed that respondent is a British

corporation domiciled in London, United Kingdom with London as its

principal place of business. Hence, under the first and second jurisdictional

rules, the petitioner may bring her case before the courts of London in

the United Kingdom. In the passenger ticket and baggage check presented

by both the petitioner and respondent, it appears that the ticket was issued

in Rome, Italy. Consequently, under the third jurisdictional rule, the

petitioner has the option to bring her case before the courts

of Rome inItaly. Finally, both the petitioner and respondent aver that the

place of destination is Rome, Italy, which is properly designated given the

routing presented in the said passenger ticket and baggage

check. Accordingly, petitioner may bring her action before the courts

of Rome, Italy. We thus find that the RTC of Makati correctly ruled that it

does not have jurisdiction over the case filed by the petitioner.

Santos III v. Northwest Orient Airlines[18] applies in this case.

Petitioner contends that Santos III v. Northwest Orient

Airlines[19] cited by the trial court is inapplicable to the present controversy

since the facts thereof are not similar with the instant case.

We are not persuaded.

In Santos III v. Northwest Orient Airlines,[20] Augusto Santos III, a

resident of the Philippines, purchased a ticket from Northwest Orient

Airlines in San Francisco, for transport between San

Francisco and Manila via Tokyo and back to San Francisco. He was wait-

listed in the Tokyo to Manila segment of his ticket, despite his prior

reservation. Contending that Northwest Orient Airlines acted in bad faith

and discriminated against him when it canceled his confirmed reservation

and gave his seat to someone who had no better right to it, Augusto Santos

III sued the carrier for damages before the RTC. Northwest Orient Airlines

moved to dismiss the complaint on ground of lack of jurisdiction citing Article

28(1) of the Warsaw Convention. The trial court granted the motion which

ruling was affirmed by the Court of Appeals. When the case was brought

before us, we denied the petition holding that under Article 28(1) of the

Warsaw Convention, Augusto Santos III must prosecute his claim in the

United States, that place being the (1) domicile of the Northwest Orient

Airlines; (2) principal office of the carrier; (3) place where contract had been

made (San Francisco); and (4) place of destination (San Francisco).[21]

We further held that Article 28(1) of the Warsaw Convention is

jurisdictional in character. Thus: A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a venue provision. First, the wording of Article 32, which indicates the places where the action for damages "must" be brought, underscores the mandatory nature of Article 28(1). Second, this characterization is consistent with one of the objectives of the Convention, which is to "regulate in a uniform manner the conditions of international transportation by air." Third, the Convention does not contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the will of the parties regardless of the time when the damage occurred. x x x x

In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept. Jurisdiction in the international sense must be established in accordance with Article 28(1) of theWarsaw Convention, following which the jurisdiction of a particular court must be established pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is determined will the issue of venue be taken up. This second question shall be governed by the law of the court to which the case is submitted.[22]

Contrary to the contention of petitioner, Santos III v. Northwest

Orient Airlines[23] is analogous to the instant case because (1) the domicile of

respondent is London, United Kingdom;[24] (2) the principal office of

respondent airline is likewise in London, United Kingdom;[25] (3) the ticket

was purchased in Rome, Italy;[26] and (4) the place of destination is Rome,

Italy.[27] In addition, petitioner based her complaint on Article 2176[28] of the

Civil Code on quasi-delict and Articles 19[29] and 21[30] of the Civil Code on

Human Relations. In Santos III v. Northwest Orient Airlines,[31] Augusto

Santos III similarly posited that Article 28 (1) of the Warsaw Convention did

not apply if the action is based on tort. Hence, contrary to the contention of

the petitioner, the factual setting of Santos III v. Northwest Orient

Airlines[32] and the instant case are parallel on the material points.

Tortious conduct as ground for the petitioners complaint is within the purview of the Warsaw Convention.

Petitioner contends that in Santos III v. Northwest Orient Airlines,

[33] the cause of action was based on a breach of contract while her cause of

action arose from the tortious conduct of the airline personnel and violation

of the Civil Code provisions on Human Relations.[34] In addition, she claims

that our pronouncement in Santos III v. Northwest Orient Airlines[35] that the

allegation of willful misconduct resulting in a tort is insufficient to exclude the

case from the comprehension of the Warsaw Convention, is more of

an obiter dictum rather than the ratiodecidendi.[36] She maintains that the

fact that said acts occurred aboard a plane is merely incidental, if not

irrelevant.[37]

We disagree with the position taken by the petitioner. Black

defines obiter dictum as "an opinion entirely unnecessary for the decision of

the case" and thus "are not binding as precedent."[38] In Santos III v.

Northwest Orient Airlines,[39] Augusto Santos III categorically put in issue the

applicability of Article 28(1) of the Warsaw Convention if the action is based

on tort.

In the said case, we held that the allegation of willful misconduct

resulting in a tort is insufficient to exclude the case from the realm of the

Warsaw Convention. In fact, our ruling that a cause of action based on tort

did not bring the case outside the sphere of the Warsaw Convention was

our ratio decidendi in disposing of the specific issue presented by Augusto

Santos III.Clearly, the contention of the herein petitioner that the said ruling

is an obiter dictum is without basis.

Relevant to this particular issue is the case of Carey v. United

Airlines,[40] where the passenger filed an action against the airline arising

from an incident involving the former and the airlines flight attendant during

an international flight resulting to a heated exchange which included insults

and profanity. The United States Court of Appeals (9th Circuit) held that the

passenger's action against the airline carrier arising from alleged

confrontational incident between passenger and flight attendant on

international flight was governed exclusively by the Warsaw Convention,

even though the incident allegedly involved intentional misconduct by the

flight attendant.[41]

In Bloom v. Alaska Airlines,[42] the passenger brought nine causes

of action against the airline in the state court, arising from a confrontation

with the flight attendant during an international flight to Mexico. The United

States Court of Appeals (9th Circuit) held that the Warsaw Convention

governs actions arising from international air travel and provides the

exclusive remedy for conduct which falls within its provisions. It further held

that the said Convention created no exception for an injury suffered as a

result of intentional conduct [43] which in that case involved a claim for

intentional infliction of emotional distress.

It is thus settled that allegations of tortious conduct committed

against an airline passenger during the course of the international carriage

do not bring the case outside the ambit of the Warsaw Convention.

Respondent, in seeking remedies from the trial court through special appearance of counsel, is not deemed to have voluntarily submitted itself to the jurisdiction of the trial court.

Petitioner argues that respondent has effectively submitted itself

to the jurisdiction of the trial court when the latter stated in its

Comment/Opposition to the Motion for Reconsideration that Defendant [is

at a loss] x x x how the plaintiff arrived at her erroneous impression that it

is/was Euro-Philippines Airlines Services, Inc. that has been making a special

appearance since x xx British Airways x x x has been clearly specifying in all

the pleadings that it has filed with this Honorable Court that it is the one

making a special appearance.[44]

In refuting the contention of petitioner, respondent cited La

Naval Drug Corporation v. Court of Appeals[45] where we held that even if a

party challenges the jurisdiction of the court over his person, as by reason of

absence or defective service of summons, and he also invokes other grounds

for the dismissal of the action under Rule 16, he is not deemed to be

in estoppel or to have waived his objection to the jurisdiction over his person.

[46]

This issue has been squarely passed upon in the recent case

of Garcia v. Sandiganbayan,[47] where we reiterated our ruling in La Naval

Drug Corporation v. Court of Appeals[48] and elucidated thus: Special Appearance to Question a Courts Jurisdiction Is NotVoluntary Appearance The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:

Sec. 20. Voluntary appearance. The defendants voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.

Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his person, together with other grounds raised therein, is not deemed to have appeared voluntarily before the court. What the rule on voluntary appearance the first sentence of the above-quoted rule means is that the voluntary appearance of the defendant in court is without qualification, in which case he is deemed to have waived his defense of lack of jurisdiction over his person due to improper service of summons. The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a) motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash Forfeiture II; and (b) motion for partial reconsideration. The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special appearance with the purpose of challenging the jurisdiction of the SB over her person and that of her three children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of her three children for lack of valid service of summons through improvident substituted service of summons

in both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she filed her motions for reconsideration, even with a prayer to admit their attached Answer Ex Abundante Ad Cautelam datedJanuary 22, 2005 setting forth affirmative defenses with a claim for damages. And the other subsequent pleadings, likewise, did not abandon her stance and defense of lack of jurisdiction due to improper substituted services of summons in the forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily appear before the SB constitutive of or equivalent to service of summons. Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said case elucidates the current view in our jurisdiction that a special appearance before the courtchallenging its jurisdiction over the person through a motion to dismiss even if the movant invokes other groundsis not tantamount to estoppel or a waiver by the movant of his objection to jurisdiction over his person; and such is not constitutive of a voluntary submission to the jurisdiction of the court. Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to cure the defective substituted services of summons. They are, therefore, not estopped from questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons made, the SB did not acquire jurisdiction over the persons of petitioner and her children. And perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and her three children are concerned, are null and void for lack of jurisdiction. (Emphasis supplied)

In this case, the special appearance of the counsel of respondent

in filing the Motion to Dismiss and other pleadings before the trial court

cannot be deemed to be voluntary submission to the jurisdiction of the said

trial court. We hence disagree with the contention of the petitioner and rule

that there was no voluntary appearance before the trial court that could

constitute estoppelor a waiver of respondents objection to jurisdiction over

its person.

WHEREFORE, the petition is DENIED. The October 14, 2005

Order of

the Regional Trial Court of Makati City, Branch 132, dismissing the

complaint for lack of jurisdiction, is AFFIRMED.

SO ORDERED.

RAPID CITY REALTY AND DEVELOPMENT CORPORATION,Petitioner,

- versus - ORLANDO VILLA and LOURDES PAEZ-VILLA,[1]

Respondents.

G.R. No. 184197 Present:

PUNO,CARPIO MORALES,NACHURA,CASTRO,BERSAMIN, andVILLARAMA, JR.,

Promulgated:February 11, 2010

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N CARPIO MORALES, J.:

Sometime in 2004, Rapid City Realty and Development

Corporation (petitioner) filed a complaint for declaration of nullity of

subdivision plans . . . mandamus and damages against several

defendants including Spouses Orlando and Lourdes Villa

(respondents). The complaint, which was docketed at the Regional

Trial Court of Antipolo City as Civil Case No. 04-7350, was lodged at

Branch 71 thereof.

After one failed attempt at personal service of summons,

Gregorio Zapanta (Zapanta), court process server, resorted to

substituted service by serving summons upon respondents

househelp who did not acknowledge receipt thereof and refused to

divulge their names. Thus Zapanta stated in the Return of Summons:

THIS IS TO CERTIFY that on September 24, 2004, the undersigned caused the service of summons together with a copy of the complaint with its annexes to defendant Spouses Lourdes Estudillo Paez-Cline and Orlando Villa at their given address at 905 Padre Faura Street, Ermita Manila, as per information given by two lady househelps who are also residing at the said address, the defendant spouses are not around at that time. On the 27 th of September, 2004, I returned to the same place to serve the summons. I served the summons and the copy of the complaint with its annexes to the two ladies ( The same lady househelp I met on Sept. 24, 2004) but they refused to sign to acknowledge

receipt and they refused to tell their name as per instruction of the defendants. With me who can attest to the said incident is Mr. Jun Llanes, who was with me at that time.[2] x x x (emphasis and underscoring supplied)

Despite substituted service, respondents failed to file their Answer,

prompting petitioner to file a Motion to Declare Defendants[-herein

respondents] in Default which the trial court granted by Order of

May 3, 2005.

More than eight months thereafter or on January 30, 2006,

respondents filed a Motion to Lift Order of Default,[3] claiming that

on January 27, 2006 they officially received all pertinent papers such

as Complaint and Annexes. Motion to Dismiss of the Solicitor

General and the ORDER dated May 3, 2005 granting the Motion to

Declare [them] in Default. And they denied the existence of two

women helpers who allegedly refused to sign and acknowledge

receipt of the summons. In any event, they contended that assuming

that the allegation were true, the helpers had no authority to

receive the documents.[4]

By Order of July 17, 2006, the trial court set aside the Order of

Default and gave herein respondents five days to file their

Answer. Respondents just the same did not file an Answer, drawing

petitioner to again file a Motion to declare them in default, which

the trial court again granted by Order of February 21, 2007.

On April 18, 2007, respondents filed an Omnibus Motion for

reconsideration of the second order declaring them in default and to

vacate proceedings, this time claiming that the trial court did not

acquire jurisdiction over their persons due to invalid service of

summons.

The trial court denied respondents Omnibus Motion by

Order of May 22, 2007 and proceeded to receive ex-parte evidence

for petitioner.

Respondents, via certiorari, challenged the trial courts February 21,

2007 and April 18, 2007 Orders before the Court of Appeals.

In the meantime, the trial court, by Decision of September 4, 2007,

rendered judgment in favor of petitioner.

By Decision of April 29, 2008,[5] the appellate court annulled the trial

courts Orders declaring respondents in default for the second time

in this wise:

In assailing the orders of the trial court through their Motion to Lift and later their Omnibus Motion the petitioners [herein-respondents] never raised any other defense in avoidance of the respondents [herein petitioners] claim, and instead focused all their energies on questioning the said courts jurisdiction. The latter motion clearly stated prefatorily their counsels reservation or special appearance to question jurisdiction over the persons of the petitioners. A party who makes a special appearance in court challenging the jurisdiction of said court based on the ground of invalid service of summons is not deemed to have submitted himself to the jurisdiction of the court.[6] (citation omitted; italics, emphasis and underscoring supplied)

Petitioners motion for reconsideration having been denied by the

appellate court by Resolution of August 12, 2008, it comes to the

Court via petition for review on certiorari, arguing in the main that

respondents, in filing the first Motion to Lift the Order of Default,

voluntarily submitted themselves to the jurisdiction of the court.

The petition is impressed with merit.

It is settled that if there is no valid service of summons, the court can

still acquire jurisdiction over the person of the defendant by virtue

of the latters voluntary appearance. Thus Section 20 of Rule 14 of

the Rules of Court provides:

Sec. 20. Voluntary appearance. The defendants voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person shall not be deemed a voluntary appearance.

And Philippine Commercial International Bank v. Spouses Wilson Dy

Hong Pi and Lolita Dy, et al. enlightens:

Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power of legal processes exerted over his person, or his voluntary appearance in court. As a general proposition, one who seeks an affirmative relief is deemed to have submitted to the jurisdiction of the court. It is by reason of this rule that we have had occasion to declare that the filing of motions to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, is considered voluntary submission to the courts jurisdiction. This, however, is tempered by the concept of conditional appearance, such that a party who makes a special appearance to challenge, among others, the courts jurisdiction over his person cannot be considered to have submitted to its authority. Prescinding from the foregoing, it is thus clear that:(1) Special appearance operates as an exception to the general rule on voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must be explicitly made , i.e., set forth in an unequivocal manner; and (3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in instances where a pleading or motion seeking affirmative relief is filed and submitted to the court for resolution.[7] (italics and underscoring supplied)

In their first Motion to Lift the Order of Default[8] dated January 30,

2006, respondents alleged:

x x x x4. In the case of respondents, there is no reason

why they should not receive the Orders of this Honorable Court since the subject of the case is their multi-million real estate property and naturally they would not want to be declared in default or lose the same outright without the benefit of a trial on the merits;

5. It would be the height of injustice if the

respondents is [sic] denied the equal protection of the laws[;]

6. Respondents must be afforded Due process of

Law as enshrined in the New Constitution, which is a basic right of every Filipino, since they were not furnished copies of pleadings by the

plaintiff and the Order dated May 3, 2005;

x x x x[9]

and accordingly prayed as follows:

WHEREFORE, . . . it is most respectfully

prayed . . . that the Order dated May 5, 2005 declaring [them] in default be LIFTED.[10]

Respondents did not, in said motion, allege that their filing thereof

was a special appearance for the purpose only to question the

jurisdiction over their persons. Clearly, they had acquiesced to the

jurisdiction of the court.

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals

Decision of April 29, 2008 is REVERSED and SET ASIDE.

Let the original records of Civil Case No. 04-7350 be remanded to

the court of origin, Regional Trial Court of Antipolo City, Branch 71.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

CLARITA DEPAKAKIBO GARCIA,

Petitioner,

- versus -

SANDIGANBAYAN and REPUBLIC OF THEPHILIPPINES,

Respondents.

G.R. No. 170122

x-----------------------------------------x

CLARITA DEPAKAKIBO GARCIA,

Petitioner,

- versus -

SANDIGANBAYAN and REPUBLIC OF THEPHILIPPINES,

Respondents.

G.R. No. 171381

Present:

CARPIO, J., Chairperson,

CHICO-NAZARIO,

VELASCO, JR.,

LEONARDO-DE CASTRO,

PERALTA, JJ.

Promulgated:

October 12, 2009

x-----------------------------------------------------------------------------------------x

D E C I S I O N

VELASCO, JR., J.:

The Case

Before us are these two (2) consolidated petitions under

Rule 65, each interposed by petitioner Clarita D. Garcia, with

application for injunctive relief. In the first petition for mandamus

and/or certiorari, docketed as G.R. No. 170122, petitioner seeks to

nullify and set aside the August 5, 2005 Order,[1] as reiterated in

another Order dated August 26, 2005, both issued by the

Sandiganbayan, Fourth Division, which effectively denied the

petitioners motion to dismiss and/or to quash Civil Case No. 0193, a

suit for forfeiture commenced by the Republic of the Philippines

against the petitioner and her immediate family. The second petition

for certiorari, docketed as G.R. No. 171381, seeks to nullify and set

aside the November 9, 2005 Resolution[2] of the Sandiganbayan,

Fourth Division, insofar as it likewise denied the petitioners motion

to dismiss and/or quash Civil Case No. 0196, another forfeiture case

involving the same parties but for different properties.

The Facts

To recover unlawfully acquired funds and properties in the

aggregate amount of PhP 143,052,015.29 that retired Maj. Gen.

Carlos F. Garcia, his wife, herein petitioner Clarita, children Ian Carl,

Juan Paulo and Timothy Mark (collectively, the Garcias) had

allegedly amassed and acquired, the Republic, through the Office of

the Ombudsman (OMB), pursuant to Republic Act No. (RA) 1379,

[3] filed with the Sandiganbayan (SB) on October 29, 2004 a petition

for the forfeiture of those properties. This petition, docketed as Civil

Case No. 0193, was eventually raffled to the Fourth Division of the

anti-graft court.

Civil Case No. 0193 was followed by the filing on July 5,

2005 of another forfeiture case, docketed as Civil Case No. 0196, this

time to recover funds and properties amounting to PhP

202,005,980.55. Civil Case No. 0196 would eventually be raffled also

to the Fourth Division of the SB. For convenience and clarity, Civil

Case No. 0193 shall hereinafter be also referred to as Forfeiture I

and Civil Case No. 0196 as Forfeiture II.

Prior to the filing of Forfeiture II, but subsequent to the

filing of Forfeiture I, the OMB charged the Garcias and three others

with violation of RA 7080 (plunder) under an Information dated April

5, 2005 which placed the value of the property and funds plundered

at PhP 303,272,005.99. Docketed as Crim. Case No. 28107, the

Information was raffled off to the Second Division of the SB. The

plunder charge, as the parties pleadings seem to indicate, covered

substantially the same properties identified in both forfeiture cases.

After the filing of Forfeiture I, the following events

transpired in relation to the case:

(1) The corresponding summons were issued and all served on Gen. Garcia at his place of detention. Per the Sheriffs Return[4] dated November 2, 2005, the summons were duly served on respondent Garcias. Earlier, or on October 29, 2004, the SB issued a writ of attachment in favor of the Republic, an issuance which Gen. Garcia challenged before this Court, docketed as G.R. No. 165835.

Instead of an answer, the Garcias filed a motion to dismiss on the ground of the SBs lack of jurisdiction over separate civil actions for forfeiture. The OMB countered with a motion to expunge and to declare the Garcias in default. To the OMBs motion, the Garcias interposed an opposition in which they manifested that they have meanwhile repaired to the Court on certiorari,docketed as G.R. No. 165835 to nullify the writ of attachment SB issued in which case the SB should defer action on the forfeiture case as a matter of judicial courtesy.

(2) By Resolution[5] of January 20, 2005, the SB denied the motion to dismiss; declared the same motion as pro forma and hence without tolling effect on the period to answer. The same resolution declared the Garcias in default.

Another resolution[6] denied the Garcias motion for reconsideration and/or to admit answer, and set a date for the ex-parte presentation of the Republics evidence.

A second motion for reconsideration was also denied on February 23, 2005, pursuant to the prohibited pleading rule.

(3) Despite the standing default order, the Garcias moved for the transfer and consolidation of Forfeiture I with the plunder case which were respectively pending in different divisions of the SB, contending that

such consolidation is mandatory under RA 8249.[7]

On May 20, 2005, the SB 4th Division denied the motion for the reason that the forfeiture case is not the corresponding civil action for the recovery of civil liability arising from the criminal case of plunder.

(4) On July 26, 2005, the Garcias filed another motion to dismiss and/or to quash Forfeiture I on, inter alia, the following grounds: (a) the filing of the plunder case ousted the SB 4thDivision of jurisdiction over the forfeiture case; and (b) that the consolidation is imperative in order to avoid possible double jeopardy entanglements.

By Order[8] of August 5, 2005, the SB merely noted the motion in view of movants having been declared in default which has yet to be lifted.

It is upon the foregoing factual antecedents that

petitioner Clarita has interposed her first special civil action for

mandamus and/or certiorari docketed as G.R. No. 170122,

raising the following issues:

I. Whether or not the [SB] 4th Division acted without or in excess of jurisdiction or with grave abuse of discretion x x x in issuing its challenged order of August 5, 2005 and August 26 2005 that merely Noted without action, hence refused to resolve petitioners motion to dismiss and/or to quash by virtue of petitioners prior default in that:

A. For lack of proper and valid service of summons, the [SB] 4th Division could not have acquired jurisdiction over petitioners, [and her childrens] x x x persons, much less make them become the true parties-litigants,

contestants or legal adversaries in forfeiture I. As the [SB] has not validly acquired jurisdiction over the petitioners [and her childrens] x x x persons, they could not possibly be declared in default, nor can a valid judgment by default be rendered against them.

B. Even then, mere declaration in default does not per se bar petitioner from challenging the [SB] 4th Divisions lack of jurisdiction over the subject matter of forfeiture I as the same can be raised anytime, even after final judgment. In the absence of jurisdiction over the subject matter, any and all proceedings before the [SB] are null and void.

C. Contrary to its August 26, 2005 rejection of petitioners motion for reconsideration of the first challenged order that the issue of jurisdiction raised therein had already been passed upon by [the SB 4th Divisions] resolution of May 20, 2005, the records clearly show that the grounds relied upon by petitioner in her motion to dismiss and/or to quash dated July 26, 2005 were entirely different, separate and distinct from the grounds set forth in petitioners manifestation and motion [to consolidate] dated April 15, 2005 that was denied by it per its resolution of May 20, 2005.

D. In any event, the [SB] 4th Division has been ousted of jurisdiction over the subject matter of forfeiture I upon the filing of the main plunder case against petitioner that mandates the automatic forfeiture of the subject properties in forfeiture cases I & II as a function or adjunct of any conviction for plunder.

E. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.

F. Since the sought forfeiture includes properties purportedly located in the USA, any penal conviction for forfeiture in this case cannot be enforced outside of the Philippines x x x.

G. Based on orderly procedure and sound administration of justice, it is imperative that the matter of forfeiture be exclusively tried in the main plunder case to avoid possible double jeopardy entanglements, and to avoid possible conflicting decisions by 2 divisions of the [SB] on the matter of forfeiture as a penal sanction.[9] (Emphasis added.)

With respect to Forfeiture II, the following events and

proceedings occurred or were taken after the petition for

Forfeiture II was filed:

(1) On July 12, 2005, the SB sheriff served the corresponding summons. In his return of July 13, 2005, the sheriff stated giving the copies of the summons to the OIC/Custodian of the PNP Detention Center who in turn handed them to Gen. Garcia. The general signed his receipt of the summons, but as to those pertaining to the other respondents, Gen. Garcia acknowledged receiving the same, but with the following qualifying note: Im receiving the copies of Clarita, Ian Carl, Juan Paolo & Timothy but these copies will not guarantee it being served to the above-named (sic).

(2) On July 26, 2005, Clarita and her children, thru special appearance of counsel, filed a motion to dismiss and/or to quash Forfeiture II primarily for lack of jurisdiction over their persons and on the subject matter thereof which is now covered by the plunder case.

To the above motion, the Republic filed its opposition with a motion for alternative service of summons. The motion for alternative service would be repeated in another motion ofAugust 25, 2005.

(3) By Joint Resolution of November 9,

2005, the SB denied both the petitioners motion to dismiss and/or to quash and the Republics motion for alternative service of summons.

On January 24, 2006, the SB denied

petitioners motion for partial reconsideration.[10]

From the last two issuances adverted to, Clarita has

come to this Court via the instant petition for certiorari,

docketed as GR No. 171381. As there submitted, the SB

4thDivision acted without or in excess of jurisdiction or with

grave abuse of discretion in issuing its Joint Resolution dated

November 9, 2005 and its Resolution of January 24, 2006

denying petitioners motion to dismiss and/or to quash in that:A. Based on its own finding that summons was improperly served on petitioner, the [SB] ought to have dismissed forfeiture II for lack of jurisdiction over petitioners person x x x.B. By virtue of the plunder case filed with the [SB] Second Division that mandates the automatic forfeiture of unlawfully acquired properties upon conviction, the [SB] Fourth Division has no jurisdiction over the subject matter of forfeiture.

C. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.

D. Based on orderly procedure and sound administration of justice, it is imperative that the matter of forfeiture be exclusively tried in the main plunder case to avoid possible double jeopardy entanglements and worse conflicting decisions by 2 divisions of the Sandiganbayan on the matter of forfeiture as a penal sanction.[11] (Emphasis added.)

Per Resolution of the Court dated March 13, 2006, G.R.

No. 170122 and G.R. No. 171381 were consolidated.

The Courts Ruling

The petitions are partly meritorious.

The core issue tendered in these consolidated cases

ultimately boils down to the question of jurisdiction and may thusly

be couched into whether the Fourth Division of the SB has acquired

jurisdiction over the person of petitionerand her three sons for that

matterconsidering that, first, vis--vis Civil Case Nos. 0193 (Forfeiture

I) and 0196 (Forfeiture II), summons against her have been

ineffectively or improperly served and, second, that the plunder

caseCrim. Case No. 28107has already been filed and pending with

another division of the SB, i.e., Second Division of the SB.

