Civpro Session 2

Civil Procedure | session 2| 1

FIRST DIVISION

[G.R. No. 92625 : December 26, 1990.]

192 SCRA 768

JOSE ORDA and IMELDA LOZADA, Petitioners, vs. THE HONORABLE COURT OF APPEALS and GIL GALANG Respondents.

D E C I S I O N

GANCAYCO, J.:

The question presented in this case is whether or not the Court of Appeals may refer a petition for habeas corpus originally filed with it to the Regional Trial Court for a full-blown trial due to conflicting facts presented by the parties.

Originally, private respondent filed a petition for habeas corpus with the Regional Trial Court of San Pablo City to regain custody of his minor daughter, Joyce, who continued staying with her maternal grandparents, petitioners herein, her mother being already deceased at the initiation of the action. The case was eventually dismissed for lack of jurisdiction because petitioners, as defendants therein, had moved to Bataan and any writ of habeas corpus to be issued by the trial court may not be enforced against them.

Subsequently, private respondent, on the basis of his being the sole surviving parent of his daughter, filed a petition for habeas corpus with the respondent Court of Appeals docketed as CA-G.R. No. 13912-SP, an original action to compel petitioners to produce the body of minor Joyce Orda Galang and explain the basis of their custody. Petitioners herein filed their Opposition/Answer 1 alleging that private respondent abandoned his wife and child, had no source of livelihood and therefore could not support his daughter, they prayed that care and custody of the child be awarded them.: rd

On 13 April 1988, respondent court issued its assailed decision, as follows:

The conflicting thesis (sic), however, of petitioner [private respondent herein] and respondents [petitioners herein] require a full-blown trial of the facts alleged by the parties. This could be shown by the initial discussions aforestated.

The records show that [private respondent] had already filed a similar petition before the Regional Trial Court, Fourth Judicial Region, Branch 31, San Pablo City, on November 23, 1987, in Special Proceedings No. SP-719 (87). However, the writ was returned unserved as [petitioners] ostensibly transferred their domicile at the Philippine Refugee Processing Center at Barrio Sabang, Morong, Bataan.

Inasmuch as [petitioners] have submitted to the jurisdiction of the Court by producing the body of the child, Joyce Orda Galang, and submitted their comments to the petition, the trial on the merits could now proceed to determine who of the parties are entitled to the custody of the child.

WHEREFORE, premises considered, this Court hereby decides to REMAND this case to the Regional Trial Court, Branch 31, San Pablo City, for trial on the merits as to which of the parties are legally entitled to the custody of the child, Joyce Orda Galang.

SO ORDERED. 2

In conformity with the foregoing decision the Regional Trial Court of San Pablo City, the Hon. Napoleon R. Flojo presiding, before which private respondent filed his first action, ordered the reinstatement of Special Proceedings No. SP-719 (87) and scheduled the case for trial on the merits. 3 Upon examination of the records of said case, petitioners noted that only the order of dismissal of the same was in the expediente of the case. They brought this matter to the attention of the trial court which then issued an order dated 27 January 1989 directing the Chief, Archives Section of the Court of Appeals "to transmit to this Court the original record of case AC-G.R. No. SP-13912 (sic) immediately upon receipt of this Order." 4

In reply, the respondent Court of Appeals advised the trial court that no records can be remanded because no expediente from the lower court was ever elevated. For this reason, petitioners filed with respondent court on 21 April 1989 a Motion for Clarification of its earlier decision alleging that CA-G.R. No. SP-13912 was an original action, not an appeal emanating from, or a special civil action to assail, a case filed with the trial court, hence no record of the case can be remanded because no expediente from the lower court was ever elevated to the Court of Appeals; that Special Proceedings No. SP-719 (87) was dismissed for lack of jurisdiction and the order of dismissal has long become final and, moreover, herein petitioners were never brought to the jurisdiction of the trial court in said special proceedings, so much so that they have not even presented an answer or opposition in said special proceedings; and that a reinstatement of Special Proceedings No. SP-719 (87), over which the trial court had lost jurisdiction, may not be justified by virtue of the order of the Court of Appeals to remand CA-G.R. No. 13912 for trial on the merits. 5

The Court of Appeals 6 resolved this motion on 6 June 1989 as follows:

At the outset, it is necessary to point out that this Court entertained this petition for Habeas Corpus in the exercise of its original jurisdiction over such case. Said petition is in no way connected with the one dismissed by the lower court in SP-719 (87).

In their Motion for Clarification, [petitioners] appear to be confused by this Court's directive remanding the case to the lower court.

It should be noted that when this Court ordered the same, it did not mean the remanding of the records, but (the) referring (of) the case to the court a quo for appropriate action, it enjoying original and concurrent jurisdiction with this Court over habeas corpus cases (B.P. 129).:-cralaw


Judge Napoleon Flojo also appears to be mixed up as he issued an Order dated January 27, 1989, which inter alia require the Chief, Archives Section of this Court "to transmit" to the Regional Trial Court "the original record of case AC-G.R. No. 13912 immediately upon receipt of this order." (p. 106, Rollo) (sic) But no records can be transmitted back to the lower court simply because no records were elevated in that, as aforesaid, the case was filed here as an original action.

The [petitioners] have manifested in their motion that they were not given an opportunity to answer or at least comment on the petition. Now the same is in the lower court as directed in the decision sought to be clarified. Indeed, issues cannot be joined if the lower court will deprive the [petitioners] (of) their right to respond to the petition.

WHEREFORE, for the sake of clarity the dispositive portion of the decision dated April 13, 1988 is hereby MODIFIED to read as follows:

"WHEREFORE, premises considered, this Court hereby decides to REFER this case to the Regional Trial Court, Branch 31, San Pablo City, for trial on the merits as to which of the parties are legally entitled to the custody of the child, Joyce Orda Galang. FOR ISSUES TO BE JOINED, THE LOWER COURT IS HEREBY ORDERED TO REQUIRE THE [petitioners] TO ANSWER THE PETITION."

SO ORDERED." 7

Both parties filed separate motions for reconsideration of the foregoing resolution. Petitioners contended that respondent Court of Appeals had no authority to refer the case to the lower court for trial on the merits because said court, in the original habeas corpus case filed by private respondent, had never acquired jurisdiction over their persons. Further, that respondent court had no power to order a case docketed with the lower court without private respondent having paid the docketing fee and filing an appropriate pleading therein. Private respondent, on the other hand, also set forth similar contentions and prayed that trial on the merits be resumed by respondent Court.

The Court of Appeals 8 resolved both motions for reconsideration on 13 March 1990 as follows:

We entertain no doubt that [petitioners] had never been brought to the jurisdiction of the lower court in SP: PROC. No. SP-719 (87)and agree with the claim that the Order of dismissal issued in said case had already become final and executory. But then, it must be pointed out again that with the filing of another petition for habeas corpus before this Court (docketed as AC [sic] G.R. SP No. 13912), an entirely new proceeding was commenced. Unlike the lower court in the previous habeas corpus case, this Court acquired jurisdiction over the persons of [petitioners] upon their filing of an Opposition/Answer on April 4, 1988 (p. 14, Rollo).

Section 9[1] in relation to Section 21 of Batas Pambansa Blg. 129 confers upon the Court of Appeals authority to try and decide habeas corpus cases concurrent with the Regional Trial Courts. Concurrent or coordinate jurisdiction has been defined as that

which is possessed by a court together with another or others over the same subject matter. Clearly, therefore, Batas Pambansa Blg. 129 provides the basis for Us to refer AC (sic) G.R. SP No. 13912 to the lower court for trial on the merits. With the referral of AC (sic) G.R. SP No. 13912, the jurisdiction which this Court acquired over the persons of [petitioners] was transferred to and conferred upon the Regional Trial Court, which necessarily must treat said case as a separate and distinct proceeding from the one it earlier dismissed. This means that the Regional Trial Court must assign the referred case a new number, but need not require the [private respondent] to remit the prescribed docketing fee inasmuch as the same had already been paid with this Court. What the parties need to do though is to reproduce the pleadings they filed in AC (sic) G.R. SP No. 13912 before the Regional Trial Court in order for issues to be joined therein.- nad

Accordingly, the dispositive portion of the Decision dated April 13, 1988 is hereby further clarified to read thus:

"WHEREFORE, premises considered, this Court hereby decides to REFER this case to the regional Trial Court, Branch 31, San Pablo City, for trial on the merits as to which of the parties are legally entitled to the custody of the child, Joyce Orda Galang. FOR THIS PURPOSE, THE PARTIES ARE DIRECTED TO REPRODUCE ALL THE PLEADINGS THEY FILED IN AC (sic) G.R. SP NO. 13912 BEFORE THE REGIONAL TRIAL COURT, UPON THE RECEIPT OF WHICH, SHALL ASSIGN THE CASE A NEW NUMBER WITHOUT REQUIRING [private respondent] TO PAY THE DOCKETING FEE."

SO ORDERED. 9

In this special civil action for Certiorari petitioners assign the following as errors committed by the Court of Appeals:

1. Respondent Court of Appeals erred, as it is without authority [to do so], in referring the original action for habeas corpus filed before it to the Regional Trial Court, Branch 31, San Pablo City, for trial on the merits to determine the issue as to which of the parties are legally entitled to the custody of the child, its reliance on Section 9[1] in relation to Section 21 of B.P. Blg. 21 being specious.

2. Respondent Court of Appeals erred in ordering the parties to the original action for habeas corpus filed before it to reproduce before the Regional Trial Court all the pleadings they filed in AC-G.R. SP No. 13912 (sic).

3. Respondent Court of Appeals erred, as it is without authority [to do so], in directing the Regional Trial Court, Branch 31, San Pablo City, to assign the case a new case number without requiring herein private respondent (as petitioner therein) to pay the docket fee therefor. 10

There is merit in the contentions of petitioners.

Essentially, petitioners argue that the Court of Appeals has no power to issue the decision remanding the proceedings to the trial court and the two subsequent resolutions clarifying the same.


The assailed decision and the two resolutions of the Court of Appeals are not supported by law and the Rules of Court. The provisions of the Judiciary Reorganization Act (B.P. Blg. 129) cited by the respondent Court of Appeals in its resolution dated 13 March 1990 are not in point. Sections 9(1) and 21 thereof merely provide that the Court of Appeals and Regional Trial Courts, respectively, exercise original jurisdiction to issue writs of habeas corpus, among others. While recognizing the concurrent original jurisdiction of both courts over habeas corpus cases as special proceedings, these provisions are not authority for remanding or referring to the latter original actions filed with the former.

On the contrary, the Court of Appeals is specifically given the power to receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original jurisdiction. 11 Furthermore, under the Supreme Court Resolution dated 11 February 1983 implementing B.P. Blg. 129 pending the corresponding thorough revision of the Rules of Court, the Court of Appeals is authorized to conduct a trial or hearing to receive evidence and for the purpose shall observe the procedure prescribed for the trial courts. 12 Clearly, the Court of Appeals should not have remanded or referred the petition for a writ of habeas corpus to the trial court.: nad

Finally, the questioned decision and resolutions go against the Revised Internal Rules of the Court of Appeals. 13 Under Rule 6, Section 2(c) (5) thereof, the proper procedure is as follows:

RULE 6

PROCEDURE IN SPECIAL CASES

x x x

SEC. 2. Special Civil Action. — Original verified petitions for Certiorari, prohibition, mandamus, habeas corpus, quo warranto and other writs may be filed in the Court of Appeals . . .

x x x

c. Judicial Action. — The Court may either deny due course or dismiss the petition outright, or require the private respondent or respondents to comment on the petition, or give due course thereto.

x x x

(5) If it appears that there is need for reception of evidence, the Division to which the Justice to whom the case is assigned for study and report belongs shall conduct the hearing. The Division shall have the power to perform any acts to resolve the factual issues raised in the case (Emphasis supplied.)

Attention is also directed to the fact that the foregoing provision is silent as to whether or not the hearing may be delegated, unlike that of the provision on annulment of judgments, Section 1(c)(3) of the same Rule, where, on motion of the parties, referral

of any of the issues to a Commissioner is allowed in accordance with Rule 33 of the Rules of Court.

Under the foregoing disquisition, the Court of Appeals was in error in ordering the remand and later on the referral of the original petition for habeas corpus filed with it to the Regional Trial Court. What respondent court should have done was to conduct the reception of evidence and pass upon the merits of the conflicting allegations of the parties insofar as the petition for a writ of habeas corpus is concerned.

While We agree with the conclusion reached by respondent court that the case requires a full-blown trial of the facts, the same should be done in the context of the special proceedings for custody of minors under Rule 99 of the Rules of Court, and not a remand or referral of the original action for a writ of habeas corpus filed with the respondent court. Parenthetically, the proper venue in this action is the place where the petitioner therein resides. 14 Petitioners' third assigned error is disposed of accordingly.

WHEREFORE, the petition for Certiorari is hereby GRANTED. The assailed decision and resolutions of the respondent Court of Appeals are SET ASIDE and a new one is rendered DISMISSING the petition for habeas corpus WITHOUT PREJUDICE to the filing by private respondent of the appropriate special proceedings to gain custody of his minor child. Let copies of this decision be furnished all Members of the respondent Court of Appeals. No costs.

SO ORDERED.


G.R. No. 101428 August 5, 1992

DR. ISABELITA VITAL-GOZON, in her official capacity as MEDICAL CENTER CHIEF OF THE NATIONAL CHILDREN'S HOSPITAL, petitioner, vs.THE HONORABLE COURT OF APPEALS and DR. ALEJANDRO S. DE LA FUENTE, respondents.

Gregorio San Agustin for private respondent.

NARVASA, C.J.:

Whether or not the Court of Appeals has jurisdiction, in a special civil action of mandamus against a public officer, to take cognizance of the matter of damages sought to be recovered from the defendant officer, is the chief issue raised in the certiorari action at bar. Also put the issue is whether or not the Solicitor General may represent the defendant public officer in the mandamus suit, in so far as the claim for damages is concerned, in light of the Court's rulings in Urbano , et al. v. Chavez, et al., and Co v. Regional Trial Court of Pasig, et al. 1

There is no dispute about the facts from which these issues arise.

In the early months of 1987 — and pursuant to Executive Order No. 119 issued on January 30, 1987 by President Corazon Aquino — reorganization of the various offices of the Ministry of Health commenced; existing offices were abolished, transfers of personnel effected.

At the time of the reorganization, Dr. Alejandro S. de la Fuente was the Chief of the Clinics of the National Children's Hospital, having been appointed to that position on December 20, 1978. Prior thereto, he occupied the post of Medical Specialist II, a position to which he was promoted in 1977 after serving as Medical Specialist I of the same hospital for six (6) years (since 1971).

On February 4, 1988 Dr. de la Fuente received notice from the Department of Health that he would be re-appointed "Medical Specialist II." Considering this is to be a demotion by no less than two ranks from his post as Chief of Clinics, Dr. de la Fuente filed a protest with the DOH Reorganization Board. When his protest was ignored, he brought his case to the Civil Service Commission where it was docketed as CSC Case No. 4. In the meantime "the duties and responsibilities pertaining to the position of Chief of Clinics were turned over to and were allowed to be exercised by Dr. Jose D. Merencilla, Jr." 2

Dr. de la Fuente's case was decided by the Civil Service Commission in a Resolution dated August 9, 1988. In that Resolution, the Commission made the following conclusion and disposition, to wit:

. . (The Commission) declares the demotion/transfer of appellant de la Fuente, Jr. from Chief of Clinics to Medical Specialists II as null and void: hence, illegal. Considering further that since the National Children's Hospital was not abolished and the position therein remained intact although the title or the position of Chief of Clinics was changed to "Chief of Medical Professional Staff" with substantially the same functions and responsibilities, the Commission hereby orders that:

1. Appellant de la Fuente, Jr. be retained or considering as never having relinquished his position of Chief of Clinics (now Chief of Medical Professional Staff) without loss of seniority rights; and

2. He be paid back salaries, transportation, representation and housing allowances and such other benefits withheld from him from the date of his illegal demotion/transfer.

No motion for reconsideration of this Resolution was ever submitted nor appeal therefrom essayed to the Supreme Court, within the thirty-day period prescribed therefor by the Constitution. 3 Consequently, the resolution became final, on September 21, 1988.

De la Fuente thereupon sent two (2) letters to Dr. Vital-Gozon, the Medical Center Chief of National Children's Hospital, 4 demanding the implementation of the Commission's decision. Dr. Vital-Gozon referred "de la Fuente's claims to the Department of Health Assistant Secretary for Legal Affairs for appropriate advice and/or action . . (She did this allegedly because, according to the Solicitor General, she was) unaware when and how a CSC Resolution becomes final and executory, whether such Resolution had in fact become final and executory and whether the DOH Legal Department would officially assail the mentioned Resolution." 5 But she did not answer Dr. de la Fuente's letters, not even to inform him of the referral thereof to the Assistant Secretary. She chose simply to await "legal guidance from the DOH Legal Department." On the other hand, no one in the DOH Legal Department bothered to reply to Dr. de la Fuente, or to take steps to comply or otherwise advise compliance, with the final and executory Resolution of the Civil Service Commission. In fact, de la Fuente claims that Vital-Gozon had "actually threatened to stop paying . . . (his) salary and allowances on the pretext that he has as yet no 'approved' appointment even as 'Medical Specialist II' . . . 6

Three months having elapsed without any word from Vital-Gozon or anyone in her behalf, or any indication whatever that the CSC Resolution of August 9, 1988 would be obeyed, and apprehensive that the funds to cover the salaries and allowances otherwise due him would revert to the General Fund, Dr. de al Fuente repaired to the


Civil Service Commission and asked it to enforce its judgment. He was however "told to file in court a petition for mandamus because of the belief that the Commission had no coercive powers — unlike a court — to enforceits final decisions/resolutions. 7

So he instituted in the Court of Appeals on December 28, 1988 an action of "mandamus and damages with preliminary injunction" to compel Vital-Gozon, and the Administrative Officer, Budget Officer and Cashier of the NCH to comply with the final and executory resolution of the Civil Service Commission. He prayed for the following specific reliefs:

(1) (That) . . a temporary restraining order be issued immediately, ordering the principal and other respondents to revert the funds the of the NCH corresponding to the amounts necessary to implement the final resolution of the CSC in CSC Case No. 4 in favor of herein petitioner, Dr. Alejandro S. de la Fuente, Jr., and to pay such sums which have accrued and due and payable as of the date of said order;

(2) After hearing on the prayer for preliminary injunction, that the restraining order be converted to a writ of preliminary injunction; and that a writ of preliminary mandatory injunction be issued ordering principal respondent and the other respondents to implement in full the said final resolution; and

(3) That, after hearing on the merits of the petition, that judgment be rendered seeking (sic) permanent writs issued and that principal respondent be ordered and commanded to comply with and implement the said final resolution without further delay; and, furthermore, that the principal respondent be ordered to pay to the sums of P100,000.00 and P20,000.00 as moral and exemplary damages, and P10,000.00 for litigation expenses and attorney's fees.

xxx xxx xxx

The Court of Appeals required the respondents to answer. It also issued a temporary restraining order as prayed for, and required the respondent to show cause why it should not be converted to a writ of preliminary injunction. The record shows that the respondents prayed for and were granted an extension of fifteen (15) days to file their answer "through counsel, who," as the Court of Appeals was later to point out, 8 "did not bother to indicate his address, thus notice was sent to him through the individual respondents. . . . (However, no) answer was filed; neither was there any show cause (sic) against a writ of preliminary injunction." It was a certain Atty. Jose Fabia who appeared in Vital-Gozon's behalf. 9

About a month afterwards, de la Fuente filed with the same Court a "Supplemental/Amended Petition" dated February 2, 1989. The second petition described as one for "quo warranto" aside from "mandamus", added three respondents including Dr. Jose Merencilla, Jr.; and alleged inter alia that he (de la Fuente) had "clear title" to the position in question in virtue of the final and executory judgment of the Civil Service Commission; that even after the Commission's judgment had become final and executory and been communicated to Vital-Gozon, the latter allowed "Dr. Merencilla, Jr. as 'OIC Professional Service' to further usurp, intrude into and unlawfully hold and exercise the public office/position of petitioner, (under a duly approved permanent appointment as 'Chief of Clinics' since 1978). De la Fuente thus prayed, additionally, for judgment:

(a) Declaring that principal respondent Dr. Jose D. Merencilla, Jr. is not legally entitled to the office of "Chief of Clinics" (now retitled/known as "Chief of Medical Professional Staff," NCH), ousting him therefrom and ordering said respondent to immediately cease and desist from further performing as "OIC Professional Service" any and all duties and responsibilities of the said office; (and)

(b) Declaring that the petitioner, Dr. Alejandro S. de la Fuente, Jr., is the lawful or de jure Chief of Clinics (now known as "Chief of the Medical Professional Staff") and placing him in the possession of said office/position, without the need of reappointment or new appointment as held by the Civil Service Commission in its resolution of August 9, 1988, in CSC Case No. 4.

xxx xxx xxx

Copy of the "Supplemental/Amended Petition" was sent to Atty. Jose A. Fabia, Counsel for Respondents c/o Dr. Ma. Isabelita Vital-Gozon, etc., National Children's Hospital, E. Rodriguez Ave., Quezon City (Atty. Fabia's address not being indicated or mentioned in his motion for Extension of Time). 10

Again the Court of Appeals required answer of the respondents. Again, none was filed. The petitions were consequently "resolved on the basis of their allegations and the annexes." The Appellate Court promulgated its judgment on June 9, 1989. 11 It held that —

The question of whether petitioner may be divested of his position as Chief of Clinics by the expedient of having him appointed to another, lower position is no longer an issue. It ceased to be such when the resolution in CSC Case No. 4 became final. The said resolution is explicit in its mandate; petitioner was declared the lawful and de jure Chief of Clinics (Chief of the Medical Professional Staff) of the National Children's Hospital, and by this


token, respondent Dr. Jose D. Merencilla, Jr. is not legally entitled to the office. Respondents, particularly Dr. Isabelita Vital-Gozon, had no discretion or choice on the matter; the resolution had to be complied with. It was ill-advised of principal respondent, and violative of the rule of law, that the resolution has not been obeyed or implemented.

and accordingly ordered —

. . . respondents, particularly Dr. Isabelita Vital-Gozon, . . . to forthwith comply with, obey and implement the resolution CSC Case No. 4 (and) . . . Dr. Jose D. Merencilla, Jr., who is not entitled to the office, . . . to immediately cease and desist from further performing and acting as OIC Professional Service.

But de la Fuente's prayer for damages — founded essentially on the refusal of Gozon, et al. to obey the final and executory judgment of the Civil Service Commission, which thus compelled him to litigate anew in a different forum — was denied by the Court of Appeals on the ground that the "petitions (for mandamus) are not the vehicle nor is the Court the forum for . . . (said) claim of damages."

Gozon acknowledged in writing that she received a copy of the Appellate Tribunal's Decision of June 9, 1989 on June 15, 1989. 12 Respondent de la Fuente acknowledged receipt of his own copy on June 15, 1989. 13 Neither Vital-Gozon nor her co-party, Dr. Merencilla, Jr., moved for reconsideration of, or attempted to appeal the decision.

It was de la Fuente who sought reconsideration of the judgment, by motion filed through new counsel, Atty. Ceferino Gaddi. 14 He insisted that the Appellate Court had competence to award damages in a mandamus action. He argued that while such a claim for damages might not have been proper in a mandamus proceeding in the Appellate Court "before the enactment of B.P. Blg. 129 because the Court of Appeals had authority to issue such writs only 'in aid of its appellate jurisdiction,'" the situation was changed by said BP 129 in virtue of which three levels of courts — the Supreme Court, the Regional Trial Court, and the Court of Appeals — were conferred concurrent original jurisdiction to issue said writs, and the Court of Appeals was given power to conduct hearings and receive evidence to resolve factual issues. To require him to separately litigate the matter of damages he continued, would lead to that multiplicity of suits which is abhorred by the law.

While his motion for reconsideration was pending, de la Fuente sought to enforce the judgment of the Court of Appeals of June 9, 1989 — directing his reinstatement pursuant to the Civil Service Commission's Resolution of August 9, 1988, supra. He filed on July 4, 1989 a "Motion for Execution," alleging that the judgment of June 9, 1989 had become final and executory for failure of Gozon, et al. — served with notice thereof on June 16, 1989 to move for its reconsideration or elevate the same to the

Supreme Court. 15 His motion was granted by the Court of Appeals in a Resolution dated July 7, 1989, 16 reading as follows:

The decision of June 9, 1989 having become final and executory, as prayed for, let the writ of execution issue forthwith.

The corresponding writ of execution issued on July 13, 1989, 17 on the invoked authority of Section 9, Rule 39. 18 The writ quoted the dispositive portion of the judgment of June 9, 1989, including, as the Solicitor General's Office points out, the second paragraph to the effect that the petitions "are not the vehicle nor is the Court the forum for the claim of damages; (hence,) the prayer therefor is denied."

The writ of execution notwithstanding, compliance with the June 9, 1989 judgment was not effected. Consequently, de la Fuente filed, on July 20, 1989, an "Urgent Ex Parte Manifestation with Prayer to Cite Respondents for Contempt," complaining that although Gozon and her co-parties had been served with the writ of execution on July 14, they had not complied therewith. By Resolution dated July 26, 1989, the Court required Gozon and Merencilla to appear before it on August 3, 1989 to answer the charge and show cause "why they should not be adjudged in contempt for disobeying and/or resisting the judgment." 19

At the hearing Gozon and Merencilla duly presented themselves, accompanied by their individual private lawyers — one for Gozon (Felipe Hidalgo, Jr.), two for Merencilla (Bernardo S. Nera and Moises S. Rimando). One other lawyer appeared in their behalf, from the Health Department, Artemio Manalo, who stated that he was there "in behalf of Jose A. Fabia." 20 They explained that they had no intention to defy the Court, they had simply referred the matter to their superiors in good faith; and they were perfectly willing to comply with the judgment, undertaking to do so "even in the afternoon" of that same day. The Court consequently ordered them "to comply with their undertaking . . . without any further delay," and report the action taken towards this end, within five (5) days.

On August 9, 1989, Gozon as "Medical Center Chief," sent a letter to Associate Justice Pedro A. Ramirez, advising that under Hospital Special Order No. 31 dated August 3, 1989, de la Fuente had been directed to assume the position of Chief of the Medical Professional Staff, and that a voucher for the payment of his allowances had been prepared and was being processed. 21

More than a month later, or more precisely on September 27, 1989, the Court of Appeals promulgated another Resolution, this time resolving de la Fuente's motion for reconsideration of June 29, 1989. 22 It modified the Decision of June 9, 1989 by (a) deleting its last paragraph (disallowing the claim of damages, supra), (b) consequently describing and treating it as a "PARTIAL DECISION," and (c) scheduling "further proceedings for the purpose of receiving evidence (of damages)," since said question "cannot be resolved by mere reference to the pleadings." 23 This was done in reliance on Section 3, Rule 65 of the Rules of Court, invoked by de la Fuente, which reads as follows: 24


Sec. 3. Mandamus. — When any tribunal, corporation, board, or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant.

At about this time, yet another lawyer, Atty. Pedro F. Martinez entered his appearance for Isabelita Gozon. 25 At his instance, the Court gave him an "opportunity to . . . file a motion for reconsideration" of the Resolution of September 27, 1989. 26 That motion he filed by registered mail on November 10, 1989. 27 His basic contentions were (a) that the decision of June 9, 1989 could no longer be altered, having become final and executory and having in fact been executed, and (b) that under BP 129, the Appellate Court had no jurisdiction over the question of damages in a mandamus action.

The Office of the Solicitor General also put in an appearance in Gozon's behalf at this juncture, saying that the case had been referred to it only on November 14, 1989. It, too, sought reconsideration of the Resolution of September 27, 1989. It filed on November 16, 1989 an "Omnibus Motion; I. For Reconsideration of Resolution dated September 27, 1989; and II. To defer hearing on petitioner's claims for damages." 28

Both motions were denied by the Court of Appeals in a Resolution dated January 11, 1991. In that Resolution, the Court —

1) declared that the amended decision had already become final and could no longer be re-opened because, although "a copy of the amendatory resolution was received by counsel who was representing Gozon on October 3, 1989," the first motion for reconsideration was not mailed until November 10, 1989 and the Solicitor General's "Omnibus Motion" was not filed until November 16, 1989; and

2) prohibited the Solicitor General from representing Gozon "in connection with . . . (de la Fuente's) claim for damages," on the authority of this Court's ruling promulgated on March 19, 1990 in G.R. No. 87977 (Urbano, et al. v. Chavez, et al.) and G.R. No. 88578 (Co v. Regional Trial Court of Pasig).29

Notice of this Resolution of January 11, 1991 was served on the Solicitor General's Office on January 18, 1991.30 Again the Solicitor General sought reconsideration, by motion dated January 25, 1991 and filed on January 30, 1991. 31Again it was rebuffed. In a Resolution rendered on August 7, 1991, 32 served on the Solicitor General's Office on August 20, 1991, 33 the Court of Appeals denied the motion. It ruled that the "question of the authority of the Solicitor General to appear as counsel for respondent Gozon . . . (had already) been extensively discussed," and that its "jurisdiction . . . to hear and determine issues on damages proceeds from Sec. 9, Batas Pambansa 129 as amended."

In an attempt to nullify the adverse dispositions of the Court of Appeals — and obtain "the ultimate and corollary relief of dismissing respondent de la Fuente's claim for damages" — the Solicitor General's Office had instituted the special civil action of certiorari at bar. It contends that the Court of Appeals is not legally competent to take cognizance of and decide the question of damages in amandamus suit. It argues that —

1) B.P. Blg. 129 does not confer jurisdiction upon the Court of Appeals to hear, as a trial court, claims for moral and exemplary damages;

2) assuming that the Court of Appeals does have jurisdiction over the claims for damages, it lost the power to take cognizance thereof after the Decision of June 9, 1989 had, by its own pronouncement, become final and executory; and

3) the Urbano and Co doctrines cited by the Appellate Tribunal do not disqualify the Solicitor General's Office from representing government officials sued in their official capacities and in damage claims not arising from a felony.

It is in light of these facts, just narrated, that this Court will now proceed to deal with the legal issues raised in this action. But first, a few brief observations respecting the proceedings in the Civil Service Commission.

I

The record demonstrates that Vital-Gozon was fully aware of the following acts and events: 34

1) the proceedings commenced by de la Fuente in the Civil Service Commission in protest against his demotion;

2) the Commission's Resolution of August 9, 1988 as well, particularly, as the direction therein that de la Fuente be reinstated and paid all his back salaries and other monetary benefits otherwise due him, this being couched in fairly simple language obviously understandable to persons of ordinary or normal intelligence;


3) no less than two (2) written demands of de la Fuente for implementation of the CSC's aforesaid Resolution of August 9, 1988;

4) the petition filed by de la Fuente in the Court of Appeals for enforcement of the CSC Resolution of August 9, 1988;

5) the extension granted by said Court of Appeals within which to file answer, notice thereof having been sent directly to her and her co-respondents since the attorney who sought the extension in their behalf (Atty. Fabia) did not set out his address in his motion for extension;

6) the "supplemental/amended petition" subsequently presented by de la Fuente, copy of which was sent to Atty. Fabia, c/o Dr. Vital-Gozon; and

7) the Decision and Amendatory Decision sent to her counsel on October 3, 1989.

To all these, her reaction, and that of the officials of the Department of Health concerned, was a regrettably cavalier one, to say the least. Neither she nor the Health officials concerned accorded said acts and events any importance. She never bothered to find out what was being done to contest or negate de la Fuente's petitions and actions, notwithstanding that as time went by, de la Fuente's efforts were being met with success.

Nothing in the record even remotely suggests that Vital-Gozon merits relief from the final and executory Resolution of the Civil Service Commission. This Court will not disturb that Resolution. It is satisfied that no procedural or substantive errors taint that Resolution, or its becoming final and executory.

II

Now, final and executory judgments are enforced by writ of execution and not by another, separate action, whether of mandamus or otherwise. Hence, execution of the Civil Service Commission's decision of August 9, 1988 should have been ordered and effected by the Commission itself, when de la Fuente filed a motion therefor. It declined to do so, however, on the alleged ground, as de la Fuente claims he was told, that it "had no coercive powers — unlike a court — to enforce its final decisions/resolutions." 35 That proposition, communicated to de la Fuente, of the Commission's supposed lack of coercive power to enforce its final judgments, is incorrect. It is inconsistent with previous acts of the Commission of actually directing execution of its decisions and resolutions, which this Court has sanctioned in several cases; 36 and it is not in truth a correct assessment of its powers under the Constitution and the relevant laws.

In an En Banc Decision promulgated on October 15, 1991 in G.R. No. 96938 entitled "Government Service Insurance System (GSIS) versus Civil Service Commission, et

al.," 37 this Court declared that in light of the pertinent provisions of the Constitution and relevant statutes —

. . . it would appear absurd to deny to the Civil Service Commission the power or authority to enforce or order execution of its decisions, resolutions or orders which, it should be stressed, it has been exercising through the years. It would seem quite obvious that the authority to decide cases in inutile unless accompanied by the authority to see that what has been decided is carried out. Hence, the grant to a tribunal or agency of adjudicatory power, or the authority to hear and adjudge cases, should normally and logically be deemed to include the grant of authority to enforce or execute the judgments it thus renders, unless the law otherwise provides.

In any event, the Commission's exercise of that power of execution has been sanctioned by this Court in several cases.

Be this as it may, the fact is that by reason of the Commission's mistaken refusal to execute its final and executory Resolution of August 9, 1988, extended proceedings have taken place in the Court of Appeals and certain issues have been expressly raised in relation thereto, supra. Those issues appear to the Court to be important enough to deserve serious treatment and resolution, instead of simply being given short shrift by a terse ruling that the proceedings in the Court Service Commission actually had the power to execute its final and executory Resolution.

III

The first such issue is whether or not the Court of Appeals has jurisdiction to take cognizance of the matter of damages in a special civil action of mandamus. The Solicitor General's Office argues that since jurisdiction is conferred only by law, not by agreement of the parties, or acquiescence of the court, and since the law conferring jurisdiction on the Court of Appeals, Section 9 of B.P. Blg. 129, makes no reference to "actions for moral and exemplary damages, as those claimed by . . . (de la Fuente)," it follows that the Court of Appeals has no competence to act on said claim of damages. And Section 3 of Rule 65, which authorizes the petitioner in amandamus suit to pray for judgment commanding the defendant inter alia "to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant," is "nothing more than a procedural rule allowing joinder of causes of action, i.e., mandamus and damages," and such an award of damages is allowable only in actions commenced in Regional Trial Courts but not in the Court of Appeals or this Court.

The argument is specious. It cannot be sustained.

The Solicitor General's Office correctly identifies Section 9, B.P. 129 as the legal provision specifying the original and appellate jurisdiction of the Court of Appeals. The


section pertinently declares that the "Intermediate Appellate Court (now the Court of Appeals) shall exercise . .," among others:

. . . Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction . . . 38

The Solicitor General's Office evidently searched said Section 9 for an explicit and specific statement regarding "actions for moral and exemplary damages," and finding none, concluded that the Court of Appeals had not been granted competence to assume cognizance of claims for such damages. The conclusion is incorrect. Section 19, governing the exclusive original jurisdiction of Regional Trial Courts in civil cases, contains no reference whatever to claims "for moral and exemplary damages," and indeed does not use the word "damages" at all; yet it is indisputable that said courts have power to try and decide claims for moral, exemplary and other classes of damages accompanying any of the types or kinds of cases falling within their specified jurisdiction. The Solicitor General's theory that the rule in question is a mere procedural one allowing joinder of an action of mandamus and another for damages, is untenable, for it implies that a claim for damages arising from the omission or failure to do an act subject of a mandamus suit may be litigated separately from the latter, the matter of damages not being inextricably linked to the cause of action for mandamus, which is certainly not the case.

Now, at the time of the enactment of B.P. 129, the issuance of the extraordinary writs above mentioned was controlled by the Rules of Court of 1964, as they continue to date to be so controlled. More particularly, the principal writs of mandamus, prohibition and certiorari were (and continue to be) governed by Rule 65; the writ ofhabeas corpus, by Rule 102; and the writ of quo warranto, by Rule 66. The so-called auxiliary writs were (and continue to be) also governed by the same code — e.g., preliminary attachment, by Rule 57; preliminary injunction, by Rule 58, receivership, by Rule 59; writ of seizure or delivery in a replevin suit, by Rule 60.

