Sunday, November 14, 2010 11:07 PM Remedial Law Review University of the Philipp

ines College of Law Second Semester Yr 2010-2011 Prof. TJ Herbosa Jurisdiction S

ubject matter jurisdiction Allegations of complaint determine jurisdiction Haseg
awa et al v. Kitamura GR 149177 Nov 23, 2007 Jurisdiction by estoppel Figueroa v
. People, GR 147407, Jul 14, 2008; Payment of filing fees - Ruby Shelter v. Hon.
Formaran GR 174914 Feb 10, 2009 Distinguished from venue Chavez v. CA GR 125813
Feb 6, 2007 Doctrine of non-interference Springfield v. RTC Judge GR 142626 Feb
6, 2007 Primary jurisdiction Sta. Ana v. Carpo GR 164340 Nov 28, 2008 Supreme C
ourt Philippine Constitution, Article VIII Power of judicial review Garcillano v
. House GR 170338 Dec 23, 2008 Doctrine of stare decisis Lazatin v. Desierto GR
147097 June 5, 2009 Hierarchy of courts Ferdinand Cruz v. Priscilla Mijares et a
l GR 154404 Sep 11, 2008; First United v. Poro Point GR 178799 Jan 19, 2009 Appe
llate jurisdiction First Lepanto Ceramics, Inc. v. CA, GR 110571, Mar 10, 1994 S
C Power of administrative supervision Sarah Ampong v. CSC GR 167916 Aug 26, 2008
Court of Appeals BP 129, as amended by RA 7902, Sec. 9 and RA 8246 Question of l
aw , fact or both CGP Transport v. PU Leasing GR 164547 Mar 28, 2007
Court of Tax Appeals RA 9282
Sandiganbayan RA 8249 Regional Trial Courts BP 129, as amended by RA 7691, Sec.
5 Incapable of pecuniary estimation - Bokingco v. CA, GR No. 161739, May 4, 2006
; RCP v. CA GR 136109 Aug 1, 2002; Recovery of possession Honorio Bernardo v. He
irs of Eusebio Villegas GR 183357 Mar 15, 2010; Encarnacion v. Amigo, GR No. 169
793 Sep 15, 2006 Issue of constitutionality Planters Products v. Fertiphil GR 16
6006 Mar 14, 2008 Quasi judicial agency Badillo v. CA GR 131903 June 26, 2008 CI
AC Fort Bonifacio v Domingo GR 180768 Feb 27, 2009 RTC acting as Special Agraria
n Court Land Bank v. Ralla Balista GR 164631 Jun 26, 2009 Default jurisdiction M
un of Pateros v. CA GR 157714 Jun 16, 2009 HLURB Tricorp v. CA GR 165742 Jun 30,
2009;Ma. Luisa Dazon v. Kenneth Yap and People Jan 15, 2010 Family Courts Sec 5
, RA 8369 Family Courts Act of 1997 A.M. No. 02-11-10-SC Rules on Declaration of
Absolute Nullity of Void Marriages and Annulment of Voidable Marriages A.M. No.
02-11-11 Rule on Legal Separation A.M. No. 02-11-12 Rule on Provisional Orders
A.M. No. 03-04-04-SC Rule on Custody of Minors and Writ of Habeas Corpus in Rela
tion to Custody of Minors A.M. No. 03-02-05-SC Rule on Guardianship of Minors A.
M. No. 02-6-02-SC Rule on Adoption
REMLAW Page 1

A.M. No. 02-6-02-SC Rule on Adoption Summary Proceedings under the Family Code,
Title XI, Chapters 1 to 3 on separation in fact between husband and wife or aban
donment by one of the other and incidents involving parental authority; Chapter
4 on Art. 41 (declaration of a spouse as presumptively dead), Art. 51(action of
a child for presumptive legitime), Art. 69 (judicial declaration of family domic
ile in case of disagreement of the spouses), Art. 73 (spouses objection to the pr
ofession of the other spouse), Arts. 96 and 124 (annulment of husbands decision i
n the administration and enjoyment of community or conjugal property; appointmen
t of spouse as sole administrator except cases of incompetent other spouse which s
hall be under Rules 93 and 95) and Art. 217 (entrusting children to homes and or
phanages). Madrinan v. Madrinan GR 159374 Jul 12, 2007 Yu v Yu GR 164915 Mar 10,
2006
Commercial Courts Sec. 5.2, RA 8799 A.M. No. 01-2-04-SC Interim Rules of Procedu
re Governing Intra-corporate Controversies A.M. 00-8-10-SC Interim Rules of Proc
edure on Corporate Rehabilitation (note FRIA) Oscar Reyes v. RTC Makati GR 16574
4 Aug 11, 2008
Metropolitan Trial Courts, Municipal Trial Courts/Circuit Trial Courts BP 129, a
s amended by RA 7691, Secs. 2 to 4 Unlawful detainer v. agrarian dispute Sps Faj
ardo v. Anita Flores GR 167891 Jan 15, 2010 Recovery of possession Vda De Barrer
a et al v. Heirs of Vicente Legaspi GR 174346 Sept 12, 2008; Ouano v. PGTT Gr No
. 134230 July 7, 2002;
Barangay Lupon RA 7160 (Local Government Code of 1991) Secs 399-422 Substantial
compliance Leo Wee v. George de Castro et al GR 1764095 Aug 20, 2008; Aquino v.
Aure, GR 153567 Feb 18, 2008 CIVIL PROCEDURE Ordinary Civil Actions Rules 1 to 3
9 Rule 1 General Provisions of the Rules of Court Liberal application Makati Ins
. V. Reyes et al GR 167403 Aug 6, 2008; Rural Bank of Seven Lakes v. Dan GR 1741
09 Dec 24, 2008;
Rule 2 Cause of Action Elements of a cause of action - Ceroferr v. CA 376 SCRA 1
44; Camarines Sur Electric v. Aquino GR 167691 Sep 23, 2008 Sufficiency of alleg
ations Vinzons-Chato v. Fortune GR 141309 Dec 23, 2008 Splitting a cause of actio
n BPI Family v. De Coscuella, GR No. 167724, Jun 27, 2006 Joinder of causes of a
ction UCPB v. Sps. Beluso GR 159912 Aug 17, 2007 Rule 3 Parties to Civil Actions
Real party in interest Carlos v. Sandoval GR 179922 Dec 16, 2008; Estreller v.
Ysmael GR 170264 Mar 13, 2009 Indispensable parties Robert De Galicia v. Mercado
, GR No. 146744, Mar 6, 2006; Lagunilla v. Velasco GR 169276 Jun 16, 2009; Josep
hine Marmo v Moises Anacay GR 182585 Nov 27 2009; Leonis Navigation v Catalina V
illamater GR 179169 Mar 3, 2010 Necessary parties Relucio v. Lopez 373 SCRA 578;
AutoCorp v. Intra Strata GR 166662 Jun 27, 2008 Capacity to sue and be sued - V
an ZuiDen v. GTVL Manufacturing 523 SCRA 233; Deutsche v CA GR 152318 Apr 16, 20
09 Misjoinder/non-joinder of parties Chua v. Torres GR 151900 Aug 30, 2005; Anic
ia Valdez Tallorin v Heirs of Juanito Tarona GR 177429 Nov 24, 2009; Littie Sara
h Agdeppa v Heirs of Ignacio Bonete GR 164436 Jan 15 2010 Successors in interest
Sui Man Hui Chan v. CA, GR 147999, Feb 27, 2004 Substitute parties Carandang vs
. Heirs of De Guzman GR 160347 Nov. 29, 2006; Judge Sumaljag v. Literato GR 1497
87 Jun 18, 2008; Domingo v Landicho GR 170015 Aug 29, 2007; Napere v. Barbarona
GR 160426 Jan 31, 2008 Indigent parties Sps Algura v. LGU GR 150135 Oct 30, 2006
REMLAW Page 2

Indigent parties Sps Algura v. LGU GR 150135 Oct 30, 2006 Rule 4 Venue of Action
s Personal action Uniwide v. Cruz GR 171456 Aug 9, 2007 Real Action Infante v. A
ran Builders, GR 156594 Aug 24, 2007; HiYield v. CA GR 168863 Jun 23, 2009 Princ
ipal party ; when to object Irene Marcos-Araneta v. CA GR 154096 Aug 22, 2008 St
ipulated venue not exclusive - Philbanking v. Tensuan, 230 SCRA 413; Spouses Lan
tin v. Judge Lantion, GR No. 160053, Aug 28, 2006 Rule 5 Uniform Procedure in Tr
ial Courts Revised Rules on Summary Procedure Summary procedure Estate of Macada
ngdang v Gaviola GR 156809 Mar 4, 2009; Angelina Soriente v Estate pf Arsenio Co
ncepcion GR 160239 Nov 25 2009; Sps Edillo v Sps Dulpina GR 188360 Jan 21 2010
Rule 6 Kinds of Pleadings Answer Rosete v. Lim, GR No. 136051, Jun 8, 2006 Compu
lsory counterclaim Financial Builders. V. FPA 338 SCRA 346; Reillo v. San Jose G
R 166393 Jun 18, 2009 Permissive counterclaim Banco de Oro v. CA GR 160354 Aug 2
5, 2005; Dec 19, 2007 Third party complaint Asian Construction v. CA 458 SCRA 75
0; Sy Tiong Shion v Sy Chin GR 174168/179438 Mar 30, 2009 Cross-claim Torres v.
CA 49 SCRA 67
Rule 7 Parts of a Pleading Sufficient in form/substance Sps Munsalado v. NHA GR
167181 Dec 23, 2008 Signature of counsel Republic v. Kenrich Dev. Do., GR No. 14
9576, August 8, 2006 Verification/Certification Madara v. Porillo GR 172449 Aug
20, 2008; Kaunlaran v. Uy GR 154974, Feb 4, 2008; Sps Valmonte v. Alcala GR 1686
67 Jul 23, 2008 Who can sign w/o sec cert Mid-Pasig Land v Mario Tablante GR 162
924 Feb 4, 2010 Rule 8 Manner of Making Allegations in Pleadings Ultimate facts
Far East Marble v. CA GR 94093 Aug 10, 1993 Specific denial under oath Filipinas
Textile v. CA 415 SCRA 635 No knowledge Warner Barnes v. Reyes 103 Phil 602 Mod
es of specific denial Gaza et al v. Lim GR 126863 Jan 16, 2003; Actionable docum
ent Casent Realty v. Philbanking GR 150731 Sep 14, 2007; Malayan v. Regis Broker
age GR 172156 Nov 23, 2007 Rule 9 Effect of Failure to Plead No default motu pro
prio Santos v PNOC GR 170943 Sep 23, 2008 Failure to appear Monzon v. Sps Relova
GR 171827 Sep 17, 2008 Remedies of party declared in default Gomez v. Montalban
GR 174414 Mar 14, 2008 Default judgment Gajudo v. Traders Royal GR 151098, Mar
21, 2006
Rule 10 Amended and Supplemental Pleadings Substantial amendment - PPA v. Gothon
g and Aboitiz GR 158401 Jan 28, 2008 When amendments allowed - Quirao v. Quirao
414 SCRA 430; Bautista v. Maya-Maya Cottages, GR 148361, Nov 29, 2005; Marcos -A
raneta et al v. CA GR 154096 Aug 22, 2008 Conform to evidence Cagungun v. Plante
rs Dev Bank GR 158674 Oct 17, 2005
Rule 11 When to File Responsive Pleading Saturday, Sunday or legal holiday - Ala
rilla v. Ocampo 417 SCRA 601 Rule 12 Bill of Particulars When a complaint is vag
ue Bantillo v. IAC, GR No 75311, Oct. 18, 1988; Republic v. SB and Marcos, GR 14
8154, Dec 17, 2007 Rule 13 Filing and Service of Pleadings, Judgments and Other
Paper Personal filing and service Maceda, et al. v. Macatangay, GR 164947, Jan 3
1, 2006 Service by registered mail - Andy Quelnan v. VHF Phil GR 138500, Sep16,
2005; Marcelino Domingo v CA GR 169122 Feb 2 2010; Sps Belen v. Hon. Chavez, GR
175334, Mar 26, 2008 Service upon counsel GCP Many Transport v. Principe GR 1414
84, Nov 11, 2005 Notice of lis pendens Sps Vicente v. Avera GR 169970 Jun 20, 20
09
Rule 14 Summons REMLAW Page 3

Rule 14 Summons Kinds of actions - Gomez v. CA GR 127692 March 10, 2004; San Ped
ro v. Ong GR 17758 Oct 17, 2008; Personal vs. substituted service of summons - G
uiguinto Credit Coop v. Torres, GR No. 170926, Sep 15, 2006; Guanzon v Arrandoza
Dec 6, 2006 GR 155392; Potenciano v. Barnes GR 159421 Aug 20, 2008 Substituted
service Clarita Garcia v SB and Republic GR 170122 Oct 12, 2009 Extraterritorial
service Montefalcon et al v. Vasquez GR 165016 Jun 17, 2008; Elmer v. Dakila Tr
ading GR 172242 Aug 14, 2007; Temporarily out PCIB v Alejando GR 175587 Sep 21,
2007; Sps Torres v. Amparo Medina GR166730 Maar 10 2010 Domestic juridical entit
y BPI v. Spouses Santiago Mar 28, 2007; Paramount v. Ordonez GR 175109, Aug 6, 2
008 Substantial compliance - Mason v. CA 413 SCRA 303; Millenium v. Tan GR 13172
4 Feb 28, 2000
Rule 15 Motions Notice of hearing - KKK Foundation Inc. v. Hon. Bargas, et al GR
163785 Dec 27, 2007; Camarines Corp v. Aquino GR 167691 Sept 23, 2008; Motion f
or extension Sarmiento v. Zaratan Feb 5, 2007 Proof of service Romulo et al v. P
eralta, GR 165665 Jan 31, 2007
Rule 16 Motion to Dismiss Jurisdiction over subject matter DAR v. Hon. Abdulwahi
d GR 163285 Feb 27, 2008 Jurisdiction over person Republic v. Glasgow GR 170281,
Jan 18, 2008 Failure to state a cause of action - Equitable PCIB v. CA GR 14355
6 Mar 16, 2004; Goodyear Phil v. Sy GR 154554 Nov 9, 2005; Aldemita v. Heirs of
Silva Nov 2, 2006; PDI v. Alameda GR 160604 Mar 28, 2008; Heirs of Maramag v. Ma
ramag GR 181132 Jun 5, 2009 Lack of cause of action - Rural Bank of Calinog v. C
A GR 146519, Jul 8, 2005; Bayot v. CA GR 155635 Nov 7, 2008 Litis pendentia - Mi
d Pasig Land Dev v. CA 413 SCRA 204; Intramuros Administration v. Contacto 402 S
CRA 581 Res judicata Francisco v. Roque GR 151339 Jan 31, 2006; Cruz v. CA GR 16
4797 Feb 13, 2006 Prescription Heirs of Dolleton v. Fil-estate GR 170750 Apr 7,
2009; Lasquite v Victory Hills GR 175375 Jun 23, 2009; Paid, waived, etc. Doa Ros
ana Realty v. Molave Dev Corp GR 180523 Mar 26, 2010 Forum Non Conveniens Raythe
on Intl v. Rouzie GR 162894 Feb 26, 2008 Denial of, unappealable Malicdem v. Flor
es Sep 8, 2006; PNB v Estate of De Guzman et al GR 182507 Jun 16, 2010 Rule 17 D
ismissal of Actions Grounds Pinga v. Santiago, GR No. 170354, Jun 30, 2006 Failu
re to prosecute Filinvest v. CA GR 142439 Dec 6, 2006; RN Dev v. A.I.I GR 166104
Jun 26, 2008; Dismissal without prejudice Heirs of Gaudiane v. CA, GR 119879, M
arch 11, 2004; Cruz v. CA GR 164797 Feb 13, 2006 Notice of dismissal prevails ov
er motion to dismiss Dael v. Sps Beltran GR 156470 Apr 30, 2008 Counterclaim Men
doza v. Paule GR 175885 Feb 31, 2009 Effect Benedicto v. Lacson GR 141508 May 5,
2010 Rule 18 Pre-Trial AM No. 03-1-09-SC Rule on Guidelines to be Observed by T
rial Court Judges and Clerks of Court in the Conduct of Pre-Trial and Use of Dep
osition-Discovery Measures Effect of failure to appear - Saguid v. CA 403 SCRA 6
78; Jazmin Espiritu v. Vladimir Lazaro, GR 181020, Nov 25, 2009 Admissions at pr
e-trial - Biesterbos v. CA 411 SCRA 396 Other pre-trial requirements - Advance T
extile Mills v. Tan GR 154040 Jul 28, 2005; Anatalia Ramos v. Dominga Dizon, GR
No. 137247, Aug. 7, 2006
Rule 19 Intervention Requirements - Nordic Asia v. CA 403 SCRA 390 When to inter
vene - Salandanan v Sps Mendoza GR 160280 (2009) Who may intervene GSIS v Nocom
GR 175989 Feb 4, 2008; Asias Emerging Dragon v DOTC GR 169914; Rep v CA GR 174166
Mar 24, 2008; Office of Ombudsman v. Maximo D. Sison GR 185954 Feb 16, 2010
REMLAW Page 4

Rule 20 Calendar of Cases Rule 21 Subpoena Macaspac v. Flores AM No. P-05-2072 A

ug 13, 2008; Re Subpoena of Dir Amante AM No. 10-1-13-SC Mar 2, 2010 Rule 22 Com
putati on of Time Filing on the last day - De Las Alas v. CA 83 SCRA 200 Rule 23
Depositions Pending Action DFA Guidelines in Taking Depositions before Philippi
ne Consular Officers Abroad Purpose of rules of discovery Republic v. Sandiganba
yan, 204 SCRA 212. Manner of taking Pfeger Dulay v Dulay, GR 158857 Nov 11, 2005
Admissibility Jowel Sales v. Sabino GR 133154 Dec 9, 2005 Sec 4- San Luis v. Ro
jas GR 159127 Mar 3, 2008; Dasmarinas v. Reyes, 225 SCRA 622 Deposition (oral ex
amination) in criminal cases Rosete v. Lim GR 136051 June 8, 2006
Rule 24 Depositions Before Action or Pending Appeal Availability of deponent as
a witness - Hyatt Industrial v. Ley Construction, GR No. 147143, Mar 10, 2006
Rule 25 Interrogatories to Parties Rule 26 Admissions by Adverse Party Purpose D
BP v. CA GR 153034 Sep 20, 2005 Period to answer a request for admission- Po v.
CA 164 SCRA 668 To whom served - Briboneria v. CA 216 SCRA 616 Effect of non-com
pliance Limos et al v Sps Odones GR 186979 Aug 11, 2010 Rule 27 Production or In
spection of Documents or Things Solidbank v. Gateway GR 164805 Apr 30, 2008 Rule
28 Physical and Mental Exami nation of Persons See RA 8054 Sec 17 [a] Rule 29 R
efusal to Comply with Modes of Discovery Rule 30 Trial When trial can be dispens
ed with - Republic v. Vda De Neri GR 139588 Mar 4, 2004 Absence of a party Spous
es Calo v. Spouses Tan, GR 151266 Nov 29, 2005 Rule 31 Consolidation or Severanc
e Requisites of consolidation - Republic v. CA 403 SCRA 403 What actions can be
consolidated - Teston v. DBP GR 144374 Nov 11, 2005; Gregorio Espinoza v. UOB, G
R 175380, Mar 22, 2010 Rule 32 Trial by Commissioner When proper Manotok Realty
v. CLT Realty GR 123346 Nov 29, 2005
Rule 33 Demurrer to Evi dence Effects of filing a demurrer - Radiowealth Finance
Co v. Sps Del Rosario GR 138739 Jul 6, 2000; Heirs of Santiago v. Heirs of Palm
a GR 160832 Oct 27, 2006 What evidence Casent Realty v. Philbanking GR 150731 Se
p 14, 2007 Rule 34 Judgment on the Pleadings Sham or specific denials - Manufact
urers Bank v. Diversified 173 SCRA 357; Tan v. De La Vega, GR No. 168809, Mar 10,
2006 Fails to tender an issue Pesane Animas Monzao v. Pryce Properties GR 15647
4 Aug 16, 2005; Sps Ong v. Roban Lending GR 172592 Jul 9, 2008; Reillo v San Jos
e GR 166393 Jun 18, 2009 Who files Doris Sunbanun v. Aurora Go GR 163280 Feb 2,
2010 Rule 35 Summary Judgments Distinguish from Rule 34 Nocom v. Camerino GR 182
984 Feb 10, 2009 Genuine issues of fact Evangelista v. Mercator Finance 409 SCRA
410; Bitanga v. Pyramid GR 173526 Aug 28, 2008; Phil Countryside v Toring GR 15
7862 Apr 16, 2009; BPI v. Sps. Yu GR 184122 Jan 20, 201; Eland Phil v Garcia GR
173289 Feb 17, 2010 Partial summary judgment - Monterey Foods Corp v. Eserjose 4
10 SCRA 627; Asian Construction v. PCI Bank, GR No. 153827, Aug 25, 2006; Jose F
eliciano Loy v. SMC GR REMLAW Page 5

Construction v. PCI Bank, GR No. 153827, Aug 25, 2006; Jose Feliciano Loy v. SMC
GR 164886 Nov 24, 2009 Not applicable Carlos v. Sandoval GR 179922 Dec 16, 2008
Rule 36 Judgments, Final Orders and Entry Thereof Form of judgment Velarde v. S
JS GR 159357 Apr 28, 2004 Several and separate judgments - Miranda v. CA 71 SCRA
295; De Leon v. CA GR 138884 June 6, 2002; Republic v. Nolasco 457 SCRA 400 Dis
positive portion Obra v. Badua et al GR 149125 Aug 9, 2007
Rule 37 New Trial or Reconsideration Second MR not allowed Sps Balanoba v. Madri
aga GR 160109 Nov 22, 2005 Requisities of MNT Bernaldez v. Francia, 398 SCRA 488
; Capuz v. CA 233 SCRA 471 Intrinsic fraud v. extrinsic fraud Libudan v. Gil 45
SCRA 17 Period to file Delos Santos v. Elizalde Feb 2, 2007
Rule 38 Relief from Judgments, Orders, or Other Proceedings Propriety of relief
from judgment Spouses Que v. CA GR 150739 Aug 18, 2005; Monzon v. Sps Relova GR
171827 Sep 17, 2008 Petition for relief before the MTC - Sps Mesina v. Meer GR 1
46845 Jul 2, 2002 Excusable negligence - Land Bank v. Natividad 458 SCRA 441; Go
mez v. Montalban GR 174414 Mar 14, 2008 CA Redena v. CA Feb 6, 2007 Who may file
De La Cruz v. Quiazon GR 171961 Nov 28, 2008
Rule 39 Execution, Satisfaction and Effect of Judgments Immutability of final ju
dgment Roman Catholic Archbishop v. Heir of Manuel Abella GR 143510 Nov 23, 2005
; Session Delights Ice Cream v. CA, GR 172149, Feb 8, 2010 Res Judicata Heirs of
Igmedio Maglaque v. CA 524 SCRA 234; PCGG et al v. SB and Officers GR 124772 Au
g 14, 2007; DBP v La Campana GR 137694 Jan 17, 2005 Conclusiveness of judgment Cayana v. CA GR 125607 18 Mar 2004; Republic of the Phil v. Ramon Yu GR 157557
March 10, 2006 Execution pending appeal - Stronghold Ins. V. Felix GR 148090 Nov
28, 2006; JP Latex v. Hon. De Leon GR 177121 Mar 16, 2009; Archinet Intl v Becc
o GR 183753 Jun 19, 2009; Rosario T. Florendo vs. Paramount Ins. Co. GR 167976 J
an. 20, 2010 By motion/independent action Yau v. Silverio Feb 4, 2008 GR 158848/
171994 Money judgment Jerome Solco v. Provido Feb 11, 2008 GR 176533 Redemption p
eriod - Hi Yield Realty Inc v. CA GR 138978 Sept 12, 2002 Exempt from execution
Honrado v. CA GR 166333 Nov 25, 2005 Garnishment Cardinal v. Asset GR 149696 She
riffs duties-Benjamin Sanga vs. Florencio Alcantara AMO-09-2657 Jan. 25, 2010; Do
mingo Pea vs. Achilles Regalado AM P-10-2772 Feb. 16, 2010 Third party claimant F
ermin v. Hon Estevez GR 147977 Mar 26, 2008 Foreign judgment Republic v. Gingoyo
n GR 166429 Feb 1, 2006; Mijares, et al V. Hon. Judge GR 139325 , 455 SCRA; 2008
Quasha vs. CA GR 182013 Dec. 4, 2009 Supervening event Republic v. Antonio et a
l GR 166866 Mar 27, 2008 Appeals In General Payment of docket fee Camposagrado v
. Camposagrado GR 143195 Sept 13, 2005 No appeal period - Republic v. Bermudez-L
orino, GR No. 160258, Jan 19, 2005 Mode of appeal from special courts - Land Ban
k of the Philippines v. De Leon 399 SCRA 376 Appeal from amended judgment De Grano
v. Lacaba GR 158877 Jun 16, 2009
Rule 40 Appeal from Municipal Trial Courts to the Regional Trial Courts Non-paym
ent of appeal fee - Badillo v. Tayag GR 143976 Apr 3, 2003 AM No. 07-7-12-SC Ame
ndments to Rules 41, 45, 58 and 65 Dec 27, 2007 Filing of appeal memo Estate of
Macadangdang v. Gaviola GR 156809 Mar 4, 2009 Sec 7 (b) Mejillano v. Lucillo GR
154717 Jun 19, 2009 Rule 41 Appeal from RTC Sec 1 Simeon Valdez v. Financiera Ma
nila, GR 183387, Sept 29, 2009; Palma v Galvez GR 165273 Mar 10, 2010 Period of
time to appeal - Neypes v. CA GR 141524 Sep 14, 2005; First Aqua Sugar v. BPI
REMLAW Page 6

Period of time to appeal - Neypes v. CA GR 141524 Sep 14, 2005; First Aqua Sugar
v. BPI Feb 5, 2007 Appeal from dismissal - Philexport v. Phil Infrastructures G
R 120384 Jan 13, 2004; Lullete S Ko v. PNB GR 169131-32 Jan 20, 2006 Period to a
ppeal - Eda v. CA, GR No. 155251, Dec 8, 2004 Presence of grave abuse Benedicta
Samson v. Hon. Judge Macaraig, GR 166356, Feb 2, 2010 Record on appeal Rovia v H
eirs of Deleste, et al GR 160825 Mar 26, 2010
Rule 42 Petition for Review from RTC to CA Form & contents Sps Lanaria v. Planta
GR 172891 Nov 22, 2007; Perez v. Falcatan, GR 139536 Sept 26, 2005; Elsie Ang v
. Dr. Grageda GR 166239 Jun 8, 2006 Period to appeal - Balgami v. CA, GR 131287,
Dec 9, 2004
Rule 43 Appeals from the Court of Tax Appeals and Quasi-Judicial Agencies to the
Court of Appeals Formal requirements - Dalton-Reyes v. CA, et al, GR 149580, Ma
r 16, 2005 Quasi judicial bodies - Jose Luis Angelo Orosa v. Alberto Roa, GR No.
140423, July 14, 2006; Villorente et al v. Aplaya Laiya GR 145013 Mar 13, 2005;
Ruvivar v. Ombudsman GR 165012 Sept 16, 2008; Phillips Seafood v BOI GR 175787
Feb 4, 2009 Impleading the lower court or agency - Basmayor v. Atencio GR 160573
Oct 19, 2005 Attaching copy of judgment CocaCola v. Cabalo, GR 144180 Jan 30, 2
006 Supporting papers BE San Diego Inc. v. Alzul 524 SCRA 402 Appeal from CSC DE
CS v Cuanan GR 169013 Dec 16, 2008 Rule 44 Ordinary Appealed Cases Revised Inter
nal Rules of the Court of Appeals (RIRCA) Grounds for dismissal of appeal - De L
eon v. CA 383 SCRA 217 Contents of appellants brief - De Liano v. CA 370 SCRA 349
Change of theory Mon v CA GR 118292 Apr 14, 2004
Rule 45 Appeal by Certiorari to the Supreme Court Question of law - Agote v. Lor
enzo, 464 SCRA 60, Jul 22, 2005; BPI v. CA, GR 160890, Nov. 10, 2004; CGP Transp
ortation v. PCI Leasing Mar 28, 2007 Limited review Local Superior of the Servan
ts of Charity v. Jody King Construction GR 141715 Oct 12, 2005; Perez Rosario, e
t al. v. CA, GR No. 140796, June 30, 2006; Republic v. Sta Ana- Burgos, 523 SCRA
309, GR 163254 , 1 June 2007 CA not impleaded Selegna v. UCPB GR 165662 May 3,
2006 Distinguished from Rule 65 Tagle v. Equitable PCI GR 172299 Apr 22, 2008; I
nternational Corporate Bank v. CA & PNB, Sept 5, 2006; San Miguel Bukid Homeowne
r v. City of Mandaluyong, GR 153653, Oct 2, 2009 Assignment of errors Phil Hawk
Corp v. Vivian Tan Lee, GR 166869, Feb 16, 2010
Rule 46 Original Cases Rule 65 supplements Rule 46 - Republic v. Carmel Dev 377
SCRA 459 Sec. 3 China Banking Corp v. Padilla Feb 2, 2007
Rule 47 Annulment of Judgments or Final Orders and Resolutions Extrinsic fraud Alma Jose v. Intra Strata 464 SCRA 496, Jul 28, 2005; De La Cruz v. Sison, GR 1
42464, Sept 26, 2005; Ramos v. Combong, Jr. GR 144273 Oct 20, 2005; Alaban v. CA
GR 156021 Sept 23, 2005 Lack of jurisdiction Ancheta v. Ancheta GR 145370, Mar
4, 2004; Republic thru APT v. G Holdings GR 141241, Nov. 22, 2005; Sps Benatiro et
al v. Heirs of Evaristo Cuyo GR 161220 Jul 30, 2008; GAUF v. RTC GR 139672 Mar
14, 2009; DENR v. Technological Advocates, GR 165333, Feb 9, 2010 SC resolution
Grande v. UP, GR No. 148456, Sep 15, 2006 Rule 48 Preliminary Conference Rule 49
Oral Argument Rule 50 Dismissal of Appeal Discretionary - PNB v. Philippine Mil
ling 26 SCRA 712 Direct appeal to SC- Atlas Consolidated Mining 201 SCRA 51 Nonpayment of fee Cu-Unjieng v. CA, GR No. 139596, Jan 24, 2006 Non-filing of brief
Govt v. CA et al GR 164150 Apr 14, 2008; Bachrach v. PPA GR
REMLAW Page 7

Non-filing of brief Govt v. CA et al GR 164150 Apr 14, 2008; Bachrach v. PPA GR 1

59915 Mar12, 2009
Rule 51 Judgment Multiple proceedings - Crystal vs. CA, 160 SCRA 79 Rule 52 Moti
on for Reconsideration Badiola v. Ca GR 170691 Apr 23, 2008 Rule 53 New Trial Ru
le 54 Internal Business Rule 55 Publication of Judgments and Final Resolutions R
ule 56 Procedure in the Supreme Court Sec 5 Ericsson v. City of Pasig GR 176667
Nov 22, 2007; Law of the case/conflicting decisions Collantes v. CA 517 SCRA 561
(2007) Prospective effect Land Bank v. De Leon GR 143275 Mar 20, 2003 A.M. No.
99-8-09 SC Amended Rules on Who Shall Resolve MRs
Provisional Remedies Rule 57 Preliminary Attachment Grounds PCL Industries v. CA
GR 147970 March 31, 2006; Magaling v. Peter Ong GR 173333 Aug 13, 2008; Profess
ional Video V Tesda GR 155504 Jun 26, 2009; Metro Inc. et al v. Laras Gifts, GR 1
71741, Nov 27, 2009 Ex Parte issuance - Davao Light and Power Co., Inc. vs. CA,
204 SCRA 343; Onate v. Abrogar, 241 SCRA 659 Provisional/ancillary Silangan Text
ile v. Judge Mar 12, 2007 Discharge of an attachment Security Pacific Assurance
v. Hon. Judge Tria-Infante GR 144740 Aug 31, 2005; Insular Savings v. CA 460 SCR
A 122; Sofia Torres v. Nicanor Satsatin, GR 166759, Nov 25, 2009
Rule 58 Preliminary InjunctionClear legal right Filipino Metals v. Secretary of
Trade and Industry GR 157498 Jul 15, 2005; Levi Strauss v. Clinton Apparelle, GR
No 138900 Sept 20, 2005; Duvaz Corp v. Export & Industry Bank 523 SCRA 405, Jun
7, 2007; Equitable PCIB v. Hon. Apurillo, GR 168746; Nov 5, 2009 Injunction sho
uld maintain status quo - Rualo v. Pitargue GR 140284 Jan 21, 2005; University v
Ang Wong GR 150280 Apr 26, 2006 Injunction not proper - Tayag v. Lacson GR 1349
71 25 Mar 2004 Irreparable injury G.G. Sportswear v. BDO, GR 184434, Feb 8, 2010
Summary hearing necessary/Procedure - Borja v. Salcedo 412 SCRA 110; National E
lectrification Adm v Val Villanueva GR 168203 Mar 9, 2010 RA 8975 act to ensure
the expeditious implementation and completion of government infrastructure proje
cts - Phil Ports Authority v. Pier 8 Arrastre GR No. 147861, Nov. 18, 2005; DFA
v Falcon GR 176657 Sep 1, 2010 Grave abuse of discretion in grant Overseas Worke
rs v. Chavez 524 SCRA 451; Power Sites v United Neon GR 163406 Nov 24, 2009 Rule
59 Receivership No receivership of property in custodia legis - Dolar v. Sundia
m 38 SCRA 616 Vivares v. Jose Reyes GR 155408 Feb 13, 2008
Rule 60 Replevin- Applicant must be owner of property - Servicewide Specialists
v. CA 318 SCRA 493 No replevin of property in custodia legis - Vda de Danao v. G
inete 395 SCRA 542 Distinguished from labor case Smart v. Astorga GR 148132 Jan
28 2008 542 SCRA 434 Improperly served Rivera v. Vargas GR 165895 Jun 5, 2009
Rule 61 Support Pendente Lite- Judgment for support never final - Lam v. Chua GR 1
31286 18 Mar 2004 Future support cannot be subject of compromise - De Asis vs. C
A, 303 SCRA 176 (1999)
Special Civil Actions Rule 62 Interpleader- Lessees recourse to interpleader - Oc
ampo v. Tirona GR 147812 Apr 6, 2005 Rule 63 Declaratory Relief and Similar Reme
dies Nature; Requisites for declaratory relief - Jumamil v. Caf et al, GR 144570,
Sep 21, 2005; Republic v Mangotara, GR 170375 July 7, 2010 REMLAW Page 8

Republic v Mangotara, GR 170375 July 7, 2010 Who may file SJS v. Lina GR 160031
Dec 18, 2008 When to file Tambunting v. Spouses Sumabat GR 144101 Sept 16, 2005;
Hon. Exec Secretary v. Southwing Heavy Industries, etc. GR 164171-72, 168741 Fe
b 20, 2006; Martelino et al v. NHMFC GR 160208 Jun 30, 2008 Rule 64 Review of Ju
dgments and Final Orders and Resolutions of the Commission on Elections and the
Commission on Audit Benguet State University v. COA, 524 SCRA 437 Rule 65 Certio
rari Grave abuse of discretion Phil Rabbit Bus Lines v. Goimco GR 135507 Nov 29,
2005 ; Preferred Home Specialties, Inc. v. CA, GR No. 163593, Dec 16, 2005, 478
SCRA 387 Plain speedy adequate remedy Cervantes v. CA GR 166755 Nov 18, 2005 ;
Davao Merchant Marine v. CA GR 144075 April 19, 2006 Service of petition New Eve
r Marketing v. CA GR 140555. July 14, 2005 Who are the parties - Flores v. Joven
394 SCRA 339 Where to file Sps Colmenares v. Vda de Gonzales GR 155454 Dec 10,
2008 Other requirements - Eagle Ridge Golf v. CA, GR 178989, Mar 18, 2010 Consti
tutional commission Comoporo v. COMELEC GR 178624 Jun 30, 2009 Distinguished fro
m Rule 45 Ang Biat Huan Sons v. CA Mar 22, 2007 ; DOLE v. Ruben Maceda, GR 18511
2, Jan 18, 2010 Sec 6 Jimmy Areno v. Skycable, GR 180302, Feb 5, 2010 Prohibitio
n Holy Spirit Homeowners v. Defensor, GR No. 163980, Aug. 3, 2006 ; Tan v. CA 52
4 SCRA 306 ; Estandarte v. PP GR 156851 Feb 18, 2008 Mandamus Calim v. Guerrero
Mar 5, 2007 Sec 7 AM 07-7-12 SC Uy Kiao Eng v. Nixon Lee, GR 176831, Jan 15, 201
0 (mandamus will not lie if no public interest) Rule 66 Quo Warranto- Against pu
blic officers Calleja v. Panday GR 168696 Feb 28, 2006 Clear legal right - Garce
s vs. CA, 253 SCRA 99 (1996); Feliciano v. Villasin GR 174929 Jun 27, 2008 Damag
es Titus B. Villanueva v. Emma Rosquetta, GR 180764, Jan 19, 2010
Rule 67 Expropriati on Multiple appeals allowed - NPC v. Aguirre-Paderanga, 464
SCRA 481, Jul 28, 2005 Two stages in action for expropriation - National Housing
v. Heirs Guivelondo 404 SCRA 389; Sps Curata v PPA GR 154251 Jun 22, 2009 Publi
c Use Masikip v. City of Pasig GR 136349 Jan 23, 2006 Reckoning date City of Ilo
ilo v Contreras-Besama GR 168967 Feb 12, 2010 Commissioners Napocor v. Purefoods
GR 160725 Sep 12, 2008
Rule 68 Foreclosure of Real Estate Mortgage- BPI Family v. Coscuella GR 167724 J
un 27, 2006; Teresita Monzon v. Sps Relova GR 171827 Sep 17, 2008 Rule 69 Partit
ion Object of partition - Sepulveda v. Pelaez GR 152195 Jan 31, 2005; Balo v. CA
GR 129704 Sep 30, 2005; Panganiban et al v. Oamil GR 149313 Jan 22, 2008 Two st
ages Marasigan v. Marasigan GR 156078 Mar 14, 2008; Figuracion-Gerilla v. Vda de
Figuracion GR 154322 Aug 22, 2006 Publication Reillo v. San Jose GR 166393 Jun
18, 2009 Rule 70 Forcible Entry and Unlawful Detainer- Distinction between forcib
le entry and unlawful detainer - Acaylar v Naraya GR 176995 Jul 30, 2008; Sales v.
Barro GR 171678 Dec 10, 2008 Question of ownership Go Ke Cheng v Chan GR 153791
Aug 24, 2007; Sps. Samonte v. Century Savings Bank, GR 176413, Nov 25, 2009 Juri
sdictional requirements for unlawful detainer - Ross-Rica v. Sps Ong GR 132197 A
ug 16, 2005; Abaya v. Merit GR 176324 Apr 16, 2008 Jurisdictional requirements f
or forcible entry Leonardo David v. Cordova GR 152992 July
REMLAW Page 9

Jurisdictional requirements for forcible entry Leonardo David v. Cordova GR 1529

92 July 27, 2005; Domalsin v. Spouses Valenciano GR 158687 Jan 25, 2006; Bunyi v
Factor GR 172547 Jun 30, 2009 Stay of judgment Bugarin v. Palisoc GR 157985 Dec
2, 2005; PNB v. DKS International GR 179161, Jan 22, 2010
Rule 71 Contempt Distinction direct and indirect contempt - Heirs of Vda De Roxas v.
CA GR 138660 5 Feb 2004 ; Nunez v Ibay AM RTJ 06-1984 Jun 30, 2009 Modes of fil
ing (re indirect contempt) Regalado v. Go GR 167988 Feb 6, 2007 Contempt against
quasi-judicial entities - LBP v. Listana 408 SCRA 328 Penalty Canada v. Judge S
uerte AM No. RTJ-04-1875 SPECIAL PROCEEDINGS Rule 72 Subject Matter and Applicab
ility of General Rules Distinction between civil action and special proceeding - Nat
cher v. CA 366 SCRA 385 Determination of heirship Portugal v. Portugal-Beltran G
R 155555 Aug 16, 2005 Termination of proceeding Tabuada v. Ruiz GR 168799 Jun 27
, 2008 Sec 2 Hilado v. CA GR 164108 May 8, 2009
Settlement of Estate of Deceased Persons Rule 73 Venue and Process- Limited juri
sdiction of probate court - Camaya v. Patulandon, GR 144915 23 Feb 2004; Paciole
s v. Chuatoco-Ching GR 127920 Aug 9, 2005; Heirs of Doromio v. Heirs of Doromio
GR 169454; 541 SCRA 479; Reyes v. Sotero, et al., GR No. 167405, Feb 16, 2006 Te
rmination of the special proceeding - Munsayac-De Villa, v. CA 414 SCRA 436 Mean
ing of residence San Luis v. San Luis Feb 6, 2007
Rule 74 Summary Settlement of Estates - Two year prescriptive period - Pedrosa v
. CA, 353 SCRA 620 Extrajudicial partition - Pada-Kilario, et al. vs. CA et al.,
GR 134329, 19 Jan 2000
Rule 75 Production of Will. Allowance of Will Necessary- Probate mandatory - Pas
cual v. CA, 409 SCRA 105 Probate proceeding in rem Alaban v. CA GR 156021 Sept
3, 2005 False will Obando v People GR 138696 July 7, 2010 Rule 76 Allowance or
isallowance of Will - Grounds Azuela v. CA, GR No. 122880, April 12, 2006 Rule
7 Allowance of Will Proved Outside of Philippines and Administration of Estate
ncheta v. Guersay-Dalaygon; GR No. 139868, June 8, 2006
Rule 78 Letters Testamentary and of Administrati on, When and to Whom Issued Fai
lure to attend hearings of applicant - Silverio v. CA, 304 SCRA 541 Intestate es
tate of Cristina suntay v Isabel Cojuangco GR 183053 June 16, 2010

2
D
7
A

Rule 79 Opposing Issuance of Letters Testamentary. Petition and Contest for Lett
ers of Administration Justification for appointment of an administrator - Avelin
o v CA, GR 115181, 31 Mar 2000
Rule 80 Special Administrator Qualifications - Valarao v. Pascual 392 SCRA 695;
Vilma Tan et al v. Hon Gedonio GR 166520 Mar 14, 2008 Justification for special
administrator - De Guzman vs. Guadiz Jr., et al., L-48585, 31 Mar 1980 Appointme
nt of special administrator discretionary - Jamero v. Melicos, GR 140929, 26 May
2005; Heirs of Castillo v. Gabriel GR 162934 Nov 11, 2005 474 SCRA Removal Co v
. Rosario et al GR No. 160671 Apr 30, 2008
Rule 81 Bonds of Executors and Administrators Rule 82- Revocation of Administrat
ion, Death, Resignation, and Removal of Executors and Administrators Ocampo v Oc
ampo GR 187879 Jul 2 , 2010 Rule 83 Inventory and Appraisal. Provision for Suppo
rt of Family Provisional inclusion in inventory - Heirs of Miguel Franco v. CA,
418 SCRA 60; Chua v. REMLAW Page 10

Provisional inclusion in inventory - Heirs of Miguel Franco v. CA, 418 SCRA 60;
Chua v. Absolute Management Corp. 413 SCRA 547
Rule 84 General Powers and Duties of Executors and Administrators Conflict of in
terest - Mananquil v. Villegas, GR 2430, 30 Aug 1990 Rule 85 Accountability and
Compensation of Executors and Administrators Duty to account - Tumang v. Laguio
GR 50277 14 Feb 1980; Charges and expenses of the administrator Quasha Pena v. L
CN Const GR 174873 Aug 26, 2008 Rule 86 Claims Against Estate Substitution of he
irs - Heirs of Lorilla, et al. v. CA, GR 118655 12 Apr 2000; Liability of heirs
for debts of decedent - Union Bank v. Santibaez, GR 149926, 23 Feb 2005 Attys fees
- Salonga Hernandez v. Pascual, GR No. 127165, May 2, 2006 Money claims Strongh
old v. Republic GR 174561 Jun 22, 2006 ; Gutierrez v. Barreto-Datu GR L-17175 Ju
l 31, 1962 Rule 87 Actions by and Against Executors and Administrators Recovery
of estate property - Valera v. Inserto GR 56504, 7 May 1987; Damages arising fro
m crime ABS CBN v Office of Ombudsman GR 133347 Apr 23, 2010
Rule 88 Payment of the Debts of the Estate Rule 89 Sales, Mortgages, and other E
ncumbrances of Property of Decedent Mortgage of estate property - Pahamatong v.
PNB, GR 156403, 31 Mar 2005; Orola v. Rural Bank of Pontevedra, GR 158566 Sept 2
0, 2005 Can heir sell estate property - Aggabao v. RTC, GR No. 146006 Feb 23, 20
04
Rule 90 Distribution and Partition of the Estate Distribution, when Quasha Pena
v LCN Const GR 174873 Aug 26, 2008 Joinder Guy v. CA GR 163707 Sep 15, 2006
Rule 91 Escheats - Republic v. CA & Solano GR 143483, 375 SCRA
Guardians and Guardianshi p Guardianship over Incompetents Rule 92 Venue Parco v
. CA, L-33152 30 Jan 1982 Vanal v. Balmes, GR 132223, 19 June 2001 Rule 93 Appoi
ntment of Guardians Rule 94 Bonds of Guardians Rule 95 Selling and Encumbering P
roperty of Ward De Pua v. San Agustin, GR L-17402, 25 July 1981 Rule 96 General
Powers and Duties of Guardi ans Rule 97 Termination of Guardianship Guardianship
of Minors AM 03-02-05 SC Rule on Guardianship of Minors Rule 98 Trustees Expres
s trust vs. implied trust Richard Lopez Trustee v. CA GR 157784 Dec 16, 2008; He
irs of Lorenzo Yap v. CA 312 SCRA 603; Saltiga de Romero v. CA 319 SCRA 180 ; Ri
chard Lopez v CA GR 157784 Dec 16, 2008 Other Special Proceedings Rule 99 Adopti
on and Custody of Minors RA 8551 An act establishing rules and policies on the
domestic adoption of Filipino children and for other purposes AM No. 02-6-02-SC
Rules on Adoption AM No. 03-04-04 SC Rules on Custody of Minors and Writ of Habea
s Corpus in relation to Custody of Minors In the matter of adoption of Stephanie
Garcia, GR 148311, 31 Mar 2005; Republic v. Miller, 306 SCRA 183; Republic v. H
ernandez, GR 117209, 9 Feb 1996 In re petition for adoption of Michelle Lim GR 1
68992 May 21, 2009
REMLAW Page 11

Special Proceedings Invol vi ng Family Code Provisions AM 02-11-10-SC Rules on D

eclaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marri
ages AM 02-11-11 SC Rule on Legal Separation AM 02-11-12 SC Rule on Provisional
Orders
Other (Summary) Proceedings under the Family Code: Title XI, Chapters 1 to 3 on
separation in fact between husband and wife or abandonment by one of the other a
nd incidents involving parental authority Chapter 4 on Art. 41 (declaration of a
spouse as presumpti vely dead) Art. 51(action of a child for presumpti ve legit
ime) Art. 69 (judicial declaration of family domicile in case of disagreement of
the spouses) Art. 73 (spouses objection to the profession of the other spouse) A
rts. 96 and 124 (annulment of husbands decision in the administration and enjoyme
nt of community or conjugal property appointment of spouse as sole administrator
except cases of incompetent other spouse which shall be under Rules 93 and 95) Ar
t. 217 (entrusting children to homes and orphanages).
Rule 101 Proceedings for Hospitalization of Insane Persons Chin Ah Foo v. Concep
cion, 54 Phil 775
Rule 102 Habeas Corpus AM No. 03-04-04 SC Rules on Custody of Minors and Writ of
Habeas Corpus in Relation to Custody of Minors SC Rules on Writs of Amparo and
Habeas Data /Writ of Kalikasan Sec of Defense v Manalo GR 180906 Oct 7, 2009 In
Re Writ of Habeas Corpus for Reynaldo De Villa, GR 158802, Nov. 17, 2004 Glenn C
aballes v. CA, GR 163108, 23 Feb 2005; Ilusorio v. Bildner, 332 SCRA 169 Pp v. A
ndal, 307 SCRA 650; Feria v. CA, 325 SCRA 525; Canlas v. Napico GR 182795 Jun 5,
2008; Tapuz v. Del Rosario GR 182484 Jun 19, 2008 P/Supt. Felixberto Castillo v
. Dr. Amanda T. Cruz, GR 182165, Nov 25, 2009; Gen Avelino Razon, Jr. et al. v M
ary Jean Tagitis, et al, GR 182498, Feb 16, 2010; Yano et al v Sanchez et al GR
186640 Feb 11, 2010 Rule 103 Change of Name RA 9048 Clerical Error Law RA 9255 A
n act allowing illegitimate children to use the surname of their father Republic
v. Lim, GR No. 153883 13 Jan 2004 In Re: Petition of Julian Wang, GR 159966, 30
March 2005 Republic v. Capote GR 157043 Feb 2, 2007 Rule 108 Cancellation or Co
rrection of Entries in the Civil Registry Tan Co v. Civil Register, GR 138496; 2
3 Feb 2004 Lee v. CA, 367 SCRA 110 Barco v CA 420 SCRA 162 Gerbert Corpuz v Sto
Tomas GR 186571 Aug 11, 2010
Rule 109 Appeals in Special Proceedings Testate of Maria Biascan v. Biascan, 347
SCRA 621; Briones v. Lilia Henson -Cruz GR 159130 Aug 22, 2008; Heirs of Siapia
n et al v Estate of Mackay GR 184799 Sept 1, 2010
Special Proceedings under Other Laws or SC rules Sec. 5/2 RA 8799 AM 01-2-04 SC
Interim Rules of Procedure governing Intra-corporate Controversies 2008 Rules on
Corporate Rehabilitation (see rules 2 and 4 re: pre-trial) Pryce Corp v. CA GR
172302 Feb 4, 2008 NB v Equitable PCIBank GR 165571 Jan 20, 2009 Jerry Ong v PDU
C GR 175117 aug 18, 2010; China Banking v Cebu Printing GR 172880 Aug 11, 2010
CRIMINAL PROCEDURE Rule 110 Prosecution of Offenses - Venue of libel cases - Mac
asaet v. People, 452 SCRA 255 Venue of BP 22 cases - Rigor v. People, GR No. 144
887, Nov. 17, 2004 AM No. 02-2-07, Sec 5
REMLAW Page 12

AM No. 02-2-07, Sec 5 Filing - Del Rosario v. Vda De Mercado 29 SCRA 116; SEC v
Interport GR 135808 Oct 6, 2008 Reinvestigation - Crespo v. Mogul 151 SCRA 462;
; Harold Tamargo v. Romulo Awingan GR 177727, Jan 19, 2010 Amendment Pp v. Casey
103 SCRA 21; Fronda Baggao v. Pp GR 151785 Dec 10, 2007; PP v. Hon Cajigal GR 15
7472 Sep 20, 2007 Sec 5 (affidavit of desistance) People v. De la Cerna GR 13689
9 904 Oct 9, 2002 Sec 6 Lasoy et al v. Zenarosa GR 129472; People v. Puig GR 173
654 765 Aug 28, 2009 Sec 15 Isip v. People GR 170298 Jun 26, 2007; Sony Corp v.
Supergreen GR 161823 Mar 22, 2007 Relationship People v. Ceredon GR 167179 Jan 2
8, 2008 Date/time of commission People v. Almendral GR 126025 Jul 6, 2004 Qualif
ying circumstances Pp v. Buayaban GR No. 112459 Mar 28, 2003 ; Pp v. Masapol 417
SCRA 371; PP v. Coredon GR 167179 Jan 28, 2008 Sec 13 (duplicity of offenses) P
eople v. Soriano GR 178325 Feb 22, 2008 Complaint-affidavit Hilario P. Soriano v
. People, GR 162336, Feb 1, 2010
Rule 111 Prosecution of Civil Action- Sec 1 Cancio v. Isip GR 133978 Nov 12, 200
2; Cheng v. Sy GR 174238 Jul 7, 2009 Sec 3 Samson v. Daway GR 1600554 Jul 21, 20
04 Sec 5 Ferrer v. SB GR 161067 Mar 14, 2008 Sec 7 Dreamwork Construction v. Jan
iola GR 184861 Jun 30, 2009 Implied reservation - Sarmiento v. CA 394 SCRA 315 E
xpress reservation - Hambon v. CA 399 SCRA 255 Civil liability - Salazar v. Pp 4
11 SCRA 598 ; First Producers Holdings Corp v. Luis Co., GR 139655 July 27, 2000
; Corpus v. Siapno AM MTJ-96-1106 Jun 17, 2002; Cruz v. Ca 388 SCRA 72 BP22 Sps
Benito Lo Ban Tiong v. Balboa GR 158177 Jan 28, 2008; Cheng v. Sps Sy GR 174238
Jun 7, 2009 Sec 4 (death of accused) - People v. Abungan GR 136843 Sept 28, 2000
; ABS-CBN v. Ombudsman GR 133347 Oct 15, 2008 Prejudicial question People v. Con
sing GR 148193 Jan 16, 2003; Reyes v. Pearlbank GR 171435 Jul 30, 2008; Dreamwor
k v. Janiola GR 184861 Jun 30, 2009
Rule 112 Preliminary InvestigationAM No. 05-8-26-SC Amendment of Rules 112 and 1
14 of the Revised Rules on Criminal Procedure by Removing the Conduct of Prelimi
nary Investigation from Judges of the First Level Courts Probable cause discreti
on of investigating prosecutor - Hegerty v. CA 409 SCRA 285 Cause of accusation
Miranda v. SB GR 154098 Jul 27, 2005 Contents of the information People v. Ibane
z 523 SCRA 136 Authority of prosecutor Tolentino v. Paqueo 523 SCRA 377 Sec 3 Sa
ntos-Concio et al v. DOJ Sec GR 175057 Jan 29, 2008; Racho v. Miro GR 168578 Sep
30, 2008; Sps Balaguan v Ca GR 174350 Aug 13, 2008 Non-interference by court Ag
uirre v. DOJ GR 170723 Mar 23, 2008; Juanito Chan v. DOJ Sec GR 147065 Mar 14, 2
008 When to question irregularities Lolita Eugenio v. PP GR 168163 Mar 26, 2008;
Failure to comply with Sec 4 - Cruz v CA 388 SCRA 72 Villaflor v. Vivar 349 SCR
A 194; Uy v. SB 354 SCRA 651 Sec 6 Baltazar v. People GR 174016 Jul 28, 2008; Ta
bujara III v. People GR 175162 Oct 29, 2008 Sec 7 GR 158211 Aug 31, 2004 San Agu
stin v. People; Ladlad v. Velasco 523 SCRA 318 Secs. 8 and 9 Victorias Milling v
. Padilla GR 156962 Oct 6, 2008 Issuance of warrant discretionary on judge - Ses
breno v. Aglugub 452 SCRA 365 Second information Saludaga v SB GR 184537 Apr 23,
2010 Rule 113 ArrestPeople v. Escordial GR 138934 January 16, 2002 Requirements
for issuance of warrant of arrest - Gutierrez v. Hernandez 524 SCRA 1 Probable
cause to issue warrant - AAA v. Carbonell GR 171465 Jan 8, 2007; People v. Lagui
o GR 128587 March 1, 2007 Inquest Ladlad v. Velasco 523 SCRA 318 PP v. Molina 35
2 SCRA 174; PP v. Salanguit 356 SCRA 683 In flagrante delicto People v. Alunday
GR 181548 Sep 3, 2008; People v. Carlos de la Cruz GR 182348 Nov 20, 2008; REMLA
W Page 13

GR 182348 Nov 20, 2008; Hot pursuit People v. Recepcion et al GR 141943-45 Nov 1
3, 2002 Rule 114 Bail- Right to bail San Miguel v. Hon. Maceda AM RTJ-03-1749 Ap
r 3, 2007 Esteban v. Alhambra GR No. 135012 Sep 7, 2004 Procedure re grant - Tab
orite v. Sollesta 408 SCRA 602; Serapio v. SB GR 148468, 148769, 149116 Jan 28,
2003; Yap v. CA 358 SCRA 564; Pp v. Fitzerald GR 140288 Oct 23, 2006 Where to ap
peal from denial of bail Chua v. CA GR 140842 Apr 12, 2007 Discretionary bail (S
ec 20) Andres v. Beltran 415 SCRA 598 (2001) Sec. 26 Okabe v. Gutierrez GR 15018
5 May 27, 2004 Meaning of reclusion perpetua Cenzon v. Hon. Abad Santos GR 164337
Jun 27, 2006 Sec 5 Jose Antonio Leviste v CA GR 189122 Mar 17, 2010 OSG Heirs of
Sarah Burgos v CA GR 169711 Feb 8, 2010
Rule 115 Rights of Accused Phil. Constitution Art. III RA 8493 (Speedy Trial Act
of 1998) and SC Circular No. 38-98 RA 7438 An act defining certain rights of pe
rson arrested, detained or under custodial investigation as well as the duties o
f arresting, detaining and investigating officers and providing penalties for vi
olations thereof Lumanog v People GR 182555 Sep 7, 2010 Speedy disposition Cabar
les v. Maceda GR 161330 Feb 20, 2007 Speedy trial Perez v. People GR 164763 Feb
12, 2008; Benares v. Lim GR 173421 Dec 14, 2006; People v. Jose R. Hernandez, GR
No. 154218 and 154372, August 28, 2006; Pp v Baloloy 381 SCRA 31; Miranda right
s Pp v. Teves 356 SCRA 14 Out of Court Identification People v. Jojo Musa GR 170
472, July 3, 2009 Right to counsel Aquino v. Paiste GR 147782 Jun 25, 2008; Peop
le v. Serzo Jr GR 118435 Jun 20, 1997; PP v Domingo Reyes GR 178300 Mar 17, 2009
Rule 116 Arraignment and PleaChange of plea - Pp v Bernas 377 SCRA 391; Pp v. U
lit GR 131799-901 23 Feb 2004; Sec. 2 - Daan v SB GR 163972-77 Mar 28, 2008
Rule 117 Motion to QuashNot a MOD- Antonio Abador v. People GR 186001, Oct 2, 20
09 Double jeopardy - Alonto v. People GR No. 140078, Dec 9, 2004; Pp v. Velasco
340 SCRA 207; Castro v. People GR 180832 Jul 23, 2008 Provisional dismissal - Pp
v. Lacson GR 149453 Apr 1, 2003 ; Torres v. Sps Aguinaldo GR 164268 Jun 28, 200
5 No authority to file - People v. Hon Garfin GR 153176, 29 Mar 2004 Denial not
correctible by certiorari Serana v. SB & PP GR 162059 Jan 22, 2008; Pp v. Romual
dez GR 166510 Jul7 23, 2008 Res judicata Pacifico Cruz v. SB GR 174599-609 Feb 1
2, 2010
Rule 118 Pre-TrialStipulation of facts - Bayas v. SB 391 SCRA 415 People v. Sita
o, 387 SCRA 701
Rule 119 Trial RA No. 6981 The Witness Protection Act Affidavit v. testimony - A
ngcaco v Pp 378 SCRA 297 Right to counsel - People v. Sunga 399 SCRA 624 Demurre
r to evidence - People v. Sandiganbayan GR 137707-11, Dec 17, 2004; Pp v. Sayabo
c GR 147201, 15 Jan 2004 ; Cabarles v. Maceda & Pp GR 161330 Feb 20, 2007; Pp v.
Tolentino et al GR 176385 Feb 26, 2008 Phil Const Art II Secs 12, 14, 16 and 17
Sec 4 People v. Webb GR 132577 Aug 17, 1999 Sec. 15 Vda de Manguerra v. Risos G
R 152643 Aug 28, 2008 Subpoena Roco v. Contreras GR 158275 Jun 28, 2005 Role of
private prosecutor Carino v. De Castro GR 176084 Apr 30, 2008
Rule 120 JudgmentDelay in promulgation - Cea v. Paguio 397 SCRA 494 Failure to a
ppear at promulgation - Tolentino v. People, GR No. 170396, August 31, 2006 Sec
5 Suero v People GR 156408 Jan 31, 2005 REMLAW Page 14

Sec 5 Suero v People GR 156408 Jan 31, 2005 Determination of penalty People v. T
emporada GR 173473 Dec 17, 2008 Sec 2 Lumanog v. People GR 182555 Sep 7, 2010
Rule 121 New Trial or Reconsideration- Requisites of MNT - Pp v Judavar 380 SCRA
548 Sec 2, Saludaga v SB GR 184537 Apr 23, 2010 Rule 122 Appeal- AM No. 00-5-03
-SC Re: Amendments to the Revised Rules of Criminal Procedure to Govern Death Pe
nalty Cases Pp v. Mateo GR 147678-87, Jul 7, 2004 Certiorari from grant of bail
- Pobre v. CA, 463 SCRA 50, Jul 8, 2005 Failure to file brief - Tamayo v CA GR 1
47070 Feb 17, 2004 Escape pending appeal - Pp v. Latayada GR 146865 Feb 18, 2004
; Vitto v. CA 404 SCRA 307 Hierarchy of courts - Quesada v. DOJ, GR No. 150325,
Aug 31, 2006 Pp v. Bayotas 236 SCRA 239 Rule 123 Procedure in the Municipal Tria
l Courts - Rule 124 Procedure in the Court of Appeals - Dismissal of appeal - Pp
v De La Concha 388 SCRA 280 Sec 8 - Nino Masas v. PP GR 177313 Dec 19, 2007 Rul
e 125 Procedure in the Supreme Court- Post-conviction review Pp v. Labriaga 250
SCRA 163 Rule 126 Search and Seizure- Plain view People v. Que Ming Kha GR 13326
5 May 29, 2002 Unannounced entry- People v. Huang Zhen Hua, GR 139301, Sep 29, 2
004 Control of property - People v. Del Castillo GR 153254, Sep 30, 2004 Excepti
ons to warrant requirement - Caballes v. CA 373 SCRA 221 Time of arrest - PP v.
Che Cun ting 328 SCRA 592; People v. Zenaida Quebral, GR 185379, Nov 27, 2009 De
termination of probable cause - Sony Music v. Espanol GR 156804 March 14, 2005 P
eople v. Judge Laguio & Wang Mar 16, 2007 Things to be seized PP v Raul Nunez GR
177168 Jun 30, 2009 Things to be seized Pp v. Raul Nunez GR 177168 Jun 30, 2009
Sec 13 Sr. Inspc. Jerry C. Valeroso v. CA & Pp GR 164815, Sept 3, 2009 Rule 127
Provisional Remedies in Criminal Cases - EVIDENCE Rule 128 General Provisions Competence Ramirez v. CA 248 SCRA 590
Rule 129 What Need Not be Proved- Judicial admission - Republic v. Sandiganbayan
406 SCRA 190; BPI Savings v. CTA 330 SCRA 507 Judicial notice Experttravel v. C
A GR 152392 Rule 130 Rules of Admissibility- Real Evidence People v. Bardaje 99
SCRA 388 DNA read AM No. 06-11-5-SC Oct 15, 2007; Estate of Rogelio Ong v. Minor
Diaz GR 171713 Dec 17, 2007; PP v Umamito GR 172607 Oct 26, 2007; Herrera v Alb
a GR 148220 Jun 15, 2005
Documentary Evi dence: Best/Secondary/Parol Evi dence Best evidence rule (Rule 1
30 Secs 2-8 ; Rule 132 Secs. 25 and 27) - Lee v. People Gr 159288 Oct 19, 2004 ;
Mallari v. People, GR 153911 Dec 10, 2004; DECS v. Del Rosario GR 146586 Jan 26
, 2005; Citibank Mastercard v. Teodoro 411 SCRA 577; Seaoil v Autocorp GR 164326
Oct 17, 2008 Parol evidence Duvaz Corp v. Export and Industry Bank 523 SCRA 405
Parol evidence rule Rule 130 Sec. 9 Ortanez v. CA 266 SCRA 561 Falsified docume
nt Pacasum v PP GR 180314 Apr 16, 2009
Electronic Evidence REMLAW Page 15

Electronic Evidence RA 8792 Electronic Commerce Act Secs. 5, 6-15 AM 01-7-01-SC

New Rules on Electronic Evidence, Rule 2, Sec 1; Rule 3, Rule 4 MCC v Ssangyong
GR 170633 Oct 17, 2007 Aznar v. Citibank Mar 28, 2007; NPC v. Codilla GR 170491
Apr 3, 2007 Ang v CA et al GR 182835 Apr 20, 2010 Interpretation of Documents Te
stimonial Evidence: Qualification of Witnesses/Testimonial Privilege/Admissions
and Confessions/Previous Conduct as Evi dence Qualification of witnesses Mental
incapacity Rule 130 Sec 20, 21 - Pp v. Mendoza GR 113791 Feb 2, 1996 Marital dis
qualification Rule 130 Sec 22 Pp v. Castaneda 88 SCRA 562 Deadmans Statute Rule 1
30 Sec 23 Razon v. IAC 207 SCRA 234 Privileged Communications Marital communicat
ions Rule 130 Sec 24 (a) Pp v. Carlos Mar 1975 Attorney-client Rule 130 Sec. 24
(b) Pp v. Sandiganbayan 275 SCRA 505; Regala v. Sandiganbayan 262 SCRA 124 Physi
cian-patient Rule 130 Sec. 24 - Lim v. CA 214 SCRA 273 (1992); Krohn v. CA 233 S
CRA 146 State secrets Rule 130 Sec 24 (e) BF v. Monetary Board 142 SCRA 523 (198
6) Parental and filial privilege Rule 130 Sec 25 Newsmans privilege RA 53, as ame
nded by RA 1477 Admissions and Confessions Admissions against interest Rule 130
Sec 26 & 32 Keller & Co. v. COB 141 SCRA 86 Compromises Rule 130 Sec 27 Pp v. Yp
arriguirre 268 SCRA 35; Pp v. Godoy 250 SCRA 676 Res Inter Alios Acta Rule 130 S
ec 28 - Pp v. Racquel 265 SCRA 248 Exceptions to res inter alios acta rule Partn
ers agents admissions Rule 130 Sec 28 Coconspirators statements Rule 130 Sec 30 Pp
v. Cabrera 57 SCRA 715 Admission by privies Rule 130 Sec 31 Sec 32 - Villanueva
v. Balaguer GR 180197 Jun 23, 2009
Confessions Rule 130 Sec 33 Pp v. Yip Wai Ming 264 SCRA 224; Pp v. Wong Chuen Mi
ng 256 SCRA 135 Corpus delicti Pp v. Romulo Tuniaco, GR 185710, Jan 19, 2010 The
Hearsay Rule Testimonial knowledge Rule 130 Sec 36 Pp v. Gaddi 170 SCRA 649 Hea
rsay, what is Phil Free Press v. CA 473 SCRA GR 132864 Dying Declaration Rule 13
0 Sec 37 - Pp v. Macandog June 6, 2001 GR 129534; Pp v. Latayada GR 146865 Feb 1
8, 2004; Pp v Cerilla GR 177147 Nov 28, 2007 Declaration against interest Rule 1
30 Sec 38 - Estrada v. Disierto GR 146710-15 Apr 3, 2001; HKO Ah Pao v. Ting GR
153476; Heirs of Franco v. CA 418 SCRA 60 Act or declaration about pedigree / Fa
mily reputation or tradition regarding pedigree Rule 130 Secs 39, 40, 41 - Rosen
do Herrera v. Alba GR 148220 June 15, 2005; Tison v. CA 276 SCRA 582 Res gestae
Rule 130 Sec 42 Pepito Capila v. Pp GR 146161 Jul 17, 2006; PP v. Cudal Oct 31,
2006; DPB Pool v. RMN GR 147039 Jan 27, 2006; Pp v. Tolentino 218 SCRA 337; Arth
ur Zarate v. RTC GR 152263, July 3, 2009 Entries in the course of business Rule
130 Sec 42 - Nestle Phil v. FY Sons GR 150780; Security Bank v. Gan GR 150464 Ju
n 27, 2006 Entries in official records Rule 130 Sec 44 Pp v. Aureo Rojo GR 82737
July 5, 1989; Pp v. Cabuang 217 SCRA 675; Franco Cruz v. CA GR 172238 Sep 17, 2
008 Commercial lists and the like Rule 130 Sec 45 PNOC Shipping v. Ca 299 SCRA 4
02 Learned Treatises Rule 130 Sec 46 Prior testimony Rule 130 Sec 47 Tan v. CA 2
0 SCRA 54
REMLAW Page 16

Opinion Rule Rule 130 Secs 48 -50 Expert witnesses Milagors Ilao Quianay v. Mapi
le GR 154087 Oct 25, 2005; Pp v. Adoviso 309 SCRA 1; Bacalso v. Padigos GR 17319
2 Apr 18, 2008
Character Evidence Rule 130 Secs 34-35; Rule 132 Sec 14 PP v. Soliman 53 OG 8083
Rule 131 Burden of Proof and Presumptions - Republic v. Vda De Neri GR 139588 4
Mar 2004 Barcelon Roxas Sec v. CIR GR 157064 GR 157064 Aug 7, 2006 Substantial e
vidence in adm proc - Republic v. Canastillo 524 SCRA 546; Salvador Pleto v. PNP
GR 169982 Nov 23, 2007 Authenticity of signature Sanchez v. Mapalad GR 148516 D
ec 27 2007 541 SCRA 397
Rule 132 Presentation of Evidence (Examination of Witnesses) Examination in open
court Galman v. Pamaran 138 SCRA 294 Cross-examination Dela Paz v. IAS 154 SCRA
65 Impeachment by prior inconsistent statement Villalon v. IAC 144 SCRA 443 Rec
alling witnesses Pp v. Rivera 200 SCRA 786 Pp v. Cadley GR 150735 15 Mar 2004 Za
lamea v CA 228 SCRA 23 Heirs of Sabanpan v. Comorposa 408 SCRA 692 Adverse party
witness - Gaw v. Suy Ben Chua GR 160855; People v Obnuranis GR 181492 Dec 16, 2
008 SC Administrative Memo No. 00-4-07 Rule on Examination of a Child Witness Au
thentication and Proof of Documents Rule 132 Secs 19-33; E-Commerce Act, Secs. 5
, 6-15; REE Rules 5, 6, 9 & 11 Heirs of Gubaton v CA GR 150206 Mar 13, 2009 Llem
os et al v. Llemos et al GR 150162 Jan 26, 2007; IBM Phil v. NLRC 305 SCRA 592;
Pp v. Lazaro 317 SCRA 435\ Sps De La Rama v Sps Pape GR 142309 Jan 30, 2009 Offe
r and Objection Rule 132 Secs 34-40 Vda de Onate v. CA 250 SCRA 283; Heirs of Do
romio v. Heirs of Doromio 541 SCRA 479; Deutsche Bank v SEC 481 SCRA 672
Rule 133 Weight and Sufficiency of Evidence- Habagat Grill v. DMC-Urban GR 15511
0 March 31, 2005; Pp v. Hijada GR 123696 11 Mar 2004; Heirs of Conti v. CA 300 S
CRA 345
DNA Evi dence Estate of Ong v Diaz GR 171713 Dec 17, 2007 People v. Umanito GR 1
72607 Oct 26, 2007 Herrera v Alba GR 148220 Jan 15, 2005 In re Writ of Habeas Co
rpus for Reynaldo De Villa GR 158802 Nov 17, 2004
Rule 134 Sec. 6 Go v. Looyuko GR 147923 537 SCRA 445 26 Oct 2007 Chain of custod
y in drugs cases Bonifacio Tejada v. Pp GR 180693, Sep 4, 2009
Pasted from <file:///D:\5y2s\Remlaw\COMPLETE%20SYLLABUS%20SECOND%20SEM%202010%20
-% 202011.doc>
REMLAW Page 17

Hasegawa et al v. Kitamura GR 149177 Nov 23, 2007

Sunday, November 14, 2010 11:16 PM
KAZUHIRO HASEGAWA AND NIPPON ENGINEERING CONSULTANTS CO., LTD. VS. MINORU KITAMU
RA [G.R. No. 149177, November 23, 2007] NACHURA
Before the Court is a petition for review on certiorari under Rule 45 of the Rul
es of Court assailing the April 18, 2001 Decision [1] of the Court of Appeals (C
A) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution [2] denying the mot
ion for reconsideration thereof. On March 30, 1999, petitioner Nippon Engineerin
g Consultants Co., Ltd. (Nippon), a Japanese consultancy firm providing technica
l and management support in the infrastructure projects of foreign governments,
[3] entered into an Independent Contractor Agreement (ICA) with respondent Minor
u Kitamura, a Japanese national permanently residing in the Philippines. [4] The
agreement provides that respondent was to extend professional services to Nippo
n for a year starting on April 1, 1999. [5] Nippon then assigned respondent to w
ork as the project manager of the Southern Tagalog Access Road (STAR) Project in
the Philippines, following the company s consultancy contract with the Philippi
ne Government. [6]
When the STAR Project was near completion, the Department of Public Works and Hi
ghways (DPWH) engaged the consultancy services of Nippon, on January 28, 2000, t
his time for the detailed engineering and construction supervision of the Bongab
onBaler Road Improvement (BBRI) Project. [7] Respondent was named as the project
manager in the contract s Appendix 3.1. [8]
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon s general manager for
its International Division, informed respondent that the company had no more in
tention of automatically renewing his ICA. His services would be engaged by the
company only up to the substantial completion of the STAR Project on March 31, 2
000, just in time for the ICA s expiry. [9] Threatened with impending unemployme
nt, respondent, through his lawyer, requested a negotiation conference and deman
ded that he be assigned to the BBRI project. Nippon insisted that respondents contr
act was for a fixed term that had already expired, and refused to negotiate for
the renewal of the ICA. [10] As he was not able to generate a positive response
from the petitioners, respondent consequently initiated on June 1, 2000 Civil Ca
se No. 00-0264 for specific performance and damages with the Regional Trial Cour
t of Lipa City. [11] For their part, petitioners, contending that the ICA had be
en perfected in Japan and executed by and between Japanese nationals, moved to d
ismiss the complaint for lack of jurisdiction. They asserted that the claim for
improper pre -termination of respondent s ICA could only be heard and ventilated
in the proper courts of Japan following the principles of lex loci celebrationi
s and lex contractus.[12]
In the meantime, on June 20, 2000, the DPWH approved Nippon s request for the re
placement of Kitamura by a certain Y. Kotake as project manager of the BBRI Proj
ect.[13]
REMLAW Page 18

Project.[13]
On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank [1
4] that matters connected with the performance of contracts are regulated by the
law prevailing at the place of performance, [15] denied the motion to dismiss.
[16] The trial court subsequently denied petitioners motion for reconsideration
, [17] prompting them to file with the appellate court, on August 14, 2000, thei
r first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No. 60205]
.[18] On August 23, 2000, the CA resolved to dismiss the petition on procedural
groundsfor lack of statement of material dates and for insufficient verification an
d certification against forum shopping. [19] An Entry of Judgment was later issu
ed by the appellate court on September 20, 2000.[20] Aggrieved by this developme
nt, petitioners filed with the CA, on September 19, 2000, still within the regle
mentary period, a second Petition for Certiorari under Rule 65 already stating t
herein the material dates and attaching thereto the proper verification and cert
ification. This second petition, which substantially raised the same issues as t
hose in the first, was docketed as CA-G.R. SP No. 60827.[21]
Ruling on the merits of the second petition, the appellate court rendered the as
sailed April 18, 2001 Decision [22] finding no grave abuse of discretion in the
trial court s denial of the motion to dismiss. The CA ruled, among others, that
the principle of lex loci celebrationis was not applicable to the case, because
nowhere in the pleadings was the validity of the written agreement put in issue.
The CA thus declared that the trial court was correct in applying instead the p
rinciple of lex loci solutionis.[23] Petitioners motion for reconsideration was
subsequently denied by the CA in the assailed July 25, 2001 Resolution. [24] Re
maining steadfast in their stance despite the series of denials, petitioners ins
tituted the instant Petition for Review on Certiorari [25] imputing the followin
g errors to the appellate court: A. The honorable court of appeals gravely erred
in finding that the trial court validly exercised jurisdiction over the instant
controversy, despite the fact that the contract subject matter of the proceedin
gs a quo was entered into by and between two japanese nationals, written wholly
in the japanese language and executed in tokyo, japan. B. The honorable court of
appeals gravely erred in overlooking the need to review our adherence to the pr
inciple of lex loci solutionis in the light of recent development[s] in private
international laws. [26] The pivotal question that this Court is called upon to
resolve is whether the subject matter jurisdiction of Philippine courts in civil
cases for specific performance and damages involving contracts executed outside
the country by foreign nationals may be assailed on the principles of lex loci
celebrationis, lex contractus, the state of the most significant relationship rule, or
forum non conveniens. However, before ruling on this issue, we must first dispo
se of the procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court s decision in CA-G.R.
SP No. 60205 has already barred the filing of the second petition docketed as C
A -G.R. SP No. 60827 (fundamentally raising the same issues as those in the firs
t one) and
REMLAW Page 19

the instant petition for review thereof. We do not agree. When the CA dismissed
CA-G.R. SP No. 60205 on account of the petition s defective certification of non
-forum shopping, it was a dismissal without prejudice.[27] The same holds true i
n the CA s dismissal of the said case due to defects in the formal requirement o
f verification [28] and in the other requirement in Rule 46 of the Rules of Cour
t on the statement of the material dates. [29] The dismissal being without preju
dice, petitioners can re-file the petition, or file a second petition attaching
thereto the appropriate verification and certificationas they, in fact didand stating
therein the material dates, within the prescribed period[30] in Section 4, Rule
65 of the said Rules. [31] The dismissal of a case without prejudice signifies t
he absence of a decision on the merits and leaves the parties free to litigate t
he matter in a subsequent action as though the dismissed action had not been com
menced. In other words, the termination of a case not on the merits does not bar
another action involving the same parties, on the same subject matter and theor
y. [32] Necessarily, because the said dismissal is without prejudice and has no
res judicata effect, and even if petitioners still indicated in the verification
and certification of the second certiorari petition that the first had already
been dismissed on procedural grounds, [33] petitioners are no longer required by
the Rules to indicate in their certification of non-forum shopping in the insta
nt petition for review of the second certiorari petition, the status of the afor
esaid first petition before the CA. In any case, an omission in the certificate
of non-forum shopping about any event that will not constitute res judicata and
litis pendentia, as in the present case, is not a fatal defect. It will not warr
ant the dismissal and nullification of the entire proceedings, considering that
the evils sought to be prevented by the said certificate are no longer present.
[34]
The Court also finds no merit in respondent s contention that petitioner Hasegaw
a is only authorized to verify and certify, on behalf of Nippon, the certiorari
petition filed with the CA and not the instant petition. True, the Authorization
[35] dated September 4, 2000, which is attached to the second certiorari petiti
on and which is also attached to the instant petition for review, is limited in
scopeits wordings indicate that Hasegawa is given the authority to sign for and act
on behalf of the company only in the petition filed with the appellate court, a
nd that authority cannot extend to the instant petition for review. [36] In a pl
ethora of cases, however, this Court has liberally applied the Rules or even sus
pended its application whenever a satisfactory explanation and a subsequent fulf
illment of the requirements have been made.[37] Given that petitioners herein su
fficiently explained their misgivings on this point and appended to their Reply
[38] an updated Authorization [39] for Hasegawa to act on behalf of the company
in the instant petition, the Court finds the same as sufficient compliance with
the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the
verification and certification. As respondent pointed out, and to which we agre
e, Hasegawa is truly not authorized to act on behalf of Nippon in this case. The
aforesaid September 4, 2000 Authorization and even the subsequent August 17, 20
01 Authorization were issued only by Nippon s president and chief executive offi
cer, not by the company s board of directors. In not a few cases, we have ruled
that corporate powers are exercised by the board of directors; thus, no person,
not even its officers, can bind the corporation, in the absence of authority fro
m the board.[40] Considering that Hasegawa verified and certified the petition o
nly on his
REMLAW Page 20

board.[40] Considering that Hasegawa verified and certified the petition only on
his behalf and not on behalf of the other petitioner, the petition has to be de
nied pursuant to Loquias v. Office of the Ombudsman. [41] Substantial compliance
will not suffice in a matter that demands strict observance of the Rules. [42]
While technical rules of procedure are designed not to frustrate the ends of jus
tice, nonetheless, they are intended to effect the proper and orderly dispositio
n of cases and effectively prevent the clogging of court dockets. [43] Further,
the Court has observed that petitioners incorrectly filed a Rule 65 petition to
question the trial court s denial of their motion to dismiss. It is a well -esta
blished rule that an order denying a motion to dismiss is interlocutory, and can
not be the subject of the extraordinary petition for certiorari or mandamus. The
appropriate recourse is to file an answer and to interpose as defenses the obje
ctions raised in the motion, to proceed to trial, and, in case of an adverse dec
ision, to elevate the entire case by appeal in due course. [44] While there are
recognized exceptions to this rule,[45] petitioners case does not fall among th
em. This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners questi
on its jurisdiction to hear and resolve the civil case for specific performance
and damages filed by the respondent. The ICA subject of the litigation was enter
ed into and perfected in Tokyo, Japan, by Japanese nationals, and written wholly
in the Japanese language. Thus, petitioners posit that local courts have no sub
stantial relationship to the parties [46] following the [state of the] most sign
ificant relationship rule in Private International Law. [47] The Court notes tha
t petitioners adopted an additional but different theory when they elevated the
case to the appellate court. In the Motion to Dismiss[48] filed with the trial c
ourt, petitioners never contended that the RTC is an inconvenient forum. They me
rely argued that the applicable law which will determine the validity or invalid
ity of respondent s claim is that of Japan, following the principles of lex loci
celebrationis and lex contractus. [49] While not abandoning this stance in thei
r petition before the appellate court, petitioners on certiorari significantly i
nvoked the defense of forum non conveniens. [50] On petition for review before t
his Court, petitioners dropped their other arguments, maintained the forum non c
onveniens defense, and introduced their new argument that the applicable princip
le is the [state of the] most significant relationship rule. [51] Be that as it
may, this Court is not inclined to deny this petition merely on the basis of the
change in theory, as explained in Philippine Ports Authority v. City of Iloilo.
[52] We only pointed out petitioners inconstancy in their arguments to emphasi
ze their incorrect assertion of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three consecutiv
e phases are involved: jurisdiction, choice of law, and recognition and enforcem
ent of judgments. Corresponding to these phases are the following questions: (1)
Where can or should litigation be initiated? (2) Which law will the court apply
? and (3) Where can the resulting judgment be enforced?[53]
Analytically, jurisdiction and choice of law are two distinct concepts. [54] Jur
isdiction considers whether it is fair to cause a defendant to travel to this st
ate; choice of law asks the further question whether the application of a substa
ntive law which will determine the merits of the case is fair to both parties. T
he power to exercise jurisdiction does not automatically give a state constituti
onal authority to apply forum law. While jurisdiction and the choice of the lex
fori will often coincide, the minimum contacts for one
REMLAW Page 21

and the choice of the lex fori will often coincide, the minimum contacts for one do no
t always provide the necessary significant contacts for the other. [55] The question o
f whether the law of a state can be applied to a transaction is different from t
he question of whether the courts of that state have jurisdiction to enter a jud
gment. [56]
In this case, only the first phase is at issuejurisdiction. Jurisdiction, however,
has various aspects. For a court to validly exercise its power to adjudicate a c
ontroversy, it must have jurisdiction over the plaintiff or the petitioner, over
the defendant or the respondent, over the subject matter, over the issues of th
e case and, in cases involving property, over the res or the thing which is the
subject of the litigation. [57] In assailing the trial court s jurisdiction here
in, petitioners are actually referring to subject matter jurisdiction. Jurisdict
ion over the subject matter in a judicial proceeding is conferred by the soverei
gn authority which establishes and organizes the court. It is given only by law
and in the manner prescribed by law. [58] It is further determined by the allega
tions of the complaint irrespective of whether the plaintiff is entitled to all
or some of the claims asserted therein. [59] To succeed in its motion for the di
smissal of an action for lack of jurisdiction over the subject matter of the cla
im, [60] the movant must show that the court or tribunal cannot act on the matte
r submitted to it because no law grants it the power to adjudicate the claims. [
61] In the instant case, petitioners, in their motion to dismiss, do not claim t
hat the trial court is not properly vested by law with jurisdiction to hear the
subject controversy for, indeed, Civil Case No. 00-0264 for specific performance
and damages is one not capable of pecuniary estimation and is properly cognizab
le by the RTC of Lipa City. [62] What they rather raise as grounds to question s
ubject matter jurisdiction are the principles of lex loci celebrationis and lex
contractus, and the state of the most significant relationship rule. The Court finds t
he invocation of these grounds unsound. Lex loci celebrationis relates to the law o
f the place of the ceremony[63] or the law of the place where a contract is made. [
64] The doctrine of lex contractus or lex loci contractus means the law of the plac
e where a contract is executed or to be performed.[65] It controls the nature, cons
truction, and validity of the contract [66] and it may pertain to the law volunt
arily agreed upon by the parties or the law intended by them either expressly or
implicitly. [67] Under the state of the most significant relationship rule, to ascert
ain what state law to apply to a dispute, the court should determine which state
has the most substantial connection to the occurrence and the parties. In a cas
e involving a contract, the court should consider where the contract was made, w
as negotiated, was to be performed, and the domicile, place of business, or plac
e of incorporation of the parties. [68] This rule takes into account several con
tacts and evaluates them according to their relative importance with respect to
the particular issue to be resolved. [69] Since these three principles in confli
ct of laws make reference to the law applicable to a dispute, they are rules pro
per for the second phase, the choice of law. [70] They determine which state s l
aw is to be applied in resolving the substantive issues of a conflicts problem.
[71] Necessarily, as the only issue in this case is that of jurisdiction, choice
-of-law rules are not only inapplicable but also not yet called for. Further, pe
titioners premature invocation of choice-of-law rules is exposed by the fact th
at they have not yet pointed out any conflict between the laws of Japan and ours
. Before determining which law should apply, first there should exist a conflict
of laws situation requiring the application of the conflict of laws rules. [72]
Also, when the law of a
REMLAW Page 22

situation requiring the application of the conflict of laws rules. [72] Also, wh
en the law of a foreign country is invoked to provide the proper rules for the s
olution of a case, the existence of such law must be pleaded and proved. [73] It
should be noted that when a conflicts case, one involving a foreign element, is
brought before a court or administrative agency, there are three alternatives o
pen to the latter in disposing of it: (1) dismiss the case, either because of la
ck of jurisdiction or refusal to assume jurisdiction over the case; (2) assume j
urisdiction over the case and apply the internal law of the forum; or (3) assume
jurisdiction over the case and take into account or apply the law of some other
State or States. [74] The courts power to hear cases and controversies is derived
from the Constitution and the laws. While it may choose to recognize laws of for
eign nations, the court is not limited by foreign sovereign law short of treatie
s or other formal agreements, even in matters regarding rights provided by forei
gn sovereigns. [75]
Neither can the other ground raised, forum non conveniens, [76] be used to depri
ve the trial court of its jurisdiction herein. First, it is not a proper basis f
or a motion to dismiss because Section 1, Rule 16 of the Rules of Court does not
include it as a ground. [77] Second, whether a suit should be entertained or di
smissed on the basis of the said doctrine depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court. [78
] In this case, the RTC decided to assume jurisdiction. Third, the propriety of
dismissing a case based on this principle requires a factual determination; henc
e, this conflicts principle is more properly considered a matter of defense. [79
]
Accordingly, since the RTC is vested by law with the power to entertain and hear
the civil case filed by respondent and the grounds raised by petitioners to ass
ail that jurisdiction are inappropriate, the trial and appellate courts correctl
y denied the petitioners motion to dismiss. WHEREFORE, premises considered, the pet
ition for review on certiorari is DENIED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI02.505\hasegawa.
docx>
REMLAW Page 23

Figueroa v. People, GR 147407, Jul 14, 2008

Sunday, November 14, 2010 11:18 PM
FIGUEROA vs. PEOPLE OF THE PHILIPPINES JULY 14, 2008 NACHURA, J. SUBJECT AREA: E
stoppel by laches NATURE: Petition for review on certiorari FACTS: Petitioner wa
s charged with the crime of reckless imprudence resulting in homicide. The RTC f
ound him guilty. In his appeal before the CA, the petitioner, for the first time
, questioned RTCs jurisdiction on the case. The CA in affirming the decision of
the RTC, ruled that the principle of estoppel by laches has already precluded th
e petitioner from questioning the jurisdiction of the RTCthe trial went on for 4
years with the petitioner actively participating therein and without him ever ra
ising the jurisdictional infirmity. The petitioner, for his part, counters that
the lack of jurisdiction of a court over the subject matter may be raised at any
time even for the first time on appeal. As undue delay is further absent herein
, the principle of laches will not be applicable. Hence, this petition. ISSUE: W
ON petitioners failure to raise the issue of jurisdiction during the trial of thi
s case, constitute laches in relation to the doctrine laid down in Tijam v. Sibo
nghanoy, notwithstanding the fact that said issue was immediately raised in peti
tioners appeal to the CA HELD:No . RATIO: Citing the ruling in Calimlim vs. Ramir
ez, the Court held that as a general rule, the issue of jurisdiction may be rais
ed at any stage of the proceedings, even on appeal, and is not lost by waiver or
by estoppel. Estoppel by laches may be invoked to bar the issue of lack of juri
sdiction only in cases in which the factual milieu is analogous to that of Tijam
v. Sibonghanoy. Laches should be clearly present for the Sibonghanoy doctrine t
o be applicable, that is, lack of jurisdiction must have been raised so belatedl
y as to warrant the presumption that the party entitled to assert it had abandon
ed or declined to assert it. In Sibonghanoy, the party invoking lack of jurisdic
tion did so only after fifteen years and at a stage when the proceedings had alr
eady been elevated to the CA. Sibonghanoy is an exceptional case because of the
presence of laches. In the case at bar, the factual settings attendant in Sibong
hanoy are not present. Petitioner Atty. Regalado, after the receipt of the Court
of Appeals resolution finding her guilty of contempt, promptly filed a Motion f
or Reconsideration assailing the said courts jurisdiction based on procedural inf
irmity in initiating the action. Her compliance with the appellate courts directi
ve to show cause why she should not be cited for contempt and filing a single pi
ece of pleading to that effect could not be considered as an active participatio
n in the judicial proceedings so as to take the case within the milieu of Sibong
hanoy. Rather, it is the natural fear to disobey the mandate of the court that c
ould lead to dire consequences that impelled her to comply. The petitioner is in
no way estopped by laches in assailing the jurisdiction of the RTC, considering
that he raised the lack thereof in his appeal before the appellate court. At th
at time, no considerable period had yet elapsed for laches to attach.
REMLAW Page 24

yet elapsed for laches to attach. DISPOSITIVE: Petition for review on certiorari
is granted. Criminal case is dismissed
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI07.627\figueroa.
docx>
REMLAW Page 25

Ruby Shelter v. Hon. Formaran GR 174914 Feb 10, 2009

Sunday, November 14, 2010 11:19 PM
G.R. No. 175914 : February 10, 2009
RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT CORPORATION, Petitioner, vs. HON. P
ABLO C. FORMARAN III, Presiding Judge of Regional Trial Court Branch 21, Naga Ci
ty, as Pairing Judge for Regional Trial Court Branch 22, Formerly Presided By HO
N. NOVELITA VILLEGAS-LLAGUNO (Retired 01 May 2006), ROMEO Y. TAN, ROBERTO L. OBI
EDO and ATTY. TOMAS A. REYES, Respondents.
DE C I SI O N
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Ru
les of Court seeking the reversal of the Decision[1 ] dated 22 November 2006 of
the Court of Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its assai
led Decision, affirmed the Order[2 ] dated 24 March 2006 of the Regional Trial C
ourt (RTC), Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering p
etitioner Ruby Shelter Builders and Realty Development Corporation to pay additi
onal docket/filing fees, computed based on Section 7(a) of Rule 141 of the Rules
of Court, as amended.
chanroblesvirtuallawlibrary
The present Petition arose from the following facts: chanroblesvirtuallawlibrary
Petitioner obtained a loan[3 ] in the total amount of P95,700,620.00 from respon
dents Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured by real estate
mortgages over five parcels of land, all located in Triangulo, Naga City, covere
d by Transfer Certificates of Title (TCTs) No. 38376,[4 ] No. 29918,[5 ] No. 383
74,[6 ] No. 39232,[7 ] and No. 39225,[8 ] issued by the Registry of Deeds for Na
ga City, in the name of petitioner. When petitioner was unable to pay the loan w
hen it became due and demandable, respondents Tan and Obiedo agreed to an extens
ion of the same. chanroblesvirtuallawlibrary
In a Memorandum of Agreement[9 ] dated 17 March 2005, respondents Tan and Obiedo
granted petitioner until 31 December 2005 to settle its indebtedness, and condo
ned the interests, penalties and surcharges accruing thereon from 1 October 2004
to 31 December 2005 which amounted to P74,678,647.00. The Memorandum of Agreeme
nt required, in turn, that petitioner execute simultaneously with the said Memor
andum, by way of dacion en pago, Deeds of Absolute Sale in favor of respondents
Tan and Obiedo, covering the same parcels of land subject of the mortgages. The
Deeds of Absolute Sale would be uniformly dated 2 January 2006, and state that p
etitioner sold to respondents Tan and Obiedo the parcels of land for
REMLAW Page 26

that petitioner sold to respondents Tan and Obiedo the parcels of land for the f
ollowing purchase prices: chanroblesvirtuallawlibrary TCT No. 38376 29918
38374
Purchase Price P 9,340,000.00 P 28,000,000.00
P 12,000,000.00
39232 39225
P 1,600,000.00 P 1,600,000.00
chanroblesvirtuallawlibrary
Petitioner could choose to pay off its indebtedness with individual or all five
parcels of land; or it could redeem said properties by paying respondents Tan an
d Obiedo the following prices for the same, inclusive of interest and penalties:
chanroblesvirtuallawlibrary TCT No. 38376 29918 38374 39232
39225
Redemption Price P 25,328,939.00 P 35,660,800.00 P 28,477,600.00 P 6,233,381.00
P 6,233,381.00
In the event that petitioner is able to redeem any of the afore-mentioned parcel
s of land, the Deed of Absolute Sale covering the said property shall be nullifi
ed and have no force and effect; and respondents Tan and Obiedo shall then retur
n the owners duplicate of the corresponding TCT to petitioner and also execute a
Deed of Discharge of Mortgage. However, if petitioner is unable to redeem the p
arcels of land within the period agreed upon, respondents Tan and Obiedo could a
lready present the Deeds of Absolute Sale covering the same to the Office of the
Register of Deeds for Naga City so respondents Tan and Obiedo could acquire TCT
s to the said properties in their names. chanroblesvirtuallawlibrary The Memoran
dum of Agreement further provided that should petitioner contest, judicially or
otherwise, any act, transaction, or event related to or necessarily connected wi
th the said Memorandum and the Deeds of Absolute Sale involving the five parcels
of land, it would pay respondents Tan and Obiedo P10,000,000.00 as liquidated d
amages inclusive of costs and attorneys fees. Petitioner would likewise pay resp
ondents Tan and Obiedo the condoned interests, surcharges and penalties.[10] Fin
ally, should a contest arise from the Memorandum of Agreement, Mr. Ruben Sia (Si
a), President of petitioner corporation, personally assumes, jointly and several
ly with petitioner, the latters monetary obligation to respondent Tan and Obiedo
.
REMLAW Page 27

petitioner, the latters monetary obligation to respondent Tan and Obiedo.