Plunder Case in Crim. Case No. 28107 Did Not Absorb

the Forfeiture Cases in Civil Case Nos. 0193 and 0196

Petitioner maintains that the SB 4th Division has no

jurisdiction over the subject matter of Forfeitures I and II as both

cases are now covered or included in the plunder case against the

Garcias. Or as petitioner puts it a bit differently, the filing of the

main plunder case (Crim. Case No. 28107), with its automatic

forfeiture mechanism in the event of conviction, ousted the SB

4th Division of its jurisdiction over the subject matter of the forfeiture

cases. The inclusion of the forfeiture cases with the plunder case is

necessary, so petitioner claims, to obviate possible double jeopardy

entanglements and colliding case dispositions. Prescinding from

these premises, petitioner would ascribe grave abuse of discretion

on the SB 4th Division for not granting its separate motions to dismiss

the two forfeiture petitions and/or to consolidate them with the

plunder case on the foregoing ground.

Petitioners contention is untenable. And in response to

what she suggests in some of her pleadings, let it be stated at the

outset that the SB has jurisdiction over actions for forfeiture under

RA 1379, albeit the proceeding thereunder is civil in nature. We said

so in Garcia v. Sandiganbayan[12] involving no less than petitioners

husband questioning certain orders issued in Forfeiture I case.

Petitioners posture respecting Forfeitures I and II being

absorbed by the plunder case, thus depriving the 4th Division of the

SB of jurisdiction over the civil cases, is flawed by the assumptions

holding it together, the first assumption being that the forfeiture

cases are the corresponding civil action for recovery of civil

liability ex delicto. As correctly ruled by the SB 4th Division in its May

20, 2005 Resolution,[13] the civil liability for forfeiture cases does not

arise from the commission of a criminal offense, thus:

Such liability is based on a statute that safeguards the right of the State to recover unlawfully acquired properties. The action of forfeiture arises when a public officer or employee [acquires] during his incumbency an amount of property which is manifestly out of proportion of his salary x x x and to his other lawful income x x x.[14] Such amount of property is then presumed prima facie to have been unlawfully acquired.[15] Thus if the respondent [public official] is unable to show to the satisfaction of the court that he has lawfully acquired the property in question, then the court shall declare such property forfeited in favor of the State, and by virtue of such judgment the property aforesaid shall become property of the State.[16] x x x(Citations in the original.)

Lest it be overlooked, Executive Order No. (EO) 14, Series

of 1986, albeit defining only the jurisdiction over cases involving ill-

gotten wealth of former President Marcos, his immediate family and

business associates, authorizes under its Sec. 3[17] the filing of

forfeiture suits under RA 1379 which will proceed independently of

any criminal proceedings. The Court, in Republic v. Sandiganbayan,

[18] interpreted this provision as empowering the Presidential

Commission on Good Government to file independent civil actions

separate from the criminal actions.

Forfeiture Cases and the Plunder Case Have Separate Causes of Action; the Former Is Civil in Nature while the Latter Is Criminal

It bears stressing, as a second point, that a forfeiture case

under RA 1379 arises out of a cause of action separate and different

from a plunder case, thus negating the notion that the crime of

plunder charged in Crim. Case No. 28107 absorbs the forfeiture

cases. In a prosecution for plunder, what is sought to be established

is the commission of the criminal acts in furtherance of the

acquisition of ill-gotten wealth. In the language of Sec. 4 of RA 7080,

for purposes of establishing the crime of plunder, it is sufficient to

establish beyond reasonable doubt a pattern of overt or criminal

acts indicative of the overall unlawful scheme or conspiracy [to

amass, accumulate or acquire ill-gotten wealth].On the other hand,

all that the court needs to determine, by preponderance of

evidence, under RA 1379 is the disproportion of respondents

properties to his legitimate income, it being unnecessary to prove

how he acquired said properties. As correctly formulated by the

Solicitor General, the forfeitable nature of the properties under the

provisions of RA 1379 does not proceed from a determination of a

specific overt act committed by the respondent public officer leading

to the acquisition of the illegal wealth.[19]

Given the foregoing considerations, petitioners thesis on

possible double jeopardy entanglements should a judgment of

conviction ensue in Crim. Case 28107 collapses entirely. Double

jeopardy, as a criminal law concept, refers to jeopardy of

punishment for the same offense,[20] suggesting that double jeopardy

presupposes two separate criminal prosecutions. Proceedings under

RA 1379 are, to repeat, civil in nature. As a necessary corollary, one

who is sued under RA 1379 may be proceeded against for a criminal

offense. Thus, the filing of a case under that law is not barred by the

conviction or acquittal of the defendant in Crim. Case 28107 for

plunder.

Moreover, given the variance in the nature and subject

matter of the proceedings between the plunder case and the subject

forfeiture cases, petitioners apprehension about the likelihood of

conflicting decisions of two different divisions of the anti-graft court

on the matter of forfeiture as a penal sanction is specious at

best. What the SB said in this regard merits approving citation:

On the matter of forfeiture as a penal sanction, respondents argue that the division where the plunder case is pending may issue a decision that would collide or be in conflict with the decision by this division on the forfeiture case. They refer to a situation where this Courts Second Division may exonerate the respondents in the plunder case while the Fourth Division grant the petition for forfeiture for the same properties in favor of the state or vice versa.

Suffice it to say that the variance in the decisions of both divisions does not give rise to a conflict. After all, forfeiture in the plunder case requires the attendance of facts and circumstances separate and distinct from that in the forfeiture case. Between the two (2) cases, there is no causal connection in the facts sought to be established and the issues sought to be addressed. As a result, the decision of this Court in one does not have a bearing on the other.

There is also no conflict even if the decisions in both cases result in an order for the forfeiture of the subject properties. The forfeiture following a conviction in the plunder case will apply only to those ill-gotten wealth not recovered by the forfeiture case and vise (sic) versa. This is on the assumption that the information on plunder and the petition for forfeiture cover the same set of properties.[21]

RA 7080 Did Not Repeal RA 1379

Petitioner takes a different tack in her bid to prove that SB

erred in not dismissing Forfeitures I and II with her assertion that RA

7080 impliedly repealed RA 1379. We are not convinced.

Nowhere in RA 7080 can we find any provision that would

indicate a repeal, expressly or impliedly, of RA 1379. RA 7080 is a

penal statute which, at its most basic, aims to penalize the act of any

public officer who by himself or in connivance with members of his

family amasses, accumulates or acquires ill-gotten wealth in the

aggregate amount of at least PhP 50 million. On the other hand, RA

1379 is not penal in nature, in that it does not make a crime the act

of a public official acquiring during his incumbency an amount of

property manifestly out of proportion of his salary and other

legitimate income. RA 1379 aims to enforce the right of the State to

recover the properties which were not lawfully acquired by the

officer.

It has often been said that all doubts must be resolved

against any implied repeal and all efforts should be exerted to

harmonize and give effect to all laws and provisions on the same

subject. To be sure, both RA 1379 and RA 7080 can very well be

harmonized. The Court perceives no irreconcilable conflict between

them. One can be enforced without nullifying the other.

Sandiganbayan Did Not Acquire Jurisdiction over

the Persons of Petitioner and Her Children

On the issue of lack of jurisdiction, petitioner argues that

the SB did not acquire jurisdiction over her person and that of her

children due to a defective substituted service of summons. There is

merit in petitioners contention.

Sec. 7, Rule 14 of the 1997 Revised Rules of Civil Procedure

clearly provides for the requirements of a valid substituted service of

summons, thus:

SEC. 7. Substituted service.If the defendant cannot be served within a reasonable time as provided in the preceding section [personal service on defendant], service may be effected (a) by leaving copies of the summons at the defendants residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of business with some competent person in charge thereof.

It is basic that a court must acquire jurisdiction over a

party for the latter to be bound by its decision or orders. Valid

service of summons, by whatever mode authorized by and proper

under the Rules, is the means by which a court acquires jurisdiction

over a person.[22]

In the instant case, it is undisputed that summons for

Forfeitures I and II were served personally on Maj. Gen. Carlos Flores

Garcia, who is detained at the PNP DetentionCenter, who

acknowledged receipt thereof by affixing his signature. It is also

undisputed that substituted service of summons for both Forfeitures

I and II were made on petitioner and her children through Maj. Gen.

Garcia at the PNP Detention Center. However, such substituted

services of summons were invalid for being irregular and defective.

In Manotoc v. Court of Appeals,[23] we broke down the

requirements to be:

(1) Impossibility of prompt personal service, i.e., the party

relying on substituted service or the sheriff must show that

defendant cannot be served promptly or there is impossibility of

prompt service within a reasonable time. Reasonable time being so

much time as is necessary under the circumstances for a reasonably

prudent and diligent man to do, conveniently, what the contract or

duty requires that should be done, having a regard for the rights and

possibility of loss, if any[,] to the other party.[24] Moreover, we

indicated therein that the sheriff must show several attempts for

personal service of at least three (3) times on at least two (2)

different dates.

(2) Specific details in the return, i.e., the sheriff must

describe in the Return of Summons the facts and circumstances

surrounding the attempted personal service.

(3) Substituted service effected on a person of suitable age

and discretion residing at defendants house or residence; or on a

competent person in charge of defendants office or regular place of

business.

From the foregoing requisites, it is apparent that no valid

substituted service of summons was made on petitioner and her

children, as the service made through Maj. Gen. Garcia did not

comply with the first two (2) requirements mentioned above for a

valid substituted service of summons. Moreover, the third

requirement was also not strictly complied with as the substituted

service was made not at petitioners house or residence but in the

PNP Detention Center where Maj. Gen. Garcia is detained, even if

the latter is of suitable age and discretion. Hence, no valid

substituted service of summons was made.

The stringent rules on valid service of summons for the

court to acquire jurisdiction over the person of the defendants,

however, admits of exceptions, as when the party voluntarily

submits himself to the jurisdiction of the court by asking affirmative

relief.[25] In the instant case, the Republic asserts that petitioner is

estopped from questioning improper service of summons since the

improvident service of summons in both forfeiture cases had been

cured by their (petitioner and her children) voluntary appearance in

the forfeiture cases. The Republic points to the various pleadings

filed by petitioner and her children during the subject forfeiture

hearings. We cannot subscribe to the Republics views.

Special Appearance to Question a Courts Jurisdiction

Is Not Voluntary Appearance

The second sentence of Sec. 20, Rule 14 of the Revised

Rules of Civil Procedure clearly provides:

Sec. 20. Voluntary appearance.The defendants voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. (Emphasis ours.)

Thus, a defendant who files a motion to dismiss, assailing

the jurisdiction of the court over his person, together with other

grounds raised therein, is not deemed to have appeared voluntarily

before the court. What the rule on voluntary appearancethe first

sentence of the above-quoted rulemeans is that the voluntary

appearance of the defendant in court is without qualification, in

which case he is deemed to have waived his defense of lack of

jurisdiction over his person due to improper service of summons.

The pleadings filed by petitioner in the subject forfeiture

cases, however, do not show that she voluntarily appeared without

qualification. Petitioner filed the following pleadings in Forfeiture

I: (a) motion to dismiss; (b) motion for reconsideration and/or to

admit answer; (c) second motion for reconsideration; (d) motion to

consolidate forfeiture case with plunder case; and (e) motion to

dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion

to dismiss and/or to quash Forfeiture II; and (b) motion for partial

reconsideration.

The foregoing pleadings, particularly the motions to

dismiss, were filed by petitioner solely for special appearance with

the purpose of challenging the jurisdiction of the SB over her person

and that of her three children. Petitioner asserts therein that SB did

not acquire jurisdiction over her person and of her three children for

lack of valid service of summons through improvident substituted

service of summons in both Forfeiture I and Forfeiture II. This stance

the petitioner never abandoned when she filed her motions for

reconsideration, even with a prayer to admit their attached Answer

Ex Abundante Ad Cautelam dated January 22, 2005 setting forth

affirmative defenses with a claim for damages. And the other

subsequent pleadings, likewise, did not abandon her stance and

defense of lack of jurisdiction due to improper substituted services

of summons in the forfeiture cases. Evidently, from the foregoing

Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure,

petitioner and her sons did not voluntarily appear before the SB

constitutive of or equivalent to service of summons.

Moreover, the leading La Naval Drug Corp. v. Court of

Appeals[26] applies to the instant case. Said case elucidates the

current view in our jurisdiction that a special appearance before the

courtchallenging its jurisdiction over the person through a motion to

dismiss even if the movant invokes other groundsis not tantamount

to estoppel or a waiver by the movant of his objection to jurisdiction

over his person; and such is not constitutive of a voluntary

submission to the jurisdiction of the court.

Thus, it cannot be said that petitioner and her three

children voluntarily appeared before the SB to cure the defective

substituted services of summons. They are, therefore, not estopped

from questioning the jurisdiction of the SB over their persons nor

are they deemed to have waived such defense of lack of

jurisdiction. Consequently, there being no valid substituted services

of summons made, the SB did not acquire jurisdiction over the

persons of petitioner and her children. And perforce, the

proceedings in the subject forfeiture cases, insofar as petitioner and

her three children are concerned, are null and void for lack of

jurisdiction. Thus, the order declaring them in default must be set

aside and voided insofar as petitioner and her three children are

concerned. For the forfeiture case to proceed against them, it is,

thus, imperative for the SB to serve anew summons or alias

summons on the petitioner and her three children in order to

acquire jurisdiction over their persons.

WHEREFORE, the petitions for certiorari and mandamus

are PARTIALLY GRANTED. The Sandiganbayan, Fourth Division has

not acquired jurisdiction over petitioner Clarita D. Garcia and her

three children. The proceedings in Civil Case Nos. 0193 and 0196

before the Sandiganbayan, Fourth Division, insofar as they pertain to

petitioner and her three children, are VOID for lack of jurisdiction

over their persons. No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. 93262 December 29, 1991

DAVAO LIGHT & POWER CO., INC., petitioner, vs.THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN, and TEODORICO ADARNA, respondents.

Breva & Breva Law Offices for petitioner.

Goc-Ong & Associates for private respondents.

NARVASA, J.:p

Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CA-G.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light & Power Co., Inc.," promulgated on May 4, 1990.1 That decision nullified and set aside the writ of

preliminary attachment issued by the Regional Trial Court of Davao City 2 in Civil Case No. 19513-89 on application of the plaintiff (Davao Light & Power Co.), before the service of summons on the defendants (herein respondents Queensland Co., Inc. and Adarna).

Following is the chronology of the undisputed material facts culled from the Appellate Tribunal's judgment of May 4, 1990.

1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a verified complaint for recovery of a sum of money and damages against Queensland Hotel, etc. and Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint contained an ex parte application for a writ of preliminary attachment.

2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued an Order granting the ex parte application and fixing the attachment bond at P4,600,513.37.

3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of attachment issued.

4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of attachment and a copy of the attachment bond, were served on defendants Queensland and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter.

5. On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the defendants.

6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge attachment.

7. On September 19, 1989, the Trial Court issued an Order denying the motion to discharge.

This Order of September 19, 1989 was successfully challenged by Queensland and Adarna in a special civil action of certiorari instituted by them in the Court of Appeals. The Order was, as aforestated, annulled by the Court of Appeals in its Decision of May 4, 1990. The Appellate Court's decision closed with the following disposition:

. . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary attachment, dated September 19, 1989 denying the motion to discharge attachment; dated November 7, 1989 denying petitioner's motion for reconsideration; as well as all other orders emanating therefrom, specially the Writ of Attachment dated May 11, 1989 and Notice of Levy on Preliminary Attachment dated May 11, 1989, are hereby declared null and void and the attachment hereby ordered DISCHARGED.

The Appellate Tribunal declared that —

. . . While it is true that a prayer for the issuance of a writ of preliminary attachment may be included m the complaint, as is usually done, it is likewise true that the Court does not acquire jurisdiction over the person of the defendant until he is duly summoned or voluntarily appears, and adding the phrase that it be issued "ex parte" does not confer said jurisdiction before actual summons had been made, nor retroact jurisdiction upon summons being made. . . .

It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in attachment," the "critical time which must be identified is . . . when the trial court acquires authority under law to act coercively against the defendant or his property . . .;" and that "the critical time is the of the vesting of jurisdiction in the court over the person of the defendant in the main case."

Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the present appellate proceedings.

The question is whether or not a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction of the latter's person by service of summons or his voluntary submission to the Court's authority.

The Court rules that the question must be answered in the affirmative and that consequently, the petition for review will have to be granted.

It is incorrect to theorize that after an action or proceeding has been commenced and jurisdiction over the person of the plaintiff has been vested in the court, but before the acquisition of jurisdiction over the person of the defendant (either by service of summons or his voluntary submission to the court's authority), nothing can be validly done by the plaintiff or the court. It is wrong to assume that the validity of acts done during this period should be defendant on, or held in suspension until, the actual obtention of jurisdiction over the defendant's person. The obtention by the court of jurisdiction over the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subject-matter or nature of the action, or the res or object hereof.

An action or proceeding is commenced by the filing of the complaint or other initiatory pleading. 4 By that act, the jurisdiction of the court over the subject matter or nature of the action or proceeding is invoked or called into activity; 5 and it is thus that the court acquires jurisdiction over said subject matter or nature of the action. 6 And it is by that self-same act of the plaintiff (or petitioner) of filing the complaint (or other appropriate pleading) — by which he signifies his submission to the court's power and authority — that jurisdiction is acquired by the court over his person. 7On the other hand, jurisdiction over the person of the defendant is obtained, as above stated, by the service of summons or other coercive process upon him or by his voluntary submission to the authority of the court. 8

The events that follow the filing of the complaint as a matter of routine are well known. After the complaint is filed, summons issues to the defendant, the summons is then transmitted to the sheriff, and finally, service of the summons is effected on the defendant in

any of the ways authorized by the Rules of Court. There is thus ordinarily some appreciable interval of time between the day of the filing of the complaint and the day of service of summons of the defendant. During this period, different acts may be done by the plaintiff or by the Court, which are unquestionable validity and propriety. Among these, for example, are the appointment of a guardian ad litem,9 the grant of authority to the plaintiff to prosecute the suit as a pauper litigant, 10 the amendment of the complaint by the plaintiff as a matter of right without leave of court, 11 authorization by the Court of service of summons by publication, 12 the dismissal of the action by the plaintiff on mere notice. 13

This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary injunction, receivership or replevin. 14 They may be validly and properly applied for and granted even before the defendant is summoned or is heard from.

A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other party may, at the commencement of the action or at any time thereafter, have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. 15 It is a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it. 16 Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant.

Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time thereafter."17 The phase, "at the commencement of the action," obviously refers to the date of the filing of the complaint — which, as above pointed out, is the date that marks "the commencement of the action;" 18 and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly commenced — by the filing of the complaint and the payment of all requisite docket and other fees — the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance.

In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for preliminary attachment is not generally necessary unless otherwise directed by the Trial Court in its discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the Court declared that "(n)othing in the Rules of Court makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment." The only pre-requisite is that the Court be satisfied, upon consideration of "the affidavit of the applicant or of some other person who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in Section 1 . . . (Rule 57), that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount due to the applicant, or the value of the property the possession of which he is entitled to recover, is as much as the sum for which the order (of attachment) is granted above all legal counterclaims." 22 If the court

be so satisfied, the "order of attachment shall be granted," 23 and the writ shall issue upon the applicant's posting of "a bond executed to the adverse party in an amount to be fixed by the judge, not exceeding the plaintiffs claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto." 24

In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18, 1989, 25 this Court had occasion to emphasize the postulate that no hearing is required on an application for preliminary attachment, with notice to the defendant, for the reason that this "would defeat the objective of the remedy . . . (since the) time which such a hearing would take, could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues." As observed by a former member of this Court, 26 such a procedure would warn absconding debtors-defendants of the commencement of the suit against them and the probable seizure of their properties, and thus give them the advantage of time to hide their assets, leaving the creditor-plaintiff holding the proverbial empty bag; it would place the creditor-applicant in danger of losing any security for a favorable judgment and thus give him only an illusory victory.

Withal, ample modes of recourse against a preliminary attachment are secured by law to the defendant. The relative ease with which a preliminary attachment may be obtained is matched and paralleled by the relative facility with which the attachment may legitimately be prevented or frustrated. These modes of recourse against preliminary attachments granted by Rule 57 were discussed at some length by the separate opinion in Mindanao Savings & Loans Asso. Inc. v. CA., supra.

That separate opinion stressed that there are two (2) ways of discharging an attachment: first, by the posting of a counterbond; and second, by a showing of its improper or irregular issuance.

1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already enforced against property, or even of preventing its enforcement altogether.

1.1. When property has already been seized under attachment, the attachment may be discharged upon counterbond in accordance with Section 12 of Rule 57.

Sec. 12. Discharge of attachment upon giving counterbond. — At any time after an order of attachment has been granted, the party whose property has been attached or the person appearing in his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given . . . in an amount equal to the value of the property attached as determined by the judge to secure the payment of any judgment that the attaching creditor may recover in the action. . . .

1.2. But even before actual levy on property, seizure under attachment may be prevented also upon counterbond. The

defendant need not wait until his property is seized before seeking the discharge of the attachment by a counterbond. This is made possible by Section 5 of Rule 57.

Sec. 5. Manner of attaching property. — The officer executing the order shall without delay attach, to await judgment and execution in the action, all the properties of the party against whom the order is issued in the province, not exempt from execution, or so much thereof as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the clerk or judge of the court from which the order issued, or gives a counter-bond executed to the applicant, in an amount sufficient to satisfy such demand besides costs, or in an amount equal to the value of the property which is about to be attached, to secure payment to the applicant of any judgment which he may recover in the action. . . . (Emphasis supplied)

2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or discharged on the ground that it has been irregularly or improperly issued, in accordance with Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may be resorted to even before any property has been levied on. Indeed, it may be availed of after property has been released from a levy on attachment, as is made clear by said Section 13, viz.:

Sec. 13. Discharge of attachment for improper or irregular issuance. — The party whose property has been attached may also, at any time either BEFORE or AFTER the release of the attached property, or before any attachment shall have been actually levied, upon reasonable notice to the attaching creditor, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order to discharge the attachment on the ground that the same was improperly or irregularly issued. If the motion be made on affidavits on the part of the party whose property has been attached, but not otherwise, the attaching creditor may oppose the same by counter-affidavits or other evidence in addition to that on which the attachment was made. . . . (Emphasis supplied)

This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching creditor instead of the other way, which, in most instances . . . would require presentation of evidence in a fullblown trial on the merits, and cannot easily be settled in a pending incident of the case." 27

It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings & Loans Asso. Inc. v.C.A., supra., 28 to wit:

(a) When an attachment may not be dissolved by a showing of its irregular or improper issuance:

. . . (W)hen the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty." (Sec. 1 [b], Rule 57), or "an action against a party who has been guilty of fraud m contracting the debt or incurring the obligation upon which the action is brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based — and consequently that the writ based thereon had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA 41) — the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886).

(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond:

. . . The dissolution of the preliminary attachment upon security given, or a showing of its irregular or improper issuance, does not of course operate to discharge the sureties on plaintiff's own attachment bond. The reason is simple. That bond is "executed to the adverse party, . . . conditioned that the . . . (applicant) will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto" (SEC. 4, Rule 57). Hence, until that determination is made, as to the applicant's entitlement to the attachment, his bond must stand and cannot be with-drawn.

With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is the same: they may also issue ex parte. 29

It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant, as above indicated — issuance of summons, order of attachment and writ of attachment (and/or appointments of guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a

pauper litigant, or amendment of the complaint by the plaintiff as a matter of right without leave of court 30 — and however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court's authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicant's affidavit and attachment bond, and of the order of attachment, as explicity required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint and order for appointment of guardian ad litem, if any, as also explicity directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon considerations of fairness, to apprise the defendant of the complaint against him, of the issuance of a writ of preliminary attachment and the grounds therefor and thus accord him the opportunity to prevent attachment of his property by the posting of a counterbond in an amount equal to the plaintiff's claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by causing dismissal of the complaint itself on any of the grounds set forth in Rule 16, or demonstrating the insufficiency of the applicant's affidavit or bond in accordance with Section 13, Rule 57.

It was on account of the failure to comply with this fundamental requirement of service of summons and the other documents above indicated that writs of attachment issued by the Trial Court ex parte were struck down by this Court's Third Division in two (2) cases, namely: Sievert v. Court of Appeals, 31 and BAC Manufacturing and Sales Corporation v. Court of Appeals, et al. 32 In contrast to the case at bar — where the summons and a copy of the complaint, as well as the order and writ of attachment and the attachment bond were served on the defendant — in Sievert, levy on attachment was attempted notwithstanding that only the petition for issuance of the writ of preliminary attachment was served on the defendant, without any prior or accompanying summons and copy of the complaint; and in BAC Manufacturing and Sales Corporation, neither the summons nor the order granting the preliminary attachment or the writ of attachment itself was served on the defendant "before or at the time the levy was made."

For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of attachment may properly issue ex parte provided that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if any), the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond.

WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is hereby REVERSED, and the order and writ of attachment issued by Hon. Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89 against Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna are hereby REINSTATED. Costs against private respondents.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 131286 March 18, 2004

JOSE LAM, petitioner, vs.ADRIANA CHUA, respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari assailing the Decision1 dated June 11, 1997 and the Resolution dated October 27, 1997 of the Court of Appeals in CA-G.R. CV. No. 51107, entitled, "Adriana Chua, Petitioner-Appellee vs. Jose Lam, Respondent-Appellant."

The case commenced on March 11, 1994 upon the filing of a petition for declaration of nullity of marriage by Adriana Chua against Jose Lam in the Regional Trial Court of Pasay City (Branch 109). Adriana alleged in the petition that: she and Jose were married on January 13, 1984; out of said marriage, they begot one son, John Paul Chua Lam; Jose was psychologically incapacitated to comply with the essential marital obligations of marriage but said incapacity was not then apparent; such psychological incapacity of Jose became manifest only after the celebration of the marriage when he frequently failed to go home, indulged in womanizing and irresponsible activities, such as, mismanaging the conjugal partnership of gains; in order to save what was left of the conjugal properties, she was forced to agree with Jose on the dissolution of their conjugal partnership of gains and the separation of present and future properties; said agreement was approved by the Regional Trial Court of Makati City (Branch 149) in a Decision dated February 28, 1994; they had long been separated in bed and board; they have agreed that the custody of their child will be with her, subject to visitation rights of Jose. Adriana prayed that the marriage between her and Jose be declared null and void but she failed to claim and pray for the support of their child, John Paul.

Summons was duly served on Jose Lam on March 22, 1994. Despite the lapse of fifteen days after service of summons, no responsive pleading was filed by him. Hence, the trial court issued an Order dated April 13, 1994, directing Asst. City Prosecutor Bonifacio Barrera to conduct an investigation for determination whether or not there was collusion between the parties and to submit his report thereon. On April 28, 1994, Asst. City Prosecutor Barrera filed his Report stating that "there seems to be no collusion between the parties".2

The trial court then set the case for hearing. The lone witness was Adriana herself. She testified that her marriage with Jose was arranged by her parents in the traditional Chinese way; that her married life was abnormal because Jose very seldom came home,

never worked for a living and instead kept asking for money from her to buy his sports cars; that she was also the one spending for all the expenses of their only child, John Paul.3 After her testimony, counsel for Adriana formally offered the documentary evidence. No evidence was presented regarding the amount of support needed by John Paul or the capacity of Jose to give support.