At that time, Section 3 of Rule 65 authorized (as it continues to authorize to date) rendition of judgment in amandamus action "commanding the defendant, immediately or at some other specified time, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant." 39 The provision makes plain that the damages are an incident, or the result of, the defendant's wrongful act in failing and refusing to do the act required to be done. It is noteworthy that the Rules of 1940 had an identical counterpart provision. 40

Moreover, Section 4 of the same Rule 65 authorized, as it continues to authorize to date, the filing of the petition "in the Supreme Court, or, if it relates to the acts or omissions of an inferior court, or of a corporation, board, officer or person, in a Court of First Instance (now Regional Trial Court) having jurisdiction thereof," as well as "inthe Court of Appeals (whether or not) 41 in aid of its appellate jurisdiction."

Worthy of note, too, is that Rule 66 of the Rules of Court similarly authorizes the recovery of damages in a quo warranto action against a corporate officer — an action within the concurrent jurisdiction of the Court of Appeals — as follows: 42

Sec. 14. Liability of officer neglecting to deliver property of corporation to receiver. — An officer of such corporation who refuses or neglects, upon demand, to deliver over to the receiver all money, property, books, deeds, notes, bills, obligations, and papers of every description within his power or control, belonging to the corporation, or in any wise necessary for the settlement of its affairs, or the discharge of its debts and liabilities, may be punished for contempt as having disobeyed a lawful order of the court, and shall be liable to the receiver for the value of all money or other things so refused or neglected to be surrendered, together with all damages that may have been sustained by the stockholders and creditors of the corporation, or any of them, in consequence of such neglect or refusal.

An award of damages was and is also allowed in connection with the auxiliary writ of preliminary attachment, preliminary injunction or receivership which the Court of Appeals has the power to issue in common with the Supreme Court and the Regional Trial Courts, 43 payable by the sureties of the bond given in support of the writ, upon seasonable application and summary hearing. 44

Since it cannot but be assumed that in formulating, and incorporating in BP 129, the provision governing the jurisdiction of the Intermediate Appellate Court, now Court of Appeals, the Batasang Pambansa was fully cognizant of the relevant provisions of the Rules of Court just cited, as well as the rule against multiplicity of actions, it follows that in conferring on the Court of Appeals original jurisdiction over the special civil action ofmandamus, among others, as well as over the issuance of auxiliary writs or processes, the Batasang Pambansaclearly intended that said Court should exercise all the powers then possessed by it under the Rules of Court in relation to said action of mandamus and auxiliary writs, including the adjudication of damages to the petitioner in the action in appropriate cases.

IV

The next issue is whether or not the Solicitor General may properly represent a public official like Dr. Vital-Gozon, who is sued for damages for allegedly refusing to comply with a lawful and executory judgment of competent authority. The doctrine laid down in the Urbano and Co cases already adverted to, 45 is quite clear:

. . . (T)he Office of the Solicitor General is not authorized to represent a public official at any stage of a criminal case. . . .

This observation should apply as well to a public official who is haled to court on a civil suit for damages arising from a felony


allegedly committed by him (Article 100, Revised Penal Code). Any pecuniary liability he may be held to account for on the occasion of such civil suit is for his own account. The State is not liable for the same. A fortiori, the Office of the Solicitor General likewise has no authority to represent him in such a civil suit for damages.

It being quite evident that Dr. Vital-Gozon is not here charged with a crime, or civilly prosecuted for damages arising from a crime, there is no legal obstacle to her being represented by the Office of the Solicitor General.

V

The last issue is whether or not the decision of the Court of Appeals of June 9, 1989 could still be modified after it was pronounced final and executory and was in fact executed with respect to de la Fuente's reinstatement to his position and the payment of the salaries and allowances due him.

There would seem to be no question about the timeliness of de la Fuente's motion for reconsideration of the June 9, 1989 decision. As already narrated, notice of said decision was served on him on the 15th of June, and his motion for reconsideration was presented on June 29, 1989, or fourteen (14) days after receiving a copy of the judgment, i.e., within the fifteen-day period prescribed by Section 1, Rule 37 of the Rules of Court for filing a motion for new trial reconsideration.

This being so, it would certainly have been entirely within the authority of the Court of Appeals, under normal circumstances, to rule on that motion for reconsideration and, in its discretion, act favorably on it, as it did through its Resolution of September 27, 1991 — by amending the decision of June 9, 1989, declaring it a partial judgment, and setting a date for reception of evidence on the la Fuente's claim for damages.

It would also appear that the motions for reconsideration of said Resolution of September 27, 1991 separately submitted in Gozon's behalf, by her own private attorney and by the Solicitor General's Office, were filed way out of time. As also already pointed out, notice of that Resolution of September 27, 1991 was served on Gozon's counsel on October 3, 1989 and on Gozon herself on October 4, 1989; but the motion for reconsideration of Atty. Martinez (Gozon's private lawyer) was not filed until November 10, 1989, thirty-eight (38) days afterwards, and that of the Solicitor General, until November 16, 1989, or forty-four (44) days later. What is worse is that, its motion for reconsideration of November 16, 1989 having been denied by a Resolution dated January 11, 1991, notice of which it received on January 18, 1991, the Solicitor General's Office filed still another motion for reconsideration on January 30, 1991, ostensibly directed against that Resolution of January 11, 1991 but actually seeking the setting aside of the Resolution of September 17, 1989. In effect it filed a second motion for reconsideration which, of course, is prohibited by law. 46

However, disposition of the question simply and solely on the foregoing premises is precluded by the fact that prior to the promulgation by the Appellate Court of its

Resolution of September 27, 1989. — granting de la Fuente's motion for reconsideration of June 29, 1989 — de la Fuente had asked for and been granted by the Court of Appeals, authority to execute the decision of June 9, 1989 and had in fact succeeded in bringing about satisfaction thereof, in so far as concerned his reinstatement to the position from which he had been illegally ousted and the payment to him his salaries and allowances.

It has therefore become essential to determine the effect of the execution of said decision of June 9, 1989 at de la Fuente's instance, on the power of the Court of Appeals to modify that judgment as earlier prayed for by de la Fuente in such a way as to concede the latter's capacity to claim damages in his mandamus action, and consequently authorize him to present evidence on the matter.

The general rule is that when a judgment has been satisfied, it passes beyond review, satisfaction being the last act and end of the proceedings, and payment of satisfaction of the obligation thereby established produces permanent and irrevocable discharge; 47 hence, a judgment debtor who acquiesces in and voluntarily complies with the judgment, is estopped from taking an appeal therefrom. 48

On the other hand the question of whether or not a judgment creditor is estopped from appealing or seeking modification of a judgment which has been executed at his instance, is one dependent upon the nature of the judgment as being indivisible or not. This is the doctrine laid down by this Court in a case decided as early as 1925, Verches v. Rios. 49 In that case this Court held that although "there are cases holding the contrary view," where the judgment is indivisible, "the weight of authority is to the effect that an acceptance of full satisfaction of the judgment annihilates the right to further prosecute the appeal; . . . that a party who has recovered judgment on a claim which cannot be split up and made the basis of several causes of action, and afterwards coerced full satisfaction by writ of execution or authority of the court, cannot maintain an appeal from the judgment against the objections of the judgment debtor;" and that even partial execution by compulsory legal process at the instance of a party in whose favor a judgment appealed from was rendered, places said party in estoppel to ask that the judgment be amended, either "by appeal or answer to his adversary's appeal, or otherwise." 50

A converso, where the judgment is divisible, estoppel should not operate against the judgment creditor who causes implementation of a part of the decision by writ of execution. This is the clear import of Verches and the precedents therein invoked. It is an aspect of the principle above mentioned that is fully consistent not only with the dissenting opinion that "(a)cceptance of payment of . . . only the uncontroverted part of the claim . . . should not preclude the plaintiff from prosecuting his appeal, to determine whether he should not have been allowed more," 51 but also with logic and common sense.

In this case, the amended judgment of the Court of Appeals is clearly divisible, satisfaction of which may be "split up." One part has reference to the enforcement of the final and executory judgment of the Civil Service Commission, that de la Fuente


should be reinstated to the position of Chief of Clinics (now Chief of Medical Professional Staff) without loss of seniority rights and that he be paid his back salaries and all monetary benefits due him from the date of his illegal demotion. This part is no longer issuable, and has not in truth been controverted by Gozon herself. The other part has reference to the damages which de la Fuente contends he suffered as a result of the unjustified refusal of Gozon and her co-parties to comply with the final and executory judgment of the Civil Service Commission, and which the Appellate Tribunal has allowed him to prove. Obviously, the second part cannot possibly affect the first. Whether de la Fuente succeeds or fails in his bid to recover damages against Gozon, et al. because of their refusal to obey the judgment of the Civil Service Commission, is a contingency that cannot affect the unalterable enforceability of that judgment. Similarly, the enforcement of the Commission's judgment (already accomplished by writ of execution of the Court of Appeals issued at de la Fuente's instance) cannot influence in any manner the question whether or not there was culpable refusal on the part of Gozon, et al. to comply with said judgment when first required so to do, and whether de la Fuente did in fact suffer compensable injury thereby.

It bears stressing that the juridical situation in which de la Fuente finds himself is not of his making. It is a consequence of circumstances not attributable to any fault on his part, i.e., the unwarranted refusal or neglect of his superiors to obey the executory judgment of the Civil Service Commission; the erroneous refusal of the Commission to execute its own decision which made necessary, in de la Fuente's view, the filing of a mandamusaction in the Court of Appeals; the initial refusal of the latter Court to acknowledge his right to damages in connection with the mandamus suit; and ultimately, the change of view by the Court of Appeals, on de la Fuente's motion, as regards its competence to take cognizance of the matter of damages in relation to the mandamusproceeding.

Under these circumstances, there was no reason whatsoever to defer concession to de la Fuente of the relief of reinstatement — to which he was indisputably already entitled — in the meantime that issues arising after finality of the Civil Service Commission's judgment were being ventilated and resolved — these issues being, to repeat, whether or not the refusal by Gozon, et al. obey said judgment of the Commission could be justified, and whether or not, by reason of that refusal to obey, de la Fuente did in fact suffer compensable injury.

It was therefore correct for the Court of Appeals, albeit by implication, to treat its judgment as divisible, or capable of being enforced by parts, and to consider de la Fuente as not having been placed in estoppel to pursue his claim for damages by seeking and obtaining authority for a partial execution of the judgment. De la Fuente not being in estoppel, it follows that his motion for reconsideration, timely filed, was not deemed abandoned or waived by the partial execution of the judgment, and jurisdiction of the Court of Appeals to amend the judgment was retained and not lost. It follows, too, that since no motion for reconsideration was filed against, or appeal attempted to be taken from, the Resolution of the Court of Appeals amending its original judgment, within the time prescribed therefor by law, said amendatory resolution has long since become final and immutable, particularly in so far as it holds

itself competent to take cognizance of the matter of damages and authorizes the reception of evidence on de la Fuente's claim therefor.

WHEREFORE, the petition is DENIED, and the challenged Resolutions of September 27, 1989, January 11, 1991 and August 7, 1991 are AFFIRMED, without pronouncement as to costs.

SO ORDERED.


G.R. No. 130866 September 16, 1998

ST. MARTIN FUNERAL HOME, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.

REGALADO, J.:

The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein private respondent before the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was no contract of employment executed between him and petitioner nor was his name included in the semi-monthly payroll. On January 22, 1996, he was dismissed from his employment for allegedly misappropriating P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR). 1

Petitioner on the other hand claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private respondent, who was formerly working as an overseas contract worker, asked for financial assistance from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily helped the mother of Amelita in overseeing the business.

In January 1996, the mother of Amelita passed away, so the latter then took over the management of the business. She then discovered that there were arrears in the payment of taxes and other government fees, although the records purported to show that the same were already paid. Amelita then made some changes in the business operation and private respondent and his wife were no longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that petitioner had illegally terminated his employment. 2

Based on the position papers of the parties, the labor arbiter rendered a decision in favor of petitioner on October 25, 1996 declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdiction over the case. 3

Not satisfied with the said decision, private respondent appealed to the NLRC contending that the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he worked as a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995 to January 23, 1996, or

a period of about one year; and (3) in ruling that there was no employer-employee relationship between him and petitioner. 4

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate proceedings. 5 Petitioner then filed a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit, 6 hence the present petition alleging that the NLRC committed grave abuse of discretion. 7

Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and opportune to reexamine the functional validity and systemic practicability of the mode of judicial review it has long adopted and still follows with respect to decisions of the NLRC. The increasing number of labor disputes that find their way to this Court and the legislative changes introduced over the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for and warrant a reassessment of that procedural aspect.

We prefatorily delve into the legal history of the NLRC. It was first established in the Department of Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable to the Secretary of Labor and, ultimately, to the President of the Philippines.

On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six months after its promulgation. 8 Created and regulated therein is the present NLRC which was attached to the Department of Labor and Employment for program and policy coordination only. 9 Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended said provision and abolished such appeals. No appellate review has since then been provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals from the decision of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No. 6715, instead merely provides that the Commission shall decide all cases within twenty days from receipt of the answer of the appellee, and that such decision shall be final and executory after ten calendar days from receipt thereof by the parties.

When the issue was raised in an early case on the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. 11


Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under Rule 65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary period under Rule 65. 14

Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as follows:

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards, or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals. 15

Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective March 18, 1995, to wit:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. Trials or hearings in the Court of Appeals must be continuous and must be completed within, three (3) months, unless extended by the Chief Justice.

It will readily be observed that, aside from the change in the name of the lower appellate court, 16 the following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A. No. 7902, viz.:

1. The last paragraph which excluded its application to the Labor Code of the Philippines and the Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting the Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.

2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the section, such that the original exclusionary clause therein now provides "except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." (Emphasis supplied).


3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission.

This, then, brings us to a somewhat perplexing impassè, both in point of purpose and terminology. As earlier explained, our mode of judicial review over decisions of the NLRC has for some time now been understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a special original action limited to the resolution of jurisdictional issues, that is, lack or excess of jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion amounting to lack of jurisdiction.

It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except, among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . . ." This would necessarily contradict what has been ruled and said all along that appeal does not lie from decisions of the NLRC. 17 Yet, under such excepting clause literally construed, the appeal from the NLRC cannot be brought to the Court of Appeals, but to this Court by necessary implication.

The same exceptive clause further confuses the situation by declaring that the Court of Appeals has no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of B.P. No. 129, and those specified cases in Section 17 of the Judiciary Act of 1948. These cases can, of course, be properly excluded from the exclusive appellate jurisdiction of the Court of Appeals. However, because of the aforementioned amendment by transposition, also supposedly excluded are cases falling within the appellate jurisdiction of the Supreme Court in accordance with the Labor Code. This is illogical and impracticable, and Congress could not have intended that procedural gaffe, since there are no cases in the Labor Code the decisions, resolutions, orders or awards wherein are within the appellate jurisdiction of the Supreme Court or of any other court for that matter.

A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may have been an oversight in the course of the deliberations on the said Act or an imprecision in the terminology used therein. In fine, Congress did intend to provide for judicial review of the adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the term used for the intended mode of review. This conclusion which we have reluctantly but prudently arrived at has been drawn from the considerations extant in the records of Congress, more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No. 1495/H. No. 10452. 18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech 19 from which we reproduce the following excerpts:

The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129, reorganized the Court of Appeals and at the same time expanded its jurisdiction and powers. Among others, its appellate jurisdiction was expanded to cover not only final judgment of Regional Trial Courts, but also all final judgment(s), decisions, resolutions, orders or awards of quasi-judicial agencies, instrumentalities, boards and commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of BP Blg. 129 and of subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act of 1948.

Mr. President, the purpose of the law is to ease the workload of the Supreme Court by the transfer of some of its burden of review of factual issues to the Court of Appeals. However, whatever benefits that can be derived from the expansion of the appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the "decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals.

Among the highest number of cases that are brought up to the Supreme Court are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions enumerated in Section 9 and, additionally, extends the coverage of appellate review of the Court of Appeals in the decision(s) of the Securities and Exchange Commission, the Social Security Commission, and the Employees Compensation Commission to reduce the number of cases elevated to the Supreme Court. (Emphases and corrections ours)

xxx xxx xxx

Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides the ideal situation of drastically reducing the workload of the Supreme Court without depriving the litigants of the privilege of review by an appellate tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee in 1986 in the Annual Report of the Supreme Court:

. . . Amendatory legislation is suggested so as to relieve the Supreme Court of the burden of


reviewing these cases which present no important issues involved beyond the particular fact and the parties involved, so that the Supreme Court may wholly devote its time to cases of public interest in the discharge of its mandated task as the guardian of the Constitution and the guarantor of the people's basic rights and additional task expressly vested on it now "to determine whether or not there has been a grave abuse of discretion amounting to lack of jurisdiction on the part of any branch or instrumentality of the Government.

We used to have 500,000 cases pending all over the land, Mr. President. It has been cut down to 300,000 cases some five years ago. I understand we are now back to 400,000 cases. Unless we distribute the work of the appellate courts, we shall continue to mount and add to the number of cases pending.

In view of the foregoing, Mr. President, and by virtue of all the reasons we have submitted, the Committee on Justice and Human Rights requests the support and collegial approval of our Chamber.

xxx xxx xxx

Surprisingly, however, in a subsequent session, the following Committee Amendment was introduced by the said sponsor and the following proceedings transpired: 20

Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with the Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising from the Labor Code will still be appealable to the Supreme Court.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was also discussed with our Colleagues in the House of Representatives and as we understand it, as approved in the House, this was also deleted, Mr. President.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. There are no further Committee amendments, Mr. President.

Senator Romulo. Mr. President, I move that we close the period of Committee amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved. (Emphasis supplied).

xxx xxx xxx

Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second reading and being a certified bill, its unanimous approval on third reading followed. 21 The Conference Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been approved by the House of Representatives, the same was likewise approved by the Senate on February 20, 1995, 22 inclusive of the dubious formulation on appeals to the Supreme Court earlier discussed.

The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme Court were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The use of the word "appeal" in relation thereto and in the instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action for certiorari are both modes of judicial review addressed to the appellate courts. The important distinction between them, however, and with which the Court is particularly concerned here is that the special civil action ofcertiorari is within the concurrent original jurisdiction of this Court and the Court of Appeals; 23 whereas to indulge in the assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495.

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically emphasized, that procedure would be advantageous to the aggrieved party on this reasoning:

On the other hand, Mr. President, to allow these cases to be appealed to the Court of Appeals would give litigants the advantage to have all the evidence on record be reexamined and reweighed after which the findings of facts and conclusions of said bodies are correspondingly affirmed, modified or reversed.

Under such guarantee, the Supreme Court can then apply strictly the axiom that factual findings of the Court of Appeals are final and


may not be reversed on appeal to the Supreme Court. A perusal of the records will reveal appeals which are factual in nature and may, therefore, be dismissed outright by minute resolutions. 24

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law, on this score we add the further observations that there is a growing number of labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose, aside from the increased number of its component divisions; and that there is undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into account:

One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only because of the imposition upon the precious time of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction.

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals for appropriate action and disposition consistent with the views and ruling herein set forth, without pronouncement as to costs.

SO ORDERED.


G.R. No. 186450 April 14, 2010

NATIONAL WATER RESOURCES BOARD (NWRB), Petitioner, vs.A. L. ANG NETWORK, INC., Respondent.

D E C I S I O N

CARPIO MORALES, J.:

In issue is whether Regional Trial Courts have jurisdiction over appeals from decisions, resolutions or orders of the National Water Resources Board (petitioner).

A.L. Ang Network (respondent) filed on January 23, 2003 an application for a Certificate of Public Convenience (CPC) with petitioner to operate and maintain a water service system in Alijis, Bacolod City.

Bacolod City Water District (BACIWA) opposed respondent’s application on the ground that it is the only government agency authorized to operate a water service system within the city.1

By Decision of August 20, 2003, petitioner granted respondent’s CPC application. BACIWA moved to have the decision reconsidered, contending that its right to due process was violated when it was not allowed to present evidence in support of its opposition.2

Petitioner reconsidered its Decision and allowed BACIWA to present evidence,3 drawing respondent to file a petition for certiorari with the Regional Trial Court (RTC) of Bacolod City against petitioner and BACIWA. Petitioner moved to dismiss the petition, arguing that the proper recourse of respondent was to the Court of Appeals, citing Rule 43 of the Rules of Court.

The RTC, by Order of April 15, 2005,4 dismissed respondent’s petition for lack of jurisdiction, holding that it is the Court of Appeals which has "exclusive appellate jurisdiction over all final judgments, decisions, resolutions, order[s] or awards of . . . quasi-judicial agencies, instrumentalities, boards or commission[s] . . . except those within the appellate jurisdiction of the Supreme Court . . . ." Thus the RTC explained:

Art. 89 of P.D. 1067 having been long repealed by BP 129, as amended, which has effectively and explicitly removed the Regional Trial Courts’ appellate jurisdiction over the decisions, resolutions, order[s] or awards of quasi-judicial agencies such as [petitioner] NWRB, and vested with the Court of Appeals, very clearly now, this Court has no jurisdiction over this instant petition.

Its motion for reconsideration having been denied, respondent filed a petition for certiorari at the Court of Appeals, which, by Decision of January 25, 2008,5 annulled and set aside the RTC April 15, 2005, holding that it is the RTC which has jurisdiction over appeals from petitioner’s decisions. Thus the appellate court discoursed.

In the analogous case of BF Northwest Homeowners Association, Inc. vs. Intermediate Appellate Court[,] the Supreme Court . . . categorically pronounced the RTC’s jurisdiction over appeals from the decisions of the NWRB consistent with Article 89 of P.D. No. 1067 and ratiocinated in this wise:

x x x x.

The logical conclusion, therefore, is that jurisdiction over actions for annulment of NWRC decisions lies with the Regional Trial Courts, particularly, when we take note of the fact that the appellate jurisdiction of the Regional Trial Court over NWRC decisions covers such broad and all embracing grounds as grave abuse of discretion, questions of law, and questions of fact and law (Art. 89, P.D. No. 1067). This conclusion is also in keeping with the Judiciary Reorganization Act of 1980, which vests Regional Trial Courts with original jurisdiction to issue writs of certiorari, prohibition, mandamus, etc. (Sec. 21 [1], B.P. Blg. 129) relating to acts or omissions of an inferior court (Sec. 4, Rule 65, Rules of Court).

x x x x.

Similarly, in Tanjay Water District vs. Pedro Gabaton, the Supreme Court conformably ruled, viz:

"Inasmuch as Civil Case No. 8144 involves the appropriation, utilization and control of water, We hold that the jurisdiction to hear and decide the dispute in the first instance, pertains to the Water Resources Council as provided in PD No. 1067 which is the special law on the subject. The Court of First Instance (now Regional Trial Court) has only appellate jurisdiction over the case."

Based on the foregoing jurisprudence, there is no doubt that [petitioner] NWRB is mistaken in its assertion. As no repeal is expressly made, Article 89 of P.D. No. 1067 is certainly meant to be an exception to the jurisdiction of the Court of Appeals over appeals or petitions for certiorari of the decisions of quasi-judicial bodies. This finds harmony with Paragraph 2, Section 4, Rule 65 of the Rules of Court wherein it is stated that, "If it involves the acts of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals." Evidently, not all petitions for certiorari under Rule 65 involving the decisions of quasi-judicial agencies must be filed with the Court of Appeals. The rule admits of some exceptions as plainly provided by the phrase "unless otherwise provided by law or these rules" and Article 89 of P.D. No. 1067 is verily an example of these exceptions. (italics and emphasis partly in the original; underscoring supplied)

http://www.lawphil.net/judjuris/juri2010/apr2010/gr_186450_2010.html#fnt5






Petitioner’s motion for reconsideration having been denied by the appellate court by Resolution of February 9, 2009,6 petitioner filed the present petition for review, contending that:

THE REGIONAL TRIAL COURT HAS NO CERTIORARI JURISDICTION OVER THE [PETITIONER] SINCE SECTION 89, PD NO. 1067, REGARDING APPEALS, HAS BEEN SUPERSEDED AND REPEALED BY [BATAS PAMBANSA BILANG] 129 AND THE RULES OF COURT. FURTHERMORE, PD 1067 ITSELF DOES NOT CONTEMPLATE THAT THE REGIONAL TRIAL COURT SHOULD HAVE CERTIORARI JURISDICTION OVER THE [PETITIONER].7 (underscoring supplied)

Petitioner maintains that the RTC does not have jurisdiction over a petition for certiorari and prohibition to annul or modify its acts or omissions as a quasi-judicial agency. Citing Section 4 of Rule 65 of the Rules of Court, petitioner contends that there is no law or rule which requires the filing of a petition for certiorari over its acts or omissions in any other court or tribunal other than the Court of Appeals.8

Petitioner goes on to fault the appellate court in holding that Batas Pambansa Bilang 129 (BP 129) or the Judiciary Reorganization Act did not expressly repeal Article 89 of Presidential Decree No. 1067 (PD 1067) otherwise known as the Water Code of the Philippines.9

Respondent, on the other hand, maintains the correctness of the assailed decision of the appellate court.

The petition is impressed with merit.

Section 9 (1) of BP 129 granted the Court of Appeals (then known as the Intermediate Appellate Court) original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction.10

Since the appellate court has exclusive appellate jurisdiction over quasi-judicial agencies under Rule 4311 of the Rules of Court, petitions for writs of certiorari, prohibition or mandamus against the acts and omissions of quasi-judicial agencies, like petitioner, should be filed with it. This is what Rule 65 of the Rules imposes for procedural uniformity. The only exception to this instruction is when the law or the Rules itself directs otherwise, as cited in Section 4, Rule 65.12 The appellate court’s construction that Article 89 of PD 1067, which reads:

ART. 89. The decisions of the [NWRB] on water rights controversies may be appealed to the [RTC] of the province where the subject matter of the controversy is situated within fifteen (15) days from the date the party appealing receives a copy of the decision, on any of the following grounds: (1) grave abuse of discretion; (2) question of law; and (3) questions of fact and law (emphasis and underscoring supplied), is such an exception, is erroneous.

Article 89 of PD 1067 had long been rendered inoperative by the passage of BP 129. Aside from delineating the jurisdictions of the Court of Appeals and the RTCs, Section 47 of BP 129 repealed or modified:

x x x. [t]he provisions of Republic Act No. 296, otherwise known as the Judiciary Act of 1948, as amended, of Republic Act No. 5179, as amended, of the Rules of Court, and of all other statutes, letters of instructions and general orders or parts thereof, inconsistent with the provisions of this Act x x x. (emphasis and underscoring supplied)

The general repealing clause under Section 47 "predicates the intended repeal under the condition that a substantial conflict must be found in existing and prior acts."13

In enacting BP 129, the Batasang Pambansa was presumed to have knowledge of the provision of Article 89 of P.D. No. 1067 and to have intended to change it.14 The legislative intent to repeal Article 89 is clear and manifest given the scope and purpose of BP 129, one of which is to provide a homogeneous procedure for the review of adjudications of quasi-judicial entities to the Court of Appeals.

More importantly, what Article 89 of PD 1067 conferred to the RTC was the power of review on appeal the decisions of petitioner. It appears that the appellate court gave significant consideration to the ground of "grave abuse of discretion" to thus hold that the RTC has certiorari jurisdiction over petitioner’s decisions. A reading of said Article 89 shows, however, that it only made "grave abuse of discretion" as another ground to invoke in an ordinary appeal to the RTC. Indeed, the provision was unique to the Water Code at the time of its application in 1976.

The issuance of BP 129, specifically Section 9 (Jurisdiction of the Court of Appeals, then known as Intermediate Appellate Court), and the subsequent formulation of the Rules, clarified and delineated the appellate and certiorari jurisdictions of the Court of Appeals over adjudications of quasi-judicial bodies. Grave abuse of discretion may be invoked before the appellate court as a ground for an error of jurisdiction.

It bears noting that, in the present case, respondent assailed petitioner’s order via certiorari before the RTC, invoking grave abuse of discretion amounting to lack or excess of jurisdiction as ground-basis thereof. In other words, it invoked such ground not for an error of judgment.

While Section 9 (3) of BP 12915 and Section 1 of Rule 43 of the Rules of Court16 does not list petitioner as"among" the quasi-judicial agencies whose final judgments, orders, resolutions or awards are appealable to the appellate court, it is non sequitur to hold that the Court of Appeals has no appellate jurisdiction over petitioner’s judgments, orders, resolutions or awards. It is settled that the list of quasi-judicial agencies specifically mentioned in Rule 43 is not meant to be exclusive.17 The employment of the word "among" clearly instructs so.1avvphi1














BF Northwest Homeowners Association v. Intermediate Appellate Court,18 a 1987 case cited by the appellate court to support its ruling that RTCs have jurisdiction over judgments, orders, resolutions or awards of petitioner, is no longer controlling in light of the definitive instruction of Rule 43 of the Revised Rules of Court.

Tanjay Water District v. Gabaton19 is not in point either as the issue raised therein was which between the RTC and the then National Water Resources Council had jurisdiction over disputes in the appropriation, utilization and control of water.

In fine, certiorari and appellate jurisdiction over adjudications of petitioner properly belongs to the Court of Appeals.

WHEREFORE, the challenged Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The April 15, 2005 Order of the Regional Trial Court of Bacolod City dismissing petitioner’s petition for lack of jurisdiction is UPHELD.

No costs.

SO ORDERED.




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.


G.R. No. 163021 April 27, 2007

PATRICIO A. VILLENA, Petitioner, vs.PATRICIO S. PAYOYO, Respondent.

D E C I S I O N

QUISUMBING, J.:

This petition for review on certiorari assails the Decision1 dated November 21, 2003 of the Court of Appeals in CA-G.R. CV No. 70513 and its Resolution2 dated March 18, 2004, denying petitioner’s motion for reconsideration. The appellate court had affirmed with modification the Decision3 dated April 26, 2000 of the Regional Trial Court (RTC) of Quezon City, Branch 78.

The facts are undisputed.

On October 28, 1997, respondent Patricio Payoyo and Novaline, Inc., through its president, petitioner Patricio Villena, entered into a contract for the delivery and installation of kitchen cabinets in Payoyo’s residence. The cabinets were to be delivered within ninety days from downpayment of 50% of the purchase price. On October 29, 1997, Payoyo paid Villena P155,183 as downpayment.

On December 9, 1997, Payoyo entered into another contract with Villena for the delivery of home appliances. On the same day, Payoyo paid 50% of the purchase price equal to P29,638.50 as downpayment.

However, Villena failed to install the kitchen cabinets and deliver the appliances. Payoyo made several demands upon Villena but the latter failed to comply.

In a letter dated March 12, 1998, Payoyo demanded the cancellation of the contracts and the refund in full of the downpayments amounting to P184,821.50. Villena promised to install the kitchen cabinets on or before May 10, 1998 and to deliver the appliances. Despite repeated demands, Villena again failed to do so.

Payoyo sent Villena two demand letters on June 24, 1998 and on July 28, 1998 asking the latter to either deliver all items or return the downpayments.

On October 26, 1998, Payoyo filed a complaint for recovery of a sum of money and damages against Villena. Villena moved to dismiss the complaint for failure to state a cause of action. He argued that there was no ground to cancel the contract; thus, there was no basis for refund. The trial court denied his motion. Villena thereafter filed an answer with compulsory counterclaim citing as an affirmative defense Payoyo’s failure to state a cause of action.

On June 1, 1999, immediately after the trial court issued a pre-trial order, Villena filed a second motion to dismiss on the ground of lack of jurisdiction over the subject matter but it was denied. Thereafter, trial ensued.

The trial court decided in favor of Payoyo, reasoning that the power to rescind is implied in reciprocal obligations. Considering that Villena repeatedly failed to comply with his obligation, Payoyo had the right to rescind the contract and demand a refund. The trial court ordered petitioner to pay respondent P184,821.50 as actual damages plus 12% interest per annum from the date of filing of the complaint and P20,000 as moral damages plus legal interest from judicial demand until fully paid.

The Court of Appeals affirmed the RTC decision with the following modifications:

1) [Petitioner Villena is] hereby ordered to pay [respondent Payoyo] actual damages in the amount of P155,183.00 with 12% interest per annum from the date of the filing of the complaint;

2) [Petitioner is] likewise ordered to deliver the Indesit Multifunction Oven and Indesit Hob in favor of [respondent] within thirty (30) days from the finality of this decision; and

3) [Respondent] is hereby ordered to pay the purchase price of the Indesit Multifunction Oven and Indesit Hob in favor of [petitioner] on the day the delivery is made.4

The appellate court reasoned that while there was delay in the delivery and installation of the kitchen cabinets, there was none in the delivery of the appliances. The contract for said appliances did not specify the date of delivery but that delivery should be made upon payment of the 50% balance of the purchase price. Considering that Payoyo failed to pay the balance, Villena did not incur delay.

Hence, the instant petition, where petitioner raises the following issues:

I.

WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.

II.

WHETHER OR NOT [THE] DEFENDANTS-APPELLANTS (PETITIONER AND NOVALINE, INC.), ARE ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE COURT UNDER THE CIRCUMSTANCES.5







Simply, the issue in this case is whether the trial court had jurisdiction over the complaint.

Petitioner maintains that the RTC should have dismissed the complaint for lack of jurisdiction. He posits that the RTC has no jurisdiction over the complaint since it is mainly for recovery of a sum of money in the amount ofP184,821.50 which is below the jurisdictional amount set for RTCs.6 Moreover, petitioner contends that the issue of jurisdiction may be raised at any time, even on appeal, since jurisdiction is conferred only by law and cannot be acquired through or waived by any act or omission of the parties.7

Respondent, on the other hand, contends that the RTC has jurisdiction over the complaint as the allegations therein show that it is actually a case for rescission of the contracts. The recovery of a sum of money is merely a necessary consequence of the cancellation of the contracts.8

The pertinent portion of Section 19 of Batas Pambansa Bilang 129, as amended by Republic Act No. 7691,9provides:

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

(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 abovementioned items exceeds Two Hundred Thousand pesos (P200,000.00).

In determining the jurisdiction of an action whose subject is incapable 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 the jurisdiction of the court depends on the amount of the claim. But, where the primary 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, such are actions whose subjects are incapable of pecuniary estimation, hence cognizable by the RTCs.10

Verily, what determines the nature of the action and which court has jurisdiction over it are the allegations of the complaint and the character of the relief sought.11

In our considered view, the complaint, albeit entitled as one for collection of a sum of money with damages, is one incapable of pecuniary estimation; thus, one within the RTC’s jurisdiction. The allegations therein show that it is actually for breach of contract, thus,

x x x x

7. Under their Contracts, prestation and/or delivery of the items will be performed and delivered within NINETY (90) DAYS from the receipt of downpayment. Plaintiff complied with its prestation but defendants defaulted with their obligation;

x x x x

10. On 12 March 1998, plaintiff sent letter to defendants requesting the latter for the cancellation of the purchase contracts and refund in full the (50%) downpayment paid in the total amount of (P 184, 821.50) within five (5) days upon receipt of the letter…

x x x x

12. On 24 March 1998, plaintiff and defendant Patricio A. Villena, personally talked [to] each other regarding the full refund of the (50%) downpayment in the amount of P 184, 821.50. Defendant informed the plaintiff that it was their fault because the order from their Australian supplier was made only on 15 December 1997. Defendant promised plaintiff [delivery of] the three (3) Kitchen Cabinets on or before 10 [M]ay 1998, and the three (3) home appliances were considered fully paid applying the (50%) downpayment of (P 29,638.50) for home appliances only. But defendant did not fulfill his promise;

13. Despite all these, repeated demands for the installation of the (3) three kitchen [c]abinets and complete delivery of home appliances were made, but defendants did nothing;

x x x x12 (Emphasis added.)

A case for breach of contract is a cause of action either for specific performance or rescission of contracts.13 An action for rescission of contract, as a counterpart of an action for specific performance, is incapable of pecuniary estimation, and therefore falls under the jurisdiction of the RTC.14 In the present case, the averments in the complaint show that Payoyo sought the cancellation of the contracts and refund of the downpayments since Villena failed to comply with the obligation to deliver the appliances and install the kitchen cabinets subject of the contracts. The court then must examine the facts and the applicable law to determine whether there is in fact substantial breach that would warrant rescission or cancellation of the contracts and entitle the respondent for a refund. While the respondent prayed for the refund, this is just incidental to the main action, which is the rescission or cancellation of the contracts.