chanroblesvirtuallawlibrary
Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized the
Memorandum of Agreement dated 17 March 2005 between respondent Tan and Obiedo, o
n one hand, and petitioner, on the other.
chanroblesvirtuallawlibrary
Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia, exe
cuted separate Deeds of Absolute Sale,[1 1 ] over the five parcels of land, in f
avor of respondents Tan and Obiedo. On the blank spaces provided for in the said
Deeds, somebody wrote the 3rd of January 2006 as the date of their execution. T
he Deeds were again notarized by respondent Atty. Reyes also on 3 January 2006.
chanroblesvirtuallawlibrary Without payment having been made by petitioner on 31
December 2005, respondents Tan and Obiedo presented the Deeds of Absolute Sale
dated 3 January 2006 before the Register of Deeds of Naga City on 8 March 2006,
as a result of which, they were able to secure TCTs over the five parcels of lan
d in their names. chanroblesvirtuallawlibrary On 16 March 2006, petitioner filed
before the RTC a Complaint[1 2 ] against respondents Tan, Obiedo, and Atty. Rey
es, for declaration of nullity of deeds of sales and damages, with prayer for th
e issuance of a writ of preliminary injunction and/or temporary restraining orde
r (TRO). The Complaint was docketed as Civil Case No. 2006-0030. chanroblesvirtu
allawlibrary On the basis of the facts already recounted above, petitioner raise
d two causes of action in its Complaint. chanroblesvirtuallawlibrary As for the
first cause of action, petitioner alleged that as early as 27 December 2005, its
President already wrote a letter informing respondents Tan and Obiedo of the in
tention of petitioner to pay its loan and requesting a meeting to compute the fi
nal amount due. The parties held meetings on 3 and 4 January 2006 but they faile
d to arrive at a mutually acceptable computation of the final amount of loan pay
able. Respondents Tan and Obiedo then refused the request of petitioner for furt
her dialogues. Unbeknownst to petitioner, despite the ongoing meetings, responde
nts Tan and Obiedo, in evident bad faith, already had the pre-executed Deeds of
Absolute Sale notarized on 3 January 2006 by respondent Atty. Reyes. Atty. Reyes
, in connivance with respondents Tan and Obiedo, falsely made it appear in the D
eeds of Absolute Sale that Mr. Sia had personally acknowledged/ratified the said
Deeds before Atty. Reyes. chanroblesvirtuallawlibrary Asserting that the Deeds
of Absolute Sale over the five parcels of land were executed merely as security
for the payment of its loan to respondents Tan
REMLAW Page 28

executed merely as security for the payment of its loan to respondents Tan and O
biedo; that the Deeds of Absolute Sale, executed in accordance with the Memorand
um of Agreement, constituted pactum commisorium and as such, were null and void;
and that the acknowledgment in the Deeds of Absolute Sale were falsified, petit
ioner averred: chanroblesvirtuallawlibrary 13.That by reason of the fraudulent a
ctions by the [herein respondents], [herein petitioner] is prejudiced and is now
in danger of being deprived, physically and legally, of the mortgaged propertie
s without benefit of legal processes such as the remedy of foreclosure and its a
ttendant procedures, solemnities and remedies available to a mortgagor, while [p
etitioner] is desirous and willing to pay its obligation and have the mortgaged
properties released. [1 3] chanroblesvirtuallawlibrary
In support of its second cause of action, petitioner narrated in its Complaint t
hat on 18 January 2006, respondents Tan and Obiedo forcibly took over, with the
use of armed men, possession of the five parcels of land subject of the falsifie
d Deeds of Absolute Sale and fenced the said properties with barbed wire. Beginn
ing 3 March 2006, respondents Tan and Obiedo started demolishing some of the com
mercial spaces standing on the parcels of land in question which were being rent
ed out by petitioner. Respondents Tan and Obiedo were also about to tear down a
principal improvement on the properties consisting of a steel-and-concrete struc
ture housing a motor vehicle terminal operated by petitioner. The actions of res
pondents Tan and Obiedo were to the damage and prejudice of petitioner and its t
enants/lessees. Petitioner, alone, claimed to have suffered at least P300,000.00
in actual damages by reason of the physical invasion by respondents Tan and Obi
edo and their armed goons of the five parcels of land. chanroblesvirtuallawlibra
ry Ultimately, petitioners prayer in its Complaint reads: chanroblesvirtuallawli
brary
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable
Court that upon the filing of this complaint, a 72-hour temporary restraining o
rder be forthwith issued ex parte: chanroblesvirtuallawlibrary
(a)Restraining [herein respondents] Tan and Obiedo, their agents, privies or rep
resentatives, from committing act/s tending to alienate the mortgaged properties
from the [herein petitioner] pending the resolution of the case, including but
not limited to the acts complained of in paragraph 14, above; chanroblesvirtuall
awlibrary (b)Restraining the Register of Deeds of Naga City from entertaining mo
ves by the [respondents] to have [petitioners] certificates of title to the mort
gaged properties cancelled and changed/registered in
REMLAW Page 29

the mortgaged properties cancelled and changed/registered in [respondents] Tans

and Obiedos names, and/or released to them;
chanroblesvirtuallawlibrary
(c)After notice and hearing, that a writ of preliminary injunction be issued imp
osing the same restraints indicated in the next preceding two paragraphs of this
prayer; and chanroblesvirtuallawlibrary (d)After trial, judgment be rendered:
chanroblesvirtuallawlibrary
1. Making the injunction permanent; chanroblesvirtuallawlibrary 2. Declaring the
provision in the Memorandum of Agreement requiring the [petitioner] to execute
deed of sales (sic) in favor of the [respondents Tan and Obiedo] as dacion en pa
go in the event of nonpayment of the debt as pactum commissorium; chanroblesvirt
uallawlibrary 3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374, 38376,
39225 and 39232, all dated January 3, 2006, the same being in contravention of
law; chanroblesvirtuallawlibrary 4. Ordering the [respondents] jointly and solid
arily to pay the [petitioner] actual damages of at least P300,000.00; attorneys
fees in the amount of P100,000.00 plus P1,000.00 per court attendance of counsel
as appearance fee; litigation expenses in the amount of at least P10,000.00 and
exemplary damages in the amount of P300,000.00, plus the costs. chanroblesvirtu
allawlibrary
[Petitioner] further prays for such other reliefs as may be proper, just and equ
itable under the premises. [14]
chanroblesvirtuallawlibrary
Upon filing its C omplaint with the RTC on 16 March 2006, petitioner paid the su
m of P13,644.25 for docket and other legal fees, as assessed by the Office of th
e Clerk of Court. The Clerk of Court initially considered Civil Case No. 2006-00
30 as an action incapable of pecuniary estimation and computed the docket and ot
her legal fees due thereon according to Section 7(b)(1), Rule 141 of the Rules o
f Court. chanroblesvirtuallawlibrary
Only respondent Tan filed an Answer[15] to the C omplaint of petitioner. Respond
ent Tan did admit that meetings were held with Mr. Sia, as the representative of
petitioner, to thresh out Mr. Sias charge that the computation by respondents T
an and Obiedo of the interests, surcharges and penalties accruing on the loan of
petitioner was replete with errors and uncertainties. However, Mr. Sia failed t
o back up his accusation of errors and uncertainties and to present his own fina
l computation of the amount due. Disappointed and exasperated, respondents Tan a
nd Obiedo informed Mr. Sia that they had already asked respondent Atty. Reyes to
come over to notarize the Deeds of Absolute Sale. Respondent Atty. Reyes asked
Mr. Sia whether it was his signature appearing above his printed
REMLAW Page 30

Absolute Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature
appearing above his printed name on the Deeds of Absolute Sale, to which Mr. Si
a replied yes. On 4 January 2006, Mr. Sia still failed to establish his claim of
errors and uncertainties in the computation of the total amount which petitione
r must pay respondent Tan and Obiedo. Mr. Sia, instead, sought a nine-month exte
nsion for paying the loan obligation of petitioner and the reduction of the inte
rest rate thereon to only one percent (1%) per month. Respondents Tan and Obiedo
rejected both demands. chanroblesvirtuallawlibrary
Respondent Tan maintained that the Deeds of Absolute Sale were not executed mere
ly as securities for the loan of petitioner. The Deeds of Absolute Sale over the
five parcels of land were the consideration for the payment of the total indebt
edness of petitioner to respondents Tan and Obiedo, and the condonation of the 1
5-month interest which already accrued on the loan, while providing petitioner w
ith the golden opportunity to still redeem all or even portions of the propertie
s covered by said Deeds. Unfortunately, petitioner failed to exercise its right
to redeem any of the said properties. chanroblesvirtuallawlibrary
Belying that they forcibly took possession of the five parcels of land, responde
nt Tan alleged that it was Mr. Sia who, with the aid of armed men, on board a Sp
orts Utility Vehicle and a truck, rammed into the personnel of respondents Tan a
nd Obiedo causing melee and disturbance. Moreover, by the execution of the Deeds
of Absolute Sale, the properties subject thereof were, ipso jure, delivered to
respondents Tan and Obiedo. The demolition of the existing structures on the pro
perties was nothing but an exercise of dominion by respondents Tan and Obiedo.
chanroblesvirtuallawlibrary
Respondent Tan, thus, sought not just the dismissal of the C omplaint of petitio
ner, but also the grant of his counterclaim. The prayer in his Answer is faithfu
lly reproduced below: chanroblesvirtuallawlibrary
Wherefore, premises considered, it is most respectfully prayed that, after due h
earing, judgment be rendered dismissing the complaint, and on the counterclaim,
[herein petitioner] and Ruben Sia, be ordered to indemnify, jointly and severall
y [herein respondents Tan and Obiedo] the amounts of not less than P10,000,000.0
0 as liquidated damages and the further sum of not less than P500,000.00 as atto
rneys fees. In the alternative, and should it become necessary, it is hereby pra
yed that [petitioner] be ordered to pay herein [respondents Tan and Obiedo] the
entire principal loan of P95,700,620.00, plus interests, surcharges and penaltie
s computed from March 17, 2005 until the entire sum is fully paid, including the
amount of P74,678,647.00 foregone interest covering the period from October 1,
2004 to December 31, 2005 or for a total of fifteen (15) months, plus incidental
expenses as may be proved in court, in the event that Annexes G to L be nullifi
ed. Other relief and remedies as are just and equitable under the premises are h
ereby prayed for.[1 6] chanroblesvirtuallawlibrary
Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he co
ntended that Civil Case No. 2006-0030 involved real properties, the docket fees
for which should be computed in accordance with Section 7(a), not Section 7(b)(1
), of Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC which to
ok effect on 16 August 2004. Since petitioner did not pay the appropriate docket
fees for Civil Case No. 2006-0030, the RTC did not acquire jurisdiction over th
e said case. Hence, respondent Tan asked the RTC to issue an order requiring pet
itioner to pay the correct and accurate docket fees pursuant to Section 7(a), Ru
le 141 of the Rules of Court, as amended; and should petitioner fail to do so, t
o deny and dismiss the prayer of petitioner for the annulment of the Deeds of Ab
solute Sale for having been executed in contravention of the law or of the Memor
andum of Agreement as pactum commisorium. chanroblesvirtuallawlibrary
REMLAW Page 31

As required by the RTC, the parties submitted their Position Papers on the matte
r. On 24 March 2006, the RTC issued an Order[17] granting respondent Tans Omnibu
s Motion. In holding that both petitioner and respondent Tan must pay docket fee
s in accordance with Section 7(a), Rule 141 of the Rules of Court, as amended, t
he RTC reasoned: chanroblesvirtuallawlibrary
It must be noted that under paragraph (b) 2. of the said Section 7, it is provid
ed that QUIETING OF TITLE which is an action classified as beyond pecuniary esti
mation shall be governed by paragraph (a). Hence, the filing fee in an action fo
r Declaration of Nullity of Deed which is also classified as beyond pecuniary es
timation, must be computed based on the provision of Section 7(A) herein-above,
in part, quoted. chanroblesvirtuallawlibrary
Since [herein respondent], Romeo Tan in his Answer has a counterclaim against th
e plaintiff, the former must likewise pay the necessary filling (sic) fees as pr
ovided for under Section 7 (A) of Amended Administrative Circular No. 35-2004 is
sued by the Supreme Court.[18] chanroblesvirtuallawlibrary
C onsequently, the RTC decreed on the matter of docket/filing fees: chanroblesvi
rtuallawlibrary
WHEREFORE, premises considered, the [herein petitioner] is hereby ordered to pay
additional filing fee and the [herein respondent], Romeo Tan is also ordered to
pay docket and filing fees on his counterclaim, both computed based on Section
7(a) of the Supreme C ourt Amended Administrative Circular No. 35-2004 within fi
fteen (15) days from receipt of this Order to the C lerk of Court, Regional Tria
l Court, Naga C ity and for the latter to compute and to collect the said fees a
ccordingly.[19] chanroblesvirtuallawlibrary
Petitioner moved[20] for the partial reconsideration of the 24 March 2006 Order
of the RTC, arguing that C ivil Case No. 2006-0030 was principally for the annul
ment of the Deeds of Absolute Sale and, as such, incapable of pecuniary estimati
on. Petitioner submitted that the RTC erred in applying Section 7(a), Rule 141 o
f the Rules of C ourt, as amended, to petitioners first cause of action in its C
omplaint in C ivil Case No. 2006-0030. chanroblesvirtuallawlibrary
In its Order[21] dated 29 March 2006, the RTC refused to reconsider its 24 March
2006 Order, based on the following ratiocination: chanroblesvirtuallawlibrary
Analyzing, the action herein pertains to real property, for as admitted by the [
herein petitioner], the deeds of sale in question pertain to real property x x x
. The Deeds of Sale subject of the instant case have already been transferred in
the name of the [herein respondents Tan and Obiedo].
chanroblesvirtuallawlibrary
C ompared with Quieting of Title, the latter action is brought when there is clo
ud on the title to real property or any interest therein or to prevent a cloud f
rom being cast upon title to the real property (Art. 476, Civil Code of the Phil
ippines) and the plaintiff must have legal or equitable title to or interest in
the real property which is the subject matter of the action (Art. 447, ibid.), a
nd yet plaintiff in QUIETING OF TITLE is required to pay the fees in accordance
with paragraph (a) of Section 7 of the said Amended Administrative
REMLAW Page 32

is required to pay the fees in accordance with paragraph (a) of Section 7 of the
said Amended Administrative C ircular No. 35-2004, hence, with more reason that
the [petitioner] who no longer has title to the real properties subject of the
instant case must be required to pay the required fees in accordance with Sectio
n 7(a) of the Amended Administrative Circular No. 35-2004 afore-mentioned. chanr
oblesvirtuallawlibrary
Furthermore, while [petitioner] claims that the action for declaration of nullit
y of deed of sale and memorandum of agreement is one incapable of pecuniary esti
mation, however, as argued by the [respondent Tan], the issue as to how much fil
ing and docket fees should be paid was never raised as an issue in the case of R
ussell vs. Vestil, 304 SCRA 738. chanroblesvirtuallawlibrary
xxxx
chanroblesvirtuallawlibrary
WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED. [22] chanrob
lesvirtuallawlibrary
In a letter dated 19 April 2006, the RTC Clerk of C ourt computed, upon the requ
est of counsel for the petitioner, the additional docket fees petitioner must pa
y for in Civil Case No. 2006-0030 as directed in the afore-mentioned RTC Orders.
Per the computation of the RTC Clerk of C ourt, after excluding the amount peti
tioner previously paid on 16 March 2006, petitioner must still pay the amount of
P720,392.60 as docket fees.[23] chanroblesvirtuallawlibrary
Petitioner, however, had not yet conceded, and it filed a Petition for Certiorar
i with the C ourt of Appeals; the petition was docketed as CA-G.R. SP No. 94800.
According to petitioner, the RTC[24] acted with grave abuse of discretion, amou
nting to lack or excess of jurisdiction, when it issued its Orders dated 24 Marc
h 2006 and 29 March 2006 mandating that the docket/filing fees for Civil Case No
. 2006-0030, an action for annulment of deeds of sale, be assessed under Section
7(a), Rule 141 of the Rules of C ourt, as amended. If the Orders would not be r
evoked, corrected, or rectified, petitioner would suffer grave injustice and irr
eparable damage. chanroblesvirtuallawlibrary
On 22 November 2006, the Court of Appeals promulgated its Decision wherein it he
ld that: chanroblesvirtuallawlibrary
C learly, the petitioners complaint involves not only the annulment of the deeds
of sale, but also the recovery of the real properties identified in the said do
cuments. In other words, the objectives of the petitioner in filing the complain
t were to cancel the deeds of sale and ultimately, to recover possession of the
same. It is therefore a real action. chanroblesvirtuallawlibrary
C onsequently, the additional docket fees that must be paid cannot be assessed i
n accordance with Section 7(b). As a real action, Section 7(a) must be applied i
n the assessment and payment of the proper docket fee. chanroblesvirtuallawlibra
ry
Resultantly, there is no grave abuse of discretion amounting to lack or excess o
f jurisdiction on the part of the court a quo. By grave abuse of discretion is m
eant capricious and whimsical exercise of judgment as is equivalent to lack of j
urisdiction, and mere abuse of discretion is not enough it must be grave. The ab
use must be grave and patent, and it must be shown that the discretion was exerc
ised arbitrarily and
REMLAW Page 33

despotically. chanroblesvirtuallawlibrary
Such a situation does not exist in this particular case. The evidence is insuffi
cient to prove that the court a quo acted despotically in rendering the assailed
orders. It acted properly and in accordance with law. Hence, error cannot be at
tributed to it. [25] chanroblesvirtuallawlibrary
Hence, the fallo of the Decision of the appellate court reads: chanroblesvirtual
lawlibrary
WHEREFORE, the petition for certiorari is DENIED. The assailed Orders of the cou
rt a quo are AFFIRMED.[2 6 ] chanroblesvirtuallawlibrary
Without seeking reconsideration of the foregoing Decision with the Court of Appe
als, petitioner filed its Petition for Review on Certiorari before this Court, w
ith a lone assignment of error, to wit: chanroblesvirtuallawlibrary
18.The herein petitioner most respectfully submits that the C ourt of Appeals co
mmitted a grave and serious reversible error in affirming the assailed Orders of
the Regional Trial Court which are clearly contrary to the pronouncement of thi
s Honorable Court in the case of Spouses De Leon v. Court of Appeals, G.R. No. 1
04796, March 6, 1998, not to mention the fact that if the said judgment is allow
ed to stand and not rectified, the same would result in grave injustice and irre
parable damage to herein petitioner in view of the prohibitive amount assessed a
s a consequence of said Orders. [27] chanroblesvirtuallawlibrary
In Manchester Development Corporation v. Court of Appeals,[28] the Court explici
tly pronounced that [t]he court acquires jurisdiction over any case only upon th
e payment of the prescribed docket fee. Hence, the payment of docket fees is not
only mandatory, but also jurisdictional. chanroblesvirtuallawlibrary
In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,[29] the Court laid down guidel
ines for the implementation of its previous pronouncement in Manchester under pa
rticular circumstances, to wit: chanroblesvirtuallawlibrary
1. It is not simply the filing of the complaint or appropriate initiatory pleadi
ng, 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 o
f the initiatory pleading is not accompanied by payment of the docket fee, the c
ourt may allow payment of the fee within a reasonable time but in no case beyond
the applicable prescriptive or reglementary period. chanroblesvirtuallawlibrary
2. The same rule applies to permissive counterclaims, third-party claims and sim
ilar 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 wi
thin a reasonable time but also in no case beyond its applicable prescriptive or
reglementary period. chanroblesvirtuallawlibrary
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
REMLAW Page 34

payment of the prescribed filing fee but, subsequently, the judgment awards a cl
aim not specified in the pleading, or if specified the same has been left for de
termination by the court, the additional filing fee therefor shall constitute a
lien on the judgment. It shall be the responsibility of the Clerk of C ourt or h
is duly authorized deputy to enforce said lien and assess and collect the additi
onal fee.
chanroblesvirtuallawlibrary
In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that p
etitioner did not pay the correct amount of docket fees for C ivil Case No. 2006
-0030. According to both the trial and appellate courts, petitioner should pay d
ocket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as a
mended. Consistent with the liberal tenor of Sun Insurance, the RTC, instead of
dismissing outright petitioners Complaint in Civil C ase No. 2006-0030, granted
petitioner time to pay the additional docket fees. Despite the seeming munificen
ce of the RTC , petitioner refused to pay the additional docket fees assessed ag
ainst it, believing that it had already paid the correct amount before, pursuant
to Section 7(b)(1), Rule 141 of the Rules of Court, as amended. chanroblesvirtu
allawlibrary
Relevant to the present controversy are the following provisions under Rule 141
of the Rules of C ourt, as amended by A.M. No. 04-2-04-SC [30] and Supreme Court
Amended Administrative Circular No. 35-2004[31]: chanroblesvirtuallawlibrary
SEC . 7. C lerks of Regional Trial Courts. chanroblesvirtuallawlibrary
(a)For filing an action or a permissive OR COMPULSORY counterclaim, CROSS-CLAIM,
or money claim against an estate not based on judgment, or for filing a third-p
arty, fourth-party, etc. complaint, or a complaint-in-intervention, if the total
sum claimed, INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF WHATEVER
KIND, AND ATTORNEYS FEES, LITIGATIO NEXPENSES AND COSTS and/or in cases involvi
ng property, the FAIR MARKET value of the REAL property in litigation STATED IN
THE CURRENT TAX DEC LARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNA
L REVENUE, WHICHEVER IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PRO
PERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION OR THE V
ALUE OF THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY THE CLAIMANT, is: chan
roblesvirtuallawlibrary
[Table of fees omitted.] chanroblesvirtuallawlibrary
If the action involves both a money claim and relief pertaining to property, the
n THE fees will be charged on both the amounts claimed and value of property bas
ed on the formula prescribed in this paragraph a.
chanroblesvirtuallawlibrary
(b)For filing: chanroblesvirtuallawlibrary
1.Actions where the value of the subject matter cannot be estimated chanroblesvi
rtuallawlibrary
2.Special civil actions, except judicial foreclosure of mortgage, EXPROPRIATION
PROCEEDINGS, PARTITION AND QUIETING OF TITLE which will chanroblesvirtuallawlibr
ary
3.
All other actions not involving property
chanroblesvirtuallawlibrary

REMLAW Page 35

3.
All other actions not involving property
chanroblesvirtuallawlibrary
[Table of fees omitted.] chanroblesvirtuallawlibrary
The docket fees under Section 7(a), Rule 141, in cases involving real property d
epend on the fair market value of the same: the higher the value of the real pro
perty, the higher the docket fees due. In contrast, Section 7(b)(1), Rule 141 im
poses a fixed or flat rate of docket fees on actions incapable of pecuniary esti
mation. chanroblesvirtuallawlibrary
In order to resolve the issue of whether petitioner paid the correct amount of d
ocket fees, it is necessary to determine the true nature of its Complaint. The d
ictum adhered to in this jurisdiction is that the nature of an action is determi
ned by the allegations in the body of the pleading or Complaint itself, rather t
han by its title or heading.[32] However, the Court finds it necessary, in ascer
taining the true nature of Civil Case No. 2006-0030, to take into account signif
icant facts and circumstances beyond the Complaint of petitioner, facts and circ
umstances which petitioner failed to state in its C omplaint but were disclosed
in the preliminary proceedings before the court a quo. chanroblesvirtuallawlibra
ry
Petitioner persistently avers that its C omplaint in Civil Case No. 2006-0030 is
primarily for the annulment of the Deeds of Absolute Sale. Based on the allegat
ions and reliefs in the Complaint alone, one would get the impression that the t
itles to the subject real properties still rest with petitioner; and that the in
terest of respondents Tan and Obiedo in the same lies only in the Deeds of Absol
ute Sale sought to be annulled. chanroblesvirtuallawlibrary
What petitioner failed to mention in its C omplaint was that respondents Tan and
Obiedo already had the Memorandum of Agreement, which clearly provided for the
execution of the Deeds of Absolute Sale, registered on the TC Ts over the five p
arcels of land, then still in the name of petitioner. After respondents Tan and
Obiedo had the Deeds of Absolute Sale notarized on 3 January 2006 and presented
the same to Register of Deeds for Naga C ity on 8 March 2006, they were already
issued TCTs over the real properties in question, in their own names. Respondent
s Tan and Obiedo have also acquired possession of the said properties, enabling
them, by petitioners own admission, to demolish the improvements thereon. chanro
blesvirtuallawlibrary
It is, thus, suspect that petitioner kept mum about the afore-mentioned facts an
d circumstances when they had already taken place before it filed its C omplaint
before the RTC on 16 March 2006. Petitioner never expressed surprise when such
facts and circumstances were established before the RTC, nor moved to amend its
C omplaint accordingly. Even though the Memorandum of Agreement was supposed to
have long been registered on its TCTs over the five parcels of land, petitioner
did not pray for the removal of the same as a cloud on its title. In the same ve
in, although petitioner alleged that respondents Tan and Obiedo forcibly took ph
ysical possession of the subject real properties, petitioner did not seek the re
storation of such possession to itself. And despite learning that respondents Ta
n and Obiedo already secured TCTs over the subject properties in their names, pe
titioner did not ask for the cancellation of said titles. The only logical and r
easonable explanation is that petitioner is reluctant to bring to the attention
of the C ourt certain facts and circumstances, keeping its C omplaint safely wor
ded, so as to institute only an action for annulment of Deeds of Absolute Sale.
Petitioner deliberately avoided raising issues on the title and possession of th
e real properties that may lead the Court to classify its case as a real action.

chanroblesvirtuallawlibrary
No matter how fastidiously petitioner attempts to conceal them, the allegations
and reliefs it sought in its
REMLAW Page 36

No matter how fastidiously petitioner attempts to conceal them, the allegations

and reliefs it sought in its C omplaint in C ivil Case No. 2006-0030 appears to
be ultimately a real action, involving as they do the recovery by petitioner of
its title to and possession of the five parcels of land from respondents Tan and
Obiedo. chanroblesvirtuallawlibrary
A real action is one in which the plaintiff seeks the recovery of real property;
or, as indicated in what is now Section 1, Rule 4 of the Rules of C ourt, a rea
l action is an action affecting title to or recovery of possession of real prope
rty.[33] chanroblesvirtuallawlibrary
Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04
-2-04-SC, had a specific paragraph governing the assessment of the docket fees f
or real action, to wit: chanroblesvirtuallawlibrary
In a real action, the assessed value of the property, or if there is none, the e
stimated value thereof shall be alleged by the claimant and shall be the basis i
n computing the fees.
chanroblesvirtuallawlibrary
It was in accordance with the afore-quoted provision that the Court, in Gochan v
. Gochan,[34] held that although the caption of the complaint filed by therein r
espondents Mercedes Gochan, et al. with the RTC was denominated as one for speci
fic performance and damages, the relief sought was the conveyance or transfer of
real property, or ultimately, the execution of deeds of conveyance in their fav
or of the real properties enumerated in the provisional memorandum of agreement.
Under these circumstances, the case before the RTC was actually a real action,
affecting as it did title to or possession of real property. C onsequently, the
basis for determining the correct docket fees shall be the assessed value of the
property, or the estimated value thereof as alleged in the complaint. But since
Mercedes Gochan failed to allege in their complaint the value of the real prope
rties, the Court found that the RTC did not acquire jurisdiction over the same f
or non-payment of the correct docket fees. chanroblesvirtuallawlibrary
Likewise, in Siapno v. Manalo,[35] the C ourt disregarded the title/denomination
of therein plaintiff Manalos amended petition as one for Mandamus with Revocati
on of Title and Damages; and adjudged the same to be a real action, the filing f
ees for which should have been computed based on the assessed value of the subje
ct property or, if there was none, the estimated value thereof. The Court expoun
ded in Siapno that: chanroblesvirtuallawlibrary
In his amended petition, respondent Manalo prayed that NTAs sale of the property
in dispute to Standford East Realty Corporation and the title issued to the lat
ter on the basis thereof, be declared null and void. In a very real sense, albei
t the amended petition is styled as one for Mandamus with Revocation of Title an
d Damages, it is, at bottom, a suit to recover from Standford the realty in ques
tion and to vest in respondent the ownership and possession thereof. In short, t
he amended petition is in reality an action in res or a real action. Our pronoun
cement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. The
re, we said: chanroblesvirtuallawlibrary
chanroblesvirtuallawlibrary
A prayer for annulment or rescission of contract does not operate to efface the
true objectives and nature of the action which is to recover real property. (Int
on, et al., v. Quintan, 81 Phil. 97, 1948) chanroblesvirtuallawlibrary
An action for the annulment or rescission of a sale of real property is a real a
ction. Its prime objective is to recover said real property. (Gavieres v. Sanche
z, 94 Phil. 760, 1954)

REMLAW Page 37

prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil.

760, 1954)
chanroblesvirtuallawlibrary
An action to annul a real estate mortgage foreclosure sale is no different from
an action to annul a private sale of real property. (Muoz v. Llamas, 87 Phil. 73
7, 1950). chanroblesvirtuallawlibrary
While it is true that petitioner does not directly seek the recovery of title or
possession of the property in question, his action for annulment of sale and hi
s claim for damages are closely intertwined with the issue of ownership of the b
uilding which, under the law, is considered immovable property, the recovery of
which is petitioner s primary objective. The prevalent doctrine is that an actio
n for the annulment or rescission of a sale of real property does not operate to
efface the fundamental and prime objective and nature of the case, which is to
recover said real property. It is a real action.
chanroblesvirtuallawlibrary
Unfortunately, and evidently to evade payment of the correct amount of filing fe
e, respondent Manalo never alleged in the body of his amended petition, much les
s in the prayer portion thereof, the assessed value of the subject res, or, if t
here is none, the estimated value thereof, to serve as basis for the receiving c
lerk in computing and arriving at the proper amount of filing fee due thereon, a
s required under Section 7 of this C ourts en banc resolution of 04 September 19
90 (Re: Proposed Amendments to Rule 141 on Legal Fees).
chanroblesvirtuallawlibrary
Even the amended petition, therefore, should have been expunged from the records
.
chanroblesvirtuallawlibrary
In fine, we rule and so hold that the trial court never acquired jurisdiction ov
er its C ivil Case No. Q-95-24791.[36] chanroblesvirtuallawlibrary
It was in Serrano v. Delica,[37] however, that the C ourt dealt with a complaint
that bore the most similarity to the one at bar. Therein respondent Delica aver
red that undue influence, coercion, and intimidation were exerted upon him by th
erein petitioners Serrano, et al. to effect transfer of his properties. Thus, De
lica filed a complaint before the RTC against Serrano, et al., praying that the
special power of attorney, the affidavit, the new titles issued in the names of
Serrano, et al., and the contracts of sale of the disputed properties be cancell
ed; that Serrano, et al. be ordered to pay Delica, jointly and severally, actual
, moral and exemplary damages in the amount of P200,000.00, as well as attorneys
fee of P200,000.00 and costs of litigation; that a TRO and a writ of preliminar
y injunction be issued ordering Serrano, et al. to immediately restore him to hi
s possession of the parcels of land in question; and that after trial, the writ
of injunction be made permanent. The Court dismissed Delicas complaint for the f
ollowing reasons: chanroblesvirtuallawlibrary
chanroblesvirtuallawlibrary
A careful examination of respondents complaint is that it is a real action.
In Paderanga vs. Buissan, we
held that in a real action, the plaintiff seeks the recovery of real property, o
r, as stated in Section 2(a), Rule 4 of the Revised Rules of Court, a real actio
n is one affecting title to real property or for the recovery of possession of,
or for partition or condemnation of, or foreclosure of a mortgage on a real prop
erty.

chanroblesvirtuallawlibrary
REMLAW Page 38

Obviously, respondents complaint is a real action involving not only the recover
y of real properties, but likewise the cancellation of the titles thereto.
chanroblesvirtuallawlibrary
C onsidering that respondents complaint is a real action, the Rule requires that
the assessed value of the property, or if there is none, the estimated value th
ereof shall be alleged by the claimant and shall be the basis in computing the f
ees. chanroblesvirtuallawlibrary
We note, however, that neither the assessed value nor the estimated value of the
questioned parcels of land were alleged by respondent in both his original and
amended complaint. What he stated in his amended complaint is that the disputed
realties have a BIR zonal valuation of P1,200.00 per square meter. However, the
alleged BIR zonal valuation is not the kind of valuation required by the Rule. I
t is the assessed value of the realty. Having utterly failed to comply with the
requirement of the Rule that he shall allege in his complaint the assessed value
of his real properties in controversy, the correct docket fee cannot be compute
d. As such, his complaint should not have been accepted by the trial court. We t
hus rule that it has not acquired jurisdiction over the present case for failure
of herein respondent to pay the required docket fee. On this ground alone, resp
ondents complaint is vulnerable to dismissal. [38] chanroblesvirtuallawlibrary
Brushing aside the significance of Serrano, petitioner argues that said decision
, rendered by the Third Division of the C ourt, and not by the Court en banc, ca
nnot modify or reverse the doctrine laid down in Spouses De Leon v. Court of App
eals.[39] Petitioner relies heavily on the declaration of this C ourt in Spouses
De Leon that an action for annulment or rescission of a contract of sale of rea
l property is incapable of pecuniary estimation. chanroblesvirtuallawlibrary
The C ourt, however, does not perceive a contradiction between Serrano and the S
pouses De Leon. The Court calls attention to the following statement in Spouses
De Leon: A review of the jurisprudence of this C ourt indicates that in determin
ing whether an action is one the subject matter of which is not capable of pecun
iary estimation, this C ourt has adopted the criterion of first ascertaining the
nature of the principal action or remedy sought. Necessarily, the determination
must be done on a case-to-case basis, depending on the facts and circumstances
of each. What petitioner conveniently ignores is that in Spouses De Leon, the ac
tion therein that private respondents instituted before the RTC was solely for a
nnulment or rescission of the contract of sale over a real property.[40] There a
ppeared to be no transfer of title or possession to the adverse party. Their com
plaint simply prayed for:
chanroblesvirtuallawlibrary
1. Ordering the nullification or rescission of the Contract of C onditional Sale
(Supplementary Agreement) for having violated the rights of plaintiffs (private
respondents) guaranteed to them under Article 886 of the C ivil C ode and/or vi
olation of the terms and conditions of the said contract.
chanroblesvirtuallawlibrary
2. Declaring void ab initio the Deed of Absolute Sale for being absolutely simul
ated; and
chanroblesvirtuallawlibrary
3. Ordering defendants (petitioners) to pay plaintiffs (private respondents) att
orney s fees in the amount of P100,000.00.[41] chanroblesvirtuallawlibrary
As this C ourt has previously discussed herein, the nature of Civil Case No. 200
6-0030 instituted by petitioner

REMLAW Page 39

As this C ourt has previously discussed herein, the nature of Civil Case No. 200
6-0030 instituted by petitioner before the RTC is closer to that of Serrano, rat
her than of Spouses De Leon, hence, calling for the application of the ruling of
the C ourt in the former, rather than in the latter. chanroblesvirtuallawlibrar
y
chanroblesvirtuallawlibrary
It is also important to note that, with the amendments introduced by A.M. No. 04
-2-04-SC, which became effective on 16 August 2004, the paragraph in Section 7,
Rule 141 of the Rules of Court, pertaining specifically to the basis for computa
tion of docket fees for real actions was deleted. Instead, Section 7(1) of Rule
141, as amended, provides that in cases involving real property, the FAIR MARKET
value of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATION
OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH IS HIGHER, O
R IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION x x x shall b
e the basis for the computation of the docket fees. Would such an amendment have
an impact on Gochan, Siapno, and Serrano? The Court rules in the negative. chan
roblesvirtuallawlibrary
A real action indisputably involves real property. The docket fees for a real ac
tion would still be determined in accordance with the value of the real property
involved therein; the only difference is in what constitutes the acceptable val
ue. In computing the docket fees for cases involving real properties, the courts
, instead of relying on the assessed or estimated value, would now be using the
fair market value of the real properties (as stated in the Tax Declaration or th
e Zonal Valuation of the Bureau of Internal Revenue, whichever is higher) or, in
the absence thereof, the stated value of the same. chanroblesvirtuallawlibrary
In sum, the C ourt finds that the true nature of the action instituted by petiti
oner against respondents is the recovery of title to and possession of real prop
erty. It is a real action necessarily involving real property, the docket fees f
or which must be computed in accordance with Section 7(1), Rule 141 of the Rules
of Court, as amended. The C ourt of Appeals, therefore, did not commit any erro
r in affirming the RTC Orders requiring petitioner to pay additional docket fees
for its Complaint in C ivil Case No. 2006-0030. chanroblesvirtuallawlibrary
chanroblesvirtuallawlibrary
The C ourt does not give much credence to the allegation of petitioner that if t
he judgment of the Court of Appeals is allowed to stand and not rectified, it wo
uld result in grave injustice and irreparable injury to petitioner in view of th
e prohibitive amount assessed against it. It is a sweeping assertion which lacks
evidentiary support. Undeniably, before the Court can conclude that the amount
of docket fees is indeed prohibitive for a party, it would have to look into the
financial capacity of said party. It baffles this Court that herein petitioner,
having the capacity to enter into multi-million transactions, now stalls at pay
ing P720,392.60 additional docket fees so it could champion before the courts it
s rights over the disputed real properties. Moreover, even though the C ourt exe
mpts individuals, as indigent or pauper litigants, from paying docket fees, it h
as never extended such an exemption to a corporate entity. chanroblesvirtuallawl
ibrary
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED
. The Decision, dated 22 November 2006, of the Court of Appeals in CA-G.R. SP No
. 94800, which affirmed the Orders dated 24 March 2006 and 29 March 2006 of the
R TC, Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitio
ner Ruby Shelter Builders and Realty De ve lopment Corporation to pay additional
docket/filing fees, computed based on Section 7(a), Rule 141 of the Rules of Co
urt, as amended, is hereby AFFIRMED. Costs against the petitioner.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI12.600\ruby%20sh
elter.docx>

REMLAW Page 40

Chavez v. CA GR 125813 Feb 6, 2007

Sunday, November 14, 2010 11:20 PM
G.R. No. 125813 February 6, 2007 FRANCISCO I. CHAVEZ and PEOPLE OF THE PHILIPPIN
ES, Petitioners, vs. COURT OF APPEALS, RAFAEL BASKIAS and RICARDO MANAPAT, Respon
dents. DEC ISIO N TINGA, J.: An Information for Libel dated 26 June 1995 was fil
ed before the Regional Trial Court (RTC) of Manila against private respondents R
afael Baskinas and Ricardo Manapat, with petitioner Francisco Chavez as the comp
lainant. The Information reads in part: "That on or about March 1995, in the Cit
y of Manila, Philippines, the said accused [Baskinas and Manapat] conspiring and
confederating with others whose true names, real identities and present whereab
outs are still unknown and helping one another, with malicious intent of impeach
ing the honesty, virtue, character and reputation of one FRANCISCO I. CHAVEZ, fo
rmer Solicitor General of the Philippines, and with the evident purpose of injur
ing and exposing him to public ridicule, hatred and contempt, did then and there
willfully, unlawfully and maliciously cause to be published in "Smart File," a
magazine of general circulation in Manila, and in their respective capacity as E
ditor-in-Chief and Author-Reporter, the following, to wit: xx x x with which pub
lished articles, the said accused meant and intended to convey, as in fact they
did mean and convey false and malicious imputations of a defect, vice and crime,
which insinuations and imputations as the accused well knew are entirely false
and untrue and without the foundation in fact whatsoever, and tend to impeach, b
esmirch and destroy the good name, character and reputation of said FRANCISCO I.
CHAVEZ, as in fact, he was exposed to dishonor, discredit, public hatred, conte
mpt and ridicule. CONTRARY TO LAW.1 Private respondents moved to quash the Infor
mation, as well as the corresponding warrants of arrest subsequently issued. How
ever, these motions were denied by the RTC of Manila, Branch 16, in an Order dat
ed 31 August 1995.2 Private respondents then filed a Petition for Certiorari wit
h the Court of Appeals, assailing the 31 August 1995 Order. The petition was gra
nted in a Decision dated 21 December 1995, hence the present petition. The crux
of the matter revolves around whether the above-quoted Information is sufficient
to sustain a charge for libel, considering the following requirement imposed by
Article 360 of the Revised Penal Code, as amended by Rep. Act No. 4363: Article
360. Persons responsible.Any person who shall publish, exhibit or cause the publ
ication or exhibition of any defamation in writing or by similar means, shall be
responsible for the same. The author or editor of a book or pamphlet, or the ed
itor or business manager of a daily newspaper, magazine or serial publication, s
hall be responsible for the defamations contained therein to the same extent as
if he were the author thereof. The criminal action and civil action for damages
in cases of written defamations, as provided for in this chapter shall be filed
simultaneously or separately with the court of first instance of the province or
city where the libelous article is printed and first published or where any of
the offended parties actually resides at the time of the commission of the offen
se: Provided, however, That where one of the offended parties is a public office
r whose office is in the City of Manila at the time of the commission of the off
ense, the action shall be filed in the Court of First Instance of the City of Ma
nila or of the city or province where the libelous article is printed and first
published, and in case such public officer does not hold office in the City of M
anila, the action shall be filed in the Court of First Instance of the province
or city where he held office at the time of the commission of the offense or whe
re the libelous article is printed and first published and in case one of the of
fended parties is a private individual, the action shall be filed
REMLAW Page 41

published and in case one of the offended parties is a private individual, the a
ction shall be filed in the Court of First Instance of the province or city wher
e he actually resides at the time of the commission of the offense or where the
libelous matter is printed and first published x x x. (Emphasis supplied.) Refer
ring to the fact that the Information against private respondents states that th
e libelous matter was "caused to be published in Smart File, a magazine of gener
al circulation in Manila," the Court of Appeals deemed the cases of Agbayani v.
Sayo3 and Soriano v. IAC4 as controlling. Based on the doctrines pronounced in s
aid cases, the appellate court held that the Information failed to allege where
the written defamation was "printed and first published," an allegation sine qua
non "if the circumstances as to where the libel was printed and first published
is used as the basis of the venue of the publication."5 It was observed that "v
enue of libel cases where the complainant is a private person is either in any o
f only two places, namely: (1) where the subject article was printed and first p
ublished; and (2) where complainant of the commission actually resides at the ti
me of the commission of the offense." The Information, it was noted, did not ind
icate that the libelous articles were printed or first published in Manila, or t
hat petitioner resided in Manila at the time of the publication of the articles.
The Court of Appeals further observed that even during the preliminary investig
ation, private respondents had already interposed that Smart File was actually p
rinted and first published in the City of Makati, and that the address of the pu
blisher Animal Farms Publication as indicated in the editorial page of the publi
cation itself was a post office box with the Makati Central Post Office. Even as
this observation was disputed by petitioner, who insisted the place of private
respondents printing and publishing business was actually in Manila, the Court of
Appeals noted that he should have been alerted enough by private respondents a
dverse insistence and that a due investigation would have inevitably revealed th
at private respondents had transferred from their previous Manila address to Mak
ati by the time the subject articles were published.6 Before this Court, petitio
ner attacks the reliance placed on Agbayani and Soriano, primarily by pointing o
ut that in both cases, the complainants were public officers, and not private of
ficials. Petitioner submits that the 1965 amendments to Article 360 of the Revis
ed Penal Code which imposed the present venue requisites were introduced in orde
r to preclude the harassment of members of the press through libel suits filed i
n remote and distant places by public officers. Petitioner also assails the conc
lusion of the Court of Appeals that the place of printing and first publication
of Smart File was in Makati, saying that this was derived out of hearsay evidenc
e. Does the subject information sufficiently vest jurisdiction in the Manila tri
al courts to hear the libel charge, in consonance with Article 360 of the Revise
d Penal Code? Jurisprudence applying the provision has established that it does
not. Agbayani supplies a comprehensive restatement of the rules of venue in acti
ons for criminal libel, following the amendment by Rep. Act No. 4363 of the Revi
sed Penal Code: Article 360 in its original form provided that the venue of the
criminal and civil actions for written defamations is the province wherein the l
ibel was published, displayed or exhibited, regardless of the place where the sa
me was written, printed or composed. Article 360 originally did not specify the
public officers and the courts that may conduct the preliminary investigation of
complaints for libel. Before article 360 was amended, the rule was that a crimi
nal action for libel may be instituted in any jurisdiction where the libelous ar
ticle was published or circulated, irrespective of where it was written or print
ed (People v. Borja, 43 Phil. 618). Under that rule, the criminal action is tran
sitory and the injured party has a choice of venue. Experience had shown that un
der that old rule the offended party could harass the accused in a libel case by
laying the venue of the criminal action in a remote or distant place. Thus, in
connection with an article published in the Daily Mirror and the Philippine Free
Press, Pio Pedrosa, Manuel V. Villareal and Joaquin Roces were charged with lib
el in the justice of the peace court of San Fabian, Pangasinan (Amansec v. De Gu
zman, 93 Phil. 933). To forestall such harassment, Republic Act No. 4363 was ena
cted. It lays down specific rules as to the venue of the criminal action so as t
o prevent the offended party in written defamation cases from inconveniencing th

e accused by means of out-of-town libel suits, meaning complaints filed in remot

e municipal courts (Explanatory Note for the bill which became Republic Act No.
REMLAW Page 42

filed in remote municipal courts (Explanatory Note for the bill which became Rep
ublic Act No. 4363, Congressional Record of May 20, 1965, pp. 424-5; Time, Inc.
v. Reyes, L-28882, May 31, 1971, 39 SCRA 303, 311). The rules on venue in articl
e 360 may be restated thus: 1. Whether the offended party is a public official o
r a private person, the criminal action may be filed in the Court of First Insta
nce of the province or city where the libelous article is printed and first publ
ished. 2. If the offended party is a private individual, the criminal action may
also be filed in the Court of First Instance of the province where he actually
resided at the time of the commission of the offense. 3. If the offended party i
s a public officer whose office is in Manila at the time of the commission of th
e offense, the action may be filed in the Court of First Instance of Manila. 4.
If the offended party is a public officer holding office outside of Manila, the
action may be filed in the Court of First Instance of the province or city where
he held office at the time of the commission of the offense.7 (Emphasis supplie
d.) The rules, as restated in Agbayani, do not lay a distinction that only those
actions for criminal libel lodged by public officers need be filed in the place
of printing and first publication. In fact, the rule is quite clear that such p
lace of printing and first publication stands as one of only two venues where a
private person may file the complaint for libel, the other venue being the place
of residence of the offended party at the time the offense was committed. The v
ery language itself of Article 360, as amended, does not support petitioner s th
esis that where the complainant is a private person, a more liberal interpretati
on of the phrase "printed and first published" is warranted than when a public o
fficer is the offended party. To wit: Article 360. Persons responsible.x x x The
criminal and civil action for damages in cases of written defamations as provide
d for in this chapter, shall be filed simultaneously or separately with the Cour
t of First Instance of the province or city where the libelous article is printe
d and first published or where any of the offended parties actually resides at t
he time of the commission of the offense. x x x Where the law does not distingui
sh, we should not distinguish.8 Petitioner faults the Court of Appeals for relyi
ng on Agbayani and Soriano, two cases wherein the complainant was a public offic
er. Yet the Court has since had the opportunity to reiterate the Agbayani doctri
ne even in cases where the complainants were private persons. Most telling of th
e recent precedents is Agustin v. Pamintuan,9 which involved a criminal action f
or libel filed by a private person, the acting general manager of the Baguio Cou
ntry Club, with the RTC of Baguio City. The relevant portion of the Information
is quoted below: That on or about the 17th day of March 2000, in the City of Bag
uio, Philippines, and within the jurisdiction of this Honorable Court, the said
accused, with deliberate intent and malicious intent and evil motive of attackin
g, injuring and impeaching the character, honesty, integrity, virtue and reputat
ion of one Anthony De Leon the acting general manager of the Baguio Country Club
, and as a private citizen of good standing and reputation in the community and
with malicious intent of exposing the (sic) Anthony De Leon to public hatred, co
ntempt, ridicule, discredit and dishonor, without any justifiable motive, did th
en and there willfully, maliciously and criminally prepare or cause to prepare,
write in his column "Cocktails" and publish in the Philippine Daily Inquirer, a
newspaper of general circulation in the City of Baguio and in the entire Philipp
ines x x x.10 (Emphasis supplied.) The phrase "the Philippine Daily Inquirer, a
newspaper of general circulation in the City of Baguio and in the entire Philipp
ines" bears obvious similarity to the reference in the Information in this case
to the publication involved as "Smart File, a magazine of general circulation in M
anila," and both private complainants in Agustin and the case at bar were privat
e citizens at the time of the filing of the complaint. Yet the Court in Agustin
ruled that the failure to allege that Baguio was the venue of printing and first
publication, or that the complainant therein was a resident of Baguio, constitu
ted a substantial defect that could not even be cured by mere amendment. The rul
es on venue as laid down in Agbayani were restated in Agustin,11 retaining no di
stinction as to venue whether the offended party is a public official or a priva
te person. In fact, the Court considered the phrase "a newspaper of general circ
ulation in the city of Baguio"

REMLAW Page 43

fact, the Court considered the phrase "a newspaper of general circulation in the
city of Baguio" as so utterly incapable of establishing Baguio as venue that th
e bulk of the discussion instead centered on whether the allegation that the com
plainant was the acting general manager of the Baguio Country Club sufficiently
established that he was a resident of Baguio City. On that point, the Court rule
d that it did not. In Macasaet v. People,12 the complainant was again a private
person.13 The Information for libel against a gossip columnist and the editors o
f the tabloid which published the column was filed with the RTC of Quezon City,
but it failed to state at all where the tabloid was printed and first published,
or where the complainant resided. Even as evidence was presented during trial t
hat complainant was a resident of Quezon City, the Court ultimately held that th
e allegations contained in the Information "[were] utterly insufficient to vest
jurisdiction on the RTC of Quezon City."14 Again, the rules laid down in Agbayan
i were cited as controlling.15 The Court further held that the evidence establis
hing the complainant s place of residence as Quezon City could not cure the defe
ct of the Information, noting that "it is settled that jurisdiction of a court o
ver a criminal case is determined by the allegations of the complaint or informa
tion."16 Macasaet resolutely stated that since the place of printing and first p
ublication or the place of residence at the time are "matters deal[ing] with the
fundamental issue of the court s jurisdiction, Article 360 of the Revised Penal
Code, as amended, mandates that either one of these statements must be alleged
in the information itself and the absence of both from the very face of the info
rmation renders the latter fatally defective."17 We affirm that proposition, whi
ch is fatal to this petition. There is no question that the Information fails to
allege that the City of Manila was the place where the offending articles were
printed and first published, or that petitioner was a resident of Manila at the
time the articles were published. Petitioner does submit that there is no need t
o employ the clause "printed and first published" in indicating where the crime
of libel was committed, as the term "publish" is "generic and within the general
context of the term print in so far as the latter term is utilized to refer t
o the physical act of producing the publication."18 Certainly, that argument fli
es in the face of our holding in Agustin, which involved a similarly worded Info
rmation, and which stands as a precedent we have no inclination to disturb. Stil
l, a perusal of the Information in this case reveals that the word "published" i
s utilized in the precise context of noting that the defendants "cause[d] to be
published in Smart File , a magazine of general circulation in Manila." The Inf
ormation states that the libelous articles were published in Smart File, and not
that they were published in Manila. The place "Manila" is in turn employed to s
ituate where Smart File was in general circulation, and not where the libel was
published or first printed. The fact that Smart File was in general circulation
in Manila does not necessarily establish that it was published and first printed
in Manila, in the same way that while leading national dailies such as the Phil
ippine Daily Inquirer or the Philippine Star are in general circulation in Cebu,
it does not mean that these newspapers are published and first printed in Cebu.
Indeed, if we hold that the Information at hand sufficiently vests jurisdiction
in Manila courts since the publication is in general circulation in Manila, the
re would be no impediment to the filing of the libel action in other locations w
here Smart File is in general circulation. Using the example of the Inquirer or
the Star, the granting of this petition would allow a resident of Aparri to file
a criminal case for libel against a reporter or editor in Jolo, simply because
these newspapers are in general circulation in Jolo. Such a consequence is preci
sely what Rep. Act No. 4363 sought to avoid. Our ruling in Banal III v. Panganib
an19 might tend to support petitioner s argument that the phrase "printed and fi
rst published" need not be necessarily employed in the Information. The Informat
ion in that case filed by private persons before the Makati City RTC read that t
he libelous matter was found in a newspaper column "of the Philippine Daily Inqu
irer which is published in English in the City of Makati, Metro Manila, Philippi
nes and of general circulation in the Philippines and abroad x x x x."20 The Cou
rt did observe that this information was "sufficient in form"21 as it clearly st
ated "that the newspaper is published in Makati City but circulated throughout t

he country, which allegation accordingly vests jurisdiction over the offense cha
rged in the RTC of Makati City."22 Yet even notwithstanding the fact that the in
formation in Banal III did not use the phrase "printed and first published," it
still categorically
REMLAW Page 44

information in Banal III did not use the phrase "printed and first published," i
t still categorically stated, at the very least, that the libelous matter was "p
ublished in English in the City of Makati." In contrast, what the Information at
bar categorically states is that the libelous matter was "published in Smart Fi
le," not "published in Manila."23 The fact that the present Information further
alleges that Smart File was "of general circulation in Manila" does not necessar
ily mean that the magazine was printed and first published in Manila. In any eve
nt, as the language in the present information hews closer to that in Agustin ra
ther than Banal III, we find the former as the appropriate precedent to apply in
this case. For us to grant the present petition, it would be necessary to aband
on the Agbayani rule providing that a private person must file the complaint for
libel either in the place of printing and first publication, or at the complain
ant s place of residence. We would also have to abandon the subsequent cases tha
t reiterate this rule in Agbayani, such as Soriano, Agustin, and Macasaet. There
is no convincing reason to resort to such a radical action. These limitations i
mposed on libel actions filed by private persons are hardly onerous, especially
as they still allow such persons to file the civil or criminal complaint in thei
r respective places of residence, in which situation there is no need to embark
on a quest to determine with precision where the libelous matter was printed and
first published.1awphi1.net If this disquisition impresses an unduly formalisti
c reading of the Information at hand, it should be reiterated that the flaws in
the Information strike at the very heart of the jurisdiction of the Manila RTC.
It is settled that jurisdiction of a court over a criminal case is determined by
the allegations of the complaint or information,24 and the offense must have be
en committed or any one of its essential ingredients took place within the terri
torial jurisdiction of the court.25 Article 360 states, in as unequivocal a mann
er as possible, that the criminal and civil action for libel shall be filed with
the court of the province or city "where the libelous article is printed and fi
rst published, or where any of the offended parties actually resides at the time
of the commission of the offense." If the Information for libel does not establ
ish with particularity any of these two venue requirements, the trial court woul
d have no jurisdiction to hear the criminal case. Another point bears to be adde
d. We are unable to share petitioner s insistence that since the protection of m
embers of the mass media from frivolous libel suits filed by public officers in
farflung places appears to have been a motivating force behind the amendments to
Article 360, a more liberal interpretation of the provision should obtain if th
e complainant is a private person. Without the venue requirements under Article
360, a private person induced by a motive to harass could, similarly as a public
officer, coerce a journalist to defend against a libel suit filed in the most r
emote of places. While Rep. Act No. 4363 does attribute value to the right to co
mment on the performance of public officials of their duties, it actually extend
s its protection to the right of any person to free expression, by assuring a re
asonable venue requirement even if the subject of comment is not a public office
r. Libel stands as an exception to one of the most cherished constitutional righ
ts, that of free expression. While libel laws ensure a modicum of responsibility
in one s own speech or expression, a prescribed legal standard that convenience
s the easy proliferation of libel suits fosters an atmosphere that inhibits the
right to speak freely. When such a prescribed standard is submitted for affirmat
ion before this Court, as is done in this petition, it must receive the highest
possible scrutiny, as it may interfere with the most basic of democratic rights.
Finally, we decline to resolve the other issues raised in the petition, as the
Information by itself is defective on its face, for the reasons we have stated,
that there is no need to evaluate whether Smart File was actually printed and fi
rst published in Manila or Makati City. The plain fact is that the Information f
ailed to make the sufficient allegation in that regard, and even any ascertainme
nt that the articles were printed and first published in Manila does not cure th
e jurisdictional defect of the Information. WHEREFORE, the petition is DENIED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI16.609\chavez%20
v%20ca.docx>

REMLAW Page 45

REMLAW Page 46

Springfield v. RTC Judge GR 142626 Feb 6, 2007

Sunday, November 14, 2010 11:20 PM
G.R. NO. 142628 February 6, 2007 SPRINGFIELD DEVELOPMENT CORPORATION, INC. and H
EIRS OF PETRA CAPISTRANO PIIT, Petitioners, vs. HONORABLE PRESIDING JUDGE OF REG
IONAL TRIAL COURT OF MISAMIS ORIENTAL, BRANCH 40, CAGAYAN DE ORO CITY, DEPARTMEN
T OF AGRARIAN REFORM ADJUDICATION BOARD (DARAB), DAR REGION X DIRECTOR, ROSALIO
GAMULO, FORTUNATO TELEN, EMERITA OLANGO, THERESA MONTUERTO, DOMINGO H. CLAPERO,
JOEL U. LIM, JENEMAIR U. POLLEY, FIDELA U. POLLEY, JESUS BATUTAY, NICANOR UCAB,
EMERIA U. LIM, EMILITO CLAPERO, ANTONINA RIAS, AURILLIO ROMULO, ERWIN P. CLAPERO
, EVELITO CULANGO, VILMA/CRUISINE ALONG, EFREN EMATA, GREGORIO CABARIBAN, and SA
BINA CANTORANA, Respondents. DEC ISIO N AUSTRIA-MARTINEZ, J.: Before the Court i
s a petition for review on certiorari under Rule 45 of the Rules of Court. The p
rincipal issue presented for resolution is whether the Regional Trial Court (RTC
) has jurisdiction to annul final judgment of the Department of Agrarian Reform
Adjudication Board (DARAB). The antecedent facts: Petra Capistrano Piit previous
ly owned Lot No. 2291 located in Cagayan de Oro City which measured 123,408 squa
re meters under Transfer Certificate of Title No. T-62623. Springfield Developme
nt Corporation, Inc. (Springfield) bought Lot No. 2291-C with an area of 68,732
square meters, and Lot No. 2291-D with an area of 49,778 square meters.1 Springf
ield developed these properties into a subdivision project called Mega Heights S
ubdivision.2 On May 4, 1990, the Department of Agrarian Reform (DAR), through it
s Municipal Agrarian Reform Officer, issued a Notice of Coverage,3 placing the p
roperty under the coverage of Republic Act (R.A.) No. 6657 or the Comprehensive
Agrarian Reform Law of 1988. There being an opposition from the heirs of Petra P
iit, the case was docketed as DARAB Case No. X-305. On August 27, 1991, DARAB Pr
ovincial Adjudicator Abeto A. Salcedo, Jr. rendered a decision declaring the nat
ure of the property as residential and not suitable for agriculture.4 The Region
al Director filed a notice of appeal, which the Provincial Adjudicator disallowe
d for being pro forma and frivolous.5 The decision became final and executory6 a
nd Springfield proceeded to develop the property.7 The DAR Regional Director the
n filed a petition for relief from judgment of the DARAB Decision, docketed as D
ARAB Case No. 0555. In its Decision dated October 5, 1995, the DARAB granted the
petition and gave due course to the Notice of Coverage. It also directed the Mu
nicipal Agrarian Reform Office to proceed with the documentation, acquisition, a
nd distribution of the property to the true and lawful beneficiaries.8 The DARAB
also issued an Order dated May 22, 1997, ordering the heirs of Piit and Springf
ield to pay the farmer-beneficiaries the amount of Twelve Million, Three Hundred
Forty Thousand, Eight Hundred Pesos (P12,340,800.00), corresponding to the valu
e of the property since the property has already been developed into a subdivisi
on. On June 13, 1997, Springfield and the heirs of Piit (petitioners) filed with
the RTC of Cagayan de Oro City, Branch 40, a petition for annulment of the DARA
B Decision dated October 5, 1995 and all its subsequent proceedings. Petitioners
contend that the DARAB decision was rendered without affording petitioners any
notice and hearing.9 On motion filed by the farmer-beneficiaries, the RTC issued
an Order dated June 25, 1997, dismissing the case for lack of jurisdiction.10 O
n July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil
action for
REMLAW Page 47

On July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civi
l action for certiorari, mandamus, and prohibition with prayer for the issuance
of writ of preliminary injunction and/or temporary restraining order, docketed a
s CA-G.R. SP No. 44563.11 Petitioners alleged that the RTC committed grave abuse
of discretion when it ruled that the annulment of judgment filed before it is a
ctually an action for certiorari in a different color. According to petitioners,
what it sought before the RTC is an annulment of the DARAB Decision and not cer
tiorari, as the DARAB Decision is void ab initio for having been rendered withou
t due process of law.12 In the assailed Decision13 dated July 16, 1998, the CA d
ismissed the petition for lack of merit, ruling that the RTC does not have juris
diction to annul the DARAB Decision because it is a coequal body.14 However, on
January 12, 1999, the CA ordered the elevation of the DARAB records before it, d
eclaring that it "overlooked the fact that petitioners likewise applied for a wr
it of prohibition against the enforcement of the DARAB decision which they claim
to be patently void."15 Forwarded to the CA were the records of the original ca
se filed with the DARAB-Region X, and it appearing that the petition for relief
from judgment and its pertinent records were forwarded to the DARAB Central Offi
ce, the CA issued another Resolution on December 20, 1999,16 requiring the DARAB
Central Office to forward the records of the case. But after receipt of the rec
ords, the CA simply denied petitioners motion for reconsideration per Resolutio
n17 dated February 23, 2000 without specifically resolving the issues raised con
cerning the prayer for a writ of prohibition. Hence, the present petition on the
following grounds: I THE COURT OF APPEALS COMMITTED A CLEAR ERROR OF LAW IN APP
LYING THE PRINCIPLE OF JUDICIAL STABILITY TO JUSTIFY ITS CONCLUSION DIVESTING TH
E REGIONAL TRIAL COURT OF ITS JURISDICTION VESTED BY LAW OVER CASES WHERE THE EX
CLUSIVE JURISDICTION WAS NOT EXPRESSLY GRANTED TO ANY OTHER COURTS [SIC] OR TRIB
UNAL, IN EFFECT, MODIFYING THE APPLICABLE LAW ON THE MATTER. II THE COURT OF APP
EALS IRREGULARLY DISMISSED PETITIONERS MOTION FOR RECONSIDERATION AFTER IT HAD
RESOLVED TO ENTERTAIN PETITIONERS PETITION FOR PROHIBITION AND TO REVIEW THE DA
RAB PROCEEDINGS, THEREBY DEPARTING FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS
. III THE HONORABLE SUPREME COURT, BEING THE HIGHEST TEMPLE OF RIGHTS, AND TO AV
OID SERIOUS MISCARRIAGE OF JUSTICE AND NEEDLESS DELAYS, IS MOST RESPECTFULLY URG
ED TO TAKE COGNIZANCE OF THE PETITION FILED IN CA-G.R. SP No. 44563 IN THE EXERC
ISE OF ITS CONCURRENT JURISDICTION, AS IF THE PETITION WAS ORIGINALLY LODGED BEF
ORE IT.18 Petitioners argue that under Batas Pambansa (B.P.) Blg. 129, there is
no provision that vests with the CA jurisdiction over actions for annulment of D
ARAB judgments. Petitioners, however, contend that the RTC may take cognizance o
f the annulment case since Section 19 of B.P. Blg. 129 vests the RTC with genera
l jurisdiction and an action for annulment is covered under such general jurisdi
ction. According to petitioners, "this is but a logical consequence of the fact
that no other courts were expressly given the jurisdiction over such actions."19
Petitioners further argue that the CA was in error when it summarily ignored th
eir application for a writ of prohibition, as it was necessary to restrain the D
ARAB from enforcing its void decision; and even if the DARAB decision was valid,
the writ of prohibition could have enjoined the execution of the DARAB decision
since there have been changes which will make the execution unjust and inequita
ble. In their Joint-Comments, the farmer-beneficiaries and the DARAB (respondent
s) refute
REMLAW Page 48

petitioners allegation that they were not afforded due process in the DARAB pro
ceedings, stating that petitioners were impleaded as a party thereto, and in fac
t, they attended some of the hearings although their counsel was absent. Respond
ents also adopt the CA s ruling that the RTC is not vested with any jurisdiction
to annul the DARAB decision. As stated at the outset, the main issue in this ca
se is whether the RTC has jurisdiction to annul a final judgment of the DARAB. N
ote must be made that the petition for annulment of the DARAB decision was filed
with the RTC on June 13, 1997, before the advent of the 1997 Rules of Civil Pro
cedure, which took effect on July 1, 1997. Thus, the applicable law is B.P. Blg.
129 or the Judiciary Reorganization Act of 1980, enacted on August 10, 1981. It
is also worthy of note that before the effectivity of B.P. Blg. 129, a court of
first instance has the authority to annul a final and executory judgment render
ed by another court of first instance or by another branch of the same court. Th
is was the Court s ruling in Dulap v. Court of Appeals.20 Yet, in subsequent cas
es,21 the Court held that the better policy, as a matter of comity or courteous
interaction between courts of first instance and the branches thereof, is for th
e annulment cases to be tried by the same court or branch which heard the main a
ction. The foregoing doctrines were modified in Ngo Bun Tiong v. Sayo,22 where t
he Court expressed that pursuant to the policy of judicial stability, the doctri
ne of non-interference between concurrent and coordinate courts should be regard
ed as highly important in the administration of justice whereby the judgment of
a court of competent jurisdiction may not be opened, modified or vacated by any
court of concurrent jurisdiction. With the introduction of B.P. Blg. 129,23 the
rule on annulment of judgments was specifically provided in Section 9(2), which
vested in the then Intermediate Appellate Court (now the CA) the exclusive origi
nal jurisdiction over actions for annulment of judgments of RTCs. Sec. 9(3) of B
.P. Blg. 129 also vested the CA with "exclusive appellate jurisdiction over all
final judgments, decisions, resolutions, orders, or awards of Regional Trial Cou
rts and quasi-judicial agencies, instrumentalities, boards or commissions, excep
t those falling within the appellate jurisdiction of the Supreme Court in accord
ance 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 1
7 of the Judiciary Act of 1948." As provided in paragraph 16 of the Interim Rule
s and Guidelines implementing B.P. Blg. 129, the quasi-judicial bodies whose dec
isions are exclusively appealable to the CA are those, which under the law, R.A.
No. 5434,24 or its enabling acts, are specifically appealable to the CA. Signif
icantly, B.P. Blg. 129 does not specifically provide for any power of the RTC to
annul judgments of quasi-judicial bodies. However, in BF Northwest Homeowners A
ssociation, Inc. v. Intermediate Appellate Court,25 the Court ruled that the RTC
s have jurisdiction over actions for annulment of the decisions of the National
Water Resources Council, which is a quasi-judicial body ranked with inferior cou
rts, pursuant to its original jurisdiction to issue writs of certiorari, prohibi
tion, and mandamus, under Sec. 21(1) of B.P. Blg. 129, in relation to acts or om
issions of an inferior court. This led to the conclusion that despite the absenc
e of any provision in B.P. Blg. 129, the RTC had the power to entertain petition
s for annulment of judgments of inferior courts and administrative or quasi-judi
cial bodies of equal ranking. This is also in harmony with the "pre-B.P. Blg. 12
9" rulings of the Court recognizing the power of a trial court (court of first i
nstance) to annul final judgments.26 Hence, while it is true, as petitioners con
tend, that the RTC had the authority to annul final judgments, such authority pe
rtained only to final judgments rendered by inferior courts and quasi-judicial b
odies of equal ranking with such inferior courts. The foregoing statements beg t
he next question, i.e., whether the DARAB is a quasi-judicial body with the rank
of an inferior court such that the RTC may take cognizance of an action for the
annulments of its judgments. The answer is no. The DARAB is a quasi-judicial bo
dy created by Executive Order Nos. 229 and 129-A. R.A. No. 6657 delineated its a
djudicatory powers and functions. The DARAB Revised Rules of Procedure adopted o
n December 26, 198827 specifically provides for the manner of judicial review of
its decisions, orders, rulings, or awards. Rule XIV, Section 1 states: SECTION
1. Certiorari to the Court of Appeals. Any decision, order, award or ruling by t

he
REMLAW Page 49

SECTION 1. Certiorari to the Court of Appeals. Any decision, order, award or rul
ing by the Board or its Adjudicators on any agrarian dispute or on any matter pe
rtaining to the application, implementation, enforcement or interpretation of ag
rarian reform laws or rules and regulations promulgated thereunder, may be broug
ht within fifteen (15) days from receipt of a copy thereof, to the Court of Appe
als by certiorari, except as provided in the next succeeding section. Notwithsta
nding an appeal to the Court of Appeals the decision of the Board or Adjudicator
appealed from, shall be immediately executory. Further, the prevailing 1997 Rul
es of Civil Procedure, as amended, expressly provides for an appeal from the DAR
AB decisions to the CA.28 The rule is that where legislation provides for an app
eal from decisions of certain administrative bodies to the CA, it means that suc
h bodies are co-equal with the RTC, in terms of rank and stature, and logically,
beyond the control of the latter.29 Given that DARAB decisions are appealable t
o the CA, the inevitable conclusion is that the DARAB is a co-equal body with th
e RTC and its decisions are beyond the RTC s control. The CA was therefore corre
ct in sustaining the RTC s dismissal of the petition for annulment of the DARAB
Decision dated October 5, 1995, as the RTC does not have any jurisdiction to ent
ertain the same. This brings to fore the issue of whether the petition for annul
ment of the DARAB judgment could be brought to the CA. As previously noted, Sect
ion 9(2) of B.P. Blg. 129 vested in the CA the exclusive original jurisdiction o
ver actions for annulment of judgments, but only those rendered by the RTCs. It
does not expressly give the CA the power to annul judgments of quasijudicial bod
ies. Thus, in Elcee Farms, Inc. v. Semillano,30 the Court affirmed the ruling of
the CA that it has no jurisdiction to entertain a petition for annulment of a f
inal and executory judgment of the NLRC, citing Section 9 of B.P. Blg. 129, as a
mended, which only vests in the CA "exclusive jurisdiction over actions for annu
lment of judgments of Regional Trial Courts." This was reiterated in Galang v. C
ourt of Appeals,31 where the Court ruled that that the CA is without jurisdictio
n to entertain a petition for annulment of judgment of a final decision of the S
ecurities and Exchange Commission. Recent rulings on similar cases involving ann
ulments of judgments of quasi-judicial bodies are also quite instructive on this
matter. In Cole v. Court of Appeals,32 involving an annulment of the judgment o
f the HLURB Arbiter and the Office of the President (OP), filed with the CA, the
Court stated that, "(U)nder Rule 47 of the Rules of Court, the remedy of annulm
ent of judgment is confined to decisions of the Regional Trial Court on the grou
nd of extrinsic fraud and lack of jurisdiction x x x." The Court further ruled,
viz.: Although the grounds set forth in the petition for annulment of judgment a
re fraud and lack of jurisdiction, said petition cannot prosper for the simple r
eason that the decision sought to be annulled was not rendered by the Regional T
rial Court but by an administrative agency (HLU Arbiter and Office of the Presid
ent), hence, not within the jurisdiction of the Court of Appeals. There is no su
ch remedy as annulment of judgment of the HLURB or the Office of the President.
Assuming arguendo that the annulment petition can be treated as a petition for r
eview under Rule 43 of the 1997 Rules of Civil Procedure, the same should have b
een dismissed by the Court of Appeals, because no error of judgment was imputed
to the HLURB and the Office of the President. Fraud and lack of jurisdiction are
beyond the province of petitions under Rule 43 of the Rules of Court, as it cov
ers only errors of judgment. A petition for annulment of judgment is an initiato
ry remedy, hence no error of judgment can be the subject thereof. Besides, the A
rbiter and the Office of the President indisputably have jurisdiction over the c
ases brought before them in line with our ruling in Francisco Sycip, Jr. vs. Cou
rt of Appeals, promulgated on March 17, 2000, where the aggrieved townhouse buye
rs may seek protection from the HLURB under Presidential Decree No. 957, otherwi
se known as "Subdivision and Condominium Buyers Protective Decree."33 (Emphasis
supplied) In Macalalag v. Ombudsman,34 the Court ruled that Rule 47 of the 1997
Rules of Civil Procedure on annulment of judgments or final orders and resoluti
ons covers "annulment by the Court of Appeals of judgments or final orders and r
esolutions in civil actions of Regional Trial Courts for which the ordinary reme
dies of new trial, appeal, petition for relief or other appropriate remedies
REMLAW Page 50

which the ordinary remedies of new trial, appeal, petition for relief or other a
ppropriate remedies could no longer be availed of through no fault of the petiti
oner." Thus, the Court concluded that judgments or final orders and resolutions
of the Ombudsman in administrative cases cannot be annulled by the CA, more so,
since The Ombudsman Act specifically deals with the remedy of an aggrieved party
from orders, directives and decisions of the Ombudsman in administrative discip
linary cases only, and the right to appeal is not to be considered granted to pa
rties aggrieved by orders and decisions of the Ombudsman in criminal or non-admi
nistrative cases. While these cases involve annulments of judgments under the 19
97 Rules of Civil Procedure, as amended, still, they still find application in t
he present case, as the provisions of B.P. Blg. 129 and the 1997 Rules of Civil
Procedure, as amended, on annulment of judgments are identical. Consequently, th
e silence of B.P. Blg. 129 on the jurisdiction of the CA to annul judgments or f
inal orders and resolutions of quasi-judicial bodies like the DARAB indicates it
s lack of such authority. Further, petitioners are also asking the Court to take
cognizance of their prayer for the issuance of a writ of prohibition, which the
y claim was not acted upon by the CA, citing the Court s action in Fortich v. Co
rona35 where the Court took cognizance of the petition previously filed with the
CA due to compelling reasons. The Court is not persuaded to do so. Fortich invo
lved a 144-hectare land located at San Vicente, Sumilao, Bukidnon, owned by the
Norberto Quisumbing, Sr. Management and Development Corporation (NQSRMDC), which
was leased as a pineapple plantation to Del Monte Philippines, Inc. for a perio
d of 10 years. During the existence of the lease, the DAR placed the entire 144hectare property under compulsory acquisition and assessed the land value at P2.
38 million. When the NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development Associa
tion) filed an application for conversion due to the passage of Resolution No. 6
by the Provincial Development Council of Bukidnon and Ordinance No. 24 by the S
angguniang Bayan of Sumilao, Bukidnon, reclassifying the area from agricultural
to industrial/institutional, the same was disapproved by the DAR Secretary and i
nstead, the property was placed under the compulsory coverage of Comprehensive A
grarian Reform Program for distribution to all qualified beneficiaries. This pro
mpted Governor Carlos O. Fortich of Bukidnon to file an appeal with the OP, whil
e NQSRMDC filed with the CA a petition for certiorari, and prohibition with prel
iminary injunction. The OP then issued a Decision dated March 29, 1996 reversing
the DAR Secretary s decision and approving the application for conversion. Exec
utive Secretary Ruben D. Torres denied the DAR s motion for reconsideration for
having been filed beyond the reglementary period of 15 days, and it was also dec
lared that the OP Decision dated March 29, 1996 had already become final and exe
cutory. Because of this, the farmer-beneficiaries staged a hunger strike on Octo
ber 9, 1997, protesting the OP s decision. In order to resolve the strike, the O
P issued a so-called "Win/Win" resolution on November 7, 1997, modifying the dec
ision in that NQSRMDC s application for conversion is approved only with respect
to the approximately 44-hectare portion of the land adjacent to the highway, as
recommended by the Department of Agriculture, while the remaining approximately
100 hectares traversed by an irrigation canal and found to be suitable for agri
culture shall be distributed to qualified farmer-beneficiaries.1awphi1.net A pet
ition for certiorari and prohibition under Rule 65 of the Revised Rules of Court
36 was then filed with the Court, which was contested by the Office of the Solic
itor General on the ground that the proper remedy should have been to file a pet
ition for review directly with the CA in accordance with Rule 43 of the Revised
Rules of Court. In resolving the issue, the Court recognized the rule that the S
upreme Court, CA and RTC have original concurrent jurisdiction to issue a writ o
f certiorari, prohibition, and mandamus. However, due to compelling reasons and
in the interest of speedy justice, the Court resolved to take primary jurisdicti
on over the petition in the interest of speedy justice, after which the Court nu
llified the act of the OP in re-opening the case and substantially modifying its
March 29, 1996 Decision which had already become final and executory, as it was
in gross disregard of the rules and basic legal precept that accord finality to
administrative determinations. It must be stressed at this point that the Court
, as a rule, will not entertain direct resort to it unless

REMLAW Page 51

the redress desired cannot be obtained in the appropriate courts, and exceptiona
l and compelling circumstances, such as cases of national interest and of seriou
s implications, justify the availment of the extraordinary remedy of writ of cer
tiorari, prohibition, or mandamus calling for the exercise of its primary jurisd
iction.37 The Court finds no compelling circumstances in this case to warrant a
relaxation of the foregoing rule. The Fortich case is not analogous with the pre
sent case such that the Court is not bound to abandon all rules, take primary ju
risdiction, and resolve the merits of petitioners application for a writ of pro
hibition. In the present case, the assailed DARAB Decision dated October 5, 1995
granting the petition for relief from judgment and giving due course to the Not
ice of Coverage was made pursuant to a petition for relief from judgment filed b
y the DAR, albeit petitioners are contesting the validity of the proceedings hel
d thereon. On the other hand, in Fortich, the OP s "Win/Win" resolution dated No
vember 7, 1997 was made motu proprio, as a result of the hunger strike staged by
the farmer-beneficiaries. Further, the OP s "Win/Win" Resolution dated November
7, 1997 in the Fortich case is a patently void judgment since it was evident th
at there was already an existing final and executory OP Decision dated March 29,
1996. In this case, the assailed DARAB Decision dated October 5, 1995 appears t
o be regular on its face, and for its alleged nullity to be resolved, the Court
must delve into the records of the case in order to determine the validity of pe
titioners argument of lack of due process, absent notice and hearing. Moreover,
the principle of hierarchy of courts applies generally to cases involving factu
al questions. As it is not a trier of facts, the Court cannot entertain cases in
volving factual issues.38 The question of whether the DARAB Decision dated Octob
er 5, 1995 is null and void and enforceable against petitioners for having been
rendered without affording petitioners due process is a factual question which r
equires a review of the records of this case for it to be judiciously resolved.
The Court notes that the CA, indeed, failed to resolve petitioners prayer for t
he issuance of the writ of prohibition, which, significantly, focuses on the all
eged nullity of the DARAB Decision dated October 5, 1995. On this score, the CA
found that the application for the issuance of the writ of prohibition was actua
lly a collateral attack on the validity of the DARAB decision. But, a final and
executory judgment may be set aside in three ways;39 and a collateral attack, wh
ereby in an action to obtain a different relief, an attack on the judgment is ne
vertheless made as an incident thereof,40 is one of these. This tenet is based u
pon a court s inherent authority to expunge void acts from its records.41 Despit
e recognizing the need to resolve petitioners application for the writ of prohi
bition in its Resolution dated January 12, 1999, the CA nonetheless summarily de
nied petitioners motion for reconsideration in its Resolution dated February 23
, 2000,42 leaving the matter hanging and unresolved. At first, the Court conside
red resolving the merits of petitioners motion for reconsideration concerning t
heir application for a writ of prohibition against enforcing the DARAB Decision
dated October 5, 1995. Thus, in a Resolution dated June 5, 2006, the Court direc
ted the CA to transmit the records of DARAB Case No. 0555, which was previously
required by the CA to be forwarded to it per Resolution dated December 20, 1999.
43 However, as of even date, the CA has not complied with the Court s Resolution
. Withal, upon re-examination of the issues involved in this case, the Court dee
ms it more judicious to remand this case to the CA for immediate resolution of p
etitioners motion for reconsideration, re: their application for the writ of pr
ohibition. Moreover, the radical conflict in the findings of the Provincial Adju
dicator and the DARAB as regards the nature of the subject property necessitates
a review of the present case. In this regard, the CA is in a better position to
fully adjudicate the case for it can delve into the records to determine the pr
obative value of the evidence supporting the findings of the Provincial Adjudica
tor and of the DARAB. In addition, the CA is empowered by its internal rules to
require parties to submit additional documents, as it may find necessary to prom
ote the ends of substantial justice, and further order the transmittal of the pr
oper records for it to fully adjudicate the case. After all, it is an avowed pol
icy of the courts that cases should be determined on the merits, after full oppo
rtunity to all parties for ventilation of their causes and defenses, rather than

on technicality or some procedural imperfections. In that way, the ends of just

ice would be
REMLAW Page 52

on technicality or some procedural imperfections. In that way, the ends of justi

ce would be served better.44 WHEREFORE, the petition is PARTLY GRANTED. This cas
e is REMANDED to the Court of Appeals which is DIRECTED to resolve petitioners
prayer for the issuance of the writ of prohibition in their Motion for Reconside
ration. Upon finality of this Decision, let the records be remanded forthwith to
the Court of Appeals.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI50.664\springfie
ld.docx>
REMLAW Page 53

Sta. Ana v. Carpo GR 164340 Nov 28, 2008

Sunday, November 14, 2010 11:20 PM
OTILIA STA. ANA vs. SPOUSES LEON G. CARPO and AURORA CARPO G.R. No. 164340 Novem
ber 28, 2008 NACHURA, J.: Before this Court is a Petition for Review on Certiora
ri1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Co
urt of Appeals (CA) Decision2 dated March 5, 2004 which reversed and set aside t
he Decision3 of the Department of Agrarian Reform Adjudication Board (DARAB) dat
ed June 24, 1998 and reinstated the Decision4 of the Provincial Agrarian Reform
Adjudicator (PARAD) of Laguna dated October 12, 1993. The Facts Respondent Leon
Carpo5 (Leon) and his brother Francisco G. Carpo are the registered co-owners of
a parcel of land designated as Lot No. 2175 of the Santa Rosa Estate Subdivisio
n, situated at Sta. Rosa, Laguna, covered by Transfer Certificate of Title (TCT)
No. T-172726 of the Register of Deeds of Laguna, with an area of 91,337 square
meters, more or less. A portion thereof, consisting of 3.5 hectares, pertained t
o Leon and his wife, respondent Aurora Carpo. It was devoted to rice and corn pr
oduction (subject land) and was tenanted by one Domingo Pastolero (Domingo), hus
band of Adoracion Pastolero (Adoracion).7 When Domingo passed away, Adoracion to
gether with her son Elpidio Pastolero, assumed the tenancy rights of Domingo ove
r the subject land. However, on December 29, 1983, Adoracion, by executing a not
arized Pinanumpaang Salaysay8 with the conformity of Leon, and for a considerati
on of P72,500.00, transferred her rights in favor of petitioner Otilia Sta. Ana9
(petitioner) who, together with her husband, Marciano de la Cruz (Marciano), be
came the new tenants of the subject land. At the outset, the parties had a harmo
nious tenancy relationship.10 Unfortunately, circumstances transpired which abra
ded the relationship. The Department of Agrarian Reform (DAR) mediated in order
to amicably settle the controversy, but no settlement was reached by the parties
. Thus, the instant case. In their Complaint for Ejectment due to Non-Payment of
Lease Rentals11 dated December 1, 1989, respondents alleged that it was their a
greement with petitioner and Marciano to increase the existing rentals from 36 c
avans to 45 cavans, and that, if respondents wanted to repossess the property, t
hey only had to pay the petitioner the amount of P72,500.00, the same amount pai
d by the latter to Adoracion. Respondents further averred that despite repeated
demands, petitioner refused to pay the actual rentals from July 1985 to Septembe
r 1989, in violation of Presidential Decree (P.D.) No. 817; and that the subject
land had been declared, upon the recommendation of the Human Settlements Commit
tee, suitable for commercial and industrial purposes, per Zoning Ordinance of 19
81 of the Municipality of Sta. Rosa, Laguna. Respondents prayed that petitioner
be ejected from the subject land and be directed to pay P75,016.00 as unpaid ren
tals. In their Answer12 dated January 26, 1990, petitioner and Marciano denied t
hat there was an agreement to increase the existing rental which was already fix
ed at 36 cavans of palay, once or twice a year depending on the availability of
irrigation water; that neither was there an agreement as to the future surrender
of the land in favor of the respondents; that they did not refuse to pay the re
ntals because they even sent verbal and written notices to the respondents, advi
sing them to accept the same; and that in view of the latters failure to respond,
petitioner and Marciano were compelled to sell the harvest and to deposit the p
roceeds thereof in Savings Account No. 9166 with the Universal Savings Bank at S
ta. Rosa, Laguna under the names of Leon and Marciano. As their special affirmat
ive defense, petitioner and Marciano claimed that Marciano is a farmer-beneficia
ry of the subject land pursuant to P.D. 27. Petitioner and Marciano prayed for t
he outright dismissal of the complaint and for the declaration of Marciano as fu
ll owner of the subject land. Thereafter, trial on the merits ensued. The PARADs
Ruling On October 12, 1993, the PARAD ruled that petitioner and Marciano deliber
ately defaulted in the payment of the rentals due the respondents. The PARAD fou
nd that the deposit made with Republic Planters Bank was actually in the names o
f petitioner and Marciano, hence, personal to them. The PARAD also found that it
was only during the hearing that petitioner and Marciano deposited the
REMLAW Page 54

PARAD also found that it was only during the hearing that petitioner and Marcian
o deposited the amount of P40,000.00 with the Universal Savings Bank for the unp
aid rentals. As such the PARAD considered the deposits as late payments and as i
mplied admission that indeed petitioner and Marciano did not pay the past rental
s when they fell due. The PARAD further held and disposed thus: The intent of th
e defendant to subject the said area under PD 27 should pass the criteria set. F
oremost is the determination of the aggregate riceland of plaintiff. He must hav
e more than seven (7) hectares of land principally devoted to the planting of pa
lay. Area over seven (7) hectares shall be the one to be covered by PD 27 on Ope
ration Land Transfer (OLT). In the case at bar, defendants failed to prove that
plaintiff has more than the required riceland. In fact the subject 3.5 hectares
are jointly owned by two. Hence, coverage for OLT is remote. Defendant claimed t
hat plaintiff is covered by LOI 474, and therefore, he is zero retention of area
. In reference to said law, wherein it provides landowner with other agricultura
l land of more than 7 hectares, or have other industrial lands from where he and
his family derived resources, then, the owner cannot retain any riceland. Howev
er, this is not applicable in the instant case, as the defendant failed to prove
that plaintiff has other source of income from where they will derive their sus
tenance. WHEREFORE, in view of the foregoing, Judgment is hereby rendered: a) Or
dering the ejectment of defendant from the subject landholding for non-payment o
f lease rentals; b) Ordering the defendant Marciano de la Cruz to surrender the
possession and cultivation of the subject land to herein plaintiffs; c) Ordering
the defendant to pay as actual damage the amount of P75,016.00 corresponding to
the unpaid rentals from July 18, 1985 up to September 16, 1989[; and] d) [D]ecl
aring the subject land not covered by Presidential Decree No. 27, Republic Act [
No.] 6657, and Executive Order No. 228. SO ORDERED. Petitioner and Marciano soug
ht relief from the DARAB.13 The DARABs Ruling On June 24, 1998, the DARAB held: I
t is a fundamental rule in this jurisdiction that for non-payment of lease renta
ls to warrant the dispossession and ejectment of a tenant, the same must be made
in a willful and deliberate manner (Cabero v. Caturna, et al., CA-G.R. 05886-R,
March 10, 1977). For a valid ouster or ejectment of a farmertenant, the willful
and deliberate intent not to pay lease rentals and/or share can be ascertained
when there is a determination of will not to do a certain act. Considering the c
ircumstances obtaining in this case, it cannot be concluded that the defendantsa
ppellants deliberately failed or refused to pay their lease rentals. It was not
the fault of defendantsappellants herein that the rentals did not reach the plai
ntiffs-appellees because the latter choose to lend a deaf ear to the notices sen
t to them. Clearly, therefore plaintiffs-appellees failed to show by substantial
evidence that the defendants-appellants deliberately failed or refused to pay t
heir lease rentals. It has been held that the mere failure of a tenant to pay th
e landowners share does not necessarily give the latter the right to eject the fo
rmer when there is lack of deliberate intent on the part of the tenant to pay (R
oxas y Cia v. Cabatuando, 1 SCRA 1106). Thus: WHEREFORE, finding the appeal inte
rposed by the defendants-appellants to be meritorious, the Decision appealed fro
m is hereby SET ASIDE and another judgment issued as follows: 1. Enjoining plain
tiffs-appellees to respect the peaceful possession and cultivation of the land i
n suit by the defendants-appellants; and 2. Directing the MARO of Sta. Rosa, Lag
una to assist the parties in the proper accounting of lease rentals to be paid b
y the defendants-appellants to the plaintiffs-appellees. No costs. SO ORDERED. A
ggrieved, respondents appealed to the CA. On April 16, 2003, Marciano passed awa
y.14 The CAs Ruling On March 5, 2004, the CA affirmed the factual findings of the
PARAD that petitioner and Marciano failed to pay the rentals and that there was
no valid tender of payment. The CA added that this failure to pay was tainted w
ith bad faith and deliberate intent. Thus, petitioner and Marciano did not legal
ly comply with their duties as tenants. Moreover, the CA held that the subject l
and was not covered by P.D. 27,
REMLAW Page 55

with their duties as tenants. Moreover, the CA held that the subject land was no
t covered by P.D. 27, Republic Act (R.A.) No. 6657 and Executive Order (E.O.) No
. 228, since the same had become a residential, commercial and industrial land,
to wit: In the case at bar, We opted to give more weight to the petitioners cont
ention that the "subject landholding is for residential, commercial, and industr
ial purposes as declared by zoning ordinance of 1981 of the town of Sta. Rosa, L
aguna upon recommendation of the Human Settlement Committee xxx." The vicinity m
ap of the subject landholding shows that it is almost beside Nissan Motors Techn
opa[r]k and surrounded by the South Expressway and several companies such as the
Coca-Cola Bottlers Philippines, Inc. and Toyota Motors Philippines along the Pu
long Santa Cruz, National Road. The vicinity map shows therefore that the subjec
t landholding is a residential, commercial, and industrial area exempted from th
e coverage of P.D. No. 27, Republic Act. No. 6657 and Executive Order No. 228. T
he CA ruled in favor of the respondents in this wise: WHEREFORE, premises consid
ered and pursuant to applicable law and jurisprudence on the matter, the present
Petition is hereby GRANTED. Accordingly, the decision of the Department of Agra
rian Reform Adjudication Board-Central Office, Elliptical Road, Diliman, Quezon
City (promulgated on June 24, 1998) is hereby REVERSED and SET ASIDE and a new o
ne entered- REINSTATING the decision of the Department of Agrarian Reform Adjudi
cation Board-Region IV, Office of the Provincial Adjudicator, Sta. Cruz, Laguna
(dated October 12, 1993). No pronouncement as to costs. SO ORDERED. Petitioner f
iled a Motion for Reconsideration15 assailing the aforementioned Decision which
the CA, however, denied in its Resolution16 dated June 28, 2004. Hence, this Pet
ition based on the following grounds: THE HONORABLE COURT OF APPEALS SERIOUSLY E
RRED IN ARROGATING UPON ITSELF WHAT IS OTHERWISE DARS POWER TO DETERMINE WHETHER
THE SUBJECT AGRICULTURAL LAND HAS BECOME RESIDENTIAL/INDUSTRIAL/COMMERCIAL. THE
HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT EQUATED "LAND RECLASSIFICATIO
N" WITH "LAND CONVERSION" FOR PURPOSES OF DETERMINING THE PROPRIETY OF EJECTMENT
OF AN AGRICULTURAL LESSEE. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN
IT FAILED TO NOTE THAT AN EJECTMENT SUIT BASED ON A CLAIM OF NON-PAYMENT OF LEAS
E RENTAL IS DIAMETRICALLY ANTITHETICAL TO THE CLAIM THAT THE SUBJECT LAND IS NO
LONGER AGRICULTURAL BUT "A RESIDENTIAL, COMMERCIAL AND INDUSTRIAL AREA EXEMPTED
FROM THE COVERAGE OF P.D. NO. 27, REPUBLIC ACT NO. 6657 AND EXECUTIVE ORDER NO.
228. THE DECISION DATED MARCH 5, 2004--INSOFAR AS IT ADOPTED THE FINDING OF DARA
B-REGION IV, OFFICE OF THE PROVINCIAL ADJUDICATOR, STA. CRUZ, LAGUNA INSTEAD OF
THAT OF THE DARABCENTRAL--IS VIOLATIVE OF SEC. 14, ART. VIII OF THE 1987 CONSTIT
UTION FOR HAVING DECIDED WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE F
ACTS AND THE LAW ON WHICH SAID DECISION IS BASED. THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED IN RESORTING TO SURMISES AND CONJECTURES WHEN IT RULED THAT THE
FAILURE OF THE HEREIN PETITIONER AND HER DECEASED HUSBAND TO DELIVER THE LEASE
RENTALS TO HEREIN RESPONDENTS, WAS DONE SO IN BAD FAITH AND WITH DELIBERATE INTE
NT TO DEPRIVE THE LAND OWNERS THEREOF. Petitioner asseverates that there is no e
vidence to support respondents claim that the failure to pay the lease rentals
was tainted with malevolence, as the records are replete with acts indicative of
good faith on the part of the petitioner and Marciano and bad faith on the part
of respondents. Moreover, petitioner claimed that the power to determine whethe
r or not the subject land is nonagricultural, hence, exempt from the coverage of
the Comprehensive Agrarian Reform Law (CARL), lies with the DAR, and not with t
he courts; that mere reclassification by way of a zoning ordinance does not warr
ant the dispossession of a tenant but conversion does, and entitles the tenant t
o payment of disturbance compensation; the legal concepts of reclassification an
d conversion are separate and distinct from each other; that respondents compla
int before the PARAD alleged and established the fact that the subject land is a
riceland, therefore, agricultural; that the CA failed to explain why it upheld
the findings of the PARAD on the issue of non-payment of lease rentals; and that
though the issue of nonpayment of lease rentals is a question of fact, due to t
he conflict of the factual findings of the PARAD and CA with those of the DARAB,
petitioner asks that this Court review the evidence on record, and
REMLAW Page 56

and CA with those of the DARAB, petitioner asks that this Court review the evide
nce on record, and pursuant to the CA decision in Cabero v. Caturna, et al.,17 r
ule on whether petitioner willfully and deliberately refused to pay lease rental
s as to warrant her dispossession from the subject land.18 On the other hand, re
spondents aver that petitioner and her family are wealthy, as they own numerous
properties in Sta. Rosa, Laguna including a luxurious house;19 that, as such, pe
titioner cannot be considered as a landless tenant deserving the protection of a
grarian reform laws; that the DARAB negated the highest degree of respect the fa
ctual findings of the PARAD deserved; that petitioner s claims that Marciano rep
eatedly made verbal and written notices20 for Leon to accept their lease rentals
were fraudulent designs to disguise the deliberate intent of petitioner not to
pay the lease rentals; that when Leon went to petitioner s residence, petitioner
did not pay the P10,000.00 due as lease rentals; that during the hearing before
the PARAD, when respondents counsel requested that they be furnished a bank ce
rtificate as to the existence of said bank deposits in Republic Planters Bank as
of April 20, 1987 and October 1, 1987, petitioner herself commented, "Nagdeposi
to ho talaga kami sa pangalan namin";21 that the statement of petitioner is an a
dmission that bank deposits, if any, were made, not in the name of Leon as conta
ined in the written notices, but rather in the names of petitioner and Marciano;
that such certificate was not introduced in evidence and that upon inquiry, sai
d deposits do not actually exist; that per recent inquiry, the bank deposit in U
niversal Savings Bank only contains P1,020.19 due to previous withdrawals made b
y Marciano; that the foregoing circumstances indicate a pattern of fraudulent mi
srepresentations by the petitioner to mislead the DARAB into believing that peti
tioner and Marciano did not deliberately refuse to pay the lease rentals; that f
rom July 18, 1985 up to the present, petitioner failed to pay the lease rentals
showing again, the deliberate refusal to pay; that this default on the part of t
he petitioner has been recurring for several years already, thus depriving the r
espondents as landowners of their share of the subject land in violation of the
principle of social justice; that as raised in respondents Omnibus Supplemental
Motion for Reconsideration22 before the DARAB and as found by the CA based on it
s vicinity map,23 the subject land is of a residential, commercial and industria
l character, exempted from agrarian reform coverage; and that the DARAB erred in
not finding the sale of the tenancy rights of Adoracion to petitioner and Marci
ano for P72,500.00 violative of P.D. 27 even if the same was with Leon s consent
. The sale, respondents contend was therefore, null and void ab initio, not susc
eptible of any ratification.24 Our Ruling Before we resolve this case on the mer
its, a procedural issue must be disposed of. Respondents strongly argue that the
instant Petition was filed out of time because, while petitioner originally cla
imed to have received her copy of the CA Resolution25 dated June 28, 2004, denyi
ng her Motion for Reconsideration,26 on July 12, 2004, petitioner eventually adm
itted, after respondents showed proof to the contrary, that she actually receive
d the said Resolution on July 7, 2004.27 Thus, petitioner had only up to July 22
, 2004 to appeal the CA s ruling to this Court. In this case, petitioner filed h
er Motion28 for Extension of Time to File Petition for Review on Certiorari (Mot
ion) on July 23, 2004. As such, there was no more period to extend. Further, the
instant Petition was filed on August 27, 2004, or three (3) days beyond the thi
rty-day extended period. Hence, respondents submit that the CA decision had alre
ady become final and executory.29 Petitioner alleges that on July 15, 2004, she
met with her counsel to engage the latter s legal services. During said meeting,
counsel asked petitioner about the date of receipt of the assailed CA Resolutio
n. Petitioner replied that she received her copy on July 12, 2004. On July 20, 2
004, counsel filed an Entry of Appearance with the CA.30 On July 23, 2004, petit
ioner through counsel filed the Motion for Extension of Time to File Petition fo
r Review. On August 11, 2004, petitioner received a copy of respondents Opposit
ion to the Motion. Thereafter, upon verification, petitioner admitted that she r
eceived the copy of the CA Resolution on July 7, 2004. Thus, her Motion was admi
ttedly filed one day late. Petitioner begs the indulgence of this Court for her
oversight and mistake, attributing the same to her lack of education and old age
. Rules of procedure are merely tools designed to facilitate the attainment of j

ustice. If the application of the Rules would tend to frustrate rather than to p
romote justice, it is always within our power to suspend the rules or except a p
articular case from their operation. Law and jurisprudence grant to courts the p
rerogative to relax compliance with the procedural rules, even the most mandator
y in character, mindful of the duty to reconcile the need to put an end to litig
ation speedily and the parties
REMLAW Page 57

right to an opportunity to be heard.31 Our recent ruling in Tanenglian v. Lorenz

o32 is instructive: We have not been oblivious to or unmindful of the extraordin
ary situations that merit liberal application of the Rules, allowing us, dependi
ng on the circumstances, to set aside technical infirmities and give due course
to the appeal. In cases where we dispense with the technicalities, we do not mea
n to undermine the force and effectivity of the periods set by law. In those rar
e cases where we did not stringently apply the procedural rules, there always ex
isted a clear need to prevent the commission of a grave injustice. Our judicial
system and the courts have always tried to maintain a healthy balance between th
e strict enforcement of procedural laws and the guarantee that every litigant be
given the full opportunity for the just and proper disposition of his cause. In
this case, petitioner was one day late in filing her Motion for Extension. To d
eny the Petition on this ground alone is too harsh a penalty for a days delay, ta
king into consideration the time, resources and effort spent by petitioner and e
ven by the respondents, in order to pursue this case all the way to this Court.
Thus, we dispense with the apparent procedural defect and resolve this case on t
he merits. The ends of justice are better served when cases are determined on th
e merits with all parties given full opportunity to ventilate their causes and d
efenses rather than on technicality or some procedural imperfections.33 The Peti
tion is impressed with merit. In sum, there are two (2) ultimate issues that req
uire resolution in this case: 1) Whether the CA erred in ruling that the subject
land had already become residential, commercial and/or industrial, thus, exclud
ed from the coverage of our laws on agrarian reform; and 2) Whether the petition
er, as an agricultural tenant, failed to pay her lease rentals when the same fel
l due as to warrant her dispossession of the subject land. On the first issue, w
e rule in the affirmative. To recapitulate, the instant case sprang from a Compl
aint for Ejectment based on Non-Payment of lease rentals. Though an allegation w
as made by the respondents that the land had been declared, upon the recommendat
ion of the Human Settlements Committee, suitable for commercial and industrial p
urposes, per Zoning Ordinance of 1981 of the Municipality of Sta. Rosa, no argum
ent was advanced by respondents to support such allegation, in the same way that
no prayer for the ejectment of the tenants was raised based on that allegation.
The PARAD held that petitioner should be ejected for non-payment of lease renta
ls. It also ruled that the subject land is not covered by P.D. No. 27, R.A. No.
6657, and E.O. No. 228, not on the basis of the allegation in the complaint, but
on the respondents right of retention. On appeal, the DARAB concentrated on th
e issue of petitioners failure to pay lease rentals. When the DARAB ruled that pe
titioner and Marciano did not deliberately fail to pay said rentals, respondents
raised a new issue in their Omnibus Motion that the transaction between Adoraci
on and petitioner was void in violation of P.D. No. 27, despite the conformity o
f Leon. This issue was not resolved by the DARAB. Finally, when the case reached
the CA, the appellate court affirmed the findings of the PARAD that petitioner
and Marciano deliberately and in bad faith did not pay the lease rentals. The CA
, however, also held that the subject land had already become a residential, com
mercial and industrial area based on the vicinity map showing that the land was
surrounded by commercial and industrial establishments. Without doubt, the PARAD
acted without jurisdiction when it held that the subject land was no longer cov
ered by our agrarian laws because of the retention rights of the respondents. Th
e CA likewise acted without jurisdiction when it ruled that the land had become
non-agricultural based on a zoning ordinance of 1981 on the strength of a mere vi
cinity map. These rulings violated the doctrine of primary jurisdiction. The doc
trine of primary jurisdiction precludes the courts from resolving a controversy
over which jurisdiction has initially been lodged in an administrative body of s
pecial competence. For agrarian reform cases, jurisdiction is vested in the Depa
rtment of Agrarian Reform (DAR); more specifically, in the Department of Agraria
n Reform Adjudication Board (DARAB). Executive Order 229 vested the DAR with (1)
quasi-judicial powers to determine and adjudicate agrarian reform matters; and
(2) jurisdiction over all matters involving the implementation of agrarian refor
m, except those falling under the exclusive original jurisdiction of the Departm
ent of Agriculture and the Department of Environment and Natural Resources.34 In