On June 23, 1994, Adriana filed an Urgent Motion to Re-Open4 on the ground that she was able to secure additional new evidence which were significant, material and indispensable. On July 6, 1994, the trial court granted the motion to re-open the case and held a hearing for the reception of additional evidence. The Pasay RTC admitted into evidence the Marriage Contract dated May 25, 1977 between Jose and one Celia Santiago, and another Marriage Contract dated May 6, 1982 between Jose and one Evan Lock,5 showing that Jose had been married twice before he married Adriana in 1984.

On August 4, 1994, the Pasay RTC rendered its Decision6 the dispositive portion of which reads as follows:

IN VIEW OF ALL THE FOREGOING, the Court hereby declares the marriage between petitioner Adriana Chua and respondent Jose Lam null and void for being bigamous by nature. The Local Civil Registrar of Quezon City and the Office of the Civil Registrar General are hereby ordered to cancel the marriage between Adriana Chua and Jose Lam celebrated on January 13, 1984 by Hon. Guillermo L. Loja of the Metropolitan Trial Court, Quezon City.

Likewise, respondent Jose Lam is hereby ordered to give a monthly support to his son John Paul Chua Lam in the amount of P20,000.00.

SO ORDERED.7

On November 3, 1994, Jose filed a Motion for Reconsideration8 thereof but only insofar as the decision awarded monthly support to his son in the amount of P20,000.00. He argued that there was already a provision for support of the child as embodied in the decision9 dated February 28, 1994 of the Makati RTC wherein he and Adriana agreed to contribute P250,000.00 each to a common fund for the benefit of the child, to wit:

8. Nothing herein shall diminish the rights and obligations of both parties with respect to their son. In the best interest of the child, the Second Party shall retain care and custody, subject to visitation rights by the First Party to be exercised through mutual arrangements.

9. It is hereby agreed by the First Party and the Second Party that the First Party and the Second Party shall initially contribute P250,000.00 each to a common fund, to be increased as required, to be used solely and exclusively for the benefit of their son. Said common fund shall be managed and administered by the Second Party, subject to periodic accounting, until the son reaches majority age.10

Jose further alleged in his motion that his contribution to the common fund had even amounted to P500,000.00.

On August 22, 1995, the Pasay RTC issued an Order denying Jose Lam’s motion for reconsideration ruling that the compromise agreement entered into by the parties and approved by the Makati

RTC before the marriage was declared null and void ab initio by the Pasay RTC, is of no moment and cannot limit and/or affect the support ordered by the latter court.

Jose then appealed the Pasay RTC’s decision to the Court of Appeals, assigning only a single error of the trial court:

THE LOWER COURT SERIOUSLY ERRED IN ORDERING APPELLANT TO GIVE A MONTHLY SUPPORT OFP20,000.00 TO HIS SON BECAUSE THIS WOULD, IN EFFECT, REQUIRE APPELLANT TO PAY TWICE THE MONTHLY SUPPORT FOR HIS CHILD. BESIDES, THE LOWER COURT HAS DULY ADMITTED THE FACT THAT THERE WAS A DECISION ISSUED BY ANOTHER COURT REQUIRING APPELLANT TO CONTRIBUTE THE AMOUNT OF P250,000.00 AS THE LATTER’S SHARE IN THE COMMON FUND FOR SUPPORT OF THE CHILD, SUBJECT TO PERIODIC ACCOUNTING AND TO BE MANAGED BY APPELLEE.11

On June 11, 1997, the Court of Appeals promulgated its decision affirming the Pasay RTC’s decision in all respects. Jose filed a motion for reconsideration of the Decision but in a Resolution dated October 27, 1997, the Court of Appeals denied the same.

Hence, Jose filed the present petition for review on certiorari under Rule 45 of the Rules of Court, likewise raising a single error of the appellate court, to wit:

THE HONORABLE COURT OF APPEALS ERRED IN DECIDING LEGAL QUESTIONS OF SUBSTANCE NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE IN FINDING THAT THE TRIAL COURT’S RULING THAT THE COMPROMISE AGREEMENT BETWEEN PETITIONER AND RESPONDENT WHERE THEY BOUND THEMSELVES TO CONTRIBUTE THE AMOUNT OF TWO HUNDRED FIFTY THOUSAND PESOS (P250,000.00) TO A COMMON FUND FOR THE BENEFIT OF THEIR CHILD DOES NOT BAR THE TRIAL COURT IN ANNULMENT CASE TO AGAIN AWARD SUPPORT IN FAVOR OF THE CHILD.

The Pasay RTC and the Court of Appeals are both correct insofar as they ruled that the amount of support is by no means permanent. In Advincula vs. Advincula,12 we held that another action for support could be filed again by the same plaintiff notwithstanding the fact that the previous case for support filed against the same defendant was dismissed. We further held in said case that:

. . . Judgment for support does not become final. The right to support is of such nature that its allowance is essentially provisional; for during the entire period that a needy party is entitled to support, his or her alimony may be modified or altered, in accordance with his increased or decreased needs, and with the means of the giver. It cannot be regarded as subject to final determination.13

Thus, there is no merit to the claim of Jose that the compromise agreement between him and Adriana, as approved by the Makati RTC and embodied in its decision dated February 28, 1994 in the case for voluntary dissolution of conjugal partnership of gains, is a bar to any further award of support in favor of their child John Paul. The provision for a common fund for the benefit of their child John Paul, as embodied in the compromise agreement between herein parties which had been approved by the Makati RTC, cannot be considered final andres judicata since any judgment for support is always subject to modification, depending upon the needs of the child and the capabilities of the parents to give support.

Having settled the issue on the authority of the trial court to award support for the child in an action for declaration of nullity of marriage of the child’s parents, this Court will now discuss the propriety of the proceedings conducted by the Pasay RTC and the decision it rendered, as affirmed by the Court of Appeals.

The Court notes four circumstances that taint the regularity of the proceedings and the decision rendered by the trial court.

First, the only ground alleged in the petition for declaration of nullity of marriage filed by Adriana with the Pasay RTC is the psychological incapacity of Jose without any prayer for the support of her child. Adriana presented, formally offered her evidence in support of the petition and submitted the case for decision as of May 12, 1994.14But on a motion to re-open filed by her on June 23, 1994, the trial court set the case for reception of evidence on July 6, 1994 and subsequently allowed Adriana to present evidence of two previous marriages contracted by Jose with other women to prove that the marriage between Adriana and Jose was null and void for being bigamous. It is only at the July 6, 1994 hearing that respondent Adriana first claimed support for John Paul when she testified in open court.

The petition of Adriana was, in effect, substantially changed by the admission of the additional evidence. The ground relied on for nullity of the marriage was changed from the psychological incapacity of Jose to that of existence of previous marriages of Jose with two different women with an additional claim for support of the child. Such substantial changes were not reflected in the petition filed with the trial court, as no formal amendment was ever made by Adriana except the insertion of the handwritten phrase "And for respondent to support the child of petitioner in an amount this Honorable Court may deem just and reasonable"15 found at the ultimate paragraph of the petition, as allowed by the Pasay RTC. There is nothing on record to show that petitioner Jose was notified of the substantial changes in the petition of Adriana.

Second, the Pasay RTC did not give Jose an opportunity to be present on July 6, 1994 for the presentation of evidence by Adriana and to refute the same. Although copy of the motion filed on June 23, 1994 with a notice of hearing on June 27, 1994 was sent to Jose, the record does not show that he received the notice in due time; neither does the record show that he was notified of the subsequent hearing held on July 6, 1994 where Adriana presented the marriage certificates and claimed for the support of their child sans the presence of Jose.

Third, the records do not show that petitioner was sent a copy of the Order dated July 6, 1994 wherein the trial court granted the Urgent Motion to Re-Open of respondent Adriana and forthwith allowed her to present her evidence to prove that petitioner herein contracted previous marriages with different women.

Fourth, the evidence presented by respondent regarding her claim for support for John Paul is glaringly insufficient and cannot be made a valid basis upon which the Pasay RTC could have determined the monthly amount of P20,000.00 for the support to be given to John Paul by petitioner Jose.

A party who has been declared in default is entitled to service of substantially amended or supplemental pleadings.16 Considering that in cases of declaration of nullity of marriage or annulment of marriage, there can be no default pursuant to Section 6, Rule 18 of

the Revised Rules of Court17 in relation to Article 48 of the Family Code,18 it is with more reason that petitioner should likewise be entitled to notice of all proceedings.

Furthermore, the lower courts are reminded of the ruling of the Court in Asian Transmission Corporation vs. Canlubang Sugar Estates,19 to wit:

It is also a general principle of law that a court cannot set itself in motion, nor has it power to decide questions except as presented by the parties in their pleadings. Anything that is decided beyond them is coram non-judice and void. Therefore where a court enters a judgment or awards relief beyond the prayer of the complaint or the scope of its allegations the excessive relief is not merely irregular but is void for want of jurisdiction, and is open to collateral attack.

The appellate court also ruled that a judgment of a court upon a subject within its general jurisdiction, but which is not brought before it by any statement or claim of the parties, and is foreign to the issues submitted for its determination, is a nullity. (Emphasis supplied)

Pursuant to the foregoing principle, it is a serious error for the trial court to have rendered judgment on issues not presented in the pleadings as it was beyond its jurisdiction to do so. The amendment of the petition to reflect the new issues and claims against Jose was, therefore, indispensable so as to authorize the court to act on the issue of whether the marriage of Jose and Adriana was bigamous and the determination of the amount that should have been awarded for the support of John Paul. When the trial court rendered judgment beyond the allegations contained in the copy of the petition served upon Jose, the Pasay RTC had acted in excess of its jurisdiction and deprived petitioner Lam of due process.

Insofar as the declaration of nullity of the marriage between Adriana and Jose for being bigamous is concerned, the decision rendered by the Pasay RTC could be declared as invalid for having been issued beyond its jurisdiction. Nonetheless, considering that Jose, did not assail the declaration of nullity of his marriage with Adriana in his motion for reconsideration which he filed with the Pasay RTC. In the petitions he filed in the Court of Appeals and with us, he likewise did not raise the issue of jurisdiction of the Pasay RTC to receive evidence and render judgment on his previous marriages with other woman which were not alleged in the petition filed by Adriana. Petitioner Jose is estopped from questioning the declaration of nullity of his marriage with Adriana and therefore, the Court will not undo the judgment of the Pasay RTC declaring the marriage of Adriana and Jose null and void for being bigamous. It is an axiomatic rule that while a jurisdictional question may be raised at any time, this, however, admits of an exception where estoppel has supervened.20

Consequently, the Court will only resolve the lone issue raised by Jose in the present petition for review on certiorari which is the award of support for his child, John Paul.

The Pasay RTC should have been aware that in determining the amount of support to be awarded, such amount should be in proportion to the resources or means of the giver and the necessities of the recipient, pursuant to Articles 194, 201 and 202 of the Family Code, to wit:

Art. 194. Support comprises everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family.

The education of the person entitled to be supported referred to in the preceding paragraph shall include his schooling or training for some profession, trade or vocation, even beyond the age of majority. Transportation shall include expenses in going to and from school, or to and from place of work.

Art. 201. The amount of support, in the cases referred to in Articles 19521 and 196,22 shall be in proportion to the resources or means of the giver and to the necessities of the recipient.

Art. 202. Support in the cases referred to in the preceding article shall be reduced or increased proportionately, according to the reduction or increase of the necessities of the recipient and the resources or means of the person obliged to furnish the same.

It is incumbent upon the trial court to base its award of support on the evidence presented before it. The evidence must prove the capacity or resources of both parents who are jointly obliged to support their children as provided for under Article 195 of the Family Code; and the monthly expenses incurred for the sustenance, dwelling, clothing, medical attendance, education and transportation of the child.

In this case, the only evidence presented by respondent Adriana regarding her claim for support of the child is her testimony, which is quoted below in verbatim:

Atty. Lorbes:

Q - After discovering that your husband had contracted two valid marriages prior to your marriage, how do you feel about it?

A - I felt it is unfair to my life.

Q - Considering the bigamous marriage contract by your husband with you, what do you want to request to the Honorable Court?

A - I want to request the Court that the respondent be ordered to support my little boy.

Court:

Q - How much support do you want?

A - P20,000.00 to P25,000.00

Q - Is there a prayer for support?

Atty. Lorbes:

A - None, Your Honor.

Court:

Get the original copy of the complaint, add and sign it for the support of the boy.

A - Yes, Your Honor.23

Evidently, such testimony does not establish the amount needed by the child nor the amount that the parents are reasonably able to give.

We take note of the Compromise Agreement, approved by and embodied in the decision of the Makati RTC, portions of which read as follows:

8. Nothing herein shall diminish the rights and obligations of both parties with respect to their son. In the best interest of the child, the Second Party shall retain care and custody, subject to visitation rights by the First Party to be exercised through mutual arrangements.

9. It is hereby agreed by the First Party and the Second Party that the First Party and the Second Party shall initially contribute P250,000.00 each to a common fund, to be increased as required, to be used solely and exclusively for the benefit of their son. Said common fund shall be managed and administered by the Second Party, subject to periodic accounting, until the son reaches majority age.

WHEREFORE, finding the aforequoted agreement to be in order, and not being contrary to law, morals or public policy, the same is hereby APPROVED. Accordingly, the conjugal partnership of gains existing between the said spouses is dissolved and a decree of complete separation is established in accordance with the provisions of Chapter 6 of the Family Code of the Philippines. The parties are hereby enjoined to faithfully comply with the conditions of their Agreement as embodied in this petition and the same shall, as between the parties, be deemed to be a decision and/or award in the matters treated in the aforesaid settlement.

Let a copy of this petition as well as the foregoing Decision be recorded in the proper local civil registries and registries of property at the expense of the herein petitioners pursuant to Article 139 of the Family Code.

SO ORDERED.

GIVEN this 28th day of February, 1994 at Makati, Metro Manila.24

The matter of support is a question that may be raised and threshed out before the Makati RTC as it was the court that approved the Compromise Agreement, or before the Pasay RTC where the petition for declaration of nullity or annulment of marriage is filed. In the interest of orderly administration of justice, the Court deems it proper that the issue on support should be resolved by the Pasay RTC where the claim for support of the child was initiated by Adriana.

The trial court’s action of merely ordering in open court during the July 6, 1994 hearing that a prayer for support be written and inserted in the petition filed by respondent Adriana does not constitute proper amendment and notice upon petitioner Jose. Consequently, herein petitioner Jose was deprived of due process when the trial court proceeded to hear the case on a motion to re-

open and render judgment without giving Jose the requisite notice and the opportunity to refute the new claim against him.

Verily, the manner by which the trial court arrived at the amount of support awarded to John Paul was whimsical, arbitrary and without any basis.

Such being the case, the Court has no other recourse but to reverse the decision of the Court of Appeals and Pasay RTC insofar as the award of support is concerned and order the remand of the case to Pasay RTC for further proceedings as to the issue regarding support.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision and Resolution of the Court of Appeals in CA-G.R. CV. No. 51107, dated June 11, 1997 and October 27, 1997, dismissing the appeal anddenying the motion for reconsideration, respectively, are hereby SET ASIDE but only insofar as the award of support in favor of John Paul Chua Lam is concerned. The Decision dated August 4, 1994 and the Order of the Regional Trial Court of Pasay City (Branch 109), dated August 22, 1995, are REVERSED and SET ASIDE for being null and void, likewise only insofar as the matter on support is concerned.

Let the records of Civil Case No. 94-0331 be remanded to the Regional Trial Court of Pasay City (Branch 109) which is DIRECTED to reopen the trial of Civil Case No. 94-0331 with respect to the claim of Adriana Chua against Jose Lam for the support of John Paul Chua Lam and conduct hearings for further reception of evidence for the proper determination of the proper amount of support to be awarded to the child John Paul Chua Lam.

SO ORDERED.

FIRST DIVISION

[G.R. No. 136913. May 12, 2000]

ANITA C. BUCE, petitioner, vs. THE HONORABLE COURT OF APPEALS, SPS. BERNARDO C. TIONGCO and ARACELI TIONGCO, SPS. DIONISIO TIONGCO and LUCILA TIONGCO, and JOSE M. TIONGCO, respondents.

D E C I S I O N

DAVIDE, JR., C.J.: Ncm

The basic issue in this petition is whether the parties intended an automatic renewal of the lease contract[1] when they agreed that the lease shall be for a period of fifteen years "subject to renewal for another ten (10) years."

Petitioner leased a 56-square meter parcel of land located at 2068 Quirino Avenue, Pandacan, Manila. The lease contract was for a period of fifteen years to commence on 1 June 1979 and to end on 1 June 1994 "subject to renewal for another ten (10) years, under the same terms and conditions." Petitioner then constructed a building and paid the required monthly rental of P200. Private respondents,

through their administrator Jose Tiongco, later demanded a gradual increase in the rental until it reached P400 in 1985. For July and August 1991, petitioner paid private respondents P1,000 as monthly rental.[2]

On 6 December 1991, private respondents counsel wrote petitioner informing her of the increase in the rent to P1,576.58 effective January 1992 pursuant to the provisions of the Rent Control Law.[3] Petitioner, however, tendered checks dated 5 October 1991,[4] 5 November 1991,[5] 5 December 1991,[6] 5 January 1992,[7] 31 May 1992,[8] and 2 January 1993[9] for only P400 each, payable to Jose Tiongco as administrator. As might be expected, private respondents refused to accept the same.

On 9 August 1993, petitioner filed with the Regional Trial Court of Manila a complaint for specific performance with prayer for consignation, which was docketed as Civil Case No. 93-67135. She prayed that private respondents be ordered to accept the rentals in accordance with the lease contract and to respect the lease of fifteen years, which was renewable for another ten years, at the rate of P200 a month.

In their Answer, private respondents countered that petitioner had already paid the monthly rent of P1,000 for July and August 1991. Under Republic Act No. 877, as amended, rental payments should already be P1,576.58[10] per month; hence, they were justified in refusing the checks for P400 that petitioner tendered. Moreover, the phrase in the lease contract authorizing renewal for another ten years does not mean automatic renewal; rather, it contemplates a mutual agreement between the parties. Ncmmis

During the pendency of the controversy, counsel for private respondents wrote petitioner reminding her that the contract expired on 1 June 1994 and demanding that she pay the rentals in arrears, which then amounted to P33,000.

On 29 August 1995, the RTC declared the lease contract automatically renewed for ten years and considered as evidence thereof (a) the stipulations in the contract giving the lessee the right to construct buildings and improvements and (b) the filing by petitioner of the complaint almost one year before the expiration of the initial term of fifteen years. It then fixed the monthly rent at P400 from 1 June 1990 to 1 June 1994; P1,000 from 1 June 1994 until 1 June 1999; and P1,500 for the rest of the period or from 1 June 2000 to 1 June 2004, reasoning that the continuous increase of rent from P200 to P250 then P300, P400 and finally P1,000 caused "an inevitable novation of their contract."[11]

On appeal, the Court of Appeals reversed the decision of the RTC, and ordered petitioner to immediately vacate the leased premises on the ground that the contract expired on 1 June 1994 without being renewed and to pay the rental arrearages at the rate of P1,000 monthly.[12]

According to the Court of Appeals, the phrase in the contract "this lease shall be for a period of fifteen (15) years effective June 1, 1979, subject to renewal for another ten (10) years, under the same terms and conditions" is unclear as to who may exercise the option to renew. The stipulation allowing the construction of a building and other improvements and the fact that the complaint was filed a year before the expiration of the contract are not indicative of automatic renewal. It applied the ruling in Fernandez v. Court of Appeals[13] that without a stipulation that the option to renew the lease is solely for

the benefit of one party any renewal of a lease contract must be upon the agreement of the parties. Since private respondents were not agreeable to an extension, the original term of the lease ended on 1 June 1994. Private respondents refusal to accept petitioners checks for P400 was justified because although the original contract specified a monthly rental of P200, the tender and acceptance of the increased rental of P1,000 novated the contract of lease; thus, petitioner was estopped from claiming that the monthly rental is otherwise.

The Court of Appeals denied petitioners motion for reconsideration. Hence this petition. Scncm

Petitioner contends that by ordering her to vacate the premises, the Appellate Court went beyond the bounds of its authority because the case she filed before the RTC was for "Specific Performance" not unlawful detainer. The power to order the lessee to vacate the leased premises is lodged in another forum. Additionally, private respondents did not pray for the ejectment of petitioners from the leased premises in their Answer with Counterclaim; well-settled is the rule that a court cannot award relief not prayed for in the complaint or compulsory counterclaim.

Petitioner further maintains that the phrase "renewable for another ten years at the option of both parties" in the Fernandez case clearly indicated the intention of the parties to renew the contract only upon mutual agreement. Whereas in this case the contract states, "[T]his lease shall be for a period of fifteen (15) years effective June 1, 1979, subject to renewal for another ten (10) years, under the same terms and conditions," making this stipulation subject to interpretation with due regard to the contemporaneous and subsequent acts of the parties. The stipulation in the contract allowing the lessee to construct buildings and improvements; her filing of the complaint a year before the expiration of the initial 15-year term; and private respondents acceptance of the increased rental are contemporaneous and subsequent acts that signify the intention of the parties to renew the contract.

On the other hand, private respondents aver that even if the original petition filed before the RTC was not for unlawful detainer, the order of the Court of Appeals requiring petitioner to vacate the premises is but a logical consequence of its finding that the lease contract had expired. To require another litigation would constitute multiplicity of suits; besides, petitioner has no other reason to stay in the premises. There is no basis why Fernandez should not be applied to the case at bar. Absent contrary stipulation in reciprocal contracts, the period of lease is deemed to be for the benefit of both parties. Sdaamiso

Private respondents argue that the alleged contemporaneous and subsequent acts do not determine the real intention of the parties as regards renewal of the lease contract. Had they intended an automatic renewal of the lease contract they would have agreed on a 25-year period instead. Correlatively, private respondents letter reminding petitioner of the expiration of the contract on 1 June 1994 and demanding payment of the rentals in arrears signifies that they are no longer interested in renewing the contract. Also petitioners refusal to pay the increased rental of P1,000 as early as 1991 and private respondents refusal to accept the P400 tendered constituted a disagreement on the rate of rental; hence, any renewal is out of the question.

The basic issue, as agreed upon by the parties, is the correct interpretation of the contract provision "this lease shall be for a period of fifteen (15) years effective June 1, 1979, subject to renewal for another ten (10) years, under the same terms and conditions."

The literal meaning of the stipulations shall control if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties.[14] However, if the terms of the agreement are ambiguous resort is made to contract interpretation which is the determination of the meaning attached to written or spoken words that make the contract.[15] Also, to ascertain the true intention of the parties, their actions, subsequent or contemporaneous, must be principally considered.[16]

The phrase "subject to renewal for another ten (10) years" is unclear on whether the parties contemplated an automatic renewal or extension of the term, or just an option to renew the contract; and if what exists is the latter, who may exercise the same or for whose benefit it was stipulated.

In this jurisdiction, a fine delineation exists between renewal of the contract and extension of its period. Generally, the renewal of a contract connotes the death of the old contract and the birth or emergence of a new one. A clause in a lease providing for an extension operates of its own force to create an additional term, but a clause providing for a renewal merely creates an obligation to execute a new lease contract for the additional term. As renewal of the contract contemplates the cessation of the old contract, then it is necessary that a new one be executed between the parties.[17] Sdaad

There is nothing in the stipulations in the contract and the parties actuation that shows that the parties intended an automatic renewal or extension of the term of the contract. Even the RTC conceded that the issue of automatic renewal is debatable. The fact that the lessee was allowed to introduce improvements on the property is not indicative of the intention of the lessors to automatically extend the contract. Considering the original 15-year duration of the contract, structures would have necessarily been constructed, added, or built on the property, which in its previous state was an idle 56-square meter lot in the heart of Manila. Petitioner leased the property for the purpose of turning it into a commercial establishment and to which it has been transformed as Anitas Grocery and Store. Neither the filing of the complaint a year before the expiration of the 15-year term nor private respondents acceptance of the increased rentals has any bearing on the intention of the parties regarding renewal. It must be recalled that the filing of the complaint was even spawned by private respondents refusal to accept the payment of monthly rental in the amount of only P400.

Now on the applicability of Fernandez v. Court of Appeals to the case at bar. Although the factual scenario in that case with regard to the renewal option is slightly off-tangent to the case under consideration because the intention of the parties therein for future mutual agreement was clearly discernible in their contract, we cannot completely disregard the pronouncement of this Court in that case; thus:

[I]n a reciprocal contract like a lease, the period must be deemed to have been agreed upon for the benefit of both parties, absent language showing that the term was deliberately set for the benefit of the lessee or lessor alone.[18] We

are not aware of any presumption in law that the term was deliberately set for the benefit of the lessee alone. Koh and Cruz in effect rested upon such a presumption. But that presumption cannot reasonably be indulged in casually in an era of rapid economic change, marked by, among other things, volatile costs of living and fluctuations in the value of domestic currency. The longer the period the more clearly unreasonable such a presumption would be. In an age like that we live in, very specific language is necessary to show an intent to grant a unilateral faculty to extend or renew a contract of lease to the lessee alone or to the lessor alone for that matter.[19] Scsdaad

In the case at bar, it was not specifically indicated who may exercise the option to renew, neither was it stated that the option was given for the benefit of herein petitioner. Thus, pursuant to the Fernandez ruling and Article 1196 of the Civil Code, the period of the lease contract is deemed to have been set for the benefit of both parties. Renewal of the contract may be had only upon their mutual agreement or at the will of both of them. Since the private respondents were not amenable to a renewal, they cannot be compelled to execute a new contract when the old contract terminated on 1 June 1994. It is the owner-lessors prerogative to terminate the lease at its expiration.[20] The continuance, effectivity and fulfillment of a contract of lease cannot be made to depend exclusively upon the free and uncontrolled choice of the lessee between continuing the payment of the rentals or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in such a contract of lease and no equality exists between the lessor and the lessee since the life of the contract would be dictated solely by the lessee.[21]

After the lease terminated on 1 June 1994 without any agreement for renewal being reached, petitioner became subject to ejectment from the premises.[22] It must be noted, however, that private respondents did not include in their Answer with Counterclaim a prayer for the restoration of possession of the leased premises. Neither did they file with the proper Metropolitan Trial Court an unlawful detainer suit[23] against petitioner after the expiration of the lease contact. Moreover, the issues agreed upon by the parties to be resolved during the pre-trial were the correct interpretation of the contract and the validity of private respondents refusal to accept petitioners payment of P400 as monthly rental.[24] They later limited the issue to the first, i.e., the correct interpretation of the contract.[25] The issue of possession of the leased premises was not among the issues agreed upon by the parties or threshed out before the court a quo. Neither was it raised by private respondents on appeal.