WHEREFORE, the petition is DENIED for lack of merit. The Decision dated November 21, 2003 of the Court of Appeals in CA-G.R. CV No. 70513 and the Resolution dated March 18, 2004 are AFFIRMED.

Costs against petitioner.

SO ORDERED.


G.R. No. 153690 February 15, 2011

DAVID LU, Petitioner, vs.PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, JOHN LU YM, KELLY LU YM, and LUDO & LUYM DEVELOPMENT CORPORATION, Respondents.

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

G.R. No. 157381

PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, JOHN LU YM, KELLY LU YM, and LUDO & LUYM DEVELOPMENT CORPORATION, Petitioners, vs.DAVID LU, Respondent.

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

G.R. No. 170889

JOHN LU YM and LUDO & LUYM DEVELOPMENT CORPORATION, Petitioners, vs.THE HONORABLE COURT OF APPEALS OF CEBU CITY (FORMER TWENTIETH DIVISION), DAVID LU, ROSA GO, SILVANO LUDO & CL CORPORATION, Respondents.

R E S O L U T I O N

CARPIO MORALES, J.:

By Decision of August 26, 2008, the Court1 unanimously disposed of the three present petitions as follows:

WHEREFORE, premises considered, the petitions in G.R. Nos. 153690 and 157381 are DENIED for being moot and academic; while the petition in G.R. No. 170889 is DISMISSED for lack of merit. Consequently, the Status Quo Order dated January 23, 2006 is hereby LIFTED.

The Court of Appeals is DIRECTED to proceed with CA-G.R. CV No. 81163 and to resolve the same with dispatch.

SO ORDERED[,]2

which Decision was, on motion for reconsideration, the Court voting 4-1,3 reversed by Resolution of August 4, 2009, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the Motion for Reconsideration filed by John Lu Ym and Ludo & LuYm Development Corporation is GRANTED. The Decision of this Court dated August 26, 2008 is RECONSIDERED and SET ASIDE. The Complaint in SRC Case No. 021-CEB, now on appeal with the Court of Appeals in CA-G.R. CV No. 81163, is DISMISSED.

All interlocutory matters challenged in these consolidated petitions are DENIED for being moot and academic.

SO ORDERED.4

David Lu’s Motion for Reconsideration and Motion to Refer Resolution to the Court En Banc was denied by minute Resolution of September 23, 2009.

Following his receipt on October 19, 2009 of the minute Resolution, David Lu personally filed on October 30, 2009 a Second Motion for Reconsideration and Motion to Refer Resolution to the Court En Banc. On even date, he filed through registered mail an "Amended Second Motion for Reconsideration and Motion to Refer Resolution to the Court En Banc." And on November 3, 2009, he filed a "Motion for Leave to File [a] Motion for Clarification[, and the] Second Motion for Reconsideration and Motion to Refer Resolution to the Court En Banc." He later also filed a "Supplement to Second Motion for Reconsideration with Motion to Dismiss" dated January 6, 2010.

John Lu Ym and Ludo & Luym Development Corporation (LLDC), meanwhile, filed with leave a Motion5 for the Issuance of an Entry of Judgment of February 2, 2010, which merited an Opposition from David Lu.

In compliance with the Court’s Resolution of January 11, 2010, Kelly Lu Ym, Victor Lu Ym and Paterno Lu Ym, Jr. filed a Comment/Opposition of March 20, 2010, while John Lu Ym and LLDC filed a Consolidated Comment of March 25, 2010, a Supplement thereto of April 20, 2010, and a Manifestation of May 24, 2010.

The present cases were later referred to the Court en banc by Resolution of October 20, 2010.

Brief Statement of the Antecedents

The three consolidated cases stemmed from the complaint for "Declaration of Nullity of Share Issue, Receivership and Dissolution" filed on August 14, 2000 before the Regional Trial Court (RTC) of Cebu City by David Lu, et al. against Paterno Lu Ym, Sr. and sons (Lu Ym father and sons) and LLDC.


By Decision of March 1, 2004, Branch 12 of the RTC ruled in favor of David et al. by annulling the issuance of the shares of stock subscribed and paid by Lu Ym father and sons at less than par value, and ordering the dissolution and asset liquidation of LLDC. The appeal of the trial court’s Decision remains pending with the appellate court inCA-G.R. CV No. 81163.

Several incidents arising from the complaint reached the Court through the present three petitions.

In G.R. No. 153690 wherein David, et al. assailed the appellate court’s resolutions dismissing their complaint for its incomplete signatory in the certificate of non-forum shopping and consequently annulling the placing of the subject corporation under receivership pendente lite, the Court, by Decision of August 26, 2008, found the issue to have been mooted by the admission by the trial court of David et al.’s Amended Complaint, filed by them pursuant to the trial court’s order to conform to the requirements of the Interim Rules of Procedure Governing Intra-Corporate Controversies.

Since an amended pleading supersedes the pleading that it amends, the original complaint of David, et al. was deemed withdrawn from the records.

The Court noted in G.R. No. 153690 that both parties admitted the mootness of the issue and that the trial court had already rendered a decision on the merits of the case. It added that the Amended Complaint stands since Lu Ym father and sons availed of an improper mode (via an Urgent Motion filed with this Court) to assail the admission of the Amended Complaint.

In G.R. No. 157381 wherein Lu Ym father and sons challenged the appellate court’s resolution restraining the trial court from proceeding with their motion to lift the receivership order which was filed during the pendency of G.R. No. 153690, the Court, by Decision of August 26, 2008 resolved that the issue was mooted by the amendment of the complaint and by the trial court’s decision on the merits. The motion having been filed ancillary to the main action, which main action was already decided on the merits by the trial court, the Court held that there was nothing more to enjoin.

G.R. No. 170889 involved the denial by the appellate court of Lu Ym father and sons’ application in CA-G.R. CV No. 81163 for a writ of preliminary injunction. By August 26, 2008 Decision, the Court dismissed the petition after finding no merit on their argument – which they raised for the first time in their motion for reconsideration before the appellate court – of lack of jurisdiction for non-payment of the correct RTC docket fees.

As reflected early on, the Court, in a turnaround, by Resolution of August 4, 2009, reconsidered its position on the matter of docket fees. It ruled that the trial court did not acquire jurisdiction over the case for David Lu, et al.’s failure to pay the correct

docket fees, hence, all interlocutory matters and incidents subject of the present petitions must consequently be denied.

Taking Cognizance of the Present Incidents

The Internal Rules of the Supreme Court (IRSC) states that the Court en banc shall act on the following matters and cases:

(a) cases in which the constitutionality or validity of any treaty, international or executive agreement, law, executive order, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question;

(b) criminal cases in which the appealed decision imposes the death penalty or reclusion perpetua;

(c) cases raising novel questions of law;

(d) cases affecting ambassadors, other public ministers, and consuls;

(e) cases involving decisions, resolutions, and orders of the Civil Service Commission, the Commission on Elections, and the Commission on Audit;

(f) cases where the penalty recommended or imposed is the dismissal of a judge, the disbarment of a lawyer, the suspension of any of them for a period of more than one year, or a fine exceeding forty thousand pesos;

(g) cases covered by the preceding paragraph and involving the reinstatement in the judiciary of a dismissed judge, the reinstatement of a lawyer in the roll of attorneys, or the lifting of a judge’s suspension or a lawyer’s suspension from the practice of law;

(h) cases involving the discipline of a Member of the Court, or a Presiding Justice, or any Associate Justice of the collegial appellate court;

(i) cases where a doctrine or principle laid down by the Court en banc or by a Division my be modified or reversed;

(j) cases involving conflicting decisions of two or more divisions;

(k) cases where three votes in a Division cannot be obtained;

(l) Division cases where the subject matter has a huge financial impact on businesses or affects the welfare of a community;


(m) Subject to Section 11 (b) of this rule, other division cases that, in the opinion of at least three Members of the Division who are voting and present, are appropriate for transfer to the Court en banc ;

(n) cases that the Court en banc deems of sufficient importance to merit its attention; and

(o) all matters involving policy decisions in the administrative supervision of all courts and their personnel.6(underscoring supplied)

The enumeration is an amalgamation of SC Circular No. 2-89 (February 7, 1989), as amended by En Banc Resolution of November 18, 1993, and the amplifications introduced by Resolution of January 18, 2000 in A.M. No. 99-12-08-SC with respect to administrative cases and matters.

The present cases fall under at least three types of cases for consideration by the Court En Banc. At least three members of the Court’s Second Division (to which the present cases were transferred,7 they being assigned to a Member thereof) found, by Resolution of October 20, 2010, that the cases were appropriate for referral-transfer to the Court En Banc which subsequently accepted8 the referral in view of the sufficiently important reason to resolve all doubts on the validity of the challenged resolutions as they appear to modify or reverse doctrines or principles of law.

In Firestone Ceramics v. Court of Appeals,9 the Court treated the consolidated cases as En Banc cases and set the therein petitioners’ motion for oral argument, after finding that the cases were of sufficient importance to merit the Court En Banc’s attention. It ruled that the Court’s action is a legitimate and valid exercise of its residual power.10

In Limketkai Sons Milling, Inc. v. Court of Appeals, the Court conceded that it is not infallible. Should any error of judgment be perceived, it does not blindly adhere to such error, and the parties adversely affected thereby are not precluded from seeking relief therefrom, by way of a motion for reconsideration. In this jurisdiction, rectification of an error, more than anything else, is of paramount importance.

x x x x

It bears stressing that where, as in the present case, the Court En Banc entertains a case for its resolution and disposition, it does so without implying that the Division of origin is incapable of rendering objective and fair justice. The action of the Court simply means that the nature of the cases calls for en banc attention and consideration. Neither can it be concluded that the Court has taken undue advantage of sheer voting strength. It was merely guided by the well-studied finding and sustainable opinion of the majority of its actual membership– that, indeed, subject cases are of sufficient importance meriting the action and decision of the whole Court. It is, of course, beyond cavil that all the members of this highest Court of the land are

always embued with the noblest of intentions in interpreting and applying the germane provisions of law, jurisprudence, rules and Resolutions of the Court– to the end that public interest be duly safeguarded and rule of law be observed.11

It is argued that the assailed Resolutions in the present cases have already become final,12 since a second motion for reconsideration is prohibited except for extraordinarily persuasive reasons and only upon express leave first obtained;13 and that once a judgment attains finality, it thereby becomes immutable and unalterable, however unjust the result of error may appear.

The contention, however, misses an important point. The doctrine of immutability of decisions applies only to final and executory decisions. Since the present cases may involve a modification or reversal of a Court-ordained doctrine or principle, the judgment rendered by the Special Third Division may be considered unconstitutional, hence, it can never become final. It finds mooring in the deliberations of the framers of the Constitution:

On proposed Section 3(4), Commissioner Natividad asked what the effect would be of a decision that violates the proviso that "no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the court en banc." The answer given was that such a decision would be invalid. Following up, Father Bernas asked whether the decision, if not challenged, could become final and binding at least on the parties. Romulo answered that, since such a decision would be in excess of jurisdiction, the decision on the case could be reopened anytime.14 (emphasis and underscoring supplied)

A decision rendered by a Division of this Court in violation of this constitutional provision would be in excess of jurisdiction and, therefore, invalid.15 Any entry of judgment may thus be said to be "inefficacious"16 since the decision is void for being unconstitutional.

While it is true that the Court en banc exercises no appellate jurisdiction over its Divisions, Justice Minerva Gonzaga-Reyes opined in Firestone and concededly recognized that "[t]he only constraint is that any doctrine or principle of law laid down by the Court, either rendered en banc or in division, may be overturned or reversed only by the Court sitting en banc."17

That a judgment must become final at some definite point at the risk of occasional error cannot be appreciated in a case that embroils not only a general allegation of "occasional error" but also a serious accusation of a violation of the Constitution, viz., that doctrines or principles of law were modified or reversed by the Court’s Special Third Division August 4, 2009 Resolution.

The law allows a determination at first impression that a doctrine or principle laid down by the court en banc or in division may be modified or reversed in a case which would warrant a referral to the Court En Banc. The use of the word "may" instead of "shall" connotes probability, not certainty, of modification or reversal of a doctrine, as


may be deemed by the Court. Ultimately, it is the entire Court which shall decide on the acceptance of the referral and, if so, "to reconcile any seeming conflict, to reverse or modify an earlier decision, and to declare the Court’s doctrine."18

The Court has the power and prerogative to suspend its own rules and to exempt a case from their operation if and when justice requires it,19 as in the present circumstance where movant filed a motion for leave after the prompt submission of a second motion for reconsideration but, nonetheless, still within 15 days from receipt of the last assailed resolution.

Well-entrenched doctrines or principles of law that went astray need to be steered back to their proper course. Specifically, as David Lu correctly points out, it is necessary to reconcile and declare the legal doctrines regarding actions that are incapable of pecuniary estimation, application of estoppel by laches in raising an objection of lack of jurisdiction, and whether bad faith can be deduced from the erroneous annotation of lis pendens.

Upon a considered, thorough reexamination, the Court grants David Lu’s Motion for Reconsideration. The assailed Resolutions of August 4, 2009 and September 23, 2009, which turn turtle settled doctrines, must be overturned. The Court thus reinstates the August 26, 2008 Decision wherein a three-tiered approach was utilized to analyze the issue on docket fees:

In the instant case, however, we cannot grant the dismissal prayed for because of the following reasons: First, the case instituted before the RTC is one incapable of pecuniary estimation. Hence, the correct docket fees were paid. Second, John and LLDC are estopped from questioning the jurisdiction of the trial court because of their active participation in the proceedings below, and because the issue of payment of insufficient docket fees had been belatedly raised before the Court of Appeals, i.e., only in their motion for reconsideration. Lastly, assuming that the docket fees paid were truly inadequate, the mistake was committed by the Clerk of Court who assessed the same and not imputable to David; and as to the deficiency, if any, the same may instead be considered a lien on the judgment that may thereafter be rendered.20 (italics in the original; emphasis and underscoring supplied)

The Value of the Subject Matter Cannot be Estimated

On the claim that the complaint had for its objective the nullification of the issuance of 600,000 shares of stock of LLDC, the real value of which based on underlying real estate values, as alleged in the complaint, stands atP1,087,055,105, the Court’s assailed August 4, 2009 Resolution found:

Upon deeper reflection, we find that the movants’ [Lu Ym father & sons] claim has merit. The 600,000 shares of stock were, indeed, properties in litigation. They were the subject matter of the complaint, and the relief prayed for entailed the nullification of the transfer thereof and their return to LLDC. David, et al., are minority shareholders of the corporation who claim to have been prejudiced by the sale of the

shares of stock to the Lu Ym father and sons. Thus, to the extent of the damage or injury they allegedly have suffered from this sale of the shares of stock, the action they filed can be characterized as one capable of pecuniary estimation. The shares of stock have a definite value, which was declared by plaintiffs [David Lu, et al.] themselves in their complaint. Accordingly, the docket fees should have been computed based on this amount. This is clear from the following version of Rule 141, Section 7, which was in effect at the time the complaint was filed[.] 21 (emphasis and underscoring supplied)

The said Resolution added that the value of the 600,000 shares of stock, which are the properties in litigation, should be the basis for the computation of the filing fees. It bears noting, however, that David, et al. are not claiming to own these shares . They do not claim to be the owners thereof entitled to be the transferees of the shares of stock. The mention of the real value of the shares of stock, over which David, et al. do not, it bears emphasis, interpose a claim of right to recovery, is merely narrative or descriptive in order to emphasize the inequitable price at which the transfer was effected.

The assailed August 4, 2009 Resolution also stated that "to the extent of the damage or injury [David, et al.] allegedly have suffered from this sale," the action "can be characterized as one capable of pecuniary estimation." The Resolution does not, however, explore the value of the extent of the damage or injury. Could it be the pro rata decrease (e.g., from 20% to 15%) of the percentage shareholding of David, et al. vis-à-vis to the whole?

Whatever property, real or personal, that would be distributed to the stockholders would be a mere consequence of the main action. In the end, in the event LLDC is dissolved, David, et al. would not be getting the value of the 600,000 shares, but only the value of their minority number of shares, which are theirs to begin with.

The complaint filed by David, et al. is one for declaration of nullity of share issuance. The main relief prayed for both in the original complaint and the amended complaint is the same, that is, to declare null and void the issuance of 600,000 unsubscribed and unissued shares to Lu Ym father and sons, et al. for a price of 1/18 of their real value, for being inequitable, having been done in breach of director’s fiduciary’s duty to stockholders, in violation of the minority stockholders’ rights, and with unjust enrichment.

As judiciously discussed in the Court’s August 26, 2008 Decision, the test in determining whether the subject matter of an action is incapable of pecuniary estimation is by ascertaining the nature of the principal action or remedy sought. It explained:

x x x To be sure, the annulment of the shares, the dissolution of the corporation and the appointment of receivers/management committee are actions which do not consist in the recovery of a sum of money. If, in the end, a sum of money or real property would be recovered, it would simply be the consequence of such principal


action. Therefore, the case before the RTC was incapable of pecuniary estimation.22 (italics in the original, emphasis and underscoring supplied)

Actions which the Court has recognized as being incapable of pecuniary estimation include legality of conveyances. In a case involving annulment of contract, the Court found it to be one which cannot be estimated:

Petitioners argue that an action for annulment or rescission of a contract of sale of real property is a real action and, therefore, the amount of the docket fees to be paid by private respondent should be based either on the assessed value of the property, subject matter of the action, or its estimated value as alleged in the complaint, pursuant to the last paragraph of §7(b) of Rule 141, as amended by the Resolution of the Court dated September 12, 1990. Since private respondents alleged that the land, in which they claimed an interest as heirs, had been sold for P4,378,000.00 to petitioners, this amount should be considered the estimated value of the land for the purpose of determining the docket fees.

On the other hand, private respondents counter that an action for annulment or rescission of a contract of sale of real property is incapable of pecuniary estimation and, so, the docket fees should be the fixed amount of P400.00 in Rule 141, §7(b)(1). In support of their argument, they cite the cases of Lapitan v. Scandia, Inc. and Bautista v. Lim. In Lapitan this Court, in an opinion by Justice J.B.L. Reyes, held:

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).

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; Manufacturer's 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.23 (emphasis and underscoring supplied)

IN FINE, the Court holds that David Lu, et al.’s complaint is one incapable of pecuniary estimation, hence, the correct docket fees were paid. The Court thus proceeds to tackle the arguments on estoppel and lien, mindful that the succeeding discussions rest merely on a contrary assumption, viz., that there was deficient payment.

Estoppel Has Set In

Assuming arguendo that the docket fees were insufficiently paid, the doctrine of estoppel already applies.

The assailed August 4, 2009 Resolution cited Vargas v. Caminas24 on the non-applicability of the Tijam doctrinewhere the issue of jurisdiction was, in fact, raised before the trial court rendered its decision. Thus the Resolution explained:

Next, the Lu Ym father and sons filed a motion for the lifting of the receivership order, which the trial court had issued in the interim. David, et al., brought the matter up to the CA even before the trial court could resolve the motion. Thereafter, David, at al., filed their Motion to Admit Complaint to Conform to the Interim Rules Governing Intra-Corporate Controversies. It was at this point that the Lu Ym father and sons raised the question of the amount of filing fees paid. They also raised this point again in the CA when they appealed the trial court’s decision in the case below.


We find that, in the circumstances, the Lu Ym father and sons are not estopped from challenging the jurisdiction of the trial court. They raised the insufficiency of the docket fees before the trial court rendered judgment and continuously maintained their position even on appeal to the CA. Although the manner of challenge waserroneous – they should have addressed this issue directly to the trial court instead of the OCA – they should not be deemed to have waived their right to assail the jurisdiction of the trial court.25 (emphasis and underscoring supplied)

Lu Ym father and sons did not raise the issue before the trial court. The narration of facts in the Court’s original decision shows that Lu Ym father and sons merely inquired from the Clerk of Court on the amount of paid docket fees on January 23, 2004. They thereafter still "speculat[ed] on the fortune of litigation."26 Thirty-seven days later or on March 1, 2004 the trial court rendered its decision adverse to them.

Meanwhile, Lu Ym father and sons attempted to verify the matter of docket fees from the Office of the Court Administrator (OCA). In their Application for the issuance a writ of preliminary injunction filed with the Court of Appeals, they still failed to question the amount of docket fees paid by David Lu, et al. It was only in their Motion for Reconsideration of the denial by the appellate court of their application for injunctive writ that they raised such issue.

Lu Ym father and sons’ further inquiry from the OCA cannot redeem them. A mere inquiry from an improper officeat that, could not, by any stretch, be considered as an act of having raised the jurisdictional question prior to the rendition of the trial court’s decision. In one case, it was held:

Here it is beyond dispute that respondents paid the full amount of docket fees as assessed by the Clerk of Court of the Regional Trial Court of Malolos, Bulacan, Branch 17, where they filed the complaint. If petitioners believed that the assessment was incorrect, they should have questioned it before the trial court. Instead, petitioners belatedly question the alleged underpayment of docket fees through this petition, attempting to support their position with the opinion and certification of the Clerk of Court of another judicial region. Needless to state, such certification has no bearing on the instant case.27 (italics in the original; emphasis and underscoring in the original)

The inequity resulting from the abrogation of the whole proceedings at this late stage when the decision subsequently rendered was adverse to the father and sons is precisely the evil being avoided by the equitable principle of estoppel.

No Intent to Defraud the Government

Assuming arguendo that the docket fees paid were insufficient, there is no proof of bad faith to warrant a dismissal of the complaint, hence, the following doctrine applies:

x x x In Sun Insurance Office, Ltd., (SIOL) v. Asuncion, this Court ruled that the filing of the complaint or appropriate initiatory pleading and the payment of the prescribed docket fee vest a trial court with jurisdiction over the subject matter or nature of the action. If the amount of docket fees paid is insufficient considering the amount of the claim, the clerk of court of the lower court involved or his duly authorized deputy has the responsibility of making a deficiency assessment. The party filing the case will be required to pay the deficiency, but jurisdiction is not automatically lost.28 (underscoring supplied)

The assailed Resolution of August 4, 2009 held, however, that the above-quoted doctrine does not apply since there was intent to defraud the government, citing one attendant circumstance– the annotation of notices of lis pendens on real properties owned by LLDC. It deduced:

From the foregoing, it is clear that a notice of lis pendens is availed of mainly in real actions. Hence, when David,et al., sought the annotation of notices of lis pendens on the titles of LLDC, they acknowledged that the complaint they had filed affected a title to or a right to possession of real properties. At the very least, they must have been fully aware that the docket fees would be based on the value of the realties involved. Their silence or inaction to point this out to the Clerk of Court who computed their docket fees, therefore, becomes highly suspect, and thus, sufficient for this Court to conclude that they have crossed beyond the threshold of good faith and into the area of fraud. Clearly, there was an effort to defraud the government in avoiding to pay the correct docket fees. Consequently, the trial court did not acquire jurisdiction over the case.29

All findings of fraud should begin the exposition with the presumption of good faith. The inquiry is not whether there was good faith on the part of David, et al., but whether there was bad faith on their part.

The erroneous annotation of a notice of lis pendens does not negate good faith. The overzealousness of a party in protecting pendente lite his perceived interest, inchoate or otherwise, in the corporation’s properties from depletion or dissipation, should not be lightly equated to bad faith.

That notices of lis pendens were erroneously annotated on the titles does not have the effect of changing the nature of the action. The aggrieved party is not left without a remedy, for they can move to cancel the annotations. The assailed August 4, 2009 Resolution, however, deemed such act as an acknowledgement that the case they filed was a real action, concerning as it indirectly does the corporate realties, the titles of which were allegedly annotated. This conclusion does not help much in ascertaining the filing fees because the value of these real properties and the value of the 600,000 shares of stock are different.

Further, good faith can be gathered from the series of amendments on the provisions on filing fees, that the Court was even prompted to make a clarification.1avvphi1


When David Lu, et al. filed the Complaint on August 14, 2000 or five days after the effectivity of the Securities Regulation Code or Republic Act No. 8799,30 the then Section 7 of Rule 141 was the applicable provision, without any restricted reference to paragraphs (a) and (b) 1 & 3 or paragraph (a) alone. Said section then provided:

SEC. 7. Clerks of Regional Trial Courts. –

(a) For filing an action or a permissive counterclaim or money claim against an estate not based on judgment, or for filing with leave of court a third-party, fourth-party, etc. complaint, or a complaint in intervention, and for all clerical services in the same, if the total sum claimed, exclusive of interest, or thestated value of the property in litigation, is:

x x x x

(b) For filing:

1. Actions where the value of the subject matter cannot be estimated

……….….. x x x

2. Special civil actions except judicial foreclosure of mortgage which shall be governed by paragraph (a) above

…...….……. x x x

3. All other actions not involving property ……….…… x x x

In a real action, the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees.

x x x x31 (emphasis supplied)

The Court, by Resolution of September 4, 2001 in A. M. No. 00-8-10-SC,32 clarified the matter of legal fees to be collected in cases formerly cognizable by the Securities and Exchange Commission following their transfer to the RTC.

Clarification has been sought on the legal fees to be collected and the period of appeal applicable in cases formerly cognizable by the Securities and Exchange Commission. It appears that the Interim Rules of Procedure on Corporate Rehabilitation and the Interim Rules of Procedure for Intra-Corporate Controversies do not provide the basis for the assessment of filing fees and the period of appeal in cases transferred from the Securities and Exchange Commission to particular Regional Trial Courts.

The nature of the above mentioned cases should first be ascertained. Section 3(a), Rule 1 of the 1997 Rules of Civil Procedure defines civil action as one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong. It further states that a civil action may either be ordinary or special, both being governed by the rules for ordinary civil actions subject to the special rules prescribed for special civil actions. Section 3(c) of the same Rule, defines a special proceeding as a remedy by which a party seeks to establish a status, a right, or a particular fact.

Applying these definitions, the cases covered by the Interim Rules for Intra-Corporate Controversies should be considered as ordinary civil actions. These cases either seek the recovery of damages/property or specific performance of an act against a party for the violation or protection of a right. These cases are:

(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; and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members or associates, respectively;

(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations;

(4) Derivative suits; and

(5) Inspection of corporate books.

On the other hand, a petition for rehabilitation, the procedure for which is provided in the Interim Rules of Procedure on Corporate Recovery, should be considered as a special proceeding. It is one that seeks to establish the status of a party or a particular fact. As provided in section 1, Rule 4 of the Interim Rules on Corporate Recovery, the status or fact sought to be established is the inability of the corporate debtor to pay its debts when they fall due so that a rehabilitation plan, containing the formula for the successful recovery of the corporation, may be approved in the end. It does not seek a relief from an injury caused by another party.

Section 7 of Rule 141 (Legal Fees) of the Revised Rules of Court lays the amount of filing fees to be assessed for actions or proceedings filed with the Regional Trial Court. Section 7(a) and (b) apply to ordinary civil actionswhile 7(d) and (g) apply to special proceedings.


In fine, the basis for computing the filing fees in intra-corporate cases shall be section 7(a) and (b) l & 3of Rule 141. For petitions for rehabilitation, section 7(d) shall be applied. (emphasis and underscoring supplied)

The new Section 21(k) of Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC33 (July 20, 2004), expressly provides that "[f]or petitions for insolvency or other cases involving intra-corporate controversies, the fees prescribed under Section 7(a) shall apply." Notatu dignum is that paragraph (b) 1 & 3 of Section 7 thereof was omitted from the reference. Said paragraph34 refers to docket fees for filing "[a]ctions where the value of the subject matter cannot be estimated" and "all other actions not involving property."

By referring the computation of such docket fees to paragraph (a) only, it denotes that an intra-corporate controversy always involves a property in litigation, the value of which is always the basis for computing the applicable filing fees. The latest amendments seem to imply that there can be no case of intra-corporate controversy where the value of the subject matter cannot be estimated. Even one for a mere inspection of corporate books.

If the complaint were filed today, one could safely find refuge in the express phraseology of Section 21 (k) of Rule 141 that paragraph (a) alone applies.

In the present case, however, the original Complaint was filed on August 14, 2000 during which time Section 7, without qualification, was the applicable provision. Even the Amended Complaint was filed on March 31, 2003 during which time the applicable rule expressed that paragraphs (a) and (b) l & 3 shall be the basis for computing the filing fees in intra-corporate cases, recognizing that there could be an intra-corporate controversy where the value of the subject matter cannot be estimated, such as an action for inspection of corporate books. The immediate illustration shows that no mistake can even be attributed to the RTC clerk of court in the assessment of the docket fees.

Finally, assuming there was deficiency in paying the docket fees and assuming further that there was a mistake in computation, the deficiency may be considered a lien on the judgment that may be rendered, there being no established intent to defraud the government.

WHEREFORE, the assailed Resolutions of August 4, 2009 and September 23, 2009 are REVERSED and SET ASIDE. The Court’s Decision of August 26, 2008 is REINSTATED.

The Court of Appeals is DIRECTED to resume the proceedings and resolve the remaining issues with utmost dispatch in CA-G.R. CV No. 81163.

SO ORDERED.


G.R. No. 165777 July 25, 2011

CEFERINA DE UNGRIA [DECEASED], substituted by her HEIRS, represented by LOLITA UNGRIA SAN JUAN-JAVIER, and RHODORA R. PELOMIDA as their Attorney-in-fact, Petitioner, vs.THE HONORABLE COURT OF APPEALS, THE HONORABLE REGIONAL TRIAL COURT OF GENERAL SANTOS CITY, BRANCH 35, ROSARIO DIDELES VDA. DE CASTOR, NEPTHALIE CASTOR ITUCAS, FEROLYN CASTOR FACURIB, RACHEL DE CASTOR, LEA CASTOR DOLLOLOSA, and ROSALIE CASTOR BENEDICTO, Respondents.

D E C I S I O N

PERALTA, J.:

Assailed in this petition for review on certiorari are the Decision1 dated May 26, 2004 and the Resolution2 dated September 17, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 60764.

On August 26, 1999, respondents Rosario Dideles Vda. de Castor (Rosario), Nepthalie Castor Itucas, Ferolyn Castor Facurib (Ferolyn), Rachel De Castor, Lea Castor Dollolosa and Rosalie Castor Benedicto, filed with the Regional Trial Court (RTC) of General Santos City a Complaint3 for ownership, possession and damages, and alternative causes of action either to declare two documents as patent nullities, and/or for recovery of Rosario's conjugal share with damages or redemption of the subject land against petitioner Ceferina de Ungria, defendants Avelino Gumban, Dolores Cagaitan, Zacasio Poutan, PO1 Jonas Montales, Ignacio Olarte and alias Dory. Respondent Rosario is the surviving wife of the late Fernando Castor, while the rest of the respondents are their legitimate children. The documents they sought to annul are (1) the Deed of Transfer of Rights and Interest including Improvements thereon dated October 3, 1960 allegedly executed by Fernando in favor of Eugenio de Ungria, petitioner's father; and (2) the Affidavit of Relinquishment dated November 23, 1960 executed by Eugenio in favor of petitioner.

Petitioner Ceferina filed a Motion to Dismiss4 (Ex-Abundante Ad Cautelam) on the following grounds: (1) the claim or demand has been extinguished by virtue of the valid sale of Lot No. 1615 to Eugenio; (2) the action is barred by extraordinary acquisitive prescription; (3) the action is barred by laches; and (4) plaintiff failed to state a cause of action, or filed the case prematurely for failure to resort to prior barangay conciliation proceedings.

Petitioner also filed an Addendum to the Motion to Dismiss5 raising the following additional grounds: (1) plaintiffs have no legal capacity to sue; and (2) the court has no jurisdiction over the case for failure of plaintiffs to pay the filing fee in full. Respondents filed their Opposition thereto.

On November 19, 1999, the RTC issued an Order6 denying the motion to dismiss, to wit:

After the motion to dismiss and its addendum have been received, it is now ripe for resolution. One of the grounds alleged in the complaint is for the recovery of conjugal share on Lot No. 1615, of Pls-209 D with damages.

It is alleged that the late Fernando Castor and Rosario Dideles Vda. de Castor were married on September 15, 1952, and the application to the land was dated January 17, 1952 and the patent was issued by the President on November 19, 1954.

The said land was sold to the defendant on October 3, 1960 (Annex C) and an Affidavit of Relinquishment dated November 23, 1960 which was made a part thereof as Annex "D." Considering the marriage of September 15, 1992, the said land became conjugal as of the date of the marriage and, therefore, ½ thereof belongs to the wife, Rosario Dideles Vda. de Castor.

Thus, considering the above, the motion to dismiss is DENIED.7

Petitioner Ceferina filed a Motion for Reconsideration,8 which the RTC denied in an Order9 dated February 4, 2000.

Petitioner filed an Omnibus Motion10 asking the RTC to resolve the issues of (1) whether or not the complaint should be dismissed or expunged from the records pursuant to Supreme Court (SC) Circular No. 7; (2) reconsidering the findings contained in the Order dated February 4, 2000; and (3) holding in abeyance the submission of the answer to the complaint.

Pending resolution of the motion, respondents filed a Motion to Allow11 them to continue prosecuting this case as indigent litigants.

On March 8, 2000, the RTC resolved the Omnibus Motion in an Order12 that read in this wise:

On the omnibus motion regarding filing fees, the plaintiffs asserted in its motion that they are charging defendant actual and compensatory damages such as are proved during the hearing of this case. So also are attorney’s fees and moral damages, all to be proved during the hearing of this case.

Since there was no hearing yet, they are not in a possession (sic) to determine how much is to be charged.

At any rate, if after hearing the Clerk of Court determine that the filing fees is still insufficient, considering the total amount of the claim, the Clerk of Court should

http://www.lawphil.net/judjuris/juri2011/jul2011/gr_165777_2011.html#fnt12













determine and, thereafter, if any amount is found due, he must require the private respondent to pay the same x x x.

As to the second issue, the same has already been decided in its order dated February 4, 2000.

WHEREFORE, premises considered, the omnibus motion is DENIED.

The defendant shall file their answer within fifteen (15) days from receipt of this order.13

From this Order, petitioner filed a motion for reconsideration and clarification on whether plaintiffs should be allowed to continue prosecuting the case as indigent litigants.

On March 30, 2000, the RTC issued a Clarificatory Order14 reading as follows:

As has been said, the plaintiff asserted in its motion that they are charging defendants actual and compensatory damages as has been proved during the hearing of this case. So also are attorney's fees and moral damages all to be proved during the hearing of this case.

Since there was no hearing yet, they are not in a possession (sic) to determine how much is to be charged.

At any rate, after hearing, the Clerk of Court determines that the filing fee is still insufficient, the same shall be considered as lien on the judgment that may be entered.

As to the motion seeking from the Honorable Court allowance to allow plaintiff to continue prosecuting this case as indigent litigants, suffice it to say that the same is already provided for in this order.

WHEREFORE, the defendants shall file their answer within fifteen (15) days from receipt of this Order.15

In an Order dated May 31, 2000, the RTC again denied petitioner's motion for reconsideration.

Petitioner filed with the CA a petition for certiorari and prohibition with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction. Petitioner sought the nullification of the Order dated November 19, 1999 and the subsequent orders issued by the RTC thereto for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Respondents filed their Comment thereto.

In a Decision dated May 26, 2004, the CA dismissed the petition. The CA found that SC Circular No. 7 would not apply where the amount of damages or value of the property was immaterial; that the Circular could be applied only in cases where the amount claimed or the value of the personal property was determinative of the court's jurisdiction citing the case of Tacay v. RTC of Tagum, Davao del Norte.16 The CA found that respondents had paid the corresponding docket fees upon the filing of the complaint, thus, the RTC had acquired jurisdiction over the case despite the failure to state the amount of damages claimed in the body of the complaint or in the prayer thereof. The CA found that the RTC did not commit grave abuse of discretion amounting to lack of jurisdiction when it denied petitioner's motion to dismiss. It noted that the RTC's Clarificatory Order dated March 30, 2000, which stated that "if after hearing the Clerk of Court determines that the filing fee is still insufficient, the same shall be considered as lien on the judgment that may be entered" was in accordance with the rule laid down in Sun Insurance Office, Ltd. v. Asuncion.17 The CA proceeded to state that a judicious examination of the complaint pointed to a determination of the respective rights and interests of the parties over the property based on the issues presented therein which could only be determined in a full-blown trial on the merits of the case.