Department of Agrarian Reform v. Abdulwahid,35 we held:

REMLAW Page 58

In Department of Agrarian Reform v. Abdulwahid,35 we held: As held by this Court

in Centeno v. Centeno [343 SCRA 153], "the DAR is vested with the primary juris
diction to determine and adjudicate agrarian reform matters and shall have the e
xclusive jurisdiction over all matters involving the implementation of the agrar
ian reform program." The DARAB has primary, original and appellate jurisdiction
"to determine and adjudicate all agrarian disputes, cases, controversies, and ma
tters or incidents involving the implementation of the Comprehensive Agrarian Re
form Program under R.A. No. 6657, E.O. Nos. 229, 228 and 129-A, R.A. No. 3844 as
amended by R.A. No. 6389, P.D. No. 27 and other agrarian laws and their impleme
nting rules and regulations." Under Section 3 (d) of R.A. No. 6657 (CARP Law), "
agrarian dispute" is defined to include "(d) . . . any controversy relating to t
enurial arrangements, whether leasehold, tenancy, stewardship or otherwise over
lands devoted to agriculture, including disputes concerning farmworkers associat
ions or representation of persons in negotiating, fixing, maintaining, changing
or seeking to arrange terms or conditions of such tenurial arrangements. It incl
udes any controversy relating to compensation of lands acquired under this Act a
nd other terms and conditions of transfer of ownership from landowners to farmwo
rkers, tenants and other agrarian reform beneficiaries, whether the disputants s
tand in the proximate relation of farm operator and beneficiary, landowner and t
enant, or lessor and lessee." Simply put, agrarian disputes, as defined by law a
nd settled in jurisprudence, are within the primary and exclusive original juris
diction of the PARAD and the DARAB, while issues of retention and non-coverage o
f a land under agrarian reform, among others, are within the domain of the DAR S
ecretary. Thus, Section 3, Rule II of the 2003 DARAB Rules of Procedure provides
: SECTION 3. Agrarian Law Implementation Cases. The Adjudicator or the Board sha
ll have no jurisdiction over matters involving the administrative implementation
of RA No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL)
of 1988 and other agrarian laws as enunciated by pertinent rules and administra
tive orders, which shall be under the exclusive prerogative of and cognizable by
the Office of the Secretary of the DAR in accordance with his issuances, to wit
: 3.1 Classification and identification of landholdings for coverage under the a
grarian reform program and the initial issuance of CLOAs and EPs, including prot
ests or oppositions thereto and petitions for lifting of such coverage; 3.2 Clas
sification, identification, inclusion, exclusion, qualification, or disqualifica
tion of potential/actual farmer-beneficiaries; 3.3 Subdivision surveys of land u
nder CARP; 3.4 Recall, or cancellation of provisional lease rentals, Certificate
s of Land Transfers (CLTs) and CARP Beneficiary Certificates (CBCs) in cases out
side the purview of Presidential Decree (PD) No. 816, including the issuance, re
call, or cancellation of EPs or CLOAs not yet registered with the Register of De
eds; 3.5 Exercise of the right of retention by the landowner; 3.6 Application fo
r exemption from coverage under Section 10 of RA 6657; 3.7 Application for exemp
tion pursuant to Department of Justice (DOJ) Opinion No. 44 (1990); 3.8 Exclusio
n from CARP coverage of agricultural land used for livestock, swine, and poultry
raising; 3.9 Cases of exemption/exclusion of fish pond and prawn farms from the
coverage of CARP pursuant to RA 7881; 3.10 Issuance of Certificate of Exemption
for land subject of Voluntary Offer to Sell (VOS) and Compulsory Acquisition (C
A) found unsuitable for agricultural purposes; 3.11 Application for conversion o
f agricultural land to residential, commercial, industrial, or other nonagricult
ural uses and purposes including protests or oppositions thereto; 3.12 Determina
tion of the rights of agrarian reform beneficiaries to homelots; 3.13 Dispositio
n of excess area of the tenants/farmer-beneficiary s landholdings; 3.14 Increase
in area of tillage of a tenant/farmer-beneficiary; 3.15 Conflict of claims in l
anded estates administered by DAR and its predecessors; or 3.16 Such other agrar
ian cases, disputes, matters or concerns referred to it by the Secretary of the
DAR. Verily, there is an established tenancy relationship between petitioner and
respondents in this case. An action for Ejectment for Non-Payment of lease rent
als is clearly an agrarian dispute, cognizable at the initial stage by the PARAD
and thereafter by the DARAB.36 But issues with respect to the retention rights
of the respondents as landowners and the exclusion/exemption of the subject land
from the coverage of

REMLAW Page 59

respondents as landowners and the exclusion/exemption of the subject land from t

he coverage of agrarian reform are issues not cognizable by the PARAD and the DA
RAB, but by the DAR Secretary because, as aforementioned, the same are Agrarian
Law Implementation (ALI) Cases. It has not escaped our notice that, as this case
progressed and reached a higher level in the hierarchy of tribunals, the respon
dents would, invariably, proffer an additional theory or defense, in order to ef
fect petitioners eviction from the land. As a consequence, the simple issue of ej
ectment based on nonpayment of rentals has been muddled. Proof necessary for the
resolution of the issue of the land being covered by, or excluded/exempted from
, P.D. No. 27, R.A. No. 6657, and other pertinent agrarian laws, as well as of t
he issue of the right of retention of the respondents, was not offered in eviden
ce. Worse, the PARAD resolved the issue of retention even if it was not raised b
y the respondents at that level, and even if the PARAD had no jurisdiction over
the same. Likewise, the CA ruled that the land had ceased being agricultural on
the basis of a mere vicinity map, in open disregard of the Doctrine of Primary J
urisdiction, since the issue was within the province of the Secretary of DAR. We
take this opportunity to remind the PARAD and the CA that "courts of justice ha
ve no power to decide a question not in issue." A judgment that goes beyond the
issues, and purports to adjudicate something on which the parties were not heard
, is extra-judicial, irregular and invalid. This norm applies not only to courts
of justice, but also to quasi-judicial bodies such as the PARAD. Accordingly, p
remature and irregular were the PARAD ruling on the retention rights of the resp
ondents, and the CA decision on the non-agricultural character of the land subje
ct of this controversy -- these issues not having passed the scrutiny of the DAR
Secretary -- are premature and irregular.37 Thus, we cannot allow ourselves to
fall into the same error as that committed by the PARAD and the CA, and resolve
the issue of the non-agricultural nature of the subject land by receiving, at th
is stage, pieces of evidence and evaluating the same, without the respondents ha
ving first introduced them in the proper forum. The Office of the DAR Secretary
is in a better position to resolve the issues on retention and exclusion/exempti
on from agrarian reform coverage, being the agency lodged with such authority in
asmuch it possesses the necessary expertise on the matter.38 Likewise, we refrai
n from entertaining the issue raised by respondents that petitioner and her fami
ly are not landless tenants and are therefore not deserving of any protection un
der our laws on agrarian reform, because fairness and due process dictate that i
ssues not raised in the proceedings below should not be raised for the first tim
e on appeal.39 On the second issue, we rule in the negative. Under Section 37 of
Republic Act No. 3844,40 as amended, coupled with the fact that the respondents
are the complainants themselves, the burden of proof to show the existence of a
lawful cause for the ejectment of the petitioner as an agricultural lessee rest
s upon the respondents as agricultural lessors.41 This proceeds from the princip
le that a tenancy relationship, once established, entitles the tenant to securit
y of tenure. Petitioner can only be ejected from the agricultural landholding on
grounds provided by law.42 Section 36 of the same law pertinently provides: Sec
. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to
the period or future surrender, of the land, an agricultural lessee shall conti
nue in the enjoyment and possession of his landholding except when his disposses
sion has been authorized by the Court in a judgment that is final and executory
if after due hearing it is shown that: xxx x (6) The agricultural lessee does no
t pay the lease rental when it falls due: Provided, That if the nonpayment of th
e rental shall be due to crop failure to the extent of seventy-five per centum a
s a result of a fortuitous event, the non-payment shall not be a ground for disp
ossession, although the obligation to pay the rental due that particular crop is
not thereby extinguished; xxx x Respondents failed to discharge such burden. Th
e agricultural tenant s failure to pay the lease rentals must be willful and del
iberate in order to warrant his dispossession of the land that he tills. Petitio
ner s counsel opines that there appears to be no decision by this Court on the m
atter; he thus submits that we should use the CA decision in Cabero v. Caturna.
This is not correct. In an En Banc Decision by this Court in Roxas y Cia v. Caba
tuando, et al.,43 we held that under our law and

REMLAW Page 60

Decision by this Court in Roxas y Cia v. Cabatuando, et al.,43 we held that unde
r our law and jurisprudence, mere failure of a tenant to pay the landholder s sh
are does not necessarily give the latter the right to eject the former when ther
e is lack of deliberate intent on the part of the tenant to pay. This ruling has
not been overturned. The term "deliberate" is characterized by or results from
slow, careful, thorough calculation and consideration of effects and consequence
s.44 The term "willful," on the other hand, is defined as one governed by will w
ithout yielding to reason or without regard to reason.45 We agree with the findi
ngs of the DARAB that it was not the fault of petitioner that the lease rentals
did not reach the respondents because the latter chose to ignore the notices sen
t to them. To note, as early as November 10, 1986, Marciano executed an Affidavi
t46 stating that Leon refused to receive the respective lease rentals consisting
of 37 cavans for November 1985 and July 1986. For 1987, Marciano wrote Leon two
letters47 informing him of the availability of the lease rentals for April and
October of the same year. On April 27, 1988, Marciano sought DAR intervention an
d mediation with respect to the execution of a leasehold contract and the fixing
of the leasehold rentals.48 Meetings were set but respondents failed to attend.
49 The dispute was referred to the barangay but the parties failed to amicably s
ettle.50 These factual circumstances negate the PARAD findings of Marcianos and p
etitioner s deliberate and willful intent not to pay lease rentals. Good faith w
as clearly demonstrated by Marciano and petitioner when, because respondents ref
used to accept the proffered payment, they even went to the point of seeking gov
ernment intervention in order to address their problems with respondents. Absent
such deliberate and willful refusal to pay lease rentals, petitioner s ejectmen
t from the subject land is not justified. WHEREFORE, the instant Petition is GRA
NTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 60640 is h
ereby REVERSED and SET ASIDE. The Decision of the Department of Agrarian Reform
Adjudication Board (DARAB) dated June 24, 1998 in DARAB Case No. 2203 is REINSTA
TED without prejudice to the rights of respondent-spouses Leon and Aurora Carpo
to seek recourse from the Office of the Department of Agrarian Reform (DAR) Secr
etary on the other issues they raised. No costs.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI53.071\sta%20ana
.docx>
REMLAW Page 61

Garcillano v. House GR 170338 Dec 23, 2008

Sunday, November 14, 2010 11:20 PM
G.R. No. 170338 December 23, 2008 Virgilio O. Garcillano vs. The House Of Repres
entatives Committees On Public Information, Public Order And Safety, National De
fense And Security, Information And Communications Technology, And Suffrage And
Electoral Reforms G.R. No. 179275 December 23, 2008 Santiago Javier Ranada And O
swaldo D. Agcaoili, Petitioners, Vs. The Senate Of The Republic Of The Philippin
es, Represented By The Senate President The Honorable Manuel Villar, Respondents
. Maj. Lindsay Rex Sagge, Petitioner-In-Intervention Aquilino Q. Pimentel, Jr.,
Benigno Noynoy C. Aquino, Rodolfo G. Biazon, Panfilo M. Lacson, Loren B. Legarda
, M.A. Jamby A.S. Madrigal, And Antonio F. Trillanes, Respondents-Intervenors
NACHURA, J.: More than three years ago, tapes ostensibly containing a wiretapped
conversation purportedly between the President of the Philippines and a high-ra
nking official of the Commission on Elections (COMELEC) surfaced. They captured
unprecedented public attention and thrust the country into a controversy that pl
aced the legitimacy of the present administration on the line, and resulted in t
he near-collapse of the Arroyo government. The tapes, notoriously referred to as
the "Hello Garci" tapes, allegedly contained the Presidents instructions to COME
LEC Commissioner Virgilio Garcillano to manipulate in her favor results of the 2
004 presidential elections. These recordings were to become the subject of heate
d legislative hearings conducted separately by committees of both Houses of Cong
ress.1 In the House of Representatives (House), on June 8, 2005, then Minority F
loor Leader Francis G. Escudero delivered a privilege speech, "Tale of Two Tapes
," and set in motion a congressional investigation jointly conducted by the Comm
ittees on Public Information, Public Order and Safety, National Defense and Secu
rity, Information and Communications Technology, and Suffrage and Electoral Refo
rms (respondent House Committees). During the inquiry, several versions of the w
iretapped conversation emerged. But on July 5, 2005, National Bureau of Investig
ation (NBI) Director Reynaldo Wycoco, Atty. Alan Paguia and the lawyer of former
NBI Deputy Director Samuel Ong submitted to the respondent House Committees sev
en alleged "original" tape recordings of the supposed three-hour taped conversat
ion. After prolonged and impassioned debate by the committee members on the admi
ssibility and authenticity of the recordings, the tapes were eventually played i
n the chambers of the House.2 On August 3, 2005, the respondent House Committees
decided to suspend the hearings indefinitely. Nevertheless, they decided to pre
pare committee reports based on the said recordings and the testimonies of the r
esource persons.3 Alarmed by these developments, petitioner Virgilio O. Garcilla
no (Garcillano) filed with this Court a Petition for Prohibition and Injunction,
with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injuncti
on4 docketed as G.R. No. 170338. He prayed that the respondent House Committees
be restrained from using these tape recordings of the "illegally obtained" wiret
apped conversations in their committee reports and for any other purpose. He fur
ther implored that the said recordings and any reference thereto be ordered stri
cken off the records of the inquiry, and the respondent House Committees directe
d to desist from further using the recordings in any of the House proceedings.5
Without reaching its denouement, the House discussion and debates on the "Garci
tapes" abruptly stopped. After more than two years of quiescence, Senator Panfil
o Lacson roused the slumbering issue with a privilege speech, "The Lighthouse Th
at Brought Darkness." In his discourse, Senator Lacson promised to provide the p
ublic "the whole unvarnished truth the whats, whens, wheres, whos and whys" of the al
leged wiretap, and sought an inquiry into the perceived willingness of telecommu
nications providers to participate in nefarious wiretapping activities. On motio
n of Senator Francis Pangilinan, Senator Lacsons speech was referred to the Senat
e Committee on National Defense and Security, chaired by Senator Rodolfo Biazon,
who had previously
REMLAW Page 62

Committee on National Defense and Security, chaired by Senator Rodolfo Biazon, w

ho had previously filed two bills6 seeking to regulate the sale, purchase and us
e of wiretapping equipment and to prohibit the Armed Forces of the Philippines (
AFP) from performing electoral duties. 7 In the Senates plenary session the follo
wing day, a lengthy debate ensued when Senator Richard Gordon aired his concern
on the possible transgression of Republic Act (R.A.) No. 42008 if the body were
to conduct a legislative inquiry on the matter. On August 28, 2007, Senator Miri
am Defensor-Santiago delivered a privilege speech, articulating her considered v
iew that the Constitution absolutely bans the use, possession, replay or communi
cation of the contents of the "Hello Garci" tapes. However, she recommended a le
gislative investigation into the role of the Intelligence Service of the AFP (IS
AFP), the Philippine National Police or other government entities in the alleged
illegal wiretapping of public officials.9 On September 6, 2007, petitioners San
tiago Ranada and Oswaldo Agcaoili, retired justices of the Court of Appeals, fil
ed before this Court a Petition for Prohibition with Prayer for the Issuance of
a Temporary Restraining Order and/or Writ of Preliminary Injunction,10 docketed
as G.R. No. 179275, seeking to bar the Senate from conducting its scheduled legi
slative inquiry. They argued in the main that the intended legislative inquiry v
iolates R.A. No. 4200 and Section 3, Article III of the Constitution.11 As the C
ourt did not issue an injunctive writ, the Senate proceeded with its public hear
ings on the "Hello Garci" tapes on September 7,12 1713 and October 1,14 2007. In
tervening as respondents,15 Senators Aquilino Q. Pimentel, Jr., Benigno Noynoy C
. Aquino, Rodolfo G. Biazon, Panfilo M. Lacson, Loren B. Legarda, M.A. Jamby A.S
. Madrigal and Antonio F. Trillanes filed their Comment16 on the petition on Sep
tember 25, 2007. The Court subsequently heard the case on oral argument.17 On Oc
tober 26, 2007, Maj. Lindsay Rex Sagge, a member of the ISAFP and one of the res
ource persons summoned by the Senate to appear and testify at its hearings, move
d to intervene as petitioner in G.R. No. 179275.18 On November 20, 2007, the Cou
rt resolved to consolidate G.R. Nos. 170338 and 179275.19 It may be noted that w
hile both petitions involve the "Hello Garci" recordings, they have different ob
jectivesthe first is poised at preventing the playing of the tapes in the House a
nd their subsequent inclusion in the committee reports, and the second seeks to
prohibit and stop the conduct of the Senate inquiry on the wiretapped conversati
on. The Court dismisses the first petition, G.R. No. 170338, and grants the seco
nd, G.R. No. 179275. -I Before delving into the merits of the case, the Court sh
all first resolve the issue on the parties standing, argued at length in their pl
eadings. In Tolentino v. COMELEC,20 we explained that "*l+egal standing or locus s
tandi refers to a personal and substantial interest in a case such that the part
y has sustained or will sustain direct injury because of the challenged governme
ntal act x x x," thus, generally, a party will be allowed to litigate only when
(1) he can show that he has personally suffered some actual or threatened injury
because of the allegedly illegal conduct of the government; (2) the injury is f
airly traceable to the challenged action; and (3) the injury is likely to be red
ressed by a favorable action.21 The gist of the question of standing is whether
a party has "alleged such a personal stake in the outcome of the controversy as
to assure that concrete adverseness which sharpens the presentation of issues up
on which the court so largely depends for illumination of difficult constitution
al questions."22 However, considering that locus standi is a mere procedural tec
hnicality, the Court, in recent cases, has relaxed the stringent direct injury t
est. David v. Macapagal-Arroyo23 articulates that a "liberal policy has been obs
erved, allowing ordinary citizens, members of Congress, and civic organizations
to prosecute actions involving the constitutionality or validity of laws, regula
tions and rulings."24 The fairly recent Chavez v. Gonzales25 even permitted a no
n-member of the broadcast media, who failed to allege a personal stake in the ou
tcome of the controversy, to challenge the acts of the Secretary of Justice and
the National Telecommunications Commission. The majority, in the said case, echo
ed the current policy that "this Court has repeatedly and consistently refused t
o wield procedural barriers as impediments to its addressing and resolving serio
us legal questions that greatly impact on public interest, in keeping with the C
ourts duty under the 1987 Constitution to determine whether or not other branches

of government have kept themselves within the limits of the Constitution and th
e laws, and that they have
REMLAW Page 63

government have kept themselves within the limits of the Constitution and the la
ws, and that they have not abused the discretion given to them."26 In G.R. No. 1
70338, petitioner Garcillano justifies his standing to initiate the petition by
alleging that he is the person alluded to in the "Hello Garci" tapes. Further, h
is was publicly identified by the members of the respondent committees as one of
the voices in the recordings.27 Obviously, therefore, petitioner Garcillano sta
nds to be directly injured by the House committees actions and charges of elector
al fraud. The Court recognizes his standing to institute the petition for prohib
ition. In G.R. No. 179275, petitioners Ranada and Agcaoili justify their standin
g by alleging that they are concerned citizens, taxpayers, and members of the IB
P. They are of the firm conviction that any attempt to use the "Hello Garci" tap
es will further divide the country. They wish to see the legal and proper use of
public funds that will necessarily be defrayed in the ensuing public hearings.
They are worried by the continuous violation of the laws and individual rights,
and the blatant attempt to abuse constitutional processes through the conduct of
legislative inquiries purportedly in aid of legislation.28 Intervenor Sagge all
eges violation of his right to due process considering that he is summoned to at
tend the Senate hearings without being apprised not only of his rights therein t
hrough the publication of the Senate Rules of Procedure Governing Inquiries in A
id of Legislation, but also of the intended legislation which underpins the inve
stigation. He further intervenes as a taxpayer bewailing the useless and wastefu
l expenditure of public funds involved in the conduct of the questioned hearings
.29 Given that petitioners Ranada and Agcaoili allege an interest in the executi
on of the laws and that intervenor Sagge asserts his constitutional right to due
process,30 they satisfy the requisite personal stake in the outcome of the cont
roversy by merely being citizens of the Republic. Following the Courts ruling in
Francisco, Jr. v. The House of Representatives,31 we find sufficient petitioners
Ranadas and Agcaoilis and intervenor Sagges allegation that the continuous conduct
by the Senate of the questioned legislative inquiry will necessarily involve th
e expenditure of public funds.32 It should be noted that in Francisco, rights pe
rsonal to then Chief Justice Hilario G. Davide, Jr. had been injured by the alle
ged unconstitutional acts of the House of Representatives, yet the Court granted
standing to the petitioners therein for, as in this case, they invariably invok
ed the vindication of their own rightsas taxpayers, members of Congress, citizens
, individually or in a class suit, and members of the bar and of the legal profe
ssionwhich were also supposedly violated by the therein assailed unconstitutional
acts.33 Likewise, a reading of the petition in G.R. No. 179275 shows that the p
etitioners and intervenor Sagge advance constitutional issues which deserve the
attention of this Court in view of their seriousness, novelty and weight as prec
edents. The issues are of transcendental and paramount importance not only to th
e public but also to the Bench and the Bar, and should be resolved for the guida
nce of all.34 Thus, in the exercise of its sound discretion and given the libera
l attitude it has shown in prior cases climaxing in the more recent case of Chav
ez, the Court recognizes the legal standing of petitioners Ranada and Agcaoili a
nd intervenor Sagge. - II The Court, however, dismisses G.R. No. 170338 for bein
g moot and academic. Repeatedly stressed in our prior decisions is the principle
that the exercise by this Court of judicial power is limited to the determinati
on and resolution of actual cases and controversies.35 By actual cases, we mean
existing conflicts appropriate or ripe for judicial determination, not conjectur
al or anticipatory, for otherwise the decision of the Court will amount to an ad
visory opinion. The power of judicial inquiry does not extend to hypothetical qu
estions because any attempt at abstraction could only lead to dialectics and bar
ren legal questions and to sterile conclusions unrelated to actualities.36 Neith
er will the Court determine a moot question in a case in which no practical reli
ef can be granted. A case becomes moot when its purpose has become stale.37 It i
s unnecessary to indulge in academic discussion of a case presenting a moot ques
tion as a judgment thereon cannot have any practical legal effect or, in the nat
ure of things, cannot be enforced.38 In G.R. No. 170338, petitioner Garcillano i
mplores from the Court, as aforementioned, the issuance of an injunctive writ to
prohibit the respondent House Committees from playing the tape recordings and f

rom including the same in their committee report. He likewise prays that the sai
d tapes be stricken off the records of the House proceedings. But the Court note
s that the recordings were already played in the House and heard by its members.
39 There is also the widely publicized fact that the committee reports
REMLAW Page 64

on the "Hello Garci" inquiry were completed and submitted to the House in plenar
y by the respondent committees.40 Having been overtaken by these events, the Gar
cillano petition has to be dismissed for being moot and academic. After all, pro
hibition is a preventive remedy to restrain the doing of an act about to be done
, and not intended to provide a remedy for an act already accomplished.41 - III
As to the petition in G.R. No. 179275, the Court grants the same. The Senate can
not be allowed to continue with the conduct of the questioned legislative inquir
y without duly published rules of procedure, in clear derogation of the constitu
tional requirement. Section 21, Article VI of the 1987 Constitution explicitly p
rovides that "[t]he Senate or the House of Representatives, or any of its respec
tive committees may conduct inquiries in aid of legislation in accordance with i
ts duly published rules of procedure." The requisite of publication of the rules
is intended to satisfy the basic requirements of due process.42 Publication is
indeed imperative, for it will be the height of injustice to punish or otherwise
burden a citizen for the transgression of a law or rule of which he had no noti
ce whatsoever, not even a constructive one.43 What constitutes publication is se
t forth in Article 2 of the Civil Code, which provides that "[l]aws shall take e
ffect after 15 days following the completion of their publication either in the
Official Gazette, or in a newspaper of general circulation in the Philippines."4
4 The respondents in G.R. No. 179275 admit in their pleadings and even on oral a
rgument that the Senate Rules of Procedure Governing Inquiries in Aid of Legisla
tion had been published in newspapers of general circulation only in 1995 and in
2006.45 With respect to the present Senate of the 14th Congress, however, of wh
ich the term of half of its members commenced on June 30, 2007, no effort was un
dertaken for the publication of these rules when they first opened their session
. Recently, the Court had occasion to rule on this very same question. In Neri v
. Senate Committee on Accountability of Public Officers and Investigations,46 we
said: Fourth, we find merit in the argument of the OSG that respondent Committe
es likewise violated Section 21 of Article VI of the Constitution, requiring tha
t the inquiry be in accordance with the "duly published rules of procedure." We
quote the OSGs explanation: The phrase "duly published rules of procedure" requir
es the Senate of every Congress to publish its rules of procedure governing inqu
iries in aid of legislation because every Senate is distinct from the one before
it or after it. Since Senatorial elections are held every three (3) years for o
ne-half of the Senates membership, the composition of the Senate also changes by
the end of each term. Each Senate may thus enact a different set of rules as it
may deem fit. Not having published its Rules of Procedure, the subject hearings
in aid of legislation conducted by the 14th Senate, are therefore, procedurally
infirm. Justice Antonio T. Carpio, in his Dissenting and Concurring Opinion, rei
nforces this ruling with the following rationalization: The present Senate under
the 1987 Constitution is no longer a continuing legislative body. The present S
enate has twenty-four members, twelve of whom are elected every three years for
a term of six years each. Thus, the term of twelve Senators expires every three
years, leaving less than a majority of Senators to continue into the next Congre
ss. The 1987 Constitution, like the 1935 Constitution, requires a majority of Se
nators to "constitute a quorum to do business." Applying the same reasoning in A
rnault v. Nazareno, the Senate under the 1987 Constitution is not a continuing b
ody because less than majority of the Senators continue into the next Congress.
The consequence is that the Rules of Procedure must be republished by the Senate
after every expiry of the term of twelve Senators.47 The subject was explained
with greater lucidity in our Resolution48 (On the Motion for Reconsideration) in
the same case, viz.: On the nature of the Senate as a "continuing body," this C
ourt sees fit to issue a clarification. Certainly, there is no debate that the S
enate as an institution is "continuing," as it is not dissolved as an entity wit
h each national election or change in the composition of its members. However, i
n the conduct of its day-to-day business the Senate of each Congress acts separa
tely and independently of the Senate of the Congress before it. The Rules of the
Senate itself confirms this when it states: RULE XLIV UNFINISHED BUSINESS SEC.
123. Unfinished business at the end of the session shall be taken up at the next
session in the same status. All pending matters and proceedings shall terminate

upon the expiration of one (1) Congress, but may be taken by the succeeding Con
gress as if present for the first time.
REMLAW Page 65

be taken by the succeeding Congress as if present for the first time. Undeniably
from the foregoing, all pending matters and proceedings, i.e., unpassed bills a
nd even legislative investigations, of the Senate of a particular Congress are c
onsidered terminated upon the expiration of that Congress and it is merely optio
nal on the Senate of the succeeding Congress to take up such unfinished matters,
not in the same status, but as if presented for the first time. The logic and p
racticality of such a rule is readily apparent considering that the Senate of th
e succeeding Congress (which will typically have a different composition as that
of the previous Congress) should not be bound by the acts and deliberations of
the Senate of which they had no part. If the Senate is a continuing body even wi
th respect to the conduct of its business, then pending matters will not be deem
ed terminated with the expiration of one Congress but will, as a matter of cours
e, continue into the next Congress with the same status. This dichotomy of the c
ontinuity of the Senate as an institution and of the opposite nature of the cond
uct of its business is reflected in its Rules. The Rules of the Senate (i.e. the
Senates main rules of procedure) states: RULE LI AMENDMENTS TO, OR REVISIONS OF,
THE RULES SEC. 136. At the start of each session in which the Senators elected
in the preceding elections shall begin their term of office, the President may e
ndorse the Rules to the appropriate committee for amendment or revision. The Rul
es may also be amended by means of a motion which should be presented at least o
ne day before its consideration, and the vote of the majority of the Senators pr
esent in the session shall be required for its approval. RULE LII DATE OF TAKING
EFFECT SEC. 137. These Rules shall take effect on the date of their adoption an
d shall remain in force until they are amended or repealed. Section 136 of the S
enate Rules quoted above takes into account the new composition of the Senate af
ter an election and the possibility of the amendment or revision of the Rules at
the start of each session in which the newly elected Senators shall begin their
term. However, it is evident that the Senate has determined that its main rules
are intended to be valid from the date of their adoption until they are amended
or repealed. Such language is conspicuously absent from the Rules. The Rules si
mply state "(t)hese Rules shall take effect seven (7) days after publication in
two (2) newspapers of general circulation." The latter does not explicitly provi
de for the continued effectivity of such rules until they are amended or repeale
d. In view of the difference in the language of the two sets of Senate rules, it
cannot be presumed that the Rules (on legislative inquiries) would continue int
o the next Congress. The Senate of the next Congress may easily adopt different
rules for its legislative inquiries which come within the rule on unfinished bus
iness. The language of Section 21, Article VI of the Constitution requiring that
the inquiry be conducted in accordance with the duly published rules of procedu
re is categorical. It is incumbent upon the Senate to publish the rules for its
legislative inquiries in each Congress or otherwise make the published rules cle
arly state that the same shall be effective in subsequent Congresses or until th
ey are amended or repealed to sufficiently put public on notice. If it was the i
ntention of the Senate for its present rules on legislative inquiries to be effe
ctive even in the next Congress, it could have easily adopted the same language
it had used in its main rules regarding effectivity. Respondents justify their n
on-observance of the constitutionally mandated publication by arguing that the r
ules have never been amended since 1995 and, despite that, they are published in
booklet form available to anyone for free, and accessible to the public at the
Senates internet web page.49 The Court does not agree. The absence of any amendme
nt to the rules cannot justify the Senates defiance of the clear and unambiguous
language of Section 21, Article VI of the Constitution. The organic law instruct
s, without more, that the Senate or its committees may conduct inquiries in aid
of legislation only in accordance with duly published rules of procedure, and do
es not make any distinction whether or not these rules have undergone amendments
or revision. The constitutional mandate to publish the said rules prevails over
any custom, practice or tradition followed by the Senate. Justice Carpios respon
se to the same argument raised by the respondents is illuminating: The publicati
on of the Rules of Procedure in the website of the Senate, or in pamphlet form a
vailable at the Senate, is not sufficient under the Taada v. Tuvera ruling which

requires publication either in the

REMLAW Page 66

the Senate, is not sufficient under the Taada v. Tuvera ruling which requires pub
lication either in the Official Gazette or in a newspaper of general circulation
. The Rules of Procedure even provide that the rules "shall take effect seven (7
) days after publication in two (2) newspapers of general circulation," precludi
ng any other form of publication. Publication in accordance with Taada is mandato
ry to comply with the due process requirement because the Rules of Procedure put
a persons liberty at risk. A person who violates the Rules of Procedure could be
arrested and detained by the Senate. The invocation by the respondents of the p
rovisions of R.A. No. 8792,50 otherwise known as the Electronic Commerce Act of
2000, to support their claim of valid publication through the internet is all th
e more incorrect. R.A. 8792 considers an electronic data message or an electroni
c document as the functional equivalent of a written document only for evidentia
ry purposes.51 In other words, the law merely recognizes the admissibility in ev
idence (for their being the original) of electronic data messages and/or electro
nic documents.52 It does not make the internet a medium for publishing laws, rul
es and regulations. Given this discussion, the respondent Senate Committees, the
refore, could not, in violation of the Constitution, use its unpublished rules i
n the legislative inquiry subject of these consolidated cases. The conduct of in
quiries in aid of legislation by the Senate has to be deferred until it shall ha
ve caused the publication of the rules, because it can do so only "in accordance
with its duly published rules of procedure." Very recently, the Senate caused t
he publication of the Senate Rules of Procedure Governing Inquiries in Aid of Le
gislation in the October 31, 2008 issues of Manila Bulletin and Malaya. While we
take judicial notice of this fact, the recent publication does not cure the inf
irmity of the inquiry sought to be prohibited by the instant petitions. Insofar
as the consolidated cases are concerned, the legislative investigation subject t
hereof still could not be undertaken by the respondent Senate Committees, becaus
e no published rules governed it, in clear contravention of the Constitution. Wi
th the foregoing disquisition, the Court finds it unnecessary to discuss the oth
er issues raised in the consolidated petitions. WHEREFORE, the petition in G.R.
No. 170338 is DISMISSED, and the petition in G.R. No. 179275 is GRANTED. Let a w
rit of prohibition be issued enjoining the Senate of the Republic of the Philipp
ines and/or any of its committees from conducting any inquiry in aid of legislat
ion centered on the "Hello Garci" tapes.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI56.033\garcillan
o.docx>
REMLAW Page 67

Lazatin v. Desierto GR 147097 June 5, 2009

Sunday, November 14, 2010 11:20 PM
G.R. No. 147097 June 5, 2009 CARMELO F. LAZATIN, MARINO A. MORALES, TEODORO L. D
AVID and ANGELITO A. PELAYO, Petitioner, vs. HON. ANIANO A. DESIERTO as OMBUDSMA
N, and SANDIGANBAYAN, THIRD DIVISION, Respondents. DEC I SI O N PERALTA, J.: Thi
s resolves the petition for certiorari under Rule 65 of the Rules of Court, pray
ing that the Ombudsman s disapproval of the Office of the Special Prosecutor s (
OSP) Resolution 1 dated September 18, 2000, recommending dismissal of the crimin
al cases filed against herein petitioners, be reversed and set aside. The antece
dent facts are as follows. On July 22, 1998, the Fact-Finding and Intelligence B
ureau of the Office of the Ombudsman filed a Complaint-Affidavit docketed as OMB
-0-98-1500, charging herein petitioners with Illegal Use of Public Funds as defi
ned and penalized under Article 220 of the Revised Penal Code and violation of S
ection 3, paragraphs (a) and (e) of Republic Act (R.A.) No. 3019, as amended. Th
e complaint alleged that there were irregularities in the use by then Congressma
n Carmello F. Lazatin of his Countrywide Development Fund (CDF) for the calendar
year 1996, i.e., he was both proponent and implementer of the projects funded f
rom his CDF; he signed vouchers and supporting papers pertinent to the disbursem
ent as Disbursing Officer; and he received, as claimant, eighteen (18) checks am
ounting to P4,868,277.08. Thus, petitioner Lazatin, with the help of petitioners
Marino A. Morales, Angelito A. Pelayo and Teodoro L. David, was allegedly able
to convert his CDF into cash. A preliminary investigation was conducted and, the
reafter, the Evaluation and Preliminary Investigation Bureau (EPIB) issued a Res
olution 2 dated May 29, 2000 recommending the filing against herein petitioners
of fourteen (14) counts each of Malversation of Public Funds and violation of Se
ction 3 (e) of R.A. No. 3019. Said Resolution was approved by the Ombudsman; hen
ce, twenty-eight (28) Informations docketed as Criminal Case Nos. 26087 to 26114
were filed against herein petitioners before the Sandiganbayan. Petitioner Laza
tin and his co-petitioners then filed their respective Motions for Reconsiderati
on/Reinvestigation, which motions were granted by the Sandiganbayan (Third Divis
ion). The Sandiganbayan also ordered the prosecution to re-evaluate the cases ag
ainst petitioners. Subsequently, the OSP submitted to the Ombudsman its Resoluti
on 3 dated September 18, 2000. It recommended the dismissal of the cases against
petitioners for lack or insufficiency of evidence. The Ombudsman, however, orde
red the Office of the Legal Affairs (OLA) to review the OSP Resolution. In a Mem
orandum4 dated October 24, 2000, the OLA recommended that the OSP Resolution be
disapproved and the OSP be directed to proceed with the trial of the cases again
st petitioners. On October 27, 2000, the Ombudsman adopted the OLA Memorandum, t
hereby disapproving the OSP Resolution dated September 18, 2000 and ordering the
aggressive prosecution of the subject cases. The cases were then returned to th
e Sandiganbayan for continuation of criminal proceedings. Thus, petitioners file
d the instant petition. Petitioners allege that: I. THE OMBUDSMAN ACTED WITH GRA
VE ABUSE OF DISCRETION OR ACTED WITHOUT OR IN EXCESS OF HIS JURISDICTION. II. TH
E QUESTIONED RESOLUTION WAS BASED ON MISAPPREHENSION OF FACTS, SPECULATIONS, SUR
MISES AND CONJECTURES. 5 Amplifying their arguments, petitioners asseverate that
the Ombudsman had no authority to overturn the OSP s Resolution dismissing the
cases against petitioners because, under Section 13, Article XI of the 1987 Cons
titution, the Ombudsman is clothed only with the power to watch, investigate and
recommend the filing of proper cases against erring officials, but it was not g
ranted the power to prosecute. They point out that under the Constitution, the p
ower to prosecute belongs to the OSP (formerly the Tanodbayan), which was intend
ed by the framers to be a separate and distinct entity
REMLAW Page 68

(formerly the Tanodbayan), which was intended by the framers to be a separate an

d distinct entity from the Office of the Ombudsman. Petitioners conclude that, a
s provided by the Constitution, the OSP being a separate and distinct entity, th
e Ombudsman should have no power and authority over the OSP. Thus, petitioners m
aintain that R.A. No. 6770 (The Ombudsman Act of 1989), which made the OSP an or
ganic component of the Office of the Ombudsman, should be struck down for being
unconstitutional. Next, petitioners insist that they should be absolved from any
liability because the checks were issued to petitioner Lazatin allegedly as rei
mbursement for the advances he made from his personal funds for expenses incurre
d to ensure the immediate implementation of projects that are badly needed by th
e Pinatubo victims. The Court finds the petition unmeritorious. Petitioners att
ack against the constitutionality of R.A. No. 6770 is stale. It has long been se
ttled that the provisions of R.A. No. 6770 granting the Office of the Ombudsman
prosecutorial powers and placing the OSP under said office have no constitutiona
l infirmity. The issue of whether said provisions of R.A. No. 6770 violated the
Constitution had been fully dissected as far back as 1995 in Acop v. Office of t
he Ombudsman.6 Therein, the Court held that giving prosecutorial powers to the O
mbudsman is in accordance with the Constitution as paragraph 8, Section 13, Arti
cle XI provides that the Ombudsman shall "exercise such other functions or dutie
s as may be provided by law." Elucidating on this matter, the Court stated: x x
x While the intention to withhold prosecutorial powers from the Ombudsman was in
deed present, the Commission [referring to the Constitutional Commission of 1986
] did not hesitate to recommend that the Legislature could, through statute, pre
scribe such other powers, functions, and duties to the Ombudsman. x x x As final
ly approved by the Commission after several amendments, this is now embodied in
paragraph 8, Section 13, Article XI (Accountability of Public Officers) of the C
onstitution, which provides: Sec.13. The Office of the Ombudsman shall have the
following powers, functions, and duties: xx x x Promulgate its rules and procedu
re and exercise such other functions or duties as may be provided by law. Expoun
ding on this power of Congress to prescribe other powers, functions, and duties
to the Ombudsman, we quote Commissioners Colayco and Monsod during interpellatio
n by Commissioner Rodrigo: xx x x MR. RODRIGO: Precisely, I am coming to that. T
he last of the enumerated functions of the Ombudsman is: "to exercise such power
s or perform such functions or duties as may be provided by law." So, the legisl
ature may vest him with powers taken away from the Tanodbayan, may it not? MR. C
OLAYCO: Yes. MR. MONSOD: Yes. xx x x MR. RODRIGO: Madam President. Section 5 rea
ds: "The Tanodbayan shall continue to function and exercise its powers as provid
ed by law." MR. COLAYCO: That is correct, because it is under P.D. No. 1630. MR.
RODRIGO: So, if it is provided by law, it can be taken away by law, I suppose.
MR. COLAYCO: That is correct. MR. RODRIGO: And precisely, Section 12(6) says tha
t among the functions that can be performed by the Ombudsman are "such functions
or duties as may be provided by law." The sponsors admitted that the legislatur
e later on might remove some powers from the Tanodbayan and transfer these to th
e Ombudsman. MR. COLAYCO: Madam President, that is correct. xx x x MR. RODRIGO:
Madam President, what I am worried about is, if we create a constitutional body
which has neither punitive nor prosecutory powers but only persuasive powers, we
might be raising the
REMLAW Page 69

neither punitive nor prosecutory powers but only persuasive powers, we might be
raising the hopes of our people too much and then disappoint them. MR. MONSOD: I
agree with the Commissioner. MR. RODRIGO: Anyway, since we state that the power
s of the Ombudsman can later on be implemented by the legislature, why not leave
this to the legislature? xx x x MR. MONSOD: (reacting to statements of Commissi
oner Blas Ople): xx x x With respect to the argument that he is a toothless anim
al, we would like to say that we are promoting the concept in its form at the pr
esent, but we are also saying that he can exercise such powers and functions as
may be provided by law in accordance with the direction of the thinking of Commi
ssioner Rodrigo. We do not think that at this time we should prescribe this, but
we leave it up to Congress at some future time if it feels that it may need to
designate what powers the Ombudsman need in order that he be more effective. Thi
s is not foreclosed. So, this is a reversible disability, unlike that of a eunuc
h; it is not an irreversible disability. 7 The constitutionality of Section 3 of
R.A. No. 6770, which subsumed the OSP under the Office of the Ombudsman, was li
kewise upheld by the Court in Acop. It was explained, thus: x x x the petitioner
s conclude that the inclusion of the Office of the Special Prosecutor as among t
he offices under the Office of the Ombudsman in Section 3 of R.A. No. 6770 ("An
Act Providing for the Functional and Structural Organization of the Office of th
e Ombudsman and for Other Purposes") is unconstitutional and void. The contentio
n is not impressed with merit. x x x xx x x x x x Section 7 of Article XI expres
sly provides that the then existing Tanodbayan, to be henceforth known as the Of
fice of the Special Prosecutor, "shall continue to function and exercise its pow
ers as now or hereafter may be provided by law, except those conferred on the Of
fice of the Ombudsman created under this Constitution." The underscored phrase e
vidently refers to the Tanodbayan s powers under P.D. No. 1630 or subsequent ame
ndatory legislation. It follows then that Congress may remove any of the Tanodba
yan s/Special Prosecutor s powers under P.D. No. 1630 or grant it other powers,
except those powers conferred by the Constitution on the Office of the Ombudsman
. Pursuing the present line of reasoning, when one considers that by express man
date of paragraph 8, Section 13, Article XI of the Constitution, the Ombudsman m
ay "exercise such other powers or perform functions or duties as may be provided
by law," it is indubitable then that Congress has the power to place the Office
of the Special Prosecutor under the Office of the Ombudsman. In the same vein,
Congress may remove some of the powers granted to the Tanodbayan by P.D. No. 163
0 and transfer them to the Ombudsman; or grant the Office of the Special Prosecu
tor such other powers and functions and duties as Congress may deem fit and wise
. This Congress did through the passage of R.A. No. 6770.8 The foregoing ruling
of the Court has been reiterated in Camanag v. Guerrero.9 More recently, in Offi
ce of the Ombudsman v. Valera,10 the Court, basing its ratio decidendi on its ru
ling in Acop and Camanag, declared that the OSP is "merely a component of the Of
fice of the Ombudsman and may only act under the supervision and control, and up
on authority of the Ombudsman" and ruled that under R.A. No. 6770, the power to
preventively suspend is lodged only with the Ombudsman and Deputy Ombudsman.11 T
he Court s ruling in Acop that the authority of the Ombudsman to prosecute based
on R.A. No. 6770 was authorized by the Constitution was also made the foundatio
n for the decision in Perez v. Sandiganbayan,12 where it was held that the power
to prosecute carries with it the power to authorize the filing of informations,
which power had not been delegated to the OSP. It is, therefore, beyond cavil t
hat under the Constitution, Congress was not proscribed from legislating the gra
nt of additional powers to the Ombudsman or placing the OSP under the Office of
the Ombudsman. Petitioners now assert that the Court s ruling on the constitutio
nality of the provisions of R.A. No. 6770 should be revisited and the principle
of stare decisis set aside. Again, this contention deserves scant consideration.
The doctrine of stare decisis et non quieta movere (to adhere to precedents and
not to unsettle things which are established) is embodied in Article 8 of the C
ivil Code of the Philippines which provides, thus: ART. 8. Judicial decisions ap
plying or interpreting the laws or the Constitution shall form a part of the leg
al system of the Philippines. It was further explained in Fermin v. People13 as
follows: The doctrine of stare decisis enjoins adherence to judicial precedents.

It requires courts in a country to follow the rule established in a decision of

the Supreme Court thereof. That
1aw 1 phi
REMLAW Page 70

country to follow the rule established in a decision of the Supreme Court thereo
f. That decision becomes a judicial precedent to be followed in subsequent cases
by all courts in the land. The doctrine of stare decisis is based on the princi
ple that once a question of law has been examined and decided, it should be deem
ed settled and closed to further argument. 14 In Chinese Young Men s Christian A
ssociation of the Philippine Islands v. Remington Steel Corporation,15 the Court
expounded on the importance of the foregoing doctrine, stating that: The doctri
ne of stare decisis is one of policy grounded on the necessity for securing cert
ainty and stability of judicial decisions, thus: Time and again, the court has h
eld that it is a very desirable and necessary judicial practice that when a cour
t has laid down a principle of law as applicable to a certain state of facts, it
will adhere to that principle and apply it to all future cases in which the fac
ts are substantially the same. Stare decisis et non quieta movere. Stand by the
decisions and disturb not what is settled. Stare decisis simply means that for t
he sake of certainty, a conclusion reached in one case should be applied to thos
e that follow if the facts are substantially the same , even though the parties
may be different. It proceeds from the first principle of justice that, absent a
ny powerful countervailing considerations, like cases ought to be decided alike.
Thus, where the same questions relating to the same event have been put forward
by the parties similarly situated as in a previous case litigated and decided b
y a competent court, the rule of stare decisis is a bar to any attempt to reliti
gate the same issue.16 The doctrine has assumed such value in our judicial syste
m that the Court has ruled that "[a] bandonment thereof must be based only on st
rong and compelling reasons, otherwise, the becoming virtue of predictability wh
ich is expected from this Court would be immeasurably affected and the public s
confidence in the stability of the solemn pronouncements diminished." 17 Verily,
only upon showing that circumstances attendant in a particular case override th
e great benefits derived by our judicial system from the doctrine of stare decis
is, can the courts be justified in setting aside the same. In this case, petitio
ners have not shown any strong, compelling reason to convince the Court that the
doctrine of stare decisis should not be applied to this case. They have not suc
cessfully demonstrated how or why it would be grave abuse of discretion for the
Ombudsman, who has been validly conferred by law with the power of control and s
upervision over the OSP, to disapprove or overturn any resolution issued by the
latter. The second issue advanced by petitioners is that the Ombudsman s disappr
oval of the OSP Resolution recommending dismissal of the cases is based on misap
prehension of facts, speculations, surmises and conjectures. The question is rea
lly whether the Ombudsman correctly ruled that there was enough evidence to supp
ort a finding of probable cause. That issue, however, pertains to a mere error o
f judgment. It must be stressed that certiorari is a remedy meant to correct onl
y errors of jurisdiction, not errors of judgment. This has been emphasized in Fi
rst Corporation v. Former Sixth Division of the Court of Appeals, 18 to wit: It
is a fundamental aphorism in law that a review of facts and evidence is not the
province of the extraordinary remedy of certiorari, which is extra ordinem - bey
ond the ambit of appeal. In certiorari proceedings, judicial review does not go
as far as to examine and assess the evidence of the parties and to weigh the pro
bative value thereof. It does not include an inquiry as to the correctness of th
e evaluation of evidence. Any error committed in the evaluation of evidence is m
erely an error of judgment that cannot be remedied by certiorari. An error of ju
dgment is one which the court may commit in the exercise of its jurisdiction. An
error of jurisdiction is one where the act complained of was issued by the cour
t without or in excess of jurisdiction, or with grave abuse of discretion, which
is tantamount to lack or in excess of jurisdiction and which error is correctib
le only by the extraordinary writ of certiorari. Certiorari will not be issued t
o cure errors of the trial court in its appreciation of the evidence of the part
ies, or its conclusions anchored on the said findings and its conclusions of law
. It is not for this Court to re -examine conflicting evidence, re-evaluate the
credibility of the witnesses or substitute the findings of fact of the court a q
uo.19 Evidently, the issue of whether the evidence indeed supports a finding of
probable cause would necessitate an examination and re-evaluation of the evidenc

e upon which the Ombudsman based its disapproval of the OSP Resolution. Hence, t
he Petition for Certiorari should not be given due course. Likewise noteworthy i
s the holding of the Court in Presidential Ad Hoc Fact-Finding Committee on Behe
st Loans v. Desierto,20 imparting the value of the Ombudsman s independence, sta
ting thus: Under Sections 12 and 13, Article XI of the 1987 Constitution and RA
6770 (The Ombudsman Act of 1989), the Ombudsman has the power to investigate and
prosecute any act or omission of a public officer or employee when such act or
omission appears to be illegal, unjust, improper or inefficient. It has been the
consistent ruling of the Court not to interfere with the Ombudsman s exercise o
f his investigatory and prosecutory powers as long as his rulings are supported
by substantial
1avvphi 1
REMLAW Page 71

his investigatory and prosecutory powers as long as his rulings are supported by
substantial evidence. Envisioned as the champion of the people and preserver of
the integrity of public service, he has wide latitude in exercising his powers
and is free from intervention from the three branches of government. This is to
ensure that his Office is insulated from any outside pressure and improper influ
ence.21 Indeed, for the Court to overturn the Ombudsman s finding of probable ca
use, it is imperative for petitioners to clearly prove that said public official
acted with grave abuse of discretion. In Presidential Commission on Good Govern
ment v. Desierto,22 the Court elaborated on what constitutes such abuse, to wit:
Grave abuse of discretion implies a capricious and whimsical exercise of judgme
nt tantamount to lack of jurisdiction. The Ombudsman s exercise of power must ha
ve been done in an arbitrary or despotic manner which must be so patent and gros
s as to amount to an evasion of a positive duty or a virtual refusal to perform
the duty enjoined or to act at all in contemplation of law. x x x23 In this case
, petitioners failed to demonstrate that the Ombudsman acted in a manner describ
ed above. Clearly, the Ombudsman was acting in accordance with R.A. No. 6770 and
properly exercised its power of control and supervision over the OSP when it di
sapproved the Resolution dated September 18, 2000. It should also be noted that
the petition does not question any order or action of the Sandiganbayan Third Di
vision; hence, it should not have been included as a respondent in this petition
. IN VIEW OF THE FOREGOING, the petition is DISMISSED for lack of merit.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI58.675\lazatin.d
ocx>
REMLAW Page 72

Ferdinand Cruz v. Priscilla Mijares et al GR 154404 Sep 11, 2008

Sunday, November 14, 2010 11:20 PM
[G.R. NO. 154464, September 11, 2008] FERDINAND A. CRUZ, VS. JUDGE PRISCILLA MIJ
ARES, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 108, PASAY CITY, METRO MANIL
A, PUBLIC RESPONDENT BENJAMIN MINA, PRIVATE RESPONDENT.
NACHURA, J.:
This is a Petition for Certiorari, Prohibition and Mandamus, with prayer for the
issuance of a writ of preliminary injunction under Rule 65 of the Rules of Cour
t. It was directly filed with this Court assailing the Resolutions dated May 10,
2002[1] and July 31, 2002[2] of the Regional Trial Court (RTC), Branch 108, Pas
ay City, which denied the appearance of the plaintiff Ferdinand A. Cruz, herein
petitioner, as party litigant, and the refusal of the public respondent, Judge P
riscilla Mijares, to voluntarily inhibit herself from trying the case. No writ o
f preliminary injunction was issued by this Court.
The antecedents: On March 5, 2002, Ferdinand A. Cruz (petitioner) sought permiss
ion to enter his appearance for and on his behalf, before the RTC, Branch 108, P
asay City, as the plaintiff in Civil Case No. 01-0410, for Abatement of Nuisance
. Petitioner, a fourth year law student, anchors his claim on Section 34 of Rule
138 of the Rules of Court[3] that a non-lawyer may appear before any court and
conduct his litigation personally. During the pre-trial, Judge Priscilla Mijares
required the petitioner to secure a written permission from the Court Administr
ator before he could be allowed to appear as counsel for himself, a party-litiga
nt. Atty. Stanley Cabrera, counsel for Benjamin Mina, Jr., filed a Motion to Dis
miss instead of a pre-trial brief to which petitioner Cruz vehemently objected a
lleging that a Motion to Dismiss is not allowed after the Answer had been filed.
Judge Mijares then remarked, "Hay naku, masama
yung marunong pa sa Huwes. Ok?"
and proceeded to hear the pending Motion to Dismiss and calendared the next hea
ring on May 2, 2002. On March 6, 2002, petitioner Cruz filed a Manifestation and
Motion to Inhibit,[4] praying for the voluntary inhibition of Judge Mijares. Th
e Motion alleged that expected partiality on the part of the respondent judge in
the conduct of the trial could be inferred from the contumacious remarks of Jud
ge Mijares during the pre-trial. It asserts that the judge, in uttering an uncal
led for remark, reflects a negative frame of mind, which engenders the belief th
at justice will not be served.[5]
In an Order[6] dated April 19, 2002, Judge Mijares denied the motion for inhibit
ion stating that throwing tenuous allegations of partiality based on the said re
mark is not enough to warrant her voluntary inhibition, considering that it was
said even prior to the start of pre-trial. Petitioner filed a motion for reconsi
deration[7] of the said order.
On May 10, 2002, Judge Mijares denied the motion with finality.[8] In the same O
rder, the trial court held that for the failure of petitioner Cruz to submit the
promised document and jurisprudence, and for his failure to satisfy the require
ments or conditions under Rule 138-A of the Rules of Court, his appearance was d
enied.
In a motion for reconsideration,[9] petitioner reiterated that the basis of his
appearance was not Rule 138-A, but Section 34 of Rule 138. He contended that the
two Rules were distinct and are applicable to different circumstances, but the
respondent judge denied the same, still invoking Rule 138-A, in an
REMLAW Page 73

different circumstances, but the respondent judge denied the same, still invokin
g Rule 138-A, in an Order[10] dated July 31, 2002. On August 16, 2002, the petit
ioner directly filed with this Court, the instant petition and assigns the follo
wing errors: I. The respondent regional trial court gravely erred and abused its
discretion when it denied the appearance of the petitioner, for and in the latt
er s behalf, in civil case no. 01-0401 [sic] contrary to rule 138, section 34 of
the rules of court, providing for the appearance of non-lawyers as a party liti
gant; II. the respondent court gravely erred and abused its discretion when it d
id not voluntarily inhibit despite the advent of jurisprudence [sic] that such a
n inhibition is proper to preserve the people s faith and confidence to the cour
ts.
The core issues raised before the Court are: (1) whether the extraordinary writs
of certiorari, prohibition and mandamus under Rule 65 of the 1997 Rules of Cour
t may issue; and (2) whether the respondent court acted with grave abuse of disc
retion amounting to lack or excess of jurisdiction when it denied the appearance
of the petitioner as party litigant and when the judge refused to inhibit herse
lf from trying the case.
This Court s jurisdiction to issue writs of certiorari, prohibition, mandamus an
d injunction is not exclusive; it has concurrent jurisdiction with the RTCs and
the Court of Appeals. This concurrence of jurisdiction is not, however, to be ta
ken as an absolute, unrestrained freedom to choose the court where the applicati
on therefor will be directed.[11] A becoming regard of the judicial hierarchy mo
st certainly indicates that petitions for the issuance of extraordinary writs ag
ainst the RTCs should be filed with the Court of Appeals.[12] The hierarchy of c
ourts is determinative of the appropriate forum for petitions for the extraordin
ary writs; and only in exceptional cases and for compelling reasons, or if warra
nted by the nature of the issues reviewed, may this Court take cognizance of pet
itions filed directly before it.[13] Considering, however, that this case involv
es the interpretation of Section 34, Rule 138 and Rule 138-A of the Rules of Cou
rt, the Court takes cognizance of herein petition. Nonetheless, the petitioner i
s cautioned not to continue his practice of filing directly before this Court pe
titions under Rule 65 when the issue raised can be resolved with dispatch by the
Court of Appeals. We will not tolerate litigants who make a mockery of the judi
cial hierarchy as it necessarily delays more important concerns before us. In re
solving the second issue, a comparative reading of Rule 138, Section 34 and Rule
138-A is necessary. Rule 138-A, or the Law Student Practice Rule, provides: RUL
E 138-A LAW STUDENT PRACTICE RULE Section 1. Conditions for Student Practice. A law student who has successfully completed his 3rd year of the regular four-ye
ar prescribed law curriculum and is enrolled in a recognized law school s clinic
al legal education program approved by the Supreme Court, may appear without com
pensation in any civil, criminal or administrative case before any trial court,
tribunal, board or officer, to represent indigent clients accepted by the legal
clinic of the law school.
Sec. 2. Appearance. - The appearance of the law student authorized by this rule,
shall be under the direct supervision and control of a member of the Integrated
Bar of the Philippines duly accredited by the law school. Any and all pleadings
, motions, briefs, memoranda or other papers to be filed, must be signed by the
supervising attorney for and in behalf of the legal clinic.
REMLAW Page 74

signed by the supervising attorney for and in behalf of the legal clinic. The re
spondent court held that the petitioner could not appear for himself and on his
behalf because of his failure to comply with Rule 138-A. In denying petitioner s
appearance, the court a quo tersely finds refuge in the fact that, on December
18, 1986, this Court issued Circular No. 19, which eventually became Rule 138-A,
and the failure of Cruz to prove on record that he is enrolled in a recognized
school s clinical legal education program and is under supervision of an attorne
y duly accredited by the law school. However, the petitioner insisted that the b
asis of his appearance was Section 34 of Rule 138, which provides: Sec. 34. By w
hom litigation is conducted. - In the court of a justice of the peace, a party m
ay conduct his litigation in person, with the aid of an agent or friend appointe
d by him for that purpose, or with the aid of an attorney. In any other court, a
party may conduct his litigation personally or by aid of an attorney, and his a
ppearance must be either personal or by a duly authorized member of the bar. and
is a rule distinct from Rule 138-A.
From the clear language of this provision of the Rules, it will have to be conce
ded that the contention of the petitioner has merit. It recognizes the right of
an individual to represent himself in any case to which he is a party. The Rules
state that a party may conduct his litigation personally or with the aid of an
attorney, and that his appearance must either be personal or by a duly authorize
d member of the Bar. The individual litigant may personally do everything in the
course of proceedings from commencement to the termination of the litigation.[1
4] Considering that a party personally conducting his litigation is restricted t
o the same rules of evidence and procedure as those qualified to practice law,[1
5] petitioner, not being a lawyer himself, runs the risk of falling into the sna
res and hazards of his own ignorance. Therefore, Cruz as plaintiff, at his own i
nstance, can personally conduct the litigation of Civil Case No. 01-0410. He wou
ld then be acting not as a counsel or lawyer, but as a party exercising his righ
t to represent himself.
The trial court must have been misled by the fact that the petitioner is a law s
tudent and must, therefore, be subject to the conditions of the Law Student Prac
tice Rule. It erred in applying Rule 138-A, when the basis of the petitioner s c
laim is Section 34 of Rule 138. The former rule provides for conditions when a l
aw student may appear in courts, while the latter rule allows the appearance of
a non-lawyer as a party representing himself.
The conclusion of the trial court that Rule 138-A superseded Rule 138 by virtue
of Circular No. 19 is misplaced. The Court never intended to repeal Rule 138 whe
n it released the guidelines for limited law student practice. In fact, it was i
ntended as an addendum to the instances when a non-lawyer may appear in courts a
nd was incorporated to the Rules of Court through Rule 138-A.
It may be relevant to recall that, in respect to the constitutional right of an
accused to be heard by himself and counsel,[16] this Court has held that during
the trial, the right to counsel cannot be waived.[17] The rationale for this rul
ing was articulated in People v. Holgado,[18] where we declared that "even the m
ost intelligent or educated man may have no skill in the science of law, particu
larly in the rules of procedure, and without counsel, he may be convicted not be
cause he is guilty but because he does not know how to establish his innocence."
The case at bar involves a civil case, with the petitioner as plaintiff therein
. The solicitous concern that the Constitution accords the accused in a criminal
prosecution obviously does not obtain in a civil case. Thus, a party litigant i
n a civil case, who insists that he can, without a lawyer s assistance, effectiv
ely undertake the successful pursuit of his claim, may be given the chance to do
so. In this case, petitioner alleges that he is a law student and impliedly ass
erts that he has the competence to litigate the case himself. Evidently, he is a
ware of the perils incident to this decision. In addition, it was subsequently c
larified in Bar Matter 730, that by virtue of Section 34, Rule 138, a law studen
t may appear as an agent or a friend of a party litigant, without need of the su
pervision of a

REMLAW Page 75

student may appear as an agent or a friend of a party litigant, without need of

the supervision of a lawyer, before inferior courts. Here, we have a law student
who, as party litigant, wishes to represent himself in court. We should grant h
is wish. Additionally, however, petitioner contends that the respondent judge co
mmitted manifest bias and partiality by ruling that there is no valid ground for
her voluntary inhibition despite her alleged negative demeanor during the pre-t
rial when she said: "Hay naku, masama
yung marunong pa sa Huwes. Ok?" Petitione
r avers that by denying his motion, the respondent judge already manifested cond
uct indicative of arbitrariness and prejudice, causing petitioner s and his co-p
laintiff s loss of faith and confidence in the respondent s impartiality. We do
not agree. It must be noted that because of this incident, the petitioner filed
an administrative case [19] against the respondent for violation of the Canons o
f Judicial Ethics, which we dismissed for lack of merit on September 15, 2002. W
e now adopt the Court s findings of fact in the administrative case and rule tha
t there was no grave abuse of discretion on the part of Judge Mijares when she d
id not inhibit herself from the trial of the case. In a Motion for Inhibition, t
he movant must prove the ground for bias and prejudice by clear and convincing e
vidence to disqualify a judge from participating in a particular trial,[20] as v
oluntary inhibition is primarily a matter of conscience and addressed to the sou
nd discretion of the judge. The decision on whether she should inhibit herself m
ust be based on her rational and logical assessment of the circumstances prevail
ing in the case before her.[21] Absent clear and convincing proof of grave abuse
of discretion on the part of the judge, this Court will rule in favor of the pr
esumption that official duty has been regularly performed.
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Resolution and Order
of the Regional Trial Court, Branch 108, Pasay City are MODIFIED. Regional Trial
Court, Branch 108, Pasay City is DIRECTED to ADMIT the Entry of Appearance of p
etitioner in Civil Case No. 01-0410 as a party litigant.
No pronouncement as to costs.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI61.962\cruz%20v%
20mijares.docx>
REMLAW Page 76

First United v. Poro Point GR 178799 Jan 19, 2009

Sunday, November 14, 2010 11:20 PM
G.R. No. 178799 January 19, 2009 FIRST UNITED CONSTRUCTORS CORPORATION, vs. PORO
POINT MANAGEMENT CORPORATION (PPMC), THE SPECIAL BIDS & AWARDS COMMITTEE (SBAC)
of PPMC, ATTY. FELIX S. RACADIO, and SATRAP CONSTRUCTION COMPANY, INC., NACHURA
, J.: First United Constructors Corporation (FUCC) filed this special civil acti
on for certiorari and prohibition with prayer for the issuance of a temporary re
straining order, seeking to annul (i) the re-bidding of the contract for the Upg
rading of the San Fernando Airport Project, Phase I, held on May 8, 2007; (ii) t
he Notice of Award1 dated May 23, 2007 to Satrap Construction Company, Inc. (SCC
I); and (iii) Notice to Proceed2 dated May 29, 2007 also to SCCI. FUCC also seek
s to permanently enjoin the Special Bids and Awards Committee (SBAC) and Poro Po
int Management Corporation (PPMC) from implementing the Contract3 in favor of SC
CI. The factual antecedents are as follows: On January 26, 2007, PPMC approved t
he Contract for the Upgrading of the San Fernando Airport Phase I. The SBAC then
issued invitations to reputable contractors to pre-qualify for the project. FUC
C and two (2) other contractors - C.M. Pancho Construction, Inc. (C.M. Pancho) a
nd EEI-New Kanlaon Construction, Inc. Joint Venture (EEI-New Kanlaon JV) respond
ed to the invitation and were pre-qualified to bid for the project. However, upo
n evaluation, none of the pre-qualified bidders was chosen. C.M. Pancho was disq
ualified because it did not possess the required minimum years of experience in
airport projects, while EEI New Kanlaon JV was disqualified because it did not s
ubmit a special license to bid as joint venture. FUCCs technical proposal, on the
other hand, obtained a failing mark because it failed to submit the automated w
eather observation system (AWOS) and its authorized representative did not sign
some pages of the narrative construction method and the tax returns. FUCC sought
reconsideration of the SBAC decision, but it was denied.4 FUCC then filed a pro
test5 with the PPMC. On March 26, 2007, Atty. Felix S. Racadio, PPMC Head, resol
ved FUCCs protest, viz.: In sum, based on the issues raised and [the] arguments p
resented by FUCC, this OFFICE finds NO REVERSIBLE ERROR committed by SBAC, both
on its findings of 06 March 2007 (giving FUCC the FAILED rating) and 12 March 20
07 (denial of FUCCs Motion for Reconsideration). In addition to the "NO REVERSIBL
E ERROR FINDING," there exists a PRESUMPTION OF REGULARITY OF OFFICIAL ACTION OF
A PUBLIC OFFICER. In the case at bar, such presumption applies. The burden of p
roof lies with the FUCC. On this score, FUCC failed to even just scratch the sur
face of the same. The proceedings and findings of SBAC, in the Pre-Qualification
stage not having been put into issue by the PROTEST, then, FUCC had opted to le
ave them as they were, thus, let them remain UNDISTURBED. WHEREFORE, in view of
the foregoing, the PROTEST filed by FUCC which is under consideration is hereby
DISMISSEDfor lack of merit. The FILING FEE paid by FUCC, the protestant, via Met
ro Bank Cashiers Check No. 0600018513, dated March 19, 2007, in the amount of Fou
r Million Seven Hundred Twenty-One Thousand Pesos (P4,721,000.00), Philippine Cu
rrency, which is equivalent to one [percent] (%) of the ABC being NONREFUNDABLE
(Sec. 55.1, IRR-A, RA 1984), the same is hereby ordered FORFEITED in favor of PP
MC. SO ORDERED.6 SBAC then scheduled a re-bidding and issued new invitations to
bid for the project. To enjoin the rebidding set on May 8, 2007, FUCC filed a pe
tition for injunction with prayer for the issuance of a preliminary injunction o
r temporary restraining order (TRO) with the Regional Trial Court (RTC) of La Un
ion, docketed as Civil Case No. 7274. On May 2, 2007, the RTC issued a TRO which
, however, was lifted on May 4, 2007 because under Section 3 of Republic Act No.
8975,7 no court, except the Supreme Court, shall issue a TRO or injunction or p
rohibit the bidding or award of a government infrastructure project. SBAC thus p
roceeded with the rebidding of the project on May 8, 2007 and awarded the projec
t to SCCI as the lowest qualified bidder.8
REMLAW Page 77

bidding of the project on May 8, 2007 and awarded the project to SCCI as the low
est qualified bidder.8 The Contract9 for the project was signed, and a notice to
proceed10 was served on SCCI on May 29, 2007. FUCC filed an amended petition wi
th the RTC to enjoin the implementation of the project. The Office of the Govern
ment Corporate Counsel (OGCC) moved to dismiss the petition for lack of jurisdic
tion. Pending resolution of OGCCs motion to dismiss, FUCC moved for the dismissal
of its amended petition, which was granted by the RTC on July 4, 2007, to wit:
Acting on the above-stated notice of dismissal, this Court hereby confirms the d
ismissal of the amended petition, in effect the dismissal of the whole action, w
ithout prejudice, pursuant to Sec. 1, Rule 17 of the Rules of Court. WHEREFORE,
this case is hereby DISMISSED. SO ORDERED.11 Claiming that there is no appeal, o
r any speedy and adequate remedy in the ordinary course of law, FUCC comes to us
via this petition. It also asks for the issuance of a TRO to enjoin the impleme
ntation of the project, asserting that SCCI is not qualified to undertake the pr
oject and the award clearly poses a real threat to the public welfare and safety
. In its November 12, 2007 Resolution, this Court denied FUCCs application for th
e issuance of a TRO for lack of merit. FUCC filed this petition praying for the
following relief, viz.: (a) That upon receipt of this Petition, a Temporary Rest
raining Order (TRO) be issued enjoining the implementation of the contract for t
he Upgrading of the San Fernando Airport Project, Phase I with respondent [SCCI]
as the contractor; (b) That after proper proceeding, judgment be rendered: (1)
permanently enjoining the implementation of the contract for the Upgrading of th
e San Fernando Airport Project, Phase I with respondent [SCCI] as the contractor
; (2) declaring the re-bidding of the contract for the Upgrading of the San Fern
ando Airport Project, Phase I on 08 May 2007 illegal and nullifying the results
thereof; (3) annulling the Notice of Award dated 23 May 2007, the Contract for t
he Upgrading of the San Fernando Airport, Phase I entered into, by and between r
espondent PPMC and respondent [SCCI] on 29 May 2007, and the Notice to Proceed d
ated 29 May 2007; and (4) directing respondent SBAC and/or respondent PPMC and/o
r respondent Atty. Recadio to reconsider the "Failed" rating of the bid of FUCC,
open the Financial Proposal Envelope submitted by FUCC during the original bidd
ing, declare FUCC as the winning bidder, and forthwith award the contract to FUC
C, as the winning bidder and being the only qualified contractor for the project
. 12 It asserts that SBAC and PPMC committed grave abuse of discretion in disqua
lifying its bid, in denying its protest, in conducting a re-bidding and in award
ing the project to SCCI. It insists that it is the only qualified contractor for
the project and prays that it be declared the winning bidder. We dismiss the pe
tition. Republic Act (RA) No. 9184, or the Government Procurement Reform Act, ou
tlines the procedure to assail decisions of the SBAC in this wise: SEC. 55. Prot
ests on Decisions of the BAC. Decisions of BAC in all stages of procurement may
be protested to the head of the procuring entity and shall be in writing. Decisi
ons of the BAC may be protested by filing a verified position paper and paying a
nonrefundable protest fee. The amount of protest fee and the periods during whi
ch the protests may be filed and resolved shall be specified in the IRR. SEC. 56
. Resolution of Protests. - The protests shall be resolved strictly on the basis
of records of the BAC. Up to a certain amount specified in the IRR, the decisio
ns of the Head of the Procuring Entity shall be final. SEC. 57. Non-interruption
of the Bidding Process. In no case shall any protest taken from any decision tr
eated in this Article stay or delay the bidding process. Protests must first be
resolved before any award is made. SEC. 58. Resort to Regular Courts; Certiorari
. Court action may be resorted only after the protest contemplated in this Artic
le shall have been completed. Cases that are filed in violation of the process s
pecified in this Article shall be dismissed for lack of jurisdiction. The region
al trial court shall have jurisdiction over final decisions of the head of the p
rocuring entity. Court actions shall be governed by Rule 65 of the 1997 Rules of
Civil Procedure. This provision is without prejudice to any law conferring on t
he Supreme Court the sole jurisdiction to issue temporary restraining orders and
injunctions relating to Infrastructure Projects of Government. FUCC challenged
the decision of SBAC in a protest filed with Atty. Racadio of the PPMC who affir
med the

REMLAW Page 78

issue temporary restraining orders and injunctions relating to Infrastructure Pr

ojects of Government. FUCC challenged the decision of SBAC in a protest filed wi
th Atty. Racadio of the PPMC who affirmed the SBAC decision. Instead of filing a
petition for certiorari, as provided in Section 58, FUCC filed a petition for i
njunction with prayer for the issuance of a temporary restraining order and/or p
reliminary injunction with the RTC. FUCC, however, later moved for its dismissal
theorizing that the RTC had no jurisdiction over petitions for injunction. Ther
eafter, it filed this petition for certiorari with this Court. Section 4, Rule 6
5 of the 1997 Rules of Civil Procedure provides that a special civil action for
certiorari shall be filed not later than sixty (60) days from the notice of the
judgment, order or resolution.13 FUCC admitted that it received the PPMC decisio
n on March 27, 2007.14 However, it filed this petition assailing the said decisi
on only on July 30, 2007. It is, therefore, too late in the day for FUCC, via th
is petition, to assail the PPMC decision which rated its bid as failed. Besides,
FUCC violated the doctrine of judicial hierarchy in filing this petition for ce
rtiorari directly with this Court. Section 58 is clear that petitions for the is
suance of a writ of certiorari against the decision of the head of the procuring
agency, like PPMC, should be filed with the Regional Trial Court. Indeed, the j
urisdiction of the RTC over petitions for certiorari is concurrent with this Cou
rt. However, such concurrence does not allow unrestricted freedom of choice of t
he court forum. A direct invocation of the Supreme Courts original jurisdiction t
o issue this writ should be allowed only when there are special and important re
asons, clearly and specifically set out in the petition.15 In the present case,
FUCC adduced no special and important reason why direct recourse to this Court s
hould be allowed. Thus, we reaffirm the judicial policy that this Court will not
entertain a direct invocation of its jurisdiction unless the redress desired ca
nnot be obtained in the appropriate lower courts, and exceptional and compelling
circumstances justify the resort to the extraordinary remedy of a writ of certi
orari. Similarly, the RTC is the proper venue to hear FUCCs prayer for permanent
injunction. Unquestionably, RA No. 897516 enjoins all courts, except the Supreme
Court, from issuing any temporary restraining order, preliminary injunction, or
preliminary mandatory injunction against the government, or any of its subdivis
ions, officials or any person or entity to restrain, prohibit or compel the bidd
ing or awarding of a contract or project of the national government. The proscri
ption, however, covers only temporary restraining orders or writs but not decisi
ons on the merits granting permanent injunction. Therefore, while courts below a
re prohibited by RA No. 8795 from issuing TROs or preliminary restraining orders
pending the adjudication of the case, said statute, however, does not explicitl
y proscribe the issuance of a permanent injunction granted by a court of law ari
sing from an adjudication of a case on the merits.17 As we explained in Alvarez
v. PICOP Resources, Inc.:18 x x x Republic Act No. 8975 merely proscribes the is
suance of temporary restraining orders and writs of preliminary injunction and p
reliminary mandatory injunction. [It] cannot, under pain of violating the Consti
tution, deprive the courts of authority to take cognizance of the issues raised
in the principal action, as long as such action and the relief sought are within
their jurisdiction. Clearly, except for the prayer for the issuance of a TRO or
preliminary injunction, the issues raised by FUCC and the relief it sought are
within the jurisdiction of the RTC. It is a procedural faux pas for FUCC to invo
ke the original jurisdiction of this Court over the issuance of a writ of certio
rari and permanent injunction. In any event, the invitation to bid contains a re
servation for PPMC to reject any bid. It has been held that where the right to r
eject is so reserved, the lowest bid, or any bid for that matter, may be rejecte
d on a mere technicality.19 The discretion to accept or reject bid and award con
tracts is vested in the government agencies entrusted with that function. This d
iscretion is of such wide latitude that the Courts will not interfere therewith
or direct the committee on bids to do a particular act or to enjoin such act wit
hin its prerogatives unless it is apparent that it is used as a shield to a frau
dulent award;20 or an unfairness or injustice is shown;21 or when in the exercis
e of its authority, it gravely abuses or exceeds its jurisdiction. Thus, where P
PMC as advertiser, availing itself of that right, opts to reject any or all bids

, the losing bidder has no cause to complain or right to dispute that choice, un
less fraudulent acts, injustice, unfairness or grave abuse of discretion is show
n. FUCC alleges that SBAC and PPMC, along with the SCCI and five (5) other bidde
rs, colluded to rig the results of the re-bidding so that SCCI would emerge as t
he so-called lowest bidder. The record, however, is bereft of any proof to subst
antiate the allegation. Neither is there any evidence offered to establish unfai
rness, injustice, caprice or arbitrariness on the part of the SBAC or the PPMC i
n awarding the contract to SCCI, the lowest bidder. The presumption of regularit
y of the bidding must thus be upheld.
REMLAW Page 79

contract to SCCI, the lowest bidder. The presumption of regularity of the biddin
g must thus be upheld. As we explained in JG Summit Holdings, Inc. v. Court of A
ppeals:22 The discretion to accept or reject a bid and award contracts is vested
in the Government agencies entrusted with that function. The discretion given t
o the authorities on this matter is of such wide latitude that the Courts will n
ot interfere therewith, unless it is apparent that it is used as a shield to a f
raudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise o
f this discretion is a policy decision that necessitates prior inquiry, investig
ation, comparison, evaluation, and deliberation. This task can best be discharge
d by the Government agencies concerned, not by the Courts. The role of the Court
s is to ascertain whether a branch or instrumentality of the Government has tran
sgressed its constitutional boundaries. But the Courts will not interfere with e
xecutive or legislative discretion exercised within those boundaries. Otherwise,
it strays into the realm of policy decision-making. It is only upon a clear sho
wing of grave abuse of discretion that the Courts will set aside the award of a
contract made by a government entity. Grave abuse of discretion implies a capric
ious, arbitrary and whimsical exercise of power (Filinvest Credit Corp. v. Inter
mediate Appellate Court, No. 65935, 30 September 1988, 166 SCRA 155). The abuse
of discretion must be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform a duty enjoined by law, as to act at al
l in contemplation of law, where the power is exercised in an arbitrary and desp
otic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Tra
der, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489). Accordingly, there be
ing no showing of grave abuse of discretion, FUCC has no valid ground to demand
annulment of the contract between PPMC and SCCI. WHEREFORE, the petition is DISM
ISSED. The assailed Decision of the PPMC is AFFIRMED. SO ORDERED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI69.889\first%20u
nited%20v%20poro.docx>
REMLAW Page 80

First Lepanto Ceramics, Inc. v. CA, GR 110571, Mar 10, 1994

Sunday, November 14, 2010 11:21 PM
G.R. No. 110571 March 10, 1994 FIRST LEPANTO CERAMICS, INC vs. CA and MARIWASA M
ANUFACTURING, INC., NOCON, J.: Brought to fore in this petition for certiorari a
nd prohibition with application for preliminary injunction is the novel question
of where and in what manner appeals from decisions of the Board of Investments
(BOI) should be filed. A thorough scrutiny of the conflicting provisions of Bata
s Pambansa Bilang 129, otherwise known as the "Judiciary Reorganization Act of 1
980," Executive Order No. 226, also known as the Omnibus Investments Code of 198
7 and Supreme Court Circular No. 1-91 is, thus, called for. Briefly, this questi
on of law arose when BOI, in its decision dated December 10, 1992 in BOI Case No
. 92-005 granted petitioner First Lepanto Ceramics, Inc. s application to amend
its BOI certificate of registration by changing the scope of its registered prod
uct from "glazed floor tiles" to "ceramic tiles." Eventually, oppositor Mariwasa
filed a motion for reconsideration of the said BOI decision while oppositor Fil
-Hispano Ceramics, Inc. did not move to reconsider the same nor appeal therefrom
. Soon rebuffed in its bid for reconsideration, Mariwasa filed a petition for re
view with respondent Court of Appeals pursuant to Circular 1-91. Acting on the p
etition, respondent court required the BOI and petitioner to comment on Mariwasa
s petition and to show cause why no injunction should issue. On February 17, 19
93, respondent court temporarily restrained the BOI from implementing its decisi
on. This temporary restraining order lapsed by its own terms on March 9, 1993, t
wenty (20) days after its issuance, without respondent court issuing any prelimi
nary injunction. On February 24, 1993, petitioner filed a "Motion to Dismiss Pet
ition and to Lift Restraining Order" on the ground that respondent court has no
appellate jurisdiction over BOI Case No. 92-005, the same being exclusively vest
ed with the Supreme Court pursuant to Article 82 of the Omnibus Investments Code
of 1987. On May 25, 1993, respondent court denied petitioner s motion to dismis
s, the dispositive portion of which reads as follows: WHEREFORE, private respond
ent s motion to dismiss the petition is hereby DENIED, for lack of merit. Privat
e respondent is hereby given an inextendible period of ten (10) days from receip
t hereof within which to file its comment to the petition. 1 Upon receipt of a c
opy of the above resolution on June 4, 1993, petitioner decided not to file any
motion for reconsideration as the question involved is essentially legal in natu
re and immediately filed a petition for certiorari and prohibition before this C
ourt. Petitioner posits the view that respondent court acted without or in exces
s of its jurisdiction in issuing the questioned resolution of May 25, 1993, for
the following reasons: I. Respondent court has no jurisdiction to entertain Mari
wasa s appeal from the BOI s decision in BOI Case No. 92-005, which has become f
inal. II. The appellate jurisdiction conferred by statute upon this Honorable Co
urt cannot be amended or superseded by Circular No. 1-91. 2 Petitioner then conc
ludes that: III. Mariwasa has lost it right to appeal . . . in this case. 3 Peti
tioner argues that the Judiciary Reorganization Act of 1980 or Batas Pambansa Bi
lang 129 and Circular 1-91, "Prescribing the Rules Governing Appeals to the Cour
t of Appeals from a Final Order or Decision of the Court of Tax Appeals and Quas
i-Judicial Agencies" cannot be the basis of Mariwasa s appeal to respondent cour
t because the procedure for appeal laid down therein runs contrary to Article 82
of E.O. 226, which provides that appeals from decisions or orders of the BOI sh
all be filed directly with this Court, to wit: Judicial relief. All orders or de
cisions of the Board (of Investments) in cases involving the provisions of this
Code shall immediately be executory. No appeal from the order or decision of the
Board by the party adversely affected shall stay such an order or decision; Pro
vided, that all appeals shall be filed directly with the Supreme Court within th
irty (30) days
REMLAW Page 81

decision; Provided, that all appeals shall be filed directly with the Supreme Co
urt within thirty (30) days from receipt of the order or decision. On the other
hand, Mariwasa maintains that whatever "obvious inconsistency" or "irreconcilabl
e repugnancy" there may have been between B.P. 129 and Article 82 of E.O. 226 on
the question of venue for appeal has already been resolved by Circular 1-91 of
the Supreme Court, which was promulgated on February 27, 1991 or four (4) years
after E.O. 226 was enacted. Sections 1, 2 and 3 of Circular 1-91, is herein quot
ed below: 1. Scope. These rules shall apply to appeals from final orders or deci
sions of the Court of Tax Appeals. They shall also apply to appeals from final o
rders or decisions of any quasi-judicial agency from which an appeal is now allo
wed by statute to the Court of Appeals or the Supreme Court. Among these agencie
s are the Securities and Exchange Commission, Land Registration Authority, Socia
l Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks an
d Technology Transfer, National Electrification Administration, Energy Regulator
y Board, National Telecommunications Commission, Secretary of Agrarian Reform an
d Special Agrarian Courts under RA 6657, Government Service Insurance System, Em
ployees Compensation Commission, Agricultural Inventions Board, Insurance Commis
sion and Philippine Atomic Energy Commission. 2. Cases not covered. These rules
shall not apply to decisions and interlocutory orders of the National Labor Rela
tions Commission or the Secretary of Labor and Employment under the Labor Code o
f the Philippines, the Central Board of Assessment Appeals, and other quasi-judi
cial agencies from which no appeal to the courts is prescribed or allowed by sta
tute. 3. Who may appeal and where to appeal. The appeal of a party affected by a
final order, decision, or judgment of the Court of Tax Appeals or of a quasi-ju
dicial agency shall be taken to the Court of Appeals within the period and in th
e manner herein provided, whether the appeal involves questions of fact or of la
w or mixed questions of fact and law. From final judgments or decisions of the C
ourt of Appeals, the aggrieved party may appeal by certiorari to the Supreme Cou
rt as provided in Rule 45 of the Rules of Court. It may be called that Section 9
(3) of B.P. 129 vests appellate jurisdiction over all final judgments, decisions
, resolutions, orders or awards of quasi-judicial agencies on the Court of Appea
ls, to wit: (3) Exclusive appellate jurisdiction over all final judgments, decis
ions, resolutions, orders, awards of Regional Trial Courts and quasi-judicial ag
encies, instrumentalities, boards or commissions, except those falling within th
e appellate jurisdiction of the Supreme Court in accordance with the Constitutio
n, the provisions of this Act, and of subparagraph (1) of the third paragraph an
d 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 co
nduct hearings, receive evidence and perform any and all acts necessary to resol
ve factual issues raised in cases falling within its original and appellate juri
sdiction, including the power to grant and conduct new trials or further proceed
ings. These provisions shall not apply to decisions and interlocutory orders iss
ued under the Labor Code of the Philippines and by the Central Board of Assessme
nt Appeals. Clearly evident in the aforequoted provision of B.P. 129 is the laud
able objective of providing a uniform procedure of appeal from decisions of all
quasi-judicial agencies for the benefit of the bench and the bar. Equally laudab
le is the twin objective of B.P. 129 of unclogging the docket of this Court to e
nable it to attend to more important tasks, which in the words of Dean Vicente G
. Sinco, as quoted in our decision in Conde v. Intermediate Appellate Court 4 is
"less concerned with the decisions of cases that begin and end with the transie
nt rights and obligations of particular individuals but is more intertwined with
the direction of national policies, momentous economic and social problems, the
delimitation of governmental authority and its impact upon fundamental rights.
In Development Bank of the Philippines vs. Court of Appeals, 5 this Court noted
that B.P. 129 did not deal only with "changes in the rules on procedures" and th
at not only was the Court of Appeals reorganized, but its jurisdiction and power
s were also broadened by Section 9 thereof. Explaining the changes, this Court s
aid: . . . Its original jurisdiction to issue writs of mandamus, prohibition, ce
rtiorari and habeas corpus, which theretofore could be exercised only in aid of
its appellate jurisdiction, was expanded by (1) extending it so as to include th

e writ of quo warranto, and also (2) empowering it to issue all said extraordina
ry writs
REMLAW Page 82

so as to include the writ of quo warranto, and also (2) empowering it to issue a
ll said extraordinary writs "whether or not in aid of its appellate jurisdiction
." Its appellate jurisdiction was also extended to cover not only final judgment
s of Regional Trial Courts, but also "all final judgments, decisions, resolution
s, orders or awards of . . . quasi-judicial agencies, instrumentalities, boards
or commissions, except those falling within the appellate jurisdiction of the Su
preme Court in accordance with the Constitution, the provisions of this Act, and
of sub-paragraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948," it being noteworthy in th
is connection that the text of the law is broad and comprehensive, and the expli
citly stated exceptions have no reference whatever to the Court of Tax Appeals.
Indeed, the intention to expand the original and appellate jurisdiction of the C
ourt of Appeals over quasi-judicial agencies, instrumentalities, boards, or comm
issions, is further stressed by the last paragraph of Section 9 which excludes f
rom its provisions, only the "decisions and interlocutory orders issued under th
e Labor Code of the Philippines and by the Central Board of Assessment Appeals."
6 However, it cannot be denied that the lawmaking system of the country is far
from perfect. During the transitional period after the country emerged from the
Marcos regime, the lawmaking power was lodged on the Executive Department. The o
bvious lack of deliberation in the drafting of our laws could perhaps explain th
e deviation of some of our laws from the goal of uniform procedure which B.P. 12
9 sought to promote. In exempli gratia, Executive Order No. 226 or the Omnibus I
nvestments Code of 1987 provides that all appeals shall be filed directly with t
he Supreme Court within thirty (30) days from receipt of the order or decision.
Noteworthy is the fact that presently, the Supreme Court entertains ordinary app
eals only from decisions of the Regional Trial Courts in criminal cases where th
e penalty imposed is reclusion perpetua or higher. Judgments of regional trial c
ourts may be appealed to the Supreme Court only by petition for review on certio
rari within fifteen (15) days from notice of judgment in accordance with Rule 45
of the Rules of Court in relation to Section 17 of the Judiciary Act of 1948, a
s amended, this being the clear intendment of the provision of the Interim Rules
that "(a)ppeals to the Supreme Court shall be taken by petition for certiorari
which shall be governed by Rule 45 of the Rules of Court." Thus, the right of ap
peal provided in E.O. 226 within thirty (30) days from receipt of the order or d
ecision is clearly not in consonance with the present procedure before this Cour
t. Only decisions, orders or rulings of a Constitutional Commission (Civil Servi
ce Commission, Commission on Elections or Commission on Audit), may be brought t
o the Supreme Court on original petitions for certiorari under Rule 65 by the ag
grieved party within thirty (30) days form receipt of a copy thereof. 7 Under th
is contextual backdrop, this Court, pursuant to its Constitutional power under S
ection 5(5), Article VIII of the 1987 Constitution to promulgate rules concernin
g pleading, practice and procedure in all courts, and by way of implementation o
f B.P. 129, issued Circular 1-91 prescribing the rules governing appeals to the
Court of Appeals from final orders or decisions of the Court of Tax Appeals and
quasijudicial agencies to eliminate unnecessary contradictions and confusing rul
es of procedure. Contrary to petitioner s contention, although a circular is not
strictly a statute or law, it has, however, the force and effect of law accordi
ng to settled jurisprudence. 8 In Inciong v. de Guia, 9 a circular of this Court
was treated as law. In adopting the recommendation of the Investigating Judge t
o impose a sanction on a judge who violated Circular No. 7 of this Court dated S
eptember 23, 1974, as amended by Circular No. 3 dated April 24, 1975 and Circula
r No. 20 dated October 4, 1979, requiring raffling of cases, this Court quoted t
he ratiocination of the Investigating Judge, brushing aside the contention of re
spondent judge that assigning cases instead of raffling is a common practice and
holding that respondent could not go against the circular of this Court until i
t is repealed or otherwise modified, as "(L)aws are repealed only by subsequent
ones, and their violation or non-observance shall not be excused by disuse, or c
ustoms or practice to the contrary." 10 The argument that Article 82 of E.O. 226
cannot be validly repealed by Circular 1-91 because the former grants a substan
tive right which, under the Constitution cannot be modified, diminished or incre

ased by this Court in the exercise of its rule-making powers is not entirely def
ensible as it seems. Respondent correctly argued that Article 82 of E.O. 226 gra
nts the right of appeal from decisions or final orders of the BOI and in grantin
g such right, it also provided where and in what manner such appeal can be broug
ht. These latter portions simply deal with procedural aspects which this Court h
as the power to regulate by virtue of its constitutional rule-making powers.
REMLAW Page 83

regulate by virtue of its constitutional rule-making powers. The case of Bustos

v. Lucero 11 distinguished between rights created by a substantive law and those
arising from procedural law: Substantive law creates substantive rights . . . .
Substantive rights is a term which includes those rights which one enjoys under
the legal system prior to the disturbance of normal relations (60 C.J., 980). S
ubstantive law is that part of the law which creates, defines and regulates righ
ts, or which regulates rights and duties which give rise to a cause of action, a
s oppossed to adjective or remedial law, which prescribes the method of enforcin
g rights or obtains a redress for their invasion. 12 Indeed, the question of whe
re and in what manner appeals from decisions of the BOI should be brought pertai
ns only to procedure or the method of enforcing the substantive right to appeal
granted by E.O. 226. In other words, the right to appeal from decisions or final
orders of the BOI under E.O. 226 remains and continues to be respected. Circula
r 1-91 simply transferred the venue of appeals from decisions of this agency to
respondent Court of Appeals and provided a different period of appeal, i.e., fif
teen (15) days from notice. It did not make an incursion into the substantive ri
ght to appeal. The fact that BOI is not expressly included in the list of quasijudicial agencies found in the third sentence of Section 1 of Circular 1-91 does
not mean that said circular does not apply to appeals from final orders or deci
sion of the BOI. The second sentence of Section 1 thereof expressly states that
"(T) hey shall also apply to appeals from final orders or decisions of any quasi
-judicial agency from which an appeal is now allowed by statute to the Court of
Appeals or the Supreme Court." E.O. 266 is one such statute. Besides, the enumer
ation is preceded by the words "(A)mong these agencies are . . . ," strongly imp
lying that there are other quasi-judicial agencies which are covered by the Circ
ular but which have not been expressly listed therein. More importantly, BOI doe
s not fall within the purview of the exclusions listed in Section 2 of the circu
lar. Only the following final decisions and interlocutory orders are expressly e
xcluded from the circular, namely, those of: (1) the National Labor Relations Co
mmission; (2) the Secretary of Labor and Employment; (3) the Central Board of As
sessment Appeals and (4) other quasi-judicial agencies from which no appeal to t
he courts is prescribed or allowed by statute. Since in DBP v. CA 13 we upheld t
he appellate jurisdiction of the Court of Appeals over the Court of Tax Appeals
despite the fact that the same is not among the agencies reorganized by B.P. 129
, on the ground that B.P. 129 is broad and comprehensive, there is no reason why
BOI should be excluded from Circular 1-91, which is but implementary of said la
w. Clearly, Circular 1-91 effectively repealed or superseded Article 82 of E.O.
226 insofar as the manner and method of enforcing the right to appeal from decis
ions of the BOI are concerned. Appeals from decisions of the BOI, which by statu
te was previously allowed to be filed directly with the Supreme Court, should no
w be brought to the Court of Appeals. WHEREFORE, in view of the foregoing reason
s, the instant petition for certiorari and prohibition with application for temp
orary restraining order and preliminary injunction is hereby DISMISSED for lack
of merit. The Temporary Restraining Order issued on July 19, 1993 is hereby LIFT
ED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI71.600\first%20l
epanto%20v%20ca.docx>
REMLAW Page 84