Accordingly, as correctly contended by the petitioner, the Court of Appeals went beyond the bounds of its authority[26] when after interpreting the questioned provision of the lease contract in favor of the private respondents it proceeded to order petitioner to vacate the subject premises.

WHEREFORE, the instant petition is partly GRANTED. The assailed decision of the Court of Appeals is REVERSED insofar as it ordered the petitioner to immediately vacate the leased premises, without prejudice, however, to the filing by the private respondents of an action for the recovery of possession of the subject property.

No costs.

SO ORDERED. DAVIDE, JR.

THIRD DIVISION

[G.R. No. 140746. March 16, 2005]

PANTRANCO NORTH EXPRESS, INC., and ALEXANDER BUNCAN, petitioners, vs. STANDARD INSURANCE COMPANY, INC., and MARTINA GICALE,respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari assailing the Decision[1] dated July 23 1999 and Resolution[2] dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453, entitled Standard Insurance Company, Inc., and Martina Gicale vs. PANTRANCO North Express, Inc., and Alexander Buncan.

In the afternoon of October 28, 1984, Crispin Gicale was driving the passenger jeepney owned by his mother Martina Gicale, respondent herein. It was then raining. While driving north bound along the National Highway in Talavera, Nueva Ecija, a passenger bus, owned by Pantranco North Express, Inc., petitioner, driven by Alexander Buncan, also a petitioner, was trailing behind. When the two vehicles were negotiating a curve along the highway, the passenger bus overtook the jeepney. In so doing, the passenger bus hit the left rear side of the jeepney and sped away.

Crispin reported the incident to the Talavera Police Station and respondent Standard Insurance Co., Inc. (Standard), insurer of the jeepney. The total cost of the repair was P21,415.00, but respondent Standard paid only P8,000.00. Martina Gicale shouldered the balance of P13,415.00.

Thereafter, Standard and Martina, respondents, demanded reimbursement from petitioners Pantranco and its driver Alexander Buncan, but they refused. This prompted respondents to file with the Regional Trial Court (RTC), Branch 94, Manila, a complaint for sum of money.

In their answer, both petitioners specifically denied the allegations in the complaint and averred that it is the Metropolitan Trial Court, not the RTC, which has jurisdiction over the case.

On June 5, 1992, the trial court rendered a Decision[3] in favor of respondents Standard and Martina, thus:

WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs, Standard Insurance Company and Martina Gicale, and against defendants Pantranco Bus Company and Alexander Buncan, ordering the latter to pay as follows:

(1) to pay plaintiff Standard Insurance the amount of P8,000.00 with interest due thereon from November 27, 1984 until fully paid;

(2) to pay plaintiff Martina Gicale the amount of P13,415.00 with interest due thereon from October 22, 1984 until fully paid;

(3) to pay the sum of P10,000.00 for attorneys fees;

(4) to pay the expenses of litigation and the cost of suit.

SO ORDERED.

On appeal, the Court of Appeals, in a Decision[4] dated July 23, 1999, affirmed the trial courts ruling, holding that:

The appellants argue that appellee Gicales claim of P13,415.00 and appellee insurance companys claim of P8,000.00 individually fell under the exclusive original jurisdiction of the municipal trial court. This is not correct because under the Totality Rule provided for under Sec. 19, Batas Pambansa Bilang 129, it is the sum of the two claims that determines the jurisdictional amount.

x x x

In the case at bench, the total of the two claims is definitely more than P20,000.00 which at the time of the incident in question was the jurisdictional amount of the Regional Trial Court.

Appellants contend that there was a misjoinder of parties. Assuming that there was, under the Rules of Court (Sec. 11, Rule 7) as well as under the Rules of Civil Procedure (ditto), the same does not affect the jurisdiction of the court nor is it a ground to dismiss the complaint.

x x x

It does not need perspicacity in logic to see that appellees Gicales and insurance companys individual claims against appellees (sic) arose from the same vehicular accident on October 28, 1984 involving appellant Pantrancos bus and appellee Gicales jeepney. That being the case, there was a question of fact common to all the parties: Whose fault or negligence caused the damage to the jeepney?

Appellants submit that they were denied their day in court because the case was deemed submitted for decision without even declaring defendants in default or to have waived the presentation of evidence. This is incorrect. Of course, the court did not declare defendants in default because that is done only when the defendant fails to tender an answer within the reglementary period. When the lower court ordered that the case is deemed submitted for decision that meant that the defendants were deemed to have waived their right to present evidence. If they failed to adduce their evidence, they should blame nobody but themselves. They failed to be present during the scheduled hearing for the reception of their evidence despite notice and without any motion or explanation. They did not even file any motion for reconsideration of the order considering the case submitted for decision.

Finally, contrary to the assertion of the defendant-appellants, the evidence preponderantly established their liability for quasi-delict under Article 2176 of the Civil Code.

Petitioners filed a motion for reconsideration but was denied by the Appellate Court in a Resolution dated November 4, 1999.

Hence, this petition for review on certiorari raising the following assignments of error:

I

WHETHER OR NOT THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT OF THE ACTION CONSIDERING THAT RESPONDENTS RESPECTIVE CAUSE OF ACTION AGAINST PETITIONERS DID NOT ARISE OUT OF THE SAME TRANSACTION NOR ARE THERE QUESTIONS OF LAW AND FACTS COMMON TO BOTH PETITIONERS AND RESPONDENTS.

II

WHETHER OR NOT PETITIONERS ARE LIABLE TO RESPONDENTS CONSIDERING THAT BASED ON THE EVIDENCE ADDUCED AND LAW APPLICABLE IN THE CASE AT BAR, RESPONDENTS HAVE NOT SHOWN ANY RIGHT TO THE RELIEF PRAYED FOR.

III

WHETHER OR NOT PETITIONERS WERE DEPRIVED OF THEIR RIGHT TO DUE PROCESS.

For their part, respondents contend that their individual claims arose out of the same vehicular accident and involve a common question of fact and law. Hence, the RTC has jurisdiction over the case.

I

Petitioners insist that the trial court has no jurisdiction over the case since the cause of action of each respondent did not arise from the same transaction and that there are no common questions of law and fact common to both parties. Section 6, Rule 3 of the Revised Rules of Court,[5] provides:

Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest.

Permissive joinder of parties requires that: (a) the right to relief arises out of the same transaction or series of transactions; (b) there is a question of law or fact common to all the plaintiffs or defendants; and (c) such joinder is not otherwise proscribed by the provisions of the Rules on jurisdiction and venue.[6]

In this case, there is a single transaction common to all, that is, Pantrancos bus hitting the rear side of the jeepney. There is also a common question of fact, that is, whether petitioners are negligent.

There being a single transaction common to both respondents, consequently, they have the same cause of action against petitioners.

To determine identity of cause of action, it must be ascertained whether the same evidence which is necessary to sustain the second cause of action would have been sufficient to authorize a recovery in the first.[7] Here, had respondents filed separate suits against petitioners, the same evidence would have been presented to sustain the same cause of action. Thus, the filing by both respondents of the complaint with the court below is in order. Such joinder of parties avoids multiplicity of suit and ensures the convenient, speedy and orderly administration of justice.

Corollarily, Section 5(d), Rule 2 of the same Rules provides:

Sec. 5. Joinder of causes of action. A party may in one pleading assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party, subject to the following conditions:

x x x

(d) Where the claims in all the causes of action are principally for recovery of money the aggregate amount claimed shall be the test of jurisdiction.

The above provision presupposes that the different causes of action which are joined accrue in favor of the same plaintiff/s and against the same defendant/s and that no misjoinder of parties is involved.[8] The issue of whether respondents claims shall be lumped together is determined by paragraph (d) of the above provision. This paragraph embodies the totality rule as exemplified by Section 33 (1) of B.P. Blg. 129[9] which states, among others, that where there are several claims or causes of action between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions.

As previously stated, respondents cause of action against petitioners arose out of the same transaction. Thus, the amount of the demand shall be the totality of the claims.

Respondent Standards claim is P8,000.00, while that of respondent Martina Gicale is P13,415.00, or a total of P21,415.00. Section 19 of B.P. Blg. 129 provides that the RTC has exclusive original jurisdiction over all other cases, in which the demand, exclusive of interest and cost or the value of the property in controversy, amounts to more than twenty thousand pesos (P20,000.00). Clearly, it is the RTC that has jurisdiction over the instant case. It bears emphasis that when the complaint was filed, R.A. 7691 expanding the jurisdiction of the Metropolitan, Municipal and Municipal Circuit Trial Courts had not yet taken effect. It became effective on April 15, 1994.

II

The finding of the trial court, affirmed by the Appellate Court, that petitioners are negligent and thus liable to respondents, is a factual finding which is binding upon us, a rule well-established in our jurisprudence. It has been repeatedly held that the trial court's factual findings, when affirmed by the Appellate Court, are conclusive and binding upon this Court, if they are not tainted with arbitrariness or oversight of some fact or circumstance of

significance and influence. Petitioners have not presented sufficient ground to warrant a deviation from this rule.[10]

III

There is no merit in petitioners contention that they were denied due process. Records show that during the hearing, petitioner Pantrancos counsel filed two motions for resetting of trial which were granted by the trial court. Subsequently, said counsel filed a notice to withdraw. After respondents had presented their evidence, the trial court, upon petitioners motion, reset the hearing to another date. On this date, Pantranco failed to appear. Thus, the trial court warned Pantranco that should it fail to appear during the next hearing, the case will be submitted for resolution on the basis of the evidence presented. Subsequently, Pantrancos new counsel manifested that his client is willing to settle the case amicably and moved for another postponement. The trial court granted the motion. On the date of the hearing, the new counsel manifested that Pantrancos employees are on strike and moved for another postponement. On the next hearing, said counsel still failed to appear. Hence, the trial court considered the case submitted for decision.

We have consistently held that the essence of due process is simply an opportunity to be heard, or an opportunity to explain ones side or an opportunity to seek for a reconsideration of the action or ruling complained of.[11]

Petitioner Pantranco filed an answer and participated during the trial and presentation of respondents evidence. It was apprised of the notices of hearing issued by the trial court. Indeed, it was afforded fair and reasonable opportunity to explain its side of the controversy. Clearly, it was not denied of its right to due process. What is frowned upon is the absolute lack of notice and hearing which is not present here.

WHEREFORE, the petition is DENIED. The assailed Decision dated July 23 1999 and Resolution dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453 are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

SECOND DIVISION

[G.R. No. 160384. April 29, 2005]

CESAR T. HILARIO, for himself and as Attorney-in-Fact of IBARRA, NESTOR, LINA and PRESCILLA, all surnamed HILARIO, petitioners, vs. ALLAN T. SALVADOR, respondent.

HEIRS OF SALUSTIANO SALVADOR, namely, REGIDOR M. SALVADOR and VIRGINIA SALVADOR-LIM, respondents-intervenors.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 63737 as well as its Resolution[2]denying the motion for the reconsideration of the said decision.

The Antecedents

On September 3, 1996, petitioners Cesar, Ibarra, Nestor, Lina and Prescilla, all surnamed Hilario, filed a complaint with the Regional Trial Court (RTC) of Romblon, Romblon, Branch 71, against private respondent Allan T. Salvador. They alleged therein, inter alia, as follows:

2. That, the plaintiffs are co-owners by inheritance from Concepcion Mazo Salvador of a parcel of land designated as Cad. Lot No. 3113-part, located at Sawang, Romblon, Romblon, which property was [adjudged] as the hereditary share of their father, Brigido M. Hilario, Jr. when their father was still single, and which adjudication was known by the plaintiffs[] fathers co-heirs;

3. That, sometime in 1989, defendant constructed his dwelling unit of mixed materials on the property of the plaintiffs father without the knowledge of the herein plaintiffs or their predecessors-in-interest;

4. That, demands have been made of the defendant to vacate the premises but the latter manifested that he have (sic) asked the prior consent of their grandmother, Concepcion Mazo Salvador;

5. That, to reach a possible amicable settlement, the plaintiffs brought the matter to the Lupon of Barangay Sawang, to no avail, evidenced by the CERTIFICATE TO FILE ACTION hereto attached as ANNEX B;

6. That, the unjustified refusal of the defendant to vacate the property has caused the plaintiffs to suffer shame, humiliation, wounded feelings, anxiety and sleepless nights;

7. That, to protect their rights and interest, plaintiffs were constrained to engage the services of a lawyer.[3]

The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus:

WHEREFORE, it is prayed of this Honorable Court that after due process (sic), an order be issued for the defendant to vacate and peacefully turn over to the plaintiffs the occupied property and that defendant be made to pay plaintiffs:

a. actual damages, as follows:

a.1. transportation expenses in connection with the projected settlement of the case amounting to P1,500.00 and for the subsequent attendance to the hearing of this case at P1,500.00 each schedule;

a.2. attorneys fees in the amount of P20,000.00 and P500.00 for every court appearance;

b. moral and exemplary damages in such amount incumbent upon the Honorable Court to determine; and

c. such other relief and remedies just and equitable under the premises.[4]

The private respondent filed a motion to dismiss the complaint on the ground of lack of jurisdiction over the nature of the action, citing Section 33 of Batas Pambansa (B.P.) Blg. 129, as amended by Section 3(3) of Republic Act (R.A.) No. 7691.[5] He averred that

(1) the complaint failed to state the assessed value of the land in dispute;(2) the complaint does not sufficiently identify and/or describe the parcel of land referred to as the subject-matter of this action;

both of which are essential requisites for determining the jurisdiction of the Court where the case is filed. In this case, however, the assessed value of the land in question is totally absent in the allegations of the complaint and there is nothing in the relief prayed for which can be picked-up for determining the Courts jurisdiction as provided by law.

In the face of this predicament, it can nevertheless be surmised by reading between the lines, that the assessed value of the land in question cannot exceed P20,000.00 and, as such, it falls within the jurisdiction of the Municipal Trial Court of Romblon and should have been filed before said Court rather than before the RTC. [6]

The petitioners opposed the motion.[7] They contended that the RTC had jurisdiction over the action since the court can take judicial notice of the market value of the property in question, which was P200.00 per square meter and considering that the property was 14,797 square meters, more or less, the total value thereof is P3,500,000.00. Besides, according to the petitioners, the motion to dismiss was premature and the proper time to interpose it is when the [petitioners] introduced evidence that the land is of such value.

On November 7, 1996, the RTC issued an Order[8] denying the motion to dismiss, holding that the action was incapable of pecuniary estimation, and therefore, cognizable by the RTC as provided in Section 19(1) of B.P. Blg. 129, as amended.

After the denial of the motion to dismiss, the private respondent filed his answer with counterclaim.[9] Traversing the material allegations of the complaint, he contended that the petitioners had no cause of action against him since the property in dispute was the conjugal property of his grandparents, the spouses Salustiano Salvador and Concepcion Mazo-Salvador.

On April 8, 1997, Regidor and Virginia Salvador filed their Answer-in-Intervention[10] making common cause with the private respondent. On her own motion, however, Virginia Salvador was dropped as intervenor.[11]

During trial, the petitioners adduced in evidence Tax Declaration No. 8590-A showing that in 1991 the property had an assessed value of P5,950.00.[12]

On June 3, 1999, the trial court rendered judgment finding in favor of the petitioners. The dispositive portion of the decision reads:

WHEREFORE, as prayed for, judgment is rendered:

Ordering the defendant to vacate and peacefully turn over to the plaintiffs the occupied property; and

Dismissing defendants counterclaim.

SO ORDERED.[13]

Aggrieved, the private respondent and respondent-intervenor Regidor Salvador appealed the decision to the CA, which rendered judgment on May 23, 2003 reversing the ruling of the RTC and dismissing the complaint for want of jurisdiction. The fallo of the decision is as follows:

IN VIEW OF THE FOREGOING, the appealed decision is REVERSED, and the case DISMISSED, without prejudice to its refilling in the proper court.

SO ORDERED.[14]

The CA declared that the action of the petitioners was one for the recovery of ownership and possession of real property. Absent any allegation in the complaint of the assessed value of the property, the Municipal Trial Court (MTC) had exclusive jurisdiction over the action, conformably to Section 33[15] of R.A. No. 7691.

The petitioners filed a motion for reconsideration of the said decision, which the appellate court denied.[16] Hence, they filed the instant petition, with the following assignment of errors:

I

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN HOLDING THAT THE INSTANT CASE, ACCION REINVINDICATORIA, FALLS WITHIN THE EXCLUSIVE ORIGINAL JURISDICTION OF THE MUNICIPAL TRIAL COURT OF ROMBLON, AND NOT WITH THE REGIONAL TRIAL COURT OF ROMBLON.

II

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN ORDERING THE REFILING OF THE CASE IN THE [PROPER] COURT, INSTEAD OF DECIDING THE CASE ON THE MERITS BASED ON THE COMPLETE RECORDS ELEVATED BEFORE SAID APPELLATE COURT AND IN NOT AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT.[17]

The Ruling of the Court

The lone issue for our resolution is whether the RTC had jurisdiction over the action of the petitioners, the plaintiffs in the RTC, against the private respondent, who was the defendant therein.

The petitioners maintain that the RTC has jurisdiction since their action is an accion reinvindicatoria, an action incapable of pecuniary estimation; thus, regardless of the assessed value of the subject property, exclusive jurisdiction falls within the said court. Besides, according to the petitioners, in their opposition to respondents motion to dismiss, they made mention of the increase in the assessed value of the land in question in the amount of P3.5 million. Moreover, the petitioners maintain that their action is also one for damages exceeding P20,000.00, over which the RTC has exclusive jurisdiction under R.A. No. 7691.

The petition has no merit.

It bears stressing that the nature of the action and which court has original and exclusive jurisdiction over the same is determined by the material allegations of the complaint, the type of relief prayed for by the plaintiff and the law in effect when the action is filed, irrespective of whether the plaintiffs are entitled to some or all of the claims asserted therein.[18] The caption of the complaint is not determinative of the nature of the action. Nor does the jurisdiction of the court depend upon the answer of the defendant or agreement of the parties or to the waiver or acquiescence of the parties.

We do not agree with the contention of the petitioners and the ruling of the CA that the action of the petitioners in the RTC was an accion reinvindicatoria. We find and so rule that the action of the petitioners was an accion publiciana, or one for the recovery of possession of the real property subject matter thereof. An accion reinvindicatoria is a suit which has for its object the recovery of possession over the real property as owner. It involves recovery of ownership and possession based on the said ownership. On the other hand, an accion publicianais one for the recovery of possession of the right to possess. It is also referred to as an ejectment suit filed after the expiration of one year after the occurrence of the cause of action or from the unlawful withholding of possession of the realty.[19]

The action of the petitioners filed on September 3, 1996 does not involve a claim of ownership over the property. They allege that they are co-owners thereof, and as such, entitled to its possession, and that the private respondent, who was the defendant, constructed his house thereon in 1989 without their knowledge and refused to vacate the property despite demands for him to do so. They prayed that the private respondent vacate the property and restore possession thereof to them.

When the petitioners filed their complaint on September 3, 1996, R.A. No. 7691 was already in effect. Section 33(3) of the law provides:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots.

Section 19(2) of the law, likewise, provides that:

Sec. 19. Jurisdiction in civil cases. The Regional Trial Court shall exercise exclusive original jurisdiction:

(2) In all civil actions, which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

The jurisdiction of the court over an action involving title to or possession of land is now determined by the assessed value of the said property and not the market value thereof. The assessed value of real property is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value.[20] The fair market value is the price at which a property may be sold by a seller, who is not compelled to sell, and bought by a buyer, who is not compelled to buy.

Even a cursory reading of the complaint will show that it does not contain an allegation stating the assessed value of the property subject of the complaint.[21] The court cannot take judicial notice of the assessed or market value of lands.[22] Absent any allegation in the complaint of the assessed value of the property, it cannot thus be determined whether the RTC or the MTC had original and exclusive jurisdiction over the petitioners action.

We note that during the trial, the petitioners adduced in evidence Tax Declaration No. 8590-A, showing that the assessed value of the property in 1991 was P5,950.00. The petitioners, however, did not bother to adduce in evidence the tax declaration containing the assessed value of the property when they filed their complaint in 1996. Even assuming that the assessed value of the property in 1991 was the same in 1995 or 1996, the MTC, and not the RTC had jurisdiction over the action of the petitioners since the case involved title to or possession of real property with an assessed value of less than P20,000.00.[23]

We quote with approval, in this connection, the CAs disquisition:

The determining jurisdictional element for the accion reinvindicatoria is, as RA 7691 discloses, the assessed value of the property in question. For properties in the provinces, the RTC has jurisdiction if the assessed value exceeds P20,000, and the MTC, if the value is P20,000 or below. An assessed value can have reference only to the tax rolls in the municipality where the property is located, and is contained in the tax declaration. In the case at bench, the most recent tax declaration secured and presented by the plaintiffs-appellees is Exhibit B. The loose remark made by them that the property was worth 3.5 million pesos, not to mention that there is absolutely no evidence for this, is irrelevant in the light of the fact that there is an assessed value. It is the amount in the tax declaration that should be consulted and no other kind of value, and as appearing in Exhibit B, this is P5,950. The case, therefore, falls within the exclusive original jurisdiction of the Municipal Trial Court of Romblon which has jurisdiction over the territory where the property is located, and not the court a quo.[24]

It is elementary that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been issued by the proper government agency.[25]

Unavailing also is the petitioners argumentation that since the complaint, likewise, seeks the recovery of damages exceeding P20,000.00, then the RTC had original jurisdiction over their actions. Section 33(3) of B.P. Blg. 129, as amended, quoted earlier, explicitly excludes from the determination of the jurisdictional amount the demand for interest, damages of whatever kind, attorneys fees, litigation expenses, and costs. This Court issued Administrative Circular No. 09-94 setting the guidelines in the implementation of R.A. No. 7691, and paragraph 2 thereof states that

2. The exclusion of the term damages of whatever kind in determining the jurisdictional amount under Section 19(8) and Section 33(1) of B.P. Blg. 129, as amended by R.A. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court.

Neither may the petitioners find comfort and solace in Section 19(8) of B.P. Blg. 129, as amended, which states:

SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs or the value of the property in controversy exceeds One Hundred Thousand Pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above-mentioned items exceeds Two Hundred Thousand Pesos (P200,000.00).

The said provision is applicable only to all other cases other than an action involving title to, or possession of real property in which the assessed value is the controlling factor in determining the courts jurisdiction. The said damages are merely incidental to, or a consequence of, the main cause of action for recovery of possession of real property.[26]

Since the RTC had no jurisdiction over the action of the petitioners, all the proceedings therein, including the decision of the RTC, are null and void. The complaint should perforce be dismissed.[27]

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 63737 are AFFIRMED. Costs against the petitioners.

SO ORDERED.

THIRD DIVISION

VICTORINO QUINAGORAN, G.R. NO. 155179Petitioner,Present: YNARES-SANTIAGO, J.,Chairperson,- versus - AUSTRIA-MARTINEZ,CHICO-NAZARIO,NACHURA, andREYES, JJ. COURT OF APPEALS andTHE HEIRS OF JUAN DE LACRUZ, Promulgated:Respondents. August 24, 2007x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45

of the Rules of Court, assailing the Decision[1] of the Court Appeals

(CA) in CA-GR SP No. 60443 dated May 27, 2002 and its

Resolution[2] dated August 28, 2002, which denied

petitioner's Motion for Reconsideration.

The factual antecedents.

The heirs of Juan dela Cruz, represented

by Senen dela Cruz (respondents), filed on October 27, 1994

a Complaint for Recovery of Portion of Registered Land with

Compensation and Damages

against Victorino Quinagoran (petitioner) before the Regional Trial

Court (RTC) Branch XI of Tuao, Cagayan, docketed as Civil Case No.

240-T.[3]They alleged that they are the co-owners of a a parcel of

land containing 13,100 sq m located at Centro, Piat, Cagayan, which

they inherited from the late Juan dela Cruz;[4] that in the mid-70s,

petitioner started occupying a house on the north-west portion of

the property, covering 400 sq m, by tolerance of respondents; that

in 1993, they asked petitioner to remove the house as they

planned to construct a commercial building on the property; that

petitioner refused, claiming ownership over the lot; and that they

suffered damages for their failure to use the same.

[5] Respondents prayed for the reconveyance and surrender of the

disputed 400 sq m, more or less, and to be paid the amount

of P5,000.00 monthly until the property is vacated, attorney's fees in

the amount of P20,000.00, costs of suit and other reliefs and

remedies just and equitable.[6]

Petitioner filed a Motion to Dismiss claiming that the RTC has no

jurisdiction over the case under Republic Act (R.A.) No. 7691, which

expanded the exclusive original jurisdiction of the Municipal Trial

Court (MTC) to include all civil actions which involve title to, or

possession of, real property, or any interest therein which does not

exceedP20,000.00. He argued that since the 346 sq m lot which he

owns adjacent to the contested property has an assessed value

of P1,730.00, the assessed value of the lot under controversy would

not be more than the said amount.[7]

The RTC denied petitioner's Motion to Dismiss in an Order

dated November 11, 1999, thus:

The Court finds the said motion to be without merit. The present action on the basis of the allegation of the complaint partakes of the nature of action publicciana (sic) and jurisdiction over said action lies with the Regional Trial Court, regardless of the value of the property. This is so because in paragraph 8 of the complaint, it is alleged that the plaintiff demanded from the defendant the removal of the house occupied by the defendant and the possession of which is Only due to Tolerance (sic) of herein plaintiffs. WHEREFORE, for lack of merit, the motion to dismiss is hereby denied.[8]

Petitioner's Motion for Reconsideration was also denied by the RTC.

[9]

Petitioner then went to the CA on a Petition

for Certiorari and Prohibition seeking the annulment of the Orders of

the RTC.[10]

On May 27, 2002, the CA rendered the herein assailed Decision

dismissing petitioner's action and affirming in toto the RTC.