Petitioner filed a Motion for Reconsideration, which the CA denied in a Resolution dated September 17, 2004. The CA ruled, among others, that the defenses of acquisitive prescription and laches were likewise unavailing. It found that the subject property is covered by a Torrens title (OCT No. V-19556); thus, it is axiomatic that adverse, notorious and continuous possession under a claim of ownership for the period fixed by law is ineffective against a Torrens title; that unless there are intervening rights of third persons which may be affected or prejudiced by a decision directing the return of the lot to petitioner, the equitable defense of laches will not apply as against the registered owner.

Hence, this petition for review on certiorari where petitioner raises the following assignment of errors:

THE COURT OF APPEALS ERRED IN NOT FINDING THAT RESPONDENT TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION IN DENYING PETITIONER'S MOTION TO DISMISS DESPITE RESPONDENTS' NON-PAYMENT OF THE CORRECT DOCKET FEES.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE ACTION OF PRIVATE RESPONDENTS IS BARRED BY LACHES AND EXTRAORDINARY ACQUISITIVE PRESCRIPTION.18

We find the petition without merit.

Preliminarily, although not raised as an issue in this petition, we find it necessary to discuss the issue of jurisdiction over the subject matter of this case. Respondents' complaint was filed in 1999, at the time Batas Pambansa Blg. (BP) 129, the Judiciary








Reorganization Act of 1980, was already amended by Republic Act (RA) No. 7691, An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts, amending for the purpose BP Blg. 129.19 Section 1 of RA 7691, amending BP Blg. 129, provides that the RTC shall exercise exclusive original 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:


(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

Section 3 of RA No. 7691 expanded the exclusive original jurisdiction of the first level courts, thus:

Section 3. Section 33 of the same law (BP Blg. 129) 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 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 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.

Respondents filed their Complaint with the RTC; hence, we would first determine whether the RTC has jurisdiction over the subject matter of this case based on the above-quoted provisions.

The Complaint filed by respondents in the RTC was for ownership, possession and damages, and alternative causes of action either to declare two documents as patent nullities and/or for recovery of conjugal share on the subject land with damages or redemption of the subject land. In their Complaint, respondents claimed that Rosario and Fernando are the registered owners of the subject land with an assessed value of P12,780.00; that the couple left the cultivation and enjoyment of the usufruct of the subject land to Fernando's mother and her second family to augment their means of livelihood; that respondent Rosario and Fernando thought that when the latter's mother died in 1980, the subject land was in the enjoyment of the second family of his mother, but later learned that the subject land was leased by petitioner Ceferina; that sometime in August 1999, respondents learned of the existence of the Deed of Transfer of Rights and Interest including Improvements thereon dated October 3, 1960, where Fernando had allegedly transferred his rights and interests on the subject land in favor of Eugenio, petitioner Ceferina's father, as well as an Affidavit of Relinquishment dated November 23, 1960 executed by Eugenio in favor of petitioner Ceferina; that Fernando's signature in the Deed of Transfer was not his but a forgery; and the Affidavit of Relinquishment was also void as it was a direct result of a simulated Deed of Transfer.

Respondents prayed that they be declared as absolute and lawful owners of the subject land and to order petitioner and the other defendants to vacate the premises and restore respondents to its possession and enjoyment therefore. On their second cause of action, they prayed that the Deed of Transfer of Rights and Interest Including Improvements Thereon be declared as a forgery, purely simulated and without any consideration; hence, inexistent, void ab initio and/or a patent nullity, as well as the Affidavit of Relinquishment which was the direct result of the Deed of Transfer. Respondents also prayed in the alternative that if the Deed be finally upheld as valid, to order petitioner to reconvey to respondent Rosario the undivided one-half portion of the subject land as conjugal owner thereof and to account and reimburse her of its usufruct; and/or to allow them to redeem the subject land.

It would appear that the first cause of action involves the issue of recovery of possession and interest of the parties over the subject land which is a real action. Respondents alleged that the assessed value of the subject land was P12,780.00 based on Tax Declaration No. 15272. Thus, since it is a real action with an assessed value of less than P20,000.00, the case would fall under the jurisdiction of the MTC as provided under the above-quoted Section 33 (3) of BP 129, as amended.

Notably, however, respondents in the same Complaint filed alternative causes of action assailing the validity of the Deed of Transfer of Rights and Interest executed by Fernando in favor of petitioner's father. Respondents also sought for the reconveyance to respondent Rosario of the undivided one-half portion of the subject land as conjugal owner thereof in case the Deed of Transfer of Rights and Interest will be upheld as valid; and/or for redemption of the subject land. Clearly, this is a case of



joinder of causes of action which comprehends more than the issue of possession of, or any interest in the real property under contention, but includes an action to annul contracts and reconveyance which are incapable of pecuniary estimation and, thus, properly within the jurisdiction of the RTC.20

In Singson v. Isabela Sawmill,21 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 exclusively by courts of first instance (now Regional Trial Courts).22

Thus, respondents correctly filed their Complaint with the RTC.

It is a settled rule in this jurisdiction that when an action is filed in court, the complaint must be accompanied by the payment of the requisite docket and filing fees.23 It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action.24

Section 7(b)(1) of Rule 141 of the Rules of Court provides:

SEC. 7. Clerks of Regional Trial Courts. - (a) For filing an action or a permissive counter-claim or money claim against an estate not based on judgment, or for filing with leave of court a third-party, fourth-party, etc. complaint, or a complaint-in-intervention, and for all clerical services in the same, if the total-sum claimed, exclusive of interest, or the stated value of the property in litigation, is:

x x x x

(b) For filing:

1. Actions where the value of the subject matter

cannot be estimated ........ P 400.00

2. x x x

In a real action, the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees.25

Since we find that the case involved the annulment of contract which is not susceptible of pecuniary estimation, thus, falling within the jurisdiction of the RTC, the docket fees should not be based on the assessed value of the subject land as claimed by petitioner in their memorandum, but should be based on Section 7(b)(1) of Rule 141. A perusal of the entries in the Legal Fees Form attached to the records would reflect that the amount of P400.00 was paid to the Clerk of Court, together with the other fees, as assessed by the Clerk of Court. Thus, upon respondents' proof of payment of the assessed fees, the RTC has properly acquired jurisdiction over the complaint. Jurisdiction once acquired is never lost, it continues until the case is terminated. 26

Notably, petitioner’s claim that the RTC did not acquire jurisdiction in this case is premised on her contention that respondents violated SC Circular No. 7 issued on March 24, 1998 requiring that all complaints must specify the amount of damages sought not only in the body of the pleadings but also in the prayer to be accepted and admitted for filing. Petitioner argues that respondents alleged in paragraph 13 of their Complaint that:

(T)he reasonable rental for the use of the [subject] land is P2,000.00 per hectare, every crop time, once every four months, or P6,000.00 a year per hectare; that defendants in proportion and length of time of their respective occupancy is and/or are jointly and severally liable to plaintiffs of the produce thereby in the following proportions, viz: (a) for defendant Ceferina de Ungria for a period of time claimed by her as such; (b) for defendants Dolores Cagautan, a certain alias "Dory," and PO1 Jonas Montales, of an undetermined area, the latter having entered the area sometime in 1998 and defendant alias "Dory," only just few months ago; that defendant Ignacio Olarte and Zacasio Puutan of occupying about one-half hectare each.27

and in their prayer asked:

x x x Ordering the defendants, jointly and severally, in proportion to the length and area of their respective occupancy, to pay reasonable rentals to the plaintiffs in the proportion and amount assessed in paragraph 13 of the First Cause of Action.

x x x x

(a) Ordering the defendants, jointly and severally, to pay plaintiffs actual and compensatory damages such as are proved during the hearing of this case;

(b) Ordering the defendants, jointly and severally, to pay plaintiffs attorneys' fees and moral damages, all to be proved during the hearing of this case.28











Thus, the RTC should have dismissed the case, since respondents did not specify the amount of damages in their prayer.

We are not persuaded.

SC Circular No. 7 was brought about by our ruling in Manchester Development Corporation v. Court of Appeals,29where we held that a pleading which does not specify in the prayer the amount of damages being asked for shall not be accepted or admitted, or shall otherwise be expunged from the record; and that the Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee.

However, in Sun Insurance Office, Ltd. v. Asuncion,30 we laid down the following guidelines in the payment of docket fees, to wit:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly-authorized deputy to enforce said lien and assess and collect the additional fee.

Subsequently, in Heirs of Bertuldo Hinog v. Melicor,31 we said:

Furthermore, the fact that private respondents prayed for payment of damages "in amounts justified by the evidence" does not call for the dismissal of the complaint for violation of SC Circular No. 7, dated March 24, 1988 which required that all complaints must specify the amount of damages sought not only in the body of the pleadings but also in the prayer in order to be accepted and admitted for filing. Sun Insurance effectively modified SC Circular No. 7 by providing that filing fees for damages and awards that cannot be estimated constitute liens on the awards finally granted by the trial court.

x x x judgment awards which were left for determination by the court or as may be proven during trial would still be subject to additional filing fees which shall constitute a lien on the judgment. It would then be the responsibility of the Clerk of Court of the trial court or his duly-authorized deputy to enforce said lien and assess and collect the additional fees.32

A reading of the allegations in the complaint would show that the amount of the rental due can only be determined after a final judgment, since there is a need to show supporting evidence when the petitioner and the other defendants started to possess the subject land. Thus, we find no reversible error committed by the CA when it ruled that there was no grave abuse of discretion committed by the RTC in issuing its Order dated March 30, 2000, where the RTC stated that "since there was no hearing yet, respondents are not in a position to determine how much is to be charged and that after hearing, the Clerk of Court determines that the filing fee is still insufficient, the same shall be considered as lien on the judgment that may be entered."

Petitioner claims that the action is barred by extraordinary acquisitive prescription and laches. Petitioner contends that she took possession of the land in the concept of an owner, open, exclusive, notorious and continuous since 1952 through her predecessor-in-interest, Eugenio, and by herself up to the present; that the late Fernando and private respondents had never taken possession of the land at any single moment; and that, granting without admitting that the transfer of rights between Fernando and Eugenio was null and void for any reason whatsoever, petitioner's possession of the land had already ripened into ownership after the lapse of 30 years from August 1952 by virtue of the extraordinary acquisitive prescription.

We are not persuaded.

It is a well-entrenched rule in this jurisdiction that no title to registered land in derogation of the rights of the registered owner shall be acquired by prescription or adverse possession.33 Prescription is unavailing not only against the registered owner but also against his hereditary successors.34 In this case, the parcel of land subject of this case is a titled property, i.e., titled in the name of the late Fernando Castor, married to Rosario Dideles.

Petitioner claims that respondent had impliedly admitted the fact of sale by Fernando to Eugenio in August 1952, but only according to respondents, the sale was null and void because it violated the provisions of the Public Land Act. Petitioner argues that the application of Fernando, dated January 17, 1952, was not the homestead application referred to in Sections 118 and 124 of the Public Land Act; and that Fernando's application was only as settler, or for the allocation of the subject land to him vice the original settler Cadiente.

Such argument does not persuade.

The trial in this case has not yet started as in fact no answer has yet been filed. We find that these issues are factual which must be resolved at the trial of this case on








the merits wherein both parties will be given ample opportunity to prove their respective claims and defenses.

Anent petitioner's defense of laches, the same is evidentiary in nature and cannot be established by mere allegations in the pleadings. Without solid evidentiary basis, laches cannot be a valid ground to dismiss respondents' complaint.35 Notably, the allegations of respondents in their petition filed before the RTC which alleged among others:

7. That sometime between the years 1965 to 1970, defendant Ceferina de Ungria, accompanied by Miss Angela Jagna-an, appeared in the residence of plaintiff Rosario Dideles Vda. de Castor in Bo.1, Banga, South Cotabato, and requested her to sign a folded document with her name only appearing thereon, telling her that it has something to do with the land above-described, of which she refused telling her that she better return it to the person who requested her to do so (referring to her mother-in-law), more so that her husband was out at that time;

8. That when the matter was brought home to Fernando Castor, the latter just commented that [his] mother desires the land above-described to be sold to defendant Ceferina de Ungria which however he was opposed to do so even as they occasionally come into heated arguments everytime this insistence on the same subject propped up;

9. That even after the death of the mother of the late Fernando Castor in Bo. Bula, City of General Santos, sometime in 1980, the latter and his surviving wife thought all the while that the land above-described was in the enjoyment of his late mother's family with his 2nd husband; that it was only after sometime when plaintiff Rosario Dideles Vda. de Castor heard that the land above-described had even been leased by defendant Ceferina de Ungria with the Stanfilco and Checkered farm;

10. That sometime in 1997, defendant Ceferina de Ungria sent overtures to plaintiffs through Ester Orejana, who is the half sister-in-law of plaintiff Rosario Dideles Vda. de Castor that she desires to settle with them relating to the land above-described; that the overtures developed into defendant Ceferina de Ungria meeting for the purpose plaintiff Ferolyn Castor Facurib where the negotiation continued with Lolita Javier as attorney-in-fact after defendant Ceferina de Ungria left to reside in Manila and which resulted later to the attorney-in-fact offering the plaintiffs P100,000.00 to quitclaim on their rights over the said land, which offer, however, was refused by plaintiffs as so [insignificant] as compared to the actual value of the same land; that in that negotiation, defendant Ceferina de Ungria was challenged to show any pertinent document to support her claim on the land in question and where she meekly answered by saying at the time that she does not have any of such document;

x x x x36

would not conclusively establish laches.1avvphil Thus, it is necessary for petitioners to proceed to trial and present controverting evidence to prove the elements of laches.

WHEREFORE, the petition for review is DENIED.

SO ORDERED.

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, Respondents.

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 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 63737 as well as its Resolution2 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[’] father’s 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. attorney’s 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 Court’s 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 isP3,500,000.00. 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 Order8 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-Intervention10 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 defendant’s 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 3315 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 respondent’s 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 exceedingP20,000.00, 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 publiciana is 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, 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.

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 CA’s 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, attorney’s 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 court’s 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.




G.R. No. 164560 July 22, 2009

ANA DE GUIA SAN PEDRO and ALEJO DOPEÑO, Petitioners, vs.HON. FATIMA G. ASDALA, in her capacity as the Presiding Judge of the Regional Trial Court of Quezon City, Branch 87; HON. MANUEL TARO, in his capacity as the Presiding Judge of the Metropolitan Trial Court of Quezon City, Branch 42; and the HEIRS OF SPOUSES APOLONIO V. DIONISIO and VALERIANA DIONISIO (namely, ALLAN GEORGE R. DIONISIO and ELEANOR R. DIONISIO, herein represented by ALLAN GEORGE R. DIONISIO), Respondents.

D E C I S I O N

DEL CASTILLO, J.:

This resolves the petition for certiorari under Rule 65 of the Rules of Court, praying that the Resolutions1 of the Court of Appeals (CA) dated September 15, 2003 and June 1, 2004, respectively, in CA-G.R. SP No. 78978, be reversed and set aside.

The antecedent facts are as follows.

Sometime in July 2001, private respondents, heirs of spouses Apolonio and Valeriana Dionisio, filed with the Metropolitan Trial Court (MeTC) of Quezon City, Branch 42, a Complaint2 against herein petitioners and Wood Crest Residents Association, Inc., for Accion Reivindicatoria, Quieting of Title and Damages, with Prayer for Preliminary Mandatory Injunction. Private respondents alleged that subject property located in Batasan Hills, Quezon City, with an assessed value of P32,100.00, was titled in the name of spouses Apolonio and Valeriana Dionisio; but petitioners, with malice and evident bad faith, claimed that they were the owners of a parcel of land that encompasses and covers subject property. Private respondents had allegedly been prevented from entering, possessing and using subject property. It was further alleged in the Complaint that petitioners' Transfer Certificate of Title over their alleged property was spurious. Private respondents then prayed that they be declared the sole and absolute owners of the subject property; that petitioners be ordered to surrender possession of subject property to them; that petitioners and Wood Crest and/or its members be ordered to pay actual and moral damages, and attorney's fees.

Petitioners, for their part, filed a Motion to Dismiss3 said complaint on the ground that the MeTC had no jurisdiction over the subject matter of the action, as the subject of litigation was incapable of pecuniary estimation.

The MeTC then issued an Order4 dated July 4, 2002 denying the motion to dismiss, ruling that, under Batas Pambansa (B.P.) Blg. 129, as amended, the MeTC had exclusive original jurisdiction over actions involving title to or possession of real property of small value.

Petitioners' Motion for Reconsideration of said Order dated July 4, 2002 was denied.

Petitioners assailed the aforementioned Order by filing a petition for certiorari with the Regional Trial Court (RTC) of Quezon City, Branch 87. However, in its Decision5 dated March 10, 2003, the RTC dismissed the petition, finding no grave abuse of discretion on the part of the MeTC Presiding Judge. The RTC sustained the MeTC ruling, stating that, in accordance with Section 33(3) of Republic Act (R.A.) No. 7691, amending B.P. Blg. 129, the MeTC had jurisdiction over the complaint for Accion Reivindicatoria, as it involves recovery of ownership and possession of real property located in Quezon City, with an assessed value not exceeding P50,000.00. A Motion for Reconsideration6 of the Decision was filed by petitioners, but was denied in an Order7 dated July 3, 2003.

Petitioners then filed with the Court of Appeals another petition for certiorari, insisting that both the MeTC and RTC acted with grave abuse of discretion amounting to lack or excess of jurisdiction by not ordering the dismissal of the complaint for Accion Reivindicatoria, for lack of jurisdiction over the same. In the assailed CA Resolution dated September 15, 2003, the CA dismissed the petition outright, holding that certiorari was not available to petitioners as they should have availed themselves of the remedy of appeal. Petitioners' motion for reconsideration of the resolution of dismissal was denied per Resolution8 dated June 1, 2004.

Thus, petitioners filed the instant petition and, in support thereof, they allege that:

THE HONORABLE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN (SIC) EXCESS OF JURISDICTION IN DENYING THE PETITION FOR CERTIORARI AND FOR FAILURE TO RESOLVE THE ISSUE RAISED IN THE CERTIORARI REGARDING THE JURISDICTION OF THE METROPOLITAN TRIAL COURT TO TAKE COGNIZANCE OF A CASE OF ACCION REINVINDICATORIA.

THE HONORABLE PUBLIC RESPONDENT FATIMA GONZALES-ASDALA, AS PRESIDING JUDGE OF RTC BRANCH 87, QUEZON CITY, ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF (SIC) JURISDICTION IN DISMISSING THE PETITION FOR CERTIORARI AND IN RESOLVING THAT A CASE OF ACCION REINVINDICATORIA IS WITHIN THE JURISDICTION OF THE METROPOLITAN TRIAL COURT.

THE HONORABLE PUBLIC RESPONDENT MANUEL TARO AS PRESIDING JUDGE MeTC, BRANCH 42, QUEZON CITY, ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN (SIC) EXCESS OF JURISDICTION IN SO TAKING COGNIZANCE OF THE COMPLAINT FORACCION REINVINDICATORIA IN CIVIL CASE NO. 27434 ENTITLED, "HEIRS OF SPS. APOLONIO V. DIONISIO AND VALERIANA DIONISIO, ETC. VS. ANA DE GUIA SAN PEDRO, ET. AL."9











The present Petition for Certiorari is doomed and should not have been entertained from the very beginning.

The settled rule is that appeals from judgments or final orders or resolutions of the CA should be by a verified petition for review on certiorari, as provided for under Rule 45 of the Revised Rules of Civil Procedure. Thus, inPasiona, Jr. v. Court of Appeals,10 the Court expounded as follows:

The aggrieved party is proscribed from assailing a decision or final order of the CA via Rule 65, because such recourse is proper only if the party has no plain, speedy and adequate remedy in the course of law. In this case, petitioner had an adequate remedy, namely, a petition for review on certiorari under Rule 45 of the Rules of Court. A petition for review on certiorari, not a special civil action for certiorari was, therefore, the correct remedy.

x x x x

Settled is the rule that where appeal is available to the aggrieved party, the special civil action for certiorari will not be entertained – remedies of appeal and certiorari are mutually exclusive, not alternative or successive. Hence, certiorari is not and cannot be a substitute for a lost appeal, especially if one's own negligence or error in one's choice of remedy occasioned such loss or lapse. One of the requisites of certiorari is that there be no available appeal or any plain, speedy and adequate remedy. Where an appeal was available, as in this case, certiorari will not prosper, even if the ground therefor is grave abuse of discretion. Petitioner's resort to this Court by Petition for Certiorari was a fatal procedural error, and the instant petition must, therefore, fail.11

For the very same reason given above, the CA, therefore, acted properly when it dismissed the petition for certiorari outright, on the ground that petitioners should have resorted to the remedy of appeal instead ofcertiorari. Verily, the present Petition for Certiorari should not have been given due course at all.

Moreover, since the period for petitioners to file a petition for review on certiorari had lapsed by the time the instant petition was filed, the assailed CA Resolutions have attained finality.1avvphi1

Nevertheless, just to put the matter to rest, the Court reiterates the ruling in Heirs of Valeriano S. Concha, Sr. v. Spouses Lumocso,12 to wit:

In a number of cases, we have held that actions for reconveyance of or for cancellation of title to or to quiet title over real property are actions that fall under the classification of cases that involve "title to, or possession of, real property, or any interest therein."

x x x x

x x x Thus, under the old law, there was no substantial effect on jurisdiction whether a case is one, the subject matter of which was incapable of pecuniary estimation, under Section 19(1) of B.P. 129, or one involving title to property under Section 19(2). The distinction between the two classes became crucial with the amendment introduced by R.A. No. 7691 in 1994, which expanded the exclusive original jurisdiction of the first level courts to include "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." Thus, under the present law, original jurisdiction over cases the subject matter of which involves "title to, possession of, real property or any interest therein" under Section 19(2) of B.P. 129 is divided between the first and second level courts, with the assessed value of the real property involved as the benchmark. This amendment was introduced to "unclog the overloaded dockets of the RTCs which would result in the speedier administration of justice."13

Clearly, the RTC and the CA ruled correctly that the MeTC had jurisdiction over private respondents' complaint forAccion Reivindicatoria.

IN VIEW OF THE FOREGOING, the petition is DISMISSED for utter lack of merit. The Resolutions of the Court of Appeals in CA-G.R. SP No. 78978, dated September 15, 2003 and June 1, 2004, are AFFIRMED.

SO ORDERED.






G.R. No. 174908 June 17, 2013

DARMA MASLAG, Petitioner, vs.ELIZABETH MONZON, WILLIAM GESTON, and REGISTRY OF DEEDS OF BENGUET, Respondents.

D E C I S I O N

DEL CASTILLO, J.:

"It is incumbent upon x x x appellants to utilize the correct mode of appeal of the decisions of trial courts to the appellate courts. In the mistaken choice of their remedy, they can blame no one but themselves."1

This is a Petition for Review on Certiorari2 of the May 31, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 83365, which dismissed petitioner Darma Maslag's (petitioner) ordinary appeal to it for being an improper remedy. The Resolution disposed of the case as follows:

WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is hereby DISMISSED.

SO ORDERED.4

The Petition also assails the CA’s September 22, 2006 Resolution5 denying petitioner’s Motion for Reconsideration.6

Factual Antecedents

In 1998, petitioner filed a Complaint7 for reconveyance of real property with declaration of nullity of original certificate of title (OCT) against respondents Elizabeth Monzon (Monzon), William Geston and the Registry of Deeds of La Trinidad, Benguet. The Complaint was filed before the Municipal Trial Court (MTC) of La Trinidad, Benguet.

After trial, the MTC found respondent Monzon guilty of fraud in obtaining an OCT over petitioner’s property.8 It ordered her to reconvey the said property to petitioner, and to pay damages and costs of suit.9

Respondents appealed to the Regional Trial Court (RTC) of La Trinidad, Benguet.

After going over the MTC records and the parties’ respective memoranda, the RTC of La Trinidad, Benguet, Branch 10, through Acting Presiding Judge Fernando P.

Cabato (Judge Cabato), issued its October 22, 2003 Order,10 declaring the MTC without jurisdiction over petitioner’s cause of action. It further held that it will take cognizance of the case pursuant to Section 8, Rule 40 of the Rules of Court, which reads:

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. – x x x

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice. Both parties acknowledged receipt of the October 22, 2003 Order,11 but neither presented additional evidence before the new judge, Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De Rivera).12

On May 4, 2004, Judge Diaz De Rivera issued a Resolution13 reversing the MTC Decision. The fallo reads as follows:

WHEREFORE, the Judgment appealed from the Municipal Trial Court of La Trinidad, Benguet is set aside. [Petitioner] is ordered to turn over the possession of the 4,415 square meter land she presently occupies to [Monzon]. This case is remanded to the court a quo for further proceedings to determine whether [Maslag] is entitled to the remedies afforded by law to a builder in good faith for the improvements she constructed thereon.

No pronouncement as to damages and costs.

SO ORDERED.14

Petitioner filed a Notice of Appeal15 from the RTC’s May 4, 2004 Resolution.

Petitioner assailed the RTC’s May 4, 2004 Resolution for reversing the MTC’s factual findings16 and prayed that the MTC Decision be adopted. Her prayer before the CA reads:

WHEREFORE, premises considered, it is most respectfully prayed that the decision of the Regional Trial Court, Branch 10 of La Trinidad, Benguet, appealed from be reversed in toto and that the Honorable Court adopt the decision of the Municipal Trial Court. Further reliefs just and equitable under the premises are prayed for.17

Respondents moved to dismiss petitioner’s ordinary appeal for being the improper remedy. They asserted that the proper mode of appeal is a Petition for Review under Rule 42 because the RTC rendered its May 4, 2004 Resolution in its appellate jurisdiction.18

http://www.lawphil.net/judjuris/juri2013/jun2013/gr_174908_2013.html#fnt18



















Ruling of the Court of Appeals

The CA dismissed petitioner’s appeal. It observed that the RTC’s May 4, 2004 Resolution (the subject matter of the appeal before the CA) set aside an MTC Judgment; hence, the proper remedy is a Petition for Review under Rule 42, and not an ordinary appeal.19

Petitioner sought reconsideration.20 She argued, for the first time, that the RTC rendered its May 4, 2004 Resolution in its original jurisdiction. She cited the earlier October 22, 2003 Order of the RTC declaring the MTC without jurisdiction over the case.

The CA denied petitioner’s Motion for Reconsideration in its September 22, 2006 Resolution:21

A perusal of the May 4, 2004 Resolution of the RTC, which is the subject matter of the appeal, clearly reveals that it took cognizance of the MTC case in the exercise of its appellate jurisdiction. Consequently, as We have previously enunciated, the proper remedy, is a petition for review under Rule 42 and not an ordinary appeal under Rule 41.

WHEREFORE, premises considered, the instant Motion for Reconsideration is DENIED. The May 31, 2006 Resolution of this Court is hereby AFFIRMED in toto.

SO ORDERED.22

Hence this Petition wherein petitioner prays that the CA be ordered to take cognizance of her appeal.23

Issues

Petitioner set forth the following issues in her Petition:

WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN DISMISSING THE APPEAL FILED BY THE PETITIONER, CONSIDERING THAT THE REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET HELD THAT THE ORIGINAL COMPLAINT AS FILED BEFORE THE MUNICIPAL TRIAL COURT OF LA TRINIDAD, BENGUET WAS DECIDED BY THE LATTER WITHOUT ANY JURISDICTION AND, IN ORDERING THAT THE CASE SHALL BE DECIDED PURSUANT TO THE PROVISION OF SECTION 8 OF RULE 40 OF THE RULES OF COURT, IT DECIDED THE CASE NOT ON ITS APPELLATE JURISDICTION BUT ON ITS ORIGINAL JURISDICTION WHAT WILL BE THE EFFECT OF THE DECISION OF THE REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET, WHEN IT DECIDED A CASE APPEALED BEFORE IT UNDER THE PROVISION OF SECTION 8, RULE 40 OF THE RULES OF COURT OF THE PHILIPPINES, AS TO THE COURSE OF REMEDY THAT MAY BE AVAILED OF BY

THE PETITIONER – A PETITION FOR REVIEWUNDER RULE 42 OR AN ORDINARY APPEAL UNDER RULE 41.24

Our Ruling

In its October 22, 2003 Order, the RTC declared that the MTC has no jurisdiction over the subject matter of the case based on the supposition that the same is incapable of pecuniary estimation. Thus, following Section 8, Rule 40 of the Rules of Court, it took cognizance of the case and directed the parties to adduce further evidence if they so desire. The parties bowed to this ruling of the RTC and, eventually, submitted the case for its decision after they had submitted their respective memoranda.

We cannot, however, gloss over this jurisdictional faux pas of the RTC. Since it involves a question of jurisdiction, we may motu proprio review and pass upon the same even at this late stage of the proceedings.25

In her Complaint26 for reconveyance of real property with declaration of nullity of OCT, petitioner claimed that she and her father had been in open, continuous, notorious and exclusive possession of the disputed property since the 1940’s. She averred:

7. Sometime in the year 1987, Elizabeth Monzon, the owner of the adjacent parcel of land being occupied by plaintiff [Maslag], informed the plaintiff that the respective parcels of land being claimed by them can now be titled. A suggestion was, thereafter made, that those who were interested to have their lands titled, will contribute to a common fund for the surveying and subsequent titling of the land;

8. Since plaintiff had, for so long, yearned for a title to the land she occupies, she contributed to the amount being requested by Elizabeth Monzon;

9. A subdivision survey was made and in the survey, the respective areas of the plaintiff and the defendants were defined and delimited – all for purposes of titling. x x x

10. But alas, despite the assurance of subdivided titles, when the title was finally issued by the Registry of Deeds, the same was only in the name of Elizabeth Monzon and WILLIAM GESTON. The name of Darma Maslag was fraudulently, deliberately and in bad faith omitted. Thus, the title to the property, to the extent of 18,295 square meters, was titled solely in the name of ELIZABETH MONZON.

As a relief, petitioner prayed that Monzon be ordered to reconvey the portion of the property which she claimed was fraudulently included in Monzon’s title. Her primary relief was to recover ownership of real property. Indubitably, petitioner’s complaint involves title to real property. An action "involving title to real property," on the other hand, was defined as an action where "the plaintiff’s cause of action is based on a










claim that she owns such property or that she has the legal rights to have exclusive control, possession, enjoyment, or disposition of the same."27

Under the present state of the law, in cases involving title to real property, original and exclusive jurisdiction belongs to either the RTC or the MTC, depending on the assessed value of the subject property.28 Pertinent provisions of Batas Pambansa Blg. (BP) 129,29 as amended by Republic Act (RA) No. 7691,30 provides:

Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts 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 x x x the assessed value of the property exceeds Fifty thousand pesos ([P]50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

x x x x

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 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) x x x.

In the case at bench, annexed to the Complaint is a Declaration of Real Property31 dated November 12, 1991, which was later marked as petitioner’s Exhibit "A",32 showing that the disputed property has an assessed value ofP12,40033 only. Such assessed value of the property is well within the jurisdiction of the MTC. In fine, the RTC, thru Judge Cabato, erred in applying Section 19(1) of BP 129 in determining which court has jurisdiction over the case and in pronouncing that the MTC is divested of original and exclusive jurisdiction.

This brings to fore the next issue of whether the CA was correct in dismissing petitioner’s appeal.

Section 2, Rule 50 of the Rules of Court provides for the dismissal of an improper appeal:

SECTION 2. Dismissal of improper appeal to the Court of Appeals. – An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.1âwphi1 (Emphasis supplied)

There are two modes of appealing an RTC decision or resolution on issues of fact and law.34 The first mode is an ordinary appeal under Rule 41 in cases where the RTC exercised its original jurisdiction. It is done by filing a Notice of Appeal with the RTC. The second mode is a petition for review under Rule 42 in cases where the RTC exercised its appellate jurisdiction over MTC decisions. It is done by filing a Petition for Review with the CA. Simply put, the distinction between these two modes of appeal lies in the type of jurisdiction exercised by the RTC in the Order or Decision being appealed.

As discussed above, the MTC has original and exclusive jurisdiction over the subject matter of the case; hence, there is no other way the RTC could have taken cognizance of the case and review the court a quo’s Judgment except in the exercise of its appellate jurisdiction. Besides, the new RTC Judge who penned the May 4, 2004 Resolution, Judge Diaz de Rivera, actually treated the case as an appeal despite the October 22, 2003 Order. He started his Resolution by stating, "This is an appeal from the Judgment rendered by the Municipal Trial Court (MTC) of La Trinidad Benguet"35 and then proceeded to discuss the merits of the "appeal." In the dispositive portion of said Resolution, he reversed the MTC’s findings and conclusions and remanded residual issues for trial with the MTC. Thus, in fact and in law, the RTC Resolution was a continuation of the proceedings that originated from the MTC. It was a judgment issued by the RTC in the exercise of its appellate jurisdiction. With regard to the RTC’s earlier October 22, 2003 Order, the same should be disregarded for it produces no effect (other than to confuse the parties whether the RTC was invested with original or appellate jurisdiction). It cannot be overemphasized that jurisdiction over the subject matter is conferred only by law and it is "not within the courts, let alone the parties, to themselves determine or conveniently set aside."37 Neither would the active participation of the parties nor estoppel operate to confer original and exclusive jurisdiction where the court or tribunal only wields appellate jurisdiction over the case.38 Thus, the CA is correct in holding that the proper mode of appeal should have been a Petition for Review under Rule 42 of the Rules of Court, and not an ordinary appeal under Rule 41.













Seeing the futility of arguing against what the RTC actually did, petitioner resorts to arguing for what the RTC should have done. She maintains that the RTC should have issued its May 4, 2004 Resolution in its original jurisdiction because it had earlier ruled that the MTC had no jurisdiction over the cause of action.

Petitioner’s argument lacks merit. To reiterate, only statutes can confer jurisdiction. Court issuances cannot seize or appropriate jurisdiction. It has been repeatedly held that "any judgment, order or resolution issued without jurisdiction is void and cannot be given any effect."39 By parity of reasoning, an order issued by a court declaring that it has original and exclusive jurisdiction over the subject matter of the case when under the law it has none cannot likewise be given effect. It amounts to usurpation of jurisdiction which cannot be countenanced. Since BP 129 already apportioned the jurisdiction of the MTC and the RTC in cases involving title to property, neither the courts nor the petitioner could alter or disregard the same. Besides, in determining the proper mode of appeal from an RTC Decision or Resolution, the determinative factor is the type of jurisdiction actually exercised by the RTC in rendering its Decision or Resolution. Was it rendered by the RTC in the exercise of its original jurisdiction, or in the exercise of its appellate jurisdiction? In short, we look at what type of jurisdiction was actually exercised by the RTC. We do not look into what type of jurisdiction the RTC should have exercised. This is but logical. Inquiring into what the RTC should have done in disposing of the case is a question which already involves the merits of the appeal, but we obviously cannot go into that where the mode of appeal was improper to begin with.

WHEREFORE, premises considered, the Petition for Review is DENIED for lack of merit. The assailed May 31, 2006 and September 22, 2006 Resolutions of the Court of Appeals in CA-G.R. CV No. 83365 are AFFIRMED.

SO ORDERED.



G.R. No. 131755 October 25, 1999

MOVERS-BASECO INTEGRATED PORT SERVICES, INC., petitioner,vs.CYBORG LEASING CORPORATION, respondent.

VITUG, J.:

The instant matter has been brought to this Court via a petition for review under Rule 45 of the Rules of Court to seek a reversal of the decision of the decision of the Regional Trial Court ("RTC") of Manila, Branch 16, in Civil Case No. 97-85267.1âwphi1.nêt

Cyborg Leasing Corporation ("Cyborg"), herein private respondent, filed on 22 August 1996 before the Metropolitan Trial Court ("MTC") of Manila a case, captioned "Damages with Prayer for a Writ of Replevin" (Civil Case No. 152839), against Conpac Warehousing, Inc. ("Conpac"), and herein petitioner Movers-Baseco Integrated Port Services ("Movers"). The complaint alleged that pursuant to a lease agreement, Cyborg had delivered one (1) NISSAN forklift to CONPAC. The lease agreement stipulated a monthly rental of P11,000.00 for the use of the equipment from its date of delivery. Conpac supposedly failed and refused to pay the stipulated rentals starting April 1995 notwithstanding demands therefor. Sometime in May 1995, petitioner took control of the operations of Conpac and seized all cargoes and equipment including the subject forklift. Petitioner ignored Cyborg's demand for the return to it of the equipment and the formal disclaimer of ownership made by CONPAC. In its Complaint, Cyborg prayed:

UPON RECEIPT AND BEFORE ANSWER

That an ORDER be issued directing the Sheriff or other officer of this Court to forthwith take custody and possession of the subject equipment and to dispose it in accordance with the Rules of Court.