Sarah Ampong v. CSC GR 167916 Aug 26, 2008

Sunday, November 14, 2010 11:21 PM
[G.R. No. 167916, August 26, 2008]
SARAH P. AMPONG VS. CIVIL SERVICE COMMISSION, CSC-REGIONAL OFFICE NO. 11, RESPON
DENT.
REYES, R.T., J.: CAN the Civil Service Commission (CSC) properly assume jurisdic
tion over administrative proceedings against a judicial employee involving acts
of dishonesty as a teacher, committed prior to her appointment to the judiciary?
Before Us is a petition for review on certiorari assailing the Decision[1] of t
he Court of Appeals (CA) affirming the CSC s exercise of administrative jurisdic
tion over petitioner. The Facts The following facts are uncontroverted: On Novem
ber 10, 1991, a Professional Board Examination for Teachers (PBET)[2] was held i
n Davao City. A certain Evelyn Junio-Decir[3] applied for and took the examinati
on at Room 16, Kapitan Tomas Monteverde Elementary School. She passed with a rat
ing of 74.27%.[4] At the time of the PBET examinations, petitioner Sarah P. Ampo
ng (nee Navarra) and Decir were public school teachers under the supervision of
the Department of Education, Culture and Sports (DECS).[5] Later, on August 3, 1
993, Ampong transferred to the Regional Trial Court (RTC) in Alabel, Sarangani P
rovince, where she was appointed as Court Interpreter III. On July 5, 1994, a wo
man representing herself as Evelyn Decir went to the Civil Service Regional Offi
ce (CSRO) No. XI, Davao City, to claim a copy of her PBET Certificate of Eligibi
lity. During the course of the transaction, the CSRO personnel noticed that the
woman did not resemble the picture of the examinee in the Picture Seat Plan (PSP
). Upon further probing, it was confirmed that the person claiming the eligibili
ty was different from the one who took the examinations. It was petitioner Ampon
g who took and passed the examinations under the name Evelyn Decir. The CSRO con
ducted a preliminary investigation and determined the existence of a prima facie
case against Decir and Ampong for Dishonesty, Grave Misconduct and Conduct Prej
udicial to the Best Interest of the Service. On August 23, 1994, they were forma
lly charged and required to file answers under oath. The formal charge reads: Th
at sometime before the conduct of the November 10, 1991 Professional Board Exami
nation for Teachers (PBET), a certain Ms. Evelyn B. Junio (now Decir) took the s
aid examination at Rm. 16 Kapitan Tomas Monteverde Elementary School, Davao City
, with a passing rate of 74.27%; That on July 5, 1994 she appeared before the CS
C Region XI Office to get her Guro Certificate; That upon verification, it was f
ound out that the picture attached in the Picture Seat Plan, marked as Annex "A"
and "A-1," respectively, were not the same compared to the picture attached in
the CSC Form 212 of Evelyn JunioDecir marked herein as annex "B," "B-1," respect
ively. There was also a marked difference in the signatures affixed in the said
annexes; That further investigations revealed that it was the pictures of Ms. Sa
rah Navarra, wife of her husband s first cousin, who took the said examination i
n behalf of Ms. Evelyn Junio-Decir, a provisional teacher; That the said act of
Mesdames Decir and Navarra are acts of dishonesty and conduct prejudicial to the
best interest of the service; that in (sic) taking the CS examination for and i
n behalf of another undermines the sanctity of the CS examinations; All these co
ntrary to existing civil service laws and regulations. (Emphasis supplied) In he
r sworn statement dated November 3, 1994, Decir denied the charges against her.
She reasoned out that it must have been the examination proctor who pasted the w
rong picture on the PSP and that her signatures were different because she was s
till signing her maiden name at the time of the
REMLAW Page 85

her signatures were different because she was still signing her maiden name at t
he time of the examination. In her Answer, Decir contended that: 2. The same acc
usation is denied, the truth being: a. When I took the Professional Board Examin
ation for Teachers (PBET) in the year 1991, I handed my 1x1 I.D. picture to the
proctor assigned in the examination room who might have inadvertently pasted in
the Seat Plan [the] wrong picture instead [of] my own picture; b. With respect t
o the marked difference in my signature both appearing in the aforesaid Seat Pla
n and also with the Form 212, the disparity lies in that in the year 1991, when
I took the afroresaid examination, I was still sporting my maiden name Evelyn B.
Junio in order to coincide with all my pertinent supporting papers, like the sp
ecial order (s.o.), appointment and among others, purposely to take said communi
cations. However, immediately after taking the PBET Examination in 1991, I start
ed using the full name of Evelyn Junio-Decir.[6] Even before filing an Answer, p
etitioner Ampong voluntarily appeared at the CSRO on February 2, 1995 and admitt
ed to the wrongdoing. When reminded that she may avail herself of the services o
f counsel, petitioner voluntarily waived said right.
On March 13, 1995, petitioner gave another admission in the following tenor:
Q: A: Now, what is then your intention in coming to this Region inasmuch as you
are still intending to file an answer to the formal charge? I came here because
I want to admit personally. So that I will not be coming here anymore. I will su
bmit my case for Resolution.
Q:
A:
So, you intend to waive your right for the formal hearing and you also admit ora
lly on the guilt of the charge on the Formal Charge dated August 24, 1994?
Yes, Ma am.
Q: A:
What else do you want to tell the Commission? x x x Inasmuch as I am already rem
orseful, I am repenting of the wrong that I have done. I am hoping that the Comm
ission can help x x x so that I will be given or granted another chance to serve
the government.
xxx x
Q:
Now inasmuch as you have declared that you have admitted the guilt that you took
the examination for and in behalf of Evelyn Junio Decir, are you telling this t
o the Commission without the assistance of the counsel or waiver of your right t
o be assisted by counsel.
A:
Yes, Ma am. I am waiving my right. [7] (Emphasis supplied)
Petitioner reiterated her admission in her sworn Answer dated March 16, 1995: 3.
That, during the commission of the act, I was still under the Department of Edu
cation, Culture and Sports, as Teacher in-charge of San Miguel Primary School, M
alungon North District, way back in 1991, when the husband of Evelyn Junio-Decir
, my husband s cousin came to me and persuaded me to take the examination in beh
alf of his wife to which I disagreed but he earnestly begged so that I was convi
nced to agree because I pity his wife considering that she is an immediate relat
ive, and there was no monetary consideration involved in this neither a compensa
tory reward for me, as I was overcome by their persuasion; 4. That, despite the
fact that I was a teacher, I was not aware that the acts I was charged, is a gro
und for disciplinary action and punishable by dismissal; 5. That I should not ha

ve conformed to this anomalous transaction considering that I was born in a Chri

stian family, and was brought up in the fear of Lord, and had been a consistent
officer of the Church Board, had been a religious leader for so many years, and
had been the organizer of the
REMLAW Page 86

Church Board, had been a religious leader for so many years, and had been the or
ganizer of the Music Festival of the Association of Evangelical Churches of Malu
ngon, Sarangani Province, thus I was devoted to church work and was known to be
of good conduct; and that my friends and acquaintances can vouch to that, but I
was just forced by circumstances to agree to the spouses Godfre and Evelyn Decir
.[8] (Emphasis added) CSC Finding and Penalty On March 21, 1996, the CSC found p
etitioner Ampong and Decir guilty of dishonesty, dismissing them from the servic
e. The dispositive part of the CSC resolution states: WHEREFORE, the Commission
hereby finds Evelyn J. Decir and Sarah P. Navarra guilty of Dishonesty. Accordin
gly, they are meted the penalty of dismissal with all its accessory penalties. T
he PBET rating of Decir is revoked.[9] Petitioner moved for reconsideration, rai
sing for the first time the issue of jurisdiction.[10] She argued that the exclu
sive authority to discipline employees of the judiciary lies with the Supreme Co
urt; that the CSC acted with abuse of discretion when it continued to exercise j
urisdiction despite her assumption of duty as a judicial employee. She contended
that at the time the case was instituted on August 23, 1994, the CSC already lo
st jurisdiction over her. She was appointed as Interpreter III of the RTC, Branc
h 38, Alabel, Sarangani Province on August 3, 1993. The CSC denied the motion fo
r reconsideration.[11] According to the Commission, to allow petitioner to evade
administrative liability would be a mockery of the country s administrative dis
ciplinary system. It will open the floodgates for others to escape prosecution b
y the mere expedient of joining another branch of government. In upholding its j
urisdiction over petitioner, the CSC differentiated between administrative super
vision exercised by the Supreme Court and administrative jurisdiction granted to
the Commission over all civil service employees: Moreover, it must be pointed o
ut that administrative supervision is distinct from administrative jurisdiction.
While it is true that this Commission does not have administrative supervision
over employees in the judiciary, it definitely has concurrent jurisdiction over
them. Such jurisdiction was conferred upon the Civil Service Commission pursuant
to existing law specifically Section 12(11), Chapter 3, Book V of the Administr
ative Code of 1987 (Executive Order No. 292) which provides as follows: "(11) He
ar and decide administrative cases instituted by or through it directly or on ap
peal, including contested appointment, and review decisions and actions of its o
ffices and of the agencies attached to it x x x." The fact that court personnel
are under the administrative supervision of the Supreme Court does not totally i
solate them from the operations of the Civil Service Law. Appointments of all of
ficials and employees in the judiciary is governed by the Civil Service Law (Sec
tion 5(6), Article VIII, 1987 Constitution). (Emphasis supplied) CA Disposition
Via petition for review under Rule 43, petitioner elevated the matter to the CA.
[12] She insisted that as a judicial employee, it is the Supreme Court and not t
he CSC that has disciplinary jurisdiction over her.
In a Decision dated November 30, 2004,[13] the CA denied the petition for lack o
f merit.
The CA noted that petitioner never raised the issue of jurisdiction until after
the CSC ruled against her. Rather, she willingly appeared before the commission,
freely admitted her wrongdoing, and even requested for clemency. Thus, she was
estopped from questioning the Commission s jurisdiction. The appellate court opi
ned that while lack of jurisdiction may be assailed at any stage, a party s acti
ve participation in the proceedings before a court, tribunal or body will estop
such party from assailing its jurisdiction. The CA further ruled that a member o
f the judiciary may be under the jurisdiction of two different bodies. As a publ
ic school teacher or a court interpreter, petitioner was part of the civil servi
ce, subject to its rules and regulations. When she committed acts in violation o
f the Civil Service Law, the CSC was clothed with administrative jurisdiction ov
er her. Issue
REMLAW Page 87

clothed with administrative jurisdiction over her. Issue

Petitioner, through this petition, assigns the lone error that: The Honorable Co
urt of Appeals-First Division decided a question of substance in a way not in ac
cord with law and jurisprudence, gravely erred in facts and in law, and has sanc
tioned such departure and grave error because it ignored or was not aware of Gar
cia v. De la Pea, 229 SCRA 766 (1994) and Adm. Matter No. OCA I.P.I. 97-329-P (CSC
v. Ampong) dated January 31, 2001, which reiterate the rule that exclusive auth
ority to discipline employees of the judiciary lies with the Supreme Court, in i
ssuing the questioned decision and resolution; which grave error warrant reversa
l of the questioned decision and resolution.[14] Put simply, the issue boils dow
n to whether the CSC has administrative jurisdiction over an employee of the Jud
iciary for acts committed while said employee was still with the Executive or Ed
ucation Department. Our Ruling
The answer to the question at the outset is in the negative but We rule against
the petition on the ground of estoppel. It is true that the CSC has administrati
ve jurisdiction over the civil service. As defined under the Constitution and th
e Administrative Code, the civil service embraces every branch, agency, subdivis
ion, and instrumentality of the government, and government-owned or controlled c
orporations.[15] Pursuant to its administrative authority, the CSC is granted th
e power to "control, supervise, and coordinate the Civil Service examinations."[
16] This authority grants to the CSC the right to take cognizance of any irregul
arity or anomaly connected with the examinations.[17] However, the Constitution
provides that the Supreme Court is given exclusive administrative supervision ov
er all courts and judicial personnel.[18] By virtue of this power, it is only th
e Supreme Court that can oversee the judges and court personnel s compliance wi
th all laws, rules and regulations. It may take the proper administrative action
against them if they commit any violation. No other branch of government may in
trude into this power, without running afoul of the doctrine of separation of po
wers.[19] Thus, this Court ruled that the Ombudsman cannot justify its investiga
tion of a judge on the powers granted to it by the Constitution. It violates the
specific mandate of the Constitution granting to the Supreme Court supervisory
powers over all courts and their personnel; it undermines the independence of th
e judiciary.[20] In Civil Service Commission v. Sta. Ana,[21] this Court held th
at impersonating an examinee of a civil service examination is an act of dishone
sty. But because the offender involved a judicial employee under the administrat
ive supervision of the Supreme Court, the CSC filed the necessary charges before
the Office of the Court Administrator (OCA), a procedure which this Court valid
ated. A similar fate befell judicial personnel in Bartolata v. Julaton,[22] invo
lving judicial employees who also impersonated civil service examinees. As in St
a. Ana, the CSC likewise filed the necessary charges before the OCA because resp
ondents were judicial employees. Finding respondents guilty of dishonesty and me
ting the penalty of dismissal, this Court held that "respondents machinations r
eflect their dishonesty and lack of integrity, rendering them unfit to maintain
their positions as public servants and employees of the judiciary."[23] Compared
to Sta. Ana and Bartolata, the present case involves a similar violation of the
Civil Service Law by a judicial employee. But this case is slightly different i
n that petitioner committed the offense before her appointment to the judicial b
ranch. At the time of commission, petitioner was a public school teacher under t
he administrative supervision of the DECS and, in taking the civil service exami
nations, under the CSC. Petitioner surreptitiously took the CSC-supervised PBET
exam in place of another person. When she did that, she became a party to cheati
ng or dishonesty in a civil service-supervised examination.
REMLAW Page 88

It is well settled that the jurisdiction to try a case is to be determined by th

e law in force at the time of the institution of the action, not at the time of
the commission of the offense.[24] Consonant with this principle, the time of co
mmission is not material to determining which court has jurisdiction. It stands
to reason that administrative jurisdiction over petitioner belongs to the Suprem
e Court, the action having been instituted by the CSC at the time when petitione
r was already a judicial employee. Indeed, the standard procedure is for the CSC
to bring its complaint against petitioner, a judicial employee, before the OCA.
Records show that the CSC did not adhere to this procedure in the present case.
However, we are constrained to uphold the ruling of the CSC based on the princi
ple of estoppel. The previous actions of petitioner have estopped her from attac
king the jurisdiction of the CSC. A party who has affirmed and invoked the juris
diction of a court or tribunal exercising quasi-judicial functions to secure an
affirmative relief may not afterwards deny that same jurisdiction to escape a pe
nalty.[25] As this Court declared in Aquino v. Court of Appeals:[26] In the inte
rest of sound administration of justice, such practice cannot be tolerated. If w
e are to sanction this argument, then all the proceedings had before the lower c
ourt and the Court of Appeals while valid in all other respects would simply bec
ome useless.[27] Under the principle of estoppel, a party may not be permitted t
o adopt a different theory on appeal to impugn the court s jurisdiction.[28] In
Emin v. De Leon,[29] this Court sustained the exercise of jurisdiction by the CS
C, while recognizing at the same time that original disciplinary jurisdiction ov
er public school teachers belongs to the appropriate committee created for the p
urpose as provided for under the Magna Carta for Public School Teachers.[30] It
was there held that a party who fully participated in the proceedings before the
CSC and was accorded due process is estopped from subsequently attacking its ju
risdiction.
Petitioner was given ample opportunity to present her side and adduce evidence i
n her defense before the CSC. She filed with it her answer to the charges levele
d against her. When the CSC found her guilty, she moved for a reconsideration of
the ruling. These circumstances all too clearly show that due process was accor
ded to petitioner.
Petitioner s admission of guilt stands. Apart from her full participation in the
proceedings before the CSC, petitioner admitted to the offense charged - that s
he impersonated Decir and took the PBET exam in the latter s place. We note that
even before petitioner filed a written answer, she voluntarily went to the CSC
Regional Office and admitted to the charges against her. In the same breath, she
waived her right to the assistance of counsel. Her admission, among others, led
the CSC to find her guilty of dishonesty, meting out to her the penalty of dism
issal. Now, she assails said confession, arguing that it was given without aid o
f counsel. In police custodial investigations, the assistance of counsel is nece
ssary in order for an extra-judicial confession to be made admissible in evidenc
e against the accused in a criminal complaint. If assistance was waived, the wai
ver should have been made with the assistance of counsel.[31]
But while a party s right to the assistance of counsel is sacred in proceedings
criminal in nature, there is no such requirement in administrative proceedings.
In Lumiqued v. Exevea,[32] this Court ruled that a party in an administrative in
quiry may or may not be assisted by counsel. Moreover, the administrative body i
s under no duty to provide the person with counsel because assistance of counsel
is not an absolute requirement.[33]
Petitioner s admission was given freely. There was no compulsion, threat or inti
midation. As found by the CSC, petitioner s admission was substantial enough to
support a finding of guilt. The CSC found petitioner guilty of dishonesty. It is
categorized as "an act which includes the procurement and/or use of fake/spurio
us civil service eligibility, the giving of assistance to ensure the
REMLAW Page 89

procurement and/or use of fake/spurious civil service eligibility, the giving of

assistance to ensure the commission or procurement of the same, cheating, collu
sion, impersonation, or any other anomalous act which amounts to any violation o
f the Civil Service examination."[34] Petitioner impersonated Decir in the PBET
exam, to ensure that the latter would obtain a passing mark. By intentionally pr
acticing a deception to secure a passing mark, their acts undeniably involve dis
honesty.[35] This Court has defined dishonesty as the "(d)isposition to lie, che
at, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty,
probity or integrity in principle; lack of fairness and straightforwardness; dis
position to defraud, deceive or betray."[36] Petitioner s dishonest act as a civ
il servant renders her unfit to be a judicial employee. Indeed, We take note tha
t petitioner should not have been appointed as a judicial employee had this Cour
t been made aware of the cheating that she committed in the civil service examin
ations. Be that as it may, petitioner s present status as a judicial employee is
not a hindrance to her getting the penalty she deserves. The conduct and behavi
or of everyone connected with an office charged with the dispensation of justice
is circumscribed with a heavy burden or responsibility. The image of a court, a
s a true temple of justice, is mirrored in the conduct, official or otherwise, o
f the men and women who work thereat, from the judge to the least and lowest of
its personnel.[37] As the Court held in another administrative case for dishones
ty: x x x Any act which diminishes or tends to diminish the faith of the people
in the judiciary shall not be countenanced. We have not hesitated to impose the
utmost penalty of dismissal for even the slightest breach of duty by, and the sl
ightest irregularity in the conduct of, said officers and employees, if so warra
nted. Such breach and irregularity detract from the dignity of the highest court
of the land and erode the faith of the people in the judiciary. xxx x As a fina
l point, we take this opportunity to emphasize that no quibbling, much less hesi
tation or circumvention, on the part of any employee to follow and conform to th
e rules and regulations enunciated by this Court and the Commission on Civil Ser
vice, should be tolerated. The Court, therefore, will not hesitate to rid its ra
nks of undesirables who undermine its efforts toward an effective and efficient
system of justice.[38] (Emphasis added) We will not tolerate dishonesty for the
Judiciary expects the best from all its employees.[39] Hindi namin papayagan ang
pandaraya sapagkat inaasahan ng Hudikatura ang pinakamabuti sa lahat nitong kaw
ani. WHEREFORE, the petition is DENIED for lack of merit.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI74.740\ampong.do
cx>
REMLAW Page 90

BP 129, as amended by RA 7902

Sunday, November 14, 2010 11:21 PM
REMLAW Page 91

RA 8246
Sunday, November 14, 2010 11:21 PM
REPUBLIC ACT NO. 8246 AN ACT CREATING ADDITIONAL DIVISIONS IN THE COURT OF APPEA
LS, INCREASING THE NUMBER OF COURT OF APPEALS JUSTICES FROM FIFTY-ONE (51) TO SI
XTY-NINE (69), AMENDING FOR THE PURPOSE BATAS PAMBANSA BILANG 129, AS AMENDED OT
HERWISE KNOWN AS THE JUDICIARY REORGANIZATION ACT OF 1980, APPROPRIATING FUNDS T
HEREFOR, AND FOR OTHER PURPOSES. Be it enacted by the Senate and House of Repres
entatives of the Philippines in Congress assembled: Section 1. Sec. 3, Chapter 1
of Batas Pambansa Blg. 129, as amended, is hereby further amended to read as fo
llows: "Sec. 3. Organization. - There is hereby created a Court of Appeals which
shall consist of a Presiding Justice and sixty-eight (68) Associate Justices wh
o shall be appointed by the President of the Philippines. The Presiding Justice
shall be so designated in his appointment, and the Associate Justices shall have
precedence according to the dates of their respective appointments, or when the
appointments of two or more of them shall bear the same date, according to the
order in which their appointments were issued by the President. Any member who i
s reappointed to the Court after rendering service in any other position in the
government shall retain the precedence to which he was entitled under his origin
al appointment, and his service in the court shall, for all intents and purposes
, be considered as continuous and uninterrupted." Sec. 2. Sec. 4 of Batas Pamban
sa Blg. 129, as amended, is hereby further amended to read as follows: "Sec. 4.
Exercise of Powers and Functions. - The Court of Appeals shall exercise its powe
rs, functions, and duties through twenty-three (23) divisions, each composed of
three (3) members. The Court may sit en banc for the purpose of exercising admin
istrative, ceremonial or other non-adjudicatory functions." Sec. 3. Sec. 10 of B
atas Pambansa Blg. 129, as amended, is hereby further amended to read as follows
: "Sec. 10. Place of Holding Sessions. - The Court of Appeals shall have its per
manent stations as follows: the first seventeen (17) divisions shall be statione
d in the City of Manila for cases coming from the First to the Fifth Judicial Re
gions; the Eighteenth, Nineteenth, and Twentieth Divisions shall be in Cebu City
for cases coming from the Sixth, Seventh and Eighth Judicial Regions; the Twent
y-first, Twenty-second and Twenty-third Divisions shall be in Cagayan de Oro Cit
y for cases coming from the Ninth, Tenth, Eleventh, and Twelfth Judicial Regions
. Whenever demanded by public interest, or whenever justified by an increase in
case load, the Supreme Court, upon its own initiative or upon recommendation of
the Presiding Justice of the Court of Appeals, may authorize any division of the
Court to hold sessions periodically, or for such periods and at such places as
the Supreme Court may determine, for the purpose of hearing and deciding cases.
Trials or hearings in the Court of Appeals must be continuous and must be comple
ted within three (3) months unless extended by the Chief Justice of the Supreme
Court." Sec. 4. The amount necessary to carry out the provisions of this Act sha
ll be included in the General Appropriations Act of the year following its enact
ment into law and thereafter. Sec. 5. Upon the effectivity of this Act, all pend
ing cases, except those which have been submitted for resolution, shall be refer
red to the proper division of the Court of Appeals. Sec. 6. Nothing in this Act
shall be construed to allow the transfer, except in cases of temporary assignmen
t, of any member of the Court of Appeals to any place or station without his or
her written consent, or to undermine the security of tenure of its members as pr
ovided in the Constitution, or alter the seniority in said Court in accordance w
ith existing laws. Sec. 7. The Supreme Court is hereby authorized and empowered
to constitute a Study Committee composed of a member of the Judiciary, the prose
cution, the Integrated Bar of the Philippines (IBP), a representative of the
REMLAW Page 92

member of the Judiciary, the prosecution, the Integrated Bar of the Philippines
(IBP), a representative of the association of law colleges and law professors, a
nd a member of the public at large. The Committee shall undertake a serious stud
y as to the feasibility and desirability of setting up a Regional Circuit Courts
of Appeals in lieu and in place of the present Court of Appeals System. The Sup
reme Court shall submit the findings and recommendations of this Committee to Co
ngress one (1) year after the effectivity of this Act. Sec. 8. Separability Clau
se. - If any portion or provision of this Act is declared unconstitutional, the
remainder of this Act or any provision not affected thereby shall remain in forc
e and effect. Sec. 9. Repealing Clause. - All laws, presidential decrees, letter
s of instruction, executive orders, rules and regulations, or any part thereof i
nconsistent with the provisions of this Act are hereby repealed or modified acco
rdingly. Sec. 10. Effectivity. - This Act shall take effect after fifteen (15) d
ays following its publication in two (2) newspapers of general circulation. Appr
oved: 30 December 1996 Pasted from <http://www.chanrobles.com/republicactno8246.
htm>
REMLAW Page 93

CGP Transport v. PU Leasing GR 164547 Mar 28, 2007

Sunday, November 14, 2010 11:21 PM
G.R. No. 164547 March 28, 2007 CGP TRANSPORTATION AND SERVICES CORPORATION, Peti
tioner, vs. PCI LEASING AND FINANCE, INCORPORATED, Respondent. DE C I S I O N CH
ICO-NAZARIO, J.: Before us is a Petition for Review on Certiorari under Rule 45
of the Revised Rules of Court seeking to annul and set aside the 26 March 2004 D
ecision1 and 13 July 2004 Resolution2 of the Court of Appeals in CA G.R. SP No.
68528 entitled "PCI Leasing and Finance, Inc. v. Hon. Alberto L. Lerma in His Ca
pacity as Presiding Judge of Branch 256 of the Regional Trial Court of Muntinlup
a City and CGP Transportation and Services Corporation." In the assailed decisio
n, the Court of Appeals set aside the 27 March 20013 and 30 August 20014 Orders
of the Regional Trial Court (RTC), Branch 256, of the City of Muntinlupa in LRC
Case No. 99-020 entitled "In re: Petition for Issuance of Writ of Possession for
Real Properties Covered by Transfer Certificates of Title Nos. 172319 and 18024
1 of the Register of Deeds for Makati City (CGP Transportation & Services Corpor
ation Properties)." Herein respondent PCI Leasing and Finance, Incorporated (PCI
) was originally the petitioner in the aforequoted case, while herein petitioner
CGP Transportation and Services Corporation (CGP) was the oppositor therein. Th
is case stemmed from the extra-judicial foreclosure proceedings instituted by he
rein respondent PCI against the Real Estate Mortgage5 and the Amendment of Real
Estate Mortgage 6 executed by herein petitioner CGP. The facts are as follows: P
etitioner CGP obtained two loans from respondent PCI, the collective principal s
um of which amounted to Sixteen Million (P16,000,000.00) pesos. Both loans were
secured by real estate mortgages over two parcels of land7 located in Bo. Cupang
, Muntinlupa City, and covered by Transfer Certificates of Title Nos. 172319 and
180241 issued by the Registry of Deeds of Makati City. Petitioner CGP failed to
pay its indebtedness to respondent PCI pursuant to the terms and conditions ext
ant on the face of the Promissory Notes covering the two loans aforementioned. A
ccordingly, the latter filed a petition for extra-judicial foreclosure of the re
al properties subject of the Real Estate Mortgage and the Amendment of Real Esta
te Mortgage, pursuant to Act No. 3135,8 as amended. During the public auction he
ld thereafter, respondent PCI was the highest bidder of the subject real propert
ies. Consequently, the corresponding Certificates of Sale were issued in the nam
e of respondent PCI. On 19 November 1997, the above-mentioned Certificates of Sa
le were registered with the Registry of Deeds of Makati City. Petitioner CGP, ho
wever, failed to redeem the real properties during the redemption period; thus,
respondent PCI insisted that actual possession thereof be turned over to it. Exp
ectedly, petitioner CGP balked at the idea and refused the demand. On 12 April 1
999, respondent PCI9 filed before the Regional Trial Court of Muntinlupa City, B
ranch 256, and docketed as LRC Case No. 99-020, a petition for an exparte issuan
ce of a Writ of Possession. Petitioner CGP opposed the subject petition. On 15 N
ovember 2000, the RTC issued an Order ruling against oppositor (herein petitione
r) CGPs stance. The Order, in part, reads: The petitioner is correct, the law exp
ressly authorized the purchaser to petition for a writ of possession during the
redemption period by filing an Ex-parte Motion under oath for that purpose and t
hat the pendency of any separate civil action can be no obstacle to the issuance
of the writ of possession which is a ministerial act of the trial court after a
title on the property has been consolidated in the mortgage. Accordingly, Ex-pa
rte reception of evidence is scheduled on December 1, 2000, at 2:00 oclock in the
afternoon.10 In its Motion for Reconsideration, petitioner CGP averred that the
scheduled hearing was violative of the writ of preliminary injunction issued in
its favor by the same trial court, albeit in a different case involving the sam
e parties particularly Civil Case No. 99-234, respecting a complaint for the ann
ulment of the foreclosure proceedings earlier mentioned. It argued that notwiths
tanding the fact that the
REMLAW Page 94

of the foreclosure proceedings earlier mentioned. It argued that notwithstanding

the fact that the complaint for annulment of foreclosure proceedings had alread
y been dismissed by the trial court, such order had not yet become final and exe
cutory inasmuch as it was appealed to the Court of Appeals. That being the case,
the writ should still be considered in effect and subsisting. On 27 March 2001,
the RTC reconsidered its Order, viz: [F]inding the grounds relied upon by the o
ppositor to be meritorious and considering further that there are several motion
s to be resolved yet by the court, the Motion for Reconsideration is GRANTED, th
e order of this court dated October 20, 2000 is set aside and the ex-parte proce
edings is hereby nullified and set aside. The Preliminary Injunction previously
issued is reinstated.11 Consequently, it was respondent PCIs turn to file a Motio
n for Reconsideration. In an Order dated 30 August 2001, the RTC stood pat on it
s position that the Opposition filed by herein petitioner CGP raised issues that
needed to be heard in the presence of both parties. Said Order stated: This res
olves the Motion for Reconsideration filed by petitioner on the order of this co
urt dated March 27, 2001, which granted the motion for reconsideration filed by
Oppositor to the Order dated November 15, 2000. There is basis to the pending mo
tion of petitioner insofar as the reinstatement of preliminary injunction earlie
r issued by this court and submission for resolution of motions are concerned, a
s they all refer to Civil Case No. 99-234. This Court recognizes the snafu broug
ht about by the several pleadings and pending incidents both in the instant case
and Civil Case No. 99-234 which involved the same parties and the same subject
matter. Be that as it may, this court, after a careful review of the verified op
position of the oppositor, including it annexes, is not inclined to grant the ex
-parte proceedings as asserted by the petitioner. This court reviewed the ground
s of oppositor in its motion for reconsideration of the order dated November 15,
2000, which allowed ex-parte presentation of evidence in this case. These groun
ds are: (a) Presence on record of a verified opposition to the petition and (b)
there was an injunction earlier issued by this court on September 3, 1999 on the
complaint for annulment of foreclosure proceedings of the subject properties fi
led by oppositor in Civil Case No. 99-234 also before this court. It is the cons
idered view of this court that the verified opposition on record joined issues t
hat need to be heard in the presence of both parties, a basic requirement of due
process. The general rule frowns [on] ex-parte proceedings. When this court iss
ued a writ of injunction in Civil Case No. 99-234, taking into consideration the
allegations in the complaint it was convinced that there was a need for a statu
s quo between the parties until all the issues joined therein are heard and disp
osed. On technical ground, the complaint in Civil Case No. 99-234 was dismissed
by this court. Although it may be too late for this court to say, there were ind
eed pending incidents that needed to be resolved in Civil Case No. 99-234. Preci
sely, when this court mentioned of pending motions, it was actually referring to
the pending incidents in Civil Case No. 99-234, as correctly pointed out by the
Oppositor, petitioner at the time of the dismissal of the complaint in Civil Ca
se No. 99-234, it has not filed yet its answer to the complaint in intervention
of the plaintiff-intervenor. Petitioner, apparently, took advantage of the inadv
ertence in the issuance of the order of dismissal in Civil Case No. 99-234 when
it kept silent of the fact that it has not filed yet an answer to the complaint
in intervention. This court is cognizant of the rule that the dismissal of the c
omplaint on the merits automatically dissolves the injunction issued therein eve
n if the decision or order of dismissal is on appeal. The dismissal of this cour
t however, of the complaint in Civil Case No. 99-234 was not the result of trial
on the merits but rather on mere technicality. It is in this light that this co
urt believes that considering that the dissolution of the injunction was the con
sequence of the order of dismissal of the complaint in Civil Case No. 99-234, wh
ich was not the result of a trial on the merits, and the said order of dismissal
is now the subject of appeal, there is a need to suspend the proceedings in thi
s case until the said appeal is disposed.12 Aggrieved, respondent PCI filed befo
re this Court, a Petition for Certiorari under Rule 65 of the Revised Rules of C
ourt, premised on the following grounds: 1. THE PUBLIC RESPONDENT ACTED WITH GRA
VE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IT

NULLIFIED AND SET ASIDE THE EX PARTE PROCEEDINGS IN THE CASE A QUO. 2. THE PUBLI
C RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCES
S OF JURISDICTION, WHEN IT REINSTATED IN THE CASE A QUO THE PRELIMINARY INJUNCTI
ON
REMLAW Page 95

EXCESS OF JURISDICTION, WHEN IT REINSTATED IN THE CASE A QUO THE PRELIMINARY INJ
UNCTION WHICH WAS ISSUED IN ANOTHER CASE (CIVIL CASE NO. 99-234). 3. THE PUBLIC
RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCESS
OF JURISDICTION, WHEN IT SET ASIDE IN THE CASE A QUO THE ORDER DATED 20 OCTOBER
2000 WHICH WAS ISSUED IN CIVIL CASE NO. 99-234. 4. THE PUBLIC RESPONDENT ACTED W
ITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, W
HEN IT SUSPENDED THE PROCEEDINGS A QUO UNTIL THE APPEAL IN CIVIL CASE NO. 99-234
IS RESOLVED.13 The petition (G.R. No. 150483) was, however, referred to the Cou
rt of Appeals by this Court for appropriate action in a Resolution,14 dated 3 De
cember 2001, pursuant to Section 6, Rule 56 of the 1997 Revised Rules of Civil P
rocedure, factual issues being involved. In response to the referral, the Court
of Appeals docketed the petition as CA G.R. SP No. 68528. In its Decision promul
gated on 26 March 2004, the Court of Appeals granted herein respondent PCIs petit
ion and set aside the RTC Order dated 30 August 2001. The dispositive portion re
ads: WHEREFORE, the instant petition is hereby GRANTED. The orders dated March 2
7, 2001 and August 28 (sic), 2001 of the Regional Trial Court, Branch 256, Munti
nlupa City, in LRC Case No. 99-020 are SET ASIDE. Further, the public respondent
judge is ordered to continue with the proceedings and to decide the case with d
ispatch.15 The appellate court found public respondent RTC Judge to have gravely
abused his discretion amounting to lack or excess of jurisdiction in suspending
the proceedings in LRC Case No. 99-020 relating to the writ of possession asked
for by herein respondent PCI. The Court of Appeals did not favor the RTC Judge
who, "in effect took cognizance of the proceedings in Civil Case No. 99-234, an
action for annulment of foreclosure proceedings filed by"16 herein petitioner CG
P one that is entirely separate from the case earlier filed. Moreover, "[w]ith t
he dismissal of the main case, (an) injunction (issued therein) is automatically
lifted and the dissolution thereof is not appealable." The Court of Appeals the
n clarified that though the preceding principle is the general rule, the circums
tances surrounding the reinstatement of the subject writ of preliminary injuncti
on do not necessarily entitle the application of the exception stated in Section
4, Rule 39 of the 1997 Revised Rules of Civil Procedure, which states: SEC. 4.
Judgments not stayed by appeal. Judgments in actions for injunction, receivershi
p, accounting and support, and such other judgments as are now or may hereafter
be declared to be immediately executory, shall be enforceable after their rendit
ion and shall not be stayed by an appeal taken therefrom, unless otherwise order
ed by the trial court. On appeal therefrom, the appellate court in its discretio
n may make an order suspending, modifying, restoring or granting the injunction,
receivership, accounting, or award of support. The stay of execution shall be u
pon such terms as to bond or otherwise as may be considered proper for the secur
ity or protection of the rights of the adverse party. It likewise noted that the
fact that there was no dispute vis--vis herein petitioner CGPs failure to redeem
the foreclosed real properties within the period, herein respondent PCIs right to
possession thereof is quite patent and absolute; and that "any question regardi
ng the validity of the mortgage or its foreclosure cannot be a legal ground for
refusing the issuance of a writ of possession xxx."17 On 13 July 2004, the Court
of Appeals denied the motion for reconsideration filed by herein petitioner CGP
. Hence, this Petition for Review on Certiorari filed under Rule 45 of the 1997
Revised Rules of Civil Procedure. Petitioner CGP does not question at all the su
bstantive aspect of the decision of the Court of Appeals. Its petition is predica
ted solelyon the issue of "whether or not the Honorable Court of Appeals gravely
erred in giving due course to the petition for certiorari of respondent, there
being already a final finding by this Honorable Court in its Resolution dated De
cember 3, 2001, in G.R. No. 150483, that the said petition raised questions of f
acts and therefore not proper for petition for certiorari."18 In its one page ar
gument, Petitioner CGP contends, in whole, that: It is undisputed that this Hono
rable Court in its resolution dated December 3, 2001 in G.R. No. 150483 has foun
d that issues of facts are raised in the petition filed therein. That these conc
lusion and finding of this Honorable Court are final and therefore no court for
that matter, including the Court of Appeals, can disturb the same. [In fact and
in truth, the factual issues are pending for resolution in the case before the C

ourt of Appeals, in the case entitled CGP TRANSPORTATION AND SERVICES CORPORATIO
N,
REMLAW Page 96

Plaintiff-appellant versus PCI LEASING AND FINANCE CORPORATION, defendant-appell

ee docketed as C.A. G.R. No. 69466.] With this factual backdrop, petitioner hone
stly believes, that there can be no other fate on the said petition [of responde
nt] but the dismissal, it being a settled jurisprudence that in a petition for r
eview, only questions of law can be raised. Even the Honorable Court of Appeals
agree on this point when it says in its aforequoted decision, citing the doctrin
e laid down by this Honorable Court in BCI Employees & Workers Union v. Marcos,
39 SCRA 178, that "It is however basic that when facts are disputed, certiorari
is not an appropriate remedy".19 Respondent PCI, in contrast, maintains that in
rendering its assailed Decision, the " Honorable Court of Appeals simply discharg
ed the duty assigned to it by this Honorable Court," apropos the latters 3 Decemb
er 2001 Resolution. We sustain respondent PCIs importunings and dismiss petitione
r CGPs petition. Although the form or mode of the original petition filed by here
in respondent PCI from the Order of the RTC was a special civil action for certi
orari, an incorrect mode of appeal there being questions of fact as assigned err
ors, i.e., the existence and relevancy of specific surrounding circumstance, the
ir relation to each other and to the whole situation,20 this Court, in order to
serve the demands of substantial justice, considers and disposes of the case as
an appeal by certiorari instead. In an appeal by certiorari under Rule 45, only
questions of law may be raised.21 In petitions such as the one filed in G.R. No.
150483, questions of fact may not be the proper subject of appeal under Rule 45
as this mode of appeal is generally confined to questions of law.22 Well entren
ched is the rule that this Court is not a trier of facts.23 The resolution of fa
ctual issues is the function of lower courts, whose findings on these matters ar
e received with respect and are in fact binding on us subject to certain excepti
ons.24 Cases where an appeal involved questions of fact, of law, or both fall wi
thin the exclusive appellate jurisdiction of the Court of Appeals.25 This is att
ested to by Section 15, Rule 44 of the 1997 Revised Rules of Civil Procedure. Th
e section reads: SEC. 15. Questions that may be raised on appeal. x x x he may i
nclude in his assignment of errors any question of law or fact that has been rai
sed in the court below and which is within the issues framed by the parties. It
was on this score that we referred the subject petition to the appellate court.
Under Section 5(f) of Rule 56 of the 1997 Revised Rules of Civil Procedure, an a
ppeal may be dismissed on the ground of erroneous choice or mode of appeal. Said
section reads: SEC. 5. Grounds for dismissal of appeal. The appeal MAY be dismi
ssed motu proprio or on motion of the respondent on the following grounds: xxx x
(f) Error in the choice or mode of appeal. This notwithstanding, the Court may
refer the case to the Court of Appeals under par. 2, Section 6 of the same rule.
Said section states: SEC. 6. Disposition of improper appeal. x x x An appeal by
certiorari taken to the Supreme Court from the Regional Trial Court submitting
issues of fact may be referred to the Court of Appeals for decision or appropria
te action. The determination of the Supreme Court on whether or not issues of fa
ct are involved shall be final. [Emphasis supplied.] This Courts discretion to re
fer the case to the Court of Appeals is by reason of the term "may" in both sect
ions. Such term denotes discretion on our part in dismissing an appeal or referr
ing one to the Court of Appeals. Besides, it must be borne in mind that procedur
al rules are intended to ensure proper administration of law and justice. The ru
les of procedure ought not to be applied in a very rigid, technical sense, for t
hey are adopted to help secure, not override, substantial justice.26 A deviation
from its rigid enforcement may thus be allowed to attain its prime objective, f
or after all, the dispensation of justice is the core reason for the existence o
f the courts. In the case at bar, substantial ends of justice warranted the refe
rral of the case to the appellate court for further appropriate proceedings. WHE
REFORE, premises considered, the instant petition is hereby DENIED. The assailed
26 March 2004 Decision and 13 July 2004 Resolution, both of the Court of Appeal
s, in CA G.R. SP No. 68528 entitled "PCI Leasing and Finances, Inc. v. Hon. Albe
rto L. Lerma, In His Capacity as Presiding Judge of Branch 256 of the Regional T
rial Court of Muntinlupa City and CGP Transportation and Services Corporation,"
are AFFIRMED.
REMLAW Page 97

AFFIRMED. No costs.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI97.755\cgp%20tra
nspo.docx>
REMLAW Page 98

RA 9282
Sunday, November 14, 2010 11:21 PM
Republic of the Philippines Congress of the Philippines Metro Manila Twelfth Con
gress Third Regular Session Begun and held in Metro Manila, on Monday, the twent
y-eight day of July, two thousand three. Republic Act No. 9282 March 30 2004 AN
ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS
RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING
ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OR REPUBLIC ACT NO. 11
25, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AN
D FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of
the Philippines in Congress assembled: Section 1. Section 1 of Republic Act No.
1125, as amended is hereby further amended to read as follows: "SECTION 1. Cour
t; Justices; Qualifications; Salary; Tenure. - There is hereby created a Court o
f Tax Appeals (CTA) which shall be of the same level as the Court of Appeals, po
ssessing all the inherent powers of a Court of Justice, and shall consist of a P
residing Justice and five (5) Associate Justices. The incumbent Presiding Judge
and Associate Judges shall continue in office and bear the new titles of Presidi
ng Justice and Associate Justices. The Presiding Justice and the most Senior Ass
ociate Justice shall serve as chairmen of the two (2) Divisions. The additional
three (3) Justices and succeeding members of the Court shall be appointed by the
President upon nomination by the Judicial and Bar Council. The Presiding Justic
e shall be so designated in his appointment, and the Associate Justices shall ha
ve precedence according to the date of their respective appointments, or when th
e appointments of two (2) or more of them shall bear the same date, according to
the order in which their appointments were issued by the President. They shall
have the same qualifications, rank, category, salary, emoluments and other privi
leges, be subject to the same inhibitions and disqualifications, and enjoy the s
ame retirements and other benefits as those provided for under existing laws for
the Presiding Justice and Associate Justices of the Court of Appeals. "Whenever
the salaries of the Presiding Justice and the Associate Justices of the Court o
f Appeals are increased, such increases in salaries shall be deemed correspondin
gly extended to and enjoyed by the Presiding Justice and Associate Justices of t
he CTA. "The Presiding Justice and Associate Justices shall hold office during g
ood behavior, until they reach the age of seventy (70), or become incapacitated
to discharge the duties of their office, unless sooner removed for the same caus
es and in the same manner provided by law for members of the judiciary of equiva
lent rank." Section 2. Section 2 of the same Act is hereby amended to read as fo
llows: "SEC. 2. Sitting En Banc or Division; Quorum; Proceedings. - The CTA may
sit en banc or in two (2) Divisions, each Division consisting of three (3) Justi
ces. "Four (4) Justices shall constitute a quorum for sessions en banc and two (
2) Justices for sessions of a Division: Provided, That when the required quorum
cannot be constituted due to any vacancy, disqualification, inhibition, disabili
ty, or any other lawful cause, the Presiding Justice shall designate any Justice
of other Divisions of the Court to sit temporarily therein. "The affirmative vo
tes of four (4) members of the Court en banc or two (2) members of a Division, a
s the case may be, shall be necessary for the rendition of a decision or resolut
ion." Section 3. Section 3 of the same Act is hereby amended to read as follows:
"SEC. 3. Clerk of Court; Division Clerks of Court; Appointment; Qualification;
Compensation. - The CTA shall have a Clerk of Court and three (3) Division Clerk
s of Court who shall be appointed by the Supreme Court. No person shall be appoi
nted Clerk of Court or Division Clerk of Court unless he is duly authorized to p
ractice law in the Philippines. The Clerk of Court and Division Clerks of Court
shall exercise the same powers and perform the same duties in regard to all matt
ers within the Court s jurisdiction, as are
REMLAW Page 99

exercised and performed by the Clerk of Court and Division Clerks of Court of th
e Court of Appeals, in so far as the same may be applicable or analogous; and in
the exercise of those powers and the performance of those duties they shall be
under the direction of the Court. The Clerk of Court and the Division Clerks of
Court shall have the same rank, privileges, salary, emoluments, retirement and o
ther benefits as those provided for the Clerk of Court and Division Clerks of Co
urt of the Court of Appeals, respectively. Section 4. Section 4 of the same Act
is hereby amended to read as follows: "SEC. 4. Other Subordinate Employees. - T
he Supreme Court shall appoint all officials and employees of the CTA, in accord
ance with the Civil Service Law. The Supreme Court shall fix their salaries and
prescribe their duties." Section 5. Section 5 of the same Act is hereby amended
to read as follows: "SEC. 5. Disqualifications. - No Justice or other officer or
employee of the CTA shall intervene, directly or indirectly, in the management
or control of any private enterprise which in any way may be affected by the fun
ctions of the Court. Justices of the Court shall be disqualified from sitting in
any case on the same grounds provided under Rule one hundred thirty-seven of th
e Rules of Court for the disqualification of judicial officers. No person who ha
s once served in the Court in a permanent capacity, either as Presiding Justice
or as Associate Justice thereof, shall be qualified to practice as counsel befor
e the Court for a period of one (1) year from his retirement or resignation." Se
ction 6. Section 6 of the same Act is hereby amended to read as follows: "SEC. 6
. Place of Office. - The CTA shall have its principal office in Metro Manila and
shall hold hearings at such time and place as it may, by order in writing, desi
gnate." Section 7. Section 7 of the same Act is hereby amended to read as follow
s: "Sec. 7. Jurisdiction. - The CTA shall exercise: "a. Exclusive appellate juri
sdiction to review by appeal, as herein provided: "1. Decisions of the Commissio
ner of Internal Revenue in cases involving disputed assessments, refunds of inte
rnal revenue taxes, fees or other charges, penalties in relation thereto, or oth
er matters arising under the National Internal Revenue or other laws administere
d by the Bureau of Internal Revenue; "2. Inaction by the Commissioner of Interna
l Revenue in cases involving disputed assessments, refunds of internal revenue t
axes, fees or other charges, penalties in relations thereto, or other matters ar
ising under the National Internal Revenue Code or other laws administered by the
Bureau of Internal Revenue, where the National Internal Revenue Code provides a
specific period of action, in which case the inaction shall be deemed a denial;
"3. Decisions, orders or resolutions of the Regional Trial Courts in local tax
cases originally decided or resolved by them in the exercise of their original o
r appellate jurisdiction; "4. Decisions of the Commissioner of Customs in cases
involving liability for customs duties, fees or other money charges, seizure, de
tention or release of property affected, fines, forfeitures or other penalties i
n relation thereto, or other matters arising under the Customs Law or other laws
administered by the Bureau of Customs; "5. Decisions of the Central Board of As
sessment Appeals in the exercise of its appellate jurisdiction over cases involv
ing the assessment and taxation of real property originally decided by the provi
ncial or city board of assessment appeals; "6. Decisions of the Secretary of Fin
ance on customs cases elevated to him automatically for review from decisions of
the Commissioner of Customs which are adverse to the Government under Section 2
315 of the Tariff and Customs Code; "7. Decisions of the Secretary of Trade and
Industry, in the case of nonagricultural product, commodity or article, and the
Secretary of Agriculture in the case of agricultural product, commodity or artic
le, involving dumping and countervailing duties under Section 301 and 302, respe
ctively, of the Tariff and Customs Code, and safeguard measures under Republic A
ct No. 8800, where either party may appeal the decision to impose or not to impo
se said duties. "b. Jurisdiction over cases involving criminal offenses as herei
n provided: "1. Exclusive original jurisdiction over all criminal offenses arisi
ng from violations of the National Internal Revenue Code or Tariff and Customs C
ode and other laws administered by the Bureau of Internal Revenue or the Bureau
of Customs: Provided, however, That offenses or felonies mentioned in this parag
raph where the principal amount o taxes and fees, exclusive of charges and penal
ties, claimed is less than One million pesos (P1,000,000.00) or where there is n

o specified amount claimed shall be tried

REMLAW Page 100

less than One million pesos (P1,000,000.00) or where there is no specified amoun
t claimed shall be tried by the regular Courts and the jurisdiction of the CTA s
hall be appellate. Any provision of law or the Rules of Court to the contrary no
twithstanding, the criminal action and the corresponding civil action for the re
covery of civil liability for taxes and penalties shall at all times be simultan
eously instituted with, and jointly determined in the same proceeding by the CTA
, the filing of the criminal action being deemed to necessarily carry with it th
e filing of the civil action, and no right to reserve the filling of such civil
action separately from the criminal action will be recognized. "2. Exclusive app
ellate jurisdiction in criminal offenses: "a. Over appeals from the judgments, r
esolutions or orders of the Regional Trial Courts in tax cases originally decide
d by them, in their respected territorial jurisdiction. "b. Over petitions for r
eview of the judgments, resolutions or orders of the Regional Trial Courts in th
e exercise of their appellate jurisdiction over tax cases originally decided by
the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Tria
l Courts in their respective jurisdiction. "c. Jurisdiction over tax collection
cases as herein provided: "1. Exclusive original jurisdiction in tax collection
cases involving final and executory assessments for taxes, fees, charges and pen
alties: Provided, however, That collection cases where the principal amount of t
axes and fees, exclusive of charges and penalties, claimed is less than One mill
ion pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court, Me
tropolitan Trial Court and Regional Trial Court. "2. Exclusive appellate jurisdi
ction in tax collection cases: "a. Over appeals from the judgments, resolutions
or orders of the Regional Trial Courts in tax collection cases originally decide
d by them, in their respective territorial jurisdiction. "b. Over petitions for
review of the judgments, resolutions or orders of the Regional Trial Courts in t
he Exercise of their appellate jurisdiction over tax collection cases originally
decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts, in their respective jurisdiction." Section 8. Section 10 o
f the same Act is hereby amended to read as follows: "SEC. 10. Power to Administ
er Oaths; Issue Subpoena; Punish for Contempt. - The Court shall have the power
to administer oaths, receive evidence, summon witnesses by subpoena duces tecum,
subject in all respects to the same restrictions and qualifications as applied
in judicial proceedings of a similar nature. The Court shall, in accordance with
Rule seventy-one of the Rules of Court, have the power to punish for contempt f
or the same causes, under the same procedure and with the same penalties provide
d therein." Section 9. Section 11 of the same Act is hereby amended to read as f
ollows: "SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party
adversely affected by a decision, ruling or inaction of the Commissioner of Inte
rnal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secreta
ry of Trade and Industry or the Secretary of Agriculture or the Central Board of
Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA
within thirty (30) days after the receipt of such decision or ruling or after t
he expiration of the period fixed by law for action as referred to in Section 7(
a)(2) herein. "Appeal shall be made by filing a petition for review under a proc
edure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Pr
ocedure with the CTA within thirty (30) days from the receipt of the decision or
ruling or in the case of inaction as herein provided, from the expiration of th
e period fixed by law to act thereon. A Division of the CTA shall hear the appea
l: Provided, however, That with respect to decisions or rulings of the Central B
oard of Assessment Appeals and the Regional Trial Court in the exercise of its a
ppellate jurisdiction appeal shall be made by filing a petition for review under
a procedure analogous to that provided for under rule 43 of the 1997 Rules of C
ivil Procedure with the CTA, which shall hear the case en banc. "All other cases
involving rulings, orders or decisions filed with the CTA as provided for in Se
ction 7 shall be raffled to its Divisions. A party adversely affected by a rulin
g, order or decision of a Division of the CTA may file a motion for reconsiderat
ion of new trial before the same Division of the CTA within fifteens (15) days f
rom notice thereof: Provide, however, That in criminal cases, the general rule a
pplicable in regular Courts on matters of prosecution and appeal shall likewise

apply. "No appeal taken to the CTA from the decision of the Commissioner of Inte
rnal Revenue or the Commissioner of Customs or the Regional Trial Court, provinc
ial, city or municipal treasurer or the Secretary of Finance, the Secretary of T
rade and Industry and Secretary of Agriculture, as the case may
REMLAW Page 101

Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agric
ulture, as the case may be shall suspend the payment, levy, distraint, and/or sa
le of any property of the taxpayer for the satisfaction of his tax liability as
provided by existing law: Provided, however, That when in the opinion of the Cou
rt the collection by the aforementioned government agencies may jeopardize the i
nterest of the Government and/or the taxpayer the Court any stage of the proceed
ing may suspend the said collection and require the taxpayer either to deposit t
he amount claimed or to file a surety bond for not more than double the amount w
ith the Court. "In criminal and collection cases covered respectively by Section
7(b) and (c) of this Act, the Government may directly file the said cases with
the CTA covering amounts within its exclusive and original jurisdiction." Sectio
n 10. Section 13 of the same Act is hereby amended to read as follows: "SEC. 13.
Decision, Maximum Period for Termination of Cases. - Cases brought before the C
ourt shall be decided in accordance with Section 15, paragraph (1), Article VIII
(Judicial Department) of the 1987 Constitution. Decisions of the Court shall be
in writing, stating clearly and distinctly the facts and the law on which they
are based, and signed by the Justices concurring therein. The Court shall provid
e for the publication of its decision in the Official Gazette in such form and m
anner as may best be adopted for public information and use. "The Justices of th
e Court shall each certify on their applications for leave, and upon salary vouc
hers presented by them for payment, or upon the payrolls under which their salar
ies are paid, that all proceedings, petitions and motions which have been submit
ted to the Court for determination or decision for a period required by the law
or the Constitution, as the case may be, have been determined or decided by the
Court on or before the date of making the certificate, and no leave shall be gra
nted and no salary shall be paid without such certificate." Section 11. Section
18 of the same Act is hereby amended as follows: "SEC. 18. Appeal to the Court o
f Tax Appeals En Banc. - No civil proceeding involving matter arising under the
National Internal Revenue Code, the Tariff and Customs Code or the Local Governm
ent Code shall be maintained, except as herein provided, until and unless an app
eal has been previously filed with the CTA and disposed of in accordance with th
e provisions of this Act. "A party adversely affected by a resolution of a Divis
ion of the CTA on a motion for reconsideration or new trial, may file a petition
for review with the CTA en banc." "SEC. 19. Review by Certiorari. - A party adv
ersely affected by a decision or ruling of the CTA en banc may file with the Sup
reme Court a verified petition for review on certiorari pursuant to Rule 45 of t
he 1997 Rules of Civil Procedure." Section 13. Distraint of Personal Property an
d/or Levy on Real Property. - Upon the issuance of any ruling, order or decision
by the CTA favorable to the national government, the CTA shall issue an order a
uthorizing the Bureau of Internal Revenue, through the Commissioner to seize and
distraint any goods, chattels, or effects, and the personal property, including
stocks and other securities, debts, credits, bank accounts, and interests in an
d rights to personal property and/or levy the real property of such persons in s
ufficient quantity to satisfy the tax or charge together with any increment ther
eto incident to delinquency. This remedy shall not be exclusive and shall not pr
eclude the Court from availing of other means under the Rules of Court. Section
14. Retention of Personnel; Security of Tenure; Upgrading of Positions and Salar
ies. - All existing permanent personnel of the CTA shall not be adversely affect
ed by this Act. They shall continue in office and shall not be removed or separa
ted from the service except for cause as provided for by existing laws. Further,
the present positions and salaries of personnel shall be upgraded to the level
of their counterparts in the Court of Appeals. Section 15. Transitory Provisions
. - In consonance with the above provision, the incumbent Presiding Judge and As
sociate Judges shall comprise a Division pending the constitution of the entire
Court. Section 16. Appropriations. - The amount necessary to carry out the provi
sions of this Act shall be included in the General Appropriations Act of the yea
r following its enactment into law and thereafter. Section 17. Repealing Clause.
- All laws, executive orders, executive issuances or letter of instructions, or
any part thereof, inconsistent with or contrary to the provisions of this Act a
re hereby deemed repealed, amended or modified accordingly. Section 18. Separabi

lity Clause. - If for any reason, any section or provision of this Act shall be
declared unconstitutional or invalid, the other parts thereof not affected there
by shall remain valid.
REMLAW Page 102

unconstitutional or invalid, the other parts thereof not affected thereby shall
remain valid. Section 19. Effectivity Clause - This Act shall take effect after
fifteen (15) days following its publication in at least (2) newspapers of genera
l circulation. Approved,
FRANKLIN DRILON JOSE DE VENECIA JR. President of the Senate Speaker of the House
of Representatives This Act which is a consolidation of Senate Bill No. 2712 an
d House Bill No. 6673 was finally passed by the Senate and the House of Represen
tatives on December 8, 2003 and February 2, 2004, respectively. OSCAR G. YABES R
OBERTO P. NAZARENO Secretary of Senate Secretary General House of Represenatives
Approved: March 30 2004 GLORIA MACAPAGAL-ARROYO President of the Philippines
Pasted from <http://www.lawphil.net/statutes/repacts/ra2004/ra_9282_2004.html>
REMLAW Page 103

RA 8249
Sunday, November 14, 2010 11:21 PM
Republic Act No. 8249 February 5, 1997 AN ACT FURTHER DEFINING THE JURISDICTION
OF THE SANDIGANBAYAN, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 1606, AS
AMENDED, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES Be it enacted by the S
enate and House of Representatives of the Philippines in Congress assembled:: Se
ction 1. The first paragraph of Section 1 of Presidential Decree No. 1606, as am
ended, is hereby further amended to read as follows: "SECTION 1. Sandiganbayan;
Composition, Qualifications; Tenure; Removal and Compensation. - A special court
, of the same level as the Court of Appeals and possessing all the inherent powe
rs of a court ofjustice, to be known as the Sandiganbayan is hereby created comp
osed of a presiding justice and fourteen associate justices who shall be appoint
ed by the President." Section 2. Section 2 of the same decree is hereby further
amended to read as follows: "SECTION 2. Official Station; Place of Holding Sessi
ons. - The Sandiganbayan shall have its principal office in the Metro Manila are
a and shall hold sessions thereat for the trial and determination of cases filed
with it: Provided, however, That cases originating from the principal geographi
cal regions of the country, that is, from Luzon, Visayas or Mindanao, shall be h
eard in their respective regions of origin except only when the greater convenie
nce of the accused and of the witnesses, or other compelling considerations requ
ire the contrary, in which instance a case originating from one geographical reg
ion may be heard in another geographical region: Provided, further, That for thi
s purpose the presiding justice shall authorize any divisions of the court to ho
ld sessions at any time and place outside Metro Manila and, where the interest o
f justice so requires, outside the territorial boundaries of the Philippines. Th
e Sandiganbayan may require the services of the personnel and the use of facilit
ies of the courts or other government offices where any of the divisions is hold
ing sessions and the personnel of such courts or offices shall be subject to the
orders of the Sandiganbayan." Section 3. The second paragraph of Section 3 of t
he same decree is hereby deleted. Section 4. Section 4 of the same decree is her
eby further amended to read as follows: "a. Violations of Republic Act No. 3019,
as amended, otherwise known as the Anti-graft and Corrupt Practices Act, Republ
ic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Pe
nal Code, where one or more of the accused are officials occupying the following
positions in the government whether in a permanent, acting or interim capacity,
at the time of the commission of the offense: "(1) Officials of the executive b
ranch occupying the positions of regional director and higher, otherwise classif
ied as Grade 27 and higher, of the Compensation and Position Classification Ac
t of 1989 (Republic Act No. 6758), specifically including: "(a) Provincial gover
nors, vice-governors, members of the sangguniang panlalawigan and provincial tre
asurers, assessors, engineers and other provincial department heads; "(b) City m
ayors, vice-mayors, members of the sangguniang panlungsod, city treasurers, asse
ssors engineers and other city department heads; "(c) Officials of the diplomati
c service occupying the position of consul and higher; "(d) Philippine army and
air force colonels, naval captains, and all officers of higher rank; "(e) Office
rs of the Philippine National Police while occupying the position of provincial
director and those holding the rank of senior superintendent or higher; "(f) Cit
y and provincial prosecutors and their assistants, and officials and prosecutors
in the Office of the Ombudsman and special prosecutor; "(g) Presidents, directo
rs or trustees, or managers of government-owned or -controlled corporations, sta
te universities or educational institutions or foundations; "(2) Members of Cong
ress and officials thereof classified as Grade 27 and up under the Compensation
and Position Classification Act of 1989; "(3) Members of the judiciary without p
rejudice to the provisions of the Constitution;
REMLAW Page 104

"(3) Members of the judiciary without prejudice to the provisions of the Constit
ution; "(4) Chairmen and members of Constitutional Commissions, without prejudic
e to the provisions of the Constitution; and "(5) All other national and local o
fficials classified as Grade 27 and higher under the Compensation and Position C
lassification Act of 1989. "b. Other offenses orfelonies whether simple or compl
exed with other crimes committed by the public officials and employees mentioned
in subsection a of this section in relation to their office. "c. Civil and crim
inal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 1
4 and 14A, issued in 1986. "In cases where none of the accused are occupying pos
itions corresponding to salary grade 27 or higher, as prescribed in the said R
epublic Act No. 6758, or military or PNP officers mentioned above, exclusive ori
ginal jurisdiction thereof shall be vested in the proper regional trial court, m
etropolitan trial court, municipal trial court and municipal circuit trial court
as the case may be, pursuant to their respective jurisdiction as provided in
Batas Pambansa Blg. 129, as amended. "The Sandiganbayan shall exercise exclusive
appellate jurisdiction over final judgments, resolutions or orders or regional
trial courts whether in the exercise of their own original jurisdiction orof the
ir appellate jurisdiction as herein provided. "The Sandiganbayan shall have excl
usive original jurisdiction over petitions for the issuance of the writs of mand
amus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary w
rits and processes in aid of its appellate jurisdiction and over petitions of si
milar nature, including quo warranto, arising or that may arise in cases filed o
r which may be filed under Executive Order Nos. 1,2,14 and 14-A, issued in 1986:
Provided, That the jurisdiction over these petitions shall not be exclusive of
the Supreme Court. The procedure prescribed in Batas Pambansa Blg. 129, as well
as the implementing rules that the Supreme Court has promulgated and may hereaft
er promulgate, relative to appeals/petitions for review to the Court of Appeals,
shall apply to appeals and petitions for review filed with the Sandiganbayan. I
n all cases elevated to the Sandiganbayan and from the Sandiganbayan to the Supr
eme Court, the Office of the Ombudsman, through its special prosecutor, shall re
present the People of the Philippines, except in cases filed pursuant to Executi
ve Order Nos. 1, 2, 14 and 14-A, issued in 1986. "In case private individuals ar
e charged as co-principals, accomplices or accessories with the public officers
or employees, including those employed in govemment-owned or controlled corporat
ions, they shall be tried jointly with said public officers and employees in the
proper courts which shall exercise exclusive jurisdiction over them. "Any provi
sions of law or Rules of Court to the contrary notwithstanding, the criminal act
ion and the corresponding civil action for the recovery of civil liability shall
at all times be simultaneously instituted with, and jointly determined in, the
same proceeding by the Sandiganbayan or the appropriate courts, the filing of th
e criminal action being deemed to necessarily carry with it the filing of the ci
vil action, and no right to reserve the filing of such civil action separately f
rom the criminal action shall be recognized: Provided, however, That where the c
ivil action had therefore been filed separately but judgment therein has not yet
been rendered, and the criminal case is hereafter filed with the Sandiganbayan
or the appropriate court, said civil action shall be transferred to the Sandigan
bayan or the appropriate court, as the case may be, for consolidation and joint
determination with the criminal action, otherwise the separate civil action shal
l be deemed abandoned." Section 5. Section 7 of the same decree is hereby furthe
r amended to read as follows: SECTION 7. Form, Finality and Enforcement of Deci
sions. - All decisions and final orders determining the merits of a case or fina
lly disposing of the action or proceedings of the Sandijanbayan shall contain co
mplete findings of the facts and the law on which they are based, on all issues
properly raised before it and necessary in deciding the case. "A petition for re
consideration of any final order or decision may be filed within fifteen (15) da
ys from promulgation or notice of the final order on judgment, and such motion f
or reconsideration shall be decided within thirty (30) days from submission ther
eon. "Decisions and final orders ofthe Sandiganbyan shall be appealable to the S
upreme Court by petition for review on certiorari raising pure questions of law
in accordance with Rule 45 of the Rules of Court. Whenever, in any case decided

by the Sandiganbayan, the penalty of reclusion perpetua, life imprisonment or de

ath is imposed, the decision shall be appealable to the Supreme Court in the man
ner prescribed in the Rules of Court.
REMLAW Page 105

prescribed in the Rules of Court. "Judgments and orders of the Sandiganbayan sha
ll be executed and enforced in the manner provided by law. "Decisions and final
orders of other courts in cases cognizable by said courts under this decree as w
ell as those rendered by them in the exercise of their appellate jurisdiction sh
all be appealable to, or be reviewable by, the Sandiganbayan in the manner provi
ded by Rule 122 of the Rules of the Court. "In case, however, the imposed penalt
y by the Sandiganbayan or the regional trial court in the proper exercise of the
ir respective jurisdictions, is death, review by the Supreme Court shall be auto
matic, whether or not accused files an appeal." Section 6. Appropriations. - The
amount necessary to carry out the initial implementation of this Act shall be c
harged against the current fiscal year appropriations of the Sandiganbayan. Ther
eafter, such sums as may be needed for its continued implementation shall be inc
luded in the annual General Appropriations Act. Section 7. Transitory Provision.
- This Act shall apply to all cases pending in any court over which trial has n
ot begun as of the approval hereof Section 8. Separability of Provisions. - If f
or any reason any provision of this Act is declared unconstitutional or invalid,
such parts or portions not affected thereby shall remain in full force and effe
ct. Section 9. Repealing Clause. - All acts, decrees, general orders and circula
rs, or parts thereof inconsistent with the provisions of this Act are hereby rep
ealed or modified accordingly. Section 10. Effectivity. - This Act shall take ef
fect fifteen (15) days after its complete publication in at least two (2) newspa
pers of general circulation. Approved: (Sgd.) ERNESTO M. MACEDA (Sgd.) JOSE DE V
ENECIA, JR. President of the Senate Speaker of the House of Representatives This
Act which is a consolidation of House Bill No. 5323 and Senate Bill No. 844 was
finally passed by the House of Representatives and the Senate on January 28,199
7 and January 29, 1997, respectively. (Sgd.) LORENZO E. LEYNES, JR. (Sgd.) ROBER
TO P. NAZARENO Secretary of Senate Secretary General House of Represenatives App
roved: February 5, 1997 (Sgd.) FIDEL V. RAMOS President of the Philippines
Pasted from <http://www.lawphil.net/statutes/repacts/ra1997/ra_8249_1997.html>
REMLAW Page 106

BP 129, as amended by RA 7691, Sec. 5

Sunday, November 14, 2010 11:21 PM
REMLAW Page 107

Bokingco v. CA, GR No. 161739, May 4, 2006

Sunday, November 14, 2010 11:22 PM
G.R. No. 161739 May 4, 2006 ALFREDO BOKINGO vs. CA, HEIRS OF CELESTINO BUSA, rep
resented by FELICIDAD BUSA-PANAL and ERNESTO M. CAMPOS CALLEJO, SR., J.: Before
the Court is the petition for review on certiorari filed by Alfredo Bokingo seek
ing to reverse and set aside the Decision1 dated December 17, 2003 of the Court
of Appeals (CA) in CA-G.R. SP No. 71510 which dismissed his petition for certior
ari filed therewith. The factual and procedural antecedents are as follows: Peti
tioner Alfredo Bokingo is one of the defendants in the complaint for injunction
and damages filed by Ernesto Campos, the Heirs of Celestino Busa,2 the Heirs of
Felicidad Busa-Panal 3 and the Heirs of Concordia Busa.4 The complaint was filed
with the Regional Trial Court (RTC) of Butuan City, Branch 3 thereof, and docke
ted as Civil Case No. 1003. The complaint alleged as follows: CAUSE OF ACTION 3.
Plaintiffs [herein respondents] are co-owners of the land subject matter. By vi
rtue of the right of representation, the heirs of FELICIDAD BUSA-PANAL and CONCO
RDIA S. BUSA and REYNALDO S. BUSA, respectively; 4. Defendants in this case are
heirs of MIGUEL BOKINGO; 5. Defendants ALFREDO BOKINGO [herein petitioner], WENC
ESLAO B. AMBRAY, JR., ROSA B. AMBRAY, CELIA A. ALMORA and JOSELITO B. AMBRAY, fi
led an application for titling of a parcel of land before the Department of Envi
ronment and Natural Resources, Office of the CENRO, Ochoa Avenue, Butuan City; 6
. The land subject matter of the application of defendants is a parcel of land l
ocated at Baan (Buhangin), Butuan City, containing an area of 2.1600 hectares, m
ore or less; 7. The land subject matter of the application for titling of defend
ants is a parcel of land inherited by plaintiffs from their father, the late CEL
ESTINO BUSA. This parcel of land is described particularly as: TAX DECLARATION N
O. GR.-10-002-0189-A "A parcel of land covered by Tax Declaration No. GR-10-0020189-A, situated in Buhangin, Butuan City, containing an area of 2.1600 HAS., mo
re or less. Bounded on the North Elisa Busa, South Pastor Ago, East Ho. Miguel B
okingo and on the West Baan River." 8. When plaintiffs knew of defendants applica
tion, plaintiffs filed a protest against defendants application on February 5, 19
96. Attached as Annex A is the Protest; 9. On November 24, 1998, the Provincial
Environment and Natural Resources Officer, HUGO I. BAOSIA, resolved the Protest i
n favor of Plaintiffs-the protestant in the DENR case. Attached as Annex B is th
e order; 10. On January 6, 1999, the Provincial Environment and Natural Resource
s Officer, HUGO T. BAOSIA, issued a certification stating that the order dated No
vember 24, 1998 has become final and executory. Attached as Annex C is the machi
ne copy of the Certification; 11. On September 9, 1999, the same DENR Officer HU
GO T. BAOSIA issued an Order of Execution which states that: In complying herewit
h, the Land Management Officer III concerned should be instructed to set forth t
he whole proceeding in writing signed by the parties and witnesses, if possible,
submit and return to this Office within sixty (60) days from receipt hereof, to
be used as evidence should it be necessary to institute any action, criminal or
otherwise, against any party who may refuse to obey the same. SO ORDERED, Butua
n City, September 9, 1999. 12. Plaintiffs requested on June 23, 1999, for a Surv
ey Authority to survey the land subject matter of this case before the CENRO Off
ice of Butuan City. Attached as Annex D is the Survey Application; 13. On July 3
0, 1999, A Survey Authority was issued by the CENRO of Butuan City, authorizing
plaintiff ENGR. ERNESTO M. CAMPOS, JR., to survey the land subject matter of the
DENR case and the case at bar. Attached as Annex E is the Survey Authority;
REMLAW Page 108

the case at bar. Attached as Annex E is the Survey Authority; 14. On November 18
, 1999 at 11:00 A.M., FELICIDAD BUSA-PANAL, MILAGROS BUSA SIMOGAN, TERESITA BUSA
LINAO, JIMMY BUSA-PANAL, son of Felicidad Busa-Panal, ALFREDO BUSA-PANAL, son-i
n-law of Concordia S. Busa, personnel of the Butuan PNP and the personnel of ENG
R. ERNESTO M. CAMPOS went to the area subject matter of this case to survey the
land. Unfortunately, Defendant SPO3 FERDINAND B. DACILLO and Defendant ALFREDO B
OKINGO, representatives of defendants, told the survey group to stop and not to
enter the area subject matter of this case. Attached as Annex F is the report of
CENRO Officer who [was] present during the November 18, 1999 survey which was s
topped by SPO3 FERDINAND B. DACILLO and ALFREDO BOKINGO; 15. Plaintiff[s] availe
d of the Barangay Justice System to resolve the controversy regarding the survey
but to no avail, defendants still refused to allow plaintiffs to survey the are
a. Thus, a Certificate to File Action was issued by the Lupong Tagapamayapa. Cop
y of the same is hereto attached as Annex G; 16. The defendants did not exercise
honesty and good faith in their acts which is a violation of Article 19 of the
New Civil Code, and which entitles the plaintiffs for damages; 17. The acts of d
efendants constrained the plaintiff*s+ to litigate and to incur attorneys fees in
the amount of PhP10,000.00 plus litigation expenses estimated at PhP10,000.00.
PRAYER Wherefore, premises considered, it is respectfully prayed that after hear
ing, this Honorable Court: 1) Enjoin permanently the illegal acts of defendants
of preventing the survey of the land subject matter of this case by ENGR. ERNEST
O M. CAMPOS; 2) Order defendants to pay plaintiffs the sum of P10,000.00 as atto
rneys fees, P10,000.00 as litigation expenses; 3) Order defendants to pay damages
to plaintiff; 4) Such other reliefs just and reasonable under the circumstances
. 5 Petitioner Bokingo, as one of the defendants in the above complaint, filed w
ith the court a quo a motion to dismiss alleging that the latter has no jurisdic
tion over the subject matter of the claim. Specifically, petitioner Bokingo cont
ended that it could be gleaned from the complaint that the issue between the par
ties involved the possession of the land. As such, the assessed value of the lan
d was crucial to determine the courts jurisdiction over the subject matter in acc
ordance with either Section 19(2) 6 or Section 33(3) 7 of Batasang Pambansa Blg.
1298 as amended by Republic Act No. 7691. If the assessed value thereof is P20,
000.00 or less, then the Municipal Trial Court (MTC) has jurisdiction over the s
ubject matter. Otherwise, jurisdiction is with the RTC. Petitioner Bokingo point
ed out in his Motion to Dismiss that the assessed value of the land subject matt
er of the complaint was not indicated. Nonetheless, he proffered that based on h
is fathers tax declaration covering the subject land, its assessed value was only
P14,410.00. Consequently, it was allegedly clear that the court a quo, a Region
al Trial Court, had no jurisdiction over the subject matter of the complaint fil
ed by the respondents. Rather, in view of the assessed value of the subject land
which was allegedly less than the P15,000.00, jurisdiction properly belonged to
the MTC. Petitioner Bokingo thus urged the court a quo to dismiss the complaint
filed by the respondents for lack of jurisdiction over the subject matter there
of. Acting thereon, the court a quo issued the Order dated March 13, 2002 denyin
g the motion to dismiss. It pointed out that the complaints allegation is that th
e respondents, as plaintiffs, are entitled to have the subject land surveyed aft
er petitioner Bokingos and his co-claimants application for the titling of the sub
ject land was dismissed by the Provincial Environment and Natural Resources Offi
cer (PENRO) and the respondents were declared to have a better right to file a p
ublic land application covering the same. Further, the relief being sought in th
e complaint is injunction in order that the respondents right to survey the subje
ct land would not be defeated. Based on these allegations, the court a quo held
that it had jurisdiction over the subject matter of the claim under Section 2 of
Rule 58 of the Rules of Court which provides in part that "[a] preliminary inju
nction may be granted by the court where the action or proceeding is pending." I
t accordingly denied petitioner Bokingos motion to dismiss the complaint for lack
of jurisdiction.1avvphil.net Petitioner Bokingo forthwith filed with the Court
of Appeals a petition for certiorari alleging grave abuse of discretion on the p
art of the court a quo in denying his motion to dismiss.
REMLAW Page 109

of discretion on the part of the court a quo in denying his motion to dismiss. O
n December 17, 2003, the CA rendered the assailed Decision dismissing the said p
etition for lack of merit, in fact and in law. It ruled that the remedy of certi
orari is unavailing to petitioner Bokingo because "an order denying a motion to
dismiss is interlocutory and cannot be the subject of the extraordinary petition
for certiorari or mandamus."9 It was noted that the records fail to disclose th
at petitioner Bokingo filed a motion for reconsideration of the order of the cou
rt a quo. According to the CA, such omission warranted the outright dismissal of
the petition for certiorari. Finally, it was not shown or even alleged in the p
etition that the court a quo, in issuing the assailed order, acted with grave ab
use of discretion amounting to lack of jurisdiction. The issue raised by petitio
ner Bokingo, the CA held, was proper for an appeal but not a petition for certio
rari. Aggrieved, petitioner Bokingo now comes to the Court seeking the reversal
of the said decision of the CA which dismissed his petition for certiorari filed
therewith. He insists that the complaint filed by the respondents with the cour
t a quo is a possessory action. To determine which court, the RTC or MTC, has pr
imary jurisdiction, petitioner Bokingo theorizes that it is necessary that the a
ssessed value of the land be alleged in the initiatory complaint. Absent such al
legation, the court where the case was filed should allegedly preliminarily dete
rmine the assessed value of the subject property to determine whether or not it
has jurisdiction over the subject matter of the claim. In the present case, acco
rding to petitioner Bokingo, the assessed value of the subject land is only P14,
410.00; hence, jurisdiction thereof properly belongs to the MTC in accordance wi
th Section 19(2) or 33(3) of BP Blg. 129 as amended by RA 7691. The petition is
bereft of merit. Preliminarily, the Court finds no reversible error in the dismi
ssal by the CA of petitioner Bokingos petition for certiorari filed therewith. As
correctly held by the CA, the mere fact that he failed to move for the reconsid
eration of the court a quos order denying his motion to dismiss was sufficient ca
use for the outright dismissal of the said petition. Certiorari as a special civ
il action will not lie unless a motion for reconsideration is first filed before
the respondent court to allow it an opportunity to correct its errors, if any.1
0 Petitioner Bokingo did not proffer any compelling reason to warrant deviation
by the CA from this salutary rule. As further observed by the CA, petitioner Bok
ingo failed to even allege grave abuse of discretion on the part of the court a
quo in rendering the order denying his motion to dismiss. In any case, the prese
nt petition lacks substantive merit. It is axiomatic that the nature of the acti
on and which court has original and exclusive jurisdiction over the same is dete
rmined by the material allegations of the complaint, the type of relief prayed f
or by the plaintiff, and the law in effect when the action is filed, irrespectiv
e of whether the plaintiffs are entitled to some or all of the claims asserted t
herein.11 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 de
fendant or agreement of the parties, or to the waiver or acquiescence of the par
ties.12 A careful perusal of the respondents complaint, quoted earlier, shows tha
t it alleges that per the Order dated November 24, 1998 of PENRO of Butuan City,
petitioner Bokingos and his co-claimants application for titling of the subject l
and was rejected. On the other hand, in the same order it was declared that the
respondents, if qualified, may file an appropriate public land application cover
ing the same land. It was further alleged that the said order became final and e
xecutory, and in connection therewith, the respondents were authorized by the Ci
ty Environment and Natural Resources Officer (CENRO) of Butuan City to conduct a
survey on the subject land. However, petitioner Bokingo, through his representa
tives, unjustly prevented the conduct of the said survey. Even when the matter r
egarding the survey was submitted to the Lupong Tagapamayapa, petitioner Bokingo
still allegedly refused to allow the respondents to survey the subject land. He
nce, the Complaint for Injunction filed by the respondents where the principal r
elief sought is to enjoin permanently the illegal acts of the defendants therein
, including petitioner Bokingo, of preventing the survey of the land subject mat
ter of the case. In this connection, it is well to note that the Court had the o
ccasion to explain that "in determining whether an action is one the subject mat

ter of which is not capable of pecuniary estimation, the nature of the principal
action, or remedy sought must first be ascertained. If it is primarily for the
recovery of a sum of money, the claim is considered capable of pecuniary estimat
ion, and jurisdiction over the action will depend on the amount of the claim. Ho
wever, 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, th
e principal relief sought, the action is one where the subject of litigation may
not be estimated in
REMLAW Page 110

the principal relief sought, the action is one where the subject of litigation m
ay not be estimated in terms of money, which is cognizable exclusively by Region
al Trial Courts."13 As gleaned from the complaint, the principal relief sought b
y the respondents in their complaint is for the court a quo to issue an injuncti
on against petitioner Bokingo and his representatives to permanently enjoin them
from preventing the survey of the subject land. For clarity, the prayer of the
complaint reads: Wherefore, premises considered, it is respectfully prayed that
after hearing, this Honorable Court: 1) Enjoin permanently the illegal acts of d
efendants of preventing the survey of the land subject matter of this case by EN
GR. ERNESTO M. CAMPOS; 2) Order defendants to pay plaintiffs the sum of P10,000.
00 as attorneys fees, P10,000.00 as litigation expenses; 3) Order defendants to p
ay damages to plaintiff; 4) Such other reliefs just and reasonable under the cir
cumstances. 14 Contrary to the view posited by petitioner Bokingo, the cause of
action of the respondents complaint is not, as yet, to recover the possession of
the subject land. There are three kinds of actions to judicially recover possess
ion of real property and these are distinguished in this wise: What really disti
nguishes an action for unlawful detainer from a possessory action (accion public
iana) and from a reinvindicatory action (accion reinvindicatoria) is that the fi
rst is limited to the question of possession de facto. An unlawful detainer suit
(accion interdictal) together with forcible entry are the two forms of an eject
ment suit that may be filed to recover possession of real property. Aside from t
he summary action of ejectment, accion publiciana or the plenary action to recov
er the right of possession and accion reinvindicatoria or the action to recover
ownership which includes recovery of possession, make up the three kinds of acti
ons to judicially recover possession.15 Significantly, the respondents complaint
has not sought to recover the possession or ownership of the subject land. Rathe
r, it is principally an action to enjoin petitioner Bokingo and his representati
ves from committing acts that would tend to prevent the survey of the subject la
nd. It cannot be said therefore that it is one of a possessory action. The respo
ndents, as plaintiffs in the court a quo, to be entitled to the injunctive relie
f sought, need to establish the following requirements: (1) the existence of a r
ight to be protected; and (2) that the acts against which the injunction is to b
e directed are violative of the said right. As such, the subject matter of litig
ation is incapable of pecuniary estimation and properly cognizable exclusively b
y the court a quo, a Regional Trial Court under Section 19 (1) of BP Blg. 129, a
s amended by RA 7691: SEC. 19. Jurisdiction in Civil Cases. Regional Trial Court
s shall exercise exclusive original jurisdiction: (1) In all civil actions in wh
ich the subject of the litigation is incapable of pecuniary estimation; xxx Henc
e, the court a quo did not err in denying petitioner Bokingos motion to dismiss.
WHEREFORE, premises considered, the petition is DENIED and the assailed Decision
dated December 17, 2003 of the Court of Appeals in CA-G.R. SP No. 71510 is AFFI
RMED in toto.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI30.753\bokingko.
docx>
REMLAW Page 111

RCP v. CA GR 136109 Aug 1, 2002;

Sunday, November 14, 2010 11:22 PM
[G.R. No. 136109. August 1, 2002] RADIO COMMUNICATIONS OF THE PHILIPPINES, INC.,
vs. COURT OF APPEALS and MANUEL DULAWON YNARES-SANTIAGO, J.: This is a petition
for review of the decision of the Court of Appeals in CA-G.R. SP No. 45987 date
d April 30, 1998 and its resolution dated October 15, 1998 denying the motion fo
r reconsideration. On June 18, 1997, private respondent Manuel Dulawon filed wit
h the Regional Trial Court of Tabuk, Kalinga, Branch 25, a complaint for breach
of contract of lease with damages against petitioner Radio Communications of the
Philippines, Inc. (RCPI). Petitioner filed a motion to dismiss the complaint fo
r lack of jurisdiction contending that it is the Municipal Trial Court which has
jurisdiction as the complaint is basically one for collection of unpaid rentals
in the sum of P84,000.00, which does not exceed the jurisdictional amount of P1
00,000.00 for Regional Trial Courts. The trial court denied the motion to dismis
s, as well as petitioners motion for reconsideration. Hence, petitioner went to t
he Court of Appeals on a petition for certiorari. On April 30, 1998, the Court o
f Appeals dismissed the petition. The dispositive portion thereof reads: WHEREFO
RE, the petition is hereby DENIED DUE COURSE and is DISMISSED. Costs against pet
itioner. SO ORDERED. The motion for reconsideration of the foregoing decision wa
s denied on October 15, 1998. Hence, this petition. The issue for resolution in
this petition is whether or not the Regional Trial Court has jurisdiction over t
he complaint filed by private respondent. Pertinent portion of Batas Pambansa Bl
g. 129, as amended by Republic Act No. 7691, provides: SEC. 19. Jurisdiction in
civil cases. Regional Trial Courts shall exercise exclusive original jurisdictio
n: (1) In all civil actions in which the subject of the litigation is incapable
of pecuniary estimation; xxx xx x xxx (8) In all other cases in which the demand
, exclusive of interest, damages of whatever kind, attorneys fees, litigation exp
enses, 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 peso
s (P200,000.00). Corollary thereto, Administrative Circular No. 09-94, states: x
xx xx x xxx 2. The exclusion of the term damages of whatever kind in determining t
he jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. 129, as
amended by R.A. No. 7691, applies to cases where the damages are merely inciden
tal 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. xxx xx x x x x. In Russell, et al., v. Vestil, et al., the Court held
that in determining whether an action is one the subject matter of which is not
capable of pecuniary estimation, the nature of the principal action or remedy s
ought 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 jurisdictio
n over the action will depend on the amount of the claim. However, where the bas
ic 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 s
ought, the action is one where the subject of the litigation may not be estimate
d in terms of money, which is cognizable exclusively by Regional Trial Courts. I
t 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 o
f the relief sought, irrespective of whether the plaintiff is entitled to all or
some of the claims asserted therein. In the case at bar, the allegations in the
complaint plainly show that private respondents cause of action is breach of con
tract. The pertinent portion of the complaint recites: xxx xx x xxx
REMLAW Page 112

is breach of contract. The pertinent portion of the complaint recites: xxx xx x

xxx 2. That sometime during the end of the year 1995, defendant through its appr
opriate officials negotiated with plaintiff the lease of a portion of the latters
building x x x 3. That the lease contract was effective for a period of three (
3) years of from January 1, 1996 to January 1, 1998 with advance payment for the
year 1996. The advance was not however given in lump sum but on installment. On
e check that was given in payment of one months rental for 1996 was even stale an
d had to be changed only after demand; 4. That as per contract the monthly renta
l for 1997 was P3,300.00 while for 1998, it is P3,700.00; 5. That the defendant
surreptitiously removed its equipments and other personalities from the leased p
remises and failed to pay rentals due for the months of January to March 1997 to
the damage and prejudice of plaintiff; that this failure and refusal on the par
t of plaintiff accelerated the payment of all rentals for each month for the yea
rs 1997 and 1998; 6. That the acts of defendant amounts to a breach of contract
which is unlawful and malicious, as in fact, it caused plaintiff serious anxiety
, emotional stress, and sleepless nights for which he is entitled to moral damag
es; 7. That plaintiff conveyed his feelings to Mr. Ronald C. Manalastas as evide
nced by a letter dated January 7, 1997 a copy of which is hereto attached to for
m part hereof as Annex B. This was later followed by a letter of plaintiffs counsel
a machine copy of which is hereto attached to form part hereof and marked as An
nex C. Both these letters landed on deaf ears thereby aggravating the worries/anxi
eties of plaintiff; 8. That the period agreed is for the benefit of both parties
and any unilateral termination constitutes breach of contract; 9. That defendan
t actually used the leased premises during the year 1996; that had it not been f
or the contract, plaintiff could have leased the premises to other persons for b
usiness purposes; that this unlawful and malicious breach of contract cannot be
lawfully countenanced hence defendant must be taught a lesson by being ordered t
o pay exemplary damages; xxx xx x x x x. It is settled that a breach of contract
is a cause of action either for specific performance or rescission of contracts
. In Manufacturers Distributors, Inc. v. Siu Liong, the Court held that actions f
or specific performance are incapable of pecuniary estimation and therefore fall
under the jurisdiction of the Regional Trial Court. Here, the averments in the
complaint reveal that the suit filed by private respondent was primarily one for
specific performance as it was aimed to enforce their three-year lease contract
which would incidentally entitle him to monetary awards if the court should fin
d that the subject contract of lease was breached. As alleged therein, petitione
rs failure to pay rentals due for the period from January to March 1997, constitu
ted a violation of their contract which had the effect of accelerating the payme
nt of monthly rentals for the years 1997 and 1998. The same complaint likewise i
mplied a premature and unilateral termination of the term of the lease with the
closure of and removal all communication equipment in the leased premises. Under
the circumstances, the court has to scrutinize the facts and the applicable law
s in order to determine whether there was indeed a violation of their lease agre
ement that would justify the award of rentals and damages. The prayer, therefore
, for the payment of unpaid rentals in the amount of P84,000.00 plus damages con
sequent to the breach is merely incidental to the main action for specific perfo
rmance. Similarly, in Manufacturers Distributors Inc., the Court explained xxx xx
x xxx That plaintiffs complaint also sought the payment by the defendant of P3,37
6.00, plus interest and attorneys fees, does not give a pecuniary estimation to t
he litigation, for the payment of such amounts can only be ordered as a conseque
nce of the specific performance primarily sought. In other words, such payment w
ould be but an incident or consequence of defendant s liability for specific per
formance. If no such liability is judicially declared, the payment can not be aw
arded. Hence, the amounts sought do not represent the value of the subject of li
tigation. Subject matter over which jurisdiction can not be conferred by consent,
has reference, not to the res or property involved in the litigation nor to a p
articular case, but to the class of cases, the purported subject of litigation,
the nature of the action and of the relief sought (Appeal of Maclain, 176 NW. 81
7). Specifically, it has been held that: The Court has no jurisdiction of a suit f
or specific performance of a contract, although the damages