[11] Pertinent portions of said Decision, read:

At the onset, we find that the complaint filed by the Heirs of Juan dela Cruz, represented

by Senen dela Cruz adequately set forth the jurisdictional requirements for a case to be cognizable by the Regional Trial Court. The Complaint is captioned recovery of portion of registered land and it contains the following allegations:

7. That since plaintiffs and defendant were neighbors, the latter being the admitted owner of the adjoining lot, the former's occupancy of said house by defendant was only due to the tolerance of herein plaintiffs; 8. That plaintiffs, in the latter period of 1993, then demanded the removal of the subject house for the purpose of constructing a commercial building and which herein defendant refused and in fact now claims ownership of the portion in which said house stands; 9. That repeated demands relative to the removal of the subject house were hence made but which landed on deaf ears; 10. That a survey of the property as owned by herein plaintiffs clearly establishes that the subject house is occupying Four Hundred (400) square meters thereof at the north-west portion thereof, as per the approved survey plan in the records of the Bureau of Lands.

x x x x It is settled that when the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected or how and when dispossession started, the remedy should either be an accion publiciana or an accion reinvindicatoria in the proper regional trial court. In the latter instances, jurisdiction pertains to the Regional Trial Court. As another legal recourse from a simple ejectment case governed by the Revised Rules of Summary Procedure, an accion publiciana is the plenary action to recover the right of possession when dispossession has lasted more than one year or when dispossession was effected by means other than those mentioned in Rule 70 of the Rules of Court. Where there is no allegation that there was denial of possession through any of the methods stated in Section 1, Rule 70 of the Rules of Court, or where there is no lease contract between the parties, the proper remedy is the

plenary action of recovery of possession. Necessarily, the action falls within the jurisdiction of the Regional Trial Court. Thus, we find that the private respondents [heirs of dela Cruz] availed of the proper remedy when they filed the action before the court a quo. Undoubtedly, the respondent court therefore did not act with grave abuse of discretion amounting to or in excess of jurisdiction in denying Quinagoran's Motion to Dismiss and the Motion for Reconsideration, thereof, because it has jurisdiction to hear and decide the instant case. x x x x It would not be amiss to point out that the nature of the action and jurisdiction of courts are determined by the allegations in the complaint. As correctly held by the Regional Trial Court, the present action on the basis of the allegation of the complaint partakes of the nature of action publiciana and jurisdiction over said action lies with the Regional Trial Court regardless of the value of the property. Therefore, we completely agree with the court a quo's conclusion that the complaint filed by the Heirs of Juan dela Cruz, represented by Senen dela Cruz, is in the nature of anaccion publiciana and hence it is the Regional Trial Court which has jurisdiction over the action, regardless of the assessed value of the property subject of present controversy.[12]

Petitioner's Motion for Reconsideration was denied on August 28,

2002 for lack of merit.[13]

Petitioner now comes before this Court on a petition for review

claiming that under R.A. No. 7691 the jurisdiction of the MTC,

Metropolitan Trial Court (MeTC), and Municipal Trial Court in Cities

(MTCC) was expanded to include exclusive original jurisdiction over

civil actions when the assessed value of the property does not

exceed P20,000.00outside Metro Manila and P50,000.00 within

Metro Manila.[14] He likewise avers that it is an indispensable

requirement that the complaint should allege the assessed value of

the property involved.[15] In this case, the complaint does not allege

that the assessed value of the land in question is more

than P20,000.00. There was also no tax declaration attached to the

complaint to show the assessed value of the property. Respondents

therefore failed to allege that the RTC has jurisdiction over the

instant case.[16] The tax declaration covering Lot No. 1807 owned by

respondents and where the herein disputed property is purportedly

part -- a copy of which petitioner submitted to the CA -- also shows

that the value of the property is only P551.00.[17] Petitioner then

prays that the CA Decision and Resolution be annulled and set aside

and that the complaint of herein respondents before the trial court

be dismissed for lack of jurisdiction.[18]

Respondents contend that: the petition is without factual and legal

bases, and the contested decision of the CA is entirely in accordance

with law;[19] nowhere in the body of their complaint before the RTC

does it state that the assessed value of the property is

below P20,000.00;[20] the contention of petitioner in his Motion

to Dismiss before the RTC that the assessed value of the disputed lot

is below P20,000.00 is based on the assessed value of an adjacent

property and no documentary proof was shown to support the said

allegation;[21] the tax declaration which petitioner

presented, together with his Supplemental Reply before the CA, and

on the basis of which he claims that the disputed property's

assessed value is only P551.00, should also not be given credence as

the said tax declaration reflects the amount of P56,100.00 for the

entire property.[22]

The question posed in the present petition is not complicated, i.e.,

does the RTC have jurisdiction over all cases of recovery of

possession regardless of the value of the property involved?

The answer is no. The doctrine on which the RTC anchored its denial

of petitioner's Motion to Dismiss, as affirmed by the CA -- that all

cases of recovery of possession or accionpubliciana lies with the

regional trial courts regardless of the value of the property -- no

longer holds true. As things now stand, a distinction must be made

between those properties the assessed value of which is

below P20,000.00, if outside Metro Manila; and P50,000.00, if

within.

Republic Act No. 7691[23] which amended Batas Pambansa Blg.

129[24] and which was already in effect[25] when respondents filed

their complaint with the RTC on October 27, 1994,[26] expressly

provides: SEC. 19. Jurisdiction in civil cases Regional Trial Courts shall exercise exclusive original jurisdiction:x x x x

(2) In all civil actions which involve the title to or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.x x x xSEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. --- Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:x x x x(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of , real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages or whatever kind, attorney's fees, litigation expenses and costs: Provided That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots.(Emphasis supplied)

The Court has also declared that all cases involving title to or

possession of real property with an assessed value of less

than P20,000.00 if outside Metro Manila, falls under the original

jurisdiction of the municipal trial court.[27]

In Atuel v. Valdez[28] the Court likewise expressly stated that:

Jurisdiction over an accion publiciana is vested in a court of general jurisdiction. Specifically, the regional trial court exercises exclusive original jurisdiction in all civil actions which involve x xx possession of real property. However, if the assessed value of the real property involved does not exceed P50,000.00 in Metro Manila, and P20,000.00 outside of Metro Manila, the municipal trial court exercises jurisdiction over actions to recover possession of real property.[29]

That settled, the next point of contention is whether the complaint

must allege the assessed value of the property involved. Petitioner

maintains that there should be such an allegation, while

respondents claim the opposite.

In no uncertain terms, the Court has already held that a complaint

must allege the assessed value of the real property subject of the

complaint or the interest thereon to determine which court has

jurisdiction over the action.[30] This is because the nature of the

action and which court has original and exclusive jurisdiction over

the same is determined by the material allegations of the complaint,

the type of relief prayed for by the plaintiff and the law in effect

when the action is filed, irrespective of whether the plaintiffs are

entitled to some or all of the claims asserted therein.[31]

In this case, the complaint denominated as Recovery of Portion of

Registered Land with Compensation and Damages, reads:

1. That plaintiffs are the only direct and legitimate heirs of the late Juan dela Cruz, who died intestate on February 3, 1977, and are all residents of Centro, Piat, Cagayan;x x x x4. That plaintiffs inherited from x x x Juan dela Cruz x x x a certain parcel of land x x x containing an area of 13,111 square meters.5. That sometime in the mid-1960's, a house was erected on the north-west portion of the aforedescribed lot x x x.x x x x 7. That since plaintiffs and defendant were neighbors, the latter being the admitted owner of the adjoining lot, the former's occupancy of said house by defendant was only due to the tolerance of herein plaintiffs; 8. That plaintiffs, in the latter period of 1993, then demanded the removal of the subject house for the purpose of constructing a commercial building and which herein defendant refused and in fact now claims ownership of the portion in which said house stands; 9. That repeated demands relative to the removal of the subject house were hence made but which landed on deaf ears; 10. That a survey of the property as owned by herein plaintiffs clearly establishes that the subject house is occupying Four Hundred (400) square meters thereof at the north-west portion thereof, as per the approved survey plan in the records of the Bureau of Lands.[32]

Nowhere in said complaint was the assessed value of the subject

property ever mentioned. There is therefore no showing on the face

of the complaint that the RTC has exclusive jurisdiction over the

action of the respondents.[33] Indeed, absent any allegation in the

complaint of the assessed value of the property, it cannot be

determined whether the RTC or the MTC has original and exclusive

jurisdiction over the petitioner's action.[34] The courts cannot take

judicial notice of the assessed or market value of the land.[35]

Jurisdiction of the court does not depend upon the answer of the

defendant or even upon agreement, waiver or acquiescence of the

parties.[36] Indeed, the jurisdiction of the court over the nature of the

action and the subject matter thereof cannot be made to depend

upon the defenses set up in the court or upon a motion to

dismiss for, otherwise, the question of jurisdiction would depend

almost entirely on the defendant.[37]

Considering that the respondents failed to allege in their complaint

the assessed value of the subject property, the RTC seriously erred

in denying the motion to dismiss.Consequently, all proceedings in

the RTC are null and void,[38] and the CA erred in affirming the RTC.[39]

WHEREFORE, the petition is GRANTED. The Court

of Appeals's Decision in CA-GR SP No. 60443 dated May 27, 2002

and its Resolution dated August 28,

2002, areREVERSED and SET ASIDE. The Regional Trial Courts Orders

dated November 11, 1999 and May 11, 2000, and all proceedings

therein are declared NULL and VOID. The complaint in Civil Case No.

240-T is dismissed without prejudice.

No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. No. 119347 March 17, 1999

EULALIA RUSSELL, PUPERTO TAUTHO, FRANCISCO TAUTHO, SUSANA T. REALES, APITACIO TAUTHO, DANILO TAUTHO, JUDITHA PROS,

GREGORIO TAUTHO, DEODITA T. JUDILLA, AGRIPINO TAUTHO, FELIX TAUTHO, WILLIAM TAUTHO, AND MARILYN PERALES, petitioners, vs.HONORABLE AUGUSTINE A. VESTlL, ADRIANO TAGALOG, MARCELO TAUTHO, JUANITA MENDOZA, DOMINGO BANTILAN, RAUL BATALUNA AND ARTEMIO CABATINGAN, respondent.

KAPUNAN, J.:

Before us is a Petition for Certiorari to set aside the Order dated January 12, 1995 issued by respondent Judge Augustine A. Vestil of the Regional Trial Court of Mandaue City, Branch 56, dismissing the complaint filed by petitioners on ground of lack of jurisdiction, as well as his Order dated February 13, 1995 denying petitioners' Motion for Reconsideration of the order of dismissal.

The facts of the case are as follows:

On September 28, 1994, petitioners filed a complaint against private respondents, denominated "DECLARATION OF NULLITY AND PARTITION," with the Regional Trial Court of Mandaue City, Branch 56, docketed as Civil Case No. MAN-2275. The complaint, in substance, alleged that petitioners are co-owners of that parcel of land, Lot 6149 situated in Liloan, Cebu and containing an area of 56,977.40 square meters, more or less. The land was previously owned by the spouses Casimero Tautho and Cesaria Tautho. Upon the death of said spouses, the property was inherited by their legal heirs, herein petitioners and private respondents. Since then, the lot had remained undivided until petitioners discovered a public document denominated "DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF A PREVIOUS ORAL AGREEMENT OF PARTITION," executed on June 6, 1990. By virtue of this deed, private respondents divided the property among themselves to the exclusion of petitioners who are also entitled to the said lot as heirs of the late spouses Casimero Tautho and Cesaria Tautho. Petitioners claimed that the document was false and perjurious as the private respondents were not the only heirs and that no oral partition of the property whatsoever had been made between the heirs. The complaint prayed that the document be declared null and void and an order be issued to partition the land among all the heirs. 1

On November 24, 1994, private respondents filed a Motion to Dismiss 2 the complaint on the ground of lack of jurisdiction over the nature of the case as the total assessed value of the subject land is P5,000.00 which under section 33 (3) 3 of Batas Pambansa Blg. 129, as amended by R.A. No. 7691, 4 falls within the exclusive jurisdiction of the Municipal Circuit Trial Curt of Liloan, Compostela. 5

Petitioners filed an Opposition to the Motion to Dismiss 6 saying that the Regional Trial Court has jurisdiction over the case since the action is one which is incapable of pecuniary estimation within the contemplation of Section 19(1) of B.P. 129, as amended. 7

On January 12, 1995, the respondent judge issued an Order granting the Motion to Dismiss. 8 A Motion for Reconsideration of said order was filed by petitioners on January 30, 1995 alleging that the same is contrary to law because their action is not one for recovery of title to or possession of the land but an action to annul a document or declare it null and void, 9 hence, one incapable of pecuniary estimation falling within the jurisdiction of the Regional Trial Court. Private respondents did not oppose the motion for reconsideration.

On February 13, 1995, the respondent judge issued another Order denying the motion for reconsideration. 10

Hence, this petition wherein the sole issue raised is whether or not the Regional Trial Court has jurisdiction to entertain Civil Case No. MAN-2275.

We find merit in the petition.

Petitioners maintain the view that the complaint filed before the Regional Trial Court is for the annulment of a document denominated as "DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF PREVIOUS ORAL PARTITION," which is clearly one incapable of pecuniary estimation, thus, cognizable by the Regional Trial Court.

Private respondents, on the other hand, insists that the action is one for re-partition and since the assessed value of the property as stated in the complaint is P5,000.00, then, the case falls within the jurisdiction of the Municipal Circuit Trial Court of Liloan, Compostela, Cebu.

For better appreciation of the facts, the pertinent portions of the complaint are reproduced hereunder:

xxx xxx xxx

3. That the plaintiffs and the defendants are the legal heirs of spouses Casimero Tautho and Cesaria N. Tautho who died long time ago;

4. That in life the spouses became the owners in fee simple of a certain parcel of land, which is more particularly described as follows:

A parcel of land containing 56,97740 square meters, more or less, located at Cotcot, Liloan, Cebu.

designated as Lot 6149 per Technical Description and Certification issued by the Office of the Land Management copy of which are hereto attached as Annexes "A" and "A-1" and are made part hereof: total assessed value is P5,000.00;

5. That the passed to the children of the spouses (who are all deceased except for defendant Marcelo Tautho), namely: Zacarias, Epifania, Vicenta, Felecisimo, Maria, Lorencia and Marcelo, and which in turn passed to the plaintiffs and defendants upon their death they being their descendants and legal heirs;

6. That the subject parcel of land has for year been undivided by and among the legal heirs of said previous owners;

7. That, very recently, plaintiffs discovered a public document, which is a declaration of heirs and deed of confirmation of a previous oral

agreement of partition, affecting the land executed by and among the defendants whereby defendants divided the property among themselves to the exclusion of plaintiffs who are entitled thereto; attached hereto as Annex "B" and is made part hereof is xerox copy of said document;

8. That the instrument (Annex "B") is false and perjurious and is a complete nullity because the defendants are not the only heirs of Casimero Tautho; plaintiffs are also heirs and descendants of said deceased; moreover, there has been no oral partition of the property;

9. That pursuant to said document (Annex "B"), defendants had procured tax declarations of the land for their supposed "shares" to the great damage and prejudice of plaintiffs;

10. That the property in controversy should be divided into seven (7) equal parts since Casimero Tautho and Cesaria N. Tautho had seven children;

11. That the parties had failed to settle the controversy amicably at the barangay level; attached hereto as Annex "C" is Certification to file Action;

12. That by reason of the foregoing unjust and illegal act of defendants, plaintiffs were forced to bring instant action and contract the services of the undersigned counsel with whom they bind themselves to pay P30,000.00 as attorney's fees.

WHEREFORE, it is most respectfully prayed of this Honorable Court to declare null and void the document (Annex "B") of declaration of heirs and confirmation and to order the partition of the land into seven (7) equal parts; each part shall respectively go to the seven (7) children of Casimero Tautho and considering six (6) of them died already the same shall go to their children or descendants, and to order the defendants to pay plaintiffs attorney's fees in the amount of P30,000.00.

Plaintiffs further pray for such other reliefs and remedies just and equitable under the premises. 11

We agree with petitioners.

The complaint filed before the Regional Trial Court is doubtless one incapable of pecuniary estimation and therefore within the jurisdiction of said court.

In Singsong vs. Isabela Sawmill, 12 we had the occasion to rule that:

[I]n determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance (now Regional Trial Courts). 13

Examples of actions incapable of pecuniary estimation are those for specific performance, support, or foreclosure of mortgage or annulment of judgment; 14 also actions questioning the validity of a mortgage, 15 annulling a deed of sale or conveyance and to recover the price paid 16 and for rescession, which is a counterpart of specific performance. 17

While actions under Sec. 33(3) of B.P. 129 are also incapable of pecuniary estimation, the law specifically mandates that they are cognizable by the MTC, METC, or MCTC where the assessed value of the real property involved does exceed P20,000.00 in Metro Manila, or P50,000.00, if located elsewhere. If the value exceeds P20,000.00 or P50,000.00 as the case may be, it is the Regional Trial Courts which have jurisdiction under Sec. 19(2). 18 However, the subject matter of the complaint in this case is annulment of a document denominated as "DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF PREVIOUS ORAL PARTITION."

The main purpose of petitioners in filing the complaint is to declare null and void the document in which private respondents declared themselves as the only heirs of the late spouses Casimero Tautho and Cesaria Tautho and divided his property among themselves to the exclusion of petitioners who also claim to be legal heirs and entitled to the property. While the complaint also prays for the partition of the property, this is just incidental to the main action, which is the declaration of nullity of the document above-described. It is axiomatic that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. 19

WHEREFORE, premises considered, the petition is hereby GRANTED. The Order dismissing Civil Case No. MAN-2275, as well as the Order denying the motion for reconsideration of said Order, is SET ASIDE.

The Regional Trial Court, Branch 56, Mandaue City is ORDERED to proceed with dispatch in resolving Civil Case No. MAN-2275. No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 80040 September 30, 1988

ISMAEL AMORGANDA and TRINIDAD G. AMORGANDA, petitioners, vs.HONORABLE COURT OF APPEALS, ESTANISLAO SAYCON and CLARA SAYCON, respondents.

Marcelo G. Flores for petitioner.

Leo B. Diocos for respondents.

PADILLA, J.:

Review on certiorari of the decision * rendered by the respondent appellate court on 17 July 1987, in CA-G.R. SP No. 09614, entitled: "Estanislao Saycon, et al., petitioners, versus Hon. Eleuterio E. Chiu, etc. et al., respondents," which set aside, for being null and void, the order issued by Judge Eleuterio E. Chill on 23 April 1986 in Civil Case No. 8794 of the Regional Trial Court of Negros Oriental, restraining the defendants therein, now private respondents, from cultivating, taking possession of, gathering the fishes and shrimps or other products thereon, or committing acts of interference or disturbance in the plaintiffs' possession of the fishpond in question, and directed the dismissal of said Civil Case No. 8794.

The facts of the case, in brief, are as follows:

On 30 July 1977, herein private respondents, spouses Estanislao and Clara Saycon, leased to herein petitioners, spouses Ismael and Trinidad Amorganda, a fishpond located at Cabalulan Manipis, Tanjay Negros Oriental, which "land is a part or portion of PLA No. 2086 containing an area of SEVEN (7) hectares, more or less, 'in the name of Pedro Saycon, lessors' deceased father,' " for a period of ten (10) years from said date. Rentals in the amount of P3,000,00 a year for the entire lease period were duly paid to and received by the lessors. On 30 January 1981, the lease period was extended for two (2) years, to expire on 30 July 1989. Again, rentals for the extended period were paid to and received by the lessors. Then, on 20 December 1982, the lessors, in consideration of another advance rental on the fishpond, again agreed to extend the lease period for another eight (8) years from 30 July 1989 and terminating on 31, July 1997. 1

On 5 January 1986, however, the lessors, herein private respondents Estanislao and Clara Saycon, harvested bangus and shrimps from the fishpond without the knowledge and consent of the lessees, herein petitioners Ismael and Trinidad Amorganda. Consequently, the petitioners filed a criminal complaint for qualified theft against the private respondents before the Provincial Fiscal of Negros Oriental. The complaint was docketed as I.S. Case No. 86-F and is still pending preliminary investigation therein. 2

Then, on 27 February 1986, the private respondents, allegedly with the aid of armed men, forcibly entered the leased fishpond and prevented the petitioners and their workers from entering the premises. As a result, the petitioners filed a complaint against the private respondents before the Regional Trial Court of Negros Oriental, docketed therein as Civil Case No. 8794, to compel the private respondents to return the leased premises to them and for damages in the amounts of. (1) P25,000. 00 every three (3) months or P100,000.00 a year, until possession of the fishpond is restored to the lessees; (b) P20,000.00, as moral damages and P10,000.00, as exemplary damages; (c) P10,000.00, as attorney's fees and P500.00 per appearance in court of counsel; and (d) such other actual expenses and damages as may be proved during the trial. The petitioners further prayed that a writ of preliminary injunction be immediately issued restraining the private respondents, their agents or persons acting in their behalf, from cultivating, taking possession of, or committing acts which would disturb or interfere with petitioners' possession of said fishpond. 3

Finding the application for the issuance of a writ of preliminary injunction to be sufficient in form and substance, the trial court issued a temporary restraining order on 4 March 1986, directing the private respondents, defendants therein, to refrain from cultivating, taking possession of, gathering fishes, shrimps and other products from the land in question until further orders, and set the application for preliminary injunction for hearing on 13 March 1986. 4

On 26 March 1986, the private respondents filed their Answer to the complaint, alleging that the private respondent Estanislao Saycon is not the true owner of the property which he had leased to the petitioners, but the government of the Philippines, because it reverted to the government after the license of Pedro Saycon, late father of private respondents Estanislao Saycon, was cancelled and all improvements existing in the area forfeited in favor of the government; that the petitioners have no right whatsoever to the fishpond because their earlier rights were lost upon the cancellation of the license of said Pedro Saycon and the area declared open for disposition to any interested party and qualified applicant; that the trial court has no jurisdiction to take cognizance of disputes relative to possessory rights over the fishpond in question, which belongs to the Bureau of Fisheries and Aquatic Resources (BFAR); that the herein petitioners failed to exhaust all administrative remedies before resort was made to the courts; and that the petitioners have no cause of action since the fishpond in question had been forfeited in favor of the government and petitioners are not applicants for permit to operate or lease the same from the government. 5

On 23 April 1986, the trial court granted the application for issuance of a writ of preliminary injunction "restraining, enjoining, and prohibiting the defendants, their agents, servants, and/or any person acting in their behalves from cultivating, taking possession of, gathering the fishes and shrimps or other products thereon, or committing acts of interference or disturbance in the plaintiffs' possession" of the fishpond in question upon the filing of an injunction bond in the amount of P50,000.00. 6 The private respondents filed a motion for reconsideration of the order, but their motion was denied on 11 June 1986. 7

Consequently, the private respondents filed a petition with the Intermediate Appellate Court (now Court of Appeals) to annul and set aside the order of 23 April 1986 on the grounds that: (1) the trial court has no jurisdiction over the case since the complaint filed is in the nature of recovery of possession and should have been filed in

the Municipal Court of Tanjay Negros Oriental, where the land is situated, in accordance with Rule 70 of the Rules of Court; (2) there is no cause of action because "(w)hen the BFAR issued an Order confiscating the fishpond in favor of the Government and declaring the contract of lease between Saycon and the Amorgandas to be null and void, the rights of the Amorgandas for (to) possession over the fishpond was (were) not anymore existing; they might have some rights for sum of money from the Saycons. The respondents have no right whatsoever to step in the shoes of the government; and (3) non-exhaustion of administrative remedies in that the action should have been filed with the BFAR before resort was made to the courts. 8

The herein petitioners in due course filed their comment with the Court of Appeals 9 and on 17 July 1987, the respondent appellate court issued the decision in question, declaring null and void the order of the regional trial court of 23 April 1986, for the reason that the complaint is one for recovery of possession over which the regional trial court has no jurisdiction, and directing the trial court to dismiss Civil Case No. 8794 of the Regional Trial Court of Negros Oriental. 10

On 10, August 1987, the petitioners filed, by registered mail, a motion for reconsideration of the decision, 11 but the respondent appellate court denied the motion for having been filed beyond the reglementary period. 12 Hence, the present recourse. The Court gave due course to the petition. 13

The petitioners raise two (2) issues, to wit:

(1) whether or not the petitioners' motion for reconsideration of the decision of the respondent appellate court had been filed out of time and the said decision, is already final and executory; and

(2) whether or not the Regional Trial Court of Negros Oriental has jurisdiction over the case.

On the procedural issue, it appears that counsel for the herein petitioners received a copy of the decision of the Court of Appeals on 24 July 1987. Pursuant to the rules, 14 he had fifteen (15) days from said date, or up to 8 August 1987, within which to appeal therefrom or file a motion for its reconsideration. Counsel for the petitioners, however, filed the motion for reconsideration only on 10 August 1987, or two (2) days after the expiration of the reglementary period. Counsel for the petitioners, in explaining the delay, claimed that the last day for filing the motion for reconsideration, 8 August 1987, fell on a holiday, a Saturday, so that he filed the motion for reconsideration on Monday, 10 August 1987, the day following a holiday and Sunday.

Saturday, 8 August 1987, however, was not an official holiday so that the petitioners' motion for reconsideration was filed beyond the reglementary period. But a strong compelling reason, i.e., the prevention of a grave miscarriage of justice exists in this case that would warrant a suspension of the Rules and excuse the delay of two (2) calendar days in the filing of said motion for reconsideration.

The private respondents have admitted to have unilaterally terminated the lease contract executed between them and the petitioners, and prevented the latter from entering the fishpond, subject matter of the lease contract, despite the fact that the lease

between them is to expire only on 31 July 1997, and that rentals have been paid to private respondents by the petitioners up to said date. Their (private respondents) excuse is that they have lost their right over the land since said land, which had been previously leased to their late father, Pedro Saycon, had been forfeited in favor of the government.

Indeed, the private respondents have lost whatever right they may have had over the fishpond in question after said land had been forfeited in favor of the government. In his Order, dated 11 April 1985, the Director of the Bureau of Fisheries and Aquatic Resources (BFAR) categorically stated that the heirs of Pedro Saycon, among them the private respondent Estanislao Saycon, "have no more leg to stand on, much less anymore personality to assert any right over the area under OFP No. F-234-B. 15 That being the case, what right had the private respondents to enter the fishpond and exclude the petitioners there from? The fact that the Director of the BFAR, in his Order of 11 April 1985, had ordered that any occupant thereon should vacate the premises did not give the private respondents license to renege on their obligation under the contract 6f lease and eject the petitioners from the land. As correctly stated by the trial court in its order dated 23 April 1986, "(t)he Order of the BFAR (Exhibit "L") relied upon by the defendant (private respondent herein) is of no moment, for the government is not a party in this case. The said Order would become material and relevant only when the government takes legal action against any possessor of the fishpond in question. 16

Besides, the private respondents who appear to be guilty of coercion, stand to unjustly profit from their fraudulent and deceitful act at the expense of the petitioners who may not be able to recover the rentals advanced by them to the private respondents.

One other reason for suspending the Rules and allowing the petitioners to appeal is that there is no indication that, in filing the motion for reconsideration on Monday, 10 August 1987, instead of Saturday, 8 August 1987, counsel for the petitioners was motivated by a desire to delay the proceedings or obstruct the administration of justice. His mistaken belief that Saturday is a legal holiday appears to be pardonable since the courts of justice do not hold office on Saturdays. Anyway, the delay of two (2) calendar days—one of which was a Sunday—in the filing of the motion for reconsideration did not prejudice the cause of the private respondents, or that said private respondents suffered material injury by reason of the delay.

In Lagunzad vs. Court of Appeals, 17 the Court said, and we quote.