AFTER TRIAL

That judgment be rendered for the plaintiff ordering the defendants, jointly and severally, to pay the following amounts:

(1) P11,000.00 per month as actual damages by way of reasonable compensation for the use, enjoyment and/or rental of the subject equipment

from April 9, 1995 until it is repossessed by the plaintiff;

(2) P1,000.000.00 as exemplary damages and

(3) P50,000.00 as attorney's fees and costs.

IN THE ALTERNATIVE

In the event that the subject equipment could not be seized, that defendants be jointly and severally ordered to pay the plaintiff its actual market value of One Hundred Fifty Thousand Pesos (P150,000.00), Philippine Currency, exclusive of the damages under paragraphs (1), (2), and (3) stated supra.

Plaintiff further prays for other equitable reliefs and remedies. 1

Upon application of Cyborg, a writ of replevin was issued following the filing of a P300,000.00 replevin bond. The directive was contained in the court's order of 27 August 1996, viz:

WHEREFORE, pursuant to Sections 1 to 3, Rule 60 of the Revised Rules of Court, a Writ of Replevin is hereby ordered issued requiring the Sheriff of this Court to fortwith take possession of the property specified on the face of this Order after serving a copy of this Order to defendants, together with a copy of the application, affidavit, and bond. Accordingly, the Sheriff of this Court is hereby required to comply with Sections 4 to 8 of Rule 60.

IT IS SO ORDERED. 2

On 06 February 1997, petitioner was served with a copy of the summons and the writ of replevin. On 14 February 1997, petitioner filed a motion to dismiss the case on the ground of lack of jurisdiction on the part of the MTC since the complaint had asked for, among other things, the following:

(a) . . . actual market value of the

equipment (par. 8 of the complaint) — P150,000.00

(b) . . . actual damages for use of the


equipment at the rate of P11,000.00

monthly from 09 April 1995 up to the

time possession was taken by the

plaintiff under the order of the Honorable

Court (par, 9(a) of the complaint) 242,000.00

(c) exemplary damages 1,000,000.00

(d) attorney's fees 50,000.00

———————

Total P1,442,000.00

On 18 March 1997, the MTC issued an order dismissing the complaint for lack of jurisdiction, and ratiocinating, thus —

It is a fundamental axiom in adjective law that jurisdiction is conferred by law, and where there is none, no agreement of the parties can vest competencia (Leonor vs. Court of Appeals, 256 SCRA 69; (1996); Department of Health vs. National Labor Commission, 251 SCRA 700; 707 (1995); 1Regalado, Remedial Law Compendium, 1988 5th rev. ed., p. 9).

Albeit the subject equipment has a market value of P150,000.00 (paragraph 8, Complaint) and while it is true that interest, damages of whatever kind, attorney's fees, litigation expenses and costs are excluded in ascertaining jurisdiction per Section 3 of Republic Act No. 7691 and are considered only to determine the filing fees, it is equally true that if the principal request in the complaint is for damages, or one of the causes of action, the amount of such claim shall be determinative ofcompetencia under Supreme Court Circular No. 09-94 dated June 14, 1994.

The amount sought to be recovered is the "amount of the demand" (Oteng vs. Tan Kiem, Ta, 61 Phil. 87) and included in the computation of the jurisdictional amount are attorney's fees recoverable as damages (Article 2208, New Civil Code), consequential damages, exemplary damages if the amount thereof is specified in the complaint (Enerio vs. Alampay, 64 SCRA 142,

and moral damages, if quantified in the complaint (Quiason, Philippines Courts and their Jurisdictions, 1986 ed., pp. 166-168).

Hence, on the basis of the clarification of the Supreme Court, the total claims of the plaintiff are beyond the purview of this Court's jurisdiction.

Accordingly, Civil Case No. 152839 is hereby DISMISSED for lack of jurisdiction as prayed for. 3

The MTC, in its order of 10 June 1997, denied Cyborg's motion for reconsideration, elaborating that it —

. . . is not unaware of Justice Regalado's discourse in his treatise that "replevin is available only where the principal relief sought in the action is the recovery of personal property, the other reliefs, like damages, being merely incidental thereto" (1 Regalado, Remedial Law Compendium, 1988 5th rev. ed., p. 437) which was utilized by plaintiffs counsel to secure re-evaluation of the challenged Order (page 2, Additional Arguments Relative to the Motion for Reconsideration). Yet, this Court cannot also ignore the language of Supreme Court Administrative Circular No. 09-94 dated June 14, 1994 that if the principal supplication is for damages, or is one of the causes of action, like in this case, the amount of such claim will spell the difference in jurisdiction between the Metropolitan Trial Court and the Regional Trial Court.

WHEREFORE, the plaintiff's Motion for Reconsideration and plaintiffs additional arguments relative to the motion for reconsideration are hereby DENIED. Accordingly, as prayed for by defendant's counsel on May 27, 1997, Sheriff Abulencia is hereby directed to RETURN the Nissan Forklift described as Equipment No. C-201, 2 Tonner, Engine No. G1-214511 FG 25 TCM to defendant Movers-Baseco Integrated Port Services, Inc. 4

Cyborg did not succeed in its motion for clarificatory judgment which the court took as just a second motion for reconsideration. Then, on 26 September 1997, Cyborg filed a petition for certiorari and prohibition, with preliminary injunction and/or prayer for temporary restraining order, against the MTC Judge, Conpac Warehousing and Movers, before the RTC of Manila (Civil Case No. 97-85267). This petition was opposed by Movers as being tardily filed. Still, later, an answer to this petition was filed by Movers.

On 20 October 1997, the RTC issued an order granting Cyborg's application for preliminary injunction; the court said:


The MTC dismissed the complaint filed by petitioner Cyborg for replevin of a leased Nissan forklift by defendant Compac and later taken into custody by defendant Movers-Baseco. Upon the MTC's denial of Cyborg's motion for reconsideration, Cyborg caused the filing of the instant petition.

In its motion to dismiss before the MTC Manila, Movers-Baseco argued that the MTC had no jurisdiction over this case because while the alleged amount of the forklift is P150,000, together with the other amounts/damages claimed, the total is beyond the MTC's jurisdiction.

Cyborg argued that since the principal action is for replevin, the other amounts being merely incidental, as the amount of P150,000 is within the MTC jurisdiction, the latter is competent to take cognizance of the case.

Such arguments, however, are better reserved for the adjudication on the merits of this petition. The issue now is whether there is sufficient legal ground to issue a writ of preliminary injunction to enjoin enforcement of the MTC's order dated June 10, 1997 which directed the delivery of the replevied forklift back to Movers-Baseco.

The MTC complaint alleged that the rentals of P11,000 per month are not being paid in the interim which lease contract is dated January 5, 1995 (Record, page 35).

It appears that Cyborg is the lessor-owner of the forklift. In the meantime, the rentals are not being paid it. As owner of the same, Cyborg has a clear right to the possession of the same during the pendency of this proceedings, the MTC having already issued a writ of replevin to gain possession of the forklift which is now in the possession of Cyborg. This status quo existing at the time this petition was filed should be maintained pending the resolution of the case, otherwise, great damage will be caused to Cyborg, the owner.

The 1997 Rules on Civil Procedure allow the ex parte issuance of a 20-day TRO, the Rules silent as to whether a bond should cover the 20-day TRO, as it is the writ of preliminary injunction that requires the filing of an injunction bond. Hence, this Court issued a TRO until October 22, 1997 (Rule 58, Section 5), otherwise, with the rentals in the interim being unpaid, Cyborg is destined to suffer GREAT damage (not necessarily irreparable), the Rule expressly mentioning great OR irreparable injury.1âwphi1.nêt

WHEREFORE, PREMISES CONSIDERED, let a writ of preliminary injunction issue against the respondents. The public and private respondents, the sheriff concerned, and any person acting for and in their behalf are restrained from implementing the order of the MTC Manila dated June 10, 1997 directing the delivery of the forklift back to the private respondent Movers-Baseco until the Court resolves the petition with finality.

Serve a copy of this order, together with a copy of the affidavit, upon the public and private respondents. No additional injunction bond is being required because Cyborg already filed an injunction bond before the MTC Manila. 5

Feeling aggrieved, petitioner filed before the RTC on 24 October 1997 this manifestation:

For accuracy, respondent Movers-Baseco would like to state that:

(a) respondent Movers-Baseco never took custody of the forklift after the respondent Sheriff took possession of the same pursuant to the writ of replevin issued by the MTC; and

(b) moreover, there is no bond posted by the petitioner for the issuance of the injunction. The bond referred to by this Court is the replevin bond posted in the Metropolitan Trial Court. 6

Ultimately, on 04 December 1997, the RTC promulgated its judgment in Civil Case No. 97-85267; resolving the merits of the petition, it concluded:

WHEREFORE, PREMISES CONSIDERED, the petition for certiorari is hereby GRANTED. Consequently,

1. Having been rendered with grave abuse of discretion, the orders of respondent judge dated March 18, (Annex A), June 10, 1997 (Annex B), and August 22, 1997 (Annex C) are hereby ANNULLED and SET ASIDE.

2. Respondent judge is ordered to refrain from implementing his order dated June 10, 1997 for the delivery of the forklift to respondent MOVERS-BASECO, making the writ of injunction permanent.

3. Remanding the case to the MTC Manila for trial on the merits.


Let a certified copy of this judgment be served upon the public respondent MTC Manila judge. Serve likewise a copy of this judgment upon the respondent Sheriff, counsel for petitioner, counsel for CONPAC, and counsel for MOVERS-BASECO. 7

Petitioner timely resorted to this Court, via the instant petition for review, assailing the decision of the RTC and submitting to the Court the following legal issues: Whether or not —

(1) the MTC had jurisdiction over respondent's complaint;

(2) the MTC's order of dismissal had become final and executory;

(3) Cyborg's special civil action of certiorari and prohibition before the RTC can be a substitute for a lost appeal; and

(4) a temporary restraining order or preliminary writ of injunction can be issued without an injunction bond apart from the replevin bond.

The threshold issue concerns MTC's jurisdiction over the action filed by Cyborg in Civil Case No. 152839 for "Damages with prayer for a writ of replevin." Hardly disputable is that the jurisdiction of the court and the nature of the action must be determined by the averments in the complaint and the character of the relief sought 8 vis-a-visthe corresponding provisions of the law involved. 9

Sec. 33 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, states:

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:

(1) Exclusive original jurisdiction over civil actions and probate proceedings testate and intestate, including the grant of provisional remedies in proper cases, where the value of the personal property, estate, or amount of the demand does not exceed, or amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where such personal property, estate, or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00), exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs, the amount of which must be specifically alleged: Provided, That interest, damages of whatever kind, attorney's fees, litigation expenses, and costs shall be included in the determination of the filing fees: Provided,further, That where there are several claims or causes of actions 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;

Supreme Court Administrative Circular No. 09-94, in turn, provides:

SUBJECT: Guidelines in the Implementation of the Republic Act No. 7691, Entitled "An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, Amending For the Purpose Batas Pambansa Blg. 129, otherwise Known As the Judiciary Reorganization Act of 1980."

xxx xxx xxx

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. 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.

The complaint filed by Cyborg with the Metropolitan Trial Court of Manila prayed for the return of the Nissan Forklift to it, as owner and as lessor pursuant to a lease agreement executed by it in favor of Conpac, or, in the alternative for the payment of P150,000.00 (the actual market value of the forklift), plus damages, plus the amount of unpaid lease, starting 09 April 1995 at P11,000.00 per month, which as of the time of the filing of the complaint on 22 August 1996 had amounted to P180,000.00 which, together with the value of the forklift, reach the sum of P230,000.00 excluding the amount of damages and attorney's fees likewise claimed. It would be incorrect to argue that the actual damages in the form of unpaid rentals were just incident of the action for the return of the forklift, considering that private respondent specifically sought in the complaint not only the seizure of the forklift from petitioner-Movers, which took control of the operations of Conpac, but likewise the payment of unpaid and outstanding rentals. Verily, the Metropolitan Trial Court's orders of 18 March 1997 and 10 June 1997 dismissing the complaint and denying the motion of private respondent, respectively, were properly decreed.

Another set back for Cyborg's cause was the fact that its petition for certiorari, with preliminary injunction and prayer for temporary restraining order, filed before the RTC should not have been allowed not only for being late but also for not being a valid substitute for a lost appeal. A petition for certiorari under the 1997 Rules of Civil Procedure should be filed within 60 days from receipt of the assailed decision, order or resolution. Cyborg's petition with the RTC was filed fourteen (14) days late 10 on 26


September 1997, or on the 74th day from its receipt of the order denying the motion for reconsideration on 14 July 1997. The RTC acted on the mistaken notion that the 1997 Rules of Civil Procedure took effect only in October 1997; in fact, the new rules became operative since 01 July 1997.

Having thus concluded, the Court need not take up the other issues raised.

WHEREFORE, the petition for review is GRANTED, and the decision of the Regional Trial Court of Manila in Civil Case No. 97-85267 is ANNULLED and SET ASIDE. The orders dated 18 March 1997, 10 June 1997 and 22 August 1997 of the Metropolitan Trial Court of Manila in Civil Case No. 152839 for "Damages With Prayer for a Writ of Replevin" are reinstated. Civil Case No. 152839 for damages is ordered DISMISSED for lack of jurisdiction.1âwphi1.nêt

SO ORDERED.


G.R. No. 143951 October 25, 2005

Norma Mangaliag and Narciso Solano, Petitioners, vs.Hon. Edelwina Catubig-Pastoral, Judge of the Regional Trial Court, 1st Judicial Region, San Carlos City, (Pangasinan), Branch 56 and Apolinario Serquina, Jr., Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari, with a prayer for the issuance of a temporary restraining order, to set aside the Order dated April 17, 2000 of the Regional Trial Court (RTC), Branch 56, San Carlos City in Civil Case No. SCC-2240, which denied petitioners’ motion to dismiss; and the Order dated June 13, 2000, which denied petitioners’ motion for reconsideration.

The factual background of the case is as follows:

On May 10, 1999, private respondent Apolinario Serquina, Jr. filed before the RTC a complaint for damages against petitioners Norma Mangaliag and Narciso Solano. The complaint alleges that: on January 21, 1999, from 9:00 to 10:00 a.m., private respondent, together with Marco de Leon, Abner Mandapat and Manuel de Guzman, was on board a tricycle driven by Jayson Laforte; while in Pagal, San Carlos City, a dump truck owned by petitioner Mangaliag and driven by her employee, petitioner Solano, coming from the opposite direction, tried to overtake and bypass a tricycle in front of it and thereby encroached the left lane and sideswiped the tricycle ridden by private respondent; due to the gross negligence, carelessness and imprudence of petitioner Solano in driving the truck, private respondent and his co-passengers sustained serious injuries and permanent deformities; petitioner Mangaliag failed to exercise due diligence required by law in the selection and supervision of her employee; private respondent was hospitalized and spent P71,392.00 as medical expenses; private respondent sustained a permanent facial deformity due to a fractured nose and suffers from severe depression as a result thereof, for which he should be compensated in the amount of P500,000.00 by way of moral damages; as a further result of his hospitalization, private respondent lost income of P25,000.00; private respondent engaged the services of counsel on a contingent basis equal to 25% of the total award.1

On July 21, 1999, petitioners filed their answer with counterclaim denying that private respondent has a cause of action against them. They attributed fault or negligence in the vehicular accident on the tricycle driver, Jayson Laforte, who was allegedly driving without license.2

Following pre-trial conference, trial on the merits ensued. When private respondent rested his case, petitioner Solano testified in his defense.

Subsequently, on March 8, 2000, petitioners, assisted by a new counsel, filed a motion to dismiss on the ground of lack of jurisdiction over the subject matter of the claim, alleging that the Municipal Trial Court (MTC) has jurisdiction over the case since the principal amount prayed for, in the amount of P71,392.00, falls within its jurisdiction.3 Private respondent opposed petitioners’ motion to dismiss.4 On March 24, 2000, petitioners filed a supplement in support of their motion to dismiss.5

On April 17, 2000, the respondent RTC Judge, Edelwina Catubig-Pastoral, issued the first assailed Order denying petitioners’ motion to dismiss,6 relying upon the mandate of Administrative Circular No. 09-94, paragraph 2 of which reads:

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. No. 7691, applied 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.

The respondent RTC Judge also cited the 1999 case of Ong vs. Court of Appeals,7 where an action for damages due to a vehicular accident, with prayer for actual damages of P10,000.00 and moral damages of P1,000,000.00, was tried in a RTC.

On May 19, 2000, petitioners filed a motion for reconsideration8 but it was denied by the respondent RTC Judge in her second assailed Order, dated June 13, 2000.9

Hence, the present petition for certiorari, with prayer for the issuance of a temporary restraining order.10

On August 9, 2000, the Court resolved to issue the temporary restraining order prayed for by petitioners. Consequently, the respondent RTC Judge desisted from hearing further Civil Case No. SCC-2240.11

Petitioners propound this issue for consideration: In an action for recovery of damages, does the amount of actual damages prayed for in the complaint provide the sole test for determining the court’s jurisdiction, or is the total amount of all the damages claimed, regardless of kind and nature, such as moral, exemplary, nominal damages, and attorney’s fees, etc., to be computed collectively with the actual damages to determine what court – whether the MTC or the RTC – has jurisdiction over the action?

Petitioners maintain that the court’s jurisdiction should be based exclusively on the amount of actual damages, excluding therefrom the amounts claimed as moral,

http://www.lawphil.net/judjuris/juri2005/oct2005/gr_143951_2005.html#fnt11












exemplary, nominal damages and attorney’s fee, etc. They submit that the specification in Administrative Circular No. 09-94 that "in cases where the claim for damages is the main cause of action. . . the amount of such claim shall be considered in determining the jurisdiction of the court"signifies that the court’s jurisdiction must be tested solely by the amount of that damage which is principally and primarily demanded, and not the totality of all the damages sought to be recovered.

Petitioners insist that private respondent’s claim for actual damages in the amount of P71,392.00 is the principal and primary demand, the same being the direct result of the alleged negligence of petitioners, while the moral damages for P500,000.00 and attorney’s fee, being the consequent effects thereof, may prosper only upon a prior finding by the court of the existence of petitioners’ negligence that caused the actual damages. Considering that the amount of actual damages claimed by private respondent in Civil Case No. SCC-2240 does not exceedP200,000.00, which was then the jurisdictional amount of the MTC, the jurisdiction over the case clearly pertains to the MTC, and not to the RTC. Therefore, the RTC should have dismissed the case for lack of jurisdiction. Petitioners cite as relevant the case of Movers-Baseco Integrated Port Services, Inc. vs. Cyborg Leasing Corporation12 wherein the Court, in disposing of the jurisdictional issue, limited its consideration only to the actual or compensatory damages.

Furthermore, while admitting that the defense of lack of jurisdiction was only raised during the trial, petitioners nevertheless contend that jurisdiction may be raised anytime, even after judgment, but before it is barred by laches or estoppel. They submit that they seasonably presented the objection to the RTC’s lack of jurisdiction, i.e., during the trial stage where no decision had as yet been rendered, must less one unfavorable to them.

At any rate, they argue that when the jurisdictional flaw is evident from the record of the case, the court may, even without the urgings of the parties, take judicial notice of such fact, and thereupon dismiss the case motu proprio.Thus, even if lack of jurisdiction was not initially raised in a motion to dismiss or in the answer, no waiver may be imputed to them.

Private respondent, on the other hand, submits that in an action for recovery of damages arising from a tortious act, the claim of moral damages is not merely an incidental or consequential claim but must be considered in the amount of demand which will determine the court’s jurisdiction. He argues that the position taken by petitioners is a misreading of paragraph 2 of Administrative Circular No. 09-94. The clear and explicit language of said circular leaves no room for doubt; hence, needs no interpretation.

He further submits that petitioners’ reliance on Movers-Baseco Integrated Port Services, Inc. is misplaced since that case is for recovery of the value of vehicle and unpaid rentals on the lease of the same. He contends that Section 18, paragraph 8 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, upon which petitioners anchor their stand, refers to all the demands involving collection of sums of

money based on obligations arising from contract, express or implied, where the claim for damages is just incidental thereto and it does not apply to actions for damages based on obligations arising from quasi-delict where the claim for damages of whatever kind is the main action.

Private respondent also contends that, being incapable of pecuniary computation, the amount of moral damages that he may be awarded depends on the sound discretion of the trial court, not restrained by the limitation of the jurisdictional amount. Should the Court follow petitioners’ line of reasoning, private respondent argues that it will result in an absurd situation where he can only be awarded moral damages of not more than P200,000.00 although he deserves more than this amount, taking into consideration his physical suffering, as well as social and financial standing, simply because his claim for actual damages does not exceed P200,000.00 which amount falls under the jurisdiction of the MTC.

Lastly, he asserts that it is too late in the day for petitioners to question the jurisdiction of the RTC since they are estopped from invoking this ground. He contends that after actively taking part in the trial proceedings and presenting a witness to seek exoneration, it would be unfair and legally improper for petitioners to seek the dismissal of the case.

At the outset, it is necessary to stress that generally a direct recourse to this Court is highly improper, for it violates the established policy of strict observance of the judicial hierarchy of courts. Although this Court, the RTCs and the Court of Appeals (CA) have concurrent jurisdiction to issue writs of certiorari, prohibition,mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum. 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.13

Thus, this Court, as a rule, will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.14 Such exceptional and compelling circumstances were present in the following cases: (a) Chavez vs. Romulo15 on the citizens’ right to bear arms; (b) Government of the United States of America vs. Purganan16 on bail in extradition proceedings; (c) Commission on Elections vs. Quijano-Padilla17 on a government contract on the modernization and computerization of the voters’ registration list; (d) Buklod ng Kawaning EIIB vs. Zamora[18] on the status and existence of a public office; and (e) Fortich vs. Corona19 on the so-called "Win-Win Resolution" of the Office of the President which modified the approval of the conversion to agro-industrial area of a 144-hectare land.

Be that as it may, the judicial hierarchy of courts is not an iron-clad rule. It generally applies to cases involving warring factual allegations. For this reason, litigants are required to repair to the trial courts at the first instance to determine the truth or falsity


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of these contending allegations on the basis of the evidence of the parties. Cases which depend on disputed facts for decision cannot be brought immediately before appellate courts as they are not triers of facts.20 Therefore, a strict application of the rule of hierarchy of courts is not necessary when the cases brought before the appellate courts do not involve factual but legal questions.

In the present case, petitioners submit a pure question of law involving the interpretation and application of paragraph 2 of Administrative Circular No. 09-94. This legal question and in order to avoid further delay are compelling enough reasons to allow petitioners’ invocation of this Court’s jurisdiction in the first instance.

Before resolving this issue, the Court shall deal first on the question of estoppel posed by private respondent. Private respondent argues that the defense of lack of jurisdiction may be waived by estoppel through active participation in the trial. Such, however, is not the general rule but an exception, best characterized by the peculiar circumstances in Tijam vs. Sibonghanoy.21 In Sibonghanoy, the party invoking lack of jurisdiction did so only after fifteen years and at a stage when the proceedings had already been elevated to the CA. Sibonghanoyis an exceptional case because of the presence of laches, which was defined therein as 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 the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert has abandoned it or declined to assert it.22

As enunciated in Calimlim vs. Ramirez,23 this Court held:

A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of 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 inSibonghanoy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy 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.

. . .

It is neither fair nor legal to bind a party by the result of a suit or proceeding which was taken cognizance of in a court which lacks jurisdiction over the same irrespective of the attendant circumstances. The equitable defense of estoppel requires knowledge or consciousness of the facts upon which it is based. The same thing is true with estoppel by conduct which may be asserted only when it is shown, among

others, that the representation must have been made with knowledge of the facts and that the party to whom it was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27 SCRA 623). The filing of an action or suit in a court that does not possess jurisdiction to entertain the same may not be presumed to be deliberate and intended to secure a ruling which could later be annulled if not favorable to the party who filed such suit or proceeding. Instituting such an action is not a one-sided affair. It can just as well be prejudicial to the one who file the action or suit in the event that he obtains a favorable judgment therein which could also be attacked for having been rendered without jurisdiction. The determination of the correct jurisdiction of a court is not a simple matter. It can raise highly debatable issues of such importance that the highest tribunal of the land is given the exclusive appellate jurisdiction to entertain the same. The point simply is that when a party commits error in filing his suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. It could have been the result of an honest mistake or of divergent interpretations of doubtful legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the suit, thereby lulling the parties into believing that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an action "whenever it appears that court has no jurisdiction over the subject matter." (Section 2, Rule 9, Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the finality of the same (Art. 1144, par. 3, Civil Code).24

In the present case, no judgment has yet been rendered by the RTC.25 As a matter of fact, as soon as the petitioners discovered the alleged jurisdictional defect, they did not fail or neglect to file the appropriate motion to dismiss. Hence, finding the pivotal element of laches to be absent, the Sibonghanoy doctrine does not control the present controversy. Instead, the general rule that the question of jurisdiction of a court may be raised at any stage of the proceedings must apply. Therefore, petitioners are not estopped from questioning the jurisdiction of the RTC.

In any event, the petition for certiorari is bereft of merit.

Section 1 of Republic Act (R.A.) No. 7691, which took effect on April 15, 1994, provides inter alia that where the amount of the demand in civil cases exceeds P100,000.00,26 exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs, the exclusive jurisdiction thereof is lodged with in the RTC. Under Section 3 of the same law, where the amount of the demand in the complaint does not exceed P100,000.00, exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs, the exclusive jurisdiction over the same is vested in the Metropolitan Trial Court, MTC and Municipal Circuit Trial Court. The jurisdictional amount was increased to P200,000.00,27 effective March 20, 1999, pursuant to Section 528 of R.A. No. 7691 and Administrative Circular No. 21-99.

In Administrative Circular No. 09-94 dated March 14, 1994, the Court specified the guidelines in the implementation of R.A. No. 7691. Paragraph 2 of the Circular provides:











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. No. 7691, applied 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 supplied)

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.29 In the present case, the allegations in the complaint plainly show that private respondent seeks to recover not only his medical expenses, lost income but also damages for physical suffering and mental anguish due to permanent facial deformity from injuries sustained in the vehicular accident. Viewed as an action for quasi-delict, the present case falls squarely within the purview of Article 2219 (2),30 which provides for the payment of moral damages in cases of quasi-delict causing physical injuries.

Private respondent’s claim for moral damages of P500,000.00 cannot be considered as merely incidental to or a consequence of the claim for actual damages. It is a separate and distinct cause of action or an independent actionable tort. It springs from the right of a person to the physical integrity of his or her body, and if that integrity is violated, damages are due and assessable.31 Hence, the demand for moral damages must be considered as a separate cause of action, independent of the claim for actual damages and must be included in determining the jurisdictional amount, in clear consonance with paragraph 2 of Administrative Circular No. 09-94.

If the rule were otherwise, i.e., the court’s jurisdiction in a case of quasi-delict causing physical injuries would only be based on the claim for actual damages and the complaint is filed in the MTC, it can only award moral damages in an amount within its jurisdictional limitations, a situation not intended by the framers of the law.

It must be remembered that moral damages, though incapable of pecuniary estimation, are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused a person.32 Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the defendant’s culpable action. Its award is aimed at restoration, as much as possible, of the spiritual status quo ante; thus, it must be proportionate to the suffering inflicted. Since each case must be governed by its own peculiar circumstances, there is no hard and fast rule in determining the proper amount.33

The petitioners’ reliance in the case of Movers-Baseco Integrated Port Services, Inc. vs. Cyborg Leasing Corporation34 is misplaced. The claim for damages therein was

based on a breach of a contract of lease, not a quasi-delict causing physical injuries, as in this case. Besides, there was no claim therein for moral damages. Furthermore, moral damages are generally not recoverable in damage actions predicated on a breach of contract in view of the provisions of Article 222035 of the Civil Code.

In view of the foregoing, the Court is convinced that the respondent RTC Judge committed no grave abuse of discretion in issuing the assailed Orders dated April 17, 2000 and June 13, 2000.

WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit. The temporary restraining order issued by this Court on August 9, 2000 is LIFTED.

The Regional Trial Court, Branch 56, San Carlos City is DIRECTED to continue with the trial proceedings in Civil Case No. SCC-2240 and resolve the case with dispatch.

Costs against petitioners.

SO ORDERED.









G.R. No. 181416 November 11, 2013

MEDICAL PLAZA MAKATI CONDOMINIUM CORPORATION, Petitioner, vs.ROBERT H. CULLEN, Respondent.

D E C I S I O N

PERALTA, J.:

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 10, 2007 and Resolution2 dated January 25, 2008 in CA-G.R. CV No. 86614. The assailed decision reversed and set aside the September 9, 2005 Order3 of the Regional Trial Court (RTC) of Makati, Branch 58 in Civil Case No. 03-1018; while the assailed resolution denied the separate motions for reconsideration filed by petitioner Medical Plaza Makati Condominium Corporation (MPMCC) and Meridien Land Holding, Inc. (MLHI).

The factual and procedural antecedents are as follows:

Respondent Robert H. Cullen purchased from MLHI condominium Unit No. 1201 of the Medical Plaza Makati covered by Condominium Certificate of Title No. 45808 of the Register of Deeds of Makati. Said title was later cancelled and Condominium Certificate of Title No. 64218 was issued in the name of respondent.

On September 19, 2002, petitioner, through its corporate secretary, Dr. Jose Giovanni E. Dimayuga, demanded from respondent payment for alleged unpaid association dues and assessments amounting to P145,567.42. Respondent disputed this demand claiming that he had been religiously paying his dues shown by the fact that he was previously elected president and director of petitioner.4 Petitioner, on the other hand, claimed that respondent’s obligation was a carry-over of that of MLHI.5 Consequently, respondent was prevented from exercising his right to vote and be voted for during the 2002 election of petitioner’s Board of Directors.6Respondent thus clarified from MLHI the veracity of petitioner’s claim, but MLHI allegedly claimed that the same had already been settled.7 This prompted respondent to demand from petitioner an explanation why he was considered a delinquent payer despite the settlement of the obligation. Petitioner failed to make such explanation. Hence, the Complaint for Damages8 filed by respondent against petitioner and MLHI, the pertinent portions of which read:

x x x x

6. Thereafter, plaintiff occupied the said condominium unit no. 1201 and religiously paid all the corresponding monthly contributions/association dues and other assessments imposed on the same. For the years 2000 and 2001,

plaintiff served as President and Director of the Medical Plaza Makati Condominium Corporation;

7. Nonetheless, on September 19, 2002, plaintiff was shocked/surprised to receive a letter from the incumbent Corporate Secretary of the defendant Medical Plaza Makati, demanding payment of alleged unpaid association dues and assessments arising from plaintiff’s condominium unit no. 1201. The said letter further stressed that plaintiff is considered a delinquent member of the defendant Medical Plaza Makati.

x x x;

8. As a consequence, plaintiff was not allowed to file his certificate of candidacy as director. Being considered a delinquent, plaintiff was also barred from exercising his right to vote in the election of new members of the Board of Directors x x x;

9. x x x Again, prior to the said election date, x x x counsel for the defendant [MPMCC] sent a demand letter to plaintiff, anent the said delinquency, explaining that the said unpaid amount is a carry-over from the obligation of defendant Meridien. x x x;

10. Verification with the defendant [MPMCC] resulted to the issuance of a certification stating that Condominium Unit 1201 has an outstanding unpaid obligation in the total amount of P145,567.42 as of November 30, 2002, which again, was attributed by defendant [MPMCC] to defendant Meridien. x x x;

11. Due to the seriousness of the matter, and the feeling that defendant Meridien made false representations considering that it fully warranted to plaintiff that condominium unit 1201 is free and clear from all liens and encumbrances, the matter was referred to counsel, who accordingly sent a letter to defendant Meridien, to demand for the payment of said unpaid association dues and other assessments imposed on the condominium unit and being claimed by defendant [MPMCC]. x x x;

12. x x x defendant Meridien claimed however, that the obligation does not exist considering that the matter was already settled and paid by defendant Meridien to defendant [MPMCC]. x x x;

13. Plaintiff thus caused to be sent a letter to defendant [MPMCC] x x x. The said letter x x x sought an explanation on the fact that, as per the letter of defendant Meridien, the delinquency of unit 1201 was already fully paid and settled, contrary to the claim of defendant [MPMCC]. x x x;

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14. Despite receipt of said letter on April 24, 2003, and to date however, no explanation was given by defendant [MPMCC], to the damage and prejudice of plaintiff who is again obviously being barred from voting/participating in the election of members of the board of directors for the year 2003;

15. Clearly, defendant [MPMCC] acted maliciously by insisting that plaintiff is a delinquent member when in fact, defendant Meridien had already paid the said delinquency, if any. The branding of plaintiff as delinquent member was willfully and deceitfully employed so as to prevent plaintiff from exercising his right to vote or be voted as director of the condominium corporation; 16. Defendant [MPMCC]’s ominous silence when confronted with claim of payment made by defendant Meridien is tantamount to admission that indeed, plaintiff is not really a delinquent member;

17. Accordingly, as a direct and proximate result of the said acts of defendant [MPMCC], plaintiff experienced/suffered from mental anguish, moral shock, and serious anxiety. Plaintiff, being a doctor of medicine and respected in the community further suffered from social humiliation and besmirched reputation thereby warranting the grant of moral damages in the amount of P500,000.00 and for which defendant [MPMCC] should be held liable;

18. By way of example or correction for the public good, and as a stern warning to all similarly situated, defendant [MPMCC] should be ordered to pay plaintiff exemplary damages in the amount of P200,000.00;

19. As a consequence, and so as to protect his rights and interests, plaintiff was constrained to hire the services of counsel, for an acceptance fee of P100,000.00 plus P2,500.00 per every court hearing attended by counsel;

20. In the event that the claim of defendant [MPMCC] turned out to be true, however, the herein defendant Meridien should be held liable instead, by ordering the same to pay the said delinquency of condominium unit 1201 in the amount of P145,567.42 as of November 30, 2002 as well as the above damages, considering that the non-payment thereof would be the proximate cause of the damages suffered by plaintiff;9

Petitioner and MLHI filed their separate motions to dismiss the complaint on the ground of lack of jurisdiction.10MLHI claims that it is the Housing and Land Use Regulatory Board (HLURB) which is vested with the exclusive jurisdiction to hear and decide the case. Petitioner, on the other hand, raises the following specific grounds for the dismissal of the complaint: (1) estoppel as respondent himself approved the assessment when he was the president; (2) lack of jurisdiction as the case involves an intra-corporate controversy; (3) prematurity for failure of respondent to exhaust all intra-corporate remedies; and (4) the case is already moot and academic, the obligation having been settled between petitioner and MLHI.11

On September 9, 2005, the RTC rendered a Decision granting petitioner’s and MLHI’s motions to dismiss and, consequently, dismissing respondent’s complaint.

The trial court agreed with MLHI that the action for specific performance filed by respondent clearly falls within the exclusive jurisdiction of the HLURB.12 As to petitioner, the court held that the complaint states no cause of action, considering that respondent’s obligation had already been settled by MLHI. It, likewise, ruled that the issues raised are intra-corporate between the corporation and member.13

On appeal, the CA reversed and set aside the trial court’s decision and remanded the case to the RTC for further proceedings. Contrary to the RTC conclusion, the CA held that the controversy is an ordinary civil action for damages which falls within the jurisdiction of regular courts.14 It explained that the case hinged on petitioner’s refusal to confirm MLHI’s claim that the subject obligation had already been settled as early as 1998 causing damage to respondent.15 Petitioner’s and MLHI’s motions for reconsideration had also been denied.16

Aggrieved, petitioner comes before the Court based on the following grounds:

I.

THE COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE, NOT THERETOFORE DETERMINED BY THE SUPREME COURT, OR HAS DECIDED IT IN A WAY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT DECLARED THE INSTANT CASE AN ORDINARY ACTION FOR DAMAGES INSTEAD OF AN INTRA-CORPORATE CONTROVERSY COGNIZABLE BY A SPECIAL COMMERCIAL COURT.

II.