REMLAW Page 113

The Court has no jurisdiction of a suit for specific performance of a contract, a

lthough the damages alleged for its breach, if permitted, are within the amount
of which that court has jurisdiction. (Mebane Cotton Breeding Station. vs. Sides,
257 SW. 302; 21 C.J.S. 59, note). xxx xx x xxx Clearly, the action for specific
performance case, irrespective of the amount of rentals and damages sought to b
e recovered, is incapable of pecuniary estimation, hence cognizable exclusively
by the Regional Trial Court. The trial court, therefore, did not err in denying
petitioners motion to dismiss. WHEREFORE, in view of all the foregoing, the petit
ion is DENIED and the assailed decision of the Court of Appeals in CA-G.R. SP No
. 45987 is AFFIRMED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI32.095\rcp%20v%2
0ca.docx>
REMLAW Page 114

Honorio Bernardo v. Heirs of Eusebio Villegas GR 183357 Mar 15, 2010;

Sunday, November 14, 2010 11:22 PM
HONORIO BERNARDO, Petitioner, vs. HEIRS OF EUSEBIO VILLEGAS, Respondents. DE C I
S I O N PEREZ, J.: This petition for review on certiorari under Rule 45 of the
Rules of Court seeks to assail the validity of the Decision1 dated 21 April 2008
of the Court of Appeals, which affirmed the judgment of the Regional Trial Cour
t (RTC) of Binangonan, Rizal in Civil Case No. R-00-035. This controversy stemme
d from a Complaint dated 14 November 2000 for accion publiciana filed by respond
ent Heirs of Eusebio Villegas against petitioner Honorio Bernardo, Romeo Gaza (G
aza) and Monina Francisco (Francisco). Respondents had earlier filed an ejectmen
t case against the trio, docketed as Civil Case No. 99-065 with the Municipal Tr
ial Court (MTC) of Binangonan, Rizal, which case was dismissed on the ground of
lack of jurisdiction for having been filed beyond the one-year prescriptive peri
od for filing a forcible entry case.2 Respondents alleged in the Complaint that
their father, Eusebio Villegas, is the registered owner of a parcel of land cove
red by Transfer Certificate of Title (TCT) No. 46891 with an area of 18,369 squa
re meters and situated in Barangay Pag-asa, Binangonan, Rizal; that petitioner,
by stealth and in the guise of merely grazing his cattle, surreptitiously entere
d into possession of a portion of respondents land; that petitioner conspired and
confederated with Gaza and Francisco by illegally constructing their own houses
on the subject land; that the issue of possession was brought to the barangay f
or conciliation but no settlement was reached by the parties; and that petitione
r, Gaza and Francisco had forcibly, unlawfully and unjustly possessed and contin
ue to possess the subject property and had refused to vacate the same. In his An
swer, petitioner denied taking possession of any portion of the property of resp
ondents. He argued that the cause of action is barred by the judgment in the eje
ctment case. He claimed that he had been in possession of his land since the ear
ly 1950s.3 As he did before the MTC, petitioner also alleged lack of jurisdictio
n on the part of the RTC. Gaza alleged that he has been occupying an abandoned r
iver bed adjacent to the property allegedly owned by respondents.4 Gaza averred
that he entered into a written agreement with petitioner, who claimed to own the
land and allowed him to build a nipa hut thereon.5 An ocular inspection was con
ducted by the trial court judge. On 5 March 2007, the trial court rendered judgm
ent in favor of respondents and ordered petitioner, Gaza and Francisco to vacate
the subject land covered by TCT No. 46891 and to pay jointly and severally resp
ondents the amount of P30,000.00 as attorneys fees and the cost of suit.6 The tri
al court held that the suit, being an accion publiciana, falls within its jurisd
iction. It found that the houses of petitioner and Gaza were inside the titled p
roperty of respondents. Its findings were based on the testimony of one of the r
espondents, Estelito Villegas; the relocation plan prepared by Engineer Rico J.
Rasay; and the Technical Report on Verification Survey submitted by Engineer Rob
ert C. Pangyarihan, petitioners own witness.7 The trial court noted that petition
er failed to present any title or tax declaration to prove ownership or possesso
ry right.8 On appeal, the Court of Appeals affirmed the ruling of the trial cour
t. In his appeal, petitioner questioned the jurisdiction of the trial court over
the subject matter and argued that in their complaint, the respondents failed t
o state the assessed value of the property in dispute. The appellate court ruled
that petitioner is estopped from raising the issue of jurisdiction because he f
ailed to file a motion to dismiss on such ground and, instead, actively particip
ated in the proceedings before the trial court. With respect to the argument tha
t being indispensable parties, all of the heirs of Eusebio Villegas should have
been impleaded as parties, the appellate court disagreed and invoked Article 487
of the Civil Code,
REMLAW Page 115

have been impleaded as parties, the appellate court disagreed and invoked Articl
e 487 of the Civil Code, which provides that any one of the co-owners may bring
an action for ejectment. The appellate court construed said provision to cover a
ll kinds of actions for recovery of possession.9 The appellate court sustained t
he trial courts finding that the portions of the land occupied by petitioner and
Gaza are owned by respondents. The appellate court likewise ruled that responden
ts could not be guilty of laches considering that Estelito Villegas, upon seeing
for the first time in 1996 that petitioner was already building his house on th
e premises, verbally asked him to discontinue the construction.10 His motion for
reconsideration having been denied, petitioner filed the instant petition. Peti
tioner insists that the trial court had no jurisdiction over the subject matter
of the action for failure of respondents to allege the assessed value of the pro
perty involved in their complaint. Petitioner belies the ruling of the appellate
court that he failed to raise objections before the trial court. Petitioner rei
terates that he raised the defense of lack of jurisdiction as early as in his An
swer filed before the trial court. Moreover, he argues that even if he did not r
aise the defense of lack of jurisdiction, the trial court should have dismissed
the complaint motu proprio. Petitioner disputes the application to him of the do
ctrine of estoppel by laches in Tijam v. Sibonghanoy.11 Petitioner avers that un
like in Tijam, he raised the issue of jurisdiction, not only in his answer, but
also in his appeal. 12 Respondents defend the ruling of the Court of Appeals and
maintain that petitioner is estopped from challenging the jurisdiction of the t
rial court.13 The issue presented before this Court is simple: Whether or not es
toppel bars petitioner from raising the issue of lack of jurisdiction. Under Bat
as Pambansa Bilang 129, the plenary action of accion publiciana must be brought
before the regional trial courts. With the modifications introduced by Republic
Act No. 769114 in 1994, the jurisdiction of the regional trial courts was limite
d to real actions where the assessed value exceeds P20,000.00, and P50,000.00 wh
ere the action is filed in Metro Manila, thus: SEC. 19. Jurisdiction in civil ca
ses. Regional Trial Courts shall exercise exclusive original jurisdiction: xxx x
(2) In all civil actions which involve the title to, or possession of, real pro
perty, or any interest therein, where the assessed value of the property involve
d exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Mani
la, where such value exceeds Fifty thousand pesos (P50,000.00) except actions fo
r forcible entry into and unlawful detainer of lands or buildings, original juri
sdiction over which is conferred upon the Metropolitan Trial Courts, Municipal T
rial Courts, and Municipal Circuit Trial Courts. Under the law as modified, juri
sdiction is determined by the assessed value of the property. A reading of the c
omplaint shows that respondents failed to state the assessed value of the disput
ed land. The averments read: xxx x 3. EUSEBIO VILLEGAS, deceased father of hte p
laintiffs, is the registered owner of a parcel of land situated in Barangay Pagasa (formerly Barangay Tayuman), Binangonan, Rizal with a land area of 18,369 sq
uare meters. The same is covered by and embraced in Transfer Certificate of Titl
e No. 46891 of the Registry of Deeds for the Province of Rizal. x x x. 4. Plaint
iffs are the legal heirs of EUSEBIO VILLEGAS and succeeded to the subject parcel
of land by virtue of their inheritance rights as compulsory heirs of said decea
sed Eusebio Villegas and upon his death, immediately took over and were enjoying
the peaceful possession of the said parcel of land and exercising said rights o
f possession and ownership thereof; 5. That sometime in 1996, defendant Honorio
Bernardo, by stealth and in guise of merely grazing his cattle, without the cons
ent of the plaintiffs, surreptitiously entered into the possession of a portion
of the subject parcel of land. Employing threats and intimidations, he claimed l
ater that the area he illegally occupied is purportedly not part and parcel of t
he land owned by the plaintiffs predecessor, Eusebio Villegas, and forcibly fence
d and built his house on the portion of land he illegally occupied; 6. Not being
content with his own forcible and unlawful invasion, usurpation and incursion i
nto the plaintiffs parcel of land, and in furtherance of his desire to forcibly e
xclude the plaintiffs of their lawful and for possession of the subject portion
of plaintiffs parcel of land, defendant Bernardo, conspired and confederated with
defendants Romeo Gaza and Monina Francisco by surreptitiously and illegally con

structing their own houses on the subject parcel of land through stealth and int
imidation;
REMLAW Page 116

constructing their own houses on the subject parcel of land through stealth and
intimidation; 7. That the issue of the possession of the subject parcel of land
was brought under the Barangay Justice System in 1996 for conciliation but, no s
ettlement was reached by the parties. Copies of the Certifications issued by the
Barangay for that matter is hereto attached and marked as Annex "B"; 8. That th
e defendants have forcibly, unlawfully, and unjustly dispossessed and still cont
inues to forcibly, unlawfully, and unjustly dispossesses the plaintiffs of their
lawful rights of possession and ownership on a portion of the subject property
since 1966 up to the present; 9. Because of the unjust refusal of the defendants
to vacate the premises, plaintiffs were constrained to engage the services of c
ounsel to protect their interest on the property for an agreed attorneys fee of P
50,000.00, and have incurred litigation expenses[;] 10. By reason of the unlawfu
l and forcible invasion by the defendants of the property of the plaintiffs whic
h was accompanied by threats and intimidation, the plaintiffs have suffered and
continue to suffer anxiety and sleepless nights for which the defendants should
be made to indemnify by way of moral damages in the amount of at least P100,000.
00; 11. To serve as an example to others who might be minded to commit similar w
anton and unlawful acts, defendants should be held answerable for exemplary dama
ges of not less than P50,000.00.15 This fact was noted by the Court of Appeals i
n its Decision but it proceeded to rule in this wise: Records show that at the t
ime plaintiffs-appellees filed their complaint below, R.A. No. 7691 which amende
d Batas Pambansa Blg. 129 was already in effect. However, the complaint failed t
o allege the assessed value of the real property involved. Although appellant in
deed raised the issue of jurisdiction in his answer, he had not filed a motion t
o dismiss on this ground nor reiterated the matter thereafter but actively parti
cipated in the proceedings after the denial of his demurrer to evidence anchored
on the failure of the plaintiffs to identify in their complaint all the heirs o
f the registered owner and supposed lack of technical description of the propert
y in the certificate of title. Indeed, appellant is now estopped to question the
trial courts jurisdiction over the subject matter and nature of the case having
actively pursued throughout the trial, by filing various pleadings and presentin
g all relevant documentary and testimonial evidence, his theory that the portion
occupied by him is not covered by the torrens title of Eusebio Villegas.16 We a
gree. As already shown, nowhere in the complaint was the assessed value of the s
ubject property ever mentioned. There is no showing on the face of the complaint
that the RTC has jurisdiction exclusive of the MTC. Indeed, absent any allegati
on in the complaint of the assessed value of the property, it cannot readily be
determined which of the two trial courts had original and exclusive jurisdiction
over the case.17 The general rule is that the jurisdiction of a court may be qu
estioned at any stage of the proceedings.18 Lack of jurisdiction is one of those
excepted grounds where the court may dismiss a claim or a case at any time when
it appears from the pleadings or the evidence on record that any of those groun
ds exists, even if they were not raised in the answer or in a motion to dismiss.
19 The reason is that jurisdiction is conferred by law, and lack of it affects
the very authority of the court to take cognizance of and to render judgment on
the action.20 However, estoppel sets in when a party participates in all stages
of a case before challenging the jurisdiction of the lower court. One cannot bel
atedly reject or repudiate its decision after voluntarily submitting to its juri
sdiction, just to secure affirmative relief against one s opponent or after fail
ing to obtain such relief. The Court has, time and again, frowned upon the undes
irable practice of a party submitting a case for decision and then accepting the
judgment, only if favorable, and attacking it for lack of jurisdiction when adv
erse.21 In Tijam, the Court held that it is iniquitous and unfair to void the tr
ial courts decision for lack of jurisdiction considering that it was raised only
after fifteen (15) years of tedious litigation, thus: The facts of this case sho
w that from the time the Surety became a quasi-party on July 31, 1948, it could
have raised the question of the lack of jurisdiction of the Court of First Insta
nce of Cebu to take cognizance of the present action by reason of the sum of mon
ey involved which, according to the law then in force, was within the original e
xclusive jurisdiction of inferior courts. It failed to do so. Instead, at severa

l stages of the proceedings in the court a quo as well as in the Court of Appeal
s, it invoked the jurisdiction of said courts to obtain affirmative relief and s
ubmitted its case for a final adjudication on the merits. It was only after an a
dverse decision was rendered by the Court of Appeals that it finally
REMLAW Page 117

the merits. It was only after an adverse decision was rendered by the Court of A
ppeals that it finally woke up to raise the question of jurisdiction. Were we to
sanction such conduct on its part, We would in effect be declaring as useless a
ll the proceedings had in the present case since it was commenced on July 19, 19
48 and compel the judgment creditors to go up their Calvary once more. The inequ
ity and unfairness of this is not only patent but revolting.22 The principle of
justice and equity as espoused in Tijam should be applied in this case. The MTC
dismissed the ejectment case upon its ruling that the case is for accion publici
ana. It did not assert jurisdiction over the case even if it could have done so
based on the assessed value of the property subject of the accion publiciana. An
d there was no showing, indeed, not even an allegation, that the MTC was not awa
re of its jurisdictional authority over an accion publiciana involving property
in the amount stated in the law. Moreover, petitioner did not bring up the issue
of jurisdictional amount that would have led the MTC to proceed with the trial
of the case. Petitioner obviously considered the dismissal to be in his favor. W
hen, as a result of such dismissal, respondents brought the case as accion publi
ciana before the RTC, petitioner never brought up the issue of jurisdictional am
ount. What petitioner mentioned in his Answer before the RTC was the generally p
hrased allegation that "the Honorable Court has no jurisdiction over the subject
matter and the nature of the action in the aboveentitled case."23 This general
assertion, which lacks any basis, is not sufficient. Clearly, petitioner failed
to point out the omission of the assessed value in the complaint. Petitioner act
ively participated during the trial by adducing evidence and filing numerous ple
adings, none of which mentioned any defect in the jurisdiction of the RTC. It wa
s only on appeal before the Court of Appeals, after he obtained an adverse judgm
ent in the trial court, that petitioner, for the first time, came up with the ar
gument that the decision is void because there was no allegation in the complain
t about the value of the property. Clearly, petitioner is estopped from question
ing the jurisdiction of the RTC. We note that the decisions of the RTC and of th
e Court of Appeals discussed extensively the merits of the case, which has been
pending for nearly ten (10) years. It was handled by two (2) judges and its reco
rds had to be reconstituted after the fire that gutted the courthouse. 24 If we
were to accede to petitioners prayer, all the effort, time and expenses of partie
s who participated in the litigation would be wasted. Quite obviously, petitione
r wants a repetition of the process hoping for the possibility of a reversal of
the decision. The Court will not countenance such practice. Significantly, the T
echnical Report on Verification Survey25 by Engineer Robert C. Pangyarihan, whic
h was attached to and formed part of the records, contained a tax declaration26
indicating that the subject property has an assessed value of P110,220.00. It is
basic that the tax declaration indicating the assessed value of the property en
joys the presumption of regularity as it has been issued by the proper governmen
t agency.27 Under Republic Act No. 7691, the RTC in fact has jurisdiction over t
he subject matter of the action.1avvphi1> Taking into consideration the decision
of the MTC proclaiming that the case is one for accion publiciana and the asses
sed value of the property as evidenced by the case records, jurisdiction pertain
s, rightfully so, with the RTC. Perforce, the petition should be denied. WHEREFO
RE, the decision of the Court of Appeals dated 21 April 2008, affirming the judg
ment of the Regional Trial Court of Binangonan, Rizal dated 5 March 2007, is AFF
IRMED. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2010/mar2010/gr_183357_2010.htm
l>
REMLAW Page 118

Encarnacion v. Amigo, GR No. 169793 Sep 15, 2006

Sunday, November 14, 2010 11:22 PM
G.R. No. 169793 September 15, 2006 VICTORIANO M. ENCARNACION vs. NIEVES AMIGO YN
ARES-SANTIAGO, J.: This petition for review assails the June 30, 2005 Decision1
of the Court of Appeals in CA-G.R. SP No. 73857, ordering the remand of Civil Ca
se No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela, Branch 20, f
or further proceedings. The antecedent facts are as follows: Petitioner Victoria
no M. Encarnacion is the registered owner of Lot No. 2121-B-1, consisting of 100
square meters and covered by TCT No. T-256650; and Lot No. 2121-B-2 consisting
of 607 square meters with TCT No. T-256651, located at District 1, National Hi-w
ay, Cauayan, Isabela. Said two lots originally form part of Lot No. 2121, a sing
le 707 square meter track of land owned by Rogelio Valiente who sold the same to
Nicasio Mallapitan on January 18, 1982. On March 21, 1985, Mallapitan sold the
land to Victoriano Magpantay. After the death of the latter in 1992, his widow,
Anita N. Magpantay executed an Affidavit of Waiver2 on April 11, 1995 waving her
right over the property in favor of her son-in-law, herein petitioner, Victoria
no Encarnacion. Thereafter, the latter caused the subdivision of the land into t
wo lots3 and the issuance of titles in his name on July 18, 1996.4 Respondent Ni
eves Amigo allegedly entered the premises and took possession of a portion of th
e property sometime in 1985 without the permission of the then owner, Victoriano
Magpantay. Said occupation by respondent continued even after TCT Nos. T-256650
and T-256651 were issue to petitioner. Consequently, petitioner, through his la
wyer sent a letter5 dated Febuary 1, 2001 demanding that the respondent vacate t
he subject property. As evidenced by the registry return receipt, the demand let
ter was delivered by registered mail to the respondent on February 12, 2001. Not
withstanding receipt of the demand letter, respondent still refused to vacate th
e subject property. Thereafter, on March 2, 2001, petitioner filed a complaint6
for ejectment, damages with injunction and prayer for restraining order with the
Municipal Trial Court in Cities of Isabela which was docketed as CV-01-030. In
his Answer, respondent alleged that he has been in actual possession and occupat
ion of a portion of the subject land since 1968 and that the issuance of Free Pa
tent and titles in the name of petitioner was tainted with irregularities.7 On O
ctober 24, 2001, the Municipal Trial Court in Cities rendered judgment, which re
ads: WHERE[FO]RE, there being a preponderance of evidence, a JUDGMENT is hereby
rendered in favor of the plaintiff VICTORIANO M. ENCARNACION and against the def
endant NIEVES AMIGOE (sic) as follows: a) ORDERING the defendant to vacate the p
ortion of the parcels of land described in Transfer Certificates of Title Nos. T
-256650 and T-256651 he is now occupying and surrender it to the plaintiff; b) O
RDERING the defendant to pay the plaintiff the sum of FIVE THOUSAND PESOS (P5,00
0) as attorney s fees, and c) ORDERING the defendant to pay rentals equivalent [
to] P500.00 per month from February, 2001 until the portion of the land occupied
by him is surrendered to the plaintiff. COSTS against the defendant. SO ORDERED
.8 On appeal, the Regional Trial Court of Cauayan, Isabela, Branch 20, ruled as
follows: WHEREFORE, judgment is hereby rendered dismissing the case on the groun
d that as the Municipal Court had no jurisdiction over the case, this Court acqu
ired no appellate jurisdiction thereof. Costs against plaintiff-appellee. SO ORD
ERED.9 Aggrieved, petitioner filed a petition for review10 under Rule 42 of the
Rules of Court before the Court of Appeals which promulgated the assailed Decisi
on remanding the case to the Regional Trial Court. The
REMLAW Page 119

Appeals which promulgated the assailed Decision remanding the case to the Region
al Trial Court. The dispositive portion thereof reads: WHEREFORE, premises consi
dered, this case is hereby REMANDED to Branch 20, Regional Trial Court of Cauaya
n, Isabela for further proceedings. No costs. SO ORDERED.11 Hence the present pe
tition raising the sole issue: [WHETHER] THE COURT OF APPEALS ERRED IN HOLDING T
HAT THE PROPER ACTION IN THIS CASE IS ACCION PUBLICIANA AND NOT UNLAWFUL DETAINE
R AS DETERMINED BY THE ALLEGATIONS IN THE COMPLAINT FILED BY PETITIONER. 12 The
petition lacks merit. In this jurisdiction, the three kinds of actions for the r
ecovery of possession of real property are: 1. Accion interdictal, or an ejectme
nt proceeding which may be either that for forcible entry (detentacion) or unlaw
ful detainer (desahucio), which is a summary action for recovery of physical pos
session where the dispossession has not lasted for more than one year, and shoul
d be brought in the proper inferior court; 2. Accion publiciana or the plenary a
ction for the recovery of the real right of possession, which should be brought
in the proper Regional Trial Court when the dispossession has lasted for more th
an one year; and 3. Accion reinvindicatoria or accion de reivindicacion, which i
s an action for the recovery of ownership which must be brought in the proper Re
gional Trial Court. 13 Based on the foregoing distinctions, the material element
that determines the proper action to be filed for the recovery of the possessio
n of the property in this case is the length of time of dispossession. Under the
Rules of Court, the remedies of forcible entry and unlawful detainer are grante
d to a person deprived of the possession of any land or building by force, intim
idation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other per
son against whom the possession of any land or building is unlawfully withheld a
fter the expiration or termination of the right to hold possession by virtue of
any contract, express or implied, or the legal representatives or assigns of any
such lessor, vendor, vendee, or other person. These remedies afford the person
deprived of the possession to file at any time within one year after such unlawf
ul deprivation or withholding of possession, an action in the proper Municipal T
rial Court against the person or persons unlawfully withholding or depriving of
possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.14 Thus, if the dispossession
has not lasted for more than one year, an ejectment proceeding is proper and the
inferior court acquires jurisdiction. On the other hand, if the dispossession l
asted for more than one year, the proper action to be filed is an accion publici
ana which should be brought to the proper Regional Trial Court. After a careful
evaluation of the evidence on record of this case, we find that the Court of App
eals committed no reversible error in holding that the proper action in this cas
e is accion publiciana; and in ordering the remand of the case to the Regional T
rial Court of Cauayan, Isabela, Branch 20, for further proceedings. Well settled
is the rule that jurisdiction of the court over the subject matter of the actio
n is determined by the allegations of the complaint at the time of its filing, i
rrespective of whether or not the plaintiff is entitled to recover upon all or s
ome of the claims asserted therein. What determines the jurisdiction of the cour
t is the nature of the action pleaded as appearing from the allegations in the c
omplaint. The averments therein and the character of the relief sought are the o
nes to be consulted.15 On its face, the complaint must show enough ground for th
e court to assume jurisdiction without resort to parol testimony.16 From the all
egations in the complaint, it appears that the petitioner became the owner of th
e property on April 11, 1995 by virtue of the waiver of rights executed by his m
other-in-law. He filed the complaint for ejectment on March 2, 2001 after his Fe
bruary 1, 2001 letter to the respondent demanding that the latter vacate the pre
mises remained unheeded. While it is true that the demand letter was received by
the respondent on February 12, 2001, thereby making the filing of the complaint
for ejectment fall within the requisite one year from last demand for complaint
s for unlawful detainer, it is also equally true that petitioner became the owne
r of the subject lot in 1995 and has been since that time deprived possession of
a portion thereof. From the date of the petitioner s dispossession in 1995 up t
o his filing of his complaint for ejectment in 2001, almost 6 years have elapsed
. The length of time that the petitioner

REMLAW Page 120

his complaint for ejectment in 2001, almost 6 years have elapsed. The length of
time that the petitioner was dispossessed of his property made his cause of acti
on beyond the ambit of an accion interdictal and effectively made it one for acc
ion publiciana. After the lapse of the one-year period, the suit must be commenc
ed in the Regional Trial Court via an accion publiciana which is a suit for reco
very of the right to possess. It is an ordinary civil proceeding to determine th
e better right of possession of realty independently of title. It also refers to
an ejectment suit filed after the expiration of one year from the accrual of th
e cause of action or from the unlawful withholding of possession of the realty.
17 Previously, we have held that if the owner of the land knew that another pers
on was occupying his property way back in 1977 but the said owner only filed the
complaint for ejectment in 1995, the proper action would be one for accion publ
iciana and not one under the summary procedure on ejectment. As explained by the
Court: We agree with the Court of Appeals that if petitioners are indeed the ow
ners of the subject lot and were unlawfully deprived of their right of possessio
n, they should present their claim before the regional trial court in an accion
publiciana or an accion reivindicatoria, and not before the metropolitan trial c
ourt in a summary proceeding for unlawful detainer or forcible entry. For even i
f one is the owner of the property, the possession thereof cannot be wrested fro
m another who had been in physical or material possession of the same for more t
han one year by resorting to a summary action for ejectment. 18 Hence, we agree
with the Court of Appeals when it declared that: The respondent s actual entry o
n the land of the petitioner was in 1985 but it was only on March 2, 2001 or six
teen years after, when petitioner filed his ejectment case. The respondent shoul
d have filed an accion publiciana case which is under the jurisdiction of the RT
C. However, the RTC should have not dismissed the case. Section 8, Rule 40 of th
e Rules of Court provides: SECTION 8. Appeal from orders dismissing case without
trial; lack of jurisdiction. If an appeal is taken from an order of the lower c
ourt dismissing the case without a trial on the merits, the Regional Trial Court
may affirm or reverse it, as the case may be. In case of affirmance and the gro
und of dismissal is lack of jurisdiction over the subject matter, the Regional T
rial Court, if it has jurisdiction thereover, shall try the case on the merits a
s if the case was originally filed with it. In case of reversal, the case shall
be remanded for further proceedings. If the case was tried on the merits by the
lower court without jurisdiction over the subject matter, the Regional Trial Cou
rt 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 pre
judice to the admission of amended pleadings and additional evidence in the inte
rest of justice. The RTC should have taken cognizance of the case. If the case i
s tried on the merits by the Municipal Court without jurisdiction over the subje
ct matter, the RTC on appeal may no longer dismiss the case if it has original j
urisdiction thereof. Moreover, the RTC shall no longer try the case on the merit
s, but shall decide the case on the basis of the evidence presented in the lower
court, without prejudice to the admission of the amended pleadings and addition
al evidence in the interest of justice.19 WHEREFORE, the petition is DENIED. The
Decision of the Court of Appeals dated June 30, 2005 in CAG.R. SP No. 73857 ord
ering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of Ca
uayan, Isabela, Branch 20, for further proceedings, is AFFIRMED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI61.906\encarnaci
on.docx>
REMLAW Page 121

Planters Products v. Fertiphil GR 166006 Mar 14, 2008

Sunday, November 14, 2010 11:28 PM
[G.R. No. 166006, March 14, 2008] PLANTERS PRODUCTS, INC. vs. FERTIPHIL CORPORAT
ION,
FACTS:
Petitioner PPI and private respondent Fertiphil are private corporations incorpo
rated under Philippine laws.[3] They are both engaged in the importation and dis
tribution of fertilizers, pesticides and agricultural chemicals.
On June 3, 1985, then President Ferdinand Marcos, exercising his legislative pow
ers, issued LOI No. 1465 which provided, among others, for the imposition of a c
apital recovery component (CRC) on the domestic sale of all grades of fertilizer
s in the Philippines.[4] The LOI provides: 3. The Administrator of the Fertilize
r Pesticide Authority to include in its fertilizer pricing formula a capital con
tribution component of not less than P10 per bag. This capital contribution shal
l be collected until adequate capital is raised to make PPI viable. Such capital
contribution shall be applied by FPA to all domestic sales of fertilizers in th
e Philippines.[5] Pursuant to the LOI, Fertiphil paid P10 for every bag of ferti
lizer it sold in the domestic market to the Fertilizer and Pesticide Authority (
FPA). FPA then remitted the amount collected to the Far East Bank and Trust Comp
any, the depositary bank of PPI. Fertiphil paid P6,689,144 to FPA from July 8, 1
985 to January 24, 1986.
After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P1
0 levy. With the return of democracy, Fertiphil demanded from PPI a refund of th
e amounts it paid under LOI No. 1465, but PPI refused to accede to the demand.[7
] Fertiphil filed a complaint for collection and damages[8] against FPA and PPI
with the RTC in Makati. It questioned the constitutionality of LOI No. 1465 for
being unjust, unreasonable, oppressive, invalid and an unlawful imposition that
amounted to a denial of due process of law.[9] Fertiphil alleged that the LOI so
lely favored PPI, a privately owned corporation, which used the proceeds to main
tain its monopoly of the fertilizer industry. In its Answer,[10] FPA, through th
e Solicitor General, countered that the issuance of LOI No. 1465 was a valid exe
rcise of the police power of the State in ensuring the stability of the fertiliz
er industry in the country. It also averred that Fertiphil did not sustain any d
amage from the LOI because the burden imposed by the levy fell on the ultimate c
onsumer, not the seller. HELD: On Locus Standi
Whether or not the complaint for collection is characterized as a private or pub
lic suit, Fertiphil has locus standi to file it. Fertiphil suffered a direct inj
ury from the enforcement of LOI No. 1465. It was required, and it did pay, the P
10 levy imposed for every bag of fertilizer sold on the domestic market. It may
be true that Fertiphil has passed some or all of the levy to the ultimate consum
er, but that does not disqualify it from attacking the constitutionality of the
LOI or from seeking a refund. As seller, it bore the ultimate burden of paying t
he levy. It faced the possibility of severe sanctions for failure to pay the lev
y. The fact of payment is sufficient injury to Fertiphil.
On theJurisdiction of the RTC It is settled that the RTC has jurisdiction to res
olve the constitutionality of a statute, presidential decree or an executive ord
er. This is clear from Section 5, Article VIII of the 1987 Constitution, which p
rovides: SECTION 5. The Supreme Court shall have the following powers:
REMLAW Page 122

SECTION 5. The Supreme Court shall have the following powers: (2) Review, revise
, reverse, modify, or affirm on appeal orcert i o ra ri, as the law or the Rules
of Court may provide, final judgments and orders of lower courtsin: (a) All cas
es in which the constitutionality or validity of any treaty, international or ex
ecutive agreement, law, presidential decree, proclamation, order, instruction, o
rdinance, or regulation is in question. The P10 levy under LOI No. 1465 is an ex
ercise of the power of taxation.
We agree with the RTC that the imposition of the levy was an exercise by the Sta
te of its taxation power. While it is true that the power of taxation can be use
d as an implement of police power,[41] the primary purpose of the levy is revenu
e generation. If the purpose is primarily revenue, or if revenue is, at least, o
ne of the real and substantial purposes, then the exaction is properly called a
tax. The P10 levy under LOI No. 1465 is too excessive to serve a mere regulatory
purpose. The levy, no doubt, was a big burden on the seller or the ultimate con
sumer. It increased the price of a bag of fertilizer by as much as five percent.
[45] A plain reading of the LOI also supports the conclusion that the levy was f
or revenue generation. The LOI expressly provided that the levy was imposed  until
adequate capital is raised to make PPI viable. Taxes are exacted only for a pub
lic purpose. The P10 levy is unconstitutional because it was not for a public pu
rpose. The levy was imposed to give undue benefit to PPI. The purpose of a law i
s evident from its text or inferable from other secondary sources. Here, We agre
e with the RTC and that CA that the levy imposed under LOI No. 1465 was not for
a public purpose. First, the LOI expressly provided that the levy be imposed to
benefit PPI, a private company. The purpose is explicit from Clause 3 of the law
, thus: The Administrator of the Fertilizer Pesticide Authority to include in it
s fertilizer pricing formula a capital contribution component of not less than P
10 per bag. This capital contribution shall be collected until adequate capital
is raised to make PPI viable. Such capital contribution shall be applied by FPA
to all domestic sales of fertilizers in the Philippines. It is clear from the Le
tter of Understanding that the levy was imposed precisely to pay the corporate d
ebts of PPI. We cannot agree with PPI that the levy was imposed to ensure the st
ability of the fertilizer industry in the country. The letter of understanding a
nd the plain text of the LOI clearly indicate that the levy was exacted for the
benefit of a private corporation. The LOI is still unconstitutional even if enac
ted under the police power; it did not promote public interest.
Even if We consider LOI No. 1695 enacted under the police power of the State, it
would still be invalid for failing to comply with the test of  lawful subjects and  l
awful means. Jurisprudence states the test as follows: (1) the interest of the pub
lic generally, as distinguished from those of particular class, requires its exe
rcise; and (2) the means employed are reasonably necessary for the accomplishmen
t of the purpose and not unduly oppressive upon individuals.
REMLAW Page 123

REMLAW Page 124

REYES, R.T., J.: THE Regional Trial Courts (RTC) have the authority and jurisdic
tion to consider the constitutionality of statutes, executive orders, presidenti
al decrees and other issuances. The Constitution vests that power not only in th
e Supreme Court but in all Regional Trial Courts. The principle is relevant in t
his petition for review on certiorari of the Decision[1] of the Court of Appeals
(CA) affirming with modification that of the RTC in Makati City,[2] finding pet
itioner Planters Products, Inc. (PPI) liable to private respondent Fertiphil Cor
poration (Fertiphil) for the levies it paid under Letter of Instruction (LOI) No
. 1465. The Facts Petitioner PPI and private respondent Fertiphil are private co
rporations incorporated under Philippine laws.[3] They are both engaged in the i
mportation and distribution of fertilizers, pesticides and agricultural chemical
s. On June 3, 1985, then President Ferdinand Marcos, exercising his legislative
powers, issued LOI No. 1465 which provided, among others, for the imposition of
a capital recovery component (CRC) on the domestic sale of all grades of fertili
zers in the Philippines.[4] The LOI provides: 3. The Administrator of the Fertil
izer Pesticide Authority to include in its fertilizer pricing formula a capital
contribution component of not less than P10 per bag. This capital contribution s
hall be collected until adequate capital is raised to make PPI viable. Such capi
tal contribution shall be applied by FPA to all domestic sales of fertilizers in
the Philippines.[5] (Underscoring supplied) Pursuant to the LOI, Fertiphil paid
P10 for every bag of fertilizer it sold in the domestic market to the Fertilize
r and Pesticide Authority (FPA). FPA then remitted the amount collected to the F
ar East Bank and Trust Company, the depositary bank of PPI. Fertiphil paid P6,68
9,144 to FPA from July 8, 1985 to January 24, 1986.[6] After the 1986 Edsa Revol
ution, FPA voluntarily stopped the imposition of the P10 levy. With the return o
f democracy, Fertiphil demanded from PPI a refund of the amounts it paid under L
OI No. 1465, but PPI refused to accede to the demand.[7] Fertiphil filed a compl
aint for collection and damages[8] against FPA and PPI with the RTC in Makati. I
t questioned the constitutionality of LOI No. 1465 for being unjust, unreasonabl
e, oppressive, invalid and an unlawful imposition that amounted to a denial of d
ue process of law.[9] Fertiphil alleged that the LOI solely favored PPI, a priva
tely owned corporation, which used the proceeds to maintain its monopoly of the
fertilizer industry. In its Answer,[10] FPA, through the Solicitor General, coun
tered that the issuance of LOI No. 1465 was a valid exercise of the police power
of the State in ensuring the stability of the fertilizer industry in the countr
y. It also averred that Fertiphil did not sustain any damage from the LOI becaus
e the burden imposed by the levy fell on the ultimate consumer, not the seller.
REMLAW Page 125

RTC Disposition On November 20, 1991, the RTC rendered judgment in favor of Fert
iphil, disposing as follows: WHEREFORE, in view of the foregoing, the Court here
by renders judgment in favor of the plaintiff and against the defendant Planters
Product, Inc., ordering the latter to pay the former: 1) the sum of P6,698,144.
00 with interest at 12% from the time of judicial demand; 2) the sum of P100,000
as attorneys fees; 3) the cost of suit. SO ORDERED.[11] Ruling that the imposition
of the P10 CRC was an exercise of the States inherent power of taxation, the RTC i
nvalidated the levy for violating the basic principle that taxes can only be lev
ied for public purpose, viz.: It is apparent that the imposition of P10 per fert
ilizer bag sold in the country by LOI 1465 is purportedly in the exercise of the
power of taxation. It is a settled principle that the power of taxation by the
state is plenary. Comprehensive and supreme, the principal check upon its abuse
resting in the responsibility of the members of the legislature to their constit
uents. However, there are two kinds of limitations on the power of taxation: the
inherent limitations and the constitutional limitations. One of the inherent li
mitations is that a tax may be levied only for public purposes: The power to tax
can be resorted to only for a constitutionally valid public purpose. By the sam
e token, taxes may not be levied for purely private purposes, for building up of
private fortunes, or for the redress of private wrongs. They cannot be levied f
or the improvement of private property, or for the benefit, and promotion of pri
vate enterprises, except where the aid is incident to the public benefit. It is
well-settled principle of constitutional law that no general tax can be levied e
xcept for the purpose of raising money which is to be expended for public use. F
unds cannot be exacted under the guise of taxation to promote a purpose that is
not of public interest. Without such limitation, the power to tax could be exerc
ised or employed as an authority to destroy the economy of the people. A tax, ho
wever, is not held void on the ground of want of public interest unless the want
of such interest is clear. (71 Am. Jur. pp. 371-372) In the case at bar, the pl
aintiff paid the amount of P6,698,144.00 to the Fertilizer and Pesticide Authori
ty pursuant to the P10 per bag of fertilizer sold imposition under LOI 1465 whic
h, in turn, remitted the amount to the defendant Planters Products, Inc. thru th
e latters depository bank, Far East Bank and Trust Co. Thus, by virtue of LOI 1465
the plaintiff, Fertiphil Corporation, which is a private domestic corporation, b
ecame poorer by the amount of P6,698,144.00 and the defendant, Planters Product,
Inc., another private domestic corporation, became richer by the amount of P6,6
98,144.00. Tested by the standards of constitutionality as set forth in the afor
e-quoted jurisprudence, it is quite evident that LOI 1465 insofar as it imposes
the amount of P10 per fertilizer bag sold in the country and orders that the sai
d amount should go to the defendant Planters Product, Inc. is unlawful because i
t violates the mandate that a tax can be levied only for a public purpose and no
t to benefit, aid and promote a private enterprise such as Planters Product, Inc
.[12] PPI moved for reconsideration but its motion was denied.[13] PPI then file
d a notice of appeal with the RTC but it failed to pay the requisite appeal dock
et fee. In a separate but related proceeding, this Court[14] allowed the appeal
of PPI and remanded the case to the CA for proper disposition. CA Decision On No
vember 28, 2003, the CA handed down its decision affirming with modification tha
t of the RTC, with the following fallo: IN VIEW OF ALL THE FOREGOING, the decisi
on appealed from is hereby AFFIRMED, subject to the MODIFICATION
REMLAW Page 126

IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby AFFIRMED, sub
ject to the MODIFICATION that the award of attorneys fees is hereby DELETED.[15] In
affirming the RTC decision, the CA ruled that the lis mota of the complaint for
collection was the constitutionality of LOI No. 1465, thus: The question then i
s whether it was proper for the trial court to exercise its power to judicially
determine the constitutionality of the subject statute in the instant case. As a
rule, where the controversy can be settled on other grounds, the courts will no
t resolve the constitutionality of a law (Lim v. Pacquing, 240 SCRA 649 [1995]).
The policy of the courts is to avoid ruling on constitutional questions and to
presume that the acts of political departments are valid, absent a clear and unm
istakable showing to the contrary. However, the courts are not precluded from ex
ercising such power when the following requisites are obtaining in a controversy
before it: First, there must be before the court an actual case calling for the
exercise of judicial review. Second, the question must be ripe for adjudication
. Third, the person challenging the validity of the act must have standing to ch
allenge. Fourth, the question of constitutionality must have been raised at the
earliest opportunity; and lastly, the issue of constitutionality must be the ver
y lis mota of the case (Integrated Bar of the Philippines v. Zamora, 338 SCRA 81
[2000]). Indisputably, the present case was primarily instituted for collection
and damages. However, a perusal of the complaint also reveals that the instant
action is founded on the claim that the levy imposed was an unlawful and unconst
itutional special assessment. Consequently, the requisite that the constitutiona
lity of the law in question be the very lis mota of the case is present, making
it proper for the trial court to rule on the constitutionality of LOI 1465.[16]
The CA held that even on the assumption that LOI No. 1465 was issued under the p
olice power of the state, it is still unconstitutional because it did not promot
e public welfare. The CA explained: In declaring LOI 1465 unconstitutional, the
trial court held that the levy imposed under the said law was an invalid exercis
e of the States power of taxation inasmuch as it violated the inherent and constitu
tional prescription that taxes be levied only for public purposes. It reasoned o
ut that the amount collected under the levy was remitted to the depository bank
of PPI, which the latter used to advance its private interest. On the other hand
, appellant submits that the subject statutes passage was a valid exercise of polic
e power. In addition, it disputes the court a quos findings arguing that the collec
tions under LOI 1465 was for the benefit of Planters Foundation, Incorporated (P
FI), a foundation created by law to hold in trust for millions of farmers, the s
tock ownership of PPI. Of the three fundamental powers of the State, the exercis
e of police power has been characterized as the most essential, insistent and th
e least limitable of powers, extending as it does to all the great public needs.
It may be exercised as long as the activity or the property sought to be regula
ted has some relevance to public welfare (Constitutional Law, by Isagani A. Cruz
, p. 38, 1995 Edition). Vast as the power is, however, it must be exercised with
in the limits set by the Constitution, which requires the concurrence of a lawfu
l subject and a lawful method. Thus, our courts have laid down the test to deter
mine the validity of a police measure as follows: (1) the interests of the publi
c generally, as distinguished from those of a particular class, requires its exe
rcise; and (2) the means employed are reasonably necessary for the accomplishmen
t of the purpose and not unduly oppressive upon individuals (National Developmen
t Company v. Philippine Veterans Bank, 192 SCRA 257 [1990]). It is upon applying
this established tests that We sustain the trial courts holding LOI 1465 unconstit
utional. To be sure, ensuring the continued supply and distribution of fertilize
r in the country is an undertaking imbued with public interest. However, the met
hod by which LOI 1465 sought to achieve this is by no means a measure that will
promote the public welfare. The governments commitment to support the successful re
habilitation and continued viability of PPI, a private corporation, is an unmist
akable attempt to mask the subject statutes impartiality. There is no way to treat
the self-interest of a favored entity, like PPI, as identical with the general i
nterest of the countrys farmers or even the Filipino people in general. Well to str
ess, substantive due process exacts fairness and equal protection disallows dist
inction where none is needed. When a statutes public

REMLAW Page 127

exacts fairness and equal protection disallows distinction where none is needed.
When a statutes public purpose is spoiled by private interest, the use of police p
ower becomes a travesty which must be struck down for being an arbitrary exercis
e of government power. To rule in favor of appellant would contravene the genera
l principle that revenues derived from taxes cannot be used for purely private p
urposes or for the exclusive benefit of private individuals.[17] The CA did not
accept PPIs claim that the levy imposed under LOI No. 1465 was for the benefit of P
lanters Foundation, Inc., a foundation created to hold in trust the stock owners
hip of PPI. The CA stated: Appellant next claims that the collections under LOI
1465 was for the benefit of Planters Foundation, Incorporated (PFI), a foundatio
n created by law to hold in trust for millions of farmers, the stock ownership o
f PFI on the strength of Letter of Undertaking (LOU) issued by then Prime Minist
er Cesar Virata on April 18, 1985 and affirmed by the Secretary of Justice in an
Opinion dated October 12, 1987, to wit: 2. Upon the effective date of this Letter
of Undertaking, the Republic shall cause FPA to include in its fertilizer pricin
g formula a capital recovery component, the proceeds of which will be used initi
ally for the purpose of funding the unpaid portion of the outstanding capital st
ock of Planters presently held in trust by Planters Foundation, Inc. (Planters F
oundation), which unpaid capital is estimated at approximately P206 million (sub
ject to validation by Planters and Planters Foundation) (such unpaid portion of
the outstanding capital stock of Planters being hereafter referred to as the Unpaid
Capital), and subsequently for such capital increases as may be required for the c
ontinuing viability of Planters. The capital recovery component shall be in the
minimum amount of P10 per bag, which will be added to the price of all domestic
sales of fertilizer in the Philippines by any importer and/or fertilizer mother
company. In this connection, the Republic hereby acknowledges that the advances
by Planters to Planters Foundation which were applied to the payment of the Plan
ters shares now held in trust by Planters Foundation, have been assigned to, amo
ng others, the Creditors. Accordingly, the Republic, through FPA, hereby agrees
to deposit the proceeds of the capital recovery component in the special trust a
ccount designated in the notice dated April 2, 1985, addressed by counsel for th
e Creditors to Planters Foundation. Such proceeds shall be deposited by FPA on o
r before the 15th day of each month. The capital recovery component shall contin
ue to be charged and collected until payment in full of (a) the Unpaid Capital a
nd/or (b) any shortfall in the payment of the Subsidy Receivables, (c) any carry
ing cost accruing from the date hereof on the amounts which may be outstanding f
rom time to time of the Unpaid Capital and/or the Subsidy Receivables and (d) th
e capital increases contemplated in paragraph 2 hereof. For the purpose of the f
oregoing clause (c), the carrying cost shall be at such rate as will represent the ful
l and reasonable cost to Planters of servicing its debts, taking into account bo
th its peso and foreign currency-denominated obligations. (Records, pp. 42-43) Appe
llants proposition is open to question, to say the least. The LOU issued by then Pr
ime Minister Virata taken together with the Justice Secretarys Opinion does not pre
ponderantly demonstrate that the collections made were held in trust in favor of
millions of farmers. Unfortunately for appellant, in the absence of sufficient
evidence to establish its claims, this Court is constrained to rely on what is e
xplicitly provided in LOI 1465 that one of the primary aims in imposing the levy i
s to support the successful rehabilitation and continued viability of PPI.[18] P
PI moved for reconsideration but its motion was denied.[19] It then filed the pr
esent petition with this Court. Issues Petitioner PPI raises four issues for Our
consideration, viz.: I THE CONSTITUTIONALITY OF LOI 1465 CANNOT BE COLLATERALLY
ATTACKED AND BE DECREED VIA A DEFAULT JUDGMENT IN A CASE FILED FOR COLLECTION A
ND DAMAGES WHERE THE ISSUE OF CONSTITUTIONALITY IS NOT THE VERY LIS MOTA OF THE
CASE. NEITHER CAN LOI 1465 BE CHALLENGED BY ANY PERSON OR ENTITY WHICH HAS NO ST
ANDING TO DO SO. II
REMLAW Page 128

II LOI 1465, BEING A LAW IMPLEMENTED FOR THE PURPOSE OF ASSURING THE FERTILIZER
SUPPLY AND DISTRIBUTION IN THE COUNTRY, AND FOR BENEFITING A FOUNDATION CREATED
BY LAW TO HOLD IN TRUST FOR MILLIONS OF FARMERS THEIR STOCK OWNERSHIP IN PPI CON
STITUTES A VALID LEGISLATION PURSUANT TO THE EXERCISE OF TAXATION AND POLICE POW
ER FOR PUBLIC PURPOSES. III THE AMOUNT COLLECTED UNDER THE CAPITAL RECOVERY COMP
ONENT WAS REMITTED TO THE GOVERNMENT, AND BECAME GOVERNMENT FUNDS PURSUANT TO AN
EFFECTIVE AND VALIDLY ENACTED LAW WHICH IMPOSED DUTIES AND CONFERRED RIGHTS BY
VIRTUE OF THE PRINCIPLE OF OPERATIVE FACT PRIOR TO ANY DECLARATION OF UNCONSTITUTIONAL
ITY OF LOI 1465. IV THE PRINCIPLE OF UNJUST VEXATION (SHOULD BE ENRICHMENT) FIND
S NO APPLICATION IN THE INSTANT CASE.[20] (Underscoring supplied)
Our Ruling We shall first tackle the procedural issues of locus standi and the j
urisdiction of the RTC to resolve constitutional issues. Fertiphil has locus sta
ndi because it suffered direct injury; doctrine of standing is a mere procedural
technicality which may be waived. PPI argues that Fertiphil has no locus standi
to question the constitutionality of LOI No. 1465 because it does not have a perso
nal and substantial interest in the case or will sustain direct injury as a resu
lt of its enforcement. *21+ It asserts that Fertiphil did not suffer any damage fro
m the CRC imposition because incidence of the levy fell on the ultimate consumer
or the farmers themselves, not on the seller fertilizer company. *22+ We cannot agre
e. The doctrine of locus standi or the right of appearance in a court of justice
has been adequately discussed by this Court in a catena of cases. Succinctly pu
t, the doctrine requires a litigant to have a material interest in the outcome o
f a case. In private suits, locus standi requires a litigant to be a real party in
interest, which is defined as the party who stands to be benefited or injured by th
e judgment in the suit or the party entitled to the avails of the suit. *23+ In publ
ic suits, this Court recognizes the difficulty of applying the doctrine especial
ly when plaintiff asserts a public right on behalf of the general public because
of conflicting public policy issues. [24] On one end, there is the right of the
ordinary citizen to petition the courts to be freed from unlawful government in
trusion and illegal official action. At the other end, there is the public polic
y precluding excessive judicial interference in official acts, which may unneces
sarily hinder the delivery of basic public services. In this jurisdiction, We ha
ve adopted the direct injury test determine locus standi in public suits. In to People
v. Vera,*25+ it was held that a person who impugns the validity of a statute mu
st have a personal and substantial interest in the case such that he has sustained,
or will sustain direct injury as a result. The direct injury test public suits is
ar to the real party in interest in rule for private suits under Section 2, Rule 3 of
the 1997 Rules of Civil Procedure.[26] Recognizing that a strict application of
the direct injury may hamper public interest, this Court relaxed test the requirement
in cases of transcendental importance with far reaching implications. Being a or
ural technicality, it has also been held that locus standi may be waived in the
public interest.[27] Whether or not the complaint for collection is characterize
d as a private or public suit, Fertiphil has locus standi to file it. Fertiphil
suffered a direct injury from the enforcement of LOI No. 1465. It was required,
and it did pay, the
REMLAW Page 129

file it. Fertiphil suffered a direct injury from the enforcement of LOI No. 1465
. It was required, and it did pay, the P10 levy imposed for every bag of fertili
zer sold on the domestic market. It may be true that Fertiphil has passed some o
r all of the levy to the ultimate consumer, but that does not disqualify it from
attacking the constitutionality of the LOI or from seeking a refund. As seller,
it bore the ultimate burden of paying the levy. It faced the possibility of sev
ere sanctions for failure to pay the levy. The fact of payment is sufficient inj
ury to Fertiphil. Moreover, Fertiphil suffered harm from the enforcement of the
LOI because it was compelled to factor in its product the levy. The levy certain
ly rendered the fertilizer products of Fertiphil and other domestic sellers much
more expensive. The harm to their business consists not only in fewer clients b
ecause of the increased price, but also in adopting alternative corporate strate
gies to meet the demands of LOI No. 1465. Fertiphil and other fertilizer sellers
may have shouldered all or part of the levy just to be competitive in the marke
t. The harm occasioned on the business of Fertiphil is sufficient injury for pur
poses of locus standi. Even assuming arguendo that there is no direct injury, We
find that the liberal policy consistently adopted by this Court on locus standi
must apply. The issues raised by Fertiphil are of paramount public importance.
It involves not only the constitutionality of a tax law but, more importantly, t
he use of taxes for public purpose. Former President Marcos issued LOI No. 1465
with the intention of rehabilitating an ailing private company. This is clear fr
om the text of the LOI. PPI is expressly named in the LOI as the direct benefici
ary of the levy. Worse, the levy was made dependent and conditional upon PPI bec
oming financially viable. The LOI provided that the capital contribution shall be c
ollected until adequate capital is raised to make PPI viable. The constitutionality
of the levy is already in doubt on a plain reading of the statute. It is Our co
nstitutional duty to squarely resolve the issue as the final arbiter of all just
iciable controversies. The doctrine of standing, being a mere procedural technic
ality, should be waived, if at all, to adequately thresh out an important consti
tutional issue. RTC may resolve constitutional issues; the constitutional issue
was adequately raised in the complaint; it is the lis mota of the case. PPI insi
sts that the RTC and the CA erred in ruling on the constitutionality of the LOI.
It asserts that the constitutionality of the LOI cannot be collaterally attacke
d in a complaint for collection.[28] Alternatively, the resolution of the consti
tutional issue is not necessary for a determination of the complaint for collect
ion.[29] Fertiphil counters that the constitutionality of the LOI was adequately
pleaded in its complaint. It claims that the constitutionality of LOI No. 1465
is the very lis mota of the case because the trial court cannot determine its cl
aim without resolving the issue.[30] It is settled that the RTC has jurisdiction
to resolve the constitutionality of a statute, presidential decree or an execut
ive order. This is clear from Section 5, Article VIII of the 1987 Constitution,
which provides: SECTION 5. The Supreme Court shall have the following powers: xx
xx (2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as t
he law or the Rules of Court may provide, final judgments and orders of lower co
urts in: (a) All cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree, proclamation, o
rder, instruction, ordinance, or regulation is in question. (Underscoring suppli
ed) In Mirasol v. Court of Appeals,[31] this Court recognized the power of the R
TC to resolve constitutional issues, thus: On the first issue. It is settled tha
t Regional Trial Courts have the authority and jurisdiction to consider the cons
titutionality of a statute, presidential decree, or executive order. The Constit
ution vests the power of judicial review or the power to declare a law, treaty,
international or executive agreement, presidential decree, order, instruction, o
rdinance, or regulation not only in this Court, but in all Regional Trial Courts
.[32]
REMLAW Page 130

In the recent case of Equi-Asia Placement, Inc. v. Department of Foreign Affairs

,[33] this Court reiterated: There is no denying that regular courts have jurisd
iction over cases involving the validity or constitutionality of a rule or regul
ation issued by administrative agencies. Such jurisdiction, however, is not limi
ted to the Court of Appeals or to this Court alone for even the regional trial c
ourts can take cognizance of actions assailing a specific rule or set of rules p
romulgated by administrative bodies. Indeed, the Constitution vests the power of
judicial review or the power to declare a law, treaty, international or executi
ve agreement, presidential decree, order, instruction, ordinance, or regulation
in the courts, including the regional trial courts.[34] Judicial review of offic
ial acts on the ground of unconstitutionality may be sought or availed of throug
h any of the actions cognizable by courts of justice, not necessarily in a suit
for declaratory relief. Such review may be had in criminal actions, as in People
v. Ferrer[35] involving the constitutionality of the now defunct Anti-Subversio
n law, or in ordinary actions, as in Krivenko v. Register of Deeds[36] involving
the constitutionality of laws prohibiting aliens from acquiring public lands. T
he constitutional issue, however, (a) must be properly raised and presented in t
he case, and (b) its resolution is necessary to a determination of the case, i.e
., the issue of constitutionality must be the very lis mota presented.[37] Contr
ary to PPIs claim, the constitutionality of LOI No. 1465 was properly and adequatel
y raised in the complaint for collection filed with the RTC. The pertinent porti
ons of the complaint allege: 6. The CRC of P10 per bag levied under LOI 1465 on
domestic sales of all grades of fertilizer in the Philippines, is unlawful, unju
st, uncalled for, unreasonable, inequitable and oppressive because: xx xx (c) It
favors only one private domestic corporation, i.e., defendant PPPI, and imposed
at the expense and disadvantage of the other fertilizer importers/distributors
who were themselves in tight business situation and were then exerting all effor
ts and maximizing management and marketing skills to remain viable; xx xx (e) It
was a glaring example of crony capitalism, a forced program through which the P
PI, having been presumptuously masqueraded as the fertilizer industry itself, was the
sole and anointed beneficiary; 7. The CRC was an unlawful; and unconstitutional
special assessment and its imposition is tantamount to illegal exaction amountin
g to a denial of due process since the persons of entities which had to bear the
burden of paying the CRC derived no benefit therefrom; that on the contrary it
was used by PPI in trying to regain its former despicable monopoly of the fertil
izer industry to the detriment of other distributors and importers.[38] (Undersc
oring supplied) The constitutionality of LOI No. 1465 is also the very lis mota
of the complaint for collection. Fertiphil filed the complaint to compel PPI to
refund the levies paid under the statute on the ground that the law imposing the
levy is unconstitutional. The thesis is that an unconstitutional law is void. I
t has no legal effect. Being void, Fertiphil had no legal obligation to pay the
levy. Necessarily, all levies duly paid pursuant to an unconstitutional law shou
ld be refunded under the civil code principle against unjust enrichment. The ref
und is a mere consequence of the law being declared unconstitutional. The RTC su
rely cannot order PPI to refund Fertiphil if it does not declare the LOI unconst
itutional. It is the unconstitutionality of the LOI which triggers the refund. T
he issue of constitutionality is the very lis mota of the complaint with the RTC
. The P10 levy under LOI No. 1465 is an exercise of the power of taxation. At an
y rate, the Court holds that the RTC and the CA did not err in ruling against th
e constitutionality of the LOI. PPI insists that LOI No. 1465 is a valid exercis
e either of the police power or the power of taxation. It claims that the LOI wa
s implemented for the purpose of assuring the fertilizer supply and distribution
in the country and for benefiting a foundation created by law to hold in trust
for millions of farmers their stock ownership in PPI. Fertiphil counters that th
e LOI is unconstitutional because it was enacted to give benefit to a private co
mpany. The
REMLAW Page 131

Fertiphil counters that the LOI is unconstitutional because it was enacted to gi

ve benefit to a private company. The levy was imposed to pay the corporate debt
of PPI. Fertiphil also argues that, even if the LOI is enacted under the police
power, it is still unconstitutional because it did not promote the general welfa
re of the people or public interest. Police power and the power of taxation are
inherent powers of the State. These powers are distinct and have different tests
for validity. Police power is the power of the State to enact legislation that
may interfere with personal liberty or property in order to promote the general
welfare,[39] while the power of taxation is the power to levy taxes to be used f
or public purpose. The main purpose of police power is the regulation of a behav
ior or conduct, while taxation is revenue generation. The lawful subjects lawful mea
ests are used to determine the validity of a law enacted under the police power.
[40] The power of taxation, on the other hand, is circumscribed by inherent and
constitutional limitations. We agree with the RTC that the imposition of the lev
y was an exercise by the State of its taxation power. While it is true that the
power of taxation can be used as an implement of police power,[41] the primary p
urpose of the levy is revenue generation. If the purpose is primarily revenue, o
r if revenue is, at least, one of the real and substantial purposes, then the ex
action is properly called a tax.[42] In Philippine Airlines, Inc. v. Edu,[43] it
was held that the imposition of a vehicle registration fee is not an exercise b
y the State of its police power, but of its taxation power, thus: It is clear fr
om the provisions of Section 73 of Commonwealth Act 123 and Section 61 of the La
nd Transportation and Traffic Code that the legislative intent and purpose behin
d the law requiring owners of vehicles to pay for their registration is mainly t
o raise funds for the construction and maintenance of highways and to a much les
ser degree, pay for the operating expenses of the administering agency. x x x Fe
es may be properly regarded as taxes even though they also serve as an instrumen
t of regulation. Taxation may be made the implement of the state s police power
(Lutz v. Araneta, 98 Phil. 148). If the purpose is primarily revenue, or if reve
nue is, at least, one of the real and substantial purposes, then the exaction is
properly called a tax. Such is the case of motor vehicle registration fees. The
same provision appears as Section 59(b) in the Land Transportation Code. It is
patent therefrom that the legislators had in mind a regulatory tax as the law re
fers to the imposition on the registration, operation or ownership of a motor ve
hicle as a tax or fee. x x x Simply put, if the exaction under Rep. Act 4136 were merel
y a regulatory fee, the imposition in Rep. Act 5448 need not be an additional Rep. Act
4136 also speaks of other fees tax. such as the special permit fees for certain types
of motor vehicles (Sec. 10) and additional fees for change of registration (Sec
. 11). These are not to be understood as taxes because such fees are very minima
l to be revenue-raising. Thus, they are not mentioned by Sec. 59(b) of the Code
as taxes like the motor vehicle registration fee and chauffeurs license fee. Such f
ees are to go into the expenditures of the Land Transportation Commission as pro
vided for in the last proviso of Sec. 61.[44] (Underscoring supplied) The P10 le
vy under LOI No. 1465 is too excessive to serve a mere regulatory purpose. The l
evy, no doubt, was a big burden on the seller or the ultimate consumer. It incre
ased the price of a bag of fertilizer by as much as five percent.[45] A plain re
ading of the LOI also supports the conclusion that the levy was for revenue gene
ration. The LOI expressly provided that the levy was imposed until adequate capital
is raised to make PPI viable. Taxes are exacted only for a public purpose. The P10
levy is unconstitutional because it was not for a public purpose. The levy was
imposed to give undue benefit to PPI. An inherent limitation on the power of tax
ation is public purpose. Taxes are exacted only for a public purpose. They canno
t be used for purely private purposes or for the exclusive benefit of private pe
rsons.[46] The reason for this is simple. The power to tax exists for the genera
l welfare; hence, implicit in its power is the limitation that it should be used
only for a public purpose. It would be a robbery for the State to tax its citiz
ens and use the funds generated for a private purpose. As an old United States c
ase bluntly put it: To lay with one hand, the power of the government on the proper
ty of the citizen, and with the other to bestow it upon favored individuals to a
id private enterprises and build up private fortunes, is nonetheless a robbery b

ecause it is done under the forms of law and is called taxation. *47+
REMLAW Page 132

The term public purpose not defined. It is an elastic concept that can be hammered to
fit modern is standards. Jurisprudence states that public purpose should be given a br
oad interpretation. It does not only pertain to those purposes which are traditi
onally viewed as essentially government functions, such as building roads and de
livery of basic services, but also includes those purposes designed to promote s
ocial justice. Thus, public money may now be used for the relocation of illegal
settlers, low-cost housing and urban or agrarian reform. While the categories of
what may constitute a public purpose are continually expanding in light of the
expansion of government functions, the inherent requirement that taxes can only
be exacted for a public purpose still stands. Public purpose is the heart of a t
ax law. When a tax law is only a mask to exact funds from the public when its tr
ue intent is to give undue benefit and advantage to a private enterprise, that l
aw will not satisfy the requirement of public purpose. The purpose of a law is eviden
t from its text or inferable from other secondary sources. Here, We agree with t
he RTC and that CA that the levy imposed under LOI No. 1465 was not for a public
purpose. First, the LOI expressly provided that the levy be imposed to benefit
PPI, a private company. The purpose is explicit from Clause 3 of the law, thus:
3. The Administrator of the Fertilizer Pesticide Authority to include in its fer
tilizer pricing formula a capital contribution component of not less than P10 pe
r bag. This capital contribution shall be collected until adequate capital is ra
ised to make PPI viable. Such capital contribution shall be applied by FPA to al
l domestic sales of fertilizers in the Philippines.[48] (Underscoring supplied)
It is a basic rule of statutory construction that the text of a statute should b
e given a literal meaning. In this case, the text of the LOI is plain that the l
evy was imposed in order to raise capital for PPI. The framers of the LOI did no
t even hide the insidious purpose of the law. They were cavalier enough to name
PPI as the ultimate beneficiary of the taxes levied under the LOI. We find it ut
terly repulsive that a tax law would expressly name a private company as the ult
imate beneficiary of the taxes to be levied from the public. This is a clear cas
e of crony capitalism. Second, the LOI provides that the imposition of the P10 l
evy was conditional and dependent upon PPI becoming financially viable. This suggests
that the levy was actually imposed to benefit PPI. The LOI notably does not fix
a maximum amount when PPI is deemed financially viable. Worse, the liability of Fertip
hil and other domestic sellers of fertilizer to pay the levy is made indefinite.
They are required to continuously pay the levy until adequate capital is raised
for PPI. Third, the RTC and the CA held that the levies paid under the LOI were
directly remitted and deposited by FPA to Far East Bank and Trust Company, the
depositary bank of PPI.[49] This proves that PPI benefited from the LOI. It is a
lso proves that the main purpose of the law was to give undue benefit and advant
age to PPI. Fourth, the levy was used to pay the corporate debts of PPI. A readi
ng of the Letter of Understanding[50] dated May 18, 1985 signed by then Prime Mi
nister Cesar Virata reveals that PPI was in deep financial problem because of it
s huge corporate debts. There were pending petitions for rehabilitation against
PPI before the Securities and Exchange Commission. The government guaranteed pay
ment of PPIs debts to its foreign creditors. To fund the payment, President Marcos
issued LOI No. 1465. The pertinent portions of the letter of understanding read:
Republic of the Philippines Office of the Prime Minister Manila LETTER OF UNDER
TAKING May 18, 1985 TO: THE BANKING AND FINANCIAL INSTITUTIONS LISTED IN ANNEX A
HERETO WHICH ARE CREDITORS (COLLECTIVELY, THE CREDITORS OF PLANTERS PRODUCTS, INC. (
TERS ) ) Gentlemen:
REMLAW Page 133

This has reference to Planters which is the principal importer and distributor o
f fertilizer, pesticides and agricultural chemicals in the Philippines. As regar
ds Planters, the Philippine Government confirms its awareness of the following:
(1) that Planters has outstanding obligations in foreign currency and/or pesos,
to the Creditors, (2) that Planters is currently experiencing financial difficul
ties, and (3) that there are presently pending with the Securities and Exchange
Commission of the Philippines a petition filed at Planters own behest for the suspe
nsion of payment of all its obligations, and a separate petition filed by Manufa
cturers Hanover Trust Company, Manila Offshore Branch for the appointment of a r
ehabilitation receiver for Planters. In connection with the foregoing, the Repub
lic of the Philippines (the Republic confirms that it considers ) and continues to cons
ider Planters as a major fertilizer distributor. Accordingly, for and in conside
ration of your expressed willingness to consider and participate in the effort t
o rehabilitate Planters, the Republic hereby manifests its full and unqualified
support of the successful rehabilitation and continuing viability of Planters, a
nd to that end, hereby binds and obligates itself to the creditors and Planters,
as follows: xx xx
2. Upon the effective date of this Letter of Undertaking, the Republic shall cau
se FPA to include in its fertilizer pricing formula a capital recovery component
, the proceeds of which will be used initially for the purpose of funding the un
paid portion of the outstanding capital stock of Planters presently held in trus
t by Planters Foundation, Inc. (Planters Foundation which unpaid capital is estimated
at approximately P206 million ), (subject to validation by Planters and Planters
Foundation) such unpaid portion of the outstanding capital stock of Planters be
ing hereafter referred to as the Unpaid Capital and subsequently for such capital incr
eases as ), may be required for the continuing viability of Planters. xx xx

The capital recovery component shall continue to be charged and collected until
payment in full of (a) the Unpaid Capital and/or (b) any shortfall in the paymen
t of the Subsidy Receivables, (c) any carrying cost accruing from the date hereo
f on the amounts which may be outstanding from time to time of the Unpaid Capita
l and/or the Subsidy Receivables, and (d) the capital increases contemplated in
paragraph 2 hereof. For the purpose of the foregoing clause (c), the carrying cost sha
ll be at such rate as will represent the full and reasonable cost to Planters of
servicing its debts, taking into account both its peso and foreign currency-den
ominated obligations. REPUBLIC OF THE PHILIPPINES By: (signed) CESAR E. A. VIRAT
A Prime Minister and Minister of Finance[51] It is clear from the Letter of Unde
rstanding that the levy was imposed precisely to pay the corporate debts of PPI.
We cannot agree with PPI that the levy was imposed to ensure the stability of t
he fertilizer industry in the country. The letter of understanding and the plain
text of the LOI clearly indicate that the levy was exacted for the benefit of a
private corporation. All told, the RTC and the CA did not err in holding that t
he levy imposed under LOI No. 1465 was not for a public purpose. LOI No. 1465 fa
iled to comply with the public purpose requirement for tax laws. The LOI is stil
l unconstitutional even if enacted under the police power; it did not promote pu
blic interest. Even if We consider LOI No. 1695 enacted under the police power o
f the State, it would still be invalid for failing to comply with the test of lawfu
l subjects lawful means. and Jurisprudence states the test as follows: (1) the inter
f the public generally, as distinguished from those of particular class, require
s its exercise; and (2) the means employed are reasonably necessary for the acco
mplishment of the purpose and not unduly oppressive upon individuals.[52]
REMLAW Page 134

upon individuals.[52] For the same reasons as discussed, LOI No. 1695 is invalid
because it did not promote public interest. The law was enacted to give undue a
dvantage to a private corporation. We quote with approval the CA ratiocination o
n this point, thus: It is upon applying this established tests that We sustain t
he trial courts holding LOI 1465 unconstitutional. To be sure, ensuring the continu
ed supply and distribution of fertilizer in the country is an undertaking imbued
with public interest. However, the method by which LOI 1465 sought to achieve t
his is by no means a measure that will promote the public welfare. The governmen
ts commitment to support the successful rehabilitation and continued viability of P
PI, a private corporation, is an unmistakable attempt to mask the subject statut
es impartiality. There is no way to treat the self-interest of a favored entity, li
ke PPI, as identical with the general interest of the countrys farmers or even the
Filipino people in general. Well to stress, substantive due process exacts fairn
ess and equal protection disallows distinction where none is needed. When a stat
utes public purpose is spoiled by private interest, the use of police power becomes
a travesty which must be struck down for being an arbitrary exercise of governm
ent power. To rule in favor of appellant would contravene the general principle
that revenues derived from taxes cannot be used for purely private purposes or f
or the exclusive benefit of private individuals. (Underscoring supplied) The gen
eral rule is that an unconstitutional law is void; the doctrine of operative fac
t is inapplicable. PPI also argues that Fertiphil cannot seek a refund even if L
OI No. 1465 is declared unconstitutional. It banks on the doctrine of operative
fact, which provides that an unconstitutional law has an effect before being dec
lared unconstitutional. PPI wants to retain the levies paid under LOI No. 1465 e
ven if it is subsequently declared to be unconstitutional. We cannot agree. It i
s settled that no question, issue or argument will be entertained on appeal, unl
ess it has been raised in the court a quo.[53] PPI did not raise the applicabili
ty of the doctrine of operative fact with the RTC and the CA. It cannot belatedl
y raise the issue with Us in order to extricate itself from the dire effects of
an unconstitutional law. At any rate, We find the doctrine inapplicable. The gen
eral rule is that an unconstitutional law is void. It produces no rights, impose
s no duties and affords no protection. It has no legal effect. It is, in legal c
ontemplation, inoperative as if it has not been passed.[54] Being void, Fertiphi
l is not required to pay the levy. All levies paid should be refunded in accorda
nce with the general civil code principle against unjust enrichment. The general
rule is supported by Article 7 of the Civil Code, which provides: ART. 7. Laws
are repealed only by subsequent ones, and their violation or non-observance shal
l not be excused by disuse or custom or practice to the contrary. When the court
s declare a law to be inconsistent with the Constitution, the former shall be vo
id and the latter shall govern. The doctrine of operative fact, as an exception
to the general rule, only applies as a matter of equity and fair play.[55] It nu
llifies the effects of an unconstitutional law by recognizing that the existence
of a statute prior to a determination of unconstitutionality is an operative fa
ct and may have consequences which cannot always be ignored. The past cannot alw
ays be erased by a new judicial declaration.[56] The doctrine is applicable when
a declaration of unconstitutionality will impose an undue burden on those who h
ave relied on the invalid law. Thus, it was applied to a criminal case when a de
claration of unconstitutionality would put the accused in double jeopardy[57] or
would put in limbo the acts done by a municipality in reliance upon a law creat
ing it.[58] Here, We do not find anything iniquitous in ordering PPI to refund t
he amounts paid by Fertiphil under LOI No. 1465. It unduly benefited from the le
vy. It was proven during the trial that the levies paid were remitted and deposi
ted to its bank account. Quite the reverse, it would be inequitable and unjust n
ot to order a refund. To do so would unjustly enrich PPI at the expense of Ferti
phil. Article 22 of the Civil Code explicitly provides that every person who, throu
gh an act of performance by another comes into possession of something at the ex
pense of the
REMLAW Page 135

person who, through an act of performance by another comes into possession of so

mething at the expense of the latter without just or legal ground shall return t
he same to him. We cannot allow PPI to profit from an unconstitutional law. Justice
and equity dictate that PPI must refund the amounts paid by Fertiphil. WHEREFOR
E, the petition is DENIED. The Court of Appeals Decision dated November 28, 2003
is AFFIRMED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI62.918\planters.
docx>
REMLAW Page 136

Badillo v. CA GR 131903 June 26, 2008

Sunday, November 14, 2010 11:28 PM
[G.R. No. 131903, June 26, 2008] OSCAR R. BADILLO, GIOVANNI C. ONG, EDGAR A. RAG
ASA REPRESENTED BY HEIRS CYNTHIA G. RAGASA, AND THEIR CHILDREN JOSEPH, CATHERINE
AND CHARMAINE ALL SURNAMED RAGASA, ROLANDO SANCADA, AND DIONISIO UMBALIN VS. CO
URT OF APPEALS, REGISTER OF DEEDS OF QUEZON CITY, GOLDKEY DEVELOPMENT CORPORATIO
N, JOSEFA CONEJERO, IGNACIO D. SONORON, PEDRO DEL ROSARIO, AND DOWAL REALTY AND
MANAGEMENT SYSTEM COMPANY CARPIO, J.: The Case This petition for certiorari[1] a
ssails the 17 September 1997 Decision[2] of the Court of Appeals in CA-G.R. CV N
o. 50035. The Court of Appeals dismissed the appeal filed by petitioners Oscar R
. Badillo, Giovanni C. Ong, Edgar A. Ragasa, Rolando Sancada, and Dionisio Umbal
in (petitioners) questioning the 5 June 1995 Order[3] of Branch 222 of the Regio
nal Trial Court of Quezon City in Civil Case No. Q-91-10510 for Annulment of Doc
uments with Prayer for Issuance of Prohibitory and Mandatory Injunction and Dama
ges. The Facts Petitioners alleged that they are the registered owners of severa
l lots adjoining a road lot known as Lot 369-A-29 or Apollo Street of subdivisio
n plan Psd-37971 (road lot). The road lot is a short access road which connects
petitioners properties to the main road known as Road 20. The road lot is cover
ed by Transfer Certificate of Title (TCT) No. RT-20895 (22682) and registered in
the name of respondent Pedro del Rosario (del Rosario). Annotated at the back o
f TCT No. RT-20895 is a court-ordered Entry No. 605/T-22655 which reads as follo
ws: "It is hereby made of record that as per order of the Court, the street lot
covered by this title shall not be closed or disposed of by the registered owner
without previous approval of the court."[4] Petitioners alleged that in gross v
iolation of the court order, del Rosario sold an unsegregated portion of the roa
d lot to his co-respondents Josefa Conejero (Conejero) and Ignacio Sonoron (Sono
ron) without obtaining prior court approval. Del Rosario, Conejero, and Sonoron
then entered into a partition agreement to divide the road lot into four lots wh
ich resulted in the partial cancellation of TCT No. RT-20895 and the subsequent
issuance of TCT Nos. 35899 and 35100 in the name of Conejero, TCT No. 35101 in t
he name of del Rosario, and TCT No. 35102 in the name of Sonoron.[5] Petitioners
stated that del Rosario sold TCT No. 35101 to Goldkey Development Corporation (
Goldkey).[6] Petitioners alleged that the Register of Deeds violated the court o
rder when it allowed the registration of the sales and the subsequent issuance o
f new titles without first obtaining judicial approval. Petitioners claimed that
Goldkey had built cement fences on the lot, thus blocking the ingress and egres
s of petitioners.[7] Petitioners prayed that the sales made in favor of Conejero
, Sonoron, and Goldkey and the partition of the road lot be declared void.[8] In
its Comment, Goldkey alleged that the Housing and Land Use Regulatory Board (HL
URB) has exclusive jurisdiction over the cases mentioned in Section 1 of Preside
ntial Decree No. (PD) 1344.[9] Goldkey argued that the Court of Appeals correctl
y dismissed petitioners appeal because petitioners merely assigned an error inv
olving a pure question of law. Goldkey added that petitioners are using the pres
ent petition as a substitute for an already lost appeal since petitioners couns
el had received the decision on 17 October 1997 and the present petition was pos
ted only on 16 December 1997.[10] In May 1991, petitioners filed an initial comp
laint with the Office of the Building Official (building official) of Quezon Cit
y, docketed as Building Case No. R-10-91-006 entitled Giovanni C. Ong, et al. v.
Manuel Chua (building case).[11] Petitioners, who initiated the building case w
hen Goldkey started putting up fences in some portions of the property, claimed
that the parcel of land was a road lot.[12] On 10 September 1991, the HLURB issu
ed a Development Permit to Goldkey allowing it to develop the land into resident
ial townhouse units. The permit also mentioned that the project is classified as
"Residential Townhouse Subdivision" and, as evaluated, the same is "in accordan
ce with the Zoning Ordinance of Quezon City."[13] REMLAW Page 137

Subdivision" and, as evaluated, the same is "in accordance with the Zoning Ordin
ance of Quezon City."[13] On 4 November 1991,[14] petitioners filed a case for A
nnulment of Title and Damages[15] with the Regional Trial Court of Quezon City.
Subsequently, the building official of Quezon City resolved the building case ag
ainst petitioners and this decision became final and executory.[16] The ruling h
eld that the property is not a road lot but a residential lot.[17] On 5 June 199
5, Branch 222 of the Regional Trial Court (trial court) of Quezon City issued an
order dismissing the case for lack of jurisdiction over the subject matter. The
Ruling of the Trial Court The trial court dismissed petitioners case for lack
of jurisdiction over the subject matter. The trial court pointed out that there
was a decision rendered by the building official of Quezon City declaring the di
sputed property a residential lot and not a road lot; hence, the building offici
al issued a building permit. The HLURB also issued a permit for the development
of the land into a townhouse project. Petitioners did not appeal both rulings. T
he trial court stated that petitioners contention that the property is a road l
ot had been rendered moot by the finding of the building official which made the
contrary declaration. If petitioners had any objection to the ruling, they shou
ld have appealed the same to the Secretary of Public Works and Highways as provi
ded in Section 307 of Executive Order No. (EO) 1096. The findings of administrat
ive agencies which have expertise are generally accorded not only respect but ev
en finality. The trial court also stated that the property had been approved by
the HLURB for development into a townhouse project. The subject land was therefo
re removed from the jurisdiction of the regular courts. The HLURB s decision was
also not appealed to the Office of the President as provided in Section 4 of PD
1344 which gave the HLURB quasi-judicial powers. The Ruling of the Appellate Co
urt On 17 September 1997, the Court of Appeals dismissed the appeal on the groun
d that it has no jurisdiction to entertain the same. The appellate court stated
that the original and amended complaints filed by petitioners were both premised
on the claim that the subject parcels of land were subdivision road lots that w
ere illegally converted into residential lots and thereafter disposed by del Ros
ario, the subdivision developer. Therefore, petitioners complaints were filed f
or the purpose of enforcing a contractual and statutory obligation of del Rosari
o to preserve a subdivision road lot for street purposes. As such, the agency wi
th jurisdiction is the HLURB, pursuant to the provisions of PD 957, 1216, and 13
44, EO 648 dated 7 February 1981 and EO 90 dated 17 December 1986. Further, the
appellate court ruled that the error assigned by petitioners involves the issue
on what law will apply to determine the jurisdiction of a tribunal over the subj
ect matter of the complaints. Petitioners assigned error involves a pure questi
on of law; hence, petitioners appealed to the wrong forum. Petitioners should ha
ve elevated their appeal to the Supreme Court and not to the Court of Appeals by
way of a simple appeal. Hence, this petition. The Issues Petitioners raise thre
e issues in this petition: 1. Whether the appellate court acted without or in ex
cess of jurisdiction or with grave abuse of discretion by dismissing petitioners
appeal on the ground that jurisdiction does not lie with the regular courts bu
t with the HLURB; 2. Whether the Court of Appeals acted without or in excess of
jurisdiction or grave abuse of discretion by dismissing petitioners appeal on t
he ground that petitioners did not assign any error of fact; and 3. Whether a pe
tition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is the
proper remedy for petitioners. The Ruling of the Court The petition lacks merit.
The HLURB is the sole regulatory body for housing and land development.[18] The
extent to which an administrative agency may exercise its powers depends on the
provisions of the statute creating such agency.[19] Courts will not determine a
controversy where the issues for resolution demand the exercise of sound admini
strative discretion.[20] Jurisdiction Lies with the HLURB PD 957,[21] otherwise
known as "The Subdivision and Condominium Buyers Protective Decree," granted th
e National
REMLAW Page 138

PD 957,[21] otherwise known as "The Subdivision and Condominium Buyers Protecti

ve Decree," granted the National Housing Authority (NHA) the exclusive jurisdict
ion to regulate the real estate business. The scope of the regulatory authority
lodged in the NHA is indicated in the second whereas clause which states: "WHERE
AS, numerous reports reveal that many real estate subdivision owners, developers
, operators, and/or sellers have reneged on their representations and obligation
s to provide and maintain properly subdivision roads, drainage, sewerage, water
systems, lighting systems, and other similar basic requirements, thus endangerin
g the health and safety of home and lot buyers," (Emphasis supplied) Thus, Secti
on 22 of PD 957 provides: Sec. 22. Alteration of Plans. - No owner or developer
shall change or alter the roads, open spaces, infrastructures, facilities for pu
blic use and/or other form of subdivision development as contained in the approv
ed subdivision plan and/or represented in its advertisements, without the permis
sion of the Authority and the written conformity or consent of the duly organize
d homeowners association, or in the absence of the latter, by the majority of th
e lot buyers in the subdivision. (Emphasis supplied) PD 1344[22] amended PD 957
by empowering the NHA to issue writs of execution in the enforcement of its deci
sions. Section 1 of PD 1344 states: Section 1. In the exercise of its functions
to regulate the real estate trade and business and in addition to its powers pro
vided for in Presidential Decree No. 957, the National Housing Authority shall h
ave exclusive jurisdiction to hear and decide cases of the following nature: a.
Unsound real estate business practices; b. Claims involving refund and any other
claims filed by subdivision lot or condominium unit buyer against the project o
wner, developer, dealer, broker or salesman; and c. Cases involving specific per
formance of contractual and statutory obligations filed by buyers of subdivision
lot or condominium unit against the owner, developer, dealer, broker or salesma
n.(Emphasis supplied) Under EO 648,[23] the NHA s functions were transferred to
the Human Settlement Regulatory Commission. Section 8 of EO 648 provides: Sectio
n 8. Transfer of Functions. - The regulatory functions of the National Housing A
uthority pursuant to Presidential Decrees No. 957, 1216, 1344 and other related
laws are hereby transferred to the Commission, together with such applicable per
sonnel, appropriation, records, equipment and property necessary for the enforce
ment and implementation of such functions. Among these regulatory functions are:
(1) Regulation of the real estate trade and business; (2) Registration of subdi
vision lots and condominium projects; (3) Issuance of license to sell subdivisio
n lots and condominium units in the registered units; (4) Approval of performanc
e bond and the suspension of license to sell; (5) Registration of dealers, broke
rs and salesmen engaged in the business of selling subdivision lots or condomini
um units; (6) Revocation of registration of dealers, brokers and salesmen; (7) A
pproval or mortgage on any subdivision lot or condominium unit made by the owner
or developer; (8) Granting of permits for the alteration of plans and the exten
sion of period for completion of subdivision or condominium projects; (9) Approv
al of the conversion to other purposes of roads and open spaces found within the
project which have been donated to the city or municipality concerned; (10) Reg
ulation of the relationship between lessors and lessees; and (11) Hear and decid
e cases on unsound real estate business practices; claims involving refund filed
against project owners, developers, dealers, brokers or salesmen and cases of s
pecific performance. (Emphasis supplied) EO 90 [24] renamed the Human Settlement
Regulatory Commission the Housing and Land Use Regulatory Board. The HLURB reta
ined the regulatory and adjudicatory functions of the NHA. Clearly, the scope an
d limitation of the HLURB s jurisdiction are well-defined. The HLURB s jurisdict
ion to hear and decide cases is determined by the nature of the cause of action,
the subject matter or property involved, and the parties.[25] In the present ca
se, petitioners are the registered owners of several lots adjoining a subdivisio
n road lot connecting their properties to the main road. Petitioners allege that
the subdivision lot owners sold the road lot to a developer who is now construc
ting cement fences, thus blocking the passageway from their lots to the main roa
d. In sum, petitioners are enforcing their statutory and contractual rights agai
nst the subdivision owners. This is a specific performance case which falls unde
r the HLURB s exclusive jurisdiction. In Osea v. Ambrosio,[26] the Court held th

at the provisions of PD 957 were intended to encompass all questions relating to

subdivisions. This intention was aimed to provide for an appropriate government
agency, which is the HLURB, to which all parties aggrieved in the implementatio
n of provisions and the enforcement of contractual rights with respect to said c
ategory of real estate may take recourse. Petitioners claim that respondents vio
lated the annotation at the back of TCT No. RT-20895 by selling an unsegregated
portion of the lot without obtaining prior court approval. The date of entry of
this annotation is 18 August 1953. When PD 957, PD 1344, and EO 648 were enacted
in 1976, 1978, and 1981, respectively, this annotation was impliedly modified s
uch that the conversion of the road lot in the subdivision plan would fall under
the HLURB s jurisdiction pursuant to these laws.
REMLAW Page 139

pursuant to these laws. Petitioners argue that they can file a specific performa
nce case to compel respondents to comply with their contractual and statutory ob
ligation to maintain the road lot. However, petitioners can only be granted comp
lete relief if the subject sales are declared void and the subsequent partition
is declared illegal. Petitioners further contend that the HLURB, having only the
jurisdiction to hear and decide specific performance cases, can only compel pet
itioners to file a case for annulment of title and prosecute the action. Petitio
ners insist that in the final analysis, a case for annulment of title would stil
l have to be filed with the ordinary courts.[27] In Pea v. GSIS,[28] the Court rul
ed that when an administrative agency is conferred quasi-judicial functions, all
controversies relating to the subject matter pertaining to its specialization a
re deemed to be included within its jurisdiction. Split jurisdiction is not favo
red. As observed in C.T. Torres Enterprises, Inc. v. Hibionada:[29] The argument
that only courts of justice can adjudicate claims resoluble under the provision
s of the Civil Code is out of step with the fast-changing times. There are hundr
eds of administrative bodies now performing this function by virtue of a valid a
uthorization from the legislature. This quasi-judicial function, as it is called
, is exercised by them as an incident of the principal power entrusted to them o
f regulating certain activities falling under their particular expertise. In the
Solid Homes case for example the Court affirmed the competence of the Housing a
nd Land Use Regulatory Board to award damages although this is an essentially ju
dicial power exercisable ordinarily only by the courts of justice. This departur
e from the traditional allocation of governmental powers is justified by expedie
ncy, or the need of the government to respond swiftly and competently to the pre
ssing problems of the modern world. Finally, in Cristobal v. Court of Appeals,[3
0] we held that "questions relating to non-compliance with the requisites for co
nversion of subdivision lots are properly cognizable by the NHA, now the HLURB,
pursuant to Section 22 of PD 957 and not by the regular courts." Appeal by Certi
orari Involving Questions of Law Section 2, Rule 41 of the Rules of Court states
: Sec. 2. Mode of appeal.(a) Ordinary Appeal. - The appeal to the Court of Appea
ls in cases decided by the Regional Trial Court in the exercise of its original
jurisdiction shall be taken by filing a notice of appeal with the court which re
ndered the judgment or final order appealed from and serving a copy thereof upon
the adverse party. No record on appeal shall be required except in special proc
eedings and other cases of multiple or separate appeals where the law or these R
ules so require. In such cases, the record on appeal shall be filed and served i
n like manner. (b) Petition for Review. - The appeal to the Court of Appeals in
cases decided by the Regional Trial Court in the exercise of its appellate juris
diction shall be by petition for review in accordance with Rule 42. (c) Appeal b
y certiorari. - In all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari i
n accordance with Rule 45.(Emphasis supplied) In Sevilleno v. Carilo,[31] citing
Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals, this Cour
t summarized the rule on appeals: (1) In all cases decided by the RTC in the exe
rcise of its original jurisdiction, appeal may be made to the Court of Appeals b
y mere notice of appeal where the appellant raises questions of fact or mixed qu
estions of fact and law; (2) In all cases decided by the RTC in the exercise of
its original jurisdiction where the appellant raises only questions of law, the
appeal must be taken to the Supreme Court on a petition for review on certiorari
under Rule 45. (3) All appeals from judgments rendered by the RTC in the exerci
se of its appellate jurisdiction, regardless of whether the appellant raises que
stions of fact, questions of law, or mixed questions of fact and law, shall be b
rought to the Court of Appeals by filing a petition for review under Rule 42. (E
mphasis supplied) In First Bancorp, Inc. v. Court of Appeals,[32] this Court als
o explained the two modes of appeal from a final order of the trial court in the
exercise of its original jurisdiction: (1) by writ of error under Section 2(a),
Rule 41 of the Rules of Court if questions of fact or questions of fact and law
are raised or involved; or (2) appeal by certiorari under Section 2(c), Rule 41
, in relation to Rule 45, where only questions of law are raised or involved. (E
mphasis supplied) In the present case, petitioners raised only one issue in thei

r Appellants Brief - whether "the Honorable Trial Court a quo seriously erred i
n holding that it has no jurisdiction over the subject matter of the case when i
n fact it has already
REMLAW Page 140

seriously erred in holding that it has no jurisdiction over the subject matter o
f the case when in fact it has already acquired jurisdiction over the persons of
the defendants and the subject matter of the case." The question on jurisdictio
n is undoubtedly one of law. We have held that "a question of law exists when th
e doubt or controversy concerns the correct application of law or jurisprudence
to a certain set of facts; or when the issue does not call for an examination of
the probative value of the evidence presented, the truth or falsehood of facts
being admitted."[33] Consequently, it is not disputed that the issue brought by
petitioners to the Court of Appeals involves solely the trial court s jurisdicti
on over the subject matter of the case. The appellate court can determine the is
sue raised without reviewing or evaluating the evidence. As petitioners appeal
solely involves a question of law, the appellate court did not err in dismissing
the appeal on the ground of lack of jurisdiction pursuant to Section 2, Rule 50
of the Rules of Court which provides: Sec. 2. Dismissal of improper appeal to t
he Court of Appeals. - An appeal under Rule 41 taken from the Regional Trial Cou
rt to the Court of Appeals raising only questions of law shall be dismissed, iss
ues purely of law not being reviewable by said court. Similarly, an appeal by no
tice 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 Co
urt of Appeals shall not be transferred to the appropriate court but shall be di
smissed outright. (Emphasis supplied) Rule 65 is not a remedy for lost appeal. P
etitioners should have directly taken their appeal to this Court by filing a pet
ition for review on certiorari under Rule 45 and not an ordinary appeal with the
Court of Appeals under Rule 41 nor a petition for certiorari with this Court un
der Rule 65. As held in Balayan v. Acorda,[34] "the special civil action for cer
tiorari is a limited form of review and is a remedy of last recourse." It lies o
nly where there is no appeal or plain, speedy, and adequate remedy in the ordina
ry course of law. In the present case, petitioners chose the wrong mode of appea
l. Hence, the instant petition cannot prevail since a petition for certiorari is
not a substitute for a lost appeal, especially if the loss or lapse was an erro
r in petitioners choice of remedy. We have held in David v. Cordova[35] that: A
petition for certiorari cannot be a substitute for an appeal from a lower court
decision. Where appeal is available to the aggrieved party, the action for cert
iorari will not be entertained. The remedies of appeal (including petitions for
review) and certiorari are mutually exclusive, not alternate or successive. Henc
e, certiorari is not and cannot be a substitute for an appeal, especially if one
s own negligence or error in one s choice of remedy occasioned such loss or lap
se. One of the requisites of certiorari is that there be no available appeal or
any plain, speedy and adequate remedy. Where an appeal is available, certiorari
will not prosper, even if the ground therefore is grave abuse of discretion. (Em
phasis supplied) There were instances when the Court has relaxed the rule on the
special civil action for certiorari as a substitute for failure to file a timel
y petition for review on certiorari under Rule 45 such as where the application
of this rule would result in a manifest failure or miscarriage of justice.[36] A
lthough the Court has the discretion to treat a petition for certiorari as havin
g been filed under Rule 45, there is nothing in the present case to warrant a li
beral application of the rules. WHEREFORE, we DISMISS the petition. We AFFIRM th
e 17 September 1997 Decision of the Court of Appeals. Costs against petitioners.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI82.964\badillo.d
ocx>
REMLAW Page 141

Fort Bonifacio v Domingo GR 180768 Feb 27, 2009

Sunday, November 14, 2010 11:29 PM
G.R. No. 180765 February 27, 2009 FORT BONIFACIO DEVELOPMENT CORPORATION vs. MAN
UEL N. DOMINGO CHICO-NAZARIO, J.: Before this Court is a Petition for Review on
Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner Fort
Bonifacio Development Corporation, seeking to reverse and set aside the Decisio
n dated 19 July 20071 and the Resolution dated 10 December 20072 of the Court of
Appeals in CA-G.R. SP No. 97731. The appellate court, in its assailed Decision,
affirmed the Order3 of the Regional Trial Court (RTC) of Pasay City, Branch 109
, in Civil Case No. 06-2000-CFM, denying the Motion to Dismiss of petitioner; an
d in its assailed Resolution, refused to reconsider its decision. Petitioner, a
domestic corporation duly organized under Philippine laws, is engaged in the rea
l estate development business. Respondent is the assignee of L and M Maxco Speci
alist Engineering Construction (LMM Construction) of its receivables from petiti
oner. On 5 July 2000, petitioner entered into a Trade Contract with LMM Construc
tion for partial structural and architectural works on one of its projects, the
Bonifacio Ridge Condominium. According to the said Contract, petitioner had the
right to withhold the retention money equivalent to 5% of the contract price for
a period of one year after the completion of the project. Retention money is a
portion of the contract price, set aside by the project owner, from all approved
billings and retained for a certain period to guarantee the performance by the
contractor of all corrective works during the defect-liability period.4 Due to t
he defect and delay in the work of LMM Construction on the condominium project,
petitioner unilaterally terminated the Trade Contract5 and hired another contrac
tor to finish the rest of the work left undone by LMM Construction. Despite the
pre-termination of the Trade Contract, petitioner was liable to pay LMM Construc
tion a fraction of the contract price in proportion to the works already perform
ed by the latter.6 On 30 July 2004, petitioner received the first Notice of Garn
ishment against the receivables of LMM Construction issued by the Construction I
ndustry Arbitration Commission (CIAC) in connection with CIAC Case No. 11-2002 f
iled by Asia-Con Builders against LMM Construction, wherein LMM Construction was
adjudged liable to Asia-Con Builders for the amount of P5,990,927.77. On 30 Apr
il 2005, petitioner received a letter dated 18 April 2005 from respondent inquir
ing on the retention money supposedly due to LMM Construction and informing peti
tioner that a portion of the amount receivable by LMM Construction therefrom was
already assigned to him as evidenced by the Deed of Assignment executed by LMM
Construction in respondents favor on 28 February 2005. LMM Construction assigned
its receivables from petitioner to respondent to settle the alleged unpaid oblig
ation of LMM Construction to respondent amounting to P804,068.21. Through its le
tter dated 11 October 2005, addressed to respondent, petitioner acknowledged tha
t LMM Construction did have receivables still with petitioner, consisting of the
retention money; but petitioner also advised respondent that the retention mone
y was not yet due and demandable and may be ascertained only after the completio
n of the corrective works undertaken by the new contractor on the condominium pr
oject. Petitioner also notified respondent that part of the receivables was also
being garnished by the other creditors of LMM Construction. Unsatisfied with th
e reply of petitioner, respondent sent another letter dated 14 October 2005 asse
rting his ownership over a portion of the retention money assigned to him and ma
intaining that the amount thereof pertaining to him can no longer be garnished t
o satisfy the obligations of LMM Construction to other persons since it already
ceased to be the property of LMM Construction by virtue of the Deed of Assignmen
t. Attached to respondents letter was the endorsement of LMM Construction dated 1
7 January 2005 approving respondents claim upon petitioner in the amount of P804,
068.21 chargeable against the retention money that may be received by LMM Constr
uction from the petitioner. Before respondents claim could be fully addressed, pe
titioner, on 6 June 2005, received the second Notice of Garnishment against the
receivables of LMM Construction, this time, issued by the National Labor Relatio
ns Commission (NLRC) to satisfy the liability of LMM Construction to Nicolas Con
signa in NLRC Case No. 00-07-05483-2003.