We cannot just more petitioner's plea for a review of his case in this instance. There is not the slightest indication of malice on his part or of a desire to delay the proceedings and to transgress the rules on procedure. If at all, his was an honest mistake or miscalculation worsened by some fortuitous occurrence which we deem condonable under the circumstances. For we have, in many cases granted relief where a stringent application of the requirement of timeliness of pleadings would have denied a litigant substantial justice and equity. Suffice it to note that the rules on technicality were promulgated to secure not to override substantial justice. As it should be in this case especially because the petition appears also to be impressed with merit.

The other issue raised by the petitioners is: whether or not the Regional Trial Court of Negros Oriental has jurisdiction over the case.

The respondent appellate court, in its decision under review, found that the regional trial court has no jurisdiction over the case since the object of the complaint was to recover possession of the land which the herein private respondents had secured by means of force, threats and intimidation. Said the appellate court:

... It is quite obvious from the foregoing that the object of the complaint is to recover possession of the property in question which private respondents acquired as lessees thereof, but of which they were deprived by petitioners by means of "force, threats and intimidation." The complaint thus alleges the facts which confer exclusive jurisdiction in the Municipal Trial Court to try the case. (Sec. 33(2), BP 129). The Honorable respondent Court being devoid of jurisdiction over the main case, it was, likewise, without jurisdiction to issue the writ of preliminary injunction dated 23 April 1986. 18

We do not agree. While the herein petitioners' complaint in the trial court alleges that they were dispossessed of the leased fishpond by the lessors, herein private respondents, by means of force, stealth and intimidation, so that the complaint would appear, at first blush, to be one for forcible entry and damages, the action is, in reality, one for specific performance, i.e., to compel the private respondents, as lessors, to comply with their obligations under the lease contract and return the possession of the leased premises to them, and for damages due to their (private respondents') unjust occupation of the land. Such action is one not capable of pecuniary estimation and comes within the exclusive original jurisdiction of regional trial courts. Thus, Article 1654 of the Civil Code provides:

Art. 1654. The lessor is obliged:

(a) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended;

(2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use it has been devoted, unless there is a stipulation to the contrary;

(3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.

In De Rivera vs. Halili, 19 the Court said that the action to compel the lessor to comply with his obligation "to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract" is within the exclusive original jurisdiction of the court of first instance, now the regional trial court.

In Lapitan vs. Scandia Inc., 20 the Court, speaking through the eminent Mr. Justice Jose B.L. Reyes, also said:

A review of the jurisprudence of this Court indicates that in determining whether an action

is one not capable of peculliary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought like in the suits to have the defendant perform his paint of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. ...

Since the present action is to compel the private respondents to perform their part of the contract of lease "to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract," the action is within the exclusive original jurisdiction of the regional trial court. 21

The respondent Court of Appeals, therefore, erroneously classified the present action as one for forcible entry and damages which is cognizable exclusively by the municipal trial court. Accordingly, the decision appealed from should be reversed and set aside.

We also find no merit in the claim of the private respondents that the Bureau of Fisheries and Aquatic Resources (BFAR) has exclusive jurisdiction over the case. In Pitargue vs. Sorilla 22 the Court ruled:

... The vesting of the Lands Department with authority to administer, dispose, and alienate public lands, ... must not be understood as depriving the other branches of the Government of the exercise of their respective functions or powers thereon, such as the authority to stop disorders and quell breaches of the peace by the police, and the authority on the part of the courts to take jurisdiction over possessory actions arising therefrom not involving, directly or indirectly, alienation and disposition.

WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE and another one entered affirming the order issued by the trial court on 23 April 1986 in Civil Case No. 8794 of the Regional Trial Court of Negros Oriental. With costs against the private respondents.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 138896 June 20, 2000

BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs.Heirs of FRANCISCO PASTOR namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD SYLIANCO, respondents.

PANGANIBAN, J.:

An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of the regional trial courts, regardless of the value of the subject property.

The Case

Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order1 of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it dismissed a Complaint for eminent domain. It ruled as follows:

Premises considered, the motion to dismiss is hereby granted on the ground that this Court has no jurisdiction over the case. Accordingly, the Orders dated February 19, 1999 and February 26, 1999, as well as the Writ of Possession issued by virtue of the latter Order are hereby recalled for being without force and effect.2

Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration.

The Facts

Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1)3 a Complaint to expropriate a property of the respondents. In an Order dated April 8, 1997, the MTC dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent domain is an exercise of the power to take private property for public use after payment of just compensation. In an action for eminent domain, therefore, the principal cause of action is the exercise of such power or right. The fact that the action also involves real property is merely incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of the Regional Trial Court and not with this Court."4

Assailed RTC Ruling

The RTC also dismissed the Complaint when filed before it, holding that an action for eminent domain affected title to real property; hence, the value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC. Concluding that the action should have been filed before the MTC since the value of the subject property was less than P20,000, the RTC ratiocinated in this wise:

The instant action is for eminent domain. It appears from the current Tax Declaration of the land involved that its assessed value is only One Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3), of Republic Act No. 7691, all civil actions involving title to, or possession of, real property with an assessed value of less than P20,000.00 are within the exclusive original jurisdiction of the Municipal Trial Courts. In the case at bar,

it is within the exclusive original jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the property involved is located.

The instant action for eminent domain or condemnation of real property is a real action affecting title to or possession of real property, hence, it is the assessed value of the property involved which determines the jurisdiction of the court. That the right of eminent domain or condemnation of real, property is included in a real action affecting title to or possession of real property, is pronounced by retired Justice Jose Y. Feria, thus, "Real actions are those affecting title to or possession of real property. These include partition or condemnation of, or foreclosures of mortgage on, real property. . . ."5

Aggrieved, petitioner appealed directly to this Court, raising a pure question of law.6 In a Resolution dated July 28, 1999, the Court denied the Petition for Review "for being posted out of time on July 2, 1999, the due date being June 2, 1999, as the motion for extension of time to file petition was denied in the resolution of July 14, 1999."7 In a subsequent Resolution dated October 6, 1999, the Court reinstated the Petition.8

Issue

In its Memorandum, petitioner submits this sole issue for the consideration of this Court:

Which court, MTC or RTC, has jurisdiction over cases for eminent domain or expropriation where the assessed value of the subject property is below Twenty Thousand (P20,000.00) Pesos?9

This Court's Ruling

The Petition is meritorious.

Main Issue:

Jurisdiction over an Expropriation Suit

In support of its appeal, petitioner cites Section 19 (1) of BP 129, which provides that RTCs shall exercise exclusive original jurisdiction over "all civil actions in which the subject of the litigation is incapable of pecuniary estimation; . . . . ." It argues that the present action involves the exercise of the right to eminent domain, and that such right is incapable of pecuniary estimation.

Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the title to or possession of real property. Thus, they argue that the case should have been brought before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This law provides that MTCs shall have exclusive original jurisdiction over all civil actions that involve title to or possession of real property, the assessed value of which does not exceed twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand pesos exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs.

We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The test to determine whether it is so was laid down by the Court in this wise:

A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901). 10

In the present case, an expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the exercise by the government of its authority and right to take private property for public use. 11 In National Power Corporation v. Jocson, 12 the Court ruled that expropriation proceedings have two phases:

The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint." An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter as the Rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard."

The second phase of the eminent domain action is concerned with the determination by the court of "the just compensation for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . .

It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its

instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity, the necessity of the expropriation, and the observance of due process. 1 In the main, the subject of an expropriation suit is the government's exercise of eminent domain, a matter that is incapable of pecuniary estimation.

True, the value of the property to be expropriated is estimated in monetary terms, for the court is duty-bound to determine the just compensation for it.1avvphi1 This, however, is merely incidental to the expropriation suit. Indeed, that amount is determined only after the court is satisfied with the propriety of the expropriation.

Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings are within the jurisdiction of Courts of First Instance," 14 the forerunners of the regional trial courts. The said case was decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original jurisdiction over "all civil actions in which the subject of the litigation is not capable of pecuniary estimation." 15 The 1997 amendments to the Rules of Court were not intended to change these jurisprudential precedents.

We are not persuaded by respondents' argument that the present action involves the title to or possession of a parcel of land. They cite the observation of retired Justice Jose Y. Feria, an eminent authority in remedial law, that condemnation or expropriation proceedings are examples of real actions that affect the title to or possession of a parcel of land. 16

Their reliance is misplaced. Justice Feria sought merely to distinguish between real and personal actions. His discussion on this point pertained to the nature of actions, not to the jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over eminent domain cases is still within the RTCs under the 1997 Rules.

To emphasize, the question in the present suit is whether the government may expropriate private property under the given set of circumstances. The government does not dispute respondents' title to or possession of the same. Indeed, it is not a question of who has a better title or right, for the government does not even claim that it has a title to the property. It merely asserts its inherent sovereign power to "appropriate and control individual property for the public benefit, as the public necessity, convenience or welfare may demand." 17

WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The Regional Trial Court is directed to HEAR the case. No costs.

SO ORDERED.

EN BANC

G.R. No. L-3448 November 27, 1950

MANUEL CRUZ, Petitioner, vs. BIENVENIDO A. TAN, Judge of the Court of First Instance of Rizal, Rizal City Branch, and TELESFORA YAMBAO, Respondents.

Eliseo Caunca for petitioner.Miguel R. Cornejo for respondents.

JUGO, J.:

This is a petition for a writ of certiorari and prohibition with injunction.chanroblesvirtualawlibrarychanrobles virtual law library

On August 3, 1949, the respondent Telesfora Yambao (plaintiff in civil case No. 898, Court of First Instance of Rizal - Rizal City Branch) filed a complaint against the petitioner Manuel Cruz (defendant in said case), in which she prayed that the petitioner herein be ordered to finish the construction of a house mentioned in the complaint, or to pay her the sum of P644.31. Within ten days from receipt of the summons, the petitioner filed a motion for a bill of particulars, which was denied by the court in an order dated September 3, 1949, received by the petitioner on September 15, 1949.chanroblesvirtualawlibrary chanrobles virtual law library

On September 19, 1949, the petitioner filed a motion to dismiss the case on the ground that the Court of First Instance of Rizal has no jurisdiction over the subject-matter of the suit inasmuch as the demand contained in the prayer is only for P644.31, which falls under the jurisdiction of the Justice of the Peace or the Judge of the municipal Court.chanroblesvirtualawlibrary chanrobles virtual law library

The motion to dismiss was denied by the court in an order dated October 3, 1949, which order also set the case for trial on the merits on October 10, 1949, although the petitioner had not yet filed his answer nor had he been declared in default.chanroblesvirtualawlibrary chanrobles virtual law library

Said order setting the case for trial on October 10, 1949 was received by the petitioner's counsel on October 12, 1949, that is, two days afterward.chanroblesvirtualawlibrary chanrobles virtual law library

On October 10, 1949, the court dismissed the case for lack of interest of the parties, as they did not appear at the trial.chanroblesvirtualawlibrary chanrobles virtual law library

On October 12, 1949, the respondent Telesfora Yambao filed a motion praying that the trial of the case be set for November 14, 1949, without asking that the order dismissing the case be set aside.chanroblesvirtualawlibrary chanrobles virtual law library

The above-mentioned motion for setting the trial on November 14, 1949 was heard on October 15, 1949, but as the petitioner's counsel received notice of said motion on the said date, October 15, in the afternoon, he could not appear at the hearing of said motion in the morning of October 15.chanroblesvirtualawlibrary chanrobles virtual law library

The court, acting upon said motion of October 12 set the case for trial on November 17, 1949.chanroblesvirtualawlibrary chanrobles virtual law library

The petitioner filed a so-called "Manifestation," dated November 17, 1949, stating that inasmuch as the order of dismissal had not been set aside, said order had become final.chanroblesvirtualawlibrary chanrobles virtual law library

On November 10, 1949, the petitioner filed the present petition with this court.chanroblesvirtualawlibrary chanrobles virtual law library

The respondent court after having been informed by the petitioner that he had filed a petition for a writ of certiorari and prohibition with injunction with the Supreme Court, issued an order postponing the trial of the case to November 29, 1949, and setting aside the order of dismissal dated October 10, 1949.chanroblesvirtualawlibrary chanrobles virtual law library

It is not necessary to pass on all the questions raised by both parties in their pleadings and memoranda in this court, except the question as to jurisdiction, for that is decisive of this case.chanroblesvirtualawlibrary chanrobles virtual law library

It will be noted that the demand of the complaint filed in the Court of First Instance of Rizal is for the sum of P644.31. The alternative remedy of specific performance, which consists in finishing the house, is capable of pecuniary estimation at the same amount, more or less, for, otherwise, the respondent Telesfora Yambao would not have made such alternative demand.chanroblesvirtualawlibrary chanrobles virtual law library

In the Judiciary Act of 1948 (Republic Act No. 296), we find the following pertinent provisions:

SEC. 44. Original jurisdiction. - Courts of First Instance shall have original jurisdiction:

xxx xxx xxxchanrobles virtual law library

(c) In all cases in which the demand, exclusive of interest, or the value of the property in controversy, amounts to more than two thousand pesos; (Emphasis supplied.)chanrobles virtual law library

Sec. 86. Jurisdiction of justices of the peace and judges of municipal courts of chartered cities. - The jurisdiction of justices of the peace and judges of municipal courts of chartered cities shall consist of:

xxx xxx xxxchanrobles virtual law library

(b) Original jurisdiction in civil actions arising in their respective municipalities, and not exclusively cognizable by the Courts of First Instance.chanroblesvirtualawlibrary chanrobles virtual law library

SEC. 88. Original jurisdiction in civil cases. - In all civil actions, including those mentioned in rules 59 and 62 of the Rules of Court, arising in his municipality or city, and not exclusively cognizable by the Court of First Instance, the justice of the peace and the judge of a municipal court shall have exclusive original jurisdiction where the value of the subject-matter or amount of the demand does not exceed two thousand pesos, exclusive of interest and costs. . . .(Emphasis supplied.)

It is clear from the above provisions that the case in question comes within the exclusive original jurisdiction of the municipal court or

justice of the peace court.chanroblesvirtualawlibrary chanrobles virtual law library

The respondent argues that the value of the house, the construction of which has almost been completed, requiring only the expenditure of P644.31 to complete it, according to the allegations of the complaint, is more than P2,873.37, and that consequently the value of the property involved is beyond the jurisdiction of the municipal court. The jurisdiction of the respective courts is determined by the value of the demand and not the value of the transaction out of which the demand arose; that is what the law says in unmistakable terms. The alternative prayer for specific performance is also of the same value, for, as said above, the alternative prayers would not have been made in the complaint if one was more valuable than the other; hence, the specific performance alternatively prayed for, is capable of pecuniary estimation at P644.31 (sec. 88, par. 2, Rep. Act No. 296).chanroblesvirtualawlibrary chanrobles virtual law library

In view of the foregoing, it is declared that the respondent Judge of the Court of First Instance of Rizal is without jurisdiction to try the case referred to, and he is ordered to stop further proceedings by dismissing the case. With costs against the respondent Telesfora Yambao.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-24668 July 31, 1968

ANDRES LAPITAN, plaintiff-appellant, vs.SCANDIA, INC., and GENERAL ENGINEERING CO., defendants-appellees.

Florido and Florido for plaintiff-appellant. Ponce Enrile, Siguion Reyna, Montecillo and Belo and Jesus P. Garcia for defendant-appellee Scandia, Inc. Jose R. Limchin for defendant-appellee General Engineering Co.

REYES, J.B.L., J.:

Andres Lapitan has appealed directly to this Court against an order of the Court of First Instance of Cebu, dismissing, for lack of jurisdiction, his complaint for rescission and damages against appellees Scandia, Inc., of Manila and General Engineering Co. of Cebu.

Lapitan's complaint in the court below averred that on April 17, 1963 he purchased from Scandia, Inc., through its sub-dealer in Cebu City, General Engineering Co., one ABC Diesel Engine, of 16 horse power, for P3,735.00, paid in cash; that he bought the engine for running a rice and corn mill at Ormoc City, Leyte; that defendants had warranted and assured him that all spare parts for said engine

are kept in stock in their stores, enabling him to avoid loss due to long periods of waiting, and that defendants would replace any part of the engine that might break within twelve months after delivery. Plaintiff further charged that on June 28, 1963, the cam rocker arm of the engine broke due to faulty material and workmanship and it stopped functioning; that the sellers were unable to send a replacement until August 29, 1963; that barely six days after replacement the new part broke again due to faulty casting and poor material, so he (Lapitan) notified the sellers and demanded rescission of the contract of sale; that he sought return of the price and damages but defendants did not pay. He, therefore, prayed (1) for rescission of the contract; (2) reimbursement of the price; (3) recovery of P4,000.00 actual damages plus P1,000.00 attorney's fees; (4) recovery of such moral and exemplary damages as the court deems just and equitable; and (5) costs and other proper relief.

After filing answers disclaiming liability, Scandia, Inc., moved to dismiss the complaint on the ground that the total amount claimed was only P8,735.00, and was within the exclusive jurisdiction of the municipal court, under Republic Act 3828, amending the Judiciary Act by increasing the jurisdiction of municipal courts to civil cases involving P10,000.00 or less.

After argument, the Court of First Instance of Cebu dismissed the action for lack of jurisdiction, invoking Cruz vs. Judge B. Tan, 48 O.G. 1320, 87 Phil. 527.

Unable to obtain reconsideration, Lapitan appealed directly to this Court, arguing (1) that rescission was incapable of pecuniary estimation, and (2) that as he claimed moral and exemplary damages, besides the price of P3,735.00, P4,000.00 actual damages, and P1,000.00 attorneys' fees, the value of his demand exceeded the jurisdiction of the municipal court.

A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, 1 this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901).

Actions for specific performance of contracts have been expressly pronounced to be exclusively cognizable by courts of first instance: De Jesus vs. Judge Garcia, L-26816, February 28, 1967; Manufacturers' Distributors, Inc. vs. Yu Siu Liong, L-21285, April 29, 1966. And no cogent reason appears, and none is here

advanced by the parties, why an action for rescission (or resolution) should be differently treated, a rescission being a counterpart, so to speak, of "specific performance". In both cases, the court would certainly have to undertake an investigation into facts that would justify one act or the other. No award for damages may be had in an action for rescission without first conducting an inquiry into matters which would justify the setting aside of a contract, in the same manner that courts of first instance would have to make findings of fact and law in actions not capable of pecuniary estimation expressly held to be so by this Court, arising from issues like those raised in Arroz v. Alojado, et al., L-22153, March 31, 1967 (the legality or illegality of the conveyance sought for and the determination of the validity of the money deposit made); De Ursua v. Pelayo, L-13285, April 18, 1950 (validity of a judgment); Bunayog v. Tunas, L-12707, December 23, 1959 (validity of a mortgage); Baito v. Sarmiento, L-13105, August 25, 1960 (the relations of the parties, the right to support created by the relation, etc., in actions for support); De Rivera, et al. v. Halili, L-15159, September 30, 1963 (the validity or nullity of documents upon which claims are predicated). Issues of the same nature may be raised by a party against whom an action for rescission has been brought, or by the plaintiff himself. It is, therefore, difficult to see why a prayer for damages in an action for rescission should be taken as the basis for concluding such action as one capable of pecuniary estimation — a prayer which must be included in the main action if plaintiff is to be compensated for what he may have suffered as a result of the breach committed by defendant, and not later on precluded from recovering damages by the rule against splitting a cause of action and discouraging multiplicity of suits.2

Of course, where the money claim is prayed for as an alternative relief to specific performance, an equivalence is implied that permits the jurisdiction to be allocated by the amount of the money claim (Cruz vs. Tan, 87 Phil. 627). But no such equivalence can be deduced in the case at bar, where the money award can be considered only if the rescission is first granted.

We, therefore, rule that the subject matter of actions for rescission of contracts are not capable of pecuniary estimation, and that the court below erred in declining to entertain appellant's action for lack of jurisdiction.

WHEREFORE, the appealed order of dismissal is reversed and set aside, and the case is ordered remanded to the court of origin for further proceedings conformable to this opinion. Costs against appellees.

SECOND DIVISION

HEIRS OF JUANITA PADILLA, represented by CLAUDIO PADILLA,

Petitioners,

G.R. No. 176858

Present:

- versus -

DOMINADOR MAGDUA,

Respondent.

CARPIO, J., Chairperson,

VELASCO, JR.,*

PERALTA,

BERSAMIN,** and

ABAD, JJ.

Promulgated:

September 15, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari[1] assailing the

Orders dated 8 September 2006[2] and 13 February 2007[3] of the

Regional Trial Court (RTC) of Tacloban City, Branch 34, in Civil Case

No. 2001-10-161.

The Facts

Juanita Padilla (Juanita), the mother of petitioners, owned a piece of

land located in San Roque, Tanauan, Leyte. After Juanitas death

on 23 March 1989, petitioners, as legal heirs of Juanita, sought to

have the land partitioned. Petitioners sent word to their eldest

brother Ricardo Bahia (Ricardo) regarding their plans for the

partition of the land. In a letter dated 5 June 1998 written by Ricardo

addressed to them, petitioners were surprised to find out that

Ricardo had declared the land for himself, prejudicing their rights as

co-heirs.It was then discovered that Juanita had allegedly executed a

notarized Affidavit of Transfer of Real Property[4] (Affidavit) in favor

of Ricardo on 4 June 1966 making him the sole owner of the

land. The records do not show that the land was registered under

the Torrens system.

On 26 October 2001, petitioners filed an action with the RTC of

Tacloban City, Branch 34, for recovery of ownership, possession,

partition and damages. Petitioners sought to declare void the sale of

the land by Ricardos daughters, Josephine Bahia and Virginia Bahia-

Abas, to respondent Dominador Magdua (Dominador). The sale was

made during the lifetime of Ricardo.

Petitioners alleged that Ricardo, through misrepresentation, had the

land transferred in his name without the consent and knowledge of

his co-heirs. Petitioners also stated that prior to 1966, Ricardo had a

house constructed on the land. However, when Ricardo and his wife

Zosima separated, Ricardo left for Inasuyan, Kawayan, Biliran and

the house was leased to third parties.

Petitioners further alleged that the signature of Juanita in the

Affidavit is highly questionable because on 15 May 1978 Juanita

executed a written instrument stating that she would be leaving

behind to her children the land which she had inherited from her

parents.

Dominador filed a motion to dismiss on the ground of lack of

jurisdiction since the assessed value of the land was within the

jurisdiction of the Municipal Trial Court of Tanauan, Leyte.

In an Order dated 20 February 2006,[5] the RTC dismissed the case

for lack of jurisdiction. The RTC explained that the assessed value of

the land in the amount of P590.00 was less than the amount

cognizable by the RTC to acquire jurisdiction over the case.[6]

Petitioners filed a motion for reconsideration. Petitioners argued

that the action was not merely for recovery of ownership and

possession, partition and damages but also for annulment of deed of

sale. Since actions to annul contracts are actions beyond pecuniary

estimation, the case was well within the jurisdiction of the RTC.

Dominador filed another motion to dismiss on the ground of

prescription.

In an Order dated 8 September 2006, the RTC reconsidered its

previous stand and took cognizance of the case. Nonetheless, the

RTC denied the motion for reconsideration and dismissed the case

on the ground of prescription pursuant to Section 1, Rule 9 of the

Rules of Court. The RTC ruled that the case was filed only in 2001 or

more than 30 years since the Affidavit was executed in 1966. The

RTC explained that while the right of an heir to his inheritance is

imprescriptible, yet when one of the co-heirs appropriates the

property as his own to the exclusion of all other heirs, then

prescription can set in. The RTC added that since prescription had

set in to question the transfer of the land under the Affidavit, it

would seem logical that no action could also be taken against the

deed of sale executed by Ricardos daughters in favor of

Dominador. The dispositive portion of the order states:

WHEREFORE, premises considered, the order of the Court is reconsidered in so far as the pronouncement of the Court that it has no jurisdiction over the nature of the action. The dismissal of the action, however, is maintained not by reason of lack of jurisdiction but by reason of prescription.

SO ORDERED.[7]

Petitioners filed another motion for reconsideration which the RTC

denied in an Order dated 13 February 2007 since petitioners raised

no new issue.

Hence, this petition.

The Issue

The main issue is whether the present action is already barred

by prescription.

The Courts Ruling

Petitioners submit that the RTC erred in dismissing the complaint on

the ground of prescription. Petitioners insist that the Affidavit

executed in 1966 does not conform with the requirement of

sufficient repudiation of co-ownership by Ricardo against his co-

heirs in accordance with Article 494 of the Civil Code. Petitioners

assert that the Affidavit became part of public records only because

it was kept by the Provincial Assessors office for real property tax

declaration purposes. However, such cannot be contemplated by

law as a record or registration affecting real properties. Petitioners

insist that the Affidavit is not an act of appropriation sufficient to be

deemed as constructive notice to an adverse claim of ownership

absent a clear showing that petitioners, as co-heirs, were notified or

had knowledge of the Affidavit issued by their mother in Ricardos

favor.

Respondent Dominador, on the other hand, maintains that Juanita,

during her lifetime, never renounced her signature on the Affidavit

or interposed objections to Ricardos possession of the land, which

was open, absolute and in the concept of an owner. Dominador

contends that the alleged written instrument dated 15 May 1978

executed by Juanita years before she died was only made known

lately and conveys the possibility of being fabricated. Dominador

adds that the alleged highly questionable signature of Juanita on the

Affidavit was only made an issue after 35 years from the date of the

transfer in 1966 until the filing of the case in 2001. As a buyer in

good faith, Dominador invokes the defense of acquisitive

prescription against petitioners.

At the outset, only questions of law may be raised in a petition for

review on certiorari under Rule 45 of the Rules of Court. The factual

findings of the lower courts are final and conclusive and may not be

reviewed on appeal except under any of the following

circumstances: (1) the conclusion is grounded on speculations,

surmises or conjectures; (2) the inference is manifestly mistaken,

absurd or impossible; (3) there is grave abuse of discretion; (4) the

judgment is based on a misapprehension of facts; (5) the findings of

fact are conflicting; (6) there is no citation of specific evidence on

which the factual findings are based; (7) the finding of absence of

facts is contradicted by the presence of evidence on record; (8) the

findings of the Court of Appeals are contrary to those of the trial

court; (9) the Court of Appeals manifestly overlooked certain

relevant and undisputed facts that, if properly considered, would

justify a different conclusion; (10) the findings of the Court of

Appeals are beyond the issues of the case; and (11) such findings are

contrary to the admissions of both parties.[8]

We find that the conclusion of the RTC in dismissing the case on the

ground of prescription based solely on the Affidavit executed by

Juanita in favor of Ricardo, the alleged seller of the property from

whom Dominador asserts his ownership, is speculative. Thus, a

review of the case is necessary.