THE COURT A QUO HAS DECIDED THE INSTANT CASE IN A WAY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT TOOK COGNIZANCE OF THE APPEAL WHILE RAISING ONLY PURE QUESTIONS OF LAW.17

The petition is meritorious.

It is a settled rule that jurisdiction over the subject matter is determined by the allegations in the complaint. It is not affected by the pleas or the theories set up by the defendant in an answer or a motion to dismiss. Otherwise, jurisdiction would become dependent almost entirely upon the whims of the defendant.18 Also illuminating is the Court’s pronouncement in Go v. Distinction Properties Development and Construction, Inc.:19

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. x x x20

Based on the allegations made by respondent in his complaint, does the controversy involve intra-corporate issues as would fall within the jurisdiction of the RTC sitting as a special commercial court or an ordinary action for damages within the jurisdiction of regular courts?

In determining whether a dispute constitutes an intra-corporate controversy, the Court uses two tests, namely, the relationship test and the nature of the controversy test.21

An intra-corporate controversy is one which pertains to any of the following relationships: (1) between the corporation, partnership or association and the public; (2) between the corporation, partnership or association and the State insofar as its franchise, permit or license to operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the stockholders, partners or associates themselves.22 Thus, under the relationship test, the existence of any of the above intra-corporate relations makes the case intra-corporate.23

Under the nature of the controversy test, "the controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation."24 In other words, jurisdiction should be determined by considering both the relationship of the parties as well as the nature of the question involved.25

Applying the two tests, we find and so hold that the case involves intra-corporate controversy. It obviously arose from the intra-corporate relations between the parties, and the questions involved pertain to their rights and obligations under the Corporation Code and matters relating to the regulation of the corporation.26

Admittedly, petitioner is a condominium corporation duly organized and existing under Philippine laws, charged with the management of the Medical Plaza Makati. Respondent, on the other hand, is the registered owner of Unit No. 1201 and is thus a stockholder/member of the condominium corporation. Clearly, there is an intra-corporate relationship between the corporation and a stockholder/member.

The nature of the action is determined by the body rather than the title of the complaint.1âwphi1 Though denominated as an action for damages, an examination of the allegations made by respondent in his complaint shows that the case principally

dwells on the propriety of the assessment made by petitioner against respondent as well as the validity of petitioner’s act in preventing respondent from participating in the election of the corporation’s Board of Directors. Respondent contested the alleged unpaid dues and assessments demanded by petitioner.

The issue is not novel. The nature of an action involving any dispute as to the validity of the assessment of association dues has been settled by the Court in Chateau de Baie Condominium Corporation v. Moreno.27 In that case, respondents therein filed a complaint for intra-corporate dispute against the petitioner therein to question how it calculated the dues assessed against them, and to ask an accounting of association dues. Petitioner, however, moved for the dismissal of the case on the ground of lack of jurisdiction alleging that since the complaint was against the owner/developer of a condominium whose condominium project was registered with and licensed by the HLURB, the latter has the exclusive jurisdiction. In sustaining the denial of the motion to dismiss, the Court held that the dispute as to the validity of the assessments is purely an intra-corporate matter between petitioner and respondent and is thus within the exclusive jurisdiction of the RTC sitting as a special commercial court. More so in this case as respondent repeatedly questioned his characterization as a delinquent member and, consequently, petitioner’s decision to bar him from exercising his rights to vote and be voted for. These issues are clearly corporate and the demand for damages is just incidental. Being corporate in nature, the issues should be threshed out before the RTC sitting as a special commercial court. The issues on damages can still be resolved in the same special commercial court just like a regular RTC which is still competent to tackle civil law issues incidental to intra-corporate disputes filed before it.28

Moreover, Presidential Decree No. 902-A enumerates the cases over which the Securities and Exchange Commission (SEC) exercises exclusive jurisdiction:

x x x x

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity; and

c) Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations.29

To be sure, this action partakes of the nature of an intra-corporate controversy, the jurisdiction over which pertains to the SEC. Pursuant to Section 5.2 of Republic Act No. 8799, otherwise known as the Securities Regulation Code, the jurisdiction of the SEC over all cases enumerated under Section 5 of Presidential Decree No. 902-A has been transferred to RTCs designated by this Court as Special Commercial Courts.30 While the CA may be correct that the RTC has jurisdiction, the case should













have been filed not with the regular court but with the branch of the RTC designated as a special commercial court. Considering that the RTC of Makati City, Branch 58 was not designated as a special commercial court, it was not vested with jurisdiction over cases previously cognizable by the SEC.31 The CA, therefore, gravely erred in remanding the case to the RTC for further proceedings.

Indeed, Republic Act (RA) No. 9904, or the Magna Carta for Homeowners and Homeowners’ Associations, approved on January 7, 2010 and became effective on July 10, 2010, empowers the HLURB to hear and decide inter-association and/or intra-association controversies or conflicts concerning homeowners’ associations. However, we cannot apply the same in the present case as it involves a controversy between a condominium unit owner and a condominium corporation. While the term association as defined in the law covers homeowners’ associations of other residential real property which is broad enough to cover a condominium corporation, it does not seem to be the legislative intent. A thorough review of the deliberations of the bicameral conference committee would show that the lawmakers did not intend to extend the coverage of the law to such kind of association. We quote hereunder the pertinent portion of the Bicameral Conference Committee’s deliberation, to wit:

THE CHAIRMAN (SEN. ZUBIRI). Let’s go back, Mr. Chair, very quickly on homeowners.

THE ACTING CHAIRMAN (REP. ZIALCITA). Ang sa akin lang, I think our views are similar, Your Honor, Senator Zubiri, the entry of the condominium units might just complicate the whole matters. So we’d like to put it on record that we’re very much concerned about the plight of the Condominium Unit Homeowners’ Association. But this could very well be addressed on a separate bill that I’m willing to co-sponsor with the distinguished Senator Zubiri, to address in the Condominium Act of the Philippines, rather than address it here because it might just create a red herring into the entire thing and it will just complicate matters, hindi ba?

THE CHAIRMAN (SEN. ZUBIRI). I also agree with you although I sympathize with them---although we sympathize with them and we feel that many times their rights have been also violated by abusive condominium corporations. However, there are certain things that we have to reconcile. There are certain issues that we have to reconcile with this version.

In the Condominium Code, for example, they just raised a very peculiar situation under the Condominium Code --- Condominium Corporation Act. It’s five years the proxy, whereas here, it’s three years. So there would already be violation or there will be already a problem with their version and our version. Sino ang matutupad doon? Will it be our version or their version?

So I agree that has to be studied further. And because they have a law pertaining to the condominium housing units, I personally feel that it would complicate matters if we include them. Although I agree that they should be looked after and their problems be looked into.

Probably we can ask our staff, Your Honor, to come up already with the bill although we have no more time. Hopefully we can tackle this again on the 15th Congress. But I agree with the sentiments and the inputs of the Honorable Chair of the House panel.

May we ask our resource persons to also probably give comments?

Atty. Dayrit.

MR. DAYRIT.

Yes I agree with you. There are many, I think, practices in their provisions in the Condominium Law that may be conflicting with this version of ours.

For instance, in the case of, let’s say, the condominium, the so-called common areas and/or maybe so called open spaces that they may have, especially common areas, they are usually owned by the condominium corporation. Unlike a subdivision where the open spaces and/or the common areas are not necessarily owned by the association. Because sometimes --- generally these are donated to the municipality or to the city. And it is only when the city or municipality gives the approval or the conformity that this is donated to the homeowners’ association. But generally, under PD [Presidential Decree] 957, it’s donated. In the Condominium Corporation, hindi. Lahat ng mga open spaces and common areas like corridors, the function rooms and everything, are owned by the corporation. So that’s one main issue that can be conflicting.

THE CHAIRMAN (SEN. ZUBIRI). I’ll just ask for a one-minute suspension so we can talk.

THE ACTING CHAIRMAN (REP. ZIALCITA). Unless you want to put a catchall phrase like what we did in the Senior Citizen’s Act. Something like, to the extent --- paano ba iyon? To the extent that it is practicable and applicable, the rights and benefits of the homeowners, are hereby extended to the --- mayroon kaming ginamit na phrase eh...to the extent that it be practicable and applicable to the unit homeoweners, is hereby extended, something like that. It’s a catchall phrase. But then again, it might create a...

MR. JALANDONI. It will become complicated. There will be a lot of conflict of laws between the two laws.

THE ACTING CHAIRMAN (REP. ZIALCITA). Kaya nga eh. At saka, I don’t know. I think the --- mayroon naman silang protection sa ano eh, di ba? Buyers decree doon sa Condominium Act. I’m sure there are provisions there eh. Huwag na lang, huwag na lang.



MR. JALANDONI. Mr. Chairman, I think it would be best if your previous comments that you’d be supporting an amendment.1âwphi1 I think that would be --- Well, that would be the best course of action with all due respect.

THE ACTING CHAIRMAN (REP. ZIALCITA). Yeah. Okay. Thank you. So iyon na lang final proposal naming ‘yung catchall phrase, "With respect to the..."32

x x x x

THE CHAIRMAN (SEN. ZUBIRI). xxx And so, what is their final decision on the definition of homeowners?

THE ACTING CHAIRMAN (REP. ZIALCITA).

We stick to the original, Mr. Chairman. We’ll just open up a whole can of worms and a whole new ball game will come into play. Besides, I am not authorized, neither are you, by our counterparts to include the condominium owners.

THE CHAIRMAN (SEN. ZUBIRI).

Basically that is correct. We are not authorized by the Senate nor – because we have discussed this lengthily on the floor, actually, several months on the floor. And we don’t have the authority as well for other Bicam members to add a provision to include a separate entity that has already their legal or their established Republic Act tackling on that particular issue. But we just like to put on record, we sympathize with the plight of our friends in the condominium associations and we will just guarantee them that we will work on an amendment to the Condominium Corporation Code. So with that – we skipped, that is correct, we have to go back to homeowners’ association definition, Your Honor, because we had skipped it altogether. So just quickly going back to Page 7 because there are amendments to the definition of homeowners. If it is alright with the House Panel, adopt the opening phrase of Subsection 7 of the Senate version as opening phrase of Subsection 10 of the reconciled version.

x x x x33

To be sure, RA 4726 or the Condominium Act was enacted to specifically govern a condominium. Said law sanctions the creation of the condominium corporation which is especially formed for the purpose of holding title to the common area, in which the holders of separate interests shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units.34 The rights and obligations of the condominium unit owners and the condominium corporation are set forth in the above Act.

Clearly, condominium corporations are not covered by the amendment. Thus, the intra-corporate dispute between petitioner and respondent is still within the jurisdiction of the RTC sitting as a special commercial court and not the HLURB. The doctrine

laid down by the Court in Chateau de Baie Condominium Corporation v. Moreno35 which in turn cited Wack Wack Condominium Corporation, et al v. CA36 is still a good law.

WHEREFORE, we hereby GRANT the petition and REVERSE the Court of Appeals Decision dated July 10, 2007 and Resolution dated January 25, 2008 in CA-G.R. CV No. 86614. The Complaint before the Regional Trial Court of Makati City, Branch 58, which is not a special commercial court, docketed as Civil Case No. 03-1018 is ordered DISMISSED for lack of jurisdiction. Let the case be REMANDED to the Executive Judge of the Regional Trial Court of Makati City for re-raffle purposes among the designated special commercial courts.

SO ORDERED.







G.R. Nos. 160054-55 July 21, 2004

MANOLO P. SAMSON, petitioner, vs.HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge, Regional Trial Court of Quezon City, Branch 90, PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC., respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Assailed in this petition for certiorari is the March 26, 2003 Order1 of the Regional Trial Court of Quezon City, Branch 90, which denied petitioner’s – (1) motion to quash the information; and (2) motion for reconsideration of the August 9, 2002 Order denying his motion to suspend the arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44. Petitioner also questioned its August 5, 2003 Order2 which denied his motion for reconsideration.

The undisputed facts show that on March 7, 2002, two informations for unfair competition under Section 168.3 (a), in relation to Section 170, of the Intellectual Property Code (Republic Act No. 8293), similarly worded save for the dates and places of commission, were filed against petitioner Manolo P. Samson, the registered owner of ITTI Shoes. The accusatory portion of said informations read:

That on or about the first week of November 1999 and sometime prior or subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, above-named accused, owner/proprietor of ITTI Shoes/Mano Shoes Manufactuirng Corporation located at Robinson’s Galleria, EDSA corner Ortigas Avenue, Quezon City, did then and there willfully, unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR products such as footwear, garments, clothing, bags, accessories and paraphernalia which are closely identical to and/or colorable imitations of the authentic Caterpillar products and likewise using trademarks, symbols and/or designs as would cause confusion, mistake or deception on the part of the buying public to the damage and prejudice of CATERPILLAR, INC., the prior adopter, user and owner of the following internationally: "CATERPILLAR", "CAT", "CATERPILLAR & DESIGN", "CAT AND DESIGN", "WALKING MACHINES" and "TRACK-TYPE TRACTOR & DESIGN."

CONTRARY TO LAW.3

On April 19, 2002, petitioner filed a motion to suspend arraignment and other proceedings in view of the existence of an alleged prejudicial question involved in Civil Case No. Q-00-41446 for unfair competition pending with the same branch; and also in view of the pendency of a petition for review filed with the Secretary of Justice assailing the Chief State Prosecutor’s resolution finding probable cause to charge petitioner with unfair competition. In an Order dated August 9, 2002, the trial court denied the motion to suspend arraignment and other proceedings.

On August 20, 2002, petitioner filed a twin motion to quash the informations and motion for reconsideration of the order denying motion to suspend, this time challenging the jurisdiction of the trial court over the offense charged. He contended that since under Section 170 of R.A. No. 8293, the penalty4 of imprisonment for unfair competition does not exceed six years, the offense is cognizable by the Municipal Trial Courts and not by the Regional Trial Court, per R.A. No. 7691.

In its assailed March 26, 2003 Order, the trial court denied petitioner’s twin motions.6 A motion for reconsideration thereof was likewise denied on August 5, 2003.

Hence, the instant petition alleging that respondent Judge gravely abused its discretion in issuing the assailed orders.

The issues posed for resolution are – (1) Which court has jurisdiction over criminal and civil cases for violation of intellectual property rights? (2) Did the respondent Judge gravely abuse his discretion in refusing to suspend the arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44 on the ground of – (a) the existence of a prejudicial question; and (b) the pendency of a petition for review with the Secretary of Justice on the finding of probable cause for unfair competition?

Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit:

SEC. 170. Penalties. – Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00), shall be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155 [Infringement], Section 168 [Unfair Competition] and Section 169.1 [False Designation of Origin and False Description or Representation].


Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under Sections 150, 155, 164, 166, 167, 168 and 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws, thus –

SEC. 163. Jurisdiction of Court. – All actions under Sections 150, 155, 164 and 166 to 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws. (Emphasis supplied)

The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark Law) which provides that jurisdiction over cases for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is lodged with the Court of First Instance (now Regional Trial Court) –

SEC. 27. Jurisdiction of Court of First Instance. – All actions under this Chapter [V – Infringement] and Chapters VI [Unfair Competition] and VII [False Designation of Origin and False Description or Representation], hereof shall be brought before the Court of First Instance.

We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293, reads –

SEC. 239. Repeals. – 239.1. All Acts and parts of Acts inconsistent herewith, more particularly Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended, are hereby repealed. (Emphasis added)

Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used the phrases "parts of Acts" and "inconsistent herewith;" and it would have simply stated "Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended are hereby repealed." It would have removed all doubts that said specific laws had been rendered without force and effect. The use of the phrases "parts of Acts" and "inconsistent herewith" only means that the repeal pertains only to provisions which are repugnant or not susceptible of harmonization with R.A. No. 8293.6 Section 27 of R.A. No. 166, however, is consistent and in harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction over violations of intellectual property rights with the Metropolitan Trial Courts, it would have expressly stated so under Section 163 thereof.

Moreover, the settled rule in statutory construction is that in case of conflict between a general law and a special law, the latter must prevail. Jurisdiction conferred by a special law to Regional Trial Courts must prevail over that granted by a general law to Municipal Trial Courts.7

In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws8 conferring jurisdiction over violations of intellectual property rights to the Regional Trial Court. They should therefore prevail over R.A. No. 7691, which is a general law.9 Hence, jurisdiction over the instant criminal case for unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00.

In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts as Intellectual Property Courts. On June 17, 2003, the Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual Property Code and Securities and Exchange Commission cases in specific Regional Trial Courts designated as Special Commercial Courts.

The case of Mirpuri v. Court of Appeals,10 invoked by petitioner finds no application in the present case. Nowhere in Mirpuri did we state that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293. Neither did we make a categorical ruling therein that jurisdiction over cases for violation of intellectual property rights is lodged with the Municipal Trial Courts. The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293 was merely a backgrounder to the enactment of the present Intellectual Property Code and cannot thus be construed as a jurisdictional pronouncement in cases for violation of intellectual property rights.

Anent the second issue, petitioner failed to substantiate his claim that there was a prejudicial question. In his petition, he prayed for the reversal of the March 26, 2003 order which sustained the denial of his motion to suspend arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44. For unknown reasons, however, he made no discussion in support of said prayer in his petition and reply to comment. Neither did he attach a copy of the complaint in Civil Case No. Q-00-41446 nor quote the pertinent portion thereof to prove the existence of a prejudicial question.

At any rate, there is no prejudicial question if the civil and the criminal action can, according to law, proceed independently of each other.11 Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require only a preponderance of evidence.

In the case at bar, the common element in the acts constituting unfair competition under Section 168 of R.A. No. 8293 is fraud.12 Pursuant to Article 33 of the Civil Code, in cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Hence, Civil Case No. Q-00-41446, which as admitted13 by private respondent also relate to unfair competition, is an independent civil action under Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will justify the suspension of the criminal cases at bar.


Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure provides –

SEC. 11. Suspension of arraignment. – Upon motion by the proper party, the arraignment shall be suspended in the following cases –

x x x x x x x x x

(c) A petition for review of the resolution of the prosecutor is pending at either the Department of Justice, or the Office of the President; Provided, that the period of suspension shall not exceed sixty (60) days counted from the filing of the petition with the reviewing office.

While the pendency of a petition for review is a ground for suspension of the arraignment, the aforecited provision limits the deferment of the arraignment to a period of 60 days reckoned from the filing of the petition with the reviewing office. It follows, therefore, that after the expiration of said period, the trial court is bound to arraign the accused or to deny the motion to defer arraignment.

In the instant case, petitioner failed to establish that respondent Judge abused his discretion in denying his motion to suspend. His pleadings and annexes submitted before the Court do not show the date of filing of the petition for review with the Secretary of Justice.14 Moreover, the Order dated August 9, 2002 denying his motion to suspend was not appended to the petition. He thus failed to discharge the burden of proving that he was entitled to a suspension of his arraignment and that the questioned orders are contrary to Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure. Indeed, the age-old but familiar rule is that he who alleges must prove his allegations.

In sum, the dismissal of the petition is proper considering that petitioner has not established that the trial court committed grave abuse of discretion. So also, his failure to attach documents relevant to his allegations warrants the dismissal of the petition, pursuant to Section 3, Rule 46 of the Rules of Civil Procedure, which states:

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. — The petition shall contain the full names and actual addresses of all the petitioners and respondents, a concise statement of the matters involved, the factual background of the case, and the grounds relied upon for the relief prayed for.

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with the original copy intended for the court indicated as such by the petitioner, and shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject thereof, such material portions of the record as are referred to therein, and other documents relevant or pertinent thereto.

x x x x x x x x x

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. (Emphasis added)

WHEREFORE, in view of all the foregoing, the petition is dismissed.

SO ORDERED.


G.R. No. 154598 August 16, 2004

IN THE MATTER OF APPLICATION FOR THE ISSUANCE OF A WRIT OF HABEAS CORPUSRICHARD BRIAN THORNTON for and in behalf of the minor child SEQUEIRA JENNIFER DELLE FRANCISCO THORNTON, petitioner, vs.ADELFA FRANCISCO THORNTON, respondent.

D E C I S I O N

CORONA, J.:

This is a petition to review, under Rule 45 of the Rules of Court, the July 5, 2002 resolution1 of the Court of Appeals, Sixteenth Division, in CA G.R. SP No. 70501 dismissing the petition for habeas corpus on the grounds of lack of jurisdiction and lack of substance. The dispositive portion2 read:

WHEREFORE, the Court DISMISSES the petition for habeas corpus on the grounds that: a) this Court has no jurisdiction over the subject matter of the petition; and b) the petition is not sufficient in substance.

Petitioner, an American, and respondent, a Filipino, were married on August 28, 1998 in the Catholic Evangelical Church at United Nations Avenue, Manila. A year later, respondent gave birth to a baby girl whom they named Sequeira Jennifer Delle Francisco Thornton.

However, after three years, respondent grew restless and bored as a plain housewife. She wanted to return to her old job as a "guest relations officer" in a nightclub, with the freedom to go out with her friends. In fact, whenever petitioner was out of the country, respondent was also often out with her friends, leaving her daughter in the care of the househelp.

Petitioner admonished respondent about her irresponsibility but she continued her carefree ways. On December 7, 2001, respondent left the family home with her daughter Sequiera without notifying her husband. She told the servants that she was bringing Sequiera to Purok Marikit, Sta. Clara, Lamitan, Basilan Province.

Petitioner filed a petition for habeas corpus in the designated Family Court in Makati City but this was dismissed, presumably because of the allegation that the child was in Basilan. Petitioner then went to Basilan to ascertain the whereabouts of respondent and their daughter. However, he did not find them there and the barangay office of Sta. Clara, Lamitan, Basilan, issued a certification3 that respondent was no longer residing there.

Petitioner gave up his search when he got hold of respondent’s cellular phone bills showing calls from different places such as Cavite, Nueva Ecija, Metro Manila and other provinces. Petitioner then filed another petition for habeas corpus, this time in the Court of Appeals which could issue a writ of habeas corpus enforceable in the entire country.

However, the petition was denied by the Court of Appeals on the ground that it did not have jurisdiction over the case. It ruled that since RA 8369 (The Family Courts Act of 1997) gave family courts exclusive original jurisdiction over petitions for habeas corpus, it impliedly repealed RA 7902 (An Act Expanding the Jurisdiction of the Court of Appeals) and Batas Pambansa 129 (The Judiciary Reorganization Act of 1980):

Under Sec. 9 (1), BP 129 (1981) the Intermediate Appellate Court (now Court of Appeals) has jurisdiction to issue a writ of habeas corpus whether or not in aid of its appellate jurisdiction. This conferment of jurisdiction was re-stated in Sec. 1, RA 7902 (1995), an act expanding the jurisdiction of this Court. This jurisdiction finds its procedural expression in Sec. 1, Rule 102 of the Rules of Court.

In 1997, RA 8369 otherwise known as Family Courts Act was enacted. It provides:

Sec. 5. Jurisdiction of Family Court. – The Family Courts shall have exclusive original jurisdiction to hear and decide the following cases:

xxx xxx xxx

b. Petition for guardianship, custody of children, habeas corpus in relation to the latter.

The vital question is, did RA 8369 impliedly repeal BP 129 and RA 7902 insofar as the jurisdiction of this Court to issue writ of habeas corpus in custody of minor cases is concerned? The simple answer is, yes, it did, because there is no other meaning of the word "exclusive" than to constitute the Family Court as the sole court which can issue said writ. If a court other than the Family Court also possesses the same competence, then the jurisdiction of the former is not exclusive but concurrent – and such an interpretation is contrary to the simple and clear wording of RA 8369.


Petitioner argues that unless this Court assumes jurisdiction over a petition for habeas corpus involving custody of minors, a respondent can easily evade the service of a writ of habeas corpus on him or her by just moving out of the region over which the Regional Trial Court issuing the writ has territorial jurisdiction. That may be so but then jurisdiction is conferred by law. In the absence of a law conferring such jurisdiction in this Court, it cannot exercise it even if it is demanded by expediency or necessity.

Whether RA 8369 is a good or unwise law is not within the authority of this Court – or any court for that matter – to determine. The enactment of a law on jurisdiction is within the exclusive domain of the legislature. When there is a perceived defect in the law, the remedy is not to be sought form the courts but only from the legislature.

The only issue before us therefore is whether the Court of Appeals has jurisdiction to issue writs of habeas corpus in cases involving custody of minors in the light of the provision in RA 8369 giving family courts exclusive original jurisdiction over such petitions.

In his comment, the Solicitor General points out that Section 20 of the Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors (A.M. No. 03-04-04-SC, effective May 15, 2003) has rendered the issue moot. Section 20 of the rule provides that a petition for habeas corpus may be filed in the Supreme Court,4 Court of Appeals, or with any of its members and, if so granted, the writ shall be enforceable anywhere in the Philippines.5

The petition is granted.

The Court of Appeals should take cognizance of the case since there is nothing in RA 8369 that revoked its jurisdiction to issue writs of habeas corpus involving the custody of minors.

The Court of Appeals opines that RA 8369 impliedly repealed RA 7902 and BP 129 since, by giving family courts exclusive jurisdiction over habeas corpus cases, the lawmakers intended it to be the sole court which can issue writs of habeas corpus. To the court a quo, the word "exclusive" apparently cannot be construed any other way.

We disagree with the CA’s reasoning because it will result in an iniquitous situation, leaving individuals like petitioner without legal recourse in obtaining custody of their children. Individuals who do not know the whereabouts of minors they are looking for would be helpless since they cannot seek redress from family courts whose writs are enforceable only in their respective territorial jurisdictions. Thus, if a minor is being transferred from one place to another, which seems to be the case here, the petitioner in a habeas corpus case will be left without legal remedy. This lack of recourse could not have been the intention of the lawmakers when they passed the Family Courts Act of 1997. As observed by the Solicitor General:

Under the Family Courts Act of 1997, the avowed policy of the State is to "protect the rights and promote the welfare of children." The creation of the Family Court is geared towards addressing three major issues regarding children’s welfare cases, as expressed by the legislators during the deliberations for the law. The legislative intent behind giving Family Courts exclusive and original jurisdiction over such cases was to avoid further clogging of regular court dockets, ensure greater sensitivity and specialization in view of the nature of the case and the parties, as well as to guarantee that the privacy of the children party to the case remains protected.

The primordial consideration is the welfare and best interests of the child. We rule therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their jurisdiction over habeas corpus cases involving the custody of minors. Again, to quote the Solicitor General:

To allow the Court of Appeals to exercise jurisdiction over the petition for habeas corpus involving a minor child whose whereabouts are uncertain and transient will not result in one of the situations that the legislature seeks to avoid. First, the welfare of the child is paramount. Second, the ex parte nature of habeas corpus proceedings will not result in disruption of the child’s privacy and emotional well-being; whereas to deprive the appellate court of jurisdiction will result in the evil sought to be avoided by the legislature: the child’s welfare and well being will be prejudiced.

This is not the first time that this Court construed the word "exclusive" as not foreclosing resort to another jurisdiction. As correctly cited by the Solicitor General, in Floresca vs. Philex Mining Corporation,6 the heirs of miners killed in a work-related accident were allowed to file suit in the regular courts even if, under the Workmen’s Compensation Act, the Workmen’s Compensation Commissioner had exclusive jurisdiction over such cases.

We agree with the observations of the Solicitor General that:

While Floresca involved a cause of action different from the case at bar. it supports petitioner’s submission that the word "exclusive" in the Family Courts Act of 1997 may not connote automatic foreclosure of the jurisdiction of other courts over habeas corpus cases involving minors. In the same manner that the remedies in the Floresca case were selective, the jurisdiction of the Court of Appeals and Family Court in the case at bar is concurrent. The Family Court can issue writs of habeas corpus enforceable only within its territorial jurisdiction. On the other hand, in cases where the territorial jurisdiction for the enforcement of the writ cannot be determined with certainty, the Court of Appeals can issue the same writ enforceable throughout the Philippines, as provided in Sec. 2, Rule 102 of the Revised Rules of Court, thus:


The Writ of Habeas Corpus may be granted by the Supreme Court, or any member thereof, on any day and at any time, or by the Court of Appeals or any member thereof in the instances authorized by law, and if so granted it shall be enforceable anywhere in the Philippines, and may be made returnable before the court or any member thereof, or before a Court of First Instance, or any judge thereof for hearing and decision on the merits. It may also be granted by a Court of First Instance, or a judge thereof, on any day and at any time, and returnable before himself, enforceable only within his judicial district. (Emphasis supplied)

In ruling that the Commissioner’s "exclusive" jurisdiction did not foreclose resort to the regular courts for damages, this Court, in the same Floresca case, said that it was merely applying and giving effect to the constitutional guarantees of social justice in the 1935 and 1973 Constitutions and implemented by the Civil Code. It also applied the well-established rule that what is controlling is the spirit and intent, not the letter, of the law:

"Idolatrous reverence" for the law sacrifices the human being. The spirit of the law insures man’s survival and ennobles him. In the words of Shakespeare, "the letter of the law killeth; its spirit giveth life."

xxx xxx xxx

It is therefore patent that giving effect to the social justice guarantees of the Constitution, as implemented by the provisions of the New Civil Code, is not an exercise of the power of law-making, but is rendering obedience to the mandates of the fundamental law and the implementing legislation aforementioned.

Language is rarely so free from ambiguity as to be incapable of being used in more than one sense. Sometimes, what the legislature actually had in mind is not accurately reflected in the language of a statute, and its literal interpretation may render it meaningless, lead to absurdity, injustice or contradiction.7 In the case at bar, a literal interpretation of the word "exclusive" will result in grave injustice and negate the policy "to protect the rights and promote the welfare of children"8 under the Constitution and the United Nations Convention on the Rights of the Child. This mandate must prevail over legal technicalities and serve as the guiding principle in construing the provisions of RA 8369.

Moreover, settled is the rule in statutory construction that implied repeals are not favored:

The two laws must be absolutely incompatible, and a clear finding thereof must surface, before the inference of implied repeal may be drawn. The rule is expressed in the maxim, interpretare et concordare leqibus est optimus interpretendi, i.e., every statute must be so interpreted and brought into

accord with other laws as to form a uniform system of jurisprudence. The fundament is that the legislature should be presumed to have known the existing laws on the subject and not have enacted conflicting statutes. Hence, all doubts must be resolved against any implied repeal, and all efforts should be exerted in order to harmonize and give effect to all laws on the subject."9

The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of Appeals and Supreme Court to issue writs of habeas corpus relating to the custody of minors. Further, it cannot be said that the provisions of RA 8369, RA 7092 and BP 129 are absolutely incompatible since RA 8369 does not prohibit the Court of Appeals and the Supreme Court from issuing writs of habeas corpus in cases involving the custody of minors. Thus, the provisions of RA 8369 must be read in harmony with RA 7029 and BP 129 ― that family courts have concurrent jurisdiction with the Court of Appeals and the Supreme Court in petitions for habeas corpus where the custody of minors is at issue.

In any case, whatever uncertainty there was has been settled with the adoption of A.M. No. 03-03-04-SC Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors. Section 20 of the rule provides that:

Section 20. Petition for writ of habeas corpus.- A verified petition for a writ of habeas corpus involving custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which the Family Court belongs.

xxx xxx xxx

The petition may likewise be filed with the Supreme Court, Court of Appeals, or with any of its members and, if so granted, the writ shall be enforceable anywhere in the Philippines. The writ may be made returnable to a Family Court or to any regular court within the region where the petitioner resides or where the minor may be found for hearing and decision on the merits. (Emphasis Ours)

From the foregoing, there is no doubt that the Court of Appeals and Supreme Court have concurrent jurisdiction with family courts in habeas corpus cases where the custody of minors is involved.

One final note. Requiring the serving officer to search for the child all over the country is not an unreasonable availment of a remedy which the Court of Appeals cited as a ground for dismissing the petition. As explained by the Solicitor General:10

That the serving officer will have to "search for the child all over the country" does not represent an insurmountable or unreasonable obstacle, since such a task is no more different from or difficult than the duty of the peace officer


in effecting a warrant of arrest, since the latter is likewise enforceable anywhere within the Philippines.

WHEREFORE, the petition is hereby GRANTED. The petition for habeas corpus in CA-G.R.-SP-No. 70501 is hereby REINSTATED and REMANDED to the Court of Appeals, Sixteenth Division.

SO ORDERED.


G.R. No. 159374 July 12, 2007

FELIPE N. MADRIÑAN, Petitioner, vs.FRANCISCA R. MADRIÑAN, Respondent.

D E C I S I O N

CORONA, J.:

When a family breaks up, the children are always the victims. The ensuing battle for custody of the minor children is not only a thorny issue but also a highly sensitive and heart-rending affair. Such is the case here. Even the usually technical subject of jurisdiction became emotionally charged.

Petitioner Felipe N. Madriñan and respondent Francisca R. Madriñan were married on July 7, 1993 in Parañaque City. They resided in San Agustin Village, Brgy. Moonwalk, Parañaque City.

Their union was blessed with three sons and a daughter: Ronnick, born on January 30, 1994; Phillip, born on November 19, 1996; Francis Angelo, born on May 12, 1998 and Krizia Ann, born on December 12, 2000.

After a bitter quarrel on May 18, 2002, petitioner allegedly left their conjugal abode and took their three sons with him to Ligao City, Albay and subsequently to Sta. Rosa, Laguna. Respondent sought the help of her parents and parents-in-law to patch things up between her and petitioner to no avail. She then brought the matter to theLupong Tagapamayapa in their barangay but this too proved futile.

Thus respondent filed a petition for habeas corpus of Ronnick, Phillip and Francis Angelo in the Court of Appeals, alleging that petitioner’s act of leaving the conjugal dwelling and going to Albay and then to Laguna disrupted the education of their children and deprived them of their mother’s care. She prayed that petitioner be ordered to appear and produce their sons before the court and to explain why they should not be returned to her custody.

Petitioner and respondent appeared at the hearing on September 17, 2002. They initially agreed that petitioner would return the custody of their three sons to respondent. Petitioner, however, had a change of heart1 and decided to file a memorandum.

On September 3, 2002, petitioner filed his memorandum2 alleging that respondent was unfit to take custody of their three sons because she was habitually drunk, frequently went home late at night or in the wee hours of the morning, spent much of her time at a beer house and neglected her duties as a mother. He claimed that, after their squabble on May 18, 2002, it was respondent who left, taking their daughter with

her. It was only then that he went to Sta. Rosa, Laguna where he worked as a tricycle driver. He submitted a certification from the principal of the Dila Elementary School in Sta. Rosa, Laguna that Ronnick and Phillip were enrolled there. He also questioned the jurisdiction of the Court of Appeals claiming that under Section 5(b) of RA 8369 (otherwise known as the "Family Courts Act of 1997") family courts have exclusive original jurisdiction to hear and decide the petition for habeas corpus filed by respondent.3

For her part, respondent averred that she did not leave their home on May 18, 2002 but was driven out by petitioner. She alleged that it was petitioner who was an alcoholic, gambler and drug addict. Petitioner’s alcoholism and drug addiction impaired his mental faculties, causing him to commit acts of violence against her and their children. The situation was aggravated by the fact that their home was adjacent to that of her in-laws who frequently meddled in their personal problems.4

On October 21, 2002, the Court of Appeals5 rendered a decision6 asserting its authority to take cognizance of the petition and ruling that, under Article 213 of the Family Code, respondent was entitled to the custody of Phillip and Francis Angelo who were at that time aged six and four, respectively, subject to the visitation rights of petitioner. With respect to Ronnick who was then eight years old, the court ruled that his custody should be determined by the proper family court in a special proceeding on custody of minors under Rule 99 of the Rules of Court.

Petitioner moved for reconsideration of the Court of Appeals decision but it was denied. Hence, this recourse.

Petitioner challenges the jurisdiction of the Court of Appeals over the petition for habeas corpus and insists that jurisdiction over the case is lodged in the family courts under RA 8369. He invokes Section 5(b) of RA 8369:

Section 5. Jurisdiction of Family Courts. – The Family Courts shall have exclusive original jurisdiction to hear and decide the following cases:

x x x x x x x x x

b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter;

x x x x x x x x x

Petitioner is wrong.