REMLAW Page 142

NLRC Case No. 00-07-05483-2003. On 13 July 2005, petitioner received an Order of

Delivery of Money issued by the Office of the Clerk of Court and Ex-Officio She
riff enforcing the first Notice of Garnishment and directing petitioner to deliv
er to Asia-Con Builders, through the Sheriff, the amount of P5,990,227.77 belong
ing to LMM Construction. In compliance with the said Order, petitioner was able
to deliver to Asia-Con Builders on 22 July 2005 and on 11 August 2005 partial pa
yments amounting to P1,170,601.81, covered by the appropriate Acknowledgement Re
ceipts. A third Notice of Garnishment against the receivables of LMM Constructio
n, already accompanied by an Order of Delivery of Money, both issued by the RTC
of Makati, Branch 133, was served upon petitioner on 26 January 2006. The Order
enjoined petitioner to deliver the amount of P558,448.27 to the Sheriff to answe
r for the favorable judgment obtained by Concrete Masters, Inc. (Concrete Master
s) against LMM Construction in Civil Case No. 05-164. Petitioner, in a letter da
ted 31 January 2006, categorically denied respondents claim on the retention mone
y, reasoning that after the completion of the rectification works on the condomi
nium project and satisfaction of the various garnishment orders, there was no mo
re left of the retention money of LMM Construction. It would appear, however, th
at petitioner fully satisfied the first Notice of Garnishment in the amount of P
5,110,833.44 only on 31 January 2006,7 the very the same date that it expressly
denied respondents claim. Also, petitioner complied with the Notice of Garnishmen
t and its accompanying Order of Delivery of Money in the amount of P558,448.27 o
n 8 February 2006, a week after its denial of respondents claim.8 The foregoing e
vents prompted respondent to file a Complaint for collection of sum of money, ag
ainst both LMM Construction and petitioner, docketed as Civil Case No. 06-0200-C
FM before the RTC of Pasay City, Branch 109. Instead of filing an Answer, petiti
oner filed a Motion to Dismiss Civil Case No. 06-0200-CFM on the ground of lack
of jurisdiction over the subject matter. Petitioner argued that since respondent
merely stepped into the shoes of LMM Construction as its assignor, it was the C
IAC and not the regular courts that had jurisdiction over the dispute as provide
d in the Trade Contract. On 6 June 2006, the RTC issued an Order denying the Mot
ion to Dismiss of petitioner, ruling that a fullblown trial was necessary to det
ermine which one between LMM Construction and petitioner should be made accounta
ble for the sum due to respondent. Petitioner sought remedy from the Court of Ap
peals by filing a Petition for Certiorari, docketed as CAG.R. SP No. 97731, chal
lenging the RTC Order dated 6 June 2006 for having been rendered by the trial co
urt with grave abuse of discretion. In its Decision promulgated on 19 July 2007,
the Court of Appeals dismissed the Petition for Certiorari and affirmed the 6 J
une 2006 Order of the RTC denying the Motion to Dismiss of petitioner. The appel
late court rejected the argument of petitioner that respondent, as the assignee
of LMM Construction, was bound by the stipulation in the Trade Contract that dis
putes arising therefrom should be brought before the CIAC. The Court of Appeals
declared that respondent was not privy, but a third party, to the Trade Contract
; and money claims of third persons against the contractor, developer, or owner
of the project are lodged in the regular courts and not in the CIAC. Similarly i
ll-fated was petitioners Motion for Reconsideration, which was denied by the Cour
t of Appeals in its Resolution dated 10 December 2007. Petitioner now comes to t
his Court via this instant Petition for Review on Certiorari praying for the rev
ersal of the 19 July 2007 Decision of the Court of Appeals and 6 June 2006 Order
of the RTC and, ultimately, for the dismissal of Civil Case No. 06-0200-CFM pen
ding before the RTC. For the resolution of this Court is the sole issue of: WHET
HER OR NOT THE RTC HAS JURISDICTION OVER CIVIL CASE NO. 06-0200-CFM. The jurisdi
ction of CIAC is defined under Executive Order No. 1008 as follows: SECTION 4. J
urisdiction.The CIAC shall have original and exclusive jurisdiction over disputes
arising from, or connected with, contracts entered into by parties involved in
construction in the Philippines, whether the disputes arises before or after the
completion of the contract, or after the abandonment or breach thereof. These d
isputes may involve government or private contracts. For the Board to acquire ju
risdiction, the parties to a dispute must agree to submit the same to voluntary
arbitration. The jurisdiction of the CIAC may include but is not limited to viol
ation of specifications for materials and

REMLAW Page 143

jurisdiction, the parties to a dispute must agree to submit the same to voluntar
y arbitration. The jurisdiction of the CIAC may include but is not limited to vi
olation of specifications for materials and workmanship; violation of the terms
of agreement; interpretation and/or application of contractual provisions; amoun
t of damages and penalties; commencement time and delays; maintenance and defect
s; payment default of employer or contractor and changes in contract cost. Exclu
ded from the coverage of this law are disputes arising from employer-employee re
lationships which shall continue to be covered by the Labor Code of the Philippi
nes. In assailing the 19 July 2007 Decision of the Court of Appeals, petitioner
invoked Article 1311 of the Civil Code on relativity of contracts. According to
said provision, all contracts shall only take effect between the contracting par
ties, their assigns and heirs except when the rights and obligations arising fro
m the contract are not transmissible. Petitioner argues that the appellate court
, in recognizing the existence of the Deed of Assignment executed by LMM Constru
ction -- in favor of respondent -- of its receivables under the Trade Contract,
should have considered the concomitant result thereof, i.e., that respondent bec
ame a party to the Trade Contract and, therefore, bound by the arbitral clause t
herein. Respondent counters that the CIAC is devoid of jurisdiction over money c
laims of third persons against the contractor, developer or owner of the project
. The jurisdiction of the CIAC is limited to settling disputes arising among con
tractors, developers and/or owners of construction projects. It does not include
the determination of who among the many creditors of the contractor should enjo
y preference in payment of its receivables from the developer/owner. It is an el
ementary rule of procedural law that jurisdiction of the court over the subject
matter is determined by the allegations of the complaint, irrespective of whethe
r or not the plaintiff is entitled to recover upon all or some of the claims ass
erted therein. As a necessary consequence, the jurisdiction of the court cannot
be made to depend upon the defenses set up in the answer or upon the motion to d
ismiss; for otherwise, the question of jurisdiction would almost entirely depend
upon the defendant. What determines the jurisdiction of the court is the nature
of the action pleaded as appearing from the allegations in the complaint. The a
verments therein and the character of the relief sought are the ones to be consu
lted.9 Accordingly, the issues in the instant case can only be properly resolved
by an examination and evaluation of respondents allegations in his Complaint in
Civil Case No. 06-0200-CFM. The allegations in respondents Complaint are clear an
d simple: That LMM Construction had an outstanding obligation to respondent in t
he amount of P804,068.21; that in payment of the said amount, LMM Construction a
ssigned to respondent its receivables from petitioner, which assignment was prop
erly made known to petitioner as early as 18 April 2005; that despite due notice
of such assignment, petitioner still refused to deliver the amount assigned to
respondent, giving preference, instead, to the garnishing creditors of LMM Const
ruction; that at the time petitioner was notified of the assignment, only one no
tice of garnishment, the first Notice of Garnishment, was received by it; that h
ad petitioner properly recognized respondents right as an assignee of a portion o
f the receivables of LMM Construction, there could have been sufficient residual
amounts to satisfy respondents claim; and that, uncertain over which one between
LMM Construction and petitioner he may resort to for payment, respondent named
them both as defendants in Civil Case No. 06-0200-CFM. A scrupulous examination
of the aforementioned allegations in respondents Complaint unveils the fact that
his cause of action springs not from a violation of the provisions of the Trade
Contract, but from the non-payment of the monetary obligation of LMM Constructio
n to him. A cause of action is a partys act or omission that violates the rights
of the other.10 The right of the respondent that was violated, prompting him to
initiate Civil Case No. 06-0200-CFM, was his right to receive payment for the fi
nancial obligation incurred by LMM Construction and to be preferred over the oth
er creditors of LMM Construction, a right which pre-existed and, thus, was separ
ate and distinct from the right to payment of LMM Construction under the Trade C
ontract. Petitioners unceasing reliance on Article 131111 of the Civil Code on re
lativity of contracts is unavailing. It is true that respondent, as the assignee
of the receivables of LMM Construction from petitioner under the Trade Contract

, merely stepped into the shoes of LMM Construction. However, it bears to emphas
ize that the right of LMM Construction to such receivables from petitioner under
the Trade Contract is not even in dispute in Civil Case No. 06-0200-CFM. What r
espondent puts in issue before the RTC is the purportedly arbitrary exercise of
discretion by the petitioner in giving preference to the claims of the other cre
ditors of LMM Construction over the receivables of the latter. It is encouraged
that disputes arising from construction contracts be referred first to the CIAC
for their arbitration and settlement, since such cases would often require exper
tise and technical knowledge in
REMLAW Page 144

arbitration and settlement, since such cases would often require expertise and t
echnical knowledge in construction. Hence, some of the matters over which the CI
AC may exercise jurisdiction, upon agreement of the parties to the construction
contract, "include but [are] not limited to violation of specifications for mate
rials and workmanship; violation of the terms of agreement; interpretation and/o
r application of contractual provisions; amount of damages and penalties; commen
cement time and delays; maintenance and defects; payment default of employer or
contractor and changes in contract cost."12 Although the jurisdiction of the CIA
C is not limited to the afore-stated enumeration, other issues which it could ta
ke cognizance of must be of the same or a closely related kind or species applyi
ng the principle of ejusdem generis in statutory construction. Respondents claim
is not even construction-related at all. Construction is defined as referring to
all onsite works on buildings or altering structures, from land clearance throu
gh completion including excavation, erection and assembly and installation of co
mponents and equipment.13 Petitioners insistence on the application of the arbitr
ation clause of the Trade Contract to respondent is clearly anchored on an erron
eous premise that respondent is seeking to enforce a right under the same. Again
, the right to the receivables of LMM Construction from petitioner under the Tra
de Contract is not being impugned herein. In fact, petitioner readily conceded t
hat LMM Construction still had receivables due from petitioner, and respondent d
id not even have to refer to a single provision in the Trade Contract to assert
his claim. What respondent is demanding is that a portion of such receivables am
ounting to P804,068.21 should have been paid to him first before the other credi
tors of LMM Construction, which, clearly, does not require the CIACs expertise an
d technical knowledge of construction. The adjudication of Civil Case No. 06-020
0-CFM necessarily involves the application of pertinent statutes and jurispruden
ce to matters such as obligations, contracts of assignment, and, if appropriate,
even preference of credits, a task more suited for a trial court to carry out a
fter a full-blown trial, than an arbitration body specifically devoted to constr
uction contracts. This Court recognizes the laudable objective of voluntary arbi
tration to provide a speedy and inexpensive method of settling disputes by allow
ing the parties to avoid the formalities, delay, expense and aggravation which c
ommonly accompany ordinary litigation, especially litigation which goes through
the entire hierarchy of courts. It cannot, however, altogether surrender to arbi
tration those cases, such as the one at bar, the extant facts of which plainly c
all for the exercise of jurisdiction by the regular courts for their resolution.
WHEREFORE, premises considered, the instant Petition is DENIED. The Decision da
ted 19 July 2007 and the Resolution dated 10 December 2007 of the Court of Appea
ls in CA-G.R. SP No. 97731 are hereby AFFIRMED in toto. Costs against the petiti
oner.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI83.064\fort%20bo
nifacio.docx>
REMLAW Page 145

Land Bank v. Ralla Balista GR 164631 Jun 26, 2009

Sunday, November 14, 2010 11:29 PM
G.R. No. 164631 June 26, 2009 LAND BANK OF THE PHILIPPINES vs. RENE RALLA BELIST
A PERALTA, J.: Before the Court is a petition for review on certiorari under Rul
e 45 of the Rules of Court filed by Land Bank of the Philippines (petitioner), s
eeking to annul and set aside the May 26, 2004 Decision1 and the July 28, 2004 R
esolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 81096. The antecedent
facts and proceedings, as narrated by the CA, are as follows: It appears that sp
ouses Pablo Ralla and Carmen Munoz Ralla had donated their eight (8) parcels of
lot located in Ligao, Albay to their daughter, Rene Ralla Belista, the herein pr
ivate respondent. The eight (8) parcels of lot were placed by the Department of
Agrarian Reform (DAR, for brevity) under the coverage of the Comprehensive Agrar
ian Reform Program (Presidential Decree No. 27 and Executive Order No. 228). Con
sequently, private respondent claimed payment of just compensation over said agr
icultural lands. It further appears that the DAR s evaluation of the subject far
ms was only P227,582.58, while petitioner Land Bank of the Philippines (LBP, for
brevity) assessed the same at P317,259.31. Believing that her lots were grossly
underestimated, private respondent, on 11 November 2002, filed a Petition for V
aluation and Payment of Just Compensation against petitioning bank before the DA
RABRegional Adjudicator for Region V (RARAD-V) docketed as DCN D-05-02-VC-005. O
n 07 July 2003, the RARAD-V issued a Decision, in favor of herein private respon
dent, the fallo of which reads: Wherefore, just compensation for the subject are
as is hereby preliminarily fixed at TWO MILLION EIGHT HUNDRED NINETY-SIX THOUSAN
D and FOUR HUNDRED EIGHT & 91/100 (P2,896,408.91) PESOS. Land Bank of the Philip
pines, Legaspi City, is hereby ordered to pay herein petitioner said amount purs
uant to existing rules and guidelines, minus the sum already remitted per Order
dated January 2, 2003. SO ORDERED. As both parties interposed their respective m
otions for reconsideration, the RARAD-V eventually issued an Order dated 8 Octob
er 2003, the decretal portion of which reads: Wherefore, the Decision dated July
7, 2003 is MODIFIED, fixing the valuation claim of petitioner herein with respe
ct to her due share in the above lots to the tune of Two Million Five Hundred Fo
rty Thousand, Two Hundred Eleven and 58/100 (P2,540,211.58) Pesos. Land Bank Leg
aspi City is hereby ordered to pay herein petitioner said amount pursuant to exi
sting rules and guidelines, minus the sum already paid per Order dated January 2
, 2003. SO ORDERED. Aggrieved, petitioner Bank, on 28 October 2003, filed an ori
ginal Petition for Determination of Just Compensation at the same sala of the RT
C, docketed as Agrarian Case No. 03-06. The court a quo motu propio dismissed th
e case when it issued the herein first assailed Order dated 12 November 2003 "fo
r failure to exhaust administrative remedies and/or comply with Sections 5, 6, a
nd 7, Rule XIX, 2003 DARAB Rules of Procedure. Petitioner LBP lodged a Motion fo
r Reconsideration arguing, inter alia, "that the DARAB 2003 Rules of Procedure d
oes not apply to SAC nor its precursor DARAB Case and that the ground for dismis
sal of the case is not among the instances when a court may dismiss a case on it
s motion." As the court a quo denied its Motion for Reconsideration in an Order
dated 28 November 2003, petitioner LBP elevated the case before the Tribunal thr
ough the present Petition for Review, theorizing: I. WHETHER OR NOT THE SAC A QU
O ERRED IN DISMISSING THE CASE MOTU PROPIO ON THE GROUND OF PLAINTIFF S FAILURE
TO EXHAUST ADMINISTRATIVE REMEDIES. II. WHETHER OR NOT SECTIONS 5, 6, AND 7, RUL
E XIX OF THE DARAB 2003 RULES OF PROCEDURE APPLY TO CASES FILED AND PENDING BEFO
RE THE DARAB OR ITS ADJUDICATORS PRIOR TO ITS EFFECTIVITY AND TO CASES FILED AND
PENDING WITH THE SPECIAL AGRARIAN COURTS.3 On May 26, 2004, the CA rendered its
assailed Decision dismissing the petition. The CA ruled that under Section 5, R
ule XIX of the 2003 DARAB Rules of Procedure, an appeal from the adjudicator s r
esolution shall be filed before the DARAB and not before the RTC; that petitione
r s filing of the case before the RTC without first seeking the intervention of
the DARAB is violative of the doctrine of nonREMLAW Page 146

case before the RTC without first seeking the intervention of the DARAB is viola
tive of the doctrine of nonexhaustion of administrative remedies. The CA found t
hat petitioner s petition for determination of just compensation was filed in th
e RTC on October 28, 2003 when the 2003 DARAB Rules of Procedure was already in
effect, i.e., on February 8, 2003, and under its transitory provision, it is pro
vided that the 2003 Rules shall govern all cases filed on or after its effectivi
ty; and, since an appeal from the adjudicator s resolution should first be filed
with the DARAB, the RTC, sitting as a Special Agrarian Court (SAC), did not err
in dismissing petitioner s petition. Petitioner filed a motion for reconsiderat
ion, which was denied in a Resolution dated July 28, 2004. Petitioner is now bef
ore the Court raising the following arguments: 1. THE COURT OF APPEALS ERRED IN
LAW IN DISMISSING THE PETITION FOR REVIEW CONSIDERING THAT THE LBP DID NOT VIOLA
TE THE "DOCTRINE OF NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES" WHEN IT FILED THE
ORIGINAL PETITION FOR DETERMINATION OF JUST COMPENSATION BEFORE THE COURT A QUO
WITHOUT FIRST SEEKING THE INTERVENTION OF THE DARAB. 2. THE COURT OF APPEALS ER
RED IN DECLARING THAT THE APPLICABLE RULE IS THE 2003 DARAB RULES OF PROCEDURE,
DESPITE THE FACT THAT THE PETITION (FOR VALUATION AND PAYMENT OF JUST COMPENSATI
ON) WAS FILED BEFORE THE RARAD ON NOVEMBER 11, 2002.4 Petitioner contends that t
he petition for valuation and payment of just compensation was filed with the DA
RAB- Regional Adjudicator for Region V (RARAD) on November 11, 2002, long before
the effectivity of the 2003 Rules of Procedure; that under the transitory provi
sion of the 2003 DARAB Rules, all cases pending with the Board and the adjudicat
ors prior to the date of the Rules effectivity shall be governed by the DARAB R
ules prevailing at the time of their filing; that clear from the transitory prov
ision that it is the proceeding of the DARAB which is governed by the 2003 DARAB
Rules of Procedure, thus, it is the date of filing of the petition with the DAR
AB or any of its adjudicators which is the reckoning date of the applicability o
f the 2003 DARAB Rules and not the date of filing with the SAC; that under the 1
994 DARAB Rules prevailing at the time of the filing of the respondent s claim f
or just compensation, the Rules provided that the decision of the adjudicator on
land valuation and preliminary determination of just compensation shall not be
appealable to the Board, but shall be brought directly to the RTC; that it was i
n the observance of the 1994 DARAB Rules that petitioner brought the adjudicator
s decision to the RTC sitting as SAC. In his Comment, respondent claims that pe
titioner s petition with the RTC is an original action and, since the case was f
iled at a time when appeal to the DARAB Central Office was already provided in t
he 2003 DARAB Rules before resorting to judicial action, the RTC correctly dismi
ssed the petition, which was correctly affirmed by the CA. Petitioner filed a Re
ply reiterating its arguments in the petition. The issue for resolution is wheth
er it is necessary that in cases involving claims for just compensation under Re
public Act (RA) No. 6657 that the decision of the Adjudicator must first be appe
aled to the DARAB before a party can resort to the RTC sitting as SAC. The court
rules in the negative. Sections 50 and 57 of RA No. 6657 provide: Section 50. Q
uasi-judicial Powers of the DAR. The DAR is hereby vested with primary jurisdict
ion to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive jurisdiction of the Department
of Agriculture (DA) and the Department of Environment and Natural Resources (DE
NR) x x x Section 57. Special Jurisdiction. The Special Agrarian Court shall hav
e original and exclusive jurisdiction over all petitions for the determination o
f just compensation to landowners, and the prosecution of all criminal offenses
under this Act. x x x The Special Agrarian Courts shall decide all appropriate c
ases under their special jurisdiction within thirty (30) days from submission of
the case for decision. Clearly, under Section 50, DAR has primary jurisdiction
to determine and adjudicate agrarian reform matters and exclusive original juris
diction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the DA and the DENR. Further
exception to the DAR s original and exclusive jurisdiction are all petitions for
the determination of just compensation to landowners and the prosecution of all
criminal offenses under RA No. 6657, which are within the jurisdiction of the R

TC sitting as a Special Agrarian Court. Thus, jurisdiction on just compensation

cases for the taking of lands under RA No. 6657 is vested in the courts. In Repu
blic v. CA,5 the Court explained:
REMLAW Page 147

6657 is vested in the courts. In Republic v. CA, 5 the Court explained: Thus, Sp
ecial Agrarian Courts, which are Regional Trial Courts, are given original and e
xclusive jurisdiction over two categories of cases, to wit: (1) "all petitions f
or the determination of just compensation to landowners" and (2) "the prosecutio
n of all criminal offenses under *R.A. No. 6657+." The provisions of 50 must be c
onstrued in harmony with this provision by considering cases involving the deter
mination of just compensation and criminal cases for violations of R.A. No. 6657
as excepted from the plenitude of power conferred on the DAR. Indeed, there is
a reason for this distinction. The DAR is an administrative agency which cannot
be granted jurisdiction over cases of eminent domain (for such are takings under
R.A. No. 6657) and over criminal cases. Thus, in EPZA v. Dulay and Sumulong v.
Guerrero - we held that the valuation of property in eminent domain is essential
ly a judicial function which cannot be vested in administrative agencies, while
in Scotys Department Store v. Micaller, we struck down a law granting the then Co
urt of Industrial Relations jurisdiction to try criminal cases for violations of
the Industrial Peace Act.6 In a number of cases, the Court has upheld the origi
nal and exclusive jurisdiction of the RTC, sitting as SAC, over all petitions fo
r determination of just compensation to landowners in accordance with Section 57
of RA No. 6657. In Land Bank of the Philippines v. Wycoco,7 the Court upheld th
e RTC s jurisdiction over Wycoco s petition for determination of just compensati
on even where no summary administrative proceedings was held before the DARAB wh
ich has primary jurisdiction over the determination of land valuation. The Court
held: In Land Bank of the Philippines v. Court of Appeals, the landowner filed
an action for determination of just compensation without waiting for the complet
ion of DARABs re-evaluation of the land. This, notwithstanding, the Court held th
at the trial court properly acquired jurisdiction because of its exclusive and o
riginal jurisdiction over determination of just compensation, thus It is clear f
rom Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and
exclusive jurisdiction over all petitions for the determination of just compens
ation to landowners." This "original and exclusive" jurisdiction of the RTC woul
d be undermined if the DAR would vest in administrative officials original juris
diction in compensation cases and make the RTC an appellate court for the review
of administrative decisions. Thus, although the new rules speak of directly app
ealing the decision of adjudicators to the RTCs sitting as Special Agrarian Cour
ts, it is clear from Sec. 57 that the original and exclusive jurisdiction to det
ermine such cases is in the RTCs. Any effort to transfer such jurisdiction to th
e adjudicators and to convert the original jurisdiction of the RTCs into an appe
llate jurisdiction would be contrary to Sec. 57 and, therefore, would be void. T
hus, direct resort to the SAC [Special Agrarian Court] by private respondent is
valid. In the case at bar, therefore, the trial court properly acquired jurisdic
tion over Wycocos complaint for determination of just compensation. It must be st
ressed that although no summary administrative proceeding was held before the DA
RAB, LBP was able to perform its legal mandate of initially determining the valu
e of Wycoco s land pursuant to Executive Order No. 405, Series of 1990.8 x x x I
n Land Bank of the Philippines v. Natividad,9 wherein Land Bank questioned the a
lleged failure of private respondents to seek reconsideration of the DAR s valua
tion, but instead filed a petition to fix just compensation with the RTC, the Co
urt said: At any rate, in Philippine Veterans Bank v. CA, we held that there is
nothing contradictory between the DARs primary jurisdiction to determine and adju
dicate agrarian reform matters and exclusive original jurisdiction over all matt
ers involving the implementation of agrarian reform, which includes the determin
ation of questions of just compensation, and the original and exclusive jurisdic
tion of regional trial courts over all petitions for the determination of just c
ompensation. The first refers to administrative proceedings, while the second re
fers to judicial proceedings.1avvphi1 In accordance with settled principles of a
dministrative law, primary jurisdiction is vested in the DAR to determine in a p
reliminary manner the just compensation for the lands taken under the agrarian r
eform program, but such determination is subject to challenge before the courts.
The resolution of just compensation cases for the taking of lands under agraria
n reform is, after all, essentially a judicial function. Thus, the trial court d

id not err in taking cognizance of the case as the determination of just compens
ation is a function addressed to the courts of justice. 10 In Land Bank of the P
hilippines v. Celada,11 where the issue was whether the SAC erred in assuming ju
risdiction over respondent s petition for determination of just compensation des
pite the pendency of the administrative proceedings before the DARAB, the Court
stated that: It would be well to emphasize that the taking of property under RA
No. 6657 is an exercise of the power of eminent domain by the State. The valuati
on of property or determination of just compensation in eminent domain proceedin
gs is essentially a judicial function which is vested with the courts and not wi
th administrative agencies. Consequently, the SAC properly took cognizance of re
spondent s petition for
REMLAW Page 148

administrative agencies. Consequently, the SAC properly took cognizance of respo

ndent s petition for determination of just compensation.12 The RTC dismissed pet
itioner s petition for determination of just compensation relying on Sections 5,
6 and 7 of Article XIX of the 2003 DARAB Rules of Procedure, to wit: Section 5.
Appeal. A party who disagrees with the resolution of the Adjudicator may bring
the matter to the Board by filing with the Adjudicator concerned a Notice of App
eal within fifteen (15) days from receipt of the resolution. The filing of a Mot
ion for Reconsideration of said resolution shall interrupt the period herein fix
ed. If the motion is denied, the aggrieved party may file the appeal within the
remaining period, but in no case shall it be less than five (5) days. Section 6.
When Resolution Deemed Final. Failure on the part of the aggrieved party to con
test the resolution of the Adjudicator within the aforecited reglementary period
provided shall be deemed a concurrence by such party with the land valuation, h
ence said valuation shall become final and executory. Section 7. Filing of Origi
nal Action with the Special Agrarian Court for Final Determination. The party wh
o disagrees with the decision of the Board may contest the same by filing an ori
ginal action with the Special Agrarian Court (SAC) having jurisdiction over the
subject property within fifteen (15) days from his receipt of the Board s decisi
on. Notably, the above-mentioned provisions deviated from Section 11, Rule XIII
of the 1994 DARAB Rules of Procedure which provides: Section 11. Land Valuation
and Preliminary Determination and Payment of Just Compensation The decision of t
he Adjudicator on land valuation and preliminary determination and payment of ju
st compensation shall not be appealable to the Board, but shall be brought direc
tly to the Regional Trial Courts designated as Special Agrarian Courts within fi
fteen (15) days from receipt of the notice thereof. Any party shall be entitled
to only one motion for reconsideration. where DARAB acknowledges that the decisi
on of just compensation cases for the taking of lands under RA 6657 is a power v
ested in the courts.13 Although Section 5, Rule XIX of the 2003 DARAB Rules of P
rocedure provides that the land valuation cases decided by the adjudicator are n
ow appealable to the Board, such rule could not change the clear import of Secti
on 57 of RA No. 6657 that the original and exclusive jurisdiction to determine j
ust compensation is in the RTC. Thus, Section 57 authorizes direct resort to the
SAC in cases involving petitions for the determination of just compensation.14
In accordance with the said Section 57, petitioner properly filed the petition b
efore the RTC and, hence, the RTC erred in dismissing the case. Jurisdiction ove
r the subject matter is conferred by law.15 Only a statute can confer jurisdicti
on on courts and administrative agencies while rules of procedure cannot.16 WHER
EFORE, the petition for review on certiorari is GRANTED. The Decision dated May
26, 2004 and the Resolution dated July 28, 2004, of the Court of Appeals in CA-G
.R. SP No. 81096, are REVERSED and SET ASIDE. The Regional Trial Court, Branch 3
, Legaspi City, sitting as Special Agrarian Court, is directed to hear without d
elay petitioner s petition for the determination of just compensation.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI85.946\landbank.
docx>
REMLAW Page 149

Mun of Pateros v. CA GR 157714 Jun 16, 2009

Sunday, November 14, 2010 11:29 PM
G.R. No. 157714 June 16, 2009 MUNICIPALITY OF PATEROS vs. THE HONORABLE COURT OF
APPEALS, THE MUNICIPALITY OF MAKATI, THE DIRECTOR OF LANDS, and THE DEPARTMENT
OF ENVIRONMENT AND NATURAL RESOURCES NACHURA, J.: Before this Court is a Petitio
n1 for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, seeki
ng the reversal of the Court of Appeals (CA) Decision2 dated January 22, 2003, w
hich denied the appeal of petitioner Municipality of Pateros (Pateros) for under
taking a wrong mode of appeal. Subject of the appeal was the Order3 of the Regio
nal Trial Court (RTC) of Makati City, Branch 139, dated June 14, 1996, which dis
missed petitioners complaint for lack of jurisdiction. The Facts The property sub
ject of this case consists of portions of then Fort William McKinley, now known
as Fort Bonifacio (subject property), currently comprising Barangays Cembo, Sout
h Cembo, West Rembo, East Rembo, Comembo, Pembo, and Pitogo (entire property). T
he subject property is allegedly situated within the territorial jurisdiction of
respondent Municipality (now City) of Makati (Makati) per Proclamation No. 2475
4 issued on January 7, 1986 (Proclamation No. 2475) by former President Ferdinan
d E. Marcos (President Marcos). Subsequently, on January 31, 1990, former Presid
ent Corazon C. Aquino (President Aquino) issued Proclamation No. 518, 5 amending
Proclamation No. 2475. Parenthetically, it may be noted that a similar boundary
dispute over the entire property exists between the Municipality (now City) of
Taguig and Makati, docketed as Civil Case No. 63896 and pending before the RTC o
f Pasig City, Branch 153. As Proclamation Nos. 2475 and 518 respectively stated
that the entire property is situated in Makati, Pateros, on January 18, 1991, fi
led an action6 for Judicial Declaration of the Territorial Boundaries of Pateros
against Makati before the RTC of Pasig City, Branch 154 (Pasig RTC). The case w
as, however, dismissed for lack of jurisdiction inasmuch as the subject property
is located in Makati and it should have been filed before the Makati RTC.7 Heed
ing the directive of the Pasig RTC, Pateros, on December 8, 1993, filed with the
RTC of Makati a Complaint8 against Makati and co-respondents, Director of Lands
and the Department of Environment and Natural Resources (DENR), for the Judicia
l Declaration of the Territorial Boundaries of Pateros with a prayer for the iss
uance of a writ of Preliminary Injunction and Temporary Restraining Order (TRO).
Pateros claimed that, based on historical and official records, it had an origi
nal area of one thousand thirty-eight (1,038) hectares, more or less. However, w
hen a cadastral mapping was conducted by the Bureau of Lands in 1978, Pateros wa
s appalled to learn that its territorial boundaries had been substantially reduc
ed to merely one hundred sixty-six (166) hectares. Pateros opined that this disp
arity was brought about by the issuance of Proclamation Nos. 2475 and 518. Thus,
Pateros prayed that the RTC judicially declare the territorial boundaries of Pa
teros based on supporting pieces of evidence, and that it nullify Proclamation N
o. 2475. Makati filed a Motion to Dismiss,9 contending that the issue was not th
e nullification of Proclamation No. 2475; that the RTC had no jurisdiction over
the subject matter of the action because original jurisdiction to resolve bounda
ry disputes among municipalities situated in Metro Manila is vested in the Metro
politan Manila Authority (MMA); that the RTC s jurisdiction is merely appellate;
that the complaint failed to state a cause of action as Pateros failed to exhau
st administrative remedies by failing to settle the dispute amicably; and that P
ateros claims had already been barred by laches because Makati, throughout the
years, had already developed the subject property and had spent millions on such
development. Makati also filed a Motion to Suspend Proceedings,10 arguing that
the bill converting Makati into a city was pending approval before the Senate an
d portions of the subject property are included in the proposed charter. Makati,
thus, opined that the continuation of the RTC proceedings would create a confli
ct between the judicial and the legislative branches. In its Order11 dated Octob
er 21, 1994, the RTC granted Makatis Motion. On July 19, 1994, Republic Act No. 7
85412 was enacted into law, converting Makati into a highly urbanized city. Pate
ros then moved for the revival of the proceedings before the RTC,13 which it gra
nted in its Order14 dated March 17, 1995. However, due to the pending Motion to

Dismiss earlier filed by Makati, the RTC required the parties to submit their re
spective Memoranda. The RTC s Ruling On June 14, 1996, the RTC issued an Order,
dismissing the case on the ground of lack of jurisdiction. The RTC
REMLAW Page 150

On June 14, 1996, the RTC issued an Order, dismissing the case on the ground of
lack of jurisdiction. The RTC held that Proclamation No. 2475 specifically decla
red that the subject property is within the territorial jurisdiction of Makati a
nd, inasmuch as the Proclamation was not declared unconstitutional, the same is
a valid and subsisting law. In the main, citing Sections 1015 and 11, 16 Article
X of the 1987 Constitution, and pursuant to this Court s ruling in Municipality
of Sogod v. Rosal, 17 the RTC held that the modification or substantial alterat
ion of boundaries of municipalities can be done only through a law enacted by Co
ngress which shall be subject to approval by a majority of the votes cast in a p
lebiscite in the political units directly affected. Hence, the RTC opined that i
t is without jurisdiction to fix the territorial boundaries of the parties. Pate
ros filed a Motion for Reconsideration18 which was, however, denied by the RTC i
n its Order19 dated August 30, 1996. Aggrieved, Pateros appealed to the CA. 20 T
he CA s Ruling On January 22, 2003, the CA denied Pateros appeal. The CA held t
hat the RTC did not make any findings of fact but merely applied various provisi
ons of law and jurisprudence. Thus, the case presented a pure question of law, w
hich Pateros should have brought directly to the Supreme Court, pursuant to Sect
ion 5(2),21 Article VIII of the 1987 Constitution and Section 2,22 Rule 41 of th
e Revised Rules of Civil Procedure. The CA also held that it would amount to gra
ve abuse of discretion amounting to lack of jurisdiction if the CA insisted on r
esolving the issues raised therein. Thus, by undertaking a wrong mode of appeal
and citing Section 2,23 Rule 50 of the Revised Rules of Civil Procedure, the CA
denied Pateros appeal. Pateros filed a Motion for Reconsideration, 24 which the
CA denied in its Resolution25 dated March 27, 2003. The Issue Hence, this Petit
ion based on the sole ground that the CA committed grave abuse of discretion in
dismissing the appeal for lack of jurisdiction.26 Pateros asseverates that the i
ssues raised before the CA involved mixed questions of fact and law, because Pat
eros sought the determination of its territorial boundaries and the nullificatio
n of Proclamation No. 2475; that Pateros does not seek the alteration, modificat
ion, or creation of another or a new local government unit (LGU), but is concern
ed only with its territorial boundaries which, according to existing records, co
nsisted of 1,038 hectares; that non-presentation of evidence before the RTC does
not make the appeal purely a question of law, because the parties were prevente
d from presenting any evidence due to the RTC s erroneous dismissal of the case
based on lack of jurisdiction; that Proclamation Nos. 2475 and 518 suffer from C
onstitutional infirmity; that the alteration or modification of the boundaries o
f municipalities or cities can only be made by a law enacted by Congress and app
roved by the majority of the votes cast in a plebiscite in the political units d
irectly affected; that Proclamation No. 2475, although issued by then President
Marcos during the Marcos era, was not a legislative enactment, pursuant to Secti
on 6 of the 1976 Amendment to the Constitution; and granting, without admitting,
that Proclamation No. 2475 is a law, it should be subject to approval by the ma
jority of the votes cast in a plebiscite in the political units directly affecte
d. Thus, Pateros prays that the assailed CA Decision be reversed and set aside,
and that the RTC be directed to proceed with the trial of the instant case.27 On
the other hand, Makati claims that the sole issue in Pateros appeal before the
CA is jurisdiction and as the question of jurisdiction is a question of law and
as the CA lacks jurisdiction over pure questions of law, therefore, Pateros res
orted to a wrong mode of appeal. The issues raised by Pateros do not consist of
questions of fact as the RTC rendered the assailed Order based on Makati s Motio
n to Dismiss and no trial on the merits was ever conducted. Makati points out th
at the CA quoted the decision of the RTC s discourse in order to show that only
a question of law was involved in Pateros appeal. Thus, Makati posits that Pate
ros defies the rules on trial, evidence, and jurisdiction in a desperate bid to
extricate itself from its mistake in taking a wrong mode of appeal, i.e., by not
ice of appeal to the CA rather than a petition for review on certiorari under Ru
le 45 of the Revised Rules of Civil Procedure filed before this Court. Makati su
bmits that the dismissal of Pateros appeal was proper, as mandated by Section 2
, Rule 50 of the said Rules. Due to the availment of the wrong mode of appeal, t
he RTC s Order dismissing the case already attained finality.28 The Director of

Lands and the DENR, through the Office of the Solicitor General (OSG), share the
stand and arguments of Makati. The OSG stresses that the parties never presente
d any evidence before the RTC which resolved the case based on the parties undi
sputed factual submissions and the application thereto of the pertinent laws, Ru
les of Civil Procedure, and jurisprudence. Hence, the OSG concludes that the app
eal before the CA involved a pure question of law.29 Our Ruling We agree that Pa
teros indeed committed a procedural infraction. It is clear that the issue raise
d by Pateros to the CA involves the jurisdiction of the RTC over the subject mat
ter of the case. The jurisdiction of a court over the subject matter of the acti
on is a matter of law; it is conferred by the Constitution or by law.
REMLAW Page 151

the subject matter of the action is a matter of law; it is conferred by the Cons
titution or by law. Consequently, issues which deal with the jurisdiction of a c
ourt over the subject matter of a case are pure questions of law. As Pateros ap
peal solely involves a question of law, it should have directly taken its appeal
to this Court by filing a petition for review on certiorari under Rule 45, not
an ordinary appeal with the CA under Rule 41. The CA did not err in holding that
Pateros pursued the wrong mode of appeal.30 However, in the interest of justice
and in order to write finis to this controversy, we opt to relax the rules. Our
ruling in Atty. Ernesto A. Tabujara III and Christine S. Dayrit v. People of th
e Philippines and Daisy Afable31 provides us with ample justification, viz.: Whi
le it is true that rules of procedure are intended to promote rather than frustr
ate the ends of justice, and while the swift unclogging of the dockets of the co
urts is a laudable objective, it nevertheless must not be met at the expense of
substantial justice. The Court has allowed some meritorious cases to proceed des
pite inherent procedural defects and lapses. This is in keeping with the princip
le that rules of procedure are mere tools designed to facilitate the attainment
of justice, and that strict and rigid application of rules which would result in
technicalities that tend to frustrate rather than promote substantial justice m
ust always be avoided. It is a far better and more prudent cause of action for t
he court to excuse a technical lapse and afford the parties a review of the case
to attain the ends of justice, rather than dispose of the case on technicality
and cause grave injustice to the parties, giving a false impression of speedy di
sposal of cases while actually resulting in more delay, if not a miscarriage of
justice.1avvphi1 In those rare cases to which we did not stringently apply the p
rocedural rules, there always existed a clear need to prevent the commission of
a grave injustice. Our judicial system and the courts have always tried to maint
ain a healthy balance between the strict enforcement of procedural laws and the
guarantee that every litigant is given the full opportunity for a just and prope
r disposition of his cause. The emerging trend in the rulings of this Court is t
o afford every party litigant the amplest opportunity for the proper and just de
termination of his cause, free from the constraints of technicalities. Time and
again, we have consistently held that rules must not be applied so rigidly as to
override substantial justice. Given the circumstances surrounding the instant c
ase, we find sufficient reason to relax the rules. Thus, we now resolve the sole
issue of whether the RTC has jurisdiction to entertain the boundary dispute bet
ween Pateros and Makati. Apart from the doctrine that the jurisdiction of a trib
unal over the subject matter of an action is conferred by law, it is also the ru
le that the courts exercise of jurisdiction is determined by the material allegat
ions of the complaint or information and the law applicable at the time the acti
on was commenced. Lack of jurisdiction of the court over an action or the subjec
t matter of an action cannot be cured by the silence, by acquiescence, or even b
y express consent of the parties. Thus, the jurisdiction of a court over the nat
ure of the action and the subject matter thereof cannot be made to depend upon t
he defenses set up in court or upon a motion to dismiss for, otherwise, the ques
tion of jurisdiction would depend almost entirely on the defendant. Once jurisdi
ction is vested, the same is retained up to the end of the litigation.32 It is w
orth stressing that, at the time the instant case was filed, the 1987 Constituti
on and the Local Government Code (LGC) of 1991 were already in effect. Thus, the
law in point is Section 118 of the LGC, which provides: Section. 118. Jurisdict
ional Responsibility for Settlement of Boundary Disputes. Boundary disputes betw
een and among local government units shall, as much as possible, be settled amic
ably. To this end: (a) Boundary disputes involving two (2) or more barangays in
the same city or municipality shall be referred for settlement to the sanggunian
g panlungsod or sangguniang bayan concerned. (b) Boundary disputes involving two
(2) or more municipalities within the same province shall be referred for settl
ement to the sangguniang panlalawigan concerned. (c) Boundary disputes involving
municipalities or component cities of different provinces shall be jointly refe
rred for settlement to the sanggunians of the province concerned. (d) Boundary d
isputes involving a component city or municipality on the one hand and a highly
urbanized city on the other, or two (2) or more highly urbanized cities, shall b

e jointly referred for settlement to the respective sanggunians of the parties.

(e) In the event the sanggunian fails to effect an amicable settlement within si
xty (60) days from the date the dispute was referred thereto, it shall issue a c
ertification to that effect. Thereafter, the dispute shall be formally tried by
the sanggunian concerned which shall decide the issue within sixty (60) days fro
m the date of the certification referred to above. 33 Notably, when Pateros file
d its complaint with the RTC of Makati, Makati was still a municipality. We take
judicial notice of the fact that there was no Sangguniang Panlalawigan that cou
ld take cognizance of the boundary dispute, as provided in Section 118(b) of the
LGC. Neither was it feasible to apply Section 118(c) or
REMLAW Page 152

boundary dispute, as provided in Section 118(b) of the LGC. Neither was it feasi
ble to apply Section 118(c) or Section 118(d), because these two provisions clea
rly refer to situations different from that obtaining in this case. Also, contra
ry to Makati s postulation, the former MMA did not also have the authority to ta
ke the place of the Sangguniang Panlalawigan because the MMA s power was limited
to the delivery of basic urban services requiring coordination in Metropolitan
Manila. The MMA s governing body, the Metropolitan Manila Council, although comp
osed of the mayors of the component cities and municipalities, was merely given
the power of: (1) formulation of policies on the delivery of basic services requ
iring coordination and consolidation; and (2) promulgation of resolutions and ot
her issuances, approval of a code of basic services, and exercise of its rule-ma
king power.34 Thus, there is no merit in Makatis argument that Pateros failed to
exhaust administrative remedies inasmuch as the LGC is silent as to the governin
g body in charge of boundary disputes involving municipalities located in the Me
tropolitan Manila area. However, now that Makati is already a highly urbanized c
ity, the parties should follow Section 118(d) of the LGC and should opt to amica
bly settle this dispute by joint referral to the respective sanggunians of the p
arties. This has become imperative because, after all, no attempt had been made
earlier to settle the dispute amicably under the aegis of the LGC. The specific
provision of the LGC, now made applicable because of the altered status of Makat
i, must be complied with. In the event that no amicable settlement is reached, a
s envisioned under Section 118(e) of the LGC, a certification shall be issued to
that effect, and the dispute shall be formally tried by the Sanggunian concerne
d within sixty (60) days from the date of the aforementioned certification. In t
his regard, Rule III of the Rules and Regulations Implementing the LGC shall gov
ern. 35 Only upon failure of these intermediary steps will resort to the RTC fol
low, as specifically provided in Section 119 of the LGC: Section 119. Appeal. Wi
thin the time and manner prescribed by the Rules of Court, any party may elevate
the decision of the sanggunian concerned to the proper Regional Trial Court hav
ing jurisdiction over the area in dispute. The Regional Trial Court shall decide
the appeal within one (1) year from the filing thereof. Pending final resolutio
n of the disputed area prior to the dispute shall be maintained and continued fo
r all legal purposes. On this score, the jurisdiction of the RTC over boundary d
isputes among LGUs was settled in National Housing Authority v. Commission on th
e Settlement of Land Problems,36 where this Court recognized the appellate juris
diction of the proper RTC. The jurisdiction of the RTC was clarified in Municipa
lity of Kananga v. Judge Madrona, 37 where this Court held that, even in the abs
ence of any specific provision of law, "RTCs have general jurisdiction to adjudi
cate all controversies except those expressly withheld from their plenary powers
. They have the power not only to take judicial cognizance of a case instituted
for judicial action for the first time, but also to do so to the exclusion of al
l other courts at that stage. Indeed, the power is not only original, but also e
xclusive." Corollarily, we feel obliged to inform Congress of the need to pass a
law specifically delineating the metes and bounds of the disputing LGUs. In Mar
iano, Jr. v. COMELEC, 38 we held that the existence of a boundary dispute does n
ot per se present an unsurmountable difficulty which will prevent Congress from
defining with reasonable certitude the territorial jurisdiction of an LGU. Congr
ess, by virtue of the powers vested in it by the Constitution, could very well p
ut an end to this dispute. We reiterate what we already said about the importanc
e and sanctity of the territorial jurisdiction of an LGU: The importance of draw
ing with precise strokes the territorial boundaries of a local unit of governmen
t cannot be overemphasized. The boundaries must be clear for they define the lim
its of the territorial jurisdiction of a local government unit. It can legitimat
ely exercise powers of government only within the limits of its territorial juri
sdiction. Beyond these limits, its acts are ultra vires. Needless to state, any
uncertainty in the boundaries of local government units will sow costly conflict
s in the exercise of governmental powers which ultimately will prejudice the peo
ple s welfare. This is the evil sought to be avoided by the Local Government Uni
t in requiring that the land area of a local government unit must be spelled out
in metes and bounds, with technical descriptions.39 WHEREFORE, the instant Peti

tion is DENIED, having been mooted by the conversion of respondent Municipality

of Makati into a highly urbanized city. The parties are hereby DIRECTED to compl
y with Section 118(d) and (e) of the Local Government Code, and Rule III of the
Rules and Regulations Implementing the Local Government Code of 1991 without pre
judice to judicial recourse, as provided in the Local Government Code. No costs.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI90.555\pateros.d
ocx>
REMLAW Page 153

Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI90.555\pateros.d

ocx>
REMLAW Page 154

Tricorp v. CA GR 165742 Jun 30, 2009

Sunday, November 14, 2010 11:29 PM
G.R. No. 165742 June 30, 2009 TRI-CORP LAND & DEVELOPMENT, INC., represented by
SOLITA S. JIMENEZ-PAULINO, Petitioner, vs. COURT OF APPEALS and GREYSTONE CORPOR
ATION, Respondents. DE C I S I O N QUISUMBING, J.: This petition for certiorari
under Rule 65 of the Rules of Court assails the Decision1 dated June 9, 2004 and
Resolution2 dated September 21, 2004 of the Court of Appeals in CA-G.R. CV No.
71285. The Court of Appeals affirmed the Orders dated November 15, 20003 and Jun
e 11, 20014 of the Regional Trial Court (RTC) of Makati City, Branch 139 in LRC
Case No. M-4086 dismissing the complaint filed by petitioner Tri-Corp Land and D
evelopment, Inc. (Tri-Corp) against respondent Greystone Corporation (Greystone)
for lack of jurisdiction. The facts, culled from the records, are as follows: O
n February 12, 1998, Greystone executed in favor of Tri-Corp a Contract to Sell
5 whereby Tri-Corp agreed to pay the purchase price, exclusive of interest, in t
he amount of P13,500,000 and payable in installments, of a unit of Casa Madeira,
a residential condominium project located at Fatima Street, San Miguel Village,
Makati City. Said unit, covered by Condominium Certificate of Title (CCT) No. 5
12326 was to be used as a family residence of Tri-Corps officers and stockholders
. However, when Tri-Corp applied for membership with the San Miguel Village Home
owners Association (SMVHA), it was denied and not given gate passes for its vehic
les. The reason cited by SMVHA for Tri-Corps denial of application was that the c
onstruction of the Casa Madeira condominium project was in violation of village
restrictions annotated as Entry No. 319767 and inscribed on October 9, 1961 at t
he back of Transfer Certificates of Title Nos. 2058278 and 2058289 covering the
lots on which the condominium project was constructed. SMVHA filed a case agains
t Greystone for this violation and prayed for the cancellation of the CCTs of th
e Casa Madeira condominium project before the Housing and Land Use Regulatory Bo
ard (HLURB). The case was docketed as HLURB Case No. REM-10045. Upon learning of
the pending case, Tri-Corp filed a Complaint-in-Intervention10 in said case for
suspension of payments until the issue of violation of the village restriction
and validity of the CCT to the condominium unit sold shall have been resolved. T
riCorp, likewise, filed a petition11 dated September 28, 2000, against Greystone
before the HLURB for Suspension and Cancellation of Certificate of Registration
and License to Sell of Greystone. Greystone, in turn, filed an ejectment suit a
gainst Tri-Corp before the Metropolitan Trial Court of Makati City, for failure
to pay under the Contract to Sell. The complaint was docketed as Civil Case No.
63308. Tri-Corp was ejected by the Sheriff in the said case for its refusal to p
ay the supersedeas bond. Civil Case No. 63308 is still pending on appeal.12 TriCorp also filed before the RTC of Makati City, sitting as a Land Registration Co
urt, a Petition for Correction of Error /Misrepresentation in the Master Deed en
tered as Memorandum on TCTs Nos. 205827 and 205828 with prayer for Temporary Res
training Order and Injunction.13 The case was docketed as LRC Case No. M-4086. T
ri-Corp alleged in its petition that Greystone used different descriptions of th
e condominium project in order to circumvent existing laws, rules and regulation
s on registration of real estate projects, to wit: [1] Thus, to obtain approval
of the San Miguel Village Association Construction and Permits Committee, it sty
led its project as a "2-Unit Duplex Residence, to conform with association rules
. [2] To obtain approval of Barangay Poblacion, Makati City, and the issuance of
Certificate of Registration and Clearance No. 2758 on the same project, it dubb
ed the same project as a "3storey townhouse", to suit barangay guidelines. [3] T
o obtain from the City of Makati Building Permit No. C1096-01259, it called the
same project a "4-unit Residential Bldg." "Two-storey duplex", to comply with zo
ning ordinances. [4] To obtain from the HLURB the Preliminary Approval of Condom
inium Plan, it described Casa Madeira as a "Condominium Project", for the purpos
e of complying with PD 957 and its
REMLAW Page 155

Madeira as a "Condominium Project", for the purpose of complying with PD 957 and
its implementing rules. [5] To obtain from the HLURB the Final Approval, it cal
led the project a Condominium Plan/Subdivision Townhouse, for the same purpose.
[6] To obtain from the HLURB a development permit, it called the project a condo
minium for the same purpose. [7] To obtain from the HLURB a Certificate of Locat
ional Viability for the same project, it was designated as a "2 Storey with Atti
c Residential Condominium", for the same purpose. [8] To obtain from the Departm
ent of Environment and Natural Resources, National Capital Region an Environment
al Compliance Certificate (ECC) it designated the project as "four units, two st
orey with attic townhouse project", to comply with the requirement of law. [9] T
o obtain from the HLURB Certificate of Registration No. 97-09-3003, it called Ca
sa Madeira a condominium project, for the purpose of complying with PD 957 and i
ts implementing rules. [10] These misrepresentations misled the petitioner as bu
yer and also mis[led] the buying public as to the real nature of [the] project.
14 [Emphasis supplied.] During the hearing on Tri-Corps application for a Writ of
Preliminary Injunction on September 28, 2000, Greystone raised the issue of jur
isdiction. Greystone contended in its Memorandum15 that the RTC had no jurisdict
ion to try and decide the case because it involves an unsound real estate practi
ce within the jurisdiction of the HLURB, Tri-Corp is not a party in interest, an
d same issues had been raised by Tri-Corp in the HLURB. In an Order dated Novemb
er 15, 2000, the RTC dismissed the case for lack of jurisdiction. The dispositiv
e portion of the order states: IN VIEW OF THE FOREGOING PREMISES, based on law a
nd jurisprudence, the COURT hereby ORDERS that: (a) The prayer for Temporary Res
training Order and/or Writ of Preliminary Injunction is hereby DENIED for lack o
f merit. (b) The Complaint dated 19 September 1990 (sic) is hereby DISMISSED, th
e same being within the exclusive jurisdiction of [the] HLURB pursuant to PD[s]
987 and 1344. SO ORDERED.16 Tri-Corp filed a motion for reconsideration but it w
as denied by the RTC in an Order dated June 11, 2001. Tri-Corp appealed to the C
ourt of Appeals. In a Decision promulgated on June 9, 2004, the Court of Appeals
affirmed the orders of the RTC. The dispositive portion of the decision states:
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the appealed orders dated November 15
, 2000 and June 11, 2001 must be, as they hereby, are AFFIRMED. Without costs in
this instance. SO ORDERED.17 Tri-Corp filed a motion for reconsideration but it
was denied by the Court of Appeals in a Resolution promulgated on September 21,
2004 for being filed out of time and for being without merit. Alleging that the
Court of Appeals committed grave abuse of discretion in affirming the orders of
the RTC, Tri-Corp filed this original action for certiorari under Rule 65. TriCorp alleges that: I. THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AM
OUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DECLARED THE MOTION FOR RECONS
IDERATION AS HAVING BEEN FILED OUT OF TIME DESPITE PROOFS OF TRAVEL. II. THE APP
ELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS
OF JURISDICTION IN DECLARING THAT HEREIN PETITIONER IS NOT A PARTY IN INTEREST.
III. THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK O
F OR EXCESS OF JURISDICTION WHEN IT RESOLVED THE INSTANT CASE IN FAVOR OF RESPON
DENT GREYSTONE WITHOUT DUE REGARD TO THE PROTECTIVE MANTLE ENSHRINED UNDER PD 95
7 TOWARDS BUYERS OF CONDOMINIUM UNITS.18 In sum, the issue is, did the Court of
Appeals act with grave abuse of discretion in denying Tri-Corps motion for recons
ideration for being filed out of time, in declaring Tri-Corp as not a party in i
nterest, and in affirming the RTCs Order dismissing the case for lack of jurisdic
tion?
REMLAW Page 156

in affirming the RTCs Order dismissing the case for lack of jurisdiction? In its
Memorandum,19 Tri-Corp asserts that it disagrees with the findings of the appell
ate court that its motion for reconsideration was filed out of time since it wou
ld be absurd to consider receipt by its mailbox as receipt by Tri-Corp when its
representative, Solita S. Jimenez-Paulino, was not physically present in the Phi
lippines.20 Tri-Corp further argues that the conclusion that Tri-Corp is not a p
arty in interest is also absurd since Tri-Corp stands to lose an enormous amount
at the instance of Greystone who stands to gain without giving anything of valu
e.21 Tri-Corp also argues that the Court of Appeals overlooked the fact that the
case is one for cancellation of inscriptions and cancellation of the CCT, which
is within the ambit of the Register of Deeds to perform, and the case is not a
simple buyer-seller of condominium relationship but one which seeks the alterati
on of annotations and cancellation of titles with the jurisdiction of the RTC si
tting as a Land Registration Court.22 On the other hand, Greystone, in its Memor
andum,23 argues that it is clear that since Tri-Corps mailbox, MBE Center, receiv
ed a copy of the decision of the Court of Appeals on June 16, 2004, it had until
July 1, 2004 within which to file a motion for reconsideration. Its motion for
reconsideration, which was filed only on July 13, 200424 was clearly filed out o
f time. As defined, grave abuse of discretion means such capricious and whimsica
l exercise of judgment as is equivalent to lack or excess of jurisdiction or, wh
ere the power is exercised in an arbitrary manner by reason of passion, prejudic
e, or personal hostility, and it must be so patent or gross as to amount to an e
vasion of a positive duty or to a virtual refusal to perform the duty enjoined o
r to act at all in contemplation of law.25 After review, we find that the Court
of Appeals did not act with grave abuse of discretion because of the following r
easons: First, the petitioner in this case is Tri-Corp and not Solita Jimenez-Pa
ulino. The reckoning time therefore to count the period to file Tri-Corps motion
for reconsideration was the date the decision was received by Tri-Corps mailbox a
nd not the date when it was received by its representative, Solita S. JimenezPau
lino.1avvphi1 Second, the Court of Appeals, in ruling that Tri-Corp is not a par
ty in interest, pointed out in its decision that the contract to sell entered in
to by both parties contains a stipulation that in case of default or nonpayment
of the stipulated amortizations and the rentals, Greystone has the option to res
cind the contract and forfeit all amounts paid as liquidated damages. Greystone
rescinded the contract.26 As the contract to sell has been rescinded, there is l
egal basis to hold that Tri-Corp is no longer a party in interest. Third, the Co
urt of Appeals decision affirming the trial courts Orders dismissing Tri-Corps pet
ition on the ground that it does not have jurisdiction over the case, has legal
basis. Section 1 of Presidential Decree No. 134427 entitled "Empowering the Nati
onal Housing Authority to Issue Writ of Execution in the Enforcement of its Deci
sions under Presidential Decree No. 957" provides: SECTION 1. In the exercise of
its functions to regulate the real estate trade and business and in addition to
its powers provided for in Presidential Decree No. 957, the National Housing Au
thority shall have exclusive jurisdiction to hear and decide cases of the follow
ing nature: A. Unsound real estate business practices; B. Claims involving refun
d and any other claims filed by subdivision lot or condominium unit buyer agains
t the project owner, developer, dealer, broker or salesman; and C. Cases involvi
ng specific performance of contractual and statutory obligations filed by buyers
of subdivision lot or condominium unit against the owner, developer, dealer, or
salesman. [Emphasis supplied.] In this case, Tri-Corps chief quest is the cancel
lation of Entry No. 31976 from TCTs Nos. 205827 and 205828, and the cancellation
of the CCT of the unit sold to it, and it alludes to Greystones use of different
descriptions of the condominium project in order to circumvent existing laws, r
ules and regulations on registration of real estate projects in its petition. Un
der these circumstances, Tri-Corp is alluding to steps allegedly taken by Greyst
one in consummating an alleged unsound real estate business practice. The HLURB
has the technical expertise to resolve this technical issue. Jurisdiction theref
ore properly pertains to the HLURB. In view of the foregoing, it cannot be said
that the Court of Appeals, in affirming the RTC Orders dismissing the case for l
ack of jurisdiction, acted with grave abuse of discretion that would warrant the

filing of a petition for certiorari under Rule 65 against it.

REMLAW Page 157

filing of a petition for certiorari under Rule 65 against it. WHEREFORE, the ins
tant petition is DISMISSEDfor lack of merit. Costs against petitioner.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI92.349\tri-corp.
docx>
REMLAW Page 158

?Ma. Luisa Dazon v. Kenneth Yap and People Jan 15, 2010
Sunday, November 14, 2010 11:29 PM
REMLAW Page 159

Sec 5, RA 8369 Family Courts Act of 1997

Sunday, November 14, 2010 11:29 PM
REPUBLIC ACT NO. 8369 AN ACT ESTABLISHING FAMILY COURTS, GRANTING THEM EXCLUSIVE
ORIGINAL JURISDICTION OVER CHILD AND FAMILY CASES, AMENDING BATAS PAMBANSA BILA
NG 129,AS AMENDED, OTHERWISE KNOWN AS ACT OF 1980, APPROPRIATING FUNDS THEREFOR
AND FOR OTHER PURPOSES. Be it enacted by the Senate and House of Representatives
of the Philippines in Congress assembled: Section 1. Title. - This Act shall be
known as the "Family Courts Act of 1997".
Sec. 2. Statement of National Policies. - The State shall protect the rights and
promote the welfare of children in keeping with the mandate of the Constitution
and the precepts of the United Nations Convention on the rights of the Child. T
he State shall provide a system of adjudication for youthful offenders which tak
es into account their peculiar circumstances.
The State recognizes the sanctity of family life and shall protect and strengthe
n the family as a basic autonomous social institution. The courts shall preserve
the solidarity of the family, provide procedures for the reconciliation of spou
ses and the amicable settlement of family controversy. Sec. 3. Establishment of
Family Courts. - There shall be established a Family Court in every province and
city in the country. In case where the city is the capital of the province, the
Family Court shall be established in the municipality which has the highest pop
ulation. Sec. 4. Qualification and Training of Family Court Judges. - Sec. 15 of
Batas Pambansa Blg. 129, as amended, is hereby further amended to read as follo
ws: "Sec. 15. (a) Qualification. - No person shall be appointed Regional Trial J
udge or Presiding Judge of the Family Court unless he is a natural-born citizen
of the Philippines, at least thirty-five (35) years of age, and, for at least te
n (10) years, has been engaged in the practice of law in the Philippines or has
held a public office in the Philippines requiring admission to the practice of l
aw as indispensable requisite. "(b) Training of Family Court Judges. - The Presi
ding Judge, as well as the court personnel of the Family Courts, shall undergo t
raining and must have the experience and demonstrated ability in dealing with ch
ild and family cases. "The Supreme Court shall provide a continuing education pr
ogram on child and family laws, procedure and other related disciplines to judge
s and personnel of such courts." Sec. 5. Jurisdiction offamily Courts. - The Fam
ily Courts shall have exclusive original jurisdiction to hear and decide the fol
lowing cases: a) Criminal cases where one or more of the accused is below eighte
en (18) years of age but not less than nine (9) years of age but not less than n
ine (9) years of age or where one or more of the victims is a minor at the time
of the commission of the offense: Provided, That if the minor is found guilty, t
he court shall promulgate sentence and ascertain any civil liability which the a
ccused may have incurred. The sentence, however, shall be suspended without need
of application pursuant to Ptesidential Decree No. 603, otherwise known as the
"Child and Youth Welfare Code"; b) Petitions for guardianship, custody of childr
en, habeas corpus in relation to the latter; c) Petitions for adoption of childr
en and the revocation thereof; d) Complaints for annulment of marriage, declarat
ion of nullity of marriage and those relating to marital status and property rel
ations of husband and wife or those living together under different status and a
greements, and petitions for dissolution of conjugal partnership of gains;
REMLAW Page 160

different status and agreements, and petitions for dissolution of conjugal partn
ership of gains; e) Petitions for support and/or acknowledgment; f) Summary judi
cial proceedings brought under the provisions of Executive Order No. 209, otherw
ise known as the "Family Code of the Philippines"; g) Petitions for declaration
of status of children as abandoned, dependent o neglected children, petitions fo
r voluntary or involuntary commitment of children; the suspension, termination,
or restoration of parental authority and other cases cognizable under Presidenti
al Decree No. 603, Executive Order No. 56, (Series of 1986), and other related l
aws; h) Petitions for the constitution of the family home; i) Cases against mino
rs cognizable under the Dangerous Drugs Act, as amended; j) Violations of Republ
ic Act No. 7610, otherwise known as the "Special Protection of Children Against
Child Abuse, Exploitation and Discrimination Act," as amended by Republic Act No
. 7658; and
k) Cases of domestic violence against: 1) Women - which are acts of gender based
violence that results, or are likely to result in physical, sexual or psycholog
ical harm or suffering to women; and other forms of physical abuse such as batte
ring or threats and coercion which violate a woman s personhood, integrity and f
reedom movement; and
2) Children - which include the commission of all forms of abuse, neglect, cruel
ty, exploitation, violence, and discrimination and all other conditions prejudic
ial to their development. If an act constitutes a criminal offense, the accused
or batterer shall be subject to criminal proceedings and the corresponding penal
ties.
If any question involving any of the above matters should arise as an incident i
n any case pending in the regular courts, said incident shall be determined in t
hat court. Sec. 6. Use of Income. - All Family Courts shall be allowed the use o
f ten per cent (10%) of their income derived from filing and other court fees un
der Rule 141 of the Rules of Court for research and other operating expenses inc
luding capital outlay: Provided, That this benefit shall likewise be enjoyed by
all courts of justice.
The Supreme Court shall promulgate the necessary guidelines to effectively imple
ment the provisions of this Sec. Sec. 7. Special Provisional Remedies. - In case
s of violence among immediate family members living in the same domicile or hous
ehold, the Family Court may issue a restraining order against the accused of def
endant upon verified application by the complainant or the victim for relief fro
m abuse. The court may order the temporary custody of children in all civil acti
ons for their custody. The court may also order support pendente lite, including
deduction from the salary and use of conjugal home and other properties in all
civil actions for support.
Sec. 8. Supervision of Youth Detention Homes. - The judge of the Family Court sh
all have direct control and supervision of the youth detention home which the lo
cal government unit shall establish to separate the youth offenders from adult c
riminals: Provided, however, That alternatives to detention and institutional ca
re shall be made available to the accused including counseling, recognizance, ba
il, community continuum, or diversions from the justice system: Provided, furthe
r, That the human rights of the accused are fully respected in a manner appropri
ate to their well-being. Sec. 9. Social Services and Counseling Division. - Unde
r the guidance ofthe Department of Social Welfare and Development (DSWD), a Soci
al Services and Counseling Division (SSCD) shall be established in each judicial
region as the Supreme Court shall deem necessary based on the number of
REMLAW Page 161

established in each judicial region as the Supreme Court shall deem necessary ba
sed on the number of juvenile and family cases existing in such jurisdiction. It
shall provide appropriate social services to all juvenile and family cases file
d with the court and recommend the proper social action. It shall also develop p
rograms, formulate uniform policies and procedures, and provide technical superv
ision and monitoring of all SSCD in coordination with the judge. Sec. 10. Social
Services and Counseling Division Staff. - The SSCD shall have a staff composed
of qualified social workers and other personnel with academic preparation in beh
avioral sciences to carry out the duties of conducting intake assessment, social
case studies, casework and counseling, and othersocial services that may be nee
ded in connection with cases filed with the court: Provided, however, That in ad
option cases and in petitions for declaration of abandonment, the case studies m
ay be prepared by social workers of duly licensed child caring or child placemen
t agencies, or the DSWD. When warranted, the division shall recommend that the c
ourt avail itself of consultative services of psychiatrists, psychologists, and
other qualified specialists presently employed in other departments of the gover
nment in connection with its cases.
The position of Social Work Adviser shall be created under the Office of the Cou
rt Administrator, who shall monitor and supervise the SSCD ofthe Regional Trial
Court.
Sec. 11. Alternative Social Services. - In accordance with Sec. 17 of this Act,
in areas where no Family Court has been established or no Regional Trial Court w
as designated by the Supreme Court due to the limited number of cases, the DSWD
shall designate and assign qualified, trained, and DSWD accredited social worker
s of the local government units to handle juvenile and family cases filed in the
designated Regional Trial Court of the place. Sec. 12. Privacy and Confidential
ity of Proceedings. - All hearings and conciliation of the child and family case
s shall be treated in a manner consistent with the promotion of the child s and
the family s dignity and worth, and shall respect their privacy at all stages of
the proceedings. Records of the cases shall be dealt with utmost confidentialit
y and the identity of parties shall not be divulged unless necessary and with au
thority of the judge. Sec. 13. Special Rules of Procedure. - The Supreme Court s
hall promulgate special rules of procedure for the transfer of cases to the new
courts during the transition period and for the disposition of family cases with
the best interests of the child and the protection of the family as primary con
sideration taking into account the United Nations Convention on the Rights of th
e Child. Sec. 14. Appeals. - Decisions and orders of the court shall be appealed
in the same manner and subject to the same conditions as appeals from the ordin
ary Regional Trial Courts. Sec. 15. Appropriations. - The amount necessary to ca
rry out the provisions of this Act shall be included in the General Appropriatio
ns Act of the year following in its enactment into law and thereafter. Sec. 16.
Implementing Rules and Regulations. - The Supreme Court, in coordination with th
e DSWD, shall formulate the necessary rules and regulations for the effective im
plementation of the social aspects of this Act. Sec. 17. Transitory Provisions.
- Pending the establishment of such Family Courts, the Supreme Court shall desig
nate from among the branches ofthe Regional Trial Court at least one Family Cour
t in each of the cities of Manila, Quezon, Pasay, Caloocan, Makati, Pasig, Manda
luyong, Muntinlupa, Laoag, Baguio, Santiago, Dagupan, Olongapo, Cabanatuan, San
Jose, Angeles, Cavite, Batangas, Lucena, Naga, Iriga, Legazpi, Roxas, Iloilo, Ba
colod, Dumaguete, Tacloban, Cebu, Mandaue, Tagbilaran, Surigao, Butuan, Cagayan
de Oro, Davao, General Santos, Oroquieta, Ozamis, Dipolog, Zamboanga, Pagadian,
Iligan, and in such other places as the Supreme Court may deem necessary. Additi
onal cases other than those provided in Sec. 5 may be assigned to the Family Cou
rts when their
REMLAW Page 162

Additional cases other than those provided in Sec. 5 may be assigned to the Fami
ly Courts when their dockets permit: Provided, That such additional cases shall
not be heard on the same day family cases are heard. In areas where there are no
Family Courts, the cases referred to in Sec. 5 of this Act shall be adjudicated
by the Regional Trial Court. Sec. 18. Separability Clause. - In case any provis
ion of this Act is declared unconstitutional, the other provisions shall remain
in effect. Sec. 19. Repealing Clause. - All other laws, decrees, executive order
s, rules or regulations inconsistent herewith are hereby repealed, amended or mo
dified accordingly.
Sec. 20. Effectivity. - This Act shall take effect fifteen (15) days after its p
ublication in at least two (2) national newspapers of general circulation. Appro
ved October 28, 1997.
Pasted from <http://www.chanrobles.com/republicactno8369.htm>
REMLAW Page 163

A.M. No. 02-11-10-SC Rules on Declaration of Absolute Nullity of Void Marriages

and Annulment of Voidable Marriages
Sunday, November 14, 2010 11:29 PM
A.M. No. 02-11-10-SC March 4, 2003 RE: PROPOSED RULE ON DECLARATION OF ABSOLUTE
NULLITY OF VOID MARRIAGES AND ANNULMENT OF VOIDABLE MARRIAGES RESOL UTI ON Actin
g on the letter of the Chairman of the Committee on Revision of the Rules of Cou
rt submitting for this Court s consideration and approval the Proposed Rule on D
eclaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marri
ages, the Court Resolved to APPROVE the same. The Rule shall take effect on Marc
h 15, 2003 following its publication in a newspaper of general circulation not l
ater than March 7, 2003 March 4, 2003 Davide, C.J. Bellosillo, Puno, Vitug Mendo
za, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio
Morales, Callejo, Sr. and Azcuna Ynares-Santiago, on leave Corona, on official
leave RULE ON DECLARATION OF ABSOLUTE NULLITY OF VOID MARIAGES AND ANNULMENT OF
VOIDABLE MARRIAGES Section 1. Scope - This Rule shall govern petitions for decla
ration of absolute nullity of void marriages and annulment of voidable marriages
under the Family Code of te Philippines. The Rules of Court shall apply supplet
orily. Section 2. Petition for declaration of absolute nullity of void marriages
. (a) Who may file. - A petition for declaration of absolute nullity of void mar
riage may be filed solely by the husband or the wife. (n) (b) Where to file. - T
he petition shal be filed in the Family Court. (c) Imprecriptibility ofaction or
defense. - An Action or defense for the declaration of absolute nullity of void
marriage shall not prescribe. (d) What to allege. - A petition under Article 36
of Family Code shall specially allege te complete facts showing the either or b
oth parties were psychologically incapacitated from complying with the essential
marital obligations of marriages at the time of the celebration of marriage eve
n if such incapacity becomes manifest only after its celebration. The complete f
acts should allege the physical manifestations, if any, as are indicative of psy
chological incapacity at the time of the celebration of the marriage but expert
opinion need not be alleged. Section 3. Petition for annulment of voidable marri
ages. (a) Who may file. - The following persons may file a petition for annulmen
t of voidable marriage based on any of the grounds under article 45 of the Famil
y Code and within the period herein indicated: (1) The contracting party whose p
arent, or guardian, or person exercising substitute parental authority did not g
ive his or her consent, within five years after attaining the age of twenty-one
unless, after attaining the age of twenty-one, such party freely cohabitated wit
h the other as husband or wife; or the parent, guardian or person having legal c
harge of the contracting party , at any time before such party has reached the a
ge of twenty-one; (2) The sane spouse who had no knowledge of the other s insani
ty; or by any relative, guardian, or person having legal charge of the insane, a
t any time before the death of either party; or by the insane spouse during the
a lucid interval or after regaining sanity, provided that the petitioner , after
coming to reason, has not freely cohabited with the other as husband or wife; (
3) The injured party whose consent was obtained by fraud, within five years afte
r the discovery of the fraud, provided that said party, with full knowledge of t
he facts constituting the fraud, has not freely cohabited with the other as husb
and or wife; (4) The injured party whose consent was obtained by force, intimida
tion, or undue influence, within five
REMLAW Page 164

cohabited with the other as husband or wife; (4) The injured party whose consent
was obtained by force, intimidation, or undue influence, within five years from
the time the force intimidation, or undue influence disappeared or ceased, prov
ided that the force, intimidation, or undue influence having disappeared or ceas
ed, said party has not thereafter freely cohabited with the other as husband or
wife; (5) The injured party where the other spouse is physically incapable of co
nsummating the marriage with the other and such incapability continues and appea
rs to be incurable, within five years after the celebration of marriage; and (6)
Te injured party where the other party was afflicted with a sexually-transmissi
ble disease found to be serious and appears to be incurable, within five years a
fter the celebration of marriage. (b) Where to file. - The petition shall be fil
ed in the Family Court. Section 4. Venue. - The Petition shall be filed in the F
amily Court of the province or city where the petitioner or the respondent has b
een residing for at least six months prior to the date of filing. Or in the case
of non-resident respondent, where he may be found in the Philippines, at the el
ection of the petitioner. Section 5. Contents and form of petition. - (1) The pe
tition shall allege the complete facts constituting the cause of action. (2) It
shall state the names and ages of the common children of the parties and specify
the regime governing their property relations, as well as the properties involv
ed. If there is no adequate provision in a written agreement between the parties
, the petitioner may apply for a provisional order for spousal support, the cust
ody and support of common children, visitation rights, administration of communi
ty or conjugal property, and other matters similarly requiringurgent action. (3)
It must be verified and accompanied celebration of marriage. (b) Where to file.
-The petition shall be filed in the Family Court. Section 4. Venue. - The petiti
on shall be filed in the Family Court of the province or city where the petition
er or the respondent has been residing for at least six months prior to the date
of filing, or in the case of a non-resident respondent, where he may be found i
n the Philippines at the election of the petitioner. Section 5. Contents and for
m of petition. - (1) The petition shall allege the complete facts constituting t
he cause of action. (2) it shall state the names and ages of the common children
of the parties and specify the regime governing their property relations, as we
ll as the properties involved. If there is no adequate provision in a written ag
reement between the parties, the petitioner may apply for a provisional order fo
r spousal support, custody and support of common children, visitation rights, ad
ministration of community or conjugal property, and other matters similarly requ
iring urgent action. (3) it must be verified and accompanied by a certification
against forum shopping. The verification and certification must be signed person
ally by me petitioner. No petition may be filed solely by counsel or through an
attorney-in-fact. If the petitioner is in a foreign country, the verification an
d certification against forum shopping shall be authenticated by the duly author
ized officer of the Philippine embassy or legation, consul general, consul or vi
ce-consul or consular agent in said country. (4) it shall be filed in six copies
. The petitioner shall serve a copy of the petition on the Office of the Solicit
or General and the Office of the City or Provincial Prosecutor, within five days
from the date of its filing and submit to the court proof of such service withi
n the same period. Failure to comply with any of the preceding requirements may
be a ground for immediate dismissal of the petition. Section 6. Summons. - The s
ervice of summons shall be governed by Rule 14 of the Rules of Court and by the
following rules: (1) Where the respondent cannot be located at his given address
or his whereabouts are unknown and cannot be ascertained by diligent inquiry, s
ervice of summons may, by leave of court, be effected upon him by publication on
ce a week for two consecutive weeks in a newspaper of general circulation in the
Philippines and in such places as the court may order In addition, a copy of th
e summons shall be served on the respondent at his last known address by registe
red mail or any other means the court may deem
REMLAW Page 165

sufficient. (2) The summons to be published shall be contained in an order of th

e court with the following data: (a) title of the case; (b) docket number; (c) n
ature of the petition; (d) principal grounds of the petition and the reliefs pra
yed for; and (e) a directive for the respondent to answer within thirty days fro
m the last issue of publication. Section 7. Motion to dismiss. - No motion to di
smiss the petition shall be allowed except on the ground of lack of jurisdiction
over the subject matter or over the parties; provided, however, that any other
ground that might warrant a dismissal of the case may be raised as an affirmativ
e defense in an answer. Section 8. Answer. - (1) The respondent shall file his a
nswer within fifteen days from service of summons, or within thirty days from th
e last issue of publication in case of service of summons by publication. The an
swer must be verified by the respondent himself and not by counsel or attorney-i
nfact. (2) If the respondent fails to file an answer, the court shall not declar
e him or her in default. (3) Where no answer is filed or if the answer does not
tender an issue, the court shall order the public prosecutor to investigate whet
her collusion exists between the parties. Section 9. Investigation report of pub
lic prosecutor. - (1) Within one month after receipt of the court order mentione
d in paragraph (3) of Section 8 above, the public prosecutor shall submit a repo
rt to the court stating whether the parties are in collusion and serve copies th
ereof on the parties and their respective counsels, if any. (2) If the public pr
osecutor finds that collusion exists, he shall state the on the finding of collu
sion within ten days from receipt of a copy of a report The court shall set the
report for hearing and If convinced that the parties are in collusion, it shall
dismiss the petition. (3) If the public prosecutor reports that no collusion exi
sts, the court shall set the case for pre-trial. It shall be the duty of the pub
lic prosecutor to appear for the State at the pre-trial. Section 10. Social work
er. - The court may require a social worker to conduct a case study and submit t
he corresponding report at least three days before the pre-trial. The court may
also require a case study at any stage of the case whenever necessary. Section 1
1. Pre-trial. (1) Pre-trial mandatory. - A pre-trial is mandatory. On motion or
motu proprio, the court shall set the pre-trial after the last pleading has been
served and filed, or upon receipt of the report of the public prosecutor that n
o collusion exists between the parties. (2) Notice of pre-trial. - (a) The notic
e of pre-trial shall contain: (1) the date of pre-trial conference; and (2) an o
rder directing the parties to file and serve their respective pre-trial briefs i
n such manner as shall ensure the receipt thereof by the adverse party at least
three days before the date of pre-trial. (b) The notice shall be served separate
ly on the parties and their respective counsels as well as on the public prosecu
tor. It shall be their duty to appear personally at the pre-trial. (c) Notice of
pre-trial shall be sent to the respondent even if he fails to file an answer. I
n case of summons by publication and the respondent failed to file his answer, n
otice of pre-trial shall be sent to respondent at his last known address. Sectio
n 12. Contents of pre-trial brief. - The pre-trial brief shall contain the follo
wing: (a) A statement of the willingness of the parties to enter into agreements
as may be allowed by law, indicating the desired terms thereof; (b) A concise s
tatement of their respective claims together with the applicable laws and author
ities; (c) Admitted facts and proposed stipulations of facts, as well as the dis
puted factual and legal issues; (d) All the evidence to be presented, including
expert opinion, if any, briefly stating or describing the nature and purpose the
reof; (e) The number and names of the witnesses and their respective affidavits;
and (f) Such other matters as the court may require. Failure to file the pre-tr
ial brief or to comply with its required contents shall have the same effect as
failure to appear at the pre-trial under the succeeding paragraphs. Section 13.
Effect of failure to appear at the pre-trial. - {a) If the petitioner fails to a
ppear personally, the case shall be dismissed unless his counsel or a duly autho
rized representative appears in court and proves a valid excuse for the non-appe
arance of the petitioner. (b) If the respondent has filed his answer but fails t
o appear, the court shall proceed with the pre-trial
REMLAW Page 166

(b) If the respondent has filed his answer but fails to appear, the court shall
proceed with the pre-trial and require the public prosecutor to investigate the
non-appearance of the respondent and submit within fifteen days thereafter a rep
ort to the court stating whether his non-appearance is due to any collusion betw
een the parties. If there Is no collusion, the court shall require the public pr
osecutor to intervene for the State during the trial on the merits to prevent su
ppression or fabrication of evidence. Section 14. Pre-trial conference. -At the
pre-trial conference, the court: (a) May refer the issues to a mediator who shal
l assist the parties in reaching an agreement on matters not prohibited by law.
The mediator shall render a report within one month from referral which, for goo
d reasons, the court may extend for a period not exceeding one month. (b) In cas
e mediation is not availed of or where it fails, the court shall proceed with th
e pre-trial conference, on which occasion it shall consider the advisability of
receiving expert testimony and such other makers as may aid in the prompt dispos
ition of the petition. Section 15. Pre-trial order. - {a) The proceedings in the
pre-trial shall be recorded. Upon termination of the pre-trial, the court shall
Issue a pre-trial order which shall recite in detail the matters taken up In th
e conference, the action taken thereon, the amendments allowed on the pleadings,
and except as to the ground of declaration of nullity or annulment, the agreeme
nts or admissions made by the parties on any of the matters considered, includin
g any provisional order that may be necessary or agreed upon by the parties. (b)
Should the action proceed to trial, the order shall contain a recital of the fo
llowing; (1) Facts undisputed, admitted, and those which need not be proved subj
ect to Section 16 of this Rule; (2) Factual and legal issues to be litigated; (3
) Evidence, including objects and documents, that have been marked and will be p
resented; (4) Names of witnesses who will be presented and their testimonies in
the form of affidavits; and (5) Schedule of the presentation of evidence. (c) Th
e pre-trial order shall also contain a directive to the public prosecutor to app
ear for the State and take steps to prevent collusion between the parties at any
stage of the proceedings and fabrication or suppression of evidence during the
trial on the merits. (d) The parlies shall not be allowed to raise issues or pre
sent witnesses and evidence other than those stated in the pre-trial order. The
order shall control the trial of the case, unless modified by the court to preve
nt manifest injustice. (e) The parties shall have five days from receipt of the
pre-trial order to propose corrections or modifications. Section 16. Prohibited
compromise. - The court-shall not allow compromise on prohibited matters, such a
s the following: (a) The civil status of persons; (b) The validity of a marriage
or of a legal separation; (c) Any ground for legal separation; (d) Future suppo
rt; (e) The jurisdiction of courts; and (f) Future legitime. Section 17. Trial.
- (1) The presiding judge shall personally conduct the trial of the case. No del
egation of the reception of evidence to a commissioner shall be allowed except a
s to matters involving property relations of the spouses. (2) The grounds for de
claration of absolute nullity or annulment of marriage must be proved. No judgme
nt on the pleadings, summary judgment, or confession of judgment shall be allowe
d. (3) The court may order the exclusion from the courtroom of all persons, incl
uding members of the press, who do not have a direct interest in the case. Such
an order may be made if the court determines on the record that requiring a part
y to testify in open court would not enhance the ascertainment of truth; would c
ause to the party psychological harm or inability to effectively communicate due
to embarrassment, fear, or timidity; would violate the right of a party to priv
acy; or would be offensive to decency or public morals. (4) No copy shall be tak
en nor any examination or perusal of the records of the case or parts thereof be
made by any person other than a party or counsel of a party, except by order of
the court. Section 18. Memoranda. - The court may require the parties and the p
ublic prosecutor, in consultation
REMLAW Page 167

Section 18. Memoranda. - The court may require the parties and the public prosec
utor, in consultation with the Office of the Solicitor General, to file their re
spective memoranda support of their claims within fifteen days from the date the
trial is terminated. It may require the Office of the Solicitor General to file
its own memorandum if the case is of significant interest to the State. No othe
r pleadings or papers may be submitted without leave of court. After the lapse o
f the period herein provided, the case will be considered submitted for decision
, with or without the memoranda. Section 19. Decision. - (1) If the court render
s a decision granting the petition, it shall declare therein that the decree of
absolute nullity or decree of annulment shall be issued by the court only after
compliance with Article 50 and 51 of the Family Code as implemented under the Ru
le on Liquidation, Partition and Distribution of Properties. (2) The parties, in
cluding the Solicitor General and the public prosecutor, shall be served with co
pies of the decision personally or by registered mail. If the respondent summone
d by publication failed to appear in the action, the dispositive part of the dec
ision shall be published once in a newspaper of general circulation. (3) The dec
ision becomes final upon the expiration of fifteen days from notice to the parti
es. Entry of judgment shall be made if no motion for reconsideration or new tria
l, or appeal Is filed by any of the parties the public prosecutor, or the Solici
tor General. (4) Upon the finality of the decision, the court shall forthwith is
sue the corresponding decree if the parties have no properties. If the parties h
ave properties, the court shall observe the procedure prescribed in Section 21 o
f this Rule. The entry of judgment shall be registered in the Civil Registry whe
re the marriage was recorded and In the Civil Registry where the Family Court gr
anting the petition for declaration of absolute nullity or annulment of marriage
is located. Section 20. Appeal. (1) Pre-condition. - No appeal from the decisio
n shall be allowed unless the appellant has filed a motion for reconsideration o
r new trial within fifteen days from notice of judgment. (2) Notice of appeal. An aggrieved party or the Solicitor General may appeal from the decision by fil
ing a Notice of Appeal within fifteen days from notice of denial of the motion f
or reconsideration or new trial. The appellant shall serve a copy of the notice
of appeal on the adverse parties. Section 21. Liquidation, partition and distrib
ution, custody, support of common children and delivery of their presumptive ieg
ltimes. - Upon entry of the judgment granting the petition, or, in case of appea
l, upon receipt of the entry of judgment of the appellate court granting the pet
ition, the Family Court, on motion of either party, shall proceed with the liqui
dation, partition and distribution of the properties of the spouses, including c
ustody, support of common children and delivery of their presumptive legitimes p
ursuant to Articles 50 and 51 of the Family Code unless such matters had been ad
judicated in previous judicial proceedings. Section 22. Issuance of Decree of De
claration of Absolute Nullity or Annulment of Marriage." (a) The court shall iss
ue the Decree after; (1) Registration of the entry of judgment granting the peti
tion for declaration of nullity or annulment of marriage in the Civil Registry w
here the marriage was celebrated and in the Civil Registry of the place where th
e Family Court is located; (2) Registration of the approved partition and distri
bution of the properties of the spouses, in the proper Register of Deeds where t
he real properties are located; and (3) The delivery of the children s presumpti
ve legitimes in cash, property, or sound securities. (b) The court shall quote i
n the Decree the dispositive portion of the judgment entered and attach to the D
ecree the approved deed of partition. Except in the case of children under Artic
les 36 and 53 of the Family Code, the court shall order the Local Civil Registra
r to issue an amended birth certificate indicating the new civil status of the c
hildren affected. Section 23. Registration and publication of the decree; decree
as best evidence. - (a) The prevailing party shall cause the registration of th
e Decree in the Civil Registry where the marriage was registered, the Civil Regi
stry of the place where the Family Court is situated, and in the National Census
and Statistics Office. He shall report td the court compliance with this requir
ement within thirty days from receipt of the copy of the Decree.
REMLAW Page 168

the copy of the Decree. (b) In case service of summons was made by publication,
the parties shall cause the publication of the Decree once in a newspaper of gen
eral circulation. (c) The registered Decree shall be the best evidence to prove
the declaration of absolute nullity or annulment of marriage and shall serve as
notice to third persons concerning the properties of petitioner and respondent a
s well as the properties or presumptive legitimes delivered to their common chil
dren. Section 24. Effect of death of a party; duty of the Family Court or Appell
ate Court. - (a) In case a party dies at any stage of the proceedings before the
entry of judgment, the court shall order the case closed and terminated, withou
t prejudice to the settlement of the estate in proper proceedings in the regular
courts. (b) If the party dies after the entry of judgment of nullity or annulme
nt, the judgment shall be binding upon the parties and their successors in inter
est in the settlement of the estate in the regular courts. Section 25. Effectlvi
ty. - This Rule shall take effect on March 15, 2003 following its publication in
a newspaper of general circulation not later than March 7, 2003.
Pasted from <http://www.lawphil.net/courts/supreme/am/am_02-11-10-sc_2003.html>
REMLAW Page 169