Here, the RTC granted the motion to dismiss filed by Dominador

based on Section 1, Rule 9 of the Rules of Court which states:

Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the

action is barred by a prior judgment or by statute of limitations, the court shall dismiss the case. (Emphasis supplied)

The RTC explained that prescription had already set in since the

Affidavit was executed on 31 May 1966 and petitioners filed the

present case only on 26 October 2001, a lapse of more than 30

years. No action could be taken against the deed of sale made in

favor of Dominador without assailing the Affidavit, and the action to

question the Affidavit had already prescribed.

After a perusal of the records, we find that the RTC incorrectly relied

on the Affidavit alone in order to dismiss the case without

considering petitioners evidence. The facts show that the land was

sold to Dominador by Ricardosdaughters, namely Josephine Bahia

and Virginia Bahia-Abas, during the lifetime of Ricardo. However,

the alleged deed of sale was not presented as evidence and neither

was it shown that Ricardos daughters had any authority from

Ricardo to dispose of the land. No cogent evidence was ever

presented that Ricardo gave his consent to, acquiesced in, or ratified

the sale made by his daughters to Dominador. In its 8 September

2006 Order, the RTC hastily concluded that Ricardos daughters had

legal personality to sell the property:

On the allegation of the plaintiffs (petitioners) that Josephine Bahia and Virginia Bahia-Abas had no legal personality or right to [sell] the subject property is of no moment in this case. It should be Ricardo Bahia who has a cause of action against [his] daughters and not the herein plaintiffs. After all, Ricardo Bahia might have already consented to or ratified the alleged deed of sale.[9]

Also, aside from the Affidavit, Dominador did not present any proof

to show that Ricardos possession of the land had been open,

continuous and exclusive for more than 30 years in order to

establish extraordinary acquisitive prescription.[10] Dominador

merely assumed that Ricardo had been in possession of the land for

30 years based on the Affidavit submitted to the RTC. The

petitioners, on the other hand, in their pleading filed with the RTC

for recovery of ownership, possession, partition and damages,

alleged that Ricardo left the land after he separated from his wife

sometime after 1966 and moved to another place. The records do

not mention, however, whether Ricardo had any intention to go

back to the land or whether Ricardos family ever lived there.

Further, Dominador failed to show that Ricardo had the land

declared in his name for taxation purposes from 1966 after the

Affidavit was executed until 2001 when the case was filed. Although

a tax declaration does not prove ownership, it is evidence of claim to

possession of the land.

Moreover, Ricardo and petitioners are co-heirs or co-owners of the

land. Co-heirs or co-owners cannot acquire by acquisitive

prescription the share of the other co-heirs or co-owners absent a

clear repudiation of the co-ownership, as expressed in Article 494 of

the Civil Code which states:

Art. 494. x x x No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs as long as he expressly or impliedly recognizes the co-ownership.

Since possession of co-owners is like that of a trustee, in order that a

co-owners possession may be deemed adverse to

the cestui que trust or other co-owners, the following requisites

must concur: (1) that he has performed unequivocal acts of

repudiation amounting to an ouster of the cestui que trust or other

co-owners, (2) that such positive acts of repudiation have been

made known to the cestui que trust or other co-owners, and (3) that

the evidence thereon must be clear and convincing.[11]

In the present case, all three requisites have been met. After

Juanitas death in 1989, petitioners sought for the partition of their

mothers land. The heirs, including Ricardo, were notified about the

plan. Ricardo, through a letter dated 5 June 1998, notified

petitioners, as his co-heirs, that he adjudicated the land solely for

himself. Accordingly, Ricardos interest in the land had now become

adverse to the claim of his co-heirs after repudiating their claim of

entitlement to the land. In Generosa v. Prangan-Valera,[12] we held

that in order that title may prescribe in favor of one of the co-

owners, it must be clearly shown that he had repudiated the claims

of the others, and that they were apprised of his claim of adverse

and exclusive ownership, before the prescriptive period begins to

run.

However, in the present case, the prescriptive period began to run

only from 5 June 1998, the date petitioners received notice of

Ricardos repudiation of their claims to the land.Since petitioners

filed an action for recovery of ownership and possession, partition

and damages with the RTC on 26 October 2001, only a mere three

years had lapsed. This three-year period falls short of the 10-year or

30-year acquisitive prescription period required by law in order to

be entitled to claim legal ownership over the land. Thus, Dominador

cannot invoke acquisitive prescription.

Further, Dominadors argument that prescription began to

commence in 1966, after the Affidavit was executed, is

erroneous. Dominador merely relied on the Affidavit submitted to

the RTC that Ricardo had been in possession of the land for more

than 30 years. Dominador did not submit any other corroborative

evidence to establish Ricardos alleged possession since

1966. In Heirs of Maningding v. Court of Appeals,[13] we held that the

evidence relative to the possession, as a fact, upon which the

alleged prescription is based, must be clear, complete and

conclusive in order to establish the prescription. Here, Dominador

failed to present any other competent evidence to prove the alleged

extraordinary acquisitive prescription of Ricardo over the land. Since

the property is an unregistered land, Dominador bought the land at

his own risk, being aware as buyer that no title had been issued over

the land. As a consequence, Dominador is not afforded protection

unless he can manifestly prove his legal entitlement to his claim.

With regard to the issue of the jurisdiction of the RTC, we hold that

the RTC did not err in taking cognizance of the case.

Under Section 1 of Republic Act No. 7691 (RA 7691),[14] amending

Batas Pambansa Blg. 129, the RTC shall exercise exclusive

jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, is hereby amended to read as follows:

Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction.

(1) In all civil actions in which the subject

of the litigation is incapable of pecuniary estimation;

(2) In all civil actions which involve the

title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x

On the other hand, Section 3 of RA 7691 expanded the jurisdiction of

the Metropolitan Trial Courts, Municipal Trial Courts and Municipal

Circuit Trial Courts over all civil actions which involve title to or

possession of real property, or any interest, outside Metro Manila

where the assessed value does not exceed Twenty thousand pesos

(P20,000.00).The provision states:

Section 3. Section 33 of the same law is hereby amended to read as follows:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Trial Circuit Trial Courts shall exercise:

x x x

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots.

In the present case, the records show that the assessed value of the

land was P590.00 according to the Declaration of Property as of 23

March 2000 filed with the RTC. Based on the value alone, being way

below P20,000.00, the MTC has jurisdiction over the case. However,

petitioners argued that the action was not merely for recovery of

ownership and possession, partition and damages but also for

annulment of deed of sale. Since annulment of contracts are actions

incapable of pecuniary estimation, the RTC has jurisdiction over the

case.[15]

Petitioners are correct. In Singson v. Isabela Sawmill,[16] we held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the

claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by courts of first instance (now Regional Trial Courts).

When petitioners filed the action with the RTC they sought to

recover ownership and possession of the land by questioning (1) the

due execution and authenticity of the Affidavit executed by Juanita

in favor of Ricardo which caused Ricardo to be the sole owner of the

land to the exclusion of petitioners who also claim to be legal heirs

and entitled to the land, and (2) the validity of the deed of sale

executed between Ricardos daughters and Dominador. Since the

principal action sought here is something other than the recovery of

a sum of money, the action is incapable of pecuniary estimation and

thus cognizable by the RTC. Well-entrenched is the rule that

jurisdiction over the subject matter of a case is conferred by law and

is determined by the allegations in the complaint and the character

of the relief sought, irrespective of whether the party is entitled to

all or some of the claims asserted.[17]

In sum, we find that the Affidavit, as the principal evidence relied

upon by the RTC to dismiss the case on the ground of prescription,

insufficiently established Dominadors rightful claim of ownership to

the land. Thus, we direct the RTC to try the case on the merits to

determine who among the parties are legally entitled to the land.

WHEREFORE, we GRANT the petition. We REVERSE AND SET

ASIDE the Orders dated 8 September 2006 and 13 February 2007 of

the Regional Trial Court of Tacloban City, Branch 34 in Civil Case No.

2001-10-161.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 181622 November 20, 2013

GENESIS INVESTMENT, INC., CEBU JAYA REALTY INC., and SPOUSES RHODORA and LAMBERT LIM, Petitioners, vs.HEIRS of CEFERINO EBARASABAL,* NAMELY: ROGELIO EBARASABAL, SPOUSES LIGAYA E. GULIMLIM AND JOSE GULIMLIM, SPOUSES VISITACION E. CONEJOS and ELIAS CONEJOS, BEN TEJERO, POCAS TEJERO, GERTRUDES TEJERO, BANING HAYO, LACIO EBARASABAL and JULIETA EBARASABAL; HEIRS OF FLORO EBARASABAL, namely: SOFIA ABELONG, PEPITO EBARASABAL AND ELPIDIO EBARASABAL; HEIRS OF LEONA EBARASABAL- APOLLO, namely: SILVESTRA A. MOJELLO and MARCELINO APOLLO; HEIRS OF PEDRO EBARASABAL, namely: BONIFACIO EBARASABAL, SERGIO EBARASABAL and JAIME EBARASABAL; HEIRS of ISIDRO EBARASABAL, NAMELY: SPOUSES CARLOSA E. NUEVO and FORTUNATO NUEVA;** HEIRS of BENITO EBARASABAL, namely: PAULO BAGAAN, SPOUSES CATALINA A. MARIBAO and RENE MARIBAO, VICENTE ABRINICA and PATRON EBARASABAL; HEIRS of JULIAN EBARASABAL, NAMELY: ALFREDO BAGAAN, JUAN BAGAAN, AVELINO BAGAAN, FERDINAND BAGAAN, MAURO BAGAAN, SPOUSES ROWENA B. LASACA and FRANCISCO LACASA,*** SPOUSES MARIA B. CABAG and EMILIO CABAG and ESTELITA BAGAAN, all being represented herein by VICTOR MOJELLO, FEDERICO BAGAAN and PAULINO EBARASABAL, as their Attorneys-in-Fact, Respondents.

D E C I S I O N

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision1 and Resolution,2 dated July 11, 2007 and January 10, 2008, respectively, of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 01017.

The antecedents of the case are as follows:

On November 12, 2003, herein respondents filed against herein petitioners a Complaint3 for Declaration of Nullity of Documents, Recovery of Shares, Partition, Damages and Attorney's Fees. The Complaint was filed with the Regional Trial Court (RTC) of Barili, Cebu.

On August 5, 2004, herein petitioners filed a Motion to Dismiss4 contending, among others, that the RTC has no jurisdiction to try the case on the ground that, as the case involves title to or possession of real property or any interest therein and since the assessed value of the subject property does not exceed P20,000.00 (the same being

only P11,990.00), the action falls within the jurisdiction of the Municipal Trial Court (MTC).5

In its Order6 dated September 29, 2004, the RTC granted petitioners' Motion to Dismiss, holding as follows:

x x x x

And while the prayer of the plaintiffs for the annulment of documents qualified the case as one incapable of pecuniary estimation thus, rendering it cognizable supposedly by the second level courts but considering that Republic Act No. 7691 expressly provides to cover "all civil actions" which phrase understandably is to include those incapable of pecuniary estimation, like the case at bar, this Court is of the view that said law really finds application here more so that the same case also "involves title to, or possession of, real property, or any interest therein." For being so, the assessed value of the real property involved is determinative of which court has jurisdiction over the case. And the plaintiffs admitting that the assessed value of the litigated area is less than P20,000.00, the defendants are correct in arguing that the case is beyond this Court's jurisdiction.7

Respondents filed a Motion for Partial Reconsideration,8 arguing that their complaint consists of several causes of action, including one for annulment of documents, which is incapable of pecuniary estimation and, as such, falls within the jurisdiction of the RTC.9

On March 17, 2005, the RTC issued an Order granting respondents' Motion for Partial Reconsideration and reversing its earlier Order dated September 29, 2004. The RTC ruled, thus:

On the issue of want of jurisdiction, this court likewise finds to be with merit the contention of the movants as indeed the main case or the primary relief prayed for by the movants is for the declaration of nullity or annulment of documents which unquestionably is incapable of pecuniary estimation and thus within the exclusive original jurisdiction of this court to try although in the process of resolving the controversy, claims of title or possession of the property in question is involved which together with all the other remaining reliefs prayed for are but purely incidental to or as a consequence of the foregoing principal relief sought.10

Petitioners filed a Motion for Reconsideration,11 but the RTC denied it in its Order dated June 23, 2005.

Aggrieved, petitioners filed a petition for certiorari with the CA. However, the CA dismissed the petition via its assailed Decision dated July 11, 2007, holding that the subject matter of respondents' complaint is incapable of pecuniary estimation and, therefore, within the jurisdiction of the RTC, considering that the main purpose in filing the action is to declare null and void the documents assailed therein.12

Petitioners' Motion for Reconsideration was, subsequently, denied in the CA Resolution dated January 10, 2008.

Hence, the instant petition for review on certiorari raising the sole issue, to wit:

Whether or not the Honorable Court of Appeals gravely erred in concluding that the Regional Trial Court, Branch 60 of Barili, Cebu

has jurisdiction over the instant case when the ALLEGATIONS IN THE COMPLAINT clearly shows that the main cause of action of the respondents is for the Recovery of their Title, Interest, and Share over a Parcel of Land, which has an assessed value of P11,990.00 and thus, within the jurisdiction of the Municipal Trial Court.13

The petition lacks merit.

For a clearer understanding of the case, this Court, like the CA, finds it proper to quote pertinent portions of respondents' Complaint, to wit:

x x x x

1. Plaintiffs are all Filipino, of legal age, surviving descendants – either as grandchildren or great grandchildren – and heirs and successors-in-interest of deceased Roman Ebarsabal, who died on 07 September 1952 x x x

x x x x

8. During the lifetime of Roman Ebarsabal, he acquired a parcel of land situated in Basdaku, Saavedra, Moalboal, Cebu, x x x.

x x x x

with a total assessed value of P2,890.00 x x x. However, for the year 2002, the property was already having (sic) a total assessed value of P11,990.00 x x x.

9. Upon the death of said Roman Ebarsabal, his eight (8) children named in par. 7 above, became co-owners of his above-described property by hereditary succession; taking peaceful possession and enjoyment of the same in fee simple pro indiviso, paying the real estate taxes thereon and did not partition the said property among themselves until all of them likewise died, leaving, however, their respective children and descendants and/or surviving heirs and successors-in-interest, and who are now the above-named plaintiffs herein;

10. The plaintiffs who are mostly residents in (sic) Mindanao and Manila, have just recently uncovered the fact that on 28th January 1997, the children and descendants of deceased Gil Ebarsabal, namely: Pelagio, Hipolito, Precela, Fructuosa, Roberta, Florentino, Erlinda, Sebastian, Cirilo, all surnamed Ebarsabal, have executed among themselves a Deed of Extrajudicial Settlement with Sale of Roman Ebarsabal's entire property described above, by virtue of which they allegedly extrajudicially settled the same and, for P2,600,000.00 – although only the sum of P950,000.00 was reflected in their Deed of Sale for reason only known to them, they sold the whole property to defendants Genesis Investment Inc. represented by co-defendant Rhodora B. Lim, the wife of Lambert Lim, without the knowledge, permission and consent of the plaintiffs who are the vendors' co-owners of the lot in question, x x x.

11. Surprisingly, however, the defendant Genesis managed to have the Tax Declaration of the property issued in the name of co-defendant Cebu Jaya Realty Incorporated, a firm which, as already intimated above, is also owned by Spouses Lambert and Rhodora B. Lim, instead of in the name of Genesis Investment, Incorporated, which is actually the vendee firm of the lot in question.

x x x x

Hence, the reason why Cebu Jaya Realty, Incorporated is joined and impleaded herein as a co-defendant.

12. Without the participation of the plaintiffs who are co-owners of the lot in question in the proceedings, the aforementioned extrajudicial settlement with sale cannot be binding upon the plaintiff-co-owners.

13. Further, where as in this case, the other heirs who are the plaintiffs herein, did not consent to the sale of their ideal shares in the inherited property, the sale was only to be limited to the pro indiviso share of the selling heirs.

x x x x

14. By representation, the plaintiffs, are therefore, by law, entitled to their rightful shares from the estate of the deceased Roman Ebarsabal consisting of seven (7) shares that would have been due as the shares of seven (7) other children of Roman Ebarsabal who are also now deceased, namely: Ceferino, Floro, Leona, Pedro, Isidoro, Julian and Benito, all surnamed Ebarsabal.

15. The defendants who had prior knowledge of the existence of the other heirs who are co-owners of the vendors of the property they purchased, had unlawfully acted in bad faith in insisting to buy the whole property in co-ownership, only from the heirs and successors-in-interest of deceased Gil Ebarsabal, who is only one (1) of the eight (8) children of deceased Roman Ebarsabal, and without notifying thereof in whatever manner the plaintiffs who are the heirs and successors-in-interest of the other co-owners of the property-in-question; thus, have compelled the plaintiffs herein to file this instant case in court to protect their interests, x x x.

x x x x

PRAYER

WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this Honorable Court that, after due notice and hearing, judgment shall be rendered in favor of the plaintiffs, as follows, to wit:

1 – Declaring as null and void and not binding upon the plaintiffs, the following documents to wit:

(a) Deed of Extrajudicial Settlement with Sale executed by and between the heirs of deceased Gil Ebarsabal headed by Pedro Ebarsabal, and Genesis Investment, Inc., represented by Rhodora Lim, dated 28th of January, 1997, marked as Annex-A;

(b) Memorandum of Agreement executed between Pedro Ebarsabal and Genesis Investment, Inc., represented by Rhodora Lim dated 27 January, which document is notarized;

(c) Tax Declaration of Real Property issued to Cebu Jaya Realty, Inc., marked as Annex-D;

2 – Ordering the defendants to make partition of the property in litigation with the plaintiffs into eight (8) equal shares; to get one (1)

share thereof, which is the only extent of what they allegedly acquired by purchase as mentioned above, and to transfer, restore or reconvey and deliver to the plaintiffs, seven (7) shares thereof, as pertaining to and due for the latter as the heirs and successors-in-interest of the seven (7) brothers and sister of deceased Gil Ebarsabal already named earlier in this complaint;

x x x x

Further reliefs and remedies just and equitable in the premises are also herein prayed for.

x x x x14

It is true that one of the causes of action of respondents pertains to the title, possession and interest of each of the contending parties over the contested property, the assessed value of which falls within the jurisdiction of the MTC. However, a complete reading of the complaint would readily show that, based on the nature of the suit, the allegations therein, and the reliefs prayed for, the action is within the jurisdiction of the RTC.

As stated above, it is clear from the records that respondents' complaint was for "Declaration of Nullity of Documents, Recovery of Shares, Partition, Damages and Attorney's Fees." In filing their Complaint with the RTC, respondents sought to recover ownership and possession of their shares in the disputed parcel of land by questioning the due execution and validity of the Deed of Extrajudicial Settlement with Sale as well as the Memorandum of Agreement entered into by and between some of their co-heirs and herein petitioners. Aside from praying that the RTC render judgment declaring as null and void the said Deed of Extrajudicial Settlement with Sale and Memorandum of Agreement, respondents likewise sought the following: (1) nullification of the Tax Declarations subsequently issued in the name of petitioner Cebu Jaya Realty, Inc.; (2) partition of the property in litigation; (3) reconveyance of their respective shares; and (3) payment of moral and exemplary damages, as well as attorney's fees, plus appearance fees.1âwphi1

Clearly, this is a case of joinder of causes of action which comprehends more than the issue of partition of or recovery of shares or interest over the real property in question but includes an action for declaration of nullity of contracts and documents which is incapable of pecuniary estimation.15

As cited by the CA, this Court, in the case of Singson v. Isabela Sawmill,16 held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by courts of first instance [now Regional Trial Courts].17

This rule was reiterated in Russell v. Vestil18 and Social Security

System v. Atlantic Gulf and Pacific Company of Manila Inc.19

Contrary to petitioners contention, the principal relief sought by petitioners is the nullification of the subject Extrajudicial Settlement with Sale entered into by and between some of their co-heirs and respondents, insofar as their individual shares in the subject property are concerned. Thus, the recovery of their undivided shares or interest over the disputed lot, which were included in the sale, simply becomes a necessary consequence if the above deed is nullified. Hence, since the principal action sought in respondents Complaint is something other than the recovery of a sum of money, the action is incapable of pecuniary estimation and, thus, cognizable by the RTC.20 Well entrenched is the rule that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the party is entitled to all or some of the claims asserted.21

Moreover, it is provided under Section 5 (c), Rule 2 of the Rules of Court that where the causes of action are between the same parties but pertain to different venues or jurisdictions, the joinder may be allowed in the RTC provided one of the causes of action falls within the jurisdiction of said court and the venue lies therein. Thus, as shown above, respondents complaint clearly falls within the jurisdiction of the RTC.

WHEREFORE, the petition is DENIED. The Decision and Resolution dated July 11, 2007 and January 10, 2008, respectively, of the Court of Appeals in CA-G.R. CEB-SP No. 01017 are AFFIRMED.

SO ORDERED.

THIRD DIVISION

BARANGAY PIAPI, herein represented by its chairman ANDRES L. LUGNASIN and LIBERATO LARGO, RITA LARGO, SABAS MONTECALBO, SR., CARLOS ZAMORA, DONATA SESICAN, DIZAR CASTILLO, ALEJANDOR GICALE, SALVACION SALE, PABLO MORASTIL, JOSE JAVELOSA, ISIDRA BERNAL, FELIX EGHOT, CORAZON EGHOT, ROSALINA REMONDE, ROA EGHOT, CEFERINA LAGROSA, MARIO ARANEZ, ALBERTO CAMARILLO, BOBBY DULAOTO, NOEL ZAMORA, MARTINO MORALLAS, DANILO FAILAGA, MARITA BRAGAT, NATIVIDAD LAGRAMON, RAQUEL GEROZAGA, SHIRLY CESAR, PIO ZAMORA, ANDRES LUGNASIN, ELPIDIO SESICAN, CRESENTA BORJA, CARLITO TANEZA, JR., MARCIAL RELLON, JEANILITO SUMALINOG, ALBERTO ZAMORA, and LUISITO LAGROSA,

Petitioners, - versus - IGNACIO TALIP representing the HEIRS OF JUAN JAYAG,

Respondent.

x ---------------------------------------------------------------------------------------------------------------x

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari[1] assailing the Orders dated January 12, 1999[2] and April 20, 1999[3] of the Regional Trial Court (RTC), Branch 18, Digos, Davao del Sur in Civil Case No. 3715 filed by the above-named petitioners against respondent Ignacio Talip representing the heirs of Juan Jayag.

The factual antecedents as borne by the records are: On August 28, 1998, petitioners filed with the said RTC

a complaint for reconveyance and damages with prayer for issuance of a temporary restraining order and/or writ of preliminary injunction against respondent, docketed as Civil Case No. 3715.

The complaint alleges that petitioners and their

predecessors-in-interest have been in actual, peaceful, continuous and open possession for more than 30 years of a parcel of land consisting of 3.2 hectares situated in Piapi, Padada, Davao del Sur. It is covered by Original Certificate of Title (OCT) No. P-(3331)-4244 of the Registry of Deeds, same province, issued in the name of Juan Jayag and has a market value of P15,000.00. The same land was subdivided into lots consisting of 100 square meters each, where the individual petitioners built their houses. On the remaining portion were constructed their barangay center, multi-purpose gym and health center. Respondent fraudulently obtained from the said Registry of Deeds a Transfer Certificate of Title (TCT) in his name. In 1998, he paid real estate taxes and subsequently, he threatened to build a barb-wire fence around the land.

Instead of filing an answer, respondent moved to

dismiss the complaint on the ground that the RTC has no jurisdiction over the case considering that the assessed value of the land is only P6,030.00. Respondent, citing Section 33 (3) of BP Blg. 129, as amended by R.A. No. 7691,[4] maintains that the case falls within the exclusive jurisdiction of the Municipal Circuit Trial Court of Padada-Kiblawan, Davao del Sur.

In their opposition to the motion to dismiss, petitioners

alleged that jurisdiction is vested in the RTC considering that the total assessed value of the property is P41,890.00, as shown by a Real Property Field Appraisal and Assessment Sheet dated August

20, 1996 issued by Atty. Marcos D. Risonar, Jr., Provincial Assessor of Davao del Sur.[5]

On January 12, 1999, the trial court issued an Order

dismissing the complaint for lack of jurisdiction. Petitioners then filed a motion for reconsideration but

was denied in an Order dated April 20, 1999. Hence, petitioners directly filed with this Court the

instant petition for review on certiorariassailing the trial courts Order dismissing the complaint for lack of jurisdiction.

Petitioners contend that under Section 19 (1) of BP Blg.

129, as amended, the RTC has jurisdiction over the complaint for reconveyance since it is incapable of pecuniary estimation.

The contention is bereft of merit. This case is analogous

to Huguete vs. Embudo.[6] There, petitioners argued that a complaint for annulment of a deed of sale and partition is incapable of pecuniary estimation, and thus falls within the exclusive jurisdiction of the RTC. However, we ruled thatthe nature of an action is not determined by what is stated in the caption of the complaint but by the allegations of the complaint and the reliefs prayed for. Where the ultimate objective of the plaintiffs, like petitioners herein, is to obtain title to real property, it should be filed in the proper court having jurisdiction over the assessed value of the property subject thereof.

Indeed, basic as a hornbook principle is that the nature

of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.[7]

Let us examine the pertinent allegations in petitioners

complaint below:x x x x x x 2. Plaintiffs by themselves

and/or thru their predecessors-in-interest have been in actual possession, in the concept of an owner, in good faith and in a manner that is open, peaceful, uninterrupted, public, adverse and continuous, for more than 30 years, the following described parcel of land, viz:

A parcel of land containing

an area of 3.2 hectares, more of less, covered by OCT No. P-(3331)-4244, in the name of Juan Jayag and situated in Piapi, Padada, Davao del Sur.

2a. The market value of the

above-described land is Fifteen Thousand Pesos (P15,000.00).

3. The respective areas that

private plaintiffs occupy consisted of an average of 100 square meters on which their homes and houses are built while a large chunk of the above-described property has been used or set aside for the barangay site of and other

infrastructures for Piapi, Padada, Davao del Sur.

x x x x x x 5. Defendant or his

predecessor-in-interest has never been in possession, of the land in suit and except for the year 1998, has not paid taxes thereon nor declared the same for taxation purposes a clear index that defendants title over the same is not genuine.

6. Defendant, in procuring

title to the land in suit did so by fraud, mistake and/or misrepresentation, hence, he holds the title for the benefit and in trust of the landowner that is, herein plaintiffs.

7. Defendant is by law under

obligation to reconvey the land in suit in favor of herein plaintiffs, x x x.

It can easily be discerned that petitioners complaint involves title to, or possession of, real property. However, they failed to allege therein the assessed value of the subject property. Instead, what they stated is the market value of the land at P15,000.00.