In Thornton v. Thornton,7 this Court resolved the issue of the Court of Appeals’ jurisdiction to issue writs ofhabeas corpus in cases involving custody of minors in the light of the provision in RA 8369 giving family courts exclusive original jurisdiction over such petitions:









The Court of Appeals should take cognizance of the case since there is nothing in RA 8369 that revoked its jurisdiction to issue writs of habeas corpus involving the custody of minors.

x x x x x x x x x

We rule therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their jurisdiction over habeas corpus cases involving the custody of minors.

x x x x x x x x x

The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of Appeals and Supreme Court to issue writs of habeas corpus relating to the custody of minors. Further, it cannot be said that the provisions of RA 8369, RA 7092 [An Act Expanding the Jurisdiction of the Court of Appeals] and BP 129 [The Judiciary Reorganization Act of 1980] are absolutely incompatible since RA 8369 does not prohibit the Court of Appeals and the Supreme Court from issuing writs of habeas corpus in cases involving the custody of minors. Thus, the provisions of RA 8369 must be read in harmony with RA 7029 and BP 129 – that family courts have concurrent jurisdiction with the Court of Appeals and the Supreme Court in petitions for habeas corpuswhere the custody of minors is at issue.8 (emphases supplied)

The jurisdiction of the Court of Appeals over petitions for habeas corpus was further affirmed by A.M. No. 03-03-04-SC (April 22, 2004) in Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors:

In any case, whatever uncertainty there was has been settled with the adoption of A.M. No. 03-03-04-SC Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors. Section 20 of the rule provides that:

Section 20. Petition for writ of habeas corpus. – A verified petition for a writ of habeas corpus involving custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which the Family Court belongs.

x x x x x x x x x

The petition may likewise be filed with the Supreme Court, Court of Appeals, or with any of its membersand, if so granted, the writ shall be enforceable anywhere in the Philippines. The writ may be made returnable to a Family Court or to any regular court within the region where the petitioner resides or where the minor may be found for hearing and decision on the merits.

From the foregoing, there is no doubt that the Court of Appeals and Supreme Court have concurrent jurisdiction with family courts in habeas corpus cases where the custody of minors is involved.9(emphases supplied)1avvphi1

We note that after petitioner moved out of their Parañaque residence on May 18, 2002, he twice transferred his sons to provinces covered by different judicial regions. This situation is what the Thornton interpretation of RA 8369’s provision on jurisdiction precisely addressed:

[The reasoning that by giving family courts exclusive jurisdiction over habeas corpus cases, the lawmakers intended them to be the sole courts which can issue writs of habeas corpus] will result in an iniquitous situation, leaving individuals like [respondent] without legal recourse in obtaining custody of their children. Individuals who do not know the whereabouts of minors they are looking for would be helpless since they cannot seek redress from family courts whose writs are enforceable only in their respective territorial jurisdictions. Thus, if a minor is being transferred from one place to another, which seems to be the case here, the petitioner in a habeas corpus case will be left without legal remedy. This lack of recourse could not have been the intention of the lawmakers when they passed [RA 8369].10

Moreover, a careful reading of Section 5(b) of RA 8369 reveals that family courts are vested with original exclusive jurisdiction in custody cases, not in habeas corpus cases. Writs of habeas corpus which may be issued exclusively by family courts under Section 5(b) of RA 8369 pertain to the ancillary remedy that may be availed of in conjunction with a petition for custody of minors under Rule 99 of the Rules of Court. In other words, the issuance of the writ is merely ancillary to the custody case pending before the family court. The writ must be issued by the same court to avoid splitting of jurisdiction, conflicting decisions, interference by a co-equal court and judicial instability.

The rule therefore is: when by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer.11 Once a court acquires jurisdiction over the subject matter of a case, it does so to the exclusion of all other courts, including related incidents and ancillary matters.

Accordingly, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.






G.R. No. 149578 April 10, 2003

EVELYN TOLOSA, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, QWANA KAIUN (through its resident-agent, FUMIO NAKAGAWA), ASIA BULK TRANSPORT PHILS. INC., PEDRO GARATE and MARIO ASIS, respondents.

PANGANIBAN, J.:

As a rule, labor arbiters and the National Labor Relations Commission have no power or authority to grant reliefs from claims that do not arise from employer-employee relations. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code, other labor statutes, or collective bargaining agreements.

The Case

The Petition for Review before us assails the April 18, 2001 Decision1 of the Court of Appeals (CA) in CA-GR SP No. 57660, as well as the April 17, 2001 CA Resolution2 denying petitioner's Motion for Reconsideration. The dispositive portion of the challenged Decision reads as follows:

"WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED and accordingly DISMISSED, without prejudice to the right of herein petitioner to file a suit before the proper court, if she so desires. No pronouncement as to costs."3

The Facts

The appellate court narrated the facts of the case in this manner:

"Evelyn Tolosa (hereafter EVELYN), was the widow of Captain Virgilio Tolosa (hereafter CAPT. TOLOSA) who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk Transport Phils. Inc., (ASIA BULK for brevity), to be the master of the Vessel named M/V Lady Dona. CAPT. TOLOSA had a monthly compensation of US$1700, plus US$400.00 monthly overtime allowance. His contract officially began on November 1, 1992, as supported by his contract of employment when he assumed command of the vessel in Yokohama, Japan. The vessel departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time of embarkation, CAPT. TOLOSA was allegedly shown to be in good health.

"During 'channeling activities' upon the vessel's departure from Yokohama sometime on November 6, 1992, CAPT. TOLOSA was drenched with rainwater. The following day, November 7, 1992, he had a slight fever and in

the succeeding twelve (12) days, his health rapidly deteriorated resulting in his death on November 18, 1992.

"According to Pedro Garate, Chief Mate of the Vessel, in his statement submitted to the U.S. Coast Guard on November 23, 1992 upon arrival in Long Beach, California CAPT. TOLOSA experienced high fever between November 11-15, 1992 and suffered from loose bowel movement (LBM) beginning November 9, 1992. By November 11, 1992, his temperature was 39.5 although his LBM had 'slightly' stopped. The next day, his temperature rose to 39.8 and had lost his appetite. In the evening of that day, November 13, 1992, he slipped in the toilet and suffered scratches at the back of his waist. First aid was applied and CAPT. TOLOSA was henceforth confined to his quarters with an able seaman to watch him 24 hours a day until November 15, 1992, when his conditioned worsened.

"On the same day, November 15, 1992, the Chief Engineer initiated the move and contacted ASIA BULK which left CAPT. TOLOSA's fate in the hands of Pedro Garate and Mario Asis, Second Mate of the same vessel who was in-charge of the primary medical care of its officers and crew. Contact with the U.S. Coast Guard in Honolulu, Hawaii (USCGHH) was likewise initiated to seek medical advice.

"On November 17, 1992, CAPT. TOLOSA was 'losing resistance' and his 'condition was getting serious.' At 2215 GMT, a telex was sent to ASIA BULK requesting for the immediate evacuation of CAPT. TOLOSA and thereafter an airlift was set on November 19, 1992. However, on November 18, 1992, at 0753 GMT, CAPT. TOLOSA was officially recorded as having breathed his last.

"Because of the death of CAPT. TOLOSA, his wife, EVELYN, as petitioner, filed a Complaint/Position Paper before the POEA (POEA Case No. 93-06-1080) against Qwana-Kaiun, thru its resident-agent, Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario Asis, as respondents.

"After initial hearings and submissions of pleadings, the case was however transferred to the Department of Labor and Employment, National Labor Relations Commission (NLRC), when the amendatory legislation expanding its jurisdiction, and removing overseas employment related claims from the ambit of POEA jurisdiction. The case was then raffled to Labor Arbiter, Vladimir Sampang.

x x x x x x x x x

"After considering the pleadings and evidences, on July 8, 1997, the Labor Arbiter Vladimir P. L. Sampang, in conformity with petitioner's plea to hold respondents solidarily liable, granted all the damages, (plus legal interest), as prayed for by the petitioner. The dispositive portion of his Decision reads:


'WHEREFORE, premises considered, the respondents are hereby ordered to jointly and solidarily pay complainants the following:

1. US$176,400.00 (US$2,100.00 x 12 months x 7 years) or P4,586,400.00 (at P26.00 per US$1.00) by way of lost income;

2. interest at the legal rate of six percent (6%) per annum or P1,238,328.00 (from November 1992 to May 1997 or 4 ½ years);

3. moral damages of P200,000.00;

4. exemplary damages of P100,000.00; and

5. 10% of the total award, or P612,472.80, as attorney's fees.'

x x x x x x x x x

"On appeal, private respondents raised before the National Labor Relations Commission (NLRC) the following grounds:

(a) the action before the Arbiter, as he himself concedes, is a complaint based on torts due to negligence. It is the regular courts of law which have jurisdiction over the action;

(b) Labor Arbiters have jurisdiction over claims for damages arising from employer-employee relationship (Art. 217, Section (a) (3));

(c) In this case, gross negligence is imputed to respondents Garate and Asis, who have no employer-employee relationship with the late Capt. Virgilio Tolosa;

(d) The labor arbiter has no jurisdiction over the controversy;

x x x x x x x x x

"Despite other peripheral issues raised by the parties in their respective pleadings, the NLRC on September 10, 1998, vacated the appealed decision dated July 8, 1997 of the Labor Arbiter and dismissed petitioner's case for lack of jurisdiction over the subject matter of the action pursuant to the provisions of the Labor Code, as amended."4 (Citations omitted)

Ruling of the Court of Appeals

Sustaining the NLRC, the CA ruled that the labor commission had no jurisdiction over the subject matter of the action filed by petitioner. Her cause did not arise from an employer-employee relation, but from a quasi delict or tort. Further, there is no reasonable causal connection between her suit for damages and her claim under Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an employer-employee relation.

Hence, this Petition.5

Issues

Petitioner raises the following issues for our consideration:

"I

"Whether or not the NLRC has jurisdiction over the case.

"II

"Whether or not Evelyn is entitled to the monetary awards granted by the labor arbiter."6

After reviewing petitioner's Memorandum, we find that we are specifically being asked to determine 1) whether the labor arbiter and the NLRC had jurisdiction over petitioner's action, and 2) whether the monetary award granted by the labor arbiter has already reached finality.

The Court's Ruling

The Petition has no merit.

First Issue:Jurisdiction over the Action

Petitioner argues that her cause of action is not predicated on a quasi delict or tort, but on the failure of private respondents -- as employers of her husband (Captain Tolosa) -- to provide him with timely, adequate and competent medical services under Article 161 of the Labor Code:

"ART 161. Assistance of employer. -- It shall be the duty of any employer to provide all the necessary assistance to ensure the adequate and immediate medical and dental attendance and treatment to an injured or sick employee in case of emergency."


Likewise, she contends that Article 217 (a) (4)7 of the Labor Code vests labor arbiters and the NLRC with jurisdiction to award all kinds of damages in cases arising from employer-employee relations.

Petitioner also alleges that the "reasonable causal connection" rule should be applied in her favor. Citing San Miguel Corporation v. Etcuban,8 she insists that a reasonable causal connection between the claim asserted and the employer-employee relation confers jurisdiction upon labor tribunals. She adds that she has satisfied the required conditions: 1) the dispute arose from an employer-employee relation, considering that the claim was for damages based on the failure of private respondents to comply with their obligation under Article 161 of the Labor Code; and 2) the dispute can be resolved by reference to the Labor Code, because the material issue is whether private respondents complied with their legal obligation to provide timely, adequate and competent medical services to guarantee Captain Tolosa's occupational safety.9

We disagree. We affirm the CA's ruling that the NLRC and the labor arbiter had no jurisdiction over petitioner's claim for damages, because that ruling was based on a quasi delict or tort per Article 2176 of the Civil Code.10

Time and time again, we have held that the allegations in the complaint determine the nature of the action and, consequently, the jurisdiction of the courts.11 After carefully examining the complaint/position paper of petitioner, we are convinced that the allegations therein are in the nature of an action based on a quasi delict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross negligence.

Petitioner's complaint/position paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who had no employer-employee relation with Captain Tolosa. Specifically, the paper alleges the following tortious acts:

"x x x [R]espondent Asis was the medical officer of the Vessel, who failed to regularly monitor Capt. Tolosa's condition, and who needed the USCG to prod him to take the latter's vital signs. In fact, he failed to keep a medical record, like a patient's card or folder, of Capt. Tolosa's illness."12

"Respondents, however, failed Capt. Tolosa because Garate never initiated actions to save him. x x x In fact, Garate rarely checked personally on Capt. Tolosa's condition, to wit:"13

"x x x Noticeably, the History (Annex "D") fails to mention any instance when Garate consulted the other officers, much less Capt. Tolosa, regarding the possibility of deviation. To save Capt. Tolosa's life was surely a just cause for the change in course, which the other officers would have concurred in had they been consulted by respondent Garate – which he grossly neglected to do.

"Garate's poor judgement, since he was the officer effectively in command of the vessel, prevented him from undertaking these emergency measures, the neglect of which resulted in Capt. Tolosa's untimely demise."14

The labor arbiter himself classified petitioner's case as "a complaint for damages, blacklisting and watchlisting (pending inquiry) for gross negligence resulting in the death of complainant's husband, Capt. Virgilio Tolosa."15

We stress that the case does not involve the adjudication of a labor dispute, but the recovery of damages based on a quasi delict. The jurisdiction of labor tribunals is limited to disputes arising from employer-employee relations, as we ruled in Georg Grotjahn GMBH & Co. v. Isnani:16

"Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement."17

The pivotal question is whether the Labor Code has any relevance to the relief sought by petitioner. From her paper, it is evident that the primary reliefs she seeks are as follows: (a) loss of earning capacity denominated therein as "actual damages" or "lost income" and (b) blacklisting. The loss she claims does not refer to the actual earnings of the deceased, but to his earning capacity based on a life expectancy of 65 years. This amount is recoverable if the action is based on a quasi delict as provided for in Article 2206 of the Civil Code,18 but not in the Labor Code.

While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages governed by the Civil Code,19 these reliefs must still he based on an action that has a reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining agreements.20

The central issue is determined essentially from the relief sought in the complaint. In San Miguel Corporation v. NLRC,21 this Court held:

"It is the character of the principal relief sought that appears essential in this connection. Where suchprincipal relief is to be granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim."22

The labor arbiter found private respondents to be grossly negligent. He ruled that Captain Tolosa, who died at age 58, could expect to live up to 65 years and to have an earning capacity of US$176,400.


It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages, overtime compensation or separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim resulting from a quasi delict or a similar cause within the realm of civil law.

"Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations."23In the present case, petitioner's claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements.

Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a safety and health standard under Book IV of the same Code. The enforcement of this labor standard rests with the labor secretary.24 Thus, claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages before the labor arbiter.

It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is merely incidental, and in which the cause of action proceeds from a different source of obligation such as a tort.25 Since petitioner's claim for damages is predicated on a quasi delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes, or collective bargaining agreements, jurisdiction over the action lies with the regular courts26 -- not with the NLRC or the labor arbiters.

Second Issue:Finality of the Monetary Award

Petitioner contends that the labor arbiter's monetary award has already reached finality, since private respondents were not able to file a timely appeal before the NLRC.

This argument cannot be passed upon in this appeal, because it was not raised in the tribunals a quo. Well-settled is the rule that issues not raised below cannot be raised for the first time on appeal. Thus, points of law, theories, and arguments not brought to the attention of the Court of Appeals need not -- and ordinarily will not -- be considered by this Court.27 Petitioner's allegation cannot be accepted by this Court on its face; to do so would be tantamount to a denial of respondents' right to due process.28

Furthermore, whether respondents were able to appeal on time is a question of fact that cannot be entertained in a petition for review under Rule 45 of the Rules of Court.

In general, the jurisdiction of this Court in cases brought before it from the Court of Appeals is limited to a review of errors of law allegedly committed by the court a quo.29

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner.

SO ORDERED.


G.R. No. 152121 July 29, 2003

EDUARDO G. EVIOTA, Petitioner, vs.THE HON. COURT OF APPEALS, THE HON. JOSE BAUTISTA, Presiding Judge of Branch 136, Regional Trial Court of Makati, and STANDARD CHARTERED BANK, Respondents.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, of the Decision1 of the Court of Appeals in CA-G.R. SP No. 60141 denying the petition for certiorari filed by the petitioner praying the nullification of the Order of the Regional Trial Court of Makati, Branch 136.2

Sometime on January 26, 1998, the respondent Standard Chartered Bank and petitioner Eduardo G. Eviota executed a contract of employment under which the petitioner was employed by the respondent bank as Compensation and Benefits Manager, VP (M21). However, the petitioner abruptly resigned from the respondent bank barely a month after his employment and rejoined his former employer.

On June 19, 1998, the respondent bank filed a complaint against the petitioner with the RTC of Makati City. The respondent bank alleged inter alia in its complaint that:

1. It is a foreign banking institution authorized to do business in the Philippines, with principal offices at the 5th Floor, Bankmer Bldg., 6756 Ayala Avenue, Makati City.

2. Defendant Eduardo Eviota ("Eviota") is a former employee of the Bank, and may be served with summons and other court processes at 8 Maple Street, Cottonwoods, Antipolo, Metro Manila.

3. On December 22, 1997, Eviota began negotiating with the Bank on his possible employment with the latter. Taken up during these negotiations were not only his compensation and benefit package, but also the nature and demands of his prospective position. The Bank made sure that Eviota was fully aware of all the terms and conditions of his possible job with the Bank.

4. On January 26, 1998, Eviota indicated his conformity with the Bank’s Offer of Employment by signing a written copy of such offer dated January 22, 1998 (the "Employment Contract"). A copy of the Employment Contract between Eviota and the Bank is hereto attached as Annex "A."

5. Acting on the Employment Contract and on Eviota’s uninhibited display of interest in assuming his position, the Bank promptly proceeded to carry out the terms of the Employment Contract as well as to facilitate his integration into the workforce. Among others, the Bank: (a) renovated and refurbished the room which was to serve as Eviota’s office; (b) purchased a 1998 Honda CR-V (Motor No. PEWED7P101101; Chassis No. PADRD 1830WV00108) for Eviota’s use; (c) purchased a desktop IBM computer for Eviota’s use; (d) arranged the takeout of Eviota’s loans with Eviota’s former employer; (e) released Eviota’s signing bonus in the net amount of P300,000.00; (f) booked Eviota’s participation in a Singapore conference on Y2K project scheduled on March 10 and 11, 1998; and (g) introduced Eviota to the local and regional staff and officers of the Bank via personal introductions and electronic mail.

6. The various expenses incurred by the Bank in carrying out the above acts are itemized below, as follows:

a. Signing Bonus P 300,000.00

b. 1 Honda CR-V 800,000.00

c. IBM Desktop Computer 89,995.00

d. Office Reconfiguration 29,815.00

e. 2-Drawer Lateral FileCabinet 13,200.00

f. 1 Officer’s Chair 31,539.00

g. 1 Guest Chair 2,200.00

h. 1 Hanging Shelf 2,012.00

i. Staff Loan Processing

Title Verification 375.00

Cost of Appraisal –

Housing Loan 3,500.00

TOTAL P1,272,636.00




An itemized schedule of the above expenses incurred by the Bank is hereto attached as Annex "B."

7. On February 25, 1998, Eviota assumed his position as Compensation and Benefits Manager with the Bank and began to discharge his duties. At one Human Resources ("HR") Committee meeting held on March 3, 1998, Eviota energetically presented to senior management his projects for the year, thus raising the latter’s expectations. The same day, Eviota instructed the Bank’s HR Administrator to book him a flight for Singapore, where he was scheduled to participate in a Y2K project on March 10 and 11, 1998. Confident of Eviota’s professed commitment to the Bank, the latter made the aforementioned airline booking for him. In addition, the Bank allowed Eviota access to certain sensitive and confidential information and documents concerning the Bank’s operations.

8. After leading the Bank to believe that he had come to stay, Eviota suddenly resigned his employment with immediate effect to re-join his previous employer. His resignation, which did not comply with the 30-day prior notice rule under the law and under the Employment Contract, was so unexpected that it disrupted plans already in the pipeline (e.g., the development of a salary/matrix grid and salary structure, and the processing of merit promotion recommendations), aborted meetings previously scheduled among Bank officers, and forced the Bank to hire the services of a third party to perform the job he was hired to do. For the services of this third party, the Bank had to pay a total of P208,807.50. A copy of a receipt for the above expenses is hereto attached as Annex "C" (See also, Annex "B").

9. Aside from causing no small degree of chaos within the Bank by reason of his sudden resignation, Eviota made off with a computer diskette and other papers and documents containing confidential information on employee compensation and other Bank matters, such as the salary schedule of all Corporate and Institutional Banking officers and photocopies of schedules of benefits provided expatriates being employed by the Bank.

10. With the benefit of hindsight, the Bank realizes that it was simply used by Eviota as a mere leverage for his selfish efforts at negotiating better terms of employment with his previous employer. Worse, there is evidence to show that in his attempts to justify his hasty departure from the Bank and conceal the real reason for his move, Eviota has resorted to falsehoods derogatory to the reputation of the Bank. In particular, he has been maliciously purveying the canard that he had hurriedly left the Bank because it had failed to provide him support. His untruthful remarks have falsely depicted the Bank as a contract violator and an undesirable employer, thus damaging the Bank’s reputation and business standing in the highly competitive banking community, and undermining its ability to recruit and retain the best personnel in the labor market.

11. On March 16, 1998, the Bank made a written demand on Eviota to return the aforementioned computer diskette and other confidential documents and papers, reimburse the Bank for the various expenses incurred on his account as a result of his resignation (with legal interest), and pay damages in the amount of at least P500,000.00 for the inconvenience and work/program disruptions suffered by the Bank.

A copy of the Bank’s demand letter dated March 16, 1998 is hereto attached as Annex "D."

12. In partial compliance with said demand, Eviota made arrangements with his previous employer to reimburse the Bank for the expenses incurred in connection with the Bank’s purchase of the Honda CR-V for his use. The Bank informed Eviota that in addition to the Honda CR-V’s purchase price of P848,000.00 (of which Eviota initially shouldered P48,000.00), incidental costs in the form of Processing Fees (P1,000.00), FPD/MCAR/98-155684 (P1,232.53) and Fund Transfer Price (P18,646.84) were incurred, bringing the total cost of the Honda CR-V to P868,881.38. On April 29, 1998, the Bank received two manager’s checks in the aggregate amount of P868,881.38, representing costs incurred in connection with the purchase of the Honda CR-V, inclusive of processing fees and other incidental costs. Previously, Eviota had returned his P300,000.00 signing bonus, less the P48,000.00 he had advanced for the Honda CR-V’s purchase price.

13. Eviota never complied with the Bank’s demand that he reimburse the latter for the other expenses incurred on his account, amounting to P360,562.12 (see, Annex "B").3

The respondent bank alleged, by way of its causes of action against the petitioner, the following:

First Cause of Action

14. Eviota’s actions constitute a clear violation of Articles 19, 20 and 21 of Republic Act No. 386, as amended (the "Civil Code"). Assuming arguendo that Eviota had the right to terminate his employment with the Bank for no reason, the manner in and circumstances under which he exercised the same are clearly abusive and contrary to the rules governing human relations.

14.1. By his actions and representations, Eviota had induced the Bank to believe that he was committed to fulfilling his obligations under the Employment Contract. As a result, the Bank incurred expenses in carrying out its part of the contract (see Annexes "B" and "C"). Less reimbursements received from Eviota, the Bank is entitled to actual damages of P360,562.12. (See, Annex "C").



Second Cause of Action

15. Under Article 285 (a) of Presidential Decree No. 442, as amended (the Labor Code), an employee may terminate without just cause the employer-employee relationship by serving written notice on the employer at least one (1) month in advance. In addition, Section 13 of the Employment Contract specifically provides that: "Your [i.e., Eviota’s] employment may be terminated by either party giving notice of at least one month." (Annex "A," p. 5.)

15.1. Eviota’s failure to comply with the above requirement threw a monkey wrench into the Bank’s operations – Eviota’s sudden resignation aborted meetings previously scheduled among Bank officers and disrupted plans for a salary/merit review program and development of a salary structure and merit grid already in the pipeline.

Hence, Eviota is liable to the Bank for damages in the amount of at least P100,000.00.

Third Cause of Action

16. Eviota’s false and derogatory statements that the Bank had failed to deliver what it had purportedly promised have besmirched the Bank’s reputation and depicted it as a contract violator and one which does not treat its employees properly. These derogatory statements have injured the Bank’s business standing in the banking community, and have undermined the Bank’s ability to recruit and retain the best personnel. Hence, plaintiff is entitled to moral damages of at least P2,000,000.00.

17. By way of example or correction for the public good, and to deter other parties from committing similar acts in the future, defendant should be held liable for exemplary damages of at least P1,000,000.00

18. Eviota’s actions have compelled plaintiff to obtain the services of undersigned counsel for a fee, in order to protect its interests. Hence, plaintiff is entitled to attorney’s fees of at least P200,000.00.4

The respondent bank prayed, that after due proceedings, judgment be rendered in its favor as follows:

WHEREFORE, it is respectfully prayed that judgment be rendered ordering the defendant to pay the plaintiff:

1. As actual damages, the amount of P360,562.12, representing expenses referred to in items c to i of par. 6 and the cost of the third-party services mentioned in par. 8;

2. For violating the 30-day notice requirement under the Labor Code and order (sic) the Employment Contract, damages in the amount of at least P100,000.00;

3. As moral damages, the amount of P2,000,000.00;

4. As exemplary damages, the amount of P1,000,000.00;

5. As attorney’s fees, the amount of P200,000.00; and

6. Costs of the suit.

Other just and equitable reliefs are likewise prayed for.5

The respondent bank appended to its complaint a copy of the petitioner’s employment contract.

The petitioner filed a motion to dismiss the complaint on the ground that the action for damages of the respondent bank was within the exclusive jurisdiction of the Labor Arbiter under paragraph 4, Article 217 of the Labor Code of the Philippines, as amended. The petitioner averred that the respondent bank’s claim for damages arose out of or were in connection with his employer-employee relationship with the respondent bank or some aspect or incident of such relationship. The respondent bank opposed the motion, claiming that its action for damages was within the exclusive jurisdiction of the trial court. Although its claims for damages incidentally involved an employer-employee relationship, the said claims are actually predicated on the petitioner’s acts and omissions which are separately, specifically and distinctly governed by the New Civil Code.

On November 29, 1999, the trial court issued an order denying the petitioner’s motion to dismiss, ratiocinating that the primary relief prayed for by the respondent bank was grounded on the tortious manner by which the petitioner terminated his employment with the latter, and as such is governed by the New Civil Code:

The Court holds that here, since the primary relief prayed for by the plaintiff is for damages, grounded on the tortious manner by which the defendant terminated his employment with the company, the same are recoverable under the applicable provision of the Civil Code, the present controversy is removed from the jurisdiction of the Labor Arbiter and brings in within the purview of the regular courts.6





The petitioner filed a motion for reconsideration of the said order, but the court issued an order denying the same. The petitioner filed a petition for certiorari with the Court of Appeals for the nullification of the orders of the trial court, alleging that the court a quo committed grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the said orders. The petitioner further asserted that contrary to the ruling of the court, the respondent bank claimed damages in its complaint against the petitioner based on his employment contract, and not on tortious acts.

On November 15, 2001, the CA promulgated a decision dismissing the petition, holding that the trial court and not the Labor Arbiter had exclusive jurisdiction over the action of the respondent bank. It held that the latter’s claims for damages were grounded on the petitioner’s sudden and unceremonious severance of his employment with the respondent bank barely a month after assuming office.

With his motion for reconsideration of the decision having been denied by the CA, the petitioner filed his petition with this Court contending that:

Suffice to state immediately that on the basis of the allegations in the complaint, it is the Labor Arbiter, not the Regional Trial Court, which has jurisdiction of the subject matter of the complaint in Civil Case No. 98-1397, the principal cause of action being the alleged omission of petitioner in giving notice to the respondent Bank employer of termination of their relationship; whereas the claims for other actual/moral/exemplary damages are well within the competence of the Labor Arbiter.7

The petition is barren of merit.

Article 217 of the Labor Code of the Philippines, as amended by Rep. Act No. 6715 which took effect on March 21, 1989 reads:

ART. 217. Jurisdiction of Labor Arbiters and the Commission.—(a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations.

Case law has it that the nature of an action and the subject matter thereof, as well as which court has jurisdiction over the same, are determined by the material allegations of the complaint and the reliefs prayed for in relation to the law involved.

Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a "reasonable causal connection" between the claim asserted and employee-employer relation. Absent such a link, the complaint will be cognizable by the regular courts of justice.8

Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court.9 In Georg Grotjahn GMBH & Co. v. Isnani,10 we held that the jurisdiction of the Labor Arbiter under Article 217 of the Labor Code, as amended, is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code of the Philippines, other labor laws or their collective bargaining agreements. In Singapore Airlines Limited v. Paño,11 the complaint of the employer against the employee for damages for wanton justice and refusal without just cause to report for duty, and for having maliciously and with bad faith violated the terms and conditions of their agreement for a course of conversion training at the expense of the employer, we ruled that jurisdiction over the action belongs to the civil court:

On appeal to this court, we held that jurisdiction over the controversy belongs to the civil courts. We stated that the action was for breach of a contractual obligation, which is intrinsically a civil dispute. We further stated that while seemingly the cause of action arose from employer-employee relations, the employer’s claim for damages is grounded on "wanton failure and refusal" without just cause to report to duty coupled with the averment that the employee "maliciously and with bad faith" violated the terms and conditions of the contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the purview of the Civil Law.

Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations.12

The claims were the natural consequences flowing from a breach of an obligation, intrinsically civil in nature.

In Medina v. Castro-Bartolome,13 we held that a complaint of an employee for damages against the employer for slanderous remarks made against him was within the exclusive jurisdiction of the regular courts of justice because the cause of action of the plaintiff was for damages for tortious acts allegedly committed by the employer.









The fact that there was between the parties an employer-employee relationship does not negate the jurisdiction of the trial court.

In Singapore Airlines Ltd. v. Paño,14 we held that:

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code.1âwphi1The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.

In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,15 the petitioner sued its employee Adonis Limjuco for breach of contract which reads:

That for a period of two (2) years after termination of service from EMPLOYER, EMPLOYEE shall not in any manner be connected, and/or employed, be a consultant and/or be an informative body directly or indirectly, with any business firm, entity or undertaking engaged in a business similar to or in competition with that of the EMPLOYER."16

The petitioner alleged in its complaint with the trial court that:

Petitioner claimed that private respondent became an employee of Angel Sound Philippines Corporation, a corporation engaged in the same line of business as that of petitioner, within two years from January 30, 1992, the date of private respondent’s resignation from petitioner’s employ. Petitioner further alleged that private respondent is holding the position of Head of the Material Management Control Department, the same position he held while in the employ of petitioner.17

The trial court dismissed the case for lack of jurisdiction over the subject matter because the cause of action for damages arose out of the parties’ employer-employee relationship. We reversed the order of the trial court and held, thus:

Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed upon in the contract as redress for private respondent’s breach of his contractual obligation to its "damage and prejudice" (Rollo, p. 57). Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so when we consider that the stipulation refers to the post-employment relations of the parties.18

In this case, the private respondent’s first cause of action for damages is anchored on the petitioner’s employment of deceit and of making the private respondent believe that he would fulfill his obligation under the employment contract with assiduousness and earnestness. The petitioner volte face when, without the requisite thirty-day

notice under the contract and the Labor Code of the Philippines, as amended, he abandoned his office and rejoined his former employer; thus, forcing the private respondent to hire a replacement. The private respondent was left in a lurch, and its corporate plans and program in jeopardy and disarray. Moreover, the petitioner took off with the private respondent’s computer diskette, papers and documents containing confidential information on employee compensation and other bank matters. On its second cause of action, the petitioner simply walked away from his employment with the private respondent sans any written notice, to the prejudice of the private respondent, its banking operations and the conduct of its business. Anent its third cause of action, the petitioner made false and derogatory statements that the private respondent reneged on its obligations under their contract of employment; thus, depicting the private respondent as unworthy of trust.

It is evident that the causes of action of the private respondent against the petitioner do not involve the provisions of the Labor Code of the Philippines and other labor laws but the New Civil Code. Thus, the said causes of action are intrinsically civil. There is no causal relationship between the causes of action of the private respondent’s causes of action against the petitioner and their employer-employee relationship. The fact that the private respondent was the erstwhile employer of the petitioner under an existing employment contract before the latter abandoned his employment is merely incidental. In fact, the petitioner had already been replaced by the private respondent before the action was filed against the petitioner.

IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED. The Decision of the Court of Appeals dismissing the petition of the petitioner is AFFIRMED.

SO ORDERED.







G.R. No. 154830 June 8, 2007

PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J. KLEPZIG,petitioners, vs.ANTONIO D. TODARO, respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the Decision1 of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155 and its Resolution2 of August 21, 2002 denying petitioners’ Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial Court (RTC) of Makati City, a complaint for Sum of Money and Damages with Preliminary Attachment against Pioneer International Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig (Klepzig).3

In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the laws of Australia and is principally engaged in the ready-mix concrete and concrete aggregates business; PPHI is the company established by PIL to own and hold the stocks of its operating company in the Philippines; PCPI is the company established by PIL to undertake its business of ready-mix concrete, concrete aggregates and quarrying operations in the Philippines; McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI; Todaro has been the managing director of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-mixed concrete and concrete aggregate production; he resigned from Betonval in February 1996; in May 1996, PIL contacted Todaro and asked him if he was available to join them in connection with their intention to establish a ready-mix concrete plant and other related operations in the Philippines; Todaro informed PIL of his availability and interest to join them; subsequently, PIL and Todaro came to an agreement wherein the former consented to engage the services of the latter as a consultant for two to three months, after which, he would be employed as the manager of PIL's ready-mix concrete operations should the company decide to invest in the Philippines; subsequently, PIL started its operations in the Philippines; however, it refused to comply with its undertaking to employ Todaro on a permanent basis.4

Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the grounds that the complaint states no cause of action, that the RTC

has no jurisdiction over the subject matter of the complaint, as the same is within the jurisdiction of the NLRC, and that the complaint should be dismissed on the basis of the doctrine of forum non conveniens.5

In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners' respective motions to dismiss.6 Herein petitioners, as defendants, filed an Urgent Omnibus Motion7 for the reconsideration of the trial court's Order of January 4, 1999 but the trial court denied it via its Order8 dated June 3, 1999.

On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On October 31, 2000, the CA rendered its presently assailed Decision denying herein petitioners' Petition for Certiorari. Petitioners filed a Motion for Reconsideration but the CA denied it in its Resolution dated August 21, 2002.

Hence, herein Petition for Review on Certiorari based on the following assignment of errors:

A.

THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION AGAINST PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE THE ALLEGATION OF EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND PETITIONERS.

B.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL COURT DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL LABOR RELATIONS COMMISSION.

C

THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID GROUND FOR DISMISSING A COMPLAINT.10

In their first assigned error, petitioners contend that there was no perfected employment contract between PIL and herein respondent. Petitioners assert that the annexes to respondent's complaint show that PIL's offer was for respondent to be employed as the manager only of its pre-mixed concrete operations and not as the












company's managing director or CEO. Petitioners argue that when respondent reiterated his intention to become the manager of PIL's overall business venture in the Philippines, he, in effect did not accept PIL's offer of employment and instead made a counter-offer, which, however, was not accepted by PIL. Petitioners also contend that under Article 1318 of the Civil Code, one of the requisites for a contract to be perfected is the consent of the contracting parties; that under Article 1319 of the same Code, consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract; that the offer must be certain and the acceptance absolute; that a qualified acceptance constitutes a counter-offer. Petitioners assert that since PIL did not accept respondent's counter-offer, there never was any employment contract that was perfected between them.

Petitioners further argue that respondent's claim for damages based on the provisions of Articles 19 and 21 of the Civil Code is baseless because it was shown that there was no perfected employment contract.

Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract, petitioners contend that PCPI and PPHI, may not also be held liable because they are juridical entities with personalities which are separate and distinct from PIL, even if they are subsidiary corporations of the latter. Petitioners also aver that the annexes to respondent's complaint show that the negotiations on the alleged employment contract took place between respondent and PIL through its office in Hongkong. In other words, PCPI and PPHI were not privy to the negotiations between PIL and respondent for the possible employment of the latter; and under Article 1311 of the Civil Code, a contract is not binding upon and cannot be enforced against one who was not a party to it even if he be aware of such contract and has acted with knowledge thereof.

Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting in his capacity as president of PCPI and PPHI and settled is the rule that an officer of a corporation is not personally liable for acts done in the performance of his duties and within the bounds of the authority conferred on him. Furthermore, petitioners argue that even if PCPI and PPHI are held liable, respondent still has no cause of action against Klepzig because PCPI and PPHI have personalities which are separate and distinct from those acting in their behalf, such as Klepzig.