A.M. No. 02-11-11 Rule on Legal Separation

Sunday, November 14, 2010 11:29 PM
A.M. No. 02-11-11-SC March 4, 2003 RE: PROPOSED RULE ON LEGAL SEPARATION RESOL U
TI ON Acting on the letter of the Chairman of the Committee on Revision of the R
ules of Court submitting for this Court s consideration and approval the Propose
d Rule on Legal Separation, the Court Resolved to APPROVED the same. The Rule sh
all take effect on March 15, 2003 following its publication in a newspaper of ge
neral circulation not later than March 7, 2003 March 4, 2003 Davide Jr. C.J., Be
llosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval Gutierrez, Carp
io, Austria-Martinez, Carpio-Morales, Callejo, Sr. and Azcuna, JJ. Ynares-Santia
go, on leave, Corona, officially on leave. RULE ON LEGAL SEPARATION Section 1. S
cope. - This Rule shall govern petitions for legal separation under the Family C
ode of the Philippines. The Rules of Court shall apply suppletorily. Section 2.
Petition. - (a) Who may and when to file. - (1) A petition for legal separation
may be filed only by the husband or the wife, as the case may be within five yea
rs from the time of the occurrence of any of the following causes: (a) Repeated
physical violence or grossly abusive conduct directed against the petitioner, a
common child, or a child of the petitioner; (b) Physical violence or moral press
ure to compel the petitioner to change religious or political affiliation; (c) A
ttempt of respondent to corrupt or induce the petitioner, a common child, or a c
hild of the petitioner, to engage in prostitution, or connivance in such corrupt
ion or inducement; (d) Final judgment sentencing the respondent to imprisonment
of more than six years, even if pardoned; (e) Drug addiction or habitual alcohol
ism of the respondent; (f) Lesbianism or homosexuality of the respondent; (g) Co
ntracting by the respondent of a subsequent bigamous marriage, whether in or out
side the Philippines; (h) Sexual infidelity or perversion of the respondent; (i)
Attempt on the life of petitioner by the respondent; or (j) Abandonment of peti
tioner by respondent without justifiable cause for more than one year. (b) Conte
nts and form. - The petition for legal separation shall: (1) Allege the complete
facts constituting the cause of action. (2) State the names and ages of the com
mon children of the parties, specify the regime governing their property relatio
ns, the properties involved, and creditors, if any. If there is no adequate prov
ision in a written agreement between the parties, the petitioner may apply for a
provisional order for spousal support, custody and support of common children,
visitation rights, administration of community or conjugal property, and other s
imilar matters requiring urgent action, (3) Be verified and accompanied by a cer
tification against forum shopping. The verification and certification must be pe
rsonally signed by the petitioner. No petition may be filed solely by counsel or
through an attorney-in-fact. If the petitioner is in a foreign country, the ver
ification and certification against forum shopping shall be authenticated by the
duly authorized officer of the Philippine embassy or legation, consul general,
consul or vice-consul or consular agent in said country (4) Be filed in six copi
es. The petitioner shall, within five days from such filing, furnish a copy of t
he petition to the City or Provincial Prosecutor and the creditors, if any, and
submit to the court proof of such service within the same period. Failure to com
ply with the preceding requirements may be a ground for immediate dismissal of
REMLAW Page 170

such service within the same period. Failure to comply with the preceding requir
ements may be a ground for immediate dismissal of the petition. (c) Venue. - The
petition shall be filed in the Family Court of the province or city where the p
etitioner or the respondent has been residing for at least six months prior to t
he date of filing "or in The case of a non-resident respondent, where he may be
found in the Philippines, at the election of the petitioner. Section 3. Summons.
- The service of summons shall be governed by Rule 14 of the Rules of Court and
by the following rules: (a) Where the respondent cannot be located at his given
address or his whereabouts are unknown and cannot be ascertained by diligent in
quiry, service of summons may, by leave of court, be effected upon him by public
ation once a week for two consecutive weeks in a newspaper of general circulatio
n in the Philippines and in such place as the court may order. In addition, a co
py of the summons shall be served on respondent at his last known address by reg
istered mail or by any other means the court may deem sufficient. (b) The summon
s to be published shall be contained in an order of the court with the following
data; (1) title of the case; (2) docket number; (3) nature of the petition; (4)
principal grounds of the petition and the reliefs prayed for, and (5) a directi
ve for respondent to answer within thirty days from the last issue of publicatio
n. Section 4. Motion to Dismiss. - No motion to dismiss the petition shall be al
lowed except on the ground of lack of jurisdiction over the subject matter or ov
er the parties; provided, however, that any other ground that might warrant a di
smissal of the case may be raised as an affirmative defense in an answer. Sectio
n 5. Answer. - (a) The respondent shall file his answer within fifteen days from
receipt of summons, or within thirty days from the last issue of publication in
case of service of summons by publication. The answer must be verified by respo
ndent himself and not by counsel or attorney-in-fact. (b) If the respondent fail
s to file an answer, the court shall not declare him in default. (c) Where no an
swer is filed/or if the answer does not tender an issue the court shall order th
e public prosecutor to investigate whether collusion exists between the parties.
Section 6. Investigation Report of Public Prosecutor. - (a) Within one one mont
h after receipt of the court order mentioned in paragraph (c) of the preceeding
section, the public prosecutor shall submit a report to the court on whether the
parties are in collusion and serve copies on the parties and their respective c
ounsels, if any. (b) If the public prosecutor finds that collusion exists, he sh
all state the basis thereof in his report. The parties shall file their respecti
ve comments on the finding of collusion within ten days from receipt of copy of
the report. The court shall set the report for hearing and if convinced that par
ties are in collusion,-it shall dismiss the petition. (c) If the public prosecut
or reports that no collusion exists, the court shall set the case for pre-trial.
It shall be the duty of the public prosecutor to appear for the State at the pr
e-trial. Section 7. Social Worker. - The court may require a social worker to co
nduct a case study and to submit the corresponding report at least three days be
fore the pre-trial. The court may also require a case study at any stage of the
case whenever necessary, Section 8. Pre-trial. (a) Pre-trial mandatory.-A pre-tr
ial is mandatory. On motion or motu proprio, the court shall set the pretrial af
ter the last pleading has been served and filed, or upon receipt of the report o
f the public prosecutor that no collusion exists between the parties on a date n
ot earlier than six months from date of the filing of the petition. (b) Notice o
f Pre-trial.-(1) The notice of pre-trial shall contain: (a) the date of pre-tria
l conference; and (b) an order directing the parties to file and serve their res
pective pre-trial briefs in such manner as shall ensure the receipt thereof by t
he adverse party at least three days before the date of pre-trial. (2) The notic
e shall be served separately on the parties and their respective counsels as wel
l as on the public prosecutor. It shall be their duty to appear personally at th
e pre-trial. (3) Notice of pre-trial shall be sent to the respondent even if he
fails to file an answer. In case of summons by publication and the respondent fa
iled to file his answer, notice of pre-trial shall be sent to respondent at his
last known address. Section 9. Contents of pre-trial brief. - The pre-trial brie
f shall contain the following: (1) A statement of the willingness of the parties
to enter into agreements as may be allowed by law,

REMLAW Page 171

Section 9. Contents of pre-trial brief. - The pre-trial brief shall contain the
following: (1) A statement of the willingness of the parties to enter into agree
ments as may be allowed by law, indicating the desired terms thereof; (2) A conc
ise statement of their respective claims together with the applicable laws and a
uthorities; (3) Admitted facts and proposed stipulations of facts, as well as th
e disputed factual and legal issues; (4) All the evidence to be presented, inclu
ding expert opinion, if any, briefly stating or describing the nature and purpos
e thereof; (5) The number and names of the witnesses and their respective affida
vits; and (6) Such other matters as the court may require. Failure to file the p
re-trial brief or to comply with its required contents shall have the same effec
t as failure to appear at the pre-trial under the succeeding section. Section 10
. Effect of failure to appear at the pre-trial. - (1) If the petitioner fails to
appear personally, the case shall be dismissed unless his counsel or a duly aut
horized representative appears in court and proves a valid excuse for the non-ap
pearance of the petitioner. (2) If the respondent filed his answer but fails to
appear, the court shall proceed with the pre-trial and require the public prosec
utor to investigate the non-appearance of the respondent and submit within fifte
en days a report to the court stating whether his non-appearance is due to any c
ollusion between the parties/ If there is no collusion the court shall require t
he public prosecutor to intervene for the State during the trial on the.merits t
o prevent suppression or fabrication of evidence. Section 11. Pre-trial conferen
ce. - At the pre-trial conference, the court may refer the issues to a mediator
who shall assist the parties in reaching an agreement on matters not prohibited
by law. The mediator shall render a report within one month from referral which,
for good reasons, the court may extend for a period not exceeding one month. In
case mediation is not availed of or where it fails, the court shall proceed wit
h the pre-trial conference, on which occasion it shall consider the advisability
of receiving expert testimony and such other matters as may aid in the prompt d
isposition of the petition. Section 12. Pre-trial order. - (a) The proceedings i
n the pre-trial shall be recorded. Upon termination of the pre-trial, the court
shall issue a pre-trial order which shall recite in detail the matters taken up
in the conference, the action taken thereon, the amendments allowed on the plead
ings, and, except as to the ground of legal separation, the agreements or admiss
ions made by the parties on any of the matters considered, including any provisi
onal order that may be necessary or agreed upon by the parties. (b) Should the a
ction proceed to trial, the order shall contain a recital of the following: (1)
Facts undisputed, admitted, and those which need not be proved subject to Sectio
n 13 of this Rule; (2) Factual and legal issues to be litigated; (3) Evidence, i
ncluding objects and documents, that have been marked and will be presented; (4)
Names of witnesses who will be presented and their testimonies in the form of a
ffidavits; and (5) Schedule of the presentation of evidence. The pre-trial order
shall also contain a directive to the public prosecutor to appear for the State
and take steps to prevent collusion between the parties at any stage of the pro
ceedings and fabrication or suppression of evidence during the trial on the meri
ts. (c) The parties shall not be allowed to raise issues or present witnesses an
d evidence other than those stated in the pre-trial order. The order shall contr
ol the trial of the case unless modified by the court to prevent manifest injust
ice. (d) The parties shall have five days from receipt of the pre-trial order to
propose corrections or modifications. Section 13. Prohibited compromise. - The
court shall not allow compromise on prohibited matters, such as the following: (
1) The civil status of persons; (2) The validity of a marriage or of a legal sep
aration; (3) Any ground lor legal separation; (4) Future support; (5) The jurisd
iction of courts; and (6) Future legitime. Section 14. Trial. - (a) The presidin
g judge shall personally conduct the trial of the case. No delegation of the rec
eption of evidence to a commissioner shall be allowed except as to matters invol
ving property relations of the spouses.
REMLAW Page 172

relations of the spouses. (b) The grounds for legal separation must be proved. N
o judgment on the pleadings, summary judgment, or confession of judgment shall b
e allowed. (c) The court may order the exclusion from the courtroom of all perso
ns, including members of the press, who do not have a direct interest in the cas
e. Such an order may be made if the court determines on the record othat requiri
ng a party to testify in open court would not enhance the ascertainment of truth
; would cause to the party psychological harm or inability to effectively commun
icate due to embarrassment, fear, or timidity; would violate the party s right t
o privacy; or would be offensive to decency (d) No copy shall be taken nor any e
xamination or perusal of the records of the case or parts thereof be made by any
person other than a party or counsel of a party, except by order of the court.
Section 15. Memoranda. - The court may require the parties and the public prosec
utor to file their respective memoranda in support of their claims within fiftee
n days from the date the trial is terminated. No other pleadings or papers may b
e submitted without leave of court. After the lapse of the period herein provide
d, the case will be considered submitted for decision, with or without the memor
anda. Section 16. Decision. - (a) The court shall deny the petition on any of th
e following grounds: (1) The aggrieved party has condoned the offense or act com
plained of or has consented to the commission of the offense or act complained o
f; (2) There is connivance in the commission of the offense-or act constituting
the ground for legal separation; (3) Both parties have given ground for legal se
paration; (4) There is collusion between the parties to obtain the decree of leg
al separation; or (5) The action is barred by prescription. (b) If the court ren
ders a decision granting the petition, it shall declare therein that the Decree
of Legal Separation shall be issued by the court only after full compliance with
liquidation under the Family Code. However, in the absence of any property of.t
he parties, the court shall forthwith issue a Decree of Legal Separation which s
hall be registered in the Civil Registry where the marriage was recorded and in
the Civil Registry where the Family Court granting the legal separation is locat
ed. (c) The decision shall likewise declare that: (1) The spouses are entitled t
o live separately from each other but the marriage bond is not severed; (2) The
obligation of mutual support between the spouses ceases; and (3) The offending s
pouse is disqualified from inheriting from the innocent spouse by intestate succ
ession, and provisions in favor of the offending spouse made in the will of the
innocent spouse are revoked by operation of law. (d) The parties, including the
Solicitor General and the public prosecutor, shall be served with copies of the
decision personally or by registered mail. If the respondent summoned by publica
tion failed to appear in the action, the dispositive part of the decision shall
also be published once in a newspaper of general circulation. Section 17. Appeal
. (a) Pre-condition. - No appeal from the decision shall be allowed unless the a
ppellant has filed a motion for reconsideration or new trial within fifteen days
from notice of judgment. (b) Notice of Appeal - An aggrieved party or the Solic
itor General may appeal from the decision by filing a Notice of Appeal within fi
fteen days from notice of denial of the motion for reconsideration or new trial.
The appellant shall serve a copy of the notice of appeal upon the adverse parti
es. Section 18. Liquidation, partition and distribution, custody, and support of
minor children. - Upon entry of the judgment granting the petition, or, in case
of appeal, upon receipt of the entry of judgment of the appellate court grantin
g the petition, the Family Court, on motion of either party, shall proceed with
the liquidation, partition and distribution of the properties of the spouses, in
cluding custody and support of common children, under the Family Code unless suc
h matters had been adjudicated in previous judicial proceedings. Section 19. Iss
uance of Decree of Legal Separation. - (a) The court shall issue the Decree of L
egal Separation after: (1) registration of the entry of judgment granting the pe
tition tor legal separation in the Civil Registry where the marriage was celebra
ted and in the Civil Registry where the Family Court is located; and
REMLAW Page 173

where the marriage was celebrated and in the Civil Registry where the Family Cou
rt is located; and (2) registration of the approved partition and distribution o
f the properties of the spouses, in the proper Register of Deeds where the real
properties are located. (b) The court shall quote in the Decree the dispositive
portion of the judgment entered and attach to the Decree the approved deed of pa
rtition. Section 20. Registration and publication of the Decree of Legal Separat
ion; decree as best evidence. (a) Registration of decree.-The prevailing party s
hall cause the registration of the Decree in the Civil Registry where the marria
ge was registered, in the Civil Registry of the place where the Family Court is
situated, and in the National Census and Statistics Office. He shall report to t
he court compliance with this requirement within thirty days iron receipt of the
copy of the Decree. (b) Publication of decree.-- In case service of summons was
made by publication, the parties shall cause the publication of the Decree once
in a newspaper of general circulation. (c) Best evidence.-The registered Decree
shall be the best evidence to prove the legal separation of the parties and sha
ll serve as notice to third persons concerning the properties of petitioner and
respondent. Section 21. Effect of death of a party; duty of the Family Court or
Appellate Court. - (a) In case a party dies at any stage of me proceedings befor
e the entry of judgment, the court shall order the case closed and terminated wi
thout prejudice to the settlement of estate proper proceedings in the regular co
urts. (b) If the party dies after the entry of judgment, the same shall be bindi
ng upon the parties and their successors in interest in the settlement of the es
tate in the regular courts. Section 22. Petition for revocation of donations. (a) Within five (5) years from the date the decision granting the petition for l
egal separation has become final, the innocent spouse may file a petition under
oath the same proceeding for legal separation to revoke the donations in favor o
f the offending spouse. (b)The revocation of the donations shall be recorded in
the Register of Deeds of Deeds in the places where the properties are located. (
c)Alienations, liens, and encumbrances registered in good faith. before the reco
rding of the petition for revocation in the registries of property shall be resp
ected. (d)After the issuance of the Decree of Legal Separation, the innocent spo
use may revoke the designation of the offending spouse as a beneficiary in any i
nsurance policy even if such designation be stipulated as irrevocable. The revoc
ation or change shall take effect upon written notification thereof to the insur
er. Section 23. Decree of Reconciliation. - (a) If the spouses had reconciled, a
joint manifestation under oath, duly signed by the spouses, may be filed in the
same proceeding for legal separation. (b) If the reconciliation occurred while
the proceeding for legal separation is pending, the court shall immediately issu
e an order terminating the proceeding. (c) If the reconciliation occurred after
the rendition of the judgment granting the petition for legal separation but bef
ore the issuance of the Decree, the spouses shall express in their manifestation
whether or not they agree to revive the former regime of their property relatio
ns or choose a new regime. The court shall immediately issue a Decree of Reconci
liation declaring that the legal separation proceeding is set aside and specifyi
ng the regime of property relations under which the spouses shall be covered. (d
) If the spouses reconciled after the issuance of the Decree, the court, upon pr
oper motion, shall issue a decree of reconciliation declaring therein that the D
ecree is set aside but the separation of property and any forfeiture of the shar
e of the guilty spouse already effected subsists, unless the spouses have agreed
to revive their former regime of property relations or adopt a new regime. (e)
In case of paragraphs (b), (c), and (d). if the reconciled spouses choose to ado
pt a regime of property relations different from that which they had prior to th
e filing of the petition for legal separation, the spouses shall comply with Sec
tion 24 hereof. (f) The decree of reconciliation shall be recorded in the Civil
Registries where the marriage and the Decree had been registered. Section 24. Re
vival of property regime or adoption of another. (a) In case of reconciliation u
nder Section 23, paragraph (c) above, the parties shall file a verified motion f
or revival of regime of property relations or the adoption of another regime of
property relations in the same proceeding for legal separation attaching to said
motion their agreement for the approval of the

REMLAW Page 174

same proceeding for legal separation attaching to said motion their agreement fo
r the approval of the court. (b) The agreement which shall be verified shall spe
cify the following: (1) The properties to be contributed to the restored or new
regime; (2) Those to be retained as separate properties of each spouse; and (3)
The names of all their known creditors, their addresses, and the amounts owing t
o each. (c) The creditors shall be furnished with copies of the motion and the a
greement. (d) The court shall require the spouses to cause the publication of th
eir verified motion for two consecutive weeks in a newspaper of general circulat
ion. (e) After due hearing, and the court decides to grant the motion, it shall
issue an order directing the parties to record the order in the proper registrie
s of property within thirty days from receipt of a copy of the order and submit
proof of compliance within the same period. Section 25. Effectivity. - This Rule
shall take effect on March 15,2003 following its publication in a newspaper of
general circulation not later than March 7, 2003.
Pasted from <http://www.lawphil.net/courts/supreme/am/am_02-11-11-sc_2003.html>
REMLAW Page 175

A.M. No. 02-11-12 Rule on Provisional Orders

Sunday, November 14, 2010 11:29 PM
A.M. No. 02-11-12-SC March 4, 2003 RE: PROPOSED RULE ON PROVISIONAL ORDERS RESOL
UTI ON Acting on the letter of the Chairman of the Committee on Revision of the
Rules of Court submitting for this Court s consideration and approval the Propo
sed Rule on Provisional Orders, the Court Resolved to APPROVED the same. The Rul
e shall take effect on March 15, 2003 following its publication in a newspaper o
f general circulation not later than March 7, 2003 March 4, 2003 Davide Jr. C.J.
, Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval Gutierrez,
Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr. and Azcuna, JJ. Ynares-Sa
ntiago, on leave, Corona, officially on leave. RULE ON PROVISIONAL ORDERS Sectio
n 1. When Issued, - Upon receipt of a verified petition for declaration of absol
ute nullity of void marriage or for annulment of voidable marriage, or for legal
separation, and at any time during the proceeding, the court, motu proprio or u
pon application under oath of any of the parties, guardian or designated custodi
an, may issue provisional orders and protection orders with or without a hearing
. These orders may be enforced immediately, with or without a bond, and for such
period and under such terms" and conditions as the court may deem necessary. Se
ction 2. Spousal Support. - In determining support for the spouses, the court ma
y be guided by the following rules: (a) In the absence of adequate provisions in
a written agreement between the spouses, the spouses may be supported from the
properties of the absolute community or the conjugal partnership. (b) The court
may award support to either spouse in such amount and for such period of time as
the court may deem just and reasonable based on their standard of living during
the marriage. (c) The court may likewise consider the following factors: (1) wh
ether the spouse seeking support is the custodian of a child whose circumstances
make it appropriate for that spouse not to seek outside employment; (2) the tim
e necessary to acquire sufficient education and training to enable the spouse se
eking support to find appropriate employment, and that spouse s future earning c
apacity; (3) theduration of the marriage; (4) the comparative financial resource
s of the spouses, including their comparative earning abilities in the labor mar
ket; (5) the needs and obligations of each spouse; (6) the contribution of each
spouse to the marriage, including services rendered in home-making, child care,
education, and career building of the other spouse; (7) the age and health of th
e spouses; (8) the physical and emotional conditions of the spouses; (9) the abi
lity of the supporting spouse to give support, taking into account that spouse s
earning capacity, earned and unearned income, assets, and standard of living; a
nd (10) any other factor the court may deem just and equitable. (d) The Family C
ourt may direct the deduction of the provisional support from the salary of the
spouse. Section 3. Child Support. - The common children of the spouses shall be
supported from the properties of the absolute community or the conjugal partners
hip. Subject to the sound discretion of the court, either parent or both may be
ordered to give an amount necessary for the support, maintenance, and education
of the child. It shall be in proportion to the resources or means of the giver a
nd to the necessities of the recipient. In determining the amount of provisional
support, the court may likewise consider the following factors: (1) the financi
al resources of the custodial and non-custodial parent and those of the child; (
2) the physical and emotional health of the child and his or her special needs a
nd aptitudes; (3) the standard of living the child has been accustomed to; (4) t
he non-monetary contributions that the parents will make toward the care and wel
l-being of the child.
REMLAW Page 176

parents will make toward the care and well-being of the child. The Family Court
may direct the deduction of the provisional support from the salary of the paren
t. Section 4. Child Custody. - In determining the right party or person to whom
the custody of the child of the parties may be awarded pending the petition, the
court shall consider the best interests of the child and shall give paramount c
onsideration to the material and moral welfare of the child. The court may likew
ise consider the following factors: (a) the agreement of the parties; (b) the de
sire and ability of each parent to foster an open and loving relationship betwee
n the child and the other parent; (c) the child s health, safety, and welfare; (
d) any history of child or spousal abase by the person seeking custody or who ha
s had any filial relationship with the child, including anyone courting the pare
nt; (e) the nature and frequency of contact with both parents; (f) habitual use
of alcohol or regulated substances; (g) marital misconduct; (h) the most suitabl
e physical, emotional, spiritual, psychological and educational environment; and
(i) the preference of the child, if over seven years of age and of sufficient d
iscernment, unless the parent chosen is unfit. The court may award provisional c
ustody in the following order of preference: (1) to both parents jointly; (2) to
either parent taking into account all relevant considerations under the foregoi
ng paragraph, especially the choice of the child over seven years of age, unless
the parent chosen is unfit; (3} to the surviving grandparent, or if there are s
everal of them, to the grandparent chosen by the child over seven years of age a
nd of sufficient discernment, unless the grandparent is unfit or disqualified; (
4) to the eldest brother or sister over twenty-one years of age, unless he or sh
e is unfit or disqualified; (5) to the child s actual custodian over twenty-one
years of age, unless unfit or disqualified; or (6) to any other person deemed by
the court suitable to provide proper care and guidance for the child. The custo
dian temporarily designated by the" court shall give the court and the parents f
ive days notice of any plan to change the residence of the child or take him out
of his residence for more than three days provided it does not prejudice the vi
sitation rights of the parents. Section 5. Visitation Rights. - Appropriate visi
tation rights shall be provided to the parent who is not awarded provisional cus
tody unless found unfit or disqualified by the court. . Section 6. Hold Departur
e Order. - Pending resolution of the petition, no child of the parties shall be
brought out of the country without prior order from the court. The court, motu p
roprio or upon application under oath, may issue ex-parte a hold departure order
, addressed to the Bureau of Immigration and Deportation, directing it not to al
low the departure of the child from the Philippines without the permission of th
e court. The Family Court issuing the hold departure order shall furnish the Dep
artment of Foreign Affairs and the Bureau of Immigration and Deportation of the
Department of Justice a copy of the hold departure order issued within twenty-fo
ur hours from the time of its issuance and through the fastest available means o
f transmittal. The hold-departure order shall contain the following information:
(a) the complete name (including the middle name), the date and place of birth,
and the place of last residence of the person against whom a hold-departure ord
er has been issued or whose departure from the country has been enjoined; (b) th
e complete title and docket number of the case in which the hold departure was i
ssued; (c) the specific nature of the case; and (d) the date of the hold-departu
re order. If available, a recent photograph of the person against whom a hold-de
parture order has been issued or whose departure from the country has been enjoi
ned should also be included. The court may recall the order. motu proprio or upo
n verified motion of any of the parties after summary hearing, subject to such t
erms and conditions as may be necessary for the best interests of the child. Sec
tion 7. Order of Protection. - The court may issue an Order of Protection requir
ing any person: (a) to stay away from the home, school, business, or place of em
ployment of the child, other parent or any other party, and to stay away from an
y other specific place designated by the court; (b) to refrain from harassing, i
ntimidating, or threatening such child or the other parent or any person to whom
custody of the child is awarded; (c) to refrain from acts of commission or omis
sion that create an unreasonable risk to the health, safety, or welfare of the c
hild;

REMLAW Page 177

or welfare of the child; (d) to permit a parent, or a person entitled to visitat

ion by a court order or a separation agreement, to visit the child at stated per
iods; (e) to permit a designated party to enter the residence during a specified
period of time in order to take persona! belongings not contested in a proceedi
ng pending with the Family Court; (f) to comply with such other orders as are ne
cessary for the protection of the child. Section 8. Administration of Common Pro
perty. - If a spouse without just cause abandons the other orfails to comply wit
h his or her obligations to the family, the court may, upon application of the a
ggrieved party under oath, issue a provisional order appointing the applicant or
a third person as receiver or sole administrator of the common property subject
to such precautionary conditions it may impose. The receiver or administrator m
ay not dispose of or encumber any common property or specific separate property
of either spouse without prior authority of the court. The provisional order iss
ued by the court shall be registered in the proper Register of Deeds and annotat
ed in all titles of properties subject of the receivership or administration. Se
ction 9. Effectivity. - This Rule shall take effect on March 15, 2003 following
its publication in a newspaper of general circulation not later than March 7, 20
03.
Pasted from <http://www.lawphil.net/courts/supreme/am/am_02-11-12-sc_2003.html>
REMLAW Page 178

A.M. No. 03-04-04-SC Rule on Custody of Minors and Writ of Habeas Corpus in Rela
tion to Custody of Minors
Sunday, November 14, 2010 11:29 PM
A.M. No. 03-04-04-SC April 22, 2003 RE: PROPOSED RULE ON CUSTODY OF MINORS AND W
RIT OF HABEAS CORPUS IN RELATION TO CUSTODY OF MINORS RESOLUTION Acting on the l
etter of the Chairman of the Committee on Revision of the Rules of Court submitt
ing for this Courts consideration and approval the Proposed Rule on custody of Mi
nors and Writ of Habeas Corpus in Relation to Custody of Minors, the Court Resol
ved to APPROVE the same. The Rule shall take effect on May 15, 2003 following it
s publication in a newspaper of general circulation not later than April 30, 200
3. April 22, 2003 Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Ynares
-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales,
Callejo, Sr., and Azcuna, JJ., concur. Quisumbing, J., on official leave. RULE
ON CUSTODY OF MINORS AND WRIT OF HABEAS CORPUS IN RELATION TO CUSTODY OF MINORS
SECTION 1. Applicability. - This rule shall apply to petitions for custody of mi
nors and writs of habeas corpus in relation thereto. The Rules of Court shall ap
ply suppletorily. Section 2. Petition for custody of minors; who may file.- A ve
rified petition for the rightful custody of a minor may be filed by any person c
laiming such right. The party against whom it may be filed shall be designated a
s the respondent. Section 3. Where to file petition. - The petition for custody
of minors shall be filed with the Family Court of the province or city where the
petitioner resides or where the minor may be found. Section 4. Contents of peti
tion. - The verified petition shall allege the following: (a) The personal circu
mstances of the petitioner and of the respondent; (b) The name, age and present
whereabouts of the minor and his or her relationship to the petitioner and the r
espondent; (c) The material operative facts constituting deprivation of custody;
and (d) Such other matters which are relevant to the custody of the minor. The
verified petition shall be accompanied by a certificate against forum shopping,
which the petitioner must sign personally. Section 5. Summons; personal service
on respondent. - If the court is satisfied that the petition is sufficient in fo
rm and substance, it shall direct the clerk of court to issue summons, which sha
ll be served together with a copy of the petition personally on the respondent.
Section 6. Motion to Dismiss. - A motion to dismiss the petition is not allowed
except on the ground of lack of jurisdiction over the subject matter or over the
parties. Any other ground that might warrant the dismissal of the petition may
be raised as an affirmative defense in the answer. Section 7. Verified Answer. The respondent shall file an answer to the petition, personally verified by him
, within five days after service of summons and a copy of the petition. Section
8. Case study; duty of social worker. - Upon the filing of the verified answer o
r the expiration of the period to file it, the court may order a social worker t
o make a case study of the minor and the parties and to submit a report and reco
mmendation to the court at least three days before the scheduled pre-trial. Sect
ion 9. Notice of mandatory pre-trial. - Within fifteen days after the filing of
the answer or the expiration of the period to file answer, the court shall issue
an order: (1) fixing a date for the pre-trial conference; (2) directing the par
ties to file and serve their respective pre-trial briefs in such manner as shall
ensure receipt thereof by the adverse party at least three days before the date
of pre-trial; and (3) requiring the respondent to present the minor before the
court.
REMLAW Page 179

requiring the respondent to present the minor before the court. The notice of it
s order shall be served separately on both the parties and their respective coun
sels. The pre-trial is mandatory. Section 10. Contents of pre-trial brief. - The
pre-trial brief shall contain the following: (a) A statement of the willingness
of the parties to enter into agreements that may be allowed by law, indicating
its terms; (b) A concise statement of their respective claims together with the
applicable laws and authorities; (c) Admitted facts and proposed stipulations of
facts; (d) The disputed factual and legal issues; (e) All the evidence to be pr
esented, briefly stating or describing its nature and purpose; (f) The number an
d names of the witnesses and their respective affidavits which shall serve as th
e affiant s testimony on direct examination; and (g) Such other matters as the c
ourt may require to be included in the pre-trial brief. Failure to file the pretrial brief or to comply with its required contents shall have the same effect a
s failure to appear at the pre-trial. Section 11. Effect of failure to appear at
the pre-trial.-(a) If the petitioner fails to appear personally at the pre-tria
l, the case shall be dismissed, unless his counsel or a duly authorized represen
tative appears in court and proves a valid excuse for the non-appearance of the
petitioner. (b) If the respondent has filed his answer but fails to appear at th
e pre-trial, the petitioner shall be allowed to present his evidence ex parte. T
he court shall then render judgment on the basis of the pleadings and the eviden
ce thus presented. Section 12. What may be done at pre-trial. - At the pre-trial
, the parties may agree on the custody of the minor. If the parties fail to agre
e, the court may refer the matter to a mediator who shall have five days to effe
ct an agreement between the parties. If the issue is not settled through mediati
on, the court shall proceed with the pre-trial conference, on which occasion it
shall consider such other matters as may aid in the prompt disposition of the pe
tition. Section 13. Provisional order awarding custody. - After an answer has be
en filed or after expiration of the period to file it, the court may issue a pro
visional order awarding custody of the minor. As far as practicable, the followi
ng order of preference shall be observed in the award of custody: (a) Both paren
ts jointly; (b) Either parent, taking into account all relevant considerations,
especially the choice of the minor over seven years of age and of sufficient dis
cernment, unless the parent chosen is unfit; (c) The grandparent, or if there ar
e several grandparents, the grandparent chosen by the minor over seven years of
age and of sufficient discernment, unless the grandparent chosen is unfit or dis
qualified; (d) The eldest brother or sister over twenty-one years of age, unless
he or she is unfit or disqualified; (e) The actual custodian of the minor over
twenty-one years of age, unless the former is unfit or disqualified; or (f) Any
other person or institution the court may deem suitable to provide proper care a
nd guidance for the minor. Section 14. Factors to consider in determining custod
y. - In awarding custody, the court shall consider the best interests of the min
or and shall give paramount consideration to his material and moral welfare. The
best interests of the minor refer to the totality of the circumstances and cond
itions as are most congenial to the survival, protection, and feelings of securi
ty of the minor encouraging to his physical, psychological and emotional develop
ment. It also means the least detrimental available alternative for safeguarding
the growth and development of the minor. The court shall also consider the foll
owing: (a) Any extrajudicial agreement which the parties may have bound themselv
es to comply with respecting the rights of the minor to maintain direct contact
with the non custodial parent on a regular basis, except when there is an existi
ng threat or danger of physical, mental, sexual or emotional violence which enda
ngers the safety and best interests of the minor; (b) The desire and ability of
one parent to foster an open and loving relationship between the minor and the o
ther parent; (c) The health, safety and welfare of the minor; (d) Any history of
child or spousal abuse by the person seeking custody or who has had any filial
relationship with the minor, including anyone courting the parent;
REMLAW Page 180

relationship with the minor, including anyone courting the parent; (e) The natur
e and frequency of contact with both parents; (f) Habitual use of alcohol, dange
rous drugs or regulated substances; (g) Marital misconduct; (h) The most suitabl
e physical, emotional, spiritual, psychological and educational environment for
the holistic development and growth of the minor; and (i) The preference of the
minor over seven years of age and of sufficient discernment, unless the parent c
hosen is unfit. Section 15. Temporary visitation rights. - The court shall provi
de in its order awarding provisional custody appropriate visitation rights to th
e non-custodial parent or parents, unless the court finds said parent or parents
unfit or disqualified. The temporary custodian shall give the court and non cus
todial parent or parents at least five days notice of any plan to change the re
sidence of the minor or take him out of his residence for more than three days p
rovided it does not prejudice the visitation rights of the non-custodial parent
or parents. Section 16. Hold Departure Order. - The minor child subject of the p
etition shall not be brought out of the country without prior order from the cou
rt while the petition is pending. The court, motu proprio or upon application un
der oath, may issue ex parte a hold departure order, addressed to the Bureau of
Immigration and Deportation, directing it not to allow the departure of the mino
r from the Philippines without the permission of the court. The Family Court iss
uing the hold departure order shall furnish the Department of Foreign Affairs an
d the Bureau of Immigration and Deportation of the Department of Justice a copy
of the hold departure order within twenty-four hours from its issuance and throu
gh the fastest available means of transmittal. The hold departure order shall co
ntain the following information: (a) The complete name (including the middle nam
e), the date and place of birth, the nationality and the place of last residence
of the person against whom a hold departure order has been issued or whose depa
rture from the country has been enjoined; (b) The complete title and docket numb
er of the case in which the hold departure order was issued; (c) The specific na
ture of the case; (d) The date of the hold departure order; and (e) A recent pho
tograph, if available, of the party against whom a hold departure order has been
issued or whose departure from the country has been enjoined. The court may rec
all the hold departure order motu proprio, or upon verified motion of any of the
parties after summary hearing, subject to such terms and conditions as may be n
ecessary for the best interests of the minor. Section 17. Protection Order. - Th
e court may issue a Protection Order requiring any person: (a) To stay away from
the home, school, business, or place of employment of the minor, other parent o
r any other party, or from any other specific place designated by the court; (b)
To cease and desist from harassing, intimidating, or threatening such minor or
the other parent or any person to whom custody of the minor is awarded; (c) To r
efrain from acts of commission or omission that create an unreasonable risk to t
he health, safety, or welfare of the minor; (d) To permit a parent, or a party e
ntitled to visitation by a court order or a separation agreement, to visit the m
inor at stated periods; (e) To permit a designated party to enter the residence
during a specified period of time in order to take personal belongings not conte
sted in a proceeding pending with the Family Court; and (f) To comply with such
other orders as are necessary for the protection of the minor. Section 18. Judgm
ent. - After trial, the court shall render judgment awarding the custody of the
minor to the proper party considering the best interests of the minor. If it app
ears that both parties are unfit to have the care and custody of the minor, the
court may designate either the paternal or maternal grandparent of the minor, or
his oldest brother or sister, or any reputable person to take charge of such mi
nor, or commit him to any suitable home for children. In its judgment, the court
may order either or both parents to give an amount necessary for the support, m
aintenance and education of the minor, irrespective of who may be its custodian.
In determining the amount of support, the court may consider the following fact
ors: (1) the financial resources of the custodial and non-custodial parent and t
hose of the minor; (2) the physical and emotional health,
REMLAW Page 181

custodial and non-custodial parent and those of the minor; (2) the physical and
emotional health, special needs, and aptitude of the minor; (3) the standard of
living the minor has been accustomed to; and (4) the non-monetary contributions
that the parents would make toward the care and well-being of the minor. The cou
rt may also issue any order that is just and reasonable permitting the parent wh
o is deprived of the care and custody of the minor to visit or have temporary cu
stody. Section 19. Appeal. - No appeal from the decision shall be allowed unless
the appellant has filed a motion for reconsideration or new trial within fiftee
n days from notice of judgment. An aggrieved party may appeal from the decision
by filing a Notice of Appeal within fifteen days from notice of the denial of th
e motion for reconsideration or new trial and serving a copy thereof on the adve
rse parties. Section 20. Petition for writ of habeas corpus. - A verified petiti
on for a writ of habeas corpus involving custody of minors shall be filed with t
he Family Court. The writ shall be enforceable within its judicial region to whi
ch the Family Court belongs. However, the petition may be filed with the regular
court in the absence of the presiding judge of the Family Court, provided, howe
ver, that the regular court shall refer the case to the Family Court as soon as
its presiding judge returns to duty. The petition may also be filed with the app
ropriate regular courts in places where there are no Family Courts. The writ iss
ued by the Family Court or the regular court shall be enforceable in the judicia
l region where they belong. 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 returnab
le to a Family Court or to any regular court within the region where the petitio
ner resides or where the minor may be found for hearing and decision on the meri
ts. Upon return of the writ, the court shall decide the issue on custody of mino
rs. The appellate court, or the member thereof, issuing the writ shall be furnis
hed a copy of the decision. Section 21. Confidentiality of proceedings. - The he
arings on custody of minors may, at the discretion of the court, be closed to th
e public and the records of the case shall not be released to non-parties withou
t its approval. Section 22. Effectivity. - This Rule shall take effect on May 15
, 2003 following its publication in a newspaper of general circulation not later
than April 30, 2003.
Pasted from <http://www.lawphil.net/courts/supreme/am/am_03_04_04_sc_2003.html>
REMLAW Page 182

A.M. No. 03-02-05-SC Rule on Guardianship of Minors

Sunday, November 14, 2010 11:29 PM
[A.M. No. 03-02-05-SC 2003-05-01]
RE: PROPOSED RULE ON GUARDIANSHIP OF MINORS RESOL UTI ON
Acting on the letter of the Chairman of the Committee on Revision of the Rules o
f Court submitting for this Courts consideration and approval the Proposed Rule o
n Guardianship of Minors, the Court Resolved to APPROVE the same.
The Rule shall take effect on May 1, 2003 following its publication in a newspap
er of general circulation not later than April 15, 2003.
April 1, 2003. <>I>Davide, Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiba
n, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Co
rona, Carpio-Moralez,Callejo Sr., Azcuna, JJ., concur RULE ON GUARDIANSHIP OF MI
NORS Section 1. Applicability of the Rule. This Rule shall apply to petitions fo
r guardianship over the person or property, or both, of a minor. The father and
the mother shall jointly exercise legal guardianship over the person and propert
y of their unemancipated common child without the necessity of a court appointme
nt. In such case, this Rule shall be suppletory to the provisions of the Family
Code on guardianship. Sec. 2. Who may petition for appointment of guardian. On g
rounds authorized by law, any relative or other person on behalf of a minor, or
the minor himself if fourteen years of age or over, may petition the Family Cour
t for the appointment of a general guardian over the person or property, or both
, of such minor. The petition may also be filed by the Secretary of Social Welfa
re and Development and by the Secretary of Health in the case of an insane minor
who needs to be hospitalized. Sec. 3. Where to file petition. A petition for gu
ardianship over the person or property, or both, of a minor may be filed in the
Family Court of the province or city where the minor actually resides. If he res
ides in a foreign country, the petition shall be flied with the Family Court of
the province or city where his property or any part thereof is situated.
Sec. 4. Grounds of petition.-The grounds for the appointment of a guardian over
the person or property, or both, of a minor are the following:
(a) death, continued absence, or incapacity of his parents; (b) suspension, depr
ivation or termination of parental authority;
(c) remarriage of his surviving parent, if the latter Is found unsuitable to exe
rcise parental authority; or
(d) when the best interests of the minor so require.
REMLAW Page 183

Sec. 5. Qualifications of guardians. In appointing a guardian, the court shall c

onsider the guardians: (a) moral character; (b) physical, mental and psychologica
l condition; (c) financial status;
(d) relationship of trust with the minor;
(e) availability to exercise the powers and duties of a guardian for the full pe
riod of the guardianship; (f) lack of conflict of interest with the minor; and
(g) ability to manage the property of the minor.
Sec. 6. Who may be appointed guardian of the person or property, or both, of a m
inor. In default of parents or a court-appointed guardian, the court may appoint
a guardian of the person or property, or both, of a minor, observing as far as
practicable, the following order of preference: (a) the surviving grandparent an
d In case several grandparents survive, the court shall select any of them takin
g Into account all relevant considerations; (b) the oldest brother or sister of
the minor over twenty-one years of age, unless unfit or disqualified; (c) the ac
tual custodian of the minor over twenty-one years of age, unless unfit or disqua
lified; and (d) any other person, who in the sound discretion of the court, woul
d serve the best interests of the minor.
Sec. 7. Contents of petition. A petition for the appointment of a general guardi
an must allege the following: (a) The jurisdictional facts;
(b) The name, age and residence of the prospective ward;
(c) The ground rendering the appointment necessary or convenient;
(d) The death of the parents of the minor or the termination, deprivation or sus
pension of their parental authority; (e) The remarriage of the minors surviving p
arent;
(f) The names, ages, and residences of relatives within the 4th civil degree of
the minor, and of persons having him in their care and custody;
(g) The probable value, character and location of the property of the minor; and
(h) The name, age and residence of the person for whom letters of guardianship
are prayed.
REMLAW Page 184

The petition shall be verified and accompanied by a certification against forum

shopping. However, no defect in the petition or verification shall render void t
he issuance of letters of guardianship. Sec. 8. Time and notice of hearing. When
a petition for the appointment of a general guardian is filed, the court shall
fix a time and place for its hearing, and shall cause reasonable notice to be gi
ven to the persons mentioned in the petition, including the minor if he is fourt
een years of age or over, and may direct other general or special notice to be g
iven.
Sec. 9. Case study report. The court shall order a social worker to conduct a ca
se study of the minor and all the prospective guardians and submit his report an
d recommendation to the court for its guidance before the scheduled hearing. The
social worker may intervene on behalf of the minor if he finds that the petitio
n for guardianship should be denied.
Sec. 10. Opposition to petition. Any interested person may contest the petition
by filing a written opposition based on such grounds as the majority of the mino
r or the unsuitability of the person for whom letters are prayed, and pray that
the petition be denied, or that letters of guardianship issue to himself, or to
any suitable person named in the opposition. Sec. 11. Hearing and order for lett
ers to issue. At the hearing of the petition, it must be shown that the requirem
ent of notice has been complied with. The prospective ward shall be presented to
the court. The court shall hear the evidence of the parties in support of their
respective allegations. If warranted, the court shall appoint a suitable guardi
an of the person or property, or both, of the minor. At the discretion of the co
urt, the hearing on guardianship may be closed to the public and the records of
the case shall not be released without its approval.
Sec. 12. When and how a guardian of the property for non-resident minor is appoi
nted; notice. When the minor resides outside the Philippines but has property in
the Philippines, any relative or friend of such minor, or any one interested in
his property, in expectancy or otherwise, may petition the Family Court for the
appointment of a guardian over the property.
Notice of hearing of the petition shall be given to the minor by publication or
any other means as the court may deem proper. The court may dispense with the pr
esence of the non-resident minor. If after hearing the court is satisfied that s
uch non-resident is a minor and a guardian is necessary or convenient, it may ap
point a guardian over his property. Sec. 13. Service of final and executory judg
ment or order. The final and executory judgment or order shall be served upon th
e Local Civil Registrar of the municipality or city where the minor resides and
the Register of Deeds of the place where his property or part thereof is situate
d shall annotate the same in the corresponding title, and report to the court hi
s compliance within fifteen days from receipt of the order.
Sec. 14. Bond of guardian; amount; conditions.-Before he enters upon the executi
on of his trust, or letters of guardianship issue, an appointed guardian may be
required to post a bond in such sum as the court shall determine and conditioned
as follows: (a) To make and return to the court, within three months after the
issuance of his letters of guardianship, a true and complete Inventory of all th
e property, real and personal, of his ward which shall come to his possession or
knowledge or to the possession or knowledge of any other person in his behalf;
(b) To faithfully execute the duties of his trust, to manage and dispose of the
property according to this rule for the best interests of the ward, and to provi
de for his proper care, custody and education;
REMLAW Page 185

rule for the best interests of the ward, and to provide for his proper care, cus
tody and education;
(c) To render a true and Just account of all the property of the ward in his han
ds, and of all proceeds or interest derived therefrom, and of the management and
disposition of the same, at the time designated by this rule and such other tim
es as the court directs; and at the expiration of his trust, to settle his accou
nts with the court and deliver and pay over all the property, effects, and monie
s remaining in his hands, or due from him on such settlement, to the person lawf
ully entitled thereto; and
(d) To perform all orders of the court and such other duties as may be required
by law. Sec. 15. Where to file the bond; action thereon. The bond posted by a gu
ardian shall be filed in the Family Court and, In case of breach of any of its c
onditions, the guardian may be prosecuted in the same proceeding for the benefit
of the ward or of any other person legally interested in the property. Whenever
necessary, the court may require the guardian to post a new bond and may discha
rge from further liability the sureties on the old bond after due notice to inte
rested persons, if no injury may result therefrom to those interested in the pro
perty. Sec. 16. Bond of parents as guardians of property of minor. lf the market
value of the property or the annual Income of the child exceeds P50,000.00, the
parent concerned shall furnish a bond In such amount as the court may determine
, but in no case less than ten per centurn of the value of such property or annu
al income, to guarantee the performance of the obligations prescribed for genera
l guardians. A verified petition for approval of the bond shall be flied in the
Family Court of the place where the child resides or, if the child resides in a
foreign country, in the Family Court of the place where the property or any part
thereof is situated. The petition shall be docketed as a summary special procee
ding In which all incidents and issues regarding the performance of the obligati
ons of a general guardian shall be heard and resolved. Sec. 17. General duties o
f guardian. A guardian shall have the care and custody of the person of his ward
and the management of his property, or only the management of his property. The
guardian of the property of a nonresident minor shall have the management of al
l his property within the Philippines. A guardian shall perform the following du
ties:
(a) To pay the just debts of the ward out of the personal property and the incom
e of the real property of the ward, If the same is sufficient; otherwise, out of
the real property of the ward upon obtaining an order for its sale or encumbran
ce; (b) To settle all accounts of his ward, and demand, sue for, receive all deb
ts due him, or may, with the approval of the court, compound for the same and gi
ve discharges to the debtor on receiving a fair and just dividend of the propert
y and effects; and to appear for and represent the ward in all actions and speci
al proceedings, unless another person is appointed for that purpose;
(c) To manage the property of the ward frugally and without waste, and apply the
income and profits thereon, insofar as may be necessary, to the comfortable and
suitable maintenance of the ward; and if such income and profits be insufficien
t for that purpose, to sell or encumber the real or personal property, upon bein
g authorized by the court to do so; (d) To consent to a partition of real or per
sonal property owned by the ward jointly or in common with others upon authority
granted by the court after hearing, notice to relatives of the ward, and a care
ful investigation as to the necessity and propriety of the proposed action;
REMLAW Page 186

(e) To submit to the court a verified inventory of the property of his ward with
in three months after his appointment, and annually thereafter, the rendition of
which may be required upon the application of an interested person; (f) To repo
rt to the court any property of the ward not included in the inventory which is
discovered, or succeeded to, or acquired by the ward within three months after s
uch discovery, succession, or acquisition; and
(g) To render to the court for its approval an accounting of the property one ye
ar from his appointment, and every year thereafter or as often as may be require
d.
Sec. 18. Power and duty of the court The court may: (a) Request the assistance o
f one or more commissioners in the appraisal of the property of the ward reporte
d in the initial and subsequent inventories; (b) Authorize reimbursement to the
guardian, other than a parent, of reasonable expenses incurred in the execution
of his trust, and allow payment of compensation for his services as the court ma
y deem just, not exceeding ten per centum of the net income of the ward, if any;
otherwise, in such amount the court determines to be a reasonable compensation
for his services; and
(c) Upon complaint of the guardian or ward, or of any person having actual or pr
ospective interest in the property at the ward, require any person suspected of
having embezzled, concealed, or disposed of any money, goods or interest, or a w
ritten instrument belonging to the ward or his property to appear for examinatio
n concerning any thereof and issue such orders as would secure the property agai
nst such embezzlement, concealment or conveyance.
Sec. 19. Petition to sell or encumber property.-When the income of a property un
der guardianship is insufficient to maintain and educate the ward, or when it is
for his benefit that his personal or real property or any part thereof be sold,
mortgaged or otherwise encumbered, and the proceeds invested in safe and produc
tive security, or in the improvement or security of other real property, the gua
rdian may file a verified petition setting forth such facts, and praying that an
order issue authorizing the sale or encumbrance of the property. Sec. 20. Order
to show cause. If the sale or encumbrance is necessary or would be beneficial t
o the ward, the court shall order his next of kin and all person/s interested in
the property to appear at a reasonable time and place therein specified and sho
w cause why the petition should not be granted. Sec. 21. Hearing on return of or
der; costs. At the time and place designated in the order to show cause, the cou
rt shall hear the allegations and evidence of the petitioner and next of kin, an
d other persons interested, together with their witnesses, and grant or deny the
petition as the best interests of the ward may require. Sec. 22. Contents of or
der for sale or encumbrance and its duration; bond. If, after full examination,
it is necessary, or would be beneficial to the ward, to sell or encumber the pro
perty, or some portion of it, the court shall order such sale or encumbrance the
proceeds of which shall be expended for the maintenance or the education of the
ward, or invested as the circumstances may require. The order shall specify the
grounds for the sale or encumbrance and may direct that the property ordered so
ld be disposed of at public sale, subject to such conditions as to the time and
manner of payment, and security where a part of the payment is deferred. The ori
ginal bond of the guardian shall stand as security for the proper appropriation
of the proceeds of the sale or encumbrance, but the court may, if deemed expedie
nt, require an additional bond as a condition for the sale or encumbrance. The a
uthority to sell or encumber shall not extend beyond one year, unless renewed by
the court.
REMLAW Page 187

to sell or encumber shall not extend beyond one year, unless renewed by the cour
t. Sec. 23. Court may order investment of proceeds and direct management of prop
erty. The court may authorize and require the guardian to invest the proceeds of
sales or encumbrances, and any other money of his ward in his hands, in real or
personal property, for the best interests of the ward, and may make such other
orders for the management, investment, and disposition of the property and effec
ts, as circumstances may warrant.
Sec. 24. Grounds for removal or resignation of guardian. When a guardian becomes
insane or otherwise incapable of discharging his trust or is found thereafter t
o be unsuitable, or has wasted or mismanaged the property of the ward, or has fa
iled to render an account or make a return for thirty days after it is due, the
court may, upon reasonable notice to the guardian, remove him as such and requir
e him to surrender the property of the ward to the person found to be lawfully e
ntitled thereto. The court may allow the guardian to resign for justifiable caus
es.
Upon the removal or resignation of the guardian, the court shall appoint a new o
ne.
No motion for removal or resignation shall be granted unless the guardian has su
bmitted the proper accounting of the property of the ward and the court has appr
oved the same. Sec. 25. Ground for termination of guardianship. The court motu p
roprio or upon verified motion of any person allowed to file a petition for guar
dianship may terminate the guardianship on the ground that the ward has come of
age or has died. The guardian shall notify the court of such fact within ten day
s of its occurrence. Sec. 26. Service of final and executory judgment or order.
The final and executory judgment or order shall be served upon the Local Civil R
egistrar of the municipality or city where the minor resides and the Register of
Deeds of the province or city where his property or any part thereof is situate
d. Both the Local Civil Registrar and the Register of Deeds shall enter the final
and executory judgment or order in the appropriate books in their offices. Sec.
27. Effect of the rule. This Rule amends Rules 92 to 97 inclusive of the Rules
of Court on guardianship of minors. Guardianship of incompetents who are not min
ors shall continue to be under the jurisdiction of the regular courts and govern
ed by the Rules of Court. Sec. 28. Effectivity. - This Rule shall take effect on
May 1, 2003 following its publication in a newspaper of general circulation not
later than April 15, 2003.
Pasted from <http://elibrary.judiciary.gov.ph/index6.php?doctype=Amendments%20to
%20the%20Rules%20of% 20Court&docid=a45475a11ec72b843d74959b60fd7bd6456477e8a4088
>
REMLAW Page 188

A.M. No. 02-6-02-SC Rule on Adoption

Sunday, November 14, 2010 11:29 PM
[A.m. No. 02-6-02-SC 2002-08-02]
RULE ON ADOPTION A. DOMESTIC ADOPTION
Section 1. Applicability of the Rule. This Rule covers the domestic adoption of
Filipino children. Sec. 2. Objectives. (a) The best interests of the child shall
be the paramount consideration in all matters relating to his care, custody and
adoption, in accordance with Philippine laws, the United Nations (UN) Conventio
n on the Rights of the Child, UN Declaration on Social and Legal Principles Rela
ting to the Protection and Welfare of Children with Special Reference to Foster
Placement and Adoption, Nationally and Internationally, and the Hague Convention
on the Protection of Children and Cooperation in Respect of Inter-country Adopt
ion. (b) The State shall provide alternative protection and assistance through f
oster care or adoption for every child who is a foundling, neglected, orphaned,
or abandoned. To this end, the State shall: (i) (i) ensure that every child rema
ins under the care and custody of his parents and is provided with love, care, u
nderstanding and security for the full and harmonious development of his persona
lity. Only when such efforts prove insufficient and no appropriate placement or
adoption within the childs extended family is available shall adoption by an unre
lated person be considered. (ii) safeguard the biological parents from making ha
sty decisions in relinquishing their parental authority over their child;
(iii) (iii) prevent the child from unnecessary separation from his biological pa
rents;
(iv) conduct public information and educational campaigns to promote a positive
environment for adoption; (v) ensure that government and private sector agencies
have the capacity to handle adoption inquiries, process domestic adoption appli
cations and offer adoption-related services including, but not limited to, paren
t preparation and post-adoption education and counseling; (vi) encourage domesti
c adoption so as to preserve the childs identity and culture in his native land,
and only when this is not available shall inter-country adoption be considered a
s a last resort; and (vii) protect adoptive parents from attempts to disturb the
ir parental authority and custody over their adopted child. Any voluntary or inv
oluntary termination of parental authority shall be administratively or judicial
ly declared so as to establish the status of the child as legally available for a
doption and his custody transferred to the Department of Social Welfare and Devel
opment or to any duly licensed and accredited child-placing or child-caring agen
cy, which entity shall be authorized to take steps for the permanent placement o
f the child.
REMLAW Page 189

Sec. 3. Definition of Terms. For purposes of this Rule:

(a) (a) Child is a person below eighteen (18) years of age at the time of the fili
ng of the petition for adoption. (b) (b) A child legally available for adoption re
fers to a child who has been voluntarily or involuntarily committed to the Depar
tment or to a duly licensed and accredited child-placing or child-caring agency,
freed of the parental authority of his biological parents, or in case of rescis
sion of adoption, his guardian or adopter(s). (c) (c) Voluntarily committed child
is one whose parents knowingly and willingly relinquish parental authority over
him in favor of the Department. (d) (d) Involuntarily committed child is one whose
parents, known or unknown, have been permanently and judicially deprived of par
ental authority over him due to abandonment; substantial, continuous or repeated
neglect and abuse; or incompetence to discharge parental responsibilities.
(e) (e) Foundling refers to a deserted or abandoned infant or child whose parents,
guardian or relatives are unknown; or a child committed to an orphanage or char
itable or similar institution with unknown facts of birth and parentage and regi
stered in the Civil Register as a foundling.
(f) (f) Abandoned child refers to one who has no proper parental care or guardians
hip or whose parents have deserted him for a period of at least six (6) continuo
us months and has been judicially declared as such. (g) (g) Dependent child refers
to one who is without a parent, guardian or custodian or one whose parents, gua
rdian or other custodian for good cause desires to be relieved of his care and c
ustody and is dependent upon the public for support. (h) (h) Neglected child is on
e whose basic needs have been deliberately not attended to or inadequately atten
ded to, physically or emotionally, by his parents or guardian. (i) (i) Physical n
eglect occurs when the child is malnourished, ill-clad and without proper shelter
.
(j) (j) Emotional neglect exists when a child is raped, seduced, maltreated, explo
ited, overworked or made to work under conditions not conducive to good health o
r made to beg in the streets or public places, or placed in moral danger, or exp
osed to drugs, alcohol, gambling, prostitution and other vices.
(k) (k) Child-placement agency refers to an agency duly licensed and accredited by
the Department to provide comprehensive child welfare services including, but n
ot limited to, receiving applications for adoption, evaluating the prospective a
doptive parents and preparing the adoption home study report. (l) (l) Child-carin
g agency refers to an agency duly licensed and accredited by the Department that
provides 24-hour residential care services for abandoned, orphaned, neglected or
voluntarily committed children. (m) (m) Department refers to the Department of So
cial Welfare and Development. (n) (n) Deed of Voluntary Commitment refers to the w
ritten and notarized instrument relinquishing parental authority and committing
the child to the care and custody of the
REMLAW Page 190

relinquishing parental authority and committing the child to the care and custod
y of the Department executed by the childs biological parents or in their absence
, mental incapacity or death, by the childs legal guardian, to be witnessed by an
authorized representative of the Department after counseling and other services
have been made available to encourage the biological parents to keep the child.
(o) (o) Child Study Report refers to a study made by the court social worker of t
he childs legal status, placement history, psychological, social, spiritual, medi
cal, ethno-cultural background and that of his biological family needed in deter
mining the most appropriate placement for him. (p) (p) Home Study Report refers to
a study made by the court social worker of the motivation and capacity of the p
rospective adoptive parents to provide a home that meets the needs of a child. (
q) (q) Supervised trial custody refers to the period of time during which a social
worker oversees the adjustment and emotional readiness of both adopters and ado
ptee in stabilizing their filial relationship. (r) (r) Licensed Social Worker refe
rs to one who possesses a degree in bachelor of science in social work as a mini
mum educational requirement and who has passed the government licensure examinat
ion for social workers as required by Republic Act No. 4373. (s) (s) Simulation o
f birth is the tampering of the civil registry to make it appear in the birth rec
ords that a certain child was born to a person who is not his biological mother,
thus causing such child to lose his true identity and status. (t) (t) Biological
Parents refer to the childs mother and father by nature. (u) (u) Pre-Adoption Serv
ices refer to psycho-social services provided by professionally-trained social wo
rkers of the Department, the social services units of local governments, private
and government health facilities, Family Courts, licensed and accredited childcaring and childplacement agencies and other individuals or entities involved in
adoption as authorized by the Department.
(v) (v) Residence means a persons actual stay in the Philippines for three (3) cont
inuous years immediately prior to the filing of a petition for adoption and whic
h is maintained until the adoption decree is entered. Temporary absences for pro
fessional, business, health, or emergency reasons not exceeding sixty (60) days
in one (1) year does not break the continuity requirement.
(w) (w) Alien refers to any person, not a Filipino citizen, who enters and remains
in the Philippines and is in possession of a valid passport or travel documents
and visa. SEC. 4. Who may adopt. The following may adopt:
(1) Any Filipino citizen of legal age, in possession of full civil capacity and
legal rights, of good moral character, has not been convicted of any crime invol
ving moral turpitude; who is emotionally and psychologically capable of caring f
or children, at least sixteen (16) years older than the adoptee, and who is in a
position to support and care for his children in keeping with the means of the
family. The requirement of a 16-year difference between the age of the adopter a
nd adoptee may be waived when the adopter is the biological parent of the adopte
e or is the spouse of the adoptees parent;
(2) Any alien possessing the same qualifications as above-stated for Filipino na
tionals: Provided, That his country has diplomatic relations with the Republic o
f the Philippines, that he has been living in the Philippines for at least three
(3) continuous years prior to the filing of the petition for
REMLAW Page 191

living in the Philippines for at least three (3) continuous years prior to the f
iling of the petition for adoption and maintains such residence until the adopti
on decree is entered, that he has been certified by his diplomatic or consular o
ffice or any appropriate government agency to have the legal capacity to adopt i
n his country, and that his government allows the adoptee to enter his country a
s his adopted child. Provided, further, That the requirements on residency and c
ertification of the aliens qualification to adopt in his country may be waived fo
r the following: (i) a former Filipino citizen who seeks to adopt a relative wit
hin the fourth (4th) degree of consanguinity or affinity; or (ii) one who seeks
to adopt the legitimate child of his Filipino spouse; or (iii) one who is marrie
d to a Filipino citizen and seeks to adopt jointly with his spouse a relative wi
thin the fourth (4th) degree of consanguinity or affinity of the Filipino spouse
. (3) The guardian with respect to the ward after the termination of the guardia
nship and clearance of his financial accountabilities. Husband and wife shall jo
intly adopt, except in the following cases:
(i) if one spouse seeks to adopt the legitimate child of one spouse by the other
spouse; or
(ii) if one spouse seeks to adopt his own illegitimate child: Provided, however,
That the other spouse has signified his consent thereto; or (iii) if the spouse
s are legally separated from each other.
In case husband and wife jointly adopt or one spouse adopts the illegitimate chi
ld of the other, joint parental authority shall be exercised by the spouses.
SEC. 5. Who may be adopted. The following may be adopted: (1) (1) Any person bel
ow eighteen (18) years of age who has been voluntarily committed to the Departme
nt under Articles 154, 155 and 156 of P.D. No. 603 or judicially declared availa
ble for adoption;
(2) (2) The legitimate child of one spouse, by the other spouse;
(3) (3) An illegitimate child, by a qualified adopter to raise the status of the
former to that of legitimacy; (4) (4) A person of legal age regardless of civil
status, if, prior to the adoption, said person has been consistently considered
and treated by the adopters as their own child since minority; (5) (5) A child
whose adoption has been previously rescinded; or (6) (6) A child whose biologica
l or adoptive parents have died: Provided, That no proceedings shall be initiate
d within six (6) months from the time of death of said parents. (7) (7) A child
not otherwise disqualified by law or these rules.
Sec. 6. Venue. The petition for adoption shall be filed with the Family Court of
the province or city
REMLAW Page 192

Sec. 6. Venue. The petition for adoption shall be filed with the Family Court of
the province or city where the prospective adoptive parents reside.
Sec. 7. Contents of the Petition. The petition shall be verified and specificall
y state at the heading of the initiatory pleading whether the petition contains
an application for change of name, rectification of simulated birth, voluntary o
r involuntary commitment of children, or declaration of child as abandoned, depe
ndent or neglected.
1) 1) If the adopter is a Filipino citizen, the petition shall allege the follow
ing:
(a) (a) The jurisdictional facts;
(b) (b) That the petitioner is of legal age, in possession of full civil capacit
y and legal rights; is of good moral character; has not been convicted of any cr
ime involving moral turpitude; is emotionally and psychologically capable of car
ing for children; is at least sixteen (16) years older than the adoptee, unless
the adopter is the biological parent of the adoptee or is the spouse of the adop
tees parent; and is in a position to support and care for his children in keeping
with the means of the family and has undergone pre-adoption services as require
d by Section 4 of Republic Act No. 8552.
2) 2) If the adopter is an alien, the petition shall allege the following:
(a) (a) The jurisdictional facts;
(b) (b) Sub-paragraph 1(b) above;
(c) (c) That his country has diplomatic relations with the Republic of the Phili
ppines;
(d) (d) That he has been certified by his diplomatic or consular office or any a
ppropriate government agency to have the legal capacity to adopt in his country
and his government allows the adoptee to enter his country as his adopted child
and reside there permanently as an adopted child; and
(e) (e) That he has been living in the Philippines for at least three (3) contin
uous years prior to the filing of the petition and he maintains such residence u
ntil the adoption decree is entered.
The requirements of certification of the aliens qualification to adopt in his cou
ntry and of residency may be waived if the alien:
(i) is a former Filipino citizen who seeks to adopt a relative within the fourth
degree of consanguinity or affinity; or (ii) seeks to adopt the legitimate chil
d of his Filipino spouse; or
(iii) is married to a Filipino citizen and seeks to adopt jointly with his spous
e a relative within the fourth degree of consanguinity or affinity of the Filipi
no spouse. 3) 3) If the adopter is the legal guardian of the adoptee, the petiti
on shall allege that guardianship had been terminated and the guardian had clear
ed his financial accountabilities. 4) 4) If the adopter is married, the spouse s
hall be a co-petitioner for joint adoption except if: (a) one spouse seeks to ad
opt the legitimate child of the other, or
REMLAW Page 193

(a) one spouse seeks to adopt the legitimate child of the other, or
(b) if one spouse seeks to adopt his own illegitimate child and the other spouse
signified written consent thereto, or
(c) if the spouses are legally separated from each other. 5) 5) If the adoptee i
s a foundling, the petition shall allege the entries which should appear in his
birth certificate, such as name of child, date of birth, place of birth, if know
n; sex, name and citizenship of adoptive mother and father, and the date and pla
ce of their marriage. 6) 6) If the petition prays for a change of name, it shall
also state the cause or reason for the change of name. In all petitions, it sha
ll be alleged:
(a) The first name, surname or names, age and residence of the adoptee as shown
by his record of birth, baptismal or foundling certificate and school records.
(b) That the adoptee is not disqualified by law to be adopted. (c) The probable
value and character of the estate of the adoptee.
(d) The first name, surname or names by which the adoptee is to be known and reg
istered in the Civil Registry.
A certification of non-forum shopping shall be included pursuant to Section 5, R
ule 7 of the 1997 Rules of Civil Procedure.
Sec. 8. Rectification of Simulated Birth. In case the petition also seeks rectif
ication of a simulated of birth, it shall allege that:
(a) (a) Petitioner is applying for rectification of a simulated birth; (b) (b) T
he simulation of birth was made prior to the date of effectivity of Republic Act
No. 8552 and the application for rectification of the birth registration and th
e petition for adoption were filed within five years from said date; (c) (c) The
petitioner made the simulation of birth for the best interests of the adoptee;
and
(d) (d) The adoptee has been consistently considered and treated by petitioner a
s his own child.
Sec. 9. Adoption of a foundling, an abandoned, dependent or neglected child. In
case the adoptee is a foundling, an abandoned, dependent or neglected child, the
petition shall allege:
(a) (a) The facts showing that the child is a foundling, abandoned, dependent or
neglected; (b) (b) The names of the parents, if known, and their residence. If
the child has no known or living parents, then the name and residence of the gua
rdian, if any; (c) (c) The name of the duly licensed child-placement agency or i
ndividual under whose care the child is in custody; and
REMLAW Page 194

child is in custody; and

(d) (d) That the Department, child-placement or child-caring agency is authorize
d to give its consent.
Sec. 10. Change of name. In case the petition also prays for change of name, the
title or caption must contain: (a) (a) The registered name of the child; (b) (b
) Aliases or other names by which the child has been known; and (c) (c) The full
name by which the child is to be known.
Sec. 11. Annexes to the Petition. The following documents shall be attached to t
he petition: A. Birth, baptismal or foundling certificate, as the case may be, a
nd school records showing the name, age and residence of the adoptee;
B. Affidavit of consent of the following:
1. The adoptee, if ten (10) years of age or over; 2. The biological parents of t
he child, if known, or the legal guardian, or the child-placement agency, childcaring agency, or the proper government instrumentality which has legal custody
of the child; 3. The legitimate and adopted children of the adopter and of the a
doptee, if any, who are ten (10) years of age or over; 4. The illegitimate child
ren of the adopter living with him who are ten (10) years of age or over; and
5. The spouse, if any, of the adopter or adoptee.
C. Child study report on the adoptee and his biological parents; D. If the petit
ioner is an alien, certification by his diplomatic or consular office or any app
ropriate government agency that he has the legal capacity to adopt in his countr
y and that his government allows the adoptee to enter his country as his own ado
pted child unless exempted under Section 4(2); E. Home study report on the adopt
ers. If the adopter is an alien or residing abroad but qualified to adopt, the h
ome study report by a foreign adoption agency duly accredited by the Inter-Count
ry Adoption Board; and F. Decree of annulment, nullity or legal separation of th
e adopter as well as that of the biological parents of the adoptee, if any.
Sec. 12. Order of Hearing. If the petition and attachments are sufficient in for
m and substance, the court shall issue an order which shall contain the followin
g: (1) the registered name of the adoptee in the birth certificate and the names
by which the
REMLAW Page 195

(1) the registered name of the adoptee in the birth certificate and the names by
which the adoptee has been known which shall be stated in the caption; (2) the
purpose of the petition; (3) the complete name which the adoptee will use if the
petition is granted; (4) the date and place of hearing which shall be set withi
n six (6) months from the date of the issuance of the order and shall direct tha
t a copy thereof be published before the date of hearing at least once a week fo
r three successive weeks in a newspaper of general circulation in the province o
r city where the court is situated; Provided, that in case of application for ch
ange of name, the date set for hearing shall not be within four (4) months after
the last publication of the notice nor within thirty (30) days prior to an elec
tion. The newspaper shall be selected by raffle under the supervision of the Exe
cutive Judge.
(5) a directive to the social worker of the court, the social service office of
the local government unit or any child-placing or child-caring agency, or the De
partment to prepare and submit child and home study reports before the hearing i
f such reports had not been attached to the petition due to unavailability at th
e time of the filing of the latter; and
(6) a directive to the social worker of the court to conduct counseling sessions
with the biological parents on the matter of adoption of the adoptee and submit
her report before the date of hearing. At the discretion of the court, copies o
f the order of hearing shall also be furnished the Office of the Solicitor Gener
al through the provincial or city prosecutor, the Department and the biological
parents of the adoptee, if known. If a change in the name of the adoptee is pray
ed for in the petition, notice to the Solicitor General shall be mandatory.
Sec. 13. Child and Home Study Reports. In preparing the child study report on th
e adoptee, the concerned social worker shall verify with the Civil Registry the
real identity and registered name of the adoptee. If the birth of the adoptee wa
s not registered with the Civil Registry, it shall be the responsibility of the
social worker to register the adoptee and secure a certificate of foundling or l
ate registration, as the case may be. The social worker shall establish that the
child is legally available for adoption and the documents in support thereof ar
e valid and authentic, that the adopter has sincere intentions and that the adop
tion shall inure to the best interests of the child. In case the adopter is an a
lien, the home study report must show the legal capacity to adopt and that his g
overnment allows the adoptee to enter his country as his adopted child in the ab
sence of the certification required under Section 7(b) of Republic Act No. 8552.
If after the conduct of the case studies, the social worker finds that there ar
e grounds to deny the petition, he shall make the proper recommendation to the c
ourt, furnishing a copy thereof to the petitioner.
Sec. 14. Hearing. Upon satisfactory proof that the order of hearing has been pub
lished and jurisdictional requirements have been complied with, the court shall
proceed to hear the petition. The petitioner and the adoptee must personally app
ear and the former must testify before the presiding
REMLAW Page 196

petitioner and the adoptee must personally appear and the former must testify be
fore the presiding judge of the court on the date set for hearing.
The court shall verify from the social worker and determine whether the biologic
al parent has been properly counseled against making hasty decisions caused by s
train or anxiety to give up the child; ensure that all measures to strengthen th
e family have been exhausted; and ascertain if any prolonged stay of the child i
n his own home will be inimical to his welfare and interest.
Sec. 15. Supervised Trial Custody. Before issuance of the decree of adoption, th
e court shall give the adopter trial custody of the adoptee for a period of at l
east six (6) months within which the parties are expected to adjust psychologica
lly and emotionally to each other and establish a bonding relationship. The tria
l custody shall be monitored by the social worker of the court, the Department,
or the social service of the local government unit, or the child-placement or ch
ild-caring agency which submitted and prepared the case studies. During said per
iod, temporary parental authority shall be vested in the adopter.
The court may, motu proprio or upon motion of any party, reduce the period or ex
empt the parties if it finds that the same shall be for the best interests of th
e adoptee, stating the reasons therefor.
An alien adopter however must complete the 6-month trial custody except the foll
owing:
a) a former Filipino citizen who seeks to adopt a relative within the fourth (4t
h) degree of consanguinity or affinity; or b) one who seeks to adopt the legitim
ate child of his Filipino spouse; or
c) one who is married to a Filipino citizen and seeks to adopt jointly with his
or her spouse the latters relative within the fourth (4th) degree of consanguinit
y or affinity. If the child is below seven (7) years of age and is placed with t
he prospective adopter through a preadoption placement authority issued by the D
epartment, the court shall order that the prospective adopter shall enjoy all th
e benefits to which the biological parent is entitled from the date the adoptee
is placed with him.
The social worker shall submit to the court a report on the result of the trial
custody within two weeks after its termination.
Sec. 16. Decree of Adoption. If the supervised trial custody is satisfactory to
the parties and the court is convinced from the trial custody report and the evi
dence adduced that the adoption shall redound to the best interests of the adopt
ee, a decree of adoption shall be issued which shall take effect as of the date
the original petition was filed even if the petitioners die before its issuance.
The decree shall: A. State the name by which the child is to be known and regis
tered;
B. Order:
1) the Clerk of Court to issue to the adopter a certificate of finality upon exp
iration of the 15-day reglementary period within which to appeal; 2) the adopter
to submit a certified true copy of the decree of adoption and the certificate o
f finality to the Civil Registrar where the child was originally registered with
in thirty (30) days from
REMLAW Page 197

finality to the Civil Registrar where the child was originally registered within
thirty (30) days from receipt of the certificate of finality. In case of change
of name, the decree shall be submitted to the Civil Registrar where the court i
ssuing the same is situated. 3) 3) the Civil Registrar of the place where the ad
optee was registered: a. to annotate on the adoptees original certificate of birt
h the decree of adoption within thirty (30) days from receipt of the certificate
of finality;
b. to issue a certificate of birth which shall not bear any notation that it is
a new or amended certificate and which shall show, among others, the following:
registry number, date of registration, name of child, sex, date of birth, place
of birth, name and citizenship of adoptive mother and father, and the date and p
lace of their marriage, when applicable;
c. to seal the original certificate of birth in the civil registry records which
can be opened only upon order of the court which issued the decree of adoption;
and d. to submit to the court issuing the decree of adoption proof of complianc
e with all the foregoing within thirty days from receipt of the decree.
If the adoptee is a foundling, the court shall order the Civil Registrar where t
he foundling was registered, to annotate the decree of adoption on the foundling
certificate and a new birth certificate shall be ordered prepared by the Civil
Registrar in accordance with the decree.
Sec. 17. Book of Adoptions. The Clerk of Court shall keep a book of adoptions sh
owing the date of issuance of the decree in each case, compliance by the Civil R
egistrar with Section 16(B)(3) and all incidents arising after the issuance of t
he decree.
Sec. 18. Confidential Nature of Proceedings and Records. All hearings in adoption
cases, after compliance with the jurisdictional requirements shall be confident
ial and shall not be open to the public. All records, books and papers relating
to the adoption cases in the files of the court, the Department, or any other ag
ency or institution participating in the adoption proceedings shall be kept stri
ctly confidential.
If the court finds that the disclosure of the information to a third person is n
ecessary for security reasons or for purposes connected with or arising out of t
he adoption and will be for the best interests of the adoptee, the court may, up
on proper motion, order the necessary information to be released, restricting th
e purposes for which it may be used.
Sec. 19. Rescission of Adoption of the Adoptee. The petition shall be verified a
nd filed by the adoptee who is over eighteen (18) years of age, or with the assi
stance of the Department, if he is a minor, or if he is over eighteen (18) years
of age but is incapacitated, by his guardian or counsel. The adoption may be re
scinded based on any of the following grounds committed by the adopter:
1) repeated physical and verbal maltreatment by the adopter despite having under
gone counseling;
2) attempt on the life of the adoptee; 3) sexual assault or violence; or
REMLAW Page 198

3) sexual assault or violence; or 4) abandonment or failure to comply with paren

tal obligations. Adoption, being in the best interests of the child, shall not b
e subject to rescission by the adopter. However, the adopter may disinherit the
adoptee for causes provided in Article 919 of the Civil Code.
Sec. 20. Venue. The petition shall be filed with the Family Court of the city or
province where the adoptee resides.
Sec. 21. Time within which to file petition. The adoptee, if incapacitated, must
file the petition for rescission or revocation of adoption within five (5) year
s after he reaches the age of majority, or if he was incompetent at the time of
the adoption, within five (5) years after recovery from such incompetency.
Sec.
arty
eof.
such

22. Order
to answer
The order
manner as

to Answer. The court shall issue an order requiring the adverse p

the petition within fifteen (15) days from receipt of a copy ther
and copy of the petition shall be served on the adverse party in
the court may direct.

Sec. 23. Judgment. If the court finds that the allegations of the petition are t
rue, it shall render judgment ordering the rescission of adoption, with or witho
ut costs, as justice requires. The court shall order that the parental authority
of the biological parent of the adoptee, if known, or the legal custody of the
Department shall be restored if the adoptee is still a minor or incapacitated an
d declare that the reciprocal rights and obligations of the adopter and the adop
tee to each other shall be extinguished. The court shall further declare that su
ccessional rights shall revert to its status prior to adoption, as of the date o
f judgment of judicial rescission. Vested rights acquired prior to judicial resc
ission shall be respected.
It shall also order the adoptee to use the name stated in his original birth or
foundling certificate.
The court shall further order the Civil Registrar where the adoption decree was
registered to cancel the new birth certificate of the adoptee and reinstate his
original birth or foundling certificate.
Sec. 24. Service of Judgment. A certified true copy of the judgment together wit
h a certificate of finality issued by the Branch Clerk of the Court which render
ed the decision in accordance with the preceding Section shall be served by the
petitioner upon the Civil Registrar concerned within thirty (30) days from recei
pt of the certificate of finality. The Civil Registrar shall forthwith enter the
rescission decree in the register and submit proof of compliance to the court i
ssuing the decree and the Clerk of Court within thirty (30) days from receipt of
the decree. The Clerk of Court shall enter the compliance in accordance with Se
ction 17 hereof.
SEC. 25. Repeal. - This supersedes Rule 99 on Adoption and Rule 100 of the Rules
of Court.
B. Inter-Country Adoption
REMLAW Page 199

B. Inter-Country Adoption
Sec. 26. Applicability. The following sections apply to inter-country adoption o
f Filipino children by foreign nationals and Filipino citizens permanently resid
ing abroad.
SEC. 27. Objectives. The State shall:
a) a) consider inter-country adoption as an alternative means of child care, if
the child cannot be placed in a foster or an adoptive family or cannot, in any s
uitable manner, be cared for in the Philippines; b) ensure that the child subjec
t of inter-country adoption enjoys the same protection accorded to children in d
omestic adoption; and c) take all measures to ensure that the placement arising
therefrom does not result in improper financial gain for those involved.
Sec. 28. Where to File Petition. A verified petition to adopt a Filipino child m
ay be filed by a foreign national or Filipino citizen permanently residing abroa
d with the Family Court having jurisdiction over the place where the child resid
es or may be found.
It may be filed directly with the Inter-Country Adoption Board.
Sec. 29. Who may be adopted. Only a child legally available for domestic adoptio
n may be the subject of inter-country adoption. Sec. 30. Contents of Petition. T
he petitioner must allege: a) a) his age and the age of the child to be adopted,
showing that he is at least twenty-seven (27) years of age and at least sixteen
(16) years older than the child to be adopted at the time of application, unles
s the petitioner is the parent by nature of the child to be adopted or the spous
e of such parent, in which case the age difference does not apply; b) b) if marr
ied, the name of the spouse who must be joined as co-petitioner except when the
adoptee is a legitimate child of his spouse; c) c) that he has the capacity to a
ct and assume all rights and responsibilities of parental authority under his na
tional laws, and has undergone the appropriate counseling from an accredited cou
nselor in his country; d) d) that he has not been convicted of a crime involving
moral turpitude;
e) e) that he is eligible to adopt under his national law;
f) f) that he can provide the proper care and support and instill the necessary
moral values and example to all his children, including the child to be adopted;
g) g) that he agrees to uphold the basic rights of the child, as embodied under
Philippine laws and the U. N. Convention on the Rights of the Child, and to abi
de by the rules and regulations issued to implement the provisions of Republic A
ct No. 8043; h) h) that he comes from a country with which the Philippines has d
iplomatic relations and whose
REMLAW Page 200

h) h) that he comes from a country with which the Philippines has diplomatic rel
ations and whose government maintains a similarly authorized and accredited agen
cy and that adoption of a Filipino child is allowed under his national laws; and
i) i) that he possesses all the qualifications and none of the disqualification
s provided in this Rule, in Republic Act No. 8043 and in all other applicable Ph
ilippine laws.
Sec. 31. Annexes. - The petition for adoption shall contain the following annexe
s written and officially translated in English: a) a) Birth certificate of petit
ioner;
b) b) Marriage contract, if married, and, if applicable, the divorce decree, or
judgment dissolving the marriage; c) c) Sworn statement of consent of petitioners
biological or adopted children above ten (10) years of age;
d) d) Physical, medical and psychological evaluation of the petitioner certified
by a duly licensed physician and psychologist; e) e) Income tax returns or any
authentic document showing the current financial capability of the petitioner; f
) f) Police clearance of petitioner issued within six (6) months before the fili
ng of the petitioner;
g) g) Character reference from the local church/minister, the petitioners employe
r and a member of the immediate community who have known the petitioner for at l
east five (5) years; h) h) Full body postcard-size pictures of the petitioner an
d his immediate family taken at least six (6) months before the filing of the pe
tition.
Sec. 32. Duty of Court. The court, after finding that the petition is sufficient
in form and substance and a proper case for inter-country adoption, shall immed
iately transmit the petition to the Inter-Country Adoption Board for appropriate
action.
SEC. 33. Effectivity. - This Rule shall take effect on August 22, 2002 following
its publication in a newspaper of general circulation.
Pasted from <http://elibrary.judiciary.gov.ph/index6.php?doctype=Amendments%20to
%20the%20Rules%20of% 20Court&docid=a45475a11ec72b843d74959b60fd7bd64564763672711
>
REMLAW Page 201

Summary Proceedings under the Family Code, Title XI, Chapters 1 to 3

Sunday, November 14, 2010 11:30 PM
TITLE XI SUMMARY JUDICIAL PROCEEDINGS IN THE FAMILY LAW Chapter 1. Prefatory Pro
visions Art. 238. Until modified by the Supreme Court, the procedural rules prov
ided for in this Title shall apply as regards separation in fact between husband
and wife, abandonment by one of the other, and incidents involving parental aut
hority. (n) Chapter 2. Separation in Fact Art. 239. When a husband and wife are
separated in fact, or one has abandoned the other and one of them seeks judicial
authorization for a transaction where the consent of the other spouse is requir
ed by law but such consent is withheld or cannot be obtained, a verified petitio
n may be filed in court alleging the foregoing facts. The petition shall attach
the proposed deed, if any, embodying the transaction, and, if none, shall descri
be in detail the said transaction and state the reason why the required consent
thereto cannot be secured. In any case, the final deed duly executed by the part
ies shall be submitted to and approved by the court. (n) Art. 240. Claims for da
mages by either spouse, except costs of the proceedings, may be litigated only i
n a separate action. (n) Art. 241. Jurisdiction over the petition shall, upon pr
oof of notice to the other spouse, be exercised by the proper court authorized t
o hear family cases, if one exists, or in the regional trial court or its equiva
lent sitting in the place where either of the spouses resides. (n) Art. 242. Upo
n the filing of the petition, the court shall notify the other spouse, whose con
sent to the transaction is required, of said petition, ordering said spouse to s
how cause why the petition should not be granted, on or before the date set in s
aid notice for the initial conference. The notice shall be accompanied by a copy
of the petition and shall be served at the last known address of the spouse con
cerned. (n) Art. 243. A preliminary conference shall be conducted by the judge p
ersonally without the parties being assisted by counsel. After the initial confe
rence, if the court deems it useful, the parties may be assisted by counsel at t
he succeeding conferences and hearings. (n) Art. 244. In case of non-appearance
of the spouse whose consent is sought, the court shall inquire into the reasons
for his failure to appear, and shall require such appearance, if possible. (n) A
rt. 245. If, despite all efforts, the attendance of the non-consenting spouse is
not secured, the court may proceed ex parte and render judgment as the facts an
d circumstances may warrant. In any case, the judge shall endeavor to protect th
e interests of the non-appearing spouse. (n) Art. 246. If the petition is not re
solved at the initial conference, said petition shall be decided in a summary he
aring on the basis of affidavits, documentary evidence or oral testimonies at th
e sound discretion of the court. If testimony is needed, the court shall specify
the witnesses to be heard and the subject-matter of their testimonies, directin
g the parties to present said witnesses. (n) Art. 247. The judgment of the court
shall be immediately final and executory. (n) Art. 248. The petition for judici
al authority to administer or encumber specific separate property of the abandon
ing spouse and to use the fruits or proceeds thereof for the support of the fami
ly shall also be governed by these rules. (n) Chapter 3. Incidents Involving Par
ental Authority Art. 249. Petitions filed under Articles 223, 225 and 235 of thi
s Code involving parental authority shall be verified.. (n) Art. 250. Such petit
ions shall be verified and filed in the proper court of the place where the chil
d resides. (n) Art. 251. Upon the filing of the petition, the court shall notify
the parents or, in their absence or
REMLAW Page 202

Art. 251. Upon the filing of the petition, the court shall notify the parents or
, in their absence or incapacity, the individuals, entities or institutions exer
cising parental authority over the child. (n) Art. 252. The rules in Chapter 2 h
ereof shall also govern summary proceedings under this Chapter insofar as they a
re applicable. (n)
Pasted from <http://webcache.googleusercontent.com/u/lawphil? q=cache:NHZcT8v7bz
kJ:www.lawphil.net/executive/execord/eo1987/eo_209_1987.html+summary+procedure+f
amily+code&cd= 10&hl=en&ct=clnk&ie=UTF-8>
REMLAW Page 203

Chapter 4
Sunday, November 14, 2010 11:30 PM
Art. 51(action of a child for presumptive legitime), Art. 69 (judicial declarati
on of family domicile in case of disagreement of the spouses), Art. 73 (spouses o
bjection to the profession of the other spouse), Arts. 96 and 124 (annulment of
husbands decision in the administration and enjoyment of community or conjugal pr
operty; appointment of spouse as sole administrator except cases of incompetent ot
her spouse which shall be under Rules 93 and 95) and Art. 217 (entrusting childr
en to homes and orphanages).
Art. 41. A marriage contracted by any person during subsistence of a previous ma
rriage shall be null and void, unless before the celebration of the subsequent m
arriage, the prior spouse had been absent for four consecutive years and the spo
use present has a well-founded belief that the absent spouse was already dead. I
n case of disappearance where there is danger of death under the circumstances s
et forth in the provisions of Article 391 of the Civil Code, an absence of only
two years shall be sufficient. For the purpose of contracting the subsequent mar
riage under the preceding paragraph the spouse present must institute a summary
proceeding as provided in this Code for the declaration of presumptive death of
the absentee, without prejudice to the effect of reappearance of the absent spou
se. (83a) Art. 51. In said partition, the value of the presumptive legitimes of
all common children, computed as of the date of the final judgment of the trial
court, shall be delivered in cash, property or sound securities, unless the part
ies, by mutual agreement judicially approved, had already provided for such matt
ers. The children or their guardian or the trustee of their property may ask for
the enforcement of the judgment. The delivery of the presumptive legitimes here
in prescribed shall in no way prejudice the ultimate successional rights of the
children accruing upon the death of either of both of the parents; but the value
of the properties already received under the decree of annulment or absolute nu
llity shall be considered as advances on their legitime. (n)
Art. 69. The husband and wife shall fix the family domicile. In case of disagree
ment, the court shall decide. The court may exempt one spouse from living with t
he other if the latter should live abroad or there are other valid and compellin
g reasons for the exemption. However, such exemption shall not apply if the same
is not compatible with the solidarity of the family. (110a) Art. 73. Either spo
use may exercise any legitimate profession, occupation, business or activity wit
hout the consent of the other. The latter may object only on valid, serious, and
moral grounds. In case of disagreement, the court shall decide whether or not:
(1) The objection is proper, and (2) Benefit has occurred to the family prior to
the objection or thereafter. If the benefit accrued prior to the objection, the
resulting obligation shall be enforced against the separate property of the spo
use who has not obtained consent. The foregoing provisions shall not prejudice t
he rights of creditors who acted in good faith. (117a) Section 4. Ownership, Adm
inistrative, Enjoyment and Disposition of the Community Property Art. 96. The ad
ministration and enjoyment of the community property shall belong to both spouse
s jointly. In case of disagreement, the husband s decision shall prevail, subjec
t to recourse to the court by the wife for proper remedy, which must be availed
of within five years from the date of the contract implementing such decision. I
n the event that one spouse is incapacitated or otherwise unable to participate
in the administration of the common properties, the other spouse may assume sole
powers of administration. These powers do not include disposition or encumbranc
e without authority of the court or the written consent of the other spouse. In
the absence of such authority or consent, the disposition or encumbrance shall b
e void. However, the transaction shall be construed as a continuing offer on the
part of the consenting spouse and the third person, and may be perfected as a b
inding contract upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors. (206a) Section 5
. Administration of the Conjugal Partnership Property Art. 124. The administrati
on and enjoyment of the conjugal partnership shall belong to both spouses jointl

y. In case of disagreement, the husband s decision shall prevail, subject to rec

ourse to the court by the wife for proper remedy, which must be availed of withi
n five years from the date of the contract implementing such decision. In the ev
ent that one spouse is incapacitated or otherwise unable to participate in the a
dministration of the conjugal properties, the other spouse may assume sole power
s of administration. These powers do not include disposition or encumbrance with
out authority of the court or the written consent of the other spouse. In the ab
sence of such authority or consent, the disposition or encumbrance shall be void
. However, the transaction shall be construed as a continuing offer on the part
of the consenting spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or authorization by the court
before the offer is withdrawn by either or both offerors. (165a) Art. 217. In ca
se of foundlings, abandoned neglected or abused children and other children simi
larly situated, parental authority shall be entrusted in summary judicial procee
dings to heads of children s homes, orphanages and similar institutions duly acc
redited by the proper government agency. (314a)
REMLAW Page 204

Madrinan v. Madrinan GR 159374 Jul 12, 2007

Sunday, November 14, 2010 11:30 PM
FELIPE N. MADRIAN, G.R. No. 159374 Petitioner, Present: PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,* - v e r s u s - CORONA, AZCUNA and GARCIA,** JJ. FRANCISCA
R. MADRIAN, Respondent. Promulgated: July 12, 2007 x-- - - - -- - - - -- - - - -- - - -- - - - -- - - - - -- - - - -- - - - - x DE 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 sens
itive and heart-rending affair. Such is the case here. Even the usually technica
l subject of jurisdiction became emotionally charged. Petitioner Felipe N. Madria
n and respondent Francisca R. Madrian were married on July 7, 1993 in Paraaque Cit
y. They resided in San Agustin Village, Brgy. Moonwalk, Paraaque City. Their unio
n 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 Kr
izia Ann, born on December 12, 2000. After a bitter quarrel on May 18, 2002, pet
itioner allegedly left their conjugal abode and took their three sons with him t
o 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 petit
ioner to no avail. She then brought the matter to the Lupong Tagapamayapa in the
ir barangay but this too proved futile. Thus respondent filed a petition for hab
eas corpus of Ronnick, Phillip and Francis Angelo in the Court of Appeals, alleg
ing that petitioners act of leaving the conjugal dwelling and going to Albay and
then to Laguna disrupted the education of their children and deprived them of th
eir mothers care. She prayed that petitioner be ordered to appear and produce the
ir sons before the court and to explain why they should not be returned to her c
ustody. Petitioner and respondent appeared at the hearing on September 17, 2002.
They initially agreed that petitioner would return the custody of their three s
ons to respondent. Petitioner, however, had a change of heart[1] and decided to
file a memorandum. On September 3, 2002, petitioner filed his memorandum[2] alle
ging that respondent was unfit to take custody of their three sons because she w
as habitually drunk, frequently went home late at night or in the wee hours of t
he 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 responden
t 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 certificatio
n from the principal of the Dila Elementary School in Sta. Rosa, Laguna that Ron
nick 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 a
s the Family Courts Act of 1997) family
REMLAW Page 205

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 deci
de the petition for habeas corpus filed by respondent.[3] For her part, responde
nt 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. Petitioners alcoholism and drug addiction impaired his mental fa
culties, 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 Appeals[5] rendered a decision[6] asserting its authority t
o take cognizance of the petition and ruling that, under Article 213 of the Fami
ly Code, respondent was entitled to the custody of Phillip and Francis Angelo wh
o were at that time aged six and four, respectively, subject to the visitation r
ights of petitioner. With respect to Ronnick who was then eight years old, the c
ourt 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. Pe
titioner moved for reconsideration of the Court of Appeals decision but it was d
enied. 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: xxx x xx x xx b)
Petitions for guardianship, custody of children, habeas corpus in relation to th
e latter; xxx x xx x xx
Petitioner is wrong. In Thornton v. Thornton,*7+ this Court resolved the issue o
f the Court of Appeals jurisdiction to issue writs of habeas corpus in cases invo
lving custody of minors in the light of the provision in RA 8369 giving family c
ourts exclusive original jurisdiction over such petitions:
The Court of Appeals should take cognizance of the case since there is nothing i
n RA 8369 that revoked its jurisdiction to issue writs of habeas corpus involvin
g the custody of minors. xxx x xx x xx We rule therefore that RA 8369 did not di
vest the Court of Appeals and the Supreme Court of their jurisdiction over habea
s corpus cases involving the custody of minors. xxx x xx x xx The provisions of
RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of App
eals and Supreme Court to issue writs of habeas corpus relating to the custody o
f 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 Judicia
ry Reorganization Act of 1980] are absolutely incompatible since RA 8369 does no
t prohibit the Court of Appeals and the Supreme Court from issuing writs of habe
as corpus in cases involving the custody of minors. Thus, the provisions of RA 8
369 must be read in harmony with RA 7029 and BP 129 that family courts have conc
urrent jurisdiction with the Court of Appeals and the Supreme Court in petitions
for habeas corpus where the custody of minors is at issue.[8] (emphases supplie
d) 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 Custod
y of Minors and Writ of Habeas Corpus in Relation to Custody of Minors:
REMLAW Page 206

to Custody of Minors:
In any case, whatever uncertainty there was has been settled with the adoption o
f A.M. No. 03-03-04-SC Re: Rule on Custody of Minors and Writ of Habeas Corpus i
n 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 o
f 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 C
ourt belongs. xxx x xx x xx 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 returnab
le to a Family Court or to any regular court within the region where the petitio
ner resides or where the minor may be found for hearing and decision on the meri
ts.
From the foregoing, there is no doubt that the Court of Appeals and Supreme Cour
t have concurrent jurisdiction with family courts in habeas corpus cases where t
he custody of minors is involved.[9] (emphases supplied) We note that after peti
tioner moved out of their Paraaque residence on May 18, 2002, he twice transferre
d his sons to provinces covered by different judicial regions. This situation is
what the Thornton interpretation of RA 8369s provision on jurisdiction precisely
addressed:
[The reasoning that by giving family courts exclusive jurisdiction over habeas c
orpus cases, the lawmakers intended them to be the sole courts which can issue w
rits of habeas corpus] will result in an iniquitous situation, leaving individua
ls like [respondent] without legal recourse in obtaining custody of their childr
en. Individuals who do not know the whereabouts of minors they are looking for w
ould be helpless since they cannot seek redress from family courts whose writs a
re enforceable only in their respective territorial jurisdictions. Thus, if a mi
nor is being transferred from one place to another, which seems to be the case h
ere, the petitioner in a habeas corpus case will be left without legal remedy. T
his lack of recourse could not have been the intention of the lawmakers when the
y passed [RA 8369].[10] Moreover, a careful reading of Section 5(b) of RA 8369 r
eveals that family courts are vested with original exclusive jurisdiction in cus
tody cases, not in habeas corpus cases. Writs of habeas corpus which may be issu
ed exclusively by family courts under Section 5(b) of RA 8369 pertain to the anc
illary 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 t
he 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, c
onflicting decisions, interference by a co-equal court and judicial instability.
The rule therefore is: when by law jurisdiction is conferred on a court or judic
ial officer, all auxiliary writs, processes and other means necessary to carry i
t into effect may be employed by such court or officer.[11] Once a court acquire
s 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.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI40.992\madrinan.
docx>
REMLAW Page 207