Section 19 (2) of Batas Pambansa Blg. 129, as amended

provides: SEC. 19. Jurisdiction in civil

cases.Regional Trial Courts shall exercise exclusive original jurisdiction:

x x x x x x (2) In all civil actions which

involve the title to, or possession of, real property, or any interest thereon, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

The Rule requires that the assessed valueof the property, or if there is none, the estimated value thereof, shall be alleged by the claimant.[8] It bears reiterating that what determines jurisdiction is the allegations in the complaint and the reliefs prayed for. Petitioners complaint is for reconveyance of a parcel of land. Considering that their action involves the title to or interest in real property, they should have alleged therein its assessed value. However, they only specified the market value or estimated value,

which isP15,000.00.Pursuant to the provision of Section 33 (3) quoted earlier, it is the Municipal Circuit Trial Court of Padada-Kiblawan, Davao del Sur, not the RTC, which has jurisdiction over the case.

WHEREFORE, the petition is DENIED.The assailed

Orders dated January 12, 1999 and April 20, 1999 of the Regional Trial Court, Branch 18, Digos, Davao del Sur in Civil Case No. 3715 are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 134230 July 17, 2002

JOVENAL OUANO, petitioner, vs.PGTT INTERNATIONAL INVESTMENT CORPORATION and HON. JUDGE RAMON G. CODILLA, JR., respondents.

SANDOVAL-GUTIERREZ, J.:

PGTT International Investment Corporation (PGTT), respondent, is a corporation duly organized under existing laws, with address at YASCO Bldg., M. J. Cuenco Ave., Cebu City.

On December 11, 1997, PGTT filed with the Regional Trial Court (RTC), Branch 20, Cebu City, a verified complaint against Jovenal Ouano, petitioner, docketed as Civil Case No. CEB- 21319, entitled "PGTT INTERNATIONAL INVESTMENT CORPORATION, Plaintiff, vs. JUVENAL OUANO, Defendant," for "Recovery of Ownership and Possession of Real Property and Damages."1 In its complaint, PGTT alleged that it is the owner of Lot Nos. 1-10, Block 2 of the Sunnymeade Crescent Subdivision located at Pit-os, Talamban, Cebu City. Sometime in October of 1996, PGTT found that Ouano uprooted the concrete monuments of the said lots, plowed them and planted corn thereon. Despite PGTT’s demand that he vacate the lots and restore them to their original condition, Ouano refused, claiming he is the owner and lawful possessor of the 380 square meters he occupied. Due to Ouano’s wrongful act, PGTT was deprived of the use of its property and suffered damages in the amount of P100,000.00 a year. Likewise, PGTT was constrained to file the subject action and hired the services of his counsel for P100,000.00. PGTT prayed:

"WHEREFORE, in view of all the foregoing, it is most respectfully prayed that after due notice and hearing, judgment be rendered ordering defendant (Jovenal Ouano) to vacate the premises and restore the lots to their original condition; pay plaintiff (PGTT) P100,000.00 as damages per year, beginning October, 1996 until he shall have vacated the premises and restored the lots to their original condition; pay P100,000.00 as attorney's fees; and pay P50,000.00 as expenses of litigation.

"Plaintiff prays for such other reliefs and remedies, just and

equitable under the premises."2

On February 5, 1998, Ouano filed a motion to dismiss the complaint on the ground that it is the Municipal Trial Court (MTC), not the RTC, which has jurisdiction over it considering that the assessed value of the lots involved is only P2,910, as indicated in the latest tax declaration,3 citing Section 19 (paragraph 2) and Section 33 (paragraph 3) of Batas Pambansa Bilang 129 (The Judiciary Reorganization Act of 1980), as amended by Republic Act No. 7691.4

In its opposition to Ouano’s motion, PGTT contends that the RTC has jurisdiction since the market value of the lots is P49,760.00.5 Besides, the complaint is not only an action for recovery of ownership and possession of real property, but also for damages exceeding P100,000.00, over which claim the RTC has exclusive original jurisdiction under Section 19 (paragraph 8) of the same law.

On March 6, 1998, the RTC, presided by Judge Ramon G. Codilla, Jr., issued an Order denying the motion to dismiss, holding that:

"This court believes that this court has jurisdiction to try this case considering that the real properties consist of ten parcels of land in a subdivision and the court takes note that there is a discrepancy somewhere by the Office of the City Assessor in the Assessment of the parcels of land for only less than P2,000.00 and that the government is very much at a loss by these unrealistic valuation."6

Ouano filed a motion for reconsideration but was likewise denied by the RTC in its Order dated May 27, 1998. The trial court ruled it has jurisdiction over the case because "(i)t is of judicial knowledge that the real properties situated in Cebu City command a higher valuation than those indicated in the tax declaration. The observation of plaintiff’s (PGTT’s) counsel as to the issue on damages is likewise sustained considering that, being a corporation, it may have incurred damages in the form of unrealized profits."7

Hence the present petition for certiorari filed by Ouano under Rule 65 of the 1997 Rules of Civil Procedure, as amended, assailing the Orders of respondent judge dated March 6, 1998 and May 27, 1998 as having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

At the outset, it is necessary to stress that a direct recourse to this Court is highly improper, for it violates the established policy of strict observance of the judicial hierarchy of courts.8 We need to reiterate, for the guidance of petitioner, that this Court’s original jurisdiction to issue a writ of certiorari (as well as prohibition, mandamus, quo warranto, habeas corpus and injunction) is concurrent with the Court of Appeals (CA), as in the present case, and with the RTCs in proper cases within their respective regions.9 However, this concurrence of jurisdiction does not grant a party seeking any of the extraordinary writs the absolute freedom to file his petition with the court of his choice. This Court is a court of last resort, and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and immemorial tradition.10The hierarchy of courts determines the appropriate forum for such petitions. Thus, petitions for the issuance of such extraordinary writs against the first level ("inferior") courts should be filed with the RTC, and those against the latter, with the CA.11 A direct invocation of this Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is the established policy. It is a policy that is necessary to prevent

inordinate demands upon this Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of its docket.12 Unfortunately, the instant petition does not allege any special and compelling reason to justify a direct recourse to this Court. However, we deem it more appropriate and practical to resolve the controversy in order to avoid further delay, but only in this instance.

The lone issue for our resolution is whether the RTC has jurisdiction over Civil Case No. CEB-21319.

The complaint seeks to recover from private respondent the ownership and possession of the lots in question and the payment of damages. Since the action involves ownership and possession of real property, the jurisdiction over the subject matter of the claim is determined by the assessed value, not the market value, thereof, pursuant to Batas Pambansa Blg. 129, as amended by R.A. 7691. Section 33 (paragraph 3) of the said law provides:

"Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. – Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:

x x x.

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots.

x x x." (Emphasis ours)

Likewise, Section 19 (paragraph 2) of the same law reads:

"Sec. 19. Jurisdiction in civil cases. - The Regional Trial Court shall exercise exclusive original jurisdiction:

x x x.

(2) In all civil actions, which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

x x x." (Emphasis ours)

It is undisputed that the assessed value of the property involved, as shown by the corresponding tax declaration, is only P2,910.00. As such, the complaint is well within the MTC’s P20,000.00 jurisdictional limit.

The finding of respondent judge that the value of the lots is higher than that indicated in the tax declaration and that, therefore, the RTC has jurisdiction over the case is highly speculative. It is elementary that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been issued by the proper government agency.

Respondent judge further held that since the complaint also seeks the recovery of damages exceeding P100,000.00, then it is within the competence of the RTC pursuant to Section 19 (paragraph 8) of Batas Pambansa Blg. 129, as amended by R.A. 7691, which states:

"SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:

x x x

"(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs or the value of the property in controversy exceeds One Hundred Thousand Pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above mentioned items exceeds Two hundred thousand pesos (P200,000.00)." (Emphasis ours)

The above provision does not apply to the instant case. It is applicable only to "all other cases" other than an action involving title to, or possession of real property in which the assessed value is the controlling factor in determining the court’s jurisdiction. Besides, the same provision explicitly excludes from the determination of the jurisdictional amount the demand for "interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs". The exclusion of such damages is reiterated in Section 33, paragraph 3 of the same Batas Pambansa Blg. 129, as amended, quoted earlier. The said damages are merely incidental to, or a consequence of, the main cause of action for recovery of ownership and possession of real property. In this connection, this Court issued Administrative Circular No. 09-94 setting the guidelines in the implementation of R.A. 7691. Paragraph 2 states:

"2. The exclusion of the term ‘damages of whatever kind’ in determining the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court." (Emphasis ours)

We thus find that in issuing the assailed orders denying petitioner’s motion to dismiss, thus taking cognizance of the case, the RTC committed grave abuse of discretion.

WHEREFORE, the instant petition is GRANTED. The assailed Orders issued by respondent RTC on March 6, 1998 and May 27, 1998 in Civil Case No. CEB-21319 areSET ASIDE. Accordingly, the complaint is ordered DISMISSED.

SO ORDERED.

FIRST DIVISION

[G.R. No. 136109. August 1, 2002]

RADIO COMMUNICATIONS OF THE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS and MANUEL DULAWON, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This is a petition for review of the decision of the Court of Appeals[1] in CA-G.R. SP No. 45987 dated April 30, 1998[2] and its resolution dated October 15, 1998[3] denying the motion for reconsideration.

On June 18, 1997, private respondent Manuel Dulawon filed with the Regional Trial Court of Tabuk, Kalinga, Branch 25, a complaint for breach of contract of lease with damages against petitioner Radio Communications of the Philippines, Inc. (RCPI). Petitioner filed a motion to dismiss the complaint for lack of jurisdiction contending that it is the Municipal Trial Court which has jurisdiction as the complaint is basically one for collection of unpaid rentals in the sum of P84,000.00, which does not exceed the jurisdictional amount of P100,000.00 for Regional Trial Courts. The trial court denied the motion to dismiss,[4] as well as petitioners motion for reconsideration.[5] Hence, petitioner went to the Court of Appeals on a petition for certiorari. On April 30, 1998, the Court of Appeals dismissed the petition. The dispositive portion thereof reads:

WHEREFORE, the petition is hereby DENIED DUE COURSE and is DISMISSED. Costs against petitioner.

SO ORDERED.[6]

The motion for reconsideration of the foregoing decision was denied on October 15, 1998. Hence, this petition.

The issue for resolution in this petition is whether or not the Regional Trial Court has jurisdiction over the complaint filed by private respondent.

Pertinent portion of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, provides:

SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:

(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

x x x x x x x x x

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two hundred thousand pesos (P200,000.00).[7]

Corollary thereto, Administrative Circular No. 09-94, states:

x x x x x x x x x

2. The exclusion of the term damages of whatever kind in determining the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. 129, as amended by R.A. No. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court.

x x x x x x x x x.

In Russell, et al., v. Vestil, et al.,[8] the Court held that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, the nature of the principal action or remedy sought must first be ascertained. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and jurisdiction over the action will depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, the action is one where the subject of the litigation may not be estimated in terms of money, which is cognizable exclusively by Regional Trial Courts.

It is axiomatic that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein.[9]

In the case at bar, the allegations in the complaint plainly show that private respondents cause of action is breach of contract. The pertinent portion of the complaint recites:

x x x x x x x x x

2. That sometime during the end of the year 1995, defendant through its appropriate officials negotiated with plaintiff the lease of a portion of the latters building x x x

3. That the lease contract was effective for a period of three (3) years of from January 1, 1996 to January 1, 1998 with advance payment for the year 1996. The advance was not however given in lump sum but on installment. One check that was given in payment of one months rental for 1996 was even stale and had to be changed only after demand;

4. That as per contract the monthly rental for 1997 was P3,300.00 while for 1998, it is P3,700.00;

5. That the defendant surreptitiously removed its equipments and other personalities from the leased premises and failed to pay rentals due for the months of January to March 1997 to the damage

and prejudice of plaintiff; that this failure and refusal on the part of plaintiff accelerated the payment of all rentals for each month for the years 1997 and 1998;

6. That the acts of defendant amounts to a breach of contract which is unlawful and malicious, as in fact, it caused plaintiff serious anxiety, emotional stress, and sleepless nights for which he is entitled to moral damages;

7. That plaintiff conveyed his feelings to Mr. Ronald C. Manalastas as evidenced by a letter dated January 7, 1997 a copy of which is hereto attached to form part hereof as Annex B. This was later followed by a letter of plaintiffs counsel a machine copy of which is hereto attached to form part hereof and marked as Annex C. Both these letters landed on deaf ears thereby aggravating the worries/anxieties of plaintiff;

8. That the period agreed is for the benefit of both parties and any unilateral termination constitutes breach of contract;

9. That defendant actually used the leased premises during the year 1996; that had it not been for the contract, plaintiff could have leased the premises to other persons for business purposes; that this unlawful and malicious breach of contract cannot be lawfully countenanced hence defendant must be taught a lesson by being ordered to pay exemplary damages;

x x x x x x x x x.[10]

It is settled that a breach of contract is a cause of action either for specific performance or rescission of contracts.[11] In Manufacturers Distributors, Inc. v. Siu Liong,[12] the Court held that actions for specific performance are incapable of pecuniary estimation and therefore fall under the jurisdiction of the Regional Trial Court.[13] Here, the averments in the complaint reveal that the suit filed by private respondent was primarily one for specific performance as it was aimed to enforce their three-year lease contract which would incidentally entitle him to monetary awards if the court should find that the subject contract of lease was breached. As alleged therein, petitioners failure to pay rentals due for the period from January to March 1997, constituted a violation of their contract which had the effect of accelerating the payment of monthly rentals for the years 1997 and 1998. The same complaint likewise implied a premature and unilateral termination of the term of the lease with the closure of and removal all communication equipment in the leased premises.[14] Under the circumstances, the court has to scrutinize the facts and the applicable laws in order to determine whether there was indeed a violation of their lease agreement that would justify the award of rentals and damages. The prayer, therefore, for the payment of unpaid rentals in the amount of P84,000.00 plus damages consequent to the breach is merely incidental to the main action for specific performance. Similarly, in Manufacturers Distributors Inc.,[15] the Court explained

x x x x x x x x x

That plaintiffs complaint also sought the payment by the defendant of P3,376.00, plus interest and attorneys fees, does not give a pecuniary estimation to the litigation, for the payment of such amounts can only be ordered as a consequence of the specific performance primarily sought. In other words, such payment would be but an incident or consequence of defendant's liability for specific performance. If no such liability is judicially declared, the payment

can not be awarded. Hence, the amounts sought do not represent the value of the subject of litigation.

Subject matter over which jurisdiction can not be conferred by consent, has reference, not to the res or property involved in the litigation nor to a particular case, but to the class of cases, the purported subject of litigation, the nature of the action and of the relief sought (Appeal of Maclain, 176 NW. 817).

Specifically, it has been held that:

The Court has no jurisdiction of a suit for specific performance of a contract, although the damages alleged for its breach, if permitted, are within the amount of which that court has jurisdiction. (Mebane Cotton Breeding Station. vs. Sides, 257 SW. 302; 21 C.J.S. 59, note).

x x x x x x x x x

Clearly, the action for specific performance case, irrespective of the amount of rentals and damages sought to be recovered, is incapable of pecuniary estimation, hence cognizable exclusively by the Regional Trial Court. The trial court, therefore, did not err in denying petitioners motion to dismiss.

WHEREFORE, in view of all the foregoing, the petition is DENIED and the assailed decision of the Court of Appeals in CA-G.R. SP No. 45987 is AFFIRMED.

SO ORDERED.

FIRST DIVISION

ARTEMIO INIEGO,[1]Petitioner, - versus - The HONORABLE JUDGE GUILLERMO G. PURGANAN, in his official capacity as Presiding Judge of the Regional Trial Court, Branch 42, City of Manila, and FOKKER C. SANTOS,Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N

CHICO-NAZARIO, J.:

For this Court to grant this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner has to persuade us on two engaging questions of law. First, he has to convince us that actions for damages based on quasi-delict are actions that are capable of pecuniary estimation, and therefore would fall under the jurisdiction of the municipal courts if the claim does not exceed the jurisdictional amount of P400,000.00 in Metro Manila. Second, he has to convince us that the moral and exemplary damages claimed by the private respondent should be excluded from the computation of the above-mentioned jurisdictional amount because they arose from a cause of action other than the negligent act of the defendant.

Petitioner urges us to reverse the 28 October 2004

Decision and 26 January 2005 Resolution of the Court of Appeals, Eighth Division, in CA-G.R. SP No. 76206 denying due course to the petition for certiorari filed by petitioner under Rule 65, elevating the 21 October 2002 Omnibus Order and the 21 January 2003 Order of the Regional Trial Court (RTC), Branch 42, City of Manila. The dispositive portion of the 28 October 2004 Decision of the Court of Appeals reads:

WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED for lack of merit.[2]

The factual and procedural antecedents of this case are as follows:

On 1 March 2002, private respondent Fokker Santos filed a complaint for quasi-delict and damages against Jimmy T. Pinion, the driver of a truck involved in a traffic accident, and against petitioner Artemio Iniego, as owner of the said truck and employer of Pinion. The complaint stemmed from a vehicular accident that happened on 11 December 1999, when a freight truck allegedly being driven by Pinion hit private respondents jitney which private respondent was driving at the time of the accident.

On 24 August 2002, private respondent filed a Motion to Declare defendant in Default allegedly for failure of the latter to file his answer within the final extended period. On 28 August 2002, petitioner filed a Motion to Admit and a Motion to Dismiss the complaint on the ground, among other things, that the RTC has no jurisdiction over the cause of action of the case.

On 21 October 2002, public respondent Judge Guillermo G. Purganan, acting as presiding judge of the RTC, Branch 42, Manila, issued the assailed Omnibus Order denying the Motion to Dismiss of the petitioner and the Motion to Declare Defendant in Default of the private respondent. Pertinent portions of the Omnibus Order and the dispositive portion thereof read:

In his opposition to the

motion to declare him in default and his Motion to Admit defendant IEGO alleged that he never received the Order dated 12 August 2002. But believing in good faith, without being presumptuous, that his 3rd Motion for additional Time to file or any appropriate [pleading] would be granted, he filed the aforesaid Motion received by the Court on 23 August 2002.

The explanation of

defendant IEGO has merit. The order dated 12 August 2002 was sent to a wrong address, thus defendant IEGO did not receive it. Since it was not received, he was not aware that the court would grant no further extension. The Motion to Admit Motion to Dismiss has to be granted and the Motion to declare Defendant IEGO [in default] has to be DENIED.

x x x x The plaintiff opines that this

court has exclusive jurisdiction because the cause of action is the claim for damages, which exceeds P400,000.00. The complaint prays for actual damages in the amount of P40,000.00, moral damages in the amount of P300,000.00, and exemplary damages in the amount of P150,000.00. Excluding attorneys fees in the amount of P50,000.00, the total amount of damages being claimed is P490,000.00.

Proceeding on the

assumption that the cause of action is the claim of (sic) for damages in the total amount of P490,000.00, this court has jurisdiction. But is the main cause of action the claim for damages?

This court is of the view that

the main cause of action is not the claim for damages but quasi-delict. Damages are being claimed only as a result of the alleged fault or negligence of both defendants under Article 2176 of the Civil Code in the case of defendant Pinion and under Article 2180 also of the Civil Code in the case of defendant Iniego. But since fault or negligence (quasi-delicts) could not be the subject of pecuniary estimation, this court has exclusive jurisdiction.

x x x x WHEREFORE, in view of all

the foregoing, the motion to declare defendant Iniego in default and the said defendants motion to dismiss are denied.[3]

On 7 November 2002, petitioner filed a Motion for Reconsideration of the Omnibus Order of 21 October 2002. On 21 January 2003, public respondent issued an Order denying petitioners motion for reconsideration. Pertinent portions of the 21 January 2003 Order are reproduced hereunder:

What this court referred to in its Order sought to be reconsidered as not

capable of pecuniary estimation is the CAUSE OF ACTION, which is quasi-delict and NOT the amount of damage prayed for.

x x x x WHEREFORE, in view of the

foregoing, the motion for reconsideration is DENIED.[4]

Petitioner elevated the 21 October 2002 and 21 January 2003 Orders of the RTC to the Court of Appeals on petition for certiorari under Rule 65 of the Rules of Court. On 28 October 2004, the Court of Appeals promulgated the assailed Decision, the dispositive portion thereof reads:

WHEREFORE, the petition is DENIED DUE COURSE and dismissed for lack of merit.[5]

On 22 November 2004, petitioner moved for reconsideration, which was denied by the Court of Appeals on 26 January 2005. Hence, this present petition.

Petitioner claims that actions for damages based on quasi-delict are actions that are capable of pecuniary estimation; hence, the jurisdiction in such cases falls upon either the municipal courts (the Municipal Trial Courts, Metropolitan Trial Courts, Municipal Trial Courts In Cities, And Municipal Circuit Trial Courts), or the Regional Trial Courts, depending on the value of the damages claimed.

Petitioner argues further that should this Court find

actions for damages capable of pecuniary estimation, then the total amount of damages claimed by the private respondent must exceed P400,000.00 in order that it may fall under the jurisdiction of the RTC. Petitioner asserts, however, that the moral and exemplary damages claimed by private respondent be excluded from the computation of the total amount of damages for jurisdictional purposes because the said moral and exemplary damages arose, not from the quasi-delict, but from the petitioners refusal to pay the actual damages.

I

Actions for damages based on quasi-delicts are

primarily and effectively actions for the recovery of a sum of money for the damages suffered because of the defendants alleged tortious acts, and are therefore capable of pecuniary estimation.

In a recent case,[6] we did affirm the jurisdiction of a

Municipal Circuit Trial Court in actions for damages based on quasi-delict, although the ground used to challenge said jurisdiction was an alleged forum shopping, and not the applicability of Section 19(1) of Batas Pambansa Blg. 129.

According to respondent Judge, what he referred to in

his assailed Order as not capable of pecuniary estimation is the cause of action, which is a quasi-delict, and not the amount of damage prayed for.[7] From this, respondent Judge concluded that since fault or negligence in quasi-delicts cannot be the subject of pecuniary estimation, the RTC has jurisdiction. The Court of Appeals

affirmed respondent Judge in this respect.[8] Respondent Judges observation is erroneous. It is

crystal clear from B.P. Blg. 129, as amended by Republic Act No. 7691, that what must be determined to be capable or incapable of pecuniary estimation is not the cause of action, but the subject matter of the action.[9] A cause of action is the delict or wrongful act or omission committed by the defendant in violation of the primary rights of the plaintiff.[10] On the other hand, the subject matter of the action is the physical facts, the thing real or personal, the money, lands, chattels, and the like, in relation to which the suit is prosecuted, and not the delict or wrong committed by the defendant.[11]

The case of Lapitan v. Scandia, Inc., et al.,[12] has guided this Court time and again in determining whether the subject matter of the action is capable of pecuniary estimation. In Lapitan, the Court spoke through the eminent Mr. Justice Jose B.L. Reyes:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance [now Regional Trial Courts] would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought like suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance [now Regional Trial Courts]. x x x.[13] (Emphasis supplied.)

Actions for damages based on quasi-delicts are primarily and effectively actions for the recovery of a sum of money for the damages suffered because of the defendants alleged tortious acts. The damages claimed in such actions represent the monetary equivalent of the injury caused to the plaintiff by the defendant, which are thus sought to be recovered by the plaintiff. This money claim is the principal relief sought, and is not merely incidental thereto or a consequence thereof. It bears to point out that the complaint filed by private respondent before the RTC actually bears the caption for DAMAGES.

Fault or negligence, which the Court of Appeals claims

is not capable of pecuniary estimation, is not actionable by itself. For such fault or negligence to be actionable, there must be a resulting damage to a third person. The relief available to the offended party in such cases is for the reparation, restitution, or payment of such damage, without which any alleged offended party has no cause of

action or relief. The fault or negligence of the defendant, therefore, is inextricably intertwined with the claim for damages, and there can be no action based on quasi-delict without a claim for damages.

We therefore rule that the subject matter of actions for

damages based on quasi-delict is capable of pecuniary estimation.

II

The amount of damages claimed is within the jurisdiction of the RTC, since it is the claim for all kinds of damages that is the basis of determining the jurisdiction of courts, whether the claims for damages arise from the same or from different causes of action.

Despite our concurrence in petitioners claim that

actions for damages based on quasi-delict are actions that are capable of pecuniary estimation, we find that the total amount of damages claimed by the private respondent nevertheless still exceeds the jurisdictional limit of P400,000.00 and remains under the jurisdiction of the RTC.

Petitioner argues that in actions for damages based on

quasi-delict, claims for damages arising from a different cause of action (i.e., other than the fault or negligence of the defendant) should not be included in the computation of the jurisdictional amount. According to petitioner, the moral and exemplary damages claimed by the respondents in the case at bar are not direct and proximate consequences of the alleged negligent act. Petitioner points out that the complaint itself stated that such moral and exemplary damages arose from the alleged refusal of defendants to honor the demand for damages, and therefore there is no reasonable cause and effect between the fault or negligence of the defendant and the claim for moral and exemplary damages.[14] If the claims for moral and exemplary damages are not included in the computation for purposes of determining jurisdiction, only the claim for actual damages in the amount of P40,000.00 will be considered, and the MeTC will have jurisdiction.

We cannot give credence to petitioners arguments. The

distinction he made between damages arising directly from injuries in a quasi-delict and those arising from a refusal to admit liability for a quasi-delict is more apparent than real, as the damages sought by respondent originate from the same cause of action: the quasi-delict. The fault or negligence of the employee and the juristantum presumption of negligence of his employer in his selection and supervision are the seeds of the damages claimed, without distinction.

Even assuming, for the sake of argument, that the

claims for moral and exemplary damages arose from a cause of action other than the quasi-delict, their inclusion in the computation of damages for jurisdictional purposes is still proper. All claims for damages should be considered in determining the jurisdiction of the court regardless of whether they arose from a single cause of action or several causes of action. Rule 2, Section 5, of the Rules of Court allows a party to assert as many causes of action as he may have against the opposing party. Subsection (d) of said section provides that where the claims in all such joined causes of action are principally for recovery of money, the aggregate amount claimed shall be the test of jurisdiction.[15]

Hence, whether or not the different claims for damages

are based on a single cause of action or different causes of action, it

is the total amount thereof which shall govern. Jurisdiction in the case at bar remains with the RTC, considering that the total amount claimed, inclusive of the moral and exemplary damages claimed, is P490,000.00.

In sum, actions for damages based on quasi-delicts are

actions that are capable of pecuniary estimation. As such, they fall within the jurisdiction of either the RTC or the municipal courts, depending on the amount of damages claimed. In this case, the amount of damages claimed is within the jurisdiction of the RTC, since it is the claim for all kinds of damages that is the basis of determining the jurisdiction of courts, whether the claims for damages arise from the same or from different causes of action.

WHEREFORE, the petition for review on certiorari is

hereby DENIED for lack of merit. The Decision and Resolution of the Court of Appeals dated 28 October 2004 and 26 January 2005, respectively, are AFFIRMED insofar as they held that the Regional Trial Court has jurisdiction. No costs.

SO ORDERED.