As to their second assigned error, petitioners contend that since herein respondent's claims for actual, moral and exemplary damages are solely premised on the alleged breach of employment contract, the present case should be considered as falling within the exclusive jurisdiction of the NLRC.

With respect to the third assigned error, petitioners assert that the principle of forum non conveniens dictates that even where exercise of jurisidiction is authorized by law, courts may refuse to entertain a case involving a foreign element where the matter can be better tried and decided elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have their residence

there and the plaintiff sought the forum merely to secure procedural advantage or to annoy or harass the defendant. Petitioners also argue that one of the factors in determining the most convenient forum for conflicts problem is the power of the court to enforce its decision. Petitioners contend that since the majority of the defendants in the present case are not residents of the Philippines, they are not subject to compulsory processes of the Philippine court handling the case for purposes of requiring their attendance during trial. Even assuming that they can be summoned, their appearance would entail excessive costs. Petitioners further assert that there is no allegation in the complaint from which one can conclude that the evidence to be presented during the trial can be better obtained in the Philippines. Moreover, the events which led to the present controversy occurred outside the Philippines. Petitioners conclude that based on the foregoing factual circumstances, the case should be dismissed under the principle of forum non conveniens.

In his Comment, respondent extensively quoted the assailed CA Decision maintaining that the factual allegations in the complaint determine whether or not the complaint states a cause of action.

As to the question of jurisdiction, respondent contends that the complaint he filed was not based on a contract of employment. Rather, it was based on petitioners' unwarranted breach of their contractual obligation to employ respondent. This breach, respondent argues, gave rise to an action for damages which is cognizable by the regular courts.

Even assuming that there was an employment contract, respondent asserts that for the NLRC to acquire jurisdiction, the claim for damages must have a reasonable causal connection with the employer-employee relationship of petitioners and respondent.

Respondent further argues that there is a perfected contract between him and petitioners as they both agreed that the latter shall employ him to manage and operate their ready-mix concrete operations in the Philippines. Even assuming that there was no perfected contract, respondent contends that his complaint alleges an alternative cause of action which is based on the provisions of Articles 19 and 21 of the Civil Code.

As to the applicability of the doctrine of forum non conveniens, respondent avers that the question of whether a suit should be entertained or dismissed on the basis of the principle of forum non conveniens depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial judge, who is in the best position to determine whether special circumstances require that the court desist from assuming jurisdiction over the suit.

The petition lacks merit.

Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or omission by which a party violates a right of another. A cause of action exists if


the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and, (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages.11

In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:

The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged therein? The inquiry is into the sufficiency, not the veracity of the material allegations. If the allegations in the complaint furnish sufficient basis on which it can be maintained, it should not be dismissed regardless of the defense that may be presented by the defendants.13

Moreover, the complaint does not have to establish or allege facts proving the existence of a cause of action at the outset; this will have to be done at the trial on the merits of the case.14 To sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain.15

Hence, in resolving whether or not the Complaint in the present case states a cause of action, the trial court correctly limited itself to examining the sufficiency of the allegations in the Complaint as well as the annexes thereto. It is proscribed from inquiring into the truth of the allegations in the Complaint or the authenticity of any of the documents referred or attached to the Complaint, since these are deemed hypothetically admitted by the respondent.

This Court has reviewed respondent’s allegations in its Complaint. In a nutshell, respondent alleged that herein petitioners reneged on their contractual obligation to employ him on a permanent basis. This allegation is sufficient to constitute a cause of action for damages.

The issue as to whether or not there was a perfected contract between petitioners and respondent is a matter which is not ripe for determination in the present case; rather, this issue must be taken up during trial, considering that its resolution would necessarily entail an examination of the veracity of the allegations not only of herein respondent as plaintiff but also of petitioners as defendants.

The Court does not agree with petitioners' contention that they were not privy to the negotiations for respondent's possible employment. It is evident from paragraphs 24 to 28 of the Complaint16 that, on various occasions, Klepzig conducted negotiations with respondent regarding the latter's possible employment. In fact, Annex "H"17of the complaint shows that it was Klepzig who informed respondent that his company was no longer interested in employing respondent. Hence, based on the allegations in the

Complaint and the annexes attached thereto, respondent has a cause of action against herein petitioners.

As to the question of jurisdiction, this Court has consistently held that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction.18 In the present case, no employer-employee relationship exists between petitioners and respondent. In fact, in his complaint, private respondent is not seeking any relief under the Labor Code, but seeks payment of damages on account of petitioners' alleged breach of their obligation under their agreement to employ him. It is settled that an action for breach of contractual obligation is intrinsically a civil dispute.19 In the alternative, respondent seeks redress on the basis of the provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present action is within the realm of civil law, and jurisdiction over it belongs to the regular courts.20

With respect to the applicability of the principle of forum non conveniens in the present case, this Court's ruling inBank of America NT & SA v. Court of Appeals21 is instructive, to wit:

The doctrine of forum non conveniens, literally meaning ‘the forum is inconvenient’, emerged in private international law to deter the practice of global forum shopping, that is to prevent non-resident litigants from choosing the forum or place wherein to bring their suit for malicious reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue. Under this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most "convenient" or available forum and the parties are not precluded from seeking remedies elsewhere.

Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court. In the case ofCommunication Materials and Design, Inc. vs. Court of Appeals, this Court held that "xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision."

Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the doctrine of forum non conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so













only after vital facts are established, to determine whether special circumstances require the court’s desistance; and that the propriety of dismissing a case based on this principle of forum non conveniens requires a factual determination, hence it is more properly considered a matter of defense.22 (emphasis supplied)

In the present case, the factual circumstances cited by petitioners which would allegedly justify the application of the doctrine of forum non conveniens are matters of defense, the merits of which should properly be threshed out during trial.

WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

Costs against petitioners.

SO ORDERED.



G.R. No. 185567 October 20, 2010

ARSENIO Z. LOCSIN, Petitioner, vs.NISSAN LEASE PHILS. INC. and LUIS BANSON, Respondents.

D E C I S I O N

BRION, J.:

Through a petition for review on certiorari,1 petitioner Arsenio Z. Locsin (Locsin) seeks the reversal of the Decision2 of the Court of Appeals (CA) dated August 28, 2008,3 in "Arsenio Z. Locsin v. Nissan Car Lease Phils., Inc. and Luis Banson," docketed as CA-G.R. SP No. 103720 and the Resolution dated December 9, 2008,4denying Locsin’s Motion for Reconsideration. The assailed ruling of the CA reversed and set aside the Decision5of the Hon. Labor Arbiter Thelma Concepcion (Labor Arbiter Concepcion) which denied Nissan Lease Phils. Inc.’s (NCLPI) and Luis T. Banson’s (Banson) Motion to Dismiss.

THE FACTUAL ANTECEDENTS

On January 1, 1992, Locsin was elected Executive Vice President and Treasurer (EVP/Treasurer) of NCLPI. As EVP/Treasurer, his duties and responsibilities included: (1) the management of the finances of the company; (2) carrying out the directions of the President and/or the Board of Directors regarding financial management; and (3) the preparation of financial reports to advise the officers and directors of the financial condition of NCLPI.6 Locsin held this position for 13 years, having been re-elected every year since 1992, until January 21, 2005, when he was nominated and elected Chairman of NCLPI’s Board of Directors.7

On August 5, 2005, a little over seven (7) months after his election as Chairman of the Board, the NCLPI Board held a special meeting at the Manila Polo Club. One of the items of the agenda was the election of a new set of officers. Unfortunately, Locsin was neither re-elected Chairman nor reinstated to his previous position as EVP/Treasurer.8

Aggrieved, on June 19, 2007, Locsin filed a complaint for illegal dismissal with prayer for reinstatement, payment of backwages, damages and attorney’s fees before the Labor Arbiter against NCLPI and Banson, who was then President of NCLPI.9

The Compulsory Arbitration Proceedings before the Labor Arbiter.

On July 11, 2007, instead of filing their position paper, NCLPI and Banson filed a Motion to Dismiss,10 on the ground that the Labor Arbiter did not have jurisdiction over the case since the issue of Locsin’s removal as EVP/Treasurer involves an intra-corporate dispute.

On August 16, 2007, Locsin submitted his opposition to the motion to dismiss, maintaining his position that he is an employee of NCLPI.

On March 10, 2008, Labor Arbiter Concepcion issued an Order denying the Motion to Dismiss, holding that her office acquired "jurisdiction to arbitrate and/or decide the instant complaint finding extant in the case an employer-employee relationship."11

NCLPI, on June 3, 2008, elevated the case to the CA through a Petition for Certiorari under Rule 65 of the Rules of Court.12 NCLPI raised the issue on whether the Labor Arbiter committed grave abuse of discretion by denying the Motion to Dismiss and holding that her office had jurisdiction over the dispute.

The CA Decision - Locsin was a corporate officer; the issue of his removal as EVP/Treasurer is an intra-corporate dispute under the RTC’s jurisdiction.

On August 28, 2008,13 the CA reversed and set aside the Labor Arbiter’s Order denying the Motion to Dismiss and ruled that Locsin was a corporate officer.

Citing PD 902-A, the CA defined "corporate officers as those officers of a corporation who are given that character either by the Corporation Code or by the corporations’ by-laws." In this regard, the CA held:

Scrutinizing the records, We hold that petitioners successfully discharged their onus of establishing that private respondent was a corporate officer who held the position of Executive Vice-President/Treasurer as provided in the by-laws of petitioner corporation and that he held such position by virtue of election by the Board of Directors.

That private respondent is a corporate officer cannot be disputed. The position of Executive Vice-President/Treasurer is specifically included in the roster of officers provided for by the (Amended) By-Laws of petitioner corporation, his duties and responsibilities, as well as compensation as such officer are likewise set forth therein.14

Article 280 of the Labor Code, the receipt of salaries by Locsin, SSS deductions on that salary, and the element of control in the performance of work duties – indicia used by the Labor Arbiter to conclude that Locsin was a regular employee – were held inapplicable by the CA.15 The CA noted the Labor Arbiter’s failure to address the fact that the position of EVP/Treasurer is specifically enumerated as an "office" in the corporation’s by-laws.16

Further, the CA pointed out Locsin’s failure to "state any circumstance by which NCLPI engaged his services as a corporate officer that would make him an employee." The CA found, in this regard, that Locsin’s assumption and retention as EVP/Treasurer was based on his election and subsequent re-elections from 1992


















until 2005. Further, he performed only those functions that were "specifically set forth in the By-Laws or required of him by the Board of Directors.17"

With respect to the suit Locsin filed with the Labor Arbiter, the CA held that:

Private respondent, in belatedly filing this suit before the Labor Arbiter, questioned the legality of his "dismissal" but in essence, he raises the issue of whether or not the Board of Directors had the authority to remove him from the corporate office to which he was elected pursuant to the By-Laws of the petitioner corporation. Indeed, had private respondent been an ordinary employee, an election conducted by the Board of Directors would not have been necessary to remove him as Executive Vice-President/Treasurer. However, in an obvious attempt to preclude the application of settled jurisprudence that corporate officers whose position is provided in the by-laws, their election, removal or dismissal is subject to Section 5 of P.D. No. 902-A (now R.A. No. 8799), private respondent would even claim in his Position Paper, that since his responsibilities were akin to that of the company’s Executive Vice-President/Treasurer, he was "hired under the pretext that he was being ‘elected’ into said post.18 [Emphasis supplied.]

As a consequence, the CA concluded that Locsin does not have any recourse with the Labor Arbiter or the NLRC since the removal of a corporate officer, whether elected or appointed, is an intra-corporate controversy over which the NLRC has no jurisdiction.19 Instead, according to the CA, Locsin’s complaint for "illegal dismissal" should have been filed in the Regional Trial Court (RTC), pursuant to Rule 6 of the Interim Rules of Procedure Governing Intra-Corporate Controversies.20

Finally, the CA addressed Locsin’s invocation of Article 4 of the Labor Code. Dismissing the application of the provision, the CA cited Dean Cesar Villanueva of the Ateneo School of Law, as follows:

x x x the non-coverage of corporate officers from the security of tenure clause under the Constitution is now well-established principle by numerous decisions upholding such doctrine under the aegis of the 1987 Constitution in the face of contemporary decisions of the same Supreme Court likewise confirming that security of tenure covers all employees or workers including managerial employees.21

THE PETITIONER’S ARGUMENTS

Failing to obtain a reconsideration of the CA’s decision, Locsin filed the present petition on January 28, 2009, raising the following procedural and substantive issues:

(1) Whether the CA has original jurisdiction to review decision of the Labor Arbiter under Rule 65?

(2) Whether he is a regular employee of NCLPI under the definition of Article 280 of the Labor Code? and

(3) Whether Locsin’s position as Executive Vice-President/Treasurer makes him a corporate officer thereby excluding him from the coverage of the Labor Code?

Procedurally, Locsin essentially submits that NCLPI wrongfully filed a petition for certiorari before the CA, as the latter’s remedy is to proceed with the arbitration, and to appeal to the NLRC after the Labor Arbiter shall have ruled on the merits of the case. Locsin cites, in this regard, Rule V, Section 6 of the Revised Rules of the National Labor Relations Commission (NLRC Rules), which provides that a denial of a motion to dismiss by the Labor Arbiter is not subject to an appeal. Locsin also argues that even if the Labor Arbiter committed grave abuse of discretion in denying the NCLPI motion, a special civil action for certiorari, filed with the CA was not the appropriate remedy, since this was a breach of the doctrine of exhaustion of administrative remedies.

Substantively, Locsin submits that he is a regular employee of NCLPI since - as he argued before the Labor Arbiter and the CA - his relationship with the company meets the "four-fold test."

First, Locsin contends that NCLPI had the power to engage his services as EVP/Treasurer. Second, he received regular wages from NCLPI, from which his SSS and Philhealth contributions, as well as his withholding taxes were deducted. Third, NCLPI had the power to terminate his employment.22 Lastly, Nissan had control over the manner of the performance of his functions as EVP/Treasurer, as shown by the 13 years of faithful execution of his job, which he carried out in accordance with the standards and expectations set by NCLPI.23 Further, Locsin maintains that even after his election as Chairman, he essentially performed the functions of EVP/Treasurer – handling the financial and administrative operations of the Corporation – thus making him a regular employee.24

Under these claimed facts, Locsin concludes that the Labor Arbiter and the NLRC – not the RTC (as NCLPI posits) – has jurisdiction to decide the controversy. Parenthetically, Locsin clarifies that he does not dispute the validity of his election as Chairman of the Board on January 1, 2005. Instead, he theorizes that he never lost his position as EVP/Treasurer having continuously performed the functions appurtenant thereto.25 Thus, he questions his "unceremonious removal" as EVP/Treasurer during the August 5, 2005 special Board meeting.

THE RESPONDENT’S ARGUMENTS

It its April 17, 2009 Comment,26 Nissan prays for the denial of the petition for lack of merit. Nissan submits that the CA correctly ruled that the Labor Arbiter does not have jurisdiction over Locsin’s complaint for illegal dismissal. In support, Nissan maintains that Locsin is a corporate officer and not an employee. In addressing the procedural defect Locsin raised, Nissan brushes the issue aside, stating that (1) this issue was belatedly raised in the Motion for Reconsideration, and that (2) in any case, Rule VI,












Section 2(1) of the NLRC does not apply since only appealable decisions, resolutions and orders are covered under the rule.

THE COURT’S RULING

We resolve to deny the petition for lack of merit.

At the outset, we stress that there are two (2) important considerations in the final determination of this case. On the one hand, Locsin raises a procedural issue that, if proven correct, will require the Court to dismiss the instant petition for using an improper remedy. On the other hand, there is the substantive issue that will be disregarded if a strict implementation of the rules of procedure is upheld.

Prefatorily, we agree with Locsin’s submission that the NCLPI incorrectly elevated the Labor Arbiter’s denial of the Motion to Dismiss to the CA. Locsin is correct in positing that the denial of a motion to dismiss is unappealable. As a general rule, an aggrieved party’s proper recourse to the denial is to file his position paper, interpose the grounds relied upon in the motion to dismiss before the labor arbiter, and actively participate in the proceedings. Thereafter, the labor arbiter’s decision can be appealed to the NLRC, not to the CA.

As a rule, we strictly adhere to the rules of procedure and do everything we can, to the point of penalizing violators, to encourage respect for these rules. We take exception to this general rule, however, when a strict implementation of these rules would cause substantial injustice to the parties.

We see it appropriate to apply the exception to this case for the reasons discussed below; hence, we are compelled to go beyond procedure and rule on the merits of the case. In the context of this case, we see sufficient justification to rule on the employer-employee relationship issue raised by NCLPI, even though the Labor Arbiter’s interlocutory order was incorrectly brought to the CA under Rule 65.

The NLRC Rules are clear: the denial by the labor arbiter of the motion to dismiss is not appealable because the denial is merely an interlocutory order.

In Metro Drug v. Metro Drug Employees,27 we definitively stated that the denial of a motion to dismiss by a labor arbiter is not immediately appealable.28

We similarly ruled in Texon Manufacturing v. Millena,29 in Sime Darby Employees Association v. National Labor Relations Commission30 and in Westmont Pharmaceuticals v. Samaniego.31 In Texon, we specifically said:

The Order of the Labor Arbiter denying petitioners’ motion to dismiss is interlocutory. It is well-settled that a denial of a motion to dismiss a complaint is an interlocutory order and hence, cannot be appealed, until a final judgment on the merits of the case is rendered. [Emphasis supplied.]32

and indicated the appropriate recourse in Metro Drug, as follows:33

x x x The NLRC rule proscribing appeal from a denial of a motion to dismiss is similar to the general rule observed in civil procedure that an order denying a motion to dismiss is interlocutory and, hence, not appealable until final judgment or order is rendered [1 Feria and Noche, Civil Procedure Annotated 453 (2001 ed.)]. The remedy of the aggrieved party in case of denial of the motion to dismiss is to file an answer and interpose, as a defense or defenses, the ground or grounds relied upon in the motion to dismiss, proceed to trial and, in case of adverse judgment, to elevate the entire case by appeal in due course [Mendoza v. Court of Appeals, G.R. No. 81909, September 5, 1991, 201 SCRA 343]. In order to avail of the extraordinary writ of certiorari, it is incumbent upon petitioner to establish that the denial of the motion to dismiss was tainted with grave abuse of discretion. [Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals, G.R. No. 115104, October 12, 1998, 297 SCRA 602]

In so citing Feria and Noche, the Court was referring to Sec. 1 (b), Rule 41 of the Rules of Court, which specifically enumerates interlocutory orders as one of the court actions that cannot be appealed. In the same rule, as amended by A.M. No. 07-7-12-SC, the aggrieved party is allowed to file an appropriate special civil action under Rule 65. The latter rule, however, also contains limitations for its application, clearly outlined in its Section 1 which provides:

Section 1. Petition for certiorari.

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

In the labor law setting, a plain, speedy and adequate remedy is still open to the aggrieved party when a labor arbiter denies a motion to dismiss. This is Article 223 of Presidential Decree No. 442, as amended (Labor Code),34 which states:

ART. 223. APPEAL

Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:










(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; x x x [Emphasis supplied.]

Pursuant to this Article, we held in Metro Drug (citing Air Services Cooperative, et al. v. Court of Appeals35) that the NLRC is clothed with sufficient authority to correct any claimed "erroneous assumption of jurisdiction" by labor arbiters:

In Air Services Cooperative, et al. v. The Court of Appeals, et al., a case where the jurisdiction of the labor arbiter was put in issue and was assailed through a petition for certiorari, prohibition and annulment of judgment before a regional trial court, this Court had the opportunity to expound on the nature of appeal as embodied in Article 223 of the Labor Code, thus:

x x x Also, while the title of the Article 223 seems to provide only for the remedy of appeal as that term is understood in procedural law and as distinguished from the office of certiorari, nonetheless, a closer reading thereof reveals that it is not as limited as understood by the petitioners x x x.

Abuse of discretion is admittedly within the ambit of certiorari and its grant of review thereof to the NLRC indicates the lawmakers’ intention to broaden the meaning of appeal as that term is used in the Code. For this reason, petitioners cannot argue now that the NLRC is devoid of any corrective power to rectify a supposed erroneous assumption of jurisdiction by the Labor Arbiter x x x. [Air Services Cooperative, et al. v. The Court of Appeals, et al. G.R. No. 118693, 23 July 1998, 293 SCRA 101]

Since the legislature had clothed the NLRC with the appellate authority to correct a claimed "erroneous assumption of jurisdiction" on the part of the labor arbiter – a case of grave abuse of discretion - the remedy availed of by petitioner in this case is patently erroneous as recourse in this case is lodged, under the law, with the NLRC.

In Metro Drug, as in the present case, the defect imputed through the NLCPI Motion to Dismiss is the labor arbiter’s lack of jurisdiction since Locsin is alleged to be a corporate officer, not an employee. Parallelisms between the two cases is undeniable, as they are similar on the following points: (1) in Metro Drug, as in this case, the Labor Arbiter issued an Order denying the Motion to Dismiss by one of the parties; (2) the basis of the Motion to Dismiss is also the alleged lack of jurisdiction by the Labor Arbiter to settle the dispute; and (3) dissatisfied with the Order of the Labor Arbiter, the aggrieved party likewise elevated the case to the CA via Rule 65.

The similarities end there, however. Unlike in the present case, the CA denied the petition for certiorari and the subsequent Motion for Reconsideration in Metro Drug; the CA correctly found that the proper appellate mechanism was an appeal to the NLRC and not a petition for certiorari under Rule 65. In the present case, the CA took a different position despite our clear ruling in Metro Drug, and allowed, not only the use of Rule 65, but also ruled on the merits.

From this perspective, the CA clearly erred in the application of the procedural rules by disregarding the relevant provisions of the NLRC Rules, as well as the requirements for a petition for certiorari under the Rules of Court. To reiterate, the proper action of an aggrieved party faced with the labor arbiter’s denial of his motion to dismiss is to submit his position paper and raise therein the supposed lack of jurisdiction. The aggrieved party cannot immediately appeal the denial since it is an interlocutory order; the appropriate remedial recourse is the procedure outlined in Article 223 of the Labor Code, not a petition for certiorari under Rule 65.

A strict implementation of the NLRC Rules and the Rules of Court would cause injustice to the parties because the Labor Arbiter clearly has no jurisdiction over the present intra-corporate dispute.

Our ruling in Mejillano v. Lucillo36 stands for the proposition that we should strictly apply the rules of procedure. We said:

Time and again, we have ruled that procedural rules do not exist for the convenience of the litigants. Rules of Procedure exist for a purpose, and to disregard such rules in the guise of liberal construction would be to defeat such purpose. Procedural rules were established primarily to provide order to and enhance the efficiency of our judicial system. [Emphasis supplied.]

An exception to this rule is our ruling in Lazaro v. Court of Appeals 37 where we held that the strict enforcement of the rules of procedure may be relaxed in exceptionally meritorious cases:

x x x Procedural rules are not to be belittled or dismissed simply because their non-observance may have resulted in prejudice to a party's substantive rights. Like all rules, they are required to be followed except only for the most persuasive of reasons when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. The Court reiterates that rules of procedure, especially those prescribing the time within which certain acts must be done, "have oft been held as absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of business. x x x The reason for rules of this nature is because the dispatch of business by courts would be impossible, and intolerable delays would result, without rules governing practice x x x. Such rules are a necessary incident to the proper, efficient and orderly discharge of judicial functions." Indeed, in no uncertain terms, the Court held that the said rules may be relaxed only in exceptionally meritorious cases. [Emphasis supplied.]

Whether a case involves an exceptionally meritorious circumstance can be tested under the guidelines we established in Sanchez v. Court of Appeals,38 as follows:

Aside from matters of life, liberty, honor or property which would warrant the suspension of the Rules of the most mandatory character and an examination and review by the appellate court of the lower court’s findings of fact, the other elements






that should be considered are the following: (a) the existence of special or compelling circumstances, (b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced thereby. [Emphasis supplied.]

Under these standards, we hold that exceptional circumstances exist in the present case to merit the relaxation of the applicable rules of procedure.

Due to existing exceptional circumstances, the ruling on the merits that Locsin is an officer and not an employee of Nissan must take precedence over procedural considerations.

We arrived at the conclusion that we should go beyond the procedural rules and immediately take a look at the intrinsic merits of the case based on several considerations.

First, the parties have sufficiently ventilated their positions on the disputed employer-employee relationship and have, in fact, submitted the matter for the CA’s consideration.

Second, the CA correctly ruled that no employer-employee relationship exists between Locsin and Nissan.

Locsin was undeniably Chairman and President, and was elected to these positions by the Nissan board pursuant to its By-laws.39 As such, he was a corporate officer, not an employee. The CA reached this conclusion by relying on the submitted facts and on Presidential Decree 902-A, which defines corporate officers as "those officers of a corporation who are given that character either by the Corporation Code or by the corporation’s by-laws." Likewise, Section 25 of Batas Pambansa Blg. 69, or the Corporation Code of the Philippines (Corporation Code) provides that corporate officers are the president, secretary, treasurer and such other officers as may be provided for in the by-laws.

Third. Even as Executive Vice-President/Treasurer, Locsin already acted as a corporate officer because the position of Executive Vice-President/Treasurer is provided for in Nissan’s By-Laws. Article IV, Section 4 of these By-Laws specifically provides for this position, as follows:

ARTICLE IVOfficers

Section 1. Election and Appointment – The Board of Directors at their first meeting, annually thereafter, shall elect as officers of the Corporation a Chairman of the Board, a President, an Executive Vice-President/Treasurer, a Vice-President/General Manager and a Corporate Secretary. The other Senior Operating Officers of the

Corporation shall be appointed by the Board upon the recommendation of the President.

x x x x

Section 4. Executive Vice-President/Treasurer – The Executive Vice-President/Treasurer shall have such powers and perform such duties as are prescribed by these By-Laws, and as may be required of him by the Board of Directors. As the concurrent Treasurer of the Corporation, he shall have the charge of the funds, securities, receipts, and disbursements of the Corporation. He shall deposit, or cause to be deposited, the credit of the Corporation in such banks or trust companies, or with such banks of other depositories, as the Board of Directors may from time to time designate. He shall tender to the President or to the Board of Directors whenever required an account of the financial condition of the corporation and of all his transactions as Treasurer. As soon as practicable after the close of each fiscal year, he shall make and submit to the Board of Directors a like report of such fiscal year. He shall keep correct books of account of all the business and transactions of the Corporation.

In Okol v. Slimmers World International,40 citing Tabang v. National Labor Relations Commission,41 we held that –

x x x an "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee. [Emphasis supplied.]

In this case, Locsin was elected by the NCLPI Board, in accordance with the Amended By-Laws of the corporation. The following factual determination by the CA is elucidating:

More important, private respondent failed to state any such "circumstance" by which the petitioner corporation "engaged his services" as corporate officer that would make him an employee. In the first place, the Vice-President/Treasurer was elected on an annual basis as provided in the By-Laws, and no duties and responsibilities were stated by private respondent which he discharged while occupying said position other than those specifically set forth in the By-Laws or required of him by the Board of Directors. The unrebutted fact remains that private respondent held the position of Executive Vice-President/Treasurer of petitioner corporation, a position provided for in the latter’s by-laws, by virtue of election by the Board of Directors, and has functioned as such Executive Vice-President/Treasurer pursuant to the provisions of the said By-Laws. Private respondent knew very well that he was simply not re-elected to the said position during the August 5, 2005 board meeting, but he had objected to the election of a new set of officers held at the time upon the advice of his lawyer that he cannot be "terminated" or replaced as Executive Vice-President/Treasurer as he had attained tenurial security.42






We fully agree with this factual determination which we find to be sufficiently supported by evidence. We likewise rule, based on law and established jurisprudence, that Locsin, at the time of his severance from NCLPI, was the latter’s corporate officer.

a. The Question of Jurisdiction

Given Locsin’s status as a corporate officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with Nissan. As we also held in Okol, a corporate officer’s dismissal from service is an intra-corporate dispute:

In a number of cases [Estrada v. National Labor Relations Commission, G.R. No. 106722, 4 October 1996, 262 SCRA 709; Lozon v. National Labor Relations Commission, 310 Phil. 1 (1995); Espino v. National Labor Relations Commission, 310 Phil. 61 (1995); Fortune Cement Corporation v. National Labor Relations Commission, G.R. No. 79762, 24 January 1991, 193 SCRA 258], we have held that a corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation.43 [Emphasis supplied.]

so that the RTC should exercise jurisdiction based on the following legal reasoning:

Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC):

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

x x x x

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SEC’s jurisdiction over all cases listed in Section 5 of PD 902-A:

5.2. The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court. [Emphasis supplied.]

b. Precedence of Substantive Merits; Primacy of Element of Jurisdiction

Based on the above jurisdictional considerations, we would be forced to remand the case to the Labor Arbiter for further proceedings if we were to dismiss the petition outright due to the wrongful use of Rule 65.44 We cannot close our eyes, however, to the factual and legal reality, established by evidence already on record, that Locsin is a corporate officer whose termination of relationship is outside a labor arbiter’s jurisdiction to rule upon.

Under these circumstances, we have to give precedence to the merits of the case, and primacy to the element of jurisdiction. Jurisdiction is the power to hear and rule on a case and is the threshold element that must exist before any quasi-judicial officer can act. In the context of the present case, the Labor Arbiter does not have jurisdiction over the termination dispute Locsin brought, and should not be allowed to continue to act on the case after the absence of jurisdiction has become obvious, based on the records and the law. In more practical terms, a contrary ruling will only cause substantial delay and inconvenience as well as unnecessary expenses, to the point of injustice, to the parties. This conclusion, of course, does not go into the merits of termination of relationship and is without prejudice to the filing of an intra-corporate dispute on this point before the appropriate RTC.

WHEREFORE, we DISMISS the petitioner’s petition for review on certiorari, and AFFIRM the Decision of the Court of Appeals, in CA-G.R. SP No. 103720, promulgated on August 28, 2008, as well as its Resolution of December 9, 2008, which reversed and set aside the March 10, 2008 Order of Labor Arbiter Concepcion in NLRC NCR Case No. 00-06-06165-07. This Decision is without prejudice to petitioner Locsin’s available recourse for relief through the appropriate remedy in the proper forum.

No pronouncement as to costs.

SO ORDERED.




G.R. No. 147874 July 17, 2006

DOLORES GAYOSO, DANNY GAYOSO, ELIZABETH G. DONDRIANO, VICTORIANO GAYOSO, CHRISTOPHER GAYOSO, REMEDIOS GAYOSO and THE HEIRS OF VICTORIANO GAYOSO, petitioners, vs.TWENTY-TWO REALTY DEVELOPMENT CORPORATION, respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals dated April 20, 2001 in CA-G.R. SP No. 48001.

This case stemmed from a Complaint for Ejectment filed by Twenty-Two Realty Development Corporation (TTRDC), respondent, on December 12, 1996 with the Metropolitan Trial Court (MeTC), Branch 60, Mandaluyong City against the above-named petitioners. The complaint, docketed as Civil Case No. 15340, alleges that on October 11, 1954, Victoriano Gayoso (now deceased) sold to Prospero Almeda a lot located on Mariveles corner Calbayog Streets, Mandaluyong City. After the sale, Almeda allowed Gayoso and his children, herein petitioners, to stay on the property as lessees, paying P20.00 a month. Later, Almeda's heirs sold the lot to respondent TTRDC. Thus, on February 19, 1996, the title to the property was transferred in the name of respondent corporation.

However, petitioners have stopped paying rentals. Respondent then sent letters dated September 12 and October 17, 1996 to petitioners demanding that they vacate the premises, but they refused to do so. This prompted respondent to file with the MeTC a complaint for illegal detainer against them.

In their answer, petitioners denied specifically TTRDC's allegations in its complaint. They claimed that the MeTC has no jurisdiction over the case since in their answer they are raising an issue of ownership. They alleged that their father, the late Victoriano Gayoso, sold the lot (a conjugal property) to Almeda without the consent of their mother. The sale, being void, Almeda could not have transferred ownership of the lot to respondent corporation.

On July 21, 1997, the MeTC rendered its Decision, the dispositive portion of which reads:

WHEREFORE, the Court renders judgment:

A. Ordering the defendants

1. and all other persons claiming rights under them to vacate the premises located at Mariveles corner Calbayog Streets, Mandaluyong City, and to surrender the possession of the same to the plaintiff;

2. to pay the plaintiff the amount of P4,000.00 representing their unpaid rentals beginning February 1981 to December 1996 and the amount of P20.00 per month every month thereafter until the premises shall have been vacated;

3. to pay the plaintiff the amount of P10,000.00 as and by way of attorney's fees; and

4. to pay the costs of suit.

B. dismissing the counterclaim.

SO ORDERED.

The MeTC ruled that since petitioners failed to pay rentals for more than three months, then respondent has the right to evict them from the premises.

On appeal, the Regional Trial Court (RTC), Branch 213, Mandaluyong City, affirmed the MeTC Decision, holding that the refusal of petitioners to vacate the property and pay the rents make out a clear case of unlawful detainer over which the MeTC has jurisdiction.

Petitioners then filed with the Court of Appeals a Petition for Review under Rule 42 of the 1997 Rules of Civil Procedure, as amended.

In its Decision dated April 20, 2001, the Court of Appeals affirmed in toto the RTC Decision, thus:

WHEREFORE, the petition is hereby DISMISSED. The decision of the Regional Trial Court affirming the decision of the Metropolitan Trial Court, National Capital Judicial Region, Mandaluyong City, Branch 60, is hereby AFFIRMED IN TOTO.

SO ORDERED.

Hence, the instant petition.



Petitioners contend that since the issue of ownership of the property in dispute is inextricably linked with the issue of possession, the MeTC has no jurisdiction over Civil Case No. 15340.

For its part, respondent maintains that the real issue is who between the parties is entitled to possession. Hence, the MeTC has jurisdiction to hear and decide the case.

We find for the respondent.

It is basic that a court's jurisdiction is provided by law. Section 33 of Batas Pambansa Blg. 129, as amended, provides in part:

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

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in such cases, the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the question of ownership, the issue of ownership shall be resolved only to determine the issue of possession; (Emphasis supplied)

Moreover, Section 18, Rule 70 of the 1997 Rules of Civil Procedure, as amended, states that:

SEC. 18. Judgment conclusive only on possession, not conclusive in actions involving title or ownership. –The judgment rendered in an action for forcible entry or detainer shall be conclusive with respect to the possession only and shall in no wise bind the title or affect the ownership of the land or building. Such judgment shall not bar an action between the same parties respecting title to the land or building.

The judgment or final order shall be appealable to the appropriate Regional Trial Court which shall decide the same on the basis of the entire record of the proceedings had in the court of origin and such memoranda and/or briefs as may be submitted by the parties or required by the Regional Trial Court.

In Barba vs. Court of Appeals,2 this Court held:

The Court has repeatedly emphasized that municipal trial courts, metropolitan trial courts, and municipal circuit trial courts now retain jurisdiction over ejectment cases if the question of possession cannot be

resolved without passing upon the issue of ownership. In forcible entry and unlawful detainer cases, even if the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, inferior courts, nonetheless, have the undoubted competence to provisionally resolve the issue of ownership for the sole purpose of determining the issue of possession. Such decision, however, does not bind the title or affect the ownership of the land or building, neither shall it bar an action between the same parties respecting title to the land or building nor be held conclusive of the facts therein found in a case between the same parties upon a different cause of action involving possession.

Likewise, in Tala Realty Services Corporation vs. Banco Filipino Savings and Mortgage Bank,3 this Court ruled:

All ejectment cases are covered by the Rule on Summary Procedure and are within the jurisdiction of the inferior courts regardless of whether they involve questions of ownership. The courts in ejectment cases may determine questions of ownership whenever necessary to decide the question of possession.

Verily, we hold that the Court of Appeals did not err in holding that the MeTC of Mandaluyong City has jurisdiction to hear and decide Civil Case No. 15340, notwithstanding the issue of ownership raised by petitioners in their answer.

WHEREFORE, we DENY the petition. The Decision of the Court of Appeals dated April 20, 2001 in CA-G.R. SP No. 48001 is AFFIRMED. Costs against petitioners.

SO ORDERED.



Civpro Session 2

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Transcript of Civpro Session 2