Yu v Yu GR 164915 Mar 10, 2006

Sunday, November 14, 2010 11:30 PM
G.R. No. 164915 March 10, 2006 ERIC JONATHAN YU, Petitioner, vs. CAROLINE T. YU,
Respondent. DE C I S I O N CARPIO MORALES, J.: On January 11, 2002, Eric Jonath
an Yu (petitioner) filed a petition for habeas corpus before the Court of Appeal
s alleging that his estranged wife Caroline Tanchay-Yu (respondent) unlawfully w
ithheld from him the custody of their minor child Bianca. The petition, which in
cluded a prayer for the award to him of the sole custody of Bianca, was docketed
as CA-G.R. SP No. 68460. Subsequently or on March 3, 2002, respondent filed a p
etition against petitioner before the Pasig Regional Trial Court (RTC) for decla
ration of nullity of marriage and dissolution of the absolute community of prope
rty. The petition included a prayer for the award to her of the sole custody of
Bianca and for the fixing of schedule of petitioners visiting rights "subject onl
y to the final and executory judgment of the Court of Appeals in CA-G.R. SP No.
68460." In the meantime, the appellate court, by Resolution of March 21, 2002, a
warded petitioner full custody of Bianca during the pendency of the habeas corpu
s case, with full visitation rights of respondent. Petitioner and respondent lat
er filed on April 5, 2002 before the appellate court a Joint Motion to Approve I
nterim Visitation Agreement which was, by Resolution of April 24, 2002, approved
. On April 18, 2002, respondent filed before the appellate court a Motion for th
e Modification of her visiting rights under the Interim Visitation Agreement. To
the Motion, petitioner filed an Opposition with Motion to Cite Respondent for C
ontempt of Court in light of her filing of the petition for declaration of nulli
ty of marriage before the Pasig RTC which, so he contended, constituted forum sh
opping. By Resolution of July 5, 2002, the appellate court ordered respondent an
d her counsel to make the necessary amendment in her petition for declaration of
nullity of marriage before the Pasig City RTC in so far as the custody aspect i
s concerned, under pain of contempt. In compliance with the appellate courts Reso
lution of July 5, 2002, respondent filed a Motion to Admit Amended Petition befo
re the Pasig RTC. She, however, later filed in December 2002 a Motion to Dismiss
her petition, without prejudice, on the ground that since she started residing
and conducting business at her new address at Pasay City, constraints on resourc
es and her very busy schedule rendered her unable to devote the necessary time a
nd attention to the petition. The Pasig RTC granted respondents motion and accord
ingly dismissed the petition without prejudice, by Order of March 28, 2003. On J
une 12, 2003, petitioner filed his own petition for declaration of nullity of ma
rriage and dissolution of the absolute community of property before the Pasig RT
C, docketed as JDRC Case No. 6190, with prayer for the award to him of the sole
custody of Bianca, subject to the final resolution by the appellate court of his
petition for habeas corpus. The appellate court eventually dismissed the habeas
corpus petition, by Resolution of July 3, 2003, for having become moot and acad
emic, "the restraint on the liberty of the person alleged to be in restraint [ha
ving been] lifted." In the meantime, respondent filed on July 24, 2003 before th
e Pasay RTC a petition for habeas corpus, which she denominated as "Amended Peti
tion," praying for, among other things, the award of the sole custody to her of
Bianca or, in the alternative, pending the hearing of the petition, the issuance
of an order "replicating and reiterating the enforceability of the Interim Visi
ting Agreement" which was approved by the appellate court. The petition was dock
eted as SP Proc. No. 03-0048. Not to be outdone, petitioner filed on July 25, 20
03 before the Pasig RTC in his petition for declaration of nullity of marriage a
n urgent motion praying for the custody of Bianca for the duration of the case.
Acting on respondents petition, Branch 113 of the Pasay RTC issued a Writ of Habe
as Corpus, a Hold Departure Order and Summons addressed to petitioner, drawing p
etitioner to file a motion to dismiss the petition on the ground of lack of juri
sdiction, failure to state a cause of action, forum shopping and litis pendentia
, he citing the pending petition for declaration of nullity of marriage which he
filed before
REMLAW Page 208

the Pasig RTC. The Pasay RTC, in the meantime, issued an Order of August 12, 200
3 declaring that pending the disposition of respondents petition, Bianca should s
tay with petitioner from Sunday afternoon to Saturday morning and "with the comp
any of her mother from Saturday 1:00 in the afternoon up to Sunday 1:00 in the a
fternoon." To this Order, petitioner filed a Motion for Reconsideration, arguing
that the Pasay RTC did not have jurisdiction to issue the same. He likewise fil
ed a Manifestation of August 14, 2003 stating that he was constrained to submit
to the said courts order but with the reservation that he was not submitting the
issue of custody and himself to its jurisdiction. Respondent soon filed her Answ
er with Counter-Petition on the nullity case before the Pasig RTC wherein she al
so prayed for the award of the sole custody to her of Bianca, subject to the fin
al disposition of the habeas corpus petition which she filed before the Pasay RT
C. By Omnibus Order of October 30, 2003, the Pasig RTC asserted its jurisdiction
over the custody aspect of the petition filed by petitioner and directed the pa
rties to comply with the provisions of the Interim Visitation Agreement, unless
they agreed to a new bilateral agreement bearing the approval of the court; and
granted custody of Bianca to petitioner for the duration of the case. The Pasay
RTC in the meantime denied, by Order of November 27, 2003, petitioners motion to
dismiss. The court, citing Sombong v. Court of Appeals,1 held that in custody ca
ses involving minors, the question of illegal and involuntary restraint of liber
ty is not the underlying rationale for the availability of a writ of habeas corp
us as a remedy; rather, a writ of habeas corpus is prosecuted for the purpose of
determining the right of custody over the child.2 And it further held that the
filing before it of the habeas corpus case by respondent, who is a resident of P
asay, is well within the ambit of the provisions of A.M. No. 03-04-04-SC.3 On th
e issue of forum shopping, the Pasay RTC held that it is petitioner, not respond
ent, who committed forum shopping, he having filed (on June 12, 2003) the petiti
on for declaration of nullity of marriage before the Pasig RTC while his petitio
n for habeas corpus before the Court of Appeals was still pending.4 The Pasay RT
C held that assuming arguendo that petitioners filing before the Pasig RTC of the
declaration of nullity of marriage case did not constitute forum shopping, it (
the Pasay RTC) acquired jurisdiction over the custody issue ahead of the Pasig R
TC, petitioner not having amended his petition before the Pasig RTC as soon as t
he Court of Appeals dismissed his petition for habeas corpus5 (on July 3, 2003).
Finally, the Pasay RTC held that there was no litis pendentia because two eleme
nts thereof are lacking, namely, 1) identity of the rights asserted and reliefs
prayed for, the relief being founded on the same facts, and 2) identity with res
pect to the two preceding particulars in the two cases such that any judgment th
at may be rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other case.6 Petitioner thereupon assailed
the Pasay RTCs denial of his Motion to Dismiss via Petition for Certiorari, Prohi
bition and Mandamus before the appellate court wherein he raised the following i
ssues: A. RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION BY DENYING PETITI
ONERS MOTION TO DISMISS DESPITE THE EVIDENT LACK OF JURISDICTION OVER THE SUBJECT
MATTER OF CUSTODY, LITIS PENDENTIA, AND DELIBERATE AND WILLFUL FORUM-SHOPPING O
N THE PART OF RESPONDENT CAROLINE T. YU. 7 B. RESPONDENT JUDGE ACTED WHIMSICALLY
, CAPRICIOUSLY AND ARBITRARILY IN ISSUING THE AUGUST 12, 2003 ORDER GRANTING RES
PONDENT CAROLINE T. YU OVERNIGHT VISITATION RIGHTS OVER THE MINOR CHILD BIANCA A
ND DENYING PETITIONERS URGENT MOTION FOR RECONSIDERATION OF THE SAID ORDER. 8 (Un
derscoring supplied) By Decision of August 10, 2004,9 the appellate court denied
petitioners petition, it holding that the assumption of jurisdiction by the Pasa
y RTC over the habeas corpus case does not constitute grave abuse of discretion;
the filing by respondent before the Pasay RTC of a petition for habeas corpus c
ould not be considered forum shopping in the strictest sense of the word as befo
re she filed it after petitioners petition for habeas corpus filed before the app
ellate court was dismissed; and it was petitioner who committed forum shopping w
hen he filed the declaration of nullity of marriage case while his habeas corpus
petition was still pending before the appellate court. In fine, the appellate c
ourt held that since respondent filed the petition for declaration of nullity of
marriage before the Pasig RTC during the pendency of the habeas corpus case he

filed before the appellate court, whereas respondent filed the habeas corpus pet
ition before the Pasay RTC on July 24,
REMLAW Page 209

appellate court, whereas respondent filed the habeas corpus petition before the
Pasay RTC on July 24, 2003 after the dismissal on July 3, 2003 by the appellate
court of petitioners habeas corpus case, jurisdiction over the issue custody of B
ianca did not attach to the Pasig RTC. As for the questioned order of the Pasay
RTC which modified the Interim Visiting Agreement, the appellate court, noting t
hat the proper remedy for the custody of Bianca was filed with the Pasay RTC, he
ld that said court had the authority to issue the same. Hence, the present petit
ion filed by petitioner faulting the appellate court for I. . . . DECLARING THAT
PETITIONER ERIC YU COMMITTED FORUM-SHOPPING IN FILLING THE PETITION FOR DECLARA
TION OF NULLITY OF MARRIAGE WITH PRAYER FOR CUSTODY BEFORE THE PASIG FAMILY COUR
T AND THAT THE LATTER COURT WAS BARRED FROM ACQUIRING JURISDICTION OVER THE CUST
ODY ASPECT OF THE NULLITY CASE IN RECKLESS DISREGARD OF THE PRINCIPLE THAT THE F
ILING OF A PETITION FOR NULLITY OF MARRIAGE BEFORE THE FAMILY COURTS VESTS THE L
ATTER WITH EXCLUSIVE JURISDICTION TO DETERMINE THE NECESSARY ISSUE OF CUSTODY. I
I. . . . APPL[YING] THE LAW OF THE CASE DOCTRINE BY RULING THAT THE PASIG FAMILY
COURT HAS NO JURISDICTION OVER THE CUSTODY ASPECT OF THE NULLITY CASE ON THE BA
SIS OF THE JULY 5, 2002 RESOLUTION OF THE COURT OF APPEALS IN CA GR SP NO. 68460
WHEN THE SAID RESOLUTION CLEARLY APPLIES ONLY TO THE NULLITY CASE FILED BY PRIV
ATE RESPONDENT ON MARCH 7, 2002 DOCKETED AS JDRC CASE NO. 5745 AND NOT TO HEREIN
PETITIONERS JUNE 12, 2003 PETITION FOR NULLITY DOCKETED AS JDRC CASE NO. 6190. I
II. . . . DECLARING THAT THE PASIG FAMILY COURT MUST YIELD TO THE JURISDICTION O
F THE PASAY COURT INSOFAR AS THE ISSUE OF CUSTODY IS CONCERNED IN GRAVE VIOLATIO
N OF THE DOCTRINE OF JUDICIAL STABILITY AND NON-INTERFERENCE. IV. . . . RULING T
HAT PRIVATE RESPONDENT CAROLINE DID NOT COMMIT FORUM-SHOPING IN FILING THE HABEA
S CORPUS CASE WITH PRAYER FOR CUSTODY BEFORE THE RESPONDENT PASAY COURT DESPITE
THE FACT THAT AN EARLIER FILED PETITION FOR DECLARATION OF NULLITY OF MARRIAGE W
ITH PRAYER FOR CUSTODY IS STILL PENDING BEFORE THE PASIG FAMILY COURT WHEN THE F
ORMER CASE WAS INSTITUTED. V. . . . RULING THAT RESPONDENT CAROLINE YU DID NOT S
UBMIT TO THE JURISDICTION OF THE PASIG FAMILY COURT BASED ON AN ERRONEOUS FACTUA
L FINDING THAT SHE FILED ON AUGUST 25, 2003 AN OMNIBUS OPPOSITION IN PETITIONERS
ACTION FOR NULLITY BEFORE THE PASIG COURT.10 (Underscoring supplied) The petitio
n is impressed with merit. The main issue raised in the present petition is whet
her the question of custody over Bianca should be litigated before the Pasay RTC
or before the Pasig RTC. Judgment on the issue of custody in the nullity of mar
riage case before the Pasig RTC, regardless of which party would prevail, would
constitute res judicata on the habeas corpus case before the Pasay RTC since the
former has jurisdiction over the parties and the subject matter. There is ident
ity in the causes of action in Pasig and Pasay because there is identity in the
facts and evidence essential to the resolution of the identical issue raised in
both actions11 whether it would serve the best interest of Bianca to be in the c
ustody of petitioner rather than respondent or vice versa. Since the ground invo
ked in the petition for declaration of nullity of marriage before the Pasig RTC
is respondents alleged psychological incapacity to perform her essential marital
obligations12 as provided in Article 36 of the Family Code, the evidence to supp
ort this cause of action necessarily involves evidence of respondents fitness to
take custody of Bianca. Thus, the elements of litis pendentia, to wit: a) identi
ty of parties, or at least such as representing the same interest in both action
s; b) identity of rights asserted and reliefs prayed for, the relief being found
ed on the same facts; and c) the identity in the two cases should be such that t
he judgment that may be rendered in the pending case would, regardless of which
party is successful, amount to res judicata in the other,13 are present. Respond
ent argues in her Comment to the petition at bar that the Pasig RTC never acquir
ed jurisdiction over the custody issue raised therein. "[T]he subsequent dismiss
al of the habeas corpus petition by the Court of Appeals on 3 July 2003 could no
t have the effect of conferring jurisdiction over the issue on the Pasig court.
For the Pasig court to acquire jurisdiction over the custody issue after the dis
missal of the habeas corpus petition before the Court of Appeals, the rule is th
at petitioner must furnish the occasion for the acquisition of jurisdiction by r
epleading his cause of action for custody and invoking said cause anew."14 (Emph
asis and

REMLAW Page 210

by repleading his cause of action for custody and invoking said cause anew."14 (
Emphasis and underscoring supplied) And respondent cites Caluag v. Pecson,15 whe
rein this Court held: Jurisdiction of the subject matter of a particular case is
something more than the general power conferred by law upon a court to take cog
nizance of cases of the general class to which the particular case belongs. It i
s not enough that a court has power in abstract to try and decide the class liti
gations [sic] to which a case belongs; it is necessary that said power be proper
ly invoked, or called into activity, by the filing of a petition, or complaint o
r other appropriate pleading. (Underscoring supplied by Caroline.) 16 Specific p
rovisions of law govern the case at bar, however. Thus Articles 49 and 50 of the
Family Code provide: Art. 49. During the pendency of the action [for annulment
or declaration of nullity of marriage] and in the absence of adequate provisions
in a written agreement between the spouses, the Court shall provide for the sup
port of the spouses and the custody and support of their common children. x x x
It shall also provide for appropriate visitation rights of the other parent. (Em
phasis and underscoring supplied)17 Art. 50. x x x x The final judgment in such
cases [for the annulment or declaration of nullity of marriage] shall provide fo
r the liquidation, partition and distribution of the properties of the spouses,
the custody and support of the common children, and the delivery of their presum
ptive legitimes, unless such other matters had been adjudicated in previous judi
cial proceedings." (Emphasis and underscoring added) By petitioners filing of the
case for declaration of nullity of marriage before the Pasig RTC he automatical
ly submitted the issue of the custody of Bianca as an incident thereof. After th
e appellate court subsequently dismissed the habeas corpus case, there was no ne
ed for petitioner to replead his prayer for custody for, as above-quoted provisi
ons of the Family Code provide, the custody issue in a declaration of nullity ca
se is deemed pleaded. That that is so gains light from Section 21 of the "Rule o
n Declaration Of Absolute Nullity Of Void Marriages and Annulment of Voidable Ma
rriages"18 which provides: Sec. 21. Liquidation, partition and distribution, cus
tody, support of common children and delivery of their presumptive legitimes.Upon
entry of the judgment granting the petition, or, in case of appeal, upon receip
t of the entry of judgment of the appellate court granting the petition, the Fam
ily Court, on motion of either party, shall proceed with the liquidation, partit
ion and distribution of the properties of the spouses, including custody, suppor
t of common children and delivery of their presumptive legitimes pursuant to Art
icles 50 and 51 of the Family Code unless such matters had been adjudicated in p
revious judicial proceedings. (Emphasis and underscoring supplied) Since this im
mediately-quoted provision directs the court taking jurisdiction over a petition
for declaration of nullity of marriage to resolve the custody of common childre
n, by mere motion of either party, it could only mean that the filing of a new a
ction is not necessary for the court to consider the issue of custody of a minor
.19 The only explicit exception to the earlier-quoted second paragraph of Art. 5
0 of the Family Code is when "such matters had been adjudicated in previous judi
cial proceedings," which is not the case here. The elements of litis pendentia h
aving been established, the more appropriate action criterion guides this Court
in deciding which of the two pending actions to abate.20 The petition filed by p
etitioner for the declaration of nullity of marriage before the Pasig RTC is the
more appropriate action to determine the issue of who between the parties shoul
d have custody over Bianca in view of the express provision of the second paragr
aph of Article 50 of the Family Code. This must be so in line with the policy of
avoiding multiplicity of suits.21 The appellate court thus erroneously applied
the law of the case doctrine when it ruled that in its July 5, 2002 Resolution t
hat the pendency of the habeas corpus petition in CA-G.R. SP No. 68460 prevented
the Pasig RTC from acquiring jurisdiction over the custody aspect of petitioners
petition for declaration of nullity. The factual circumstances of the case refe
lected above do not justify the application of the law of the case doctrine whic
h has been defined as follows: Law of the case has been defined as the opinion d
elivered on a former appeal. It is a term applied to an established rule that wh
en an appellate court passes on a question and remands the case to the lower cou
rt for further proceedings, the question there settled becomes the law of the ca

se upon
REMLAW Page 211

court for further proceedings, the question there settled becomes the law of the
case upon subsequent appeal. It means that whatever is once irrevocably establi
shed as the controlling legal rule or decision between the same parties in the s
ame case continues to be the law of the case, whether correct on general princip
les or not, so long as the facts on which such decision was predicated continue
to be the facts of the case before the court." (Emphasis and underscoring suppli
ed, italics in the original) 22 WHEREFORE, the petition is GRANTED. The August 1
0, 2004 decision of the Court of Appeals is REVERSED and SET ASIDE,and another i
s entered DISMISSING Pasay City Regional Trial Court Sp. Proc. No. 03-0048-CFM a
nd ordering Branch 69 of Pasig City Regional Trial Court to continue, with dispa
tch, the proceedings in JDRC No. 6190.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI55.344\yu%20v%20
yu.docx>
REMLAW Page 212

Sec. 5.2, RA 8799

Sunday, November 14, 2010 11:30 PM
Section 5. Powers and Functions of the Commission. 5.2. The Commissions jurisdicti
on 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 Reg
ional Trial Court: Provided, That the Supreme Court in the exercise of its autho
rity may designate the Regional Trial Court branches that shall exercise jurisdi
ction over the cases. The Commission shall retain jurisdiction over pending case
s involving intra-corporate disputes submitted for final resolution which should
be resolved within one (1) year from the enactment of this Code. The Commission
shall retain jurisdiction over pending suspension of payment/rehabilitation cas
es filed as of 30 June 2000 until finally disposed.
Pasted from <http://www.lawphil.net/statutes/repacts/ra2000/ra_8799_2000.html>
REMLAW Page 213

A.M. No. 01-2-04-SC Interim Rules of Procedure Governing Intracorporate Controve

rsies
Sunday, November 14, 2010 11:31 PM
The Lawphil Project - Arellano Law Foundation A.M. No. 01-2-04-SC. March 13, 200
1
A.M. No. 01-2-04-SC. March 13, 2001 Re: PROPOSED INTERIM RULES OF PROCEDURE GOVE
RNING INTRA-CORPORATE CONTROVERSIES UNDER R. A. NO. 8799 RESOLUTION INTERIM RULE
S OF PROCEDURE FOR INTRA-CORPORATE CONTROVERSIES RULE 1 GENERAL PROVISIONS SECTI
ON 1. (a) Cases covered. These Rules shall govern the procedure to be observed i
n civil cases involving the following: 1. Devices or schemes employed by, or any
act of, the board of directors, business associates, officers or partners, amou
nting 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, pa
rtnership, or association relations, between and among stockholders, members, or
associates; and between, any or all of them and the corporation, partnership, o
r association of which they are stockholders, members, or associates, respective
ly; 3. Controversies in the election or appointment of directors, trustees, offi
cers, or managers of corporations, partnerships, or associations; 4. Derivative
suits; and 5. Inspection of corporate books. (b) prohibition against nuisance an
d harassment suits. - Nuisance and harassment suits are prohibited. In determini
ng whether a suit is a nuisance or harassment suit, the court shall consider, am
ong others, the following: 1. The extent of the shareholding or interest of the
initiating stockholder or member; 2. Subject matter of the suit; 3. Legal and fa
ctual basis of the complaint; 4. Availability of appraisal rights for the act or
acts complained of; and 5. Prejudice or damage to the corporation, partnership,
or association in relation to the relief sought. In case of nuisance or harassm
ent suits, the court may, moto proprio or upon motion, forthwith dismiss the cas
e. SEC. 2. Suppletory application of the Rules of Court. The Rules of Court, in
so far as they may be applicable and are not inconsistent with these Rules, are
hereby adopted to form an integral part of these Rules. SEC. 3. Construction. Th
ese Rules shall be liberally construed in order to promote their objective of se
curing a just, summary, speedy and inexpensive determination of every action or
proceeding. SEC. 4. Executory nature of decisions and orders. All decisions and
orders issued under these Rules shall immediately be executory. No appeal or pet
ition taken therefrom shall stay the enforcement or implementation of the decisi
on or order, unless restrained by an appellate court. Interlocutory orders shall
not be subject to appeal.
REMLAW Page 214

shall not be subject to appeal. SEC. 5. Venue. All actions covered by these Rule
s shall be commenced and tried in the Regional Trial Court which has jurisdictio
n over the principal office of the corporation, partnership, or association conc
erned. Where the principal office of the corporation, partnership or association
is registered in the Securities and Exchange Commission as Metro Manila, the ac
tion must be filed in the city or municipality where the head office is located.
SEC. 6. Service of pleadings. When so authorized by the court, any pleading and
/or document required by these Rules may be filed with the court and/or served u
pon the other parties by facsimile transmission (tax) or electronic mail (e-mail
. In such cases, the date of transmission shall be deemed to be prima facie the
date of service. SEC. 7. Signing of pleadings, motions and other papers. Every p
leading, motion, and other paper of a party represented by an attorney shall be
signed by at least one attorney of record in the attorneys individual name, whose
address shall be stated. A party who is not represented by an attorney shall si
gn the pleading, motion, or other paper and state his address. The signature of
an attorney or party constitutes a certification by the signer that he has read
the pleading, motion, or other paper; that to the best of his knowledge, informa
tion, and belief formed after reasonable inquiry, it is well grounded in fact an
d is warranted by existing law or a good faith argument for the extension, modif
ication, or reversal of existing jurisprudence; and that it is not interposed fo
r any improper purpose, such as to harass or to cause unnecessary delay or needl
ess increase in the cost of litigation. If a pleading, motion, or other paper is
not signed, it shall be stricken off the record unless it is promptly signed by
the pleader or movant, after he is notified of the omission. SEC. 8. Prohibited
pleadings. The following pleadings are prohibited: 1. Motion to dismiss; 2. Mot
ion for a bill of particulars; 3. Motion for new trial, or for reconsideration o
f judgment or order, or for re-opening of trial; 4. Motion for extension of time
to file pleadings, affidavits or any other paper, except those filed due to cle
arly compelling reasons. Such motion must be verified and under oath; and 5. Mot
ion for postponement and other motions of similar intent, except those filed due
to clearly compelling reasons. Such motion must be verified and under oath. SEC
. 9. Assignment of cases. All cases filed under these Rules shall be tried by ju
dges designated by the Supreme Court to hear and decide cases transferred from t
he Securities and Exchange Commission to the Regional Trial Courts and filed dir
ectly with said courts pursuant to Republic Act No. 8799, otherwise known as the
Securities and Regulation Cod RULE 2 COMMENCEMENT OF ACTION AND PLEADINGS SECTI
ON 1. Commencement of action. An action under these Rules is commenced by the fi
ling of a verified complaint with the proper Regional Trial Court. SEC. 2. Plead
ings allowed. The only pleadings allowed to be filed under these Rules are the c
omplaint, answer, compulsory counterclaims or cross-claims pleaded in the answer
, and the answer to the counterclaims or cross-claims. SEC. 3. Verification. The
complaint and the answer shall be verified by an affidavit stating that the aff
iant has read the pleading and the allegations therein are true and correct base
d on his own personal knowledge or on authentic records. SEC. 4. Complaint. The
complaint shall state or contain: 1. the names, addresses, and other relevant pe
rsonal or juridical circumstances of the parties; 2. all facts material and rele
vant to the plaintiffs cause or causes of action, which shall be supported by aff
idavits of the plaintiff or his witnesses and copies of documentary and other ev
idence supportive of such cause or causes of action; 3. the law, rule, or regula
tion relied upon, violated, or sought to be enforced; 4. a certification that (a
) the plaintiff has not theretofore commenced any action or filed any claim invo
lving the same issues in any court, tribunal or quasi-judicial agency, and, to t
he best of his knowledge, no such other action or claim is pending therein; (b)
if there is such other action or claim, a complete statement of the present stat
us thereof; and (c) if he
REMLAW Page 215

other action or claim, a complete statement of the present status thereof; and (
c) if he should thereafter learn that the same or similar action or claim has be
en filed or is pending, he shall report that fact within five (5) days therefrom
to the court; and 5. the relief sought. SEC. 5. Summons. The summons and the co
mplaint shall be served together not later than five (5) days from the date of f
iling of the complaint. a. Service upon domestic private juridical entities. If
the defendant is a domestic corporation, service shall be deemed adequate if mad
e upon any of the statutory or corporate officers as fixed by the by-laws or the
ir respective secretaries. If the defendant is a partnership, service shall be d
eemed adequate if made upon any of the managing or general partners or upon thei
r respective secretaries. If the defendant is an association, service shall be d
eemed adequate if made upon any of its officers or their respective secretaries.
b. Service upon foreign private juridical entity. When the defendant is a forei
gn private juridical entity which is transacting or has transacted business in t
he Philippines, service may be made on its resident agent designated in accordan
ce with law for that purpose, or, if there be no such agent, on the government o
fficial designated by law to that effect, or on any of its officers or agents wi
thin the Philippines. SEC. 6. Answer. The defendant shall file his answer to the
complaint, serving a copy thereof on the plaintiff, within fifteen (15) days fr
om service of summons. In the answer, the defendant shall: 1. Specify each mater
ial allegation of fact the truth of which he admits; 2. Specify each material al
legation of fact the truth of which he does not admit. Where the defendant desir
es to deny only a part of an averment, he shall specify so much of it as true an
d material and shall deny only the remainder; 3. Specify each material allegatio
n of fact as to which truth he has no knowledge or information sufficient to for
m a belief, and this shall have the effect of a denial; 4. State the defenses, i
ncluding grounds for a motion to dismiss under the Rules of Court; 5. State the
law, rule, or regulation relied upon; 6. Address each of the causes of action st
ated in the complaint; 7. State the facts upon which he relies for his defense,
including affidavits of witnesses and copies of documentary and other evidence s
upportive of such cause or causes of action; 8. State any compulsory counterclai
m/s and cross-claim/s; and 9. State the relief sought. The answer to counterclai
ms or cross-claims shall be filed within ten (10) days from service of the answe
r in which they are pleaded. SEC. 7. Effect of failure to answer. If the defenda
nt fails to answer within the period above provided, he shall be considered in d
efault. Upon motion or motu proprio, the court shall render judgment either dism
issing the complaint or granting the relief prayed for as the records may warran
t. In no case shall the court award a relief beyond or different from that praye
d for. SEC. 8. Affidavits, documentary and other evidence. Affidavits shall be b
ased on personal knowledge, shall set forth such facts as would be admissible in
evidence, and shall show affirmatively that the affiant is competent to testify
on the matters stated therein. The affidavits shall be in question and answer f
orm, and shall comply with the rules on admissibility of evidence. Affidavits of
witnesses as well as documentary and other evidence shall be attached to the ap
propriate pleading; Provided, however, that affidavits, documentary and other ev
idence not so submitted may be attached to the pre-trial brief required under th
ese Rules. Affidavits and other evidence not so submitted shall not be admitted
in evidence, except in the following cases: 1. Testimony of unwilling, hostile,
or adverse party witnesses. A witness is presumed prima facie hostile if he fail
s or refuses to execute an affidavit after a written request therefor; 2. If the
failure to submit the evidence is for meritorious and compelling reasons; and 3
. Newly discovered evidence. In case of (2) and (3) above, the affidavit and evi
dence must be submitted not later than five (5) days prior to its introduction i
n evidence. RULE 3
REMLAW Page 216

RULE 3 MODES OF DISCOVERY SECTION 1. In general. A party can only avail of any o
f the modes of discovery not later than fifteen (15) days from the joinder of is
sues. SEC. 2. Objections. Any mode of discovery such as interrogatories, request
for admission, production or inspection of documents or things, may be objected
to within ten (10) days from receipt of the discovery device and only on the gr
ound that the matter requested is patently incompetent, immaterial, irrelevant o
r privileged in nature. The court shall rule on the objections not later than fi
fteen (15) days from the filing thereof. SEC. 3. Compliance. Compliance with any
mode of discovery shall be made within ten (10) days from receipt of the discove
ry device, or if there are objections, from receipt of the ruling of the court.
SEC. 4. Sanctions. The sanctions prescribed in the Rules of Court for failure to
avail of, or refusal to comply with, the modes of discovery shall apply. In add
ition, the court may, upon motion, declare a party non-suited or as in default,
as the case may be, if the refusal to comply with a mode of discovery is patentl
y unjustified.
RULE 4 PRE-TRIAL SECTION 1. Pre-trial conference; mandatory nature. Within five
(5) days after the period for availment of, and compliance with, the modes of di
scovery prescribed in Rule 3 hereof, whichever comes later, the court shall issu
e and serve an order immediately setting the case for pre-trial conference and d
irecting the parties to submit their respective pre-trial briefs. The parties sh
all file with the court and furnish each other copies of their respective pre-tr
ial brief in such manner as to ensure its receipt by the court and the other par
ty at least five (5) days before the date set for the pre-trial. The parties sha
ll set forth in their pre-trial briefs, among other matters, the following: 1. B
rief statement of the nature of the case, which shall summarize the theory or th
eories of the party in clear and concise language; 2. Allegations expressly admi
tted by either or both parties; 3. Allegations deemed admitted by either or both
parties; 4. Documents not specifically denied under oath by either or both part
ies; 5. Amendments to the pleadings; 6. Statement of the issues, which shall sep
arately summarize the factual and legal issues involved in the case; 7. Names of
witnesses to be presented and the summary of their testimony as contained in th
eir affidavits supporting their positions on each of the issues; 8. All other pi
eces of evidence, whether documentary or otherwise and their respective purposes
; 9. Specific proposals for an amicable settlement; 10. Possibility of referral
to mediation or other alternative modes of dispute resolution; 11. Proposed sche
dule of hearings; and 12. Such other matters as may aid in the just and speedy d
isposition of the case. SEC. 2. Nature and purpose of pre-trial conference. Duri
ng the pre-trial conference, the court shall, with its active participation, ens
ure that the parties consider in detail all of the following: 1. The possibility
of an amicable settlement; 2. Referral of the dispute to mediation or other for
ms of dispute resolution; 3. Facts that need not be proven, either because they
are matters of judicial notice or expressly or deemed admitted; 4. Amendments to
the pleadings; 5. The possibility of obtaining stipulations and admissions of f
acts and documents; 6. Objections to the admissibility of testimonial, documenta
ry and other evidence; 7. Objections to the form or substance of any affidavit,
or part thereof; 8. Simplification of the issues; 9. The possibility of submitti
ng the case for decision on the basis of position papers, affidavits, documentar
y and real evidence; 10. A complete schedule of hearing dates; and
REMLAW Page 217

10. A complete schedule of hearing dates; and 11. Such other matters as may aid
in the speedy and summary disposition of the case. SEC. 3. Termination. The prel
iminary conference shall be terminated not later than ten (10) days after its co
mmencement, whether or not the parties have agreed to settle amicably. SEC. 4. J
udgment before pre-trial. If, after submission of the pre-trial briefs, the cour
t determines that, upon consideration of the pleadings, the affidavits and other
evidence submitted by the parties, a judgment may be rendered, the court may or
der the parties to file simultaneously their respective memoranda within a non-e
xtendible period of twenty (20) days from receipt of the order. Thereafter, the
court shall render judgment, either full or otherwise, not later than ninety (90
) days from the expiration of the period to file the memoranda. SEC. 5. Pre-tria
l order; judgment after pre-trial. The proceedings in the pre-trial shall be rec
orded. Within ten (10) days after the termination of the pre-trial, the court sh
all issue an order which shall recite in detail the matters taken up in the conf
erence, the actions taken thereon, the amendments allowed in the pleadings, and
the agreements or admissions made by the parties as to any of the matters consid
ered. The court shall rule on all objections to or comments on the admissibility
of any documentary or other evidence, including any affidavit or any part there
of. Should the action proceed to trial, the order shall explicitly define and li
mit the issues to be tried and shall strictly follow the form set forth in Annex
"A" of these Rules. The contents of the order shall control the subsequent cour
se of the action, unless modified before trial to prevent manifest injustice. Af
ter the pre-trial, the court may render judgment, either full or partial, as the
evidence presented during the pre-trial may warrant.
RULE 5 TRIAL SECTION 1. Witnesses. If the court deems necessary to hold hearings
to determine specific factual matters before rendering judgment, it shall, in t
he pre-trial order, set the case for trial on the dates agreed upon by the parti
es. Only persons whose affidavits were submitted may be presented as witnesses,
except in cases specified in section 8, Rule 2 of these Rules. The affidavits of
the witnesses shall serve as their direct testimonies, subject to cross-examina
tion in accordance with existing rules on evidence. SEC. 2. Trial schedule. Unle
ss judgment is rendered pursuant to Rule 4 of these Rules, the initial hearing s
hall be held not later than thirty (30) days from the date of the pre-trial orde
r. The hearings shall be completed not later than sixty (60) days from the date
of the initial hearing, thirty (30) days of which shall be allotted to the plain
tiffs and thirty (30) days to the defendants in the manner prescribed in the rep
-trial order. The failure of a party to present a witness on a scheduled hearing
date shall be deemed a waiver of such hearing date. However, a party may presen
t such witness or witnesses within his remaining allotted hearing dates. SEC. 3.
Written offer of evidence. Evidence not otherwise admitted by the parties or ru
led upon by the court during the pre-trial conference shall be offered in writin
g not later than five (5) days from the completion of the presentation of eviden
ce of the party concerned. The opposing party shall have five (5) days from rece
ipt of the offer to file his comments or objections. The court shall make its ru
ling on the offer within five (5) days from the expiration of the period to file
comments or objections. SEC. 4. Memoranda. Immediately after ruling on the last
offer of evidence, the court shall order the parties to simultaneously file, wi
thin thirty (30) days from receipt of the order, their respective memoranda. The
memoranda shall contain the following: 1. A "Statement of the Case," which is a
clear and concise statement of the nature of the action and a summary of the pr
oceedings; 2. A "Statement of the Facts," which is a clear and concise statement
in narrative form of the established facts, with reference to the testimonial,
documentary or other evidence in support thereof; 3. A "Statement of the issues,
" which is a clear and concise statement of the issues presented to the court fo
r resolution; 4. The "Arguments," which is a clear and concise presentation of t
he argument in support of each issue; and
REMLAW Page 218

each issue; and 5. The "Relief," which is a specification of the order or judgme
nt which the party seeks to obtain. No reply memorandum shall be allowed. SEC. 5
. Decision after trial. The court shall render a decision not later than (90) da
ys from the lapse of the period to file the memoranda, with or without said plea
ding having been filed. RULE 6 ELECTION CONTESTS SECTION 1. Cases covered. The p
rovisions of this rule shall apply to election contests in stock and nonstock co
rporations. SEC. 2. Definition. An election contest refers to any controversy or
dispute involving title or claim to any elective office in a stock or non-stock
corporation, the validation of proxies, the manner and validity of elections, a
nd the qualifications of candidates, including the proclamation of winners, to t
he office of director, trustee or other officer directly elected by the stockhol
ders in a close corporation or by members of a non-stock corporation where the a
rticles of incorporation or by-laws so provide. SEC. 3. Complaint. In addition to
the requirements in section 4, Rule 2 of these Rules, the complaint in an elect
ion contest must state the following: 1. The case was filed within fifteen (15)
days from the date of the election if the by-laws of the corporation do not prov
ide for a procedure for resolution of the controversy, or within fifteen (15) da
ys from the resolution of the controversy by the corporation as provided in its
by-laws; and 2. The plaintiff has exhausted all intra-corporate remedies in elec
tion cases as provided for in the by-laws of the corporation. SEC. 4. Duty of th
e court upon the filing of the complaint. Within two (2) days from the filing of
the complaint, the court, upon a consideration of the allegations thereof, may
dismiss the complaint outright if it is not sufficient in form and substance, or
, if it is sufficient, order the issuance of summons which shall be served, toge
ther with a copy of the complaint, on the defendant within two (2) days from its
issuance. SEC. 5. Answer. The defendant shall file his answer to the complaint,
serving a copy thereof on the plaintiff, within ten (10) days from service of s
ummons and the complaint. The answer shall contain the matters required in secti
on 6, Rule 2 of these Rules. SEC. 6. Affidavits, documentary and other evidence.
The parties shall attach to the complaint and answer the affidavits of witnesse
s, documentary and other evidence in support thereof, if any. Acting on the Memo
randum of the Committee on SEC Cases submitting for this Courts consideration and
approval the Proposed Interim Rules of Procedure for Intra-Corporate Controvers
ies, the Court Resolved to APPROVE the same. The Interim Rules shall take effect
on April 1, 2001 following its publication in two (2) newspapers of general cir
culation. March 13, 2001, Manila. (Sgd.) HILARIO G. DAVIDE, JR., Chief Justice (
Sgd.) JOSUE N. BELLOSILLO, Associate Justice (Sgd.) JOSE A. R. MELO, Associate J
ustice (Sgd.) REYNATO S. PUNO, Associate Justice (Sgd.) JOSE C. VITUG, Associate
Justice (Sgd.) SANTIAGO M. KAPUNAN, Associate Justice (Sgd.) VICENTE V. MENDOZA
, Associate Justice (Sgd.) ARTEMIO V. PANGANIBAN, Associate Justice (Sgd.) LEONA
RDO A. QUISUMBING, Associate Justice
(Sgd.) (Sgd.) BERNARDO P. PARDO ARTURO B. BUENA Associate Justice Associate Just
ice
REMLAW Page 219

(Sgd.) (Sgd.) MINERVA P. GONZAGA-REYES CONSUELO YNARES-SANTIAGO Associate Justic

e Associate Justice (Sgd). (Sgd.) SABINO R. DE LEON, JR. ANGELINA SANDOVAL-GUTIE
RREZ Associate Justice Associate Justice The Lawphil Project - Arellano Law Foun
dation
Pasted from <http://www.lawphil.net/courts/supreme/am/am_2_04_2001.html>
REMLAW Page 220

A.M. 00-8-10-SC Interim Rules of Procedure on Corporate Rehabilitation (note FRI

A)
Sunday, November 14, 2010 11:31 PM
EN BANC Agenda for December 2, 2008 Item No. 76 EN BANC A.M. NO. 00-8-10-SC RULE
S OF PROCEDURE ON CORPORATE REHABILITATION RESOLUTION Acting on the recommendati
on of The Subcommittee on Special Rules for Special Commercial Courts, submittin
g for the consideration and approval of the Court the proposed Rules of Procedure
on Corporate Rehabilitation (2008), the Court Resolved to APPROVE the same. The
Rule shall take effect on January 16, 2009 following its publication in two (2)
newspapers of general circulation. December 2, 2008. RULES OF PROCEDURE ON CORPORATE
EHABILITATION (2008) RULE 1 COVERAGE SECTION 1. Scope.These Rules shall apply to
petitions for rehabilitation of corporations, partnerships and associations purs
uant to Presidential Decree No. 902-A, as amended. SEC. 2. Applicability to Reha
bilitation Cases Transferred from the Securities and Exchange Commission. Cases
for rehabilitation transferred from the Securities and Exchange Commission to th
e Regional Trial Courts pursuant to Republic Act No. 8799, otherwise known as Th
e Securities Regulation Code, shall likewise be governed by these Rules. RULE 2
DEFINITION OF TERMS AND CONSTRUCTION SEC. 1. Definition of Terms.For purposes of
these Rules: Administrative Expenses shall refer to (a) reasonable and necessary e
xpenses that are incurred in connection with the filing of the petition; (b) exp
enses incurred in the ordinary course of business after the issuance of the stay
order, excluding interest payable to the creditors for loans and credit accommo
dations existing at the time of the issuance of the stay order; and (c) other ex
penses that are authorized under these Rules. Affidavit of General Financial Cond
ition shall refer to a verified statement on the general financial condition of t
he debtor required in Section 2, Rule 4 of these Rules. Affiliate is a corporation
that directly or indirectly, through one or more intermediaries, is controlled
by, or is under the common control of another corporation, which thereby becomes
its parent corporation. Asset is anything of value that can be in the form of mon
ey, such as cash at the bank or amounts owed; fixed assets such as property or e
quipment; or intangibles including intellectual property, the book value of whic
h is shown in the last three audited financial statements immediately preceding
the filing of the petition. In case the debtor is less than three years in opera
tion, it is sufficient that the book value is based on the audited financial sta
tement/s for the two years or year immediately preceding the filing of the petit
ion, as the case may be. Board of Directors shall include the executive committee
or the management of a partnership or association. Claim shall include all claims
or demands of whatever nature or character against a debtor or its property, whe
ther for money or otherwise. Control is the power of a parent corporation to direc
t or govern the financial and operating policies of an enterprise so as to obtai
n benefits from its activities. Control is presumed to exist when the parent
REMLAW Page 221

an enterprise so as to obtain benefits from its activities. Control is presumed

to exist when the parent owns, directly or indirectly through subsidiaries, more
than onehalf (1/2) of the voting power of an enterprise unless, in exceptional c
ircumstances, it can clearly be demonstrated that such ownership does not consti
tute control. Control also exists even when the parent owns one-half (1/2) or le
ss of the voting power of an enterprise when there is power: (a) Over more than
one-half (1/2) of the voting rights by virtue of an agreement with investors; (b
) To direct or govern the financial and operating policies of the enterprise und
er a statute or an agreement; (c) To appoint or remove the majority of the membe
rs of the board of directors or equivalent governing body; or (d) To cast the ma
jority votes at meetings of the board of directors or equivalent governing body.
Creditor shall mean any holder of a Claim. Court shall refer to the proper Regional
Trial Court designated to hear and decide the cases contemplated under these Ru
les. Days shall refer to calendar days unless otherwise provided in these Rules. De
btor shall mean any corporation, partnership or association or a group of compani
es, whether supervised or regulated by the Securities and Exchange Commission or
other government agencies, on whose behalf a petition for rehabilitation has be
en filed under these Rules. Foreign court means a judicial or other authority comp
etent to control or supervise a foreign proceeding. Foreign proceeding means a col
lective judicial or administrative proceeding in a foreign State, including an i
nterim proceeding, pursuant to a law relating to insolvency in which proceeding
the assets and affairs of the debtor are subject to control or supervision by a
foreign court, for the purpose of rehabilitation or re-organization. Foreign repr
esentative means a person or entity, including one appointed on an interim basis,
authorized in a foreign proceeding to administer the reorganization or rehabili
tation of the debtor or to act as a representative of the foreign proceeding. Gro
up of companies refers to, and can cover only, corporations that are financially
related to one another as parent corporations, subsidiaries and affiliates. When
the petition covers a group of companies, all reference under these Rules to deb
tor shall include and apply to the group of companies. Liabilities shall refer to m
onetary claims against the debtor, including stockholders advances that have been
recorded in the debtors audited financial statements as advances for future subs
criptions. Parent is a corporation which has control over another corporation dire
ctly or indirectly through one or more intermediaries. Rehabilitation shall mean t
he restoration of the debtor to a position of successful operation and solvency,
if it is shown that its continuance of operation is economically feasible and i
ts creditors can recover by way of the present value of payments projected in th
e plan, more if the corporation continues as a going concern than if it is immed
iately liquidated. Secured claim shall refer to any claim whose payment or fulfill
ment is secured by contract or by law, including any claim or credit enumerated
under Articles 2241 and 2242 of the Civil Code and Article 110, as amended, of t
he Labor Code of the Philippines. Subsidiary means a corporation more than fifty p
ercent (50%) of the voting stock of which is owned or controlled directly or ind
irectly through one or more intermediaries by another corporation, which thereby
becomes its parent corporation. Unsecured claim shall mean any claim other than a
secured claim. SEC. 2. Construction. These Rules shall be liberally construed t
o carry out the objectives of Sections 5(d), 6(c) and 6(d) of Presidential Decre
e No. 902-A, as amended, and to assist the parties in obtaining a just, expediti
ous and inexpensive determination of cases. Where applicable, the Rules of Court
shall apply suppletorily to proceedings under these Rules. RULE 3 GENERAL PROVI
SIONS SEC. 1. Nature of Proceedings.Any proceeding initiated under these Rules sh
all be considered in rem. Jurisdiction over all persons affected by the proceedi
ngs shall be considered as acquired upon
REMLAW Page 222

Jurisdiction over all persons affected by the proceedings shall be considered as

acquired upon publication of the notice of the commencement of the proceedings
in any newspaper of general circulation in the Philippines in the manner prescri
bed by these Rules. The proceedings shall also be summary and non-adversarial in
nature. The following pleadings are prohibited: (a) Motion to dismiss; (b) Moti
on for a bill of particulars; (c) Petition for relief; (d) Motion for extension;
(e) Motion for postponement; (f) Third-party complaint; (g) Intervention; (h) M
otion to hear affirmative defenses; and (i) Any pleading or motion which is simi
lar to or of like effect as any of the foregoing. Any pleading, motion, oppositi
on, defense or claim filed by any interested party shall be supported by verifie
d statements that the affiant has read the same and that the factual allegations
therein are true and correct of his personal knowledge or based on authentic re
cords, and shall contain as annexes such documents as may be deemed by the party
submitting the same as supportive of the allegations in the affidavits. The cou
rt may decide matters on the basis of affidavits and other documentary evidence.
Where necessary, the court shall conduct clarificatory hearings before resolvin
g any matter submitted to it for resolution. SEC. 2. Venue. Petitions for rehabi
litation pursuant to these Rules shall be filed in the regional trial court whic
h has jurisdiction over the principal office of the debtor as specified in its a
rticles of incorporation or partnership. Where the principal office of the corpo
ration, partnership or association is registered in the Securities and Exchange
Commission as Metro Manila, the action must be filed in the regional trial court
of the city or municipality where the head office is located. A joint petition
by a group of companies shall be filed in the Regional Trial Court which has jur
isdiction over the principal office of the parent company, as specified in its A
rticles of Incorporation. SEC. 3. Service of Pleadings and Documents. When so aut
horized by the court, any pleading and/or document required by these Rules may b
e filed with the court and/or served upon the other parties by facsimile transmi
ssion (fax) or electronic mail (e-mail). In such cases, the date of transmission
shall be deemed to be the date of service. Where the pleading or document is vo
luminous, the court may, upon motion, waive the requirement of service; provided
that a copy thereof together with all its attachments is duly filed with the co
urt and is made available for examination and reproduction by any party, and pro
vided, further, that a notice of such filing and availability is duly served on
the parties. SEC. 4. Trade Secrets and Other Confidential Information. Upon moti
on, the court may issue an order to protect trade secrets or other confidential
research, development or commercial information belonging to the debtor. SEC. 5.
Executory Nature of Orders. Any order issued by the court under these Rules is
immediately executory. A petition to review the order shall not stay the executi
on of the order unless restrained or enjoined by the appellate court. Unless oth
erwise provided in these Rules, the review of any order or decision of the court
or an appeal therefrom shall be in accordance with the Rules of Court; provided
, however, that the reliefs ordered by the trial or appellate courts shall take
into account the need for resolution of proceedings in a just, equitable and spe
edy manner. SEC. 6. Nullification of Illegal Transfers and Preferences. Upon mot
ion the court may nullify any transfer of property or any other conveyance, sale
, payment or agreement made in violation of its stay order or in violation of th
ese Rules. SEC. 7. Stay Order. If the court finds the petition to be sufficient
in form and substance, it shall, not later than five (5) working days from the f
iling of the petition, issue an order: (a) appointing a rehabilitation receiver
and fixing his bond; (b) staying enforcement of all claims, whether for money or
otherwise and whether such enforcement is by court action or otherwise, against
the debtor, its guarantors and persons not solidarily liable with the debtor; p
rovided, that the stay order shall not cover claims against letters of credit an
d similar security arrangements issued by a third party to secure the payment of
the debtors obligations; provided, further, that the stay order shall not cover
foreclosure by a creditor of property not belonging to a debtor under corporate
rehabilitation; provided,
REMLAW Page 223

foreclosure by a creditor of property not belonging to a debtor under corporate

rehabilitation; provided, however, that where the owner of such property sought
to be foreclosed is also a guarantor or one who is not solidarily liable, said o
wner shall be entitled to the benefit of excussion as such guarantor; (c) prohib
iting the debtor from selling, encumbering, transferring, or disposing in any ma
nner any of its properties except in the ordinary course of business; (d) prohib
iting the debtor from making any payment of its liabilities except as provided i
n items (e), (f) and (g) of this Section or when ordered by the court pursuant t
o Section 10 of Rule 3; (e) prohibiting the debtors suppliers of goods or service
s from withholding supply of goods and services in the ordinary course of busine
ss for as long as the debtor makes payments for the services and goods supplied
after the issuance of the stay order; (f) directing the payment in full of all a
dministrative expenses incurred after the issuance of the stay order; (g) direct
ing the payment of new loans or other forms of credit accommodations obtained fo
r the rehabilitation of the debtor with prior court approval; (h) fixing the dat
es of the initial hearing on the petition not earlier than forty-five (45) days
but not later than sixty (60) days from the filing thereof; (i) directing the pe
titioner to publish the Order in a newspaper of general circulation in the Phili
ppines once a week for two (2) consecutive weeks; (j) directing the petitioner t
o furnish a copy of the petition and its annexes, as well as the stay order, to
the creditors named in the petition and the appropriate regulatory agencies such
as, but not limited to, the Securities and Exchange Commission, the Bangko Sent
ral ng Pilipinas, the Insurance Commission, the National Telecommunications Comm
ission, the Housing and Land Use Regulatory Board and the Energy Regulatory Comm
ission; (k) directing the petitioner that foreign creditors with no known addres
ses in the Philippines be individually given a copy of the stay order at their f
oreign addresses; (l) directing all creditors and all interested parties (includ
ing the regulatory agencies concerned) to file and serve on the debtor a verifie
d comment on or opposition to the petition, with supporting affidavits and docum
ents, not later than fifteen (15) days before the date of the first initial hear
ing and putting them on notice that their failure to do so will bar them from pa
rticipating in the proceedings; and (m) directing the creditors and interested p
arties to secure from the court copies of the petition and its annexes within su
ch time as to enable themselves to file their comment on or opposition to the pe
tition and to prepare for the initial hearing of the petition. The issuance of a
stay order does not affect the right to commence actions or proceedings insofar
as it is necessary to preserve a claim against the debtor. SEC. 8. Service of S
tay Order on Rehabilitation Receiver. The petitioner shall immediately serve a c
opy of the stay order on the rehabilitation receiver appointed by the court, who
shall manifest his acceptance or non-acceptance of his appointment not later th
an ten (10) days from receipt of the order. SEC. 9. Period of Stay Order. The st
ay order shall be effective from the date of its issuance until the approval of
the rehabilitation plan or the dismissal of the petition. SEC. 10. Relief from,
Modification, or Termination of Stay Order. (a) The court may, upon motion, term
inate, modify, or set conditions for the continuance of the stay order, or relie
ve a claim from the coverage thereof upon showing that (1) any of the allegation
s in the petition, or any of the contents of any attachment, or the verification
thereof has ceased to be true; (2) a creditor does not have adequate protection
over property securing its claim; (3) the debtors secured obligation is more tha
n the fair market value of the property subject of the stay and such property is
not necessary for the rehabilitation of the debtor; or (4) the property covered
by the stay order is not essential or necessary to the rehabilitation and the c
reditors failure to enforce its claim will cause more damage to the creditor than
to the debtor. (b) For purposes of this Section, the creditor lacks adequate pr
otection if it can be shown that: (1) The debtor fails or refuses to honor a pre
-existing agreement with the creditor to keep the property insured; (2) The debt
or fails or refuses to take commercially reasonable steps to maintain the proper
ty; or (3) The property has depreciated to an extent that the creditor is unders
ecured. (c) Upon showing of the creditors lack of adequate protection, the court
shall order the rehabilitation receiver to (1) make arrangements to provide for

the insurance or maintenance of the property, or (2) to make payments or otherwi

se provide additional or replacement security such that the obligation is fully
secured. If such arrangements are not feasible, the court shall modify the stay
order to allow the secured creditor lacking adequate protection to enforce its c
laim against the debtor; provided, however, that the court may deny the creditor
the remedies in this paragraph if such remedies would prevent the continuation
of the debtor as a going concern or otherwise prevent the approval and implement
ation of
REMLAW Page 224

continuation of the debtor as a going concern or otherwise prevent the approval

and implementation of a rehabilitation plan. SEC. 11. Qualifications of Rehabili
tation Receiver. (a) In the appointment of the rehabilitation receiver, the foll
owing qualifications shall be taken into consideration by the court: (1) Experti
se and acumen to manage and operate a business similar in size and complexity to
that of the debtor; (2) Knowledge in management, finance and rehabilitation of
distressed companies; (3) General familiarity with the rights of creditors in su
spension of payments or rehabilitation, and general understanding of the duties
and obligations of a rehabilitation receiver; (4) Good moral character, independ
ence and integrity; (5) Lack of conflict of interest as defined in this Section;
and (6) Willingness and ability to file a bond in such amount as may be determi
ned by the court. (b) Without limiting the generality of the following, a rehabi
litation receiver may be deemed to have a conflict of interest if: (1) He is a c
reditor or stockholder of the debtor; (2) He is engaged in a line of business wh
ich competes with the debtor; (3) He is, or was within two (2) years from the fi
ling of the petition, a director, officer, or employee of the debtor or any of i
ts present creditors, or the auditor or accountant of the debtor; (4) He is or w
as within two (2) years from the filing of the petition, an underwriter of the o
utstanding securities of the debtor; (5) He is related by consanguinity or affin
ity within the fourth civil degree to any creditor, stockholder, director, offic
er, employee, or underwriter of the debtor; or (6) He has any other direct or in
direct material interest in the debtor or any creditor. SEC. 12. Powers and Func
tions of Rehabilitation Receiver. The rehabilitation receiver shall not take ove
r the management and control of the debtor but shall closely oversee and monitor
the operations of the debtor during the pendency of the proceedings. For this p
urpose, the rehabilitation receiver shall have the powers, duties and functions
of a receiver under Presidential Decree No. 902-A, as amended, and the Rules of
Court. The rehabilitation receiver shall be considered as an officer of the cour
t. He shall be primarily tasked to study the best way to rehabilitate the debtor
and to ensure that the value of the debtors property is reasonably maintained pe
nding the determination of whether or not the debtor should be rehabilitated, as
well as implement the rehabilitation plan after its approval. Accordingly, he s
hall have the following powers and functions: (a) To verify the accuracy of the
petition, including its annexes such as the Schedule of Debts and Liabilities an
d the Inventory of Assets submitted in support of the petition; (b) To accept an
d incorporate, when justified, amendments to the Schedule of Debts and Liabiliti
es; (c) To recommend to the court the disallowance of claims and rejection of am
endments to the Schedule of Debts and Liabilities that lack sufficient proof and
justification; (d) To submit to the court and make available for review by the
creditors, a revised Schedule of Debts and Liabilities; (e) To investigate the a
cts, conduct, properties, liabilities and financial condition of the debtor, the
operation of its business and the desirability of the continuance thereof; and,
any other matter relevant to the proceeding or to the formulation of a rehabili
tation plan; (f) To examine under oath the directors and officers of the debtor
and any other witnesses that he may deem appropriate; (g) To make available to t
he creditors documents and notices necessary for them to follow and participate
in the proceedings; (h) To report to the court any fact ascertained by him perta
ining to the causes of the debtors problems, fraud, preferences, dispositions, en
cumbrances, misconduct, mismanagement and irregularities committed by the stockh
olders, directors, management, or any other person against the debtor; (i) To em
ploy such person or persons such as lawyers, accountants, appraisers and staff a
s are necessary in performing his functions and duties as rehabilitation receive
r; (j) To monitor the operations of the debtor and to immediately report to the
court any material adverse change in the debtors business;
REMLAW Page 225

change in the debtors business; (k) To evaluate the existing assets and liabiliti
es, earnings and operations of the debtor; (l) To determine and recommend to the
court the best way to salvage and protect the interests of the creditors, stock
holders and the general public; (m) To study the rehabilitation plan proposed by
the debtor or any rehabilitation plan submitted during the proceedings, togethe
r with any comments made thereon; (n) To prohibit and report to the court any en
cumbrance, transfer or disposition of the debtors property outside of the ordinar
y course of business or what is allowed by the court; (o) To prohibit and report
to the court any payments outside of the ordinary course of business; (p) To ha
ve unlimited access to the debtors employees, premises, books, records and financ
ial documents during business hours; (q) To inspect, copy, photocopy or photogra
ph any document, paper, book, account or letter, whether in the possession of th
e debtor or other persons; (r) To gain entry into any property for the purpose o
f inspecting, measuring, surveying or photographing it or any designated relevan
t object or operation thereon; (s) To take possession, control and custody of th
e debtors assets; (t) To notify counterparties and the court as to contracts that
the debtor has decided to continue to perform or breach; (u) To be notified of
and to attend all meetings of the board of directors and stockholders of the deb
tor; (v) To recommend any modification of an approved rehabilitation plan as he
may deem appropriate; (w) To bring to the attention of the court any material ch
ange affecting the debtors ability to meet the obligations under the rehabilitati
on plan; (x) To recommend the appointment of a management committee in the cases
provided for under Presidential Decree No. 902-A, as amended; (y) To recommend
the termination of the proceedings and the dissolution of the debtor if he deter
mines that the continuance in business of such entity is no longer feasible or p
rofitable or no longer works to the best interest of the stockholders, parties-l
itigants, creditors or the general public; (z) To apply to the court for any ord
er or directive that he may deem necessary or desirable to aid him in the exerci
se of his powers and performance of his duties and functions; and (aa) To exerci
se such other powers as may from time to time be conferred upon him by the court
. SEC. 13. Oath and Bond. Before entering upon his powers, duties and functions,
the rehabilitation receiver must be sworn in to perform them faithfully, and mu
st post a bond executed in favor of the debtor in such sum as the court may dire
ct, to guarantee that he will faithfully discharge his duties and obey the order
s of the court. If necessary, he shall also declare under oath that he will perf
orm the duties of a trustee of the assets of the debtor, will act honestly and i
n good faith, and deal with the assets of the debtor in a commercially reasonabl
e manner. SEC. 14. Fees and Expenses. The rehabilitation receiver and the person
s hired by him shall be entitled to reasonable professional fees and reimburseme
nt of expenses which shall be considered as administrative expenses. SEC. 15. Im
munity from Suit. The rehabilitation receiver shall not be subject to any action
, claim or demand in connection with any act done or omitted by him in good fait
h in the exercise of his functions and powers herein conferred. SEC. 16. Reports
. The rehabilitation receiver shall file a written report every three (3) months
to the court or as often as the court may require on the general condition of t
he debtor. The report shall include, at the minimum, interim financial statement
s of the debtor. SEC. 17. Dismissal of Rehabilitation Receiver. A rehabilitation
receiver may, upon motion, be dismissed by the court on the following grounds:
(a) if he fails, without just cause, to perform any of his powers and functions
under these Rules; or (b) on any of the grounds for removing a trustee under the
general principles of trusts. SEC. 18. Rehabilitation Plan. The rehabilitation
plan shall include (a) the desired business targets or goals and the duration an
d coverage of the rehabilitation; (b) the terms and conditions of such rehabilit
ation which shall include the manner of its implementation, giving due regard to
the interests of secured creditors such as, but not limited, to the non-impairm
ent of their security liens or interests; (c) the material financial commitments
to support the rehabilitation plan; (d) the means for
REMLAW Page 226

interests; (c) the material financial commitments to support the rehabilitation

plan; (d) the means for the execution of the rehabilitation plan, which may incl
ude debt to equity conversion, restructuring of the debts, dacion en pago or sal
e or exchange or any disposition of assets or of the interest of shareholders, p
artners or members; (e) a liquidation analysis setting out for each creditor tha
t the present value of payments it would receive under the plan is more than tha
t which it would receive if the assets of the debtor were sold by a liquidator w
ithin a six-month period from the estimated date of filing of the petition; and
(f) such other relevant information to enable a reasonable investor to make an i
nformed decision on the feasibility of the rehabilitation plan. SEC. 19. Repayme
nt Period. If the rehabilitation plan extends the period for the debtor to pay i
ts contractual obligations, the new period should not extend beyond fifteen (15)
years from the expiration of the stipulated term existing at the time of filing
of the petition. SEC. 20. Effects of Rehabilitation Plan. The approval of the r
ehabilitation plan by the court shall result in the following: (a) The plan and
its provisions shall be binding upon the debtor and all persons who may be affec
ted thereby, including the creditors, whether or not such persons have participa
ted in the proceedings or opposed the plan or whether or not their claims have b
een scheduled; (b) The debtor shall comply with the provisions of the plan and s
hall take all actions necessary to carry out the plan; (c) Payments shall be mad
e to the creditors in accordance with the provisions of the plan; (d) Contracts
and other arrangements between the debtor and its creditors shall be interpreted
as continuing to apply to the extent that they do not conflict with the provisi
ons of the plan; and (e) Any compromises on amounts or rescheduling of timing of
payments by the debtor shall be binding on creditors regardless of whether or n
ot the plan is successfully implemented. SEC. 21. Revocation of Rehabilitation P
lan on Grounds of Fraud. Upon motion, within ninety (90) days from the approval
of the rehabilitation plan, and after notice and hearing, the court may revoke t
he approval thereof on the ground that the same was secured through fraud. SEC.
22. Alteration or Modification of Rehabilitation Plan. An approved rehabilitatio
n plan may, upon motion, be altered or modified if, in the judgment of the court
, such alteration or modification is necessary to achieve the desired targets or
goals set forth therein. SEC. 23. Termination of Proceedings. The court shall,
upon motion or upon recommendation of the rehabilitation receiver, terminate the
proceeding in any of the following cases: (a) Dismissal of the petition; (b) Fa
ilure of the debtor to submit the rehabilitation plan; (c) Disapproval of the re
habilitation plan by the court; (d) Failure to achieve the desired targets or go
als as set forth in the rehabilitation plan; (e) Failure of the debtor to perfor
m its obligations under the plan; (f) Determination that the rehabilitation plan
may no longer be implemented in accordance with its terms, conditions, restrict
ions or assumptions; or (g) Successful implementation of the rehabilitation plan
. SEC. 24. Discharge of Rehabilitation Receiver. Upon termination of the rehabil
itation proceedings, the rehabilitation receiver shall submit his final report a
nd accounting within such period of time as the court will allow him. Upon appro
val of his report and accounting, the court shall order his discharge. RULE 4 DE
BTOR-INITIATED REHABILITATION SEC. 1. Who May Petition. Any debtor who foresees
the impossibility of meeting its debts when they respectively fall due, may peti
tion the proper regional trial court for rehabilitation. A group of companies ma
y jointly file a petition for rehabilitation under these Rules when one or more
of its constituent corporations foresee the impossibility of meeting debts when
they respectively fall due, and the financial distress would likely adversely af
fect the financial condition and/or operations of the other member companies of
the group and/or the participation of the other member companies of the group is
essential under the terms and conditions of the proposed rehabilitation plan. S
EC. 2. Contents of Petition. (a) The petition filed by the debtor must be verifi
ed and must set forth with sufficient particularity all the following material f
acts: (1) the name and business of the debtor; (2) the nature of the business of
the debtor; (3) the history of the debtor; (4) the cause of its inability to pa
y its debts; (5) all the pending
REMLAW Page 227

the debtor; (3) the history of the debtor; (4) the cause of its inability to pay
its debts; (5) all the pending actions or proceedings known to the debtor and t
he courts or tribunals where they are pending; (6) threats or demands to enforce
claims or liens against the debtor; and (7) the manner by which the debtor may
be rehabilitated and how such rehabilitation may benefit the general body of cre
ditors, employees and stockholders. (b) The petition shall be accompanied by the
following documents: (1) An audited financial statement of the debtor at the en
d of its last fiscal year; (2) Interim financial statements as of the end of the
month prior to the filing of the petition; (3) A Schedule of Debts and Liabilit
ies which lists all the creditors of the debtor, indicating the name and last ad
dress of record of each creditor; the amount of each claim as to principal, inte
rest, or penalties due as of the date of filing; the nature of the claim; and an
y pledge, lien, mortgage judgment or other security given for the payment thereo
f; (4) An Inventory of Assets which must list with reasonable specificity all th
e assets of the debtor, stating the nature of each asset, the location and condi
tion thereof, the book value or market value of the asset, and attaching the cor
responding certificate of title therefor in case of real property, or the eviden
ce of title or ownership in case of movable property, the encumbrances, liens or
claims thereon, if any, and the identities and addresses of the lienholders and
claimants. The Inventory shall include a Schedule of Accounts Receivable which
must indicate the amount of each, the persons from whom due, the date of maturit
y and the degree of collectibility categorizing them as highly collectible to re
motely collectible; (5) A rehabilitation plan which conforms with the minimal re
quirements set out in Section 18 of Rule 3; (6) A Schedule of Payments and Dispo
sition of Assets which the debtor may have effected within three (3) months imme
diately preceding the filing of the petition; (7) A Schedule of Cash Flow of the
debtor for three (3) months immediately preceding the filing of the petition, a
nd a detailed schedule of the projected cash flow for the succeeding three (3) m
onths; (8) A Statement of Possible Claims by or against the debtor which must co
ntain a brief statement of the facts which might give rise to the claim and an e
stimate of the probable amount thereof; (9) An Affidavit of General Financial Co
ndition which shall contain answers to the questions or matters prescribed in An
nex A hereof; (10) At least three (3) nominees for the position of rehabilitation
receiver as well as their qualifications and addresses, including but not limite
d to their telephone numbers, fax numbers and e-mail address; and (11) A certifi
cate attesting under oath that (i) the filing of the petition has been duly auth
orized; and (ii) the directors and stockholders of the debtor have irrevocably a
pproved and/or consented to, in accordance with existing laws, all actions or ma
tters necessary and desirable to rehabilitate the debtor including, but not limi
ted to, amendments to the articles of incorporation and by-laws or articles of p
artnership; increase or decrease in the authorized capital stock; issuance of bo
nded indebtedness; alienation, transfer, or encumbrance of assets of the debtor;
and modification of shareholders rights. (c) Five (5) copies of the petition sha
ll be filed with the court. SEC. 3. Verification by Debtor. The petition filed b
y the debtor must be verified by an affidavit of a responsible officer of the de
btor and shall be in a form substantially as follows: I, _________________, (posi
tion) of (name of petitioner), do solemnly swear that the petitioner has been du
ly authorized to file the petition and that the stockholders and board of direct
ors (or governing body) have approved and/or consented to, in accordance with la
w, all actions or matters necessary or desirable to rehabilitate the debtor. The
petition is being filed to protect the interests of the debtor, the stockholder
s, the investors and the creditors of the debtor, which warrant the appointment
of a rehabilitation receiver. There is no petition for insolvency filed with any
other body, court or tribunal affecting the petitioner. The Inventory of Assets
and the Schedule of Debts and Liabilities contains a full, correct and true des
cription of all debts and liabilities and of all goods, effects, estate and prop
erty of whatever kind or class belonging to petitioner. The Inventory also conta
ins a full, correct and true statement of all debts owing or due to petitioner,
or to any person or persons in trust for petitioner and of all securities and co
ntracts whereby any money may hereafter become due or payable to petitioner or b

y or through which any benefit or advantage may accrue to petitioner. The petiti
on contains a concise statement of the facts giving rise, or which might give ri
se, to any cause of action in favor of petitioner. Petitioner has no land, money
, stock, expectancy, or property of any kind,
REMLAW Page 228

action in favor of petitioner. Petitioner has no land, money, stock, expectancy,

or property of any kind, except those set forth in the Inventory of Assets. Pet
itioner has, in no instance, created or acknowledged a debt for a greater sum th
an the true and correct amount. Petitioner, its officers, directors and stockhol
ders have not, directly or indirectly, concealed, fraudulently sold or otherwise
fraudulently disposed of, any part of petitioners real or personal property, est
ate, effects or rights of action, and petitioner, its officers, directors and st
ockholders have not in any way compounded with any of its creditors in order to
give preference to such creditors, or to receive or to accept any profit or adva
ntage therefrom, or to defraud or deceive in any manner any creditor to whom pet
itioner is indebted. Petitioner, its officers, directors, and stockholders have
been acting in good faith and with due diligence. SEC. 4. Opposition to or Comme
nt on Petition. Every creditor of the debtor or any interested party shall file
his verified opposition to or comment on the petition not later than fifteen (15
) days before the date of the initial hearing fixed in the stay order. After suc
h time, no creditor or interested party shall be allowed to file any comment the
reon or opposition thereto without leave of court. If the Schedule of Debts and
Liabilities omits a claim or liability, the creditor concerned shall attach to i
ts comment or opposition a verified statement of the obligations allegedly due i
t. SEC. 5. Initial Hearing. (a) On or before the initial hearing set in the orde
r mentioned in Section 7 of Rule 3, the petitioner shall file a publishers affida
vit showing that the publication requirements and a petitioners affidavit showing
that the notification requirement for foreign creditors had been complied with,
as required in the stay order. (b) Before proceeding with the initial hearing,
the court shall determine whether the jurisdictional requirements set forth abov
e had been complied with. After finding that such requirements are met, the cour
t shall ensure that the parties consider in detail all of the following: (1) Ame
ndments to the rehabilitation plan proposed by the debtor; (2) Simplification of
the issues; (3) The possibility of obtaining stipulations and admission of fact
s and documents, including resort to request for admission under Rule 26 of the
Rules of Court; (4) The possibility of amicably agreeing on any issue brought up
in the comments on, or opposition to, the petition; (5) Referral of any account
ing, financial and other technical issues to an expert; (6) The possibility of s
ubmitting the petition for decision on the basis of the comments, opposition, af
fidavits and other documents on record; (7) The possibility of a new rehabilitat
ion plan voluntarily agreed upon by the debtor and its creditors; and (8) Such o
ther matters as may aid in the speedy and summary disposition of the case. SEC.
6. Additional Hearings. The court may hold additional hearings as part of the in
itial hearing contemplated in these Rules but the initial hearing must be conclu
ded not later than ninety (90) days from the initial date of the initial hearing
fixed in the stay order. SEC. 7. Order After Initial Hearing. (a) Within twenty
(20) days after the last hearing, the court shall issue an order which shall: (
1) Give due course to the petition and immediately refer the petition and its an
nexes to the rehabilitation receiver who shall evaluate the rehabilitation plan
and submit his recommendations to the court not later than ninety (90) days from
the date of the last initial hearing, if the court is satisfied that there is m
erit to the petition, otherwise the court shall immediately dismiss the petition
; and (2) Recite in detail the matters taken up in the initial hearing and the a
ctions taken thereon, including a substitute rehabilitation plan contemplated in
Sections 5 (b)(7) and (8) of this Rule; (b) If the debtor and creditors agree o
n a new rehabilitation plan pursuant to Section 5 (b)(7) of this Rule, the order
shall so state the fact and require the rehabilitation receiver to supply the d
etails of the plan and submit it for the approval of the court not later than si
xty (60) days from the date of the last initial hearing. The court shall approve
the new rehabilitation plan not later than ninety (90) days from the date of th
e last initial hearing upon concurrence of the following: (1) Approval or endors
ement of creditors holding at least two-thirds (2/3) of the total liabilities of
the debtor including secured creditors holding more than fifty percent (50%) of
the total secured claims of
REMLAW Page 229

debtor including secured creditors holding more than fifty percent (50%) of the
total secured claims of the debtor and unsecured creditors holding more than fif
ty percent (50%) of the total unsecured claims of the debtor; (2) The rehabilita
tion plan complies with the requirements specified in Section 18 of Rule 3; (3)
The rehabilitation plan would provide the objecting class of creditors with paym
ents whose present value projected in the plan would be greater than that which
they would have received if the assets of the debtor were sold by a liquidator w
ithin a six (6)-month period from the date of filing of the petition; and (4) Th
e rehabilitation receiver has recommended approval of the plan. The approval by
the court of the new rehabilitation plan shall have the same effect as approval
of a rehabilitation plan under Section 20 of Rule 3. SEC. 8. Creditors Meetings.
If no new rehabilitation plan is agreed upon by the debtor and the creditors, th
e rehabilitation receiver, at any time before he submits his evaluation on the d
ebtorproposed rehabilitation plan to the court as prescribed in Section 7(a)(1)
of this Rule, shall, either alone or with the debtor, meet with the creditors or
any interested party to discuss the plan with a view to clarifying or resolving
any matter connected therewith. SEC. 9. Comments on or Opposition to Rehabilita
tion Plan. Any creditor or interested party of record may file comments on or op
position to the proposed rehabilitation plan, with a copy given to the rehabilit
ation receiver, not later than sixty (60) days from the date of the last initial
hearing. The court shall conduct summary and non-adversarial proceedings to rec
eive evidence, if necessary, in hearing the comments on and opposition to the pl
an. SEC. 10. Modification of Proposed Rehabilitation Plan. The debtor may modify
its rehabilitation plan in the light of the comments of the rehabilitation rece
iver and creditors or any interested party and submit a revised or substitute re
habilitation plan for the final approval of the court. Such rehabilitation plan
must be submitted to the court not later than ten (10) months from the date of t
he date of filing of the petition. SEC. 11. Approval of Rehabilitation Plan. The
court may approve a rehabilitation plan even over the opposition of creditors o
f the debtor if, in its judgment, the rehabilitation of the debtor is feasible a
nd the opposition of the creditors is manifestly unreasonable. The opposition of
the creditors is manifestly unreasonable if the following are present: (a) The
rehabilitation plan complies with the requirements specified in Section 18 of Ru
le 3; (b) The rehabilitation plan would provide the objecting class of creditors
with payments whose present value projected in the plan would be greater than t
hat which they would have received if the assets of the debtor were sold by a li
quidator within a six (6)month period from the date of filing of the petition; a
nd (c) The rehabilitation receiver has recommended approval of the plan. In appr
oving the rehabilitation plan, the court shall ensure that the rights of the sec
ured creditors are not impaired. The court shall also issue the necessary orders
or processes for its immediate and successful implementation. It may impose suc
h terms, conditions, or restrictions as the effective implementation and monitor
ing thereof may reasonably require, or for the protection and preservation of th
e interests of the creditors should the plan fail. SEC. 12. Period to Decide Pet
ition. The court shall decide the petition within one (1) year from the date of
filing of the petition, unless the court, for good cause shown, is able to secur
e an extension of the period from the Supreme Court. RULE 5 CREDITOR-INITIATED R
EHABILITATION SEC. 1. Who May Petition. Any creditor or creditors holding at lea
st twenty percent (20%) of the debtors total liabilities may file a petition with
the proper regional trial court for rehabilitation of a debtor that cannot meet
its debts as they respectively fall due. SEC. 2. Requirements for Creditor-Init
iated Petitions. Where the petition is filed by a creditor or creditors under th
is Rule, it is sufficient that the petition is accompanied by a rehabilitation p
lan and a list of at least three (3) nominees to the position of rehabilitation
receiver and verified by a sworn statement that the affiant has read the petitio
n and that its contents are true and correct of his personal knowledge or based
on authentic records and that the petition is being filed to protect the interes
ts of
REMLAW Page 230

the debtor, the stockholders, the investors and the creditors of the debtor. SEC
. 3. Applicability of Provisions Relating to Debtor-Initiated Rehabilitation. Th
e provisions of Sections 5 to 12 of Rule 4 shall apply to rehabilitation under t
his Rule. RULE 6 PRE-NEGOTIATED REHABILITATION SEC. 1. Pre-negotiated Rehabilita
tion Plan. A debtor that foresees the impossibility of meeting its debts as they
fall due may, by itself or jointly with any of its creditors, file a verified p
etition for the approval of a pre-negotiated rehabilitation plan. The petition s
hall comply with Section 2 of Rule 4 and be supported by an affidavit showing th
e written approval or endorsement of creditors holding at least two-thirds (2/3)
of the total liabilities of the debtor, including secured creditors holding mor
e than fifty percent (50%) of the total secured claims of the debtor and unsecur
ed creditors holding more than fifty percent (50%) of the total unsecured claims
of the debtor. SEC. 2. Issuance of Order. If the court finds the petition suffi
cient in form and substance, it shall, not later than five (5) working days from
the filing of the petition, issue an order which shall: (a) Identify the debtor
, its principal business or activity/ies and its principal place of business; (b
) Direct the publication of the order in a newspaper of general circulation once
a week for at least two (2) consecutive weeks, with the first publication to be
made within seven (7) days from the time of its issuance; (c) Direct the servic
e by personal delivery of a copy of the petition on each creditor who is not a p
etitioner holding at least five percent (5%) of the total liabilities of the deb
tor, as determined in the schedule attached to the petition, within three (3) da
ys; (d) Direct the petitioner to furnish a copy of the petition and its annexes,
as well as the stay order, to the relevant regulatory agency; (e) State that co
pies of the petition and the rehabilitation plan are available for examination a
nd copying by any interested party; (f) Direct creditors and other parties inter
ested (including the Securities and Exchange Commission and the relevant regulat
ory agencies such as, but not limited to, the Bangko Sentral ng Pilipinas, the I
nsurance Commission, the National Telecommunications Commission, the Housing and
Land Use Regulatory Board and the Energy Regulatory Commission) in opposing the
petition or rehabilitation plan to file their verified objections thereto or co
mments thereon within a period of not later than twenty (20) days from the secon
d publication of the order, with a warning that failure to do so will bar them f
rom participating in the proceedings; (g) Appoint the rehabilitation receiver na
med in the plan, unless the court finds that he is not qualified under these Rul
es in which case it may appoint a qualified rehabilitation receiver of its choic
e; (h) Stay enforcement of all claims, whether for money or otherwise and whethe
r such enforcement is by court action or otherwise, against the debtor, its guar
antors and persons not solidarily liable with the debtor; provided, that the sta
y order shall not cover claims against letters of credit and similar security ar
rangements issued by a third party to secure the payment of the debtors obligatio
ns; provided further, that the stay order shall not cover foreclosure by a credi
tor of property not belonging to a debtor under corporate rehabilitation; provid
ed, however, that where the owner of such property sought to be foreclosed is al
so a guarantor or one who is not solidarily liable, said owner shall be entitled
to the benefit of excussion as such guarantor; (i) Prohibit the debtor from sel
ling, encumbering, transferring, or disposing in any manner any of its propertie
s except in the ordinary course of business; (j) Prohibit the debtor from making
any payment of its liabilities outstanding as of the date of filing of the peti
tion; (k) Prohibit the debtors suppliers of goods or services from withholding su
pply of goods and services in the ordinary course of business for as long as the
debtor makes payments for the services and goods supplied after the issuance of
the stay order; (l) Direct the payment in full of all administrative expenses i
ncurred after the issuance of the stay order; and (m) Direct the payment of new
loans or other forms of credit accommodations obtained for the rehabilitation of
the debtor with prior court approval. SEC. 3. Approval of Plan. Within ten (10)
days from the date of the second publication of the order referred to in Sectio
n 2 of this Rule, the court shall approve the rehabilitation plan unless a credi
tor or
REMLAW Page 231

referred to in Section 2 of this Rule, the court shall approve the rehabilitatio
n plan unless a creditor or other interested party submits a verified objection
to it in accordance with the next succeeding section. SEC. 4. Objection to Petit
ion or Rehabilitation Plan. Any creditor or other interested party may submit to
the court a verified objection to the petition or the rehabilitation plan. The
objections shall be limited to the following: (a) The petition or the rehabilita
tion plan or their attachments contain material omissions or are materially fals
e or misleading; (b) The terms of rehabilitation are unattainable; or (c) The ap
proval or endorsement of creditors required under Section 1 of this Rule has not
been obtained Copies of any objection to the petition or the rehabilitation pla
n shall be served on the petitioning debtor and/or creditors. SEC. 5. Hearing on
Objections. The court shall set the case for hearing not earlier than ten (10)
days and no later than twenty (20) days from the date of the second publication
of the order mentioned in Section 2 of this Rule on the objections to the petiti
on or rehabilitation plan. If the court finds that the objection is in accordanc
e with the immediately preceding section, it shall direct the petitioner to cure
the defect within a period fifteen (15) days from receipt of the order. SEC. 6.
Period for Approval of Rehabilitation Plan. The court shall decide the petition
not later than one hundred twenty (120) days from the date of the filing of the
petition. If the court fails to do so within said period, the rehabilitation pl
an shall be deemed approved SEC. 7. Effects of Approval of Rehabilitation Plan.
Approval of the rehabilitation plan under this Rule shall have the same legal ef
fect as approval of a rehabilitation plan under Section 20 of Rule 3. SEC. 8. Re
vocation of Approved Rehabilitation Plan. Not later than thirty (30) days from t
he approval of a rehabilitation plan under this Rule, the plan may, upon motion
and after notice and hearing, be revoked on the ground that the approval was sec
ured by fraud or that the petitioner has failed to cure the defect ordered by th
e court pursuant to Section 5 of this Rule. SEC. 9. Effect of Rule on Pending Pe
titions. Any pending petition for rehabilitation that has not undergone the init
ial hearing prescribed under the Interim Rules of Procedure for Corporate Rehabi
litation at the time of the effectivity of these Rules may be converted into a r
ehabilitation proceeding under this Rule. RULE 7 RECOGNITION OF FOREIGN PROCEEDI
NGS SEC. 1. Scope of Application. This Rule applies where (a) assistance is soug
ht in a Philippine court by a foreign court or a foreign representative in conne
ction with a foreign proceeding; (b) assistance is sought in a foreign State in
connection with a domestic proceeding governed by these Rules; or (c) a foreign
proceeding and a domestic proceeding are concurrently taking place. The sole fac
t that a petition is filed pursuant to this Rule does not subject the foreign re
presentative or the foreign assets and affairs of the debtor to the jurisdiction
of the local courts for any purpose other than the petition. SEC. 2. Non-Recogn
ition of Foreign Proceeding. Nothing in this Rule prevents the court from refusi
ng to take an action governed by this Rule if (a) the action would be manifestly
contrary to the public policy of the Philippines; and (b) if the court finds th
at the country of which the petitioner is a national does not grant recognition
to a Philippine rehabilitation proceeding in a manner substantially in accordanc
e with this Rule. SEC. 3. Petition for Recognition of Foreign Proceeding. A fore
ign representative may apply with the Regional Trial Court where the debtor resi
des for recognition of the foreign proceeding in which the foreign representativ
e has been appointed. A petition for recognition shall be accompanied by: (a) A
certified copy of the decision commencing the foreign proceeding and appointing
the foreign representative; or (b) A certificate from the foreign court affirmin
g the existence of the foreign proceeding and of the appointment of the foreign
representative; or (c) In the absence of evidence referred to in subparagraphs (
a) and (b), any other evidence acceptable to the court of the existence of the f
oreign proceeding and of the appointment of the foreign representative.
REMLAW Page 232

representative. SEC. 4. Recognition of Foreign Proceeding. A foreign proceeding

shall be recognized if: (a) The proceeding is a foreign proceeding as defined he
rein; (b) The person or body applying for recognition is a foreign representativ
e as defined herein; and (c) The petition meets the requirements of Section 3 of
this Rule; SEC. 5. Period to Recognize Foreign Proceeding. A petition for recog
nition of a foreign proceeding shall be decided within thirty (30) days from the
filing thereof. SEC. 6. Notification to Court. From the time of filing the peti
tion for recognition of the foreign proceeding, the foreign representative shall
inform the court promptly of: (a) Any substantial change in the status of the f
oreign proceeding or the status of the foreign representatives appointment; and (
b)Any other foreign proceeding regarding the same debtor that becomes known to t
he foreign representative. SEC. 7. Provisional Relief that May be Granted upon A
pplication for Recognition of Foreign Proceeding. From the time of filing a peti
tion for recognition until the same is decided upon, the court may, upon motion
of the foreign representative where relief is urgently needed to protect the ass
ets of the debtor or the interests of the creditors, grant relief of a provision
al nature, including: (a) Staying execution against the debtors assets; (b) Entru
sting the administration or realization of all or part of the debtors assets loca
ted in the Philippines to the foreign representative or another person designate
d by the court in order to protect and preserve the value of assets that, by the
ir nature or because of other circumstances, are perishable, susceptible to deva
luation or otherwise in jeopardy; (c) Any relief mentioned in Sections 9(a)(1),
(2) and (7) of this Rule. SEC. 8. Effects of Recognition of Foreign Proceeding.
Upon recognition of a foreign proceeding: (a) Commencement or continuation of in
dividual actions or individual proceedings concerning the debtors assets, rights,
obligations or liabilities is stayed; provided, that such stay does not affect
the right to commence individual actions or proceedings to the extent necessary
to preserve a claim against the debtor. (b) Execution against the debtors assets
is stayed; and (c) The right to transfer, encumber or otherwise dispose of any a
ssets of the debtor is suspended. SEC. 9. Relief That May be Granted After Recog
nition of Foreign Proceeding. (a) Upon recognition of a foreign proceeding, wher
e necessary to protect the assets of the debtor or the interests of the creditor
s, the court may, upon motion of the foreign representative, grant any appropria
te relief including: (1) Staying the commencement or continuation of individual
actions or individual proceedings concerning the debtors assets, rights, obligati
ons or liabilities to the extent they have not been stayed under Section 8(a) of
this Rule; (2) Staying execution against the debtors assets to the extent it has
not been stayed under Section 8(b) of this Rule; (3) Suspending the right to tr
ansfer, encumber or otherwise dispose of any assets of the debtor to the extent
this right has not been suspended under Section 8(c) of this Rule; (4) Providing
for the examination of witnesses, the taking of evidence or the delivery of inf
ormation concerning the debtors assets, affairs, rights, obligations or liabiliti
es; (5) Entrusting the administration or realization of all or part of the debto
rs assets located in the Philippines to the foreign representative or another per
son designated by the court; (6) Extending the relief granted under Section 7 of
this Rule; (7) Granting any additional relief that may be available to the reha
bilitation receiver under these laws. (b) Upon recognition of a foreign proceedi
ng, the court may, at the request of the foreign representative, entrust the dis
tribution of all or part of the debtors assets located in the Philippines to the
foreign representative or another person designated by the court; provided that
the court is satisfied that the interests of local creditors are adequately prot
ected. SEC. 10. Protection of Creditors and Other Interested Persons. (a) In gra
nting or denying relief under this Rule or in modifying or terminating the relie
f under paragraph (c) of this Section, the court must be satisfied that the inte
rests of the creditors and other interested persons, including the debtor, are a
dequately protected.
REMLAW Page 233

persons, including the debtor, are adequately protected. (b) The court may subje
ct the relief granted under Section 7 or Section 9 of this Rule to conditions it
considers appropriate. (c) The court may, upon motion of the foreign representa
tive or a person affected by the relief granted under Section 7 or Section 9 of
this Rule, or on its own motion, modify or terminate such relief. SEC. 11. Actio
ns to Avoid Acts Detrimental to Creditors. Upon recognition of a foreign proceed
ing, the foreign representative acquires the standing to initiate actions to avo
id or otherwise render ineffective acts detrimental to creditors that are availa
ble under these Rules. SEC. 12. Intervention by Foreign Representative in Philip
pine Proceedings. Upon recognition of a foreign proceeding, the foreign represen
tative may intervene in any action or proceeding in the Philippines in which the
debtor is a party. SEC. 13. Cooperation and Direct Communication with Foreign C
ourts and Foreign Representatives. In matters covered by this Rule, the court sh
all cooperate to the maximum extent possible with foreign courts or foreign repr
esentatives. The court is entitled to communicate directly with, or request info
rmation or assistance directly from, foreign courts or foreign representatives.
SEC. 14. Forms of Cooperation. Cooperation may be implemented by any appropriate
means, including but not limited to the following: (a) Appointment of a person
or body to act at the discretion of the court; (b) Communication of information
by any means considered appropriate by the court; (c) Coordination of the admini
stration and supervision of the debtors assets and affairs; (d) Approval or imple
mentation by courts of agreements concerning the coordination of proceedings; (e
) Coordination of concurrent proceedings regarding the same debtor; (f) Suspensi
on of proceedings against the debtor; (g) Limiting the relief to assets that sho
uld be administered in a foreign proceeding pending in a jurisdiction other than
the place where the debtor has its principal place of business (foreign non-mai
n proceeding) or information required in that proceeding; and (h) Implementation
of rehabilitation or re-organization plan for the debtor. Nothing in this Rule
limits the power of the court to provide additional assistance to the foreign re
presentative under other applicable laws. SEC. 15. Commencement of Local Proceed
ing after Recognition of Foreign Proceeding. After the recognition of a foreign
proceeding, a local proceeding under these Rules may be commenced only if the de
btor is doing business in the Philippines, the effects of the proceedings shall
be restricted to the assets of the debtor located in the country and, to the ext
ent necessary to implement cooperation and coordination under Sections 13 and 14
of this Rule, to the other assets of the debtor that, under local laws, must be
administered in that proceeding. SEC. 16. Local and Foreign Proceedings. Where
a foreign proceeding and a local proceeding are taking place concurrently regard
ing the same debtor, the court shall seek cooperation and coordination under Sec
tions 13 and 14 of this Rule. Any relief granted to the foreign proceeding must
be made consistent with the relief granted in the local proceeding. RULE 8 PROCE
DURAL REMEDIES SEC. 1. Motion for Reconsideration. A party may file a motion for
reconsideration of any order issued by the court prior to the approval of the r
ehabilitation plan. No relief can be extended to the party aggrieved by the cour
ts order on the motion through a special civil action for certiorari under Rule 6
5 of the Rules of Court. Such order can only be elevated to the Court of Appeals
as an assigned error in the petition for review of the decision or order approv
ing or disapproving the rehabilitation plan. An order issued after the approval
of the rehabilitation plan can be reviewed only through a special civil action f
or certiorari under Rule 65 of the Rules of Court. SEC. 2. Review of Decision or
Order on Rehabilitation Plan. An order approving or disapproving a rehabilitati
on plan can only be reviewed through a petition for review to the Court of Appea
ls under Rule 43 of the Rules of Court within fifteen (15) days from notice of t
he decision or order. RULE 9 FINAL PROVISIONS SEC. 1. Severability. If any provi
sion or section of these Rules is held invalid, the other provisions or
REMLAW Page 234

SEC. 1. Severability. If any provision or section of these Rules is held invalid

, the other provisions or sections shall not be affected thereby. SEC. 2. Transi
tory Provision. Unless the court orders otherwise to prevent manifest injustice,
any pending petition for rehabilitation that has not undergone the initial hear
ing prescribed under the Interim Rules of Procedure for Corporate Rehabilitation
at the time of the effectivity of these Rules shall be governed by these Rules.
SEC. 3. Effectivity. These Rules shall take effect on 16 January 2009 following
its publication in two (2) newspapers of general circulation in the Philippines
.
Pasted from <http://blog.pinoy-business.com/rules-of-procedure-on-corporate-reha
bilitation-2008/>
REMLAW Page 235

Oscar Reyes v. RTC Makati GR 165744 Aug 11, 2008

Sunday, November 14, 2010 11:31 PM
[G.R. No. 165744, August 11, 2008] OSCAR C. REYES, PETITIONER, VS. HON. REGIONAL
TRIAL COURT OF MAKATI, BRANCH 142, ZENITH INSURANCE CORPORATION, AND RODRIGO C.
REYES, RESPONDENTS. DE CI S I ON BRION, J.: This Petition for Review on Certior
ari under Rule 45 of the Rules of Court seeks to set aside the Decision of the C
ourt of Appeals (CA)[1] promulgated on May 26, 2004 in CA-G.R. SP No. 74970. The
CA Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, M
akati City dated November 29, 2002[2] in Civil Case No. 00-1553 (entitled "Accou
nting of All Corporate Funds and Assets, and Damages") which denied petitioner O
scar C. Reyes (Oscar) Motion to Declare Complaint as Nuisance or Harassment Sui
t. BACKGROUND FACTS Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are
two of the four children of the spouses Pedro and Anastacia Reyes. Pedro, Anasta
cia, Oscar, and Rodrigo each owned shares of stock of Zenith Insurance Corporati
on (Zenith), a domestic corporation established by their family. Pedro died in 1
964, while Anastacia died in 1993. Although Pedro s estate was judicially partit
ioned among his heirs sometime in the 1970s, no similar settlement and partition
appear to have been made with Anastacia s estate, which included her shareholdi
ngs in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of Zenith; Os
car and Rodrigo owned 8,715,637 and 4,250 shares, respectively.[3] On May 9, 200
0, Zenith and Rodrigo filed a complaint[4] with the Securities and Exchange Comm
ission (SEC) against Oscar, docketed as SEC Case No. 05-00-6615. The complaint s
tated that it is "a derivative suit initiated and filed by the complainant Rodri
go C. Reyes to obtain an accounting of the funds and assets of ZENITH INSURANCE
CORPORATION which are now or formerly in the control, custody, and/or possession
of respondent [herein petitioner Oscar] and to determine the shares of stock of
deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulent
ly appropriated [by Oscar] for himself [and] which were not collated and taken i
nto account in the partition, distribution, and/or settlement of the estate of t
he deceased spouses, for which he should be ordered to account for all the incom
e from the time he took these shares of stock, and should now deliver to his bro
thers and sisters their just and respective shares."[5] [Emphasis supplied.] In
his Answer with Counterclaim,[6] Oscar denied the charge that he illegally acqui
red the shares of Anastacia Reyes. He asserted, as a defense, that he purchased
the subject shares with his own funds from the unissued stocks of Zenith, and th
at the suit is not a bona fide derivative suit because the requisites therefor h
ave not been complied with. He thus questioned the SEC s jurisdiction to enterta
in the complaint because it pertains to the settlement of the estate of Anastaci
a Reyes. When Republic Act (R.A.) No. 8799[7] took effect, the SEC s exclusive a
nd original jurisdiction over cases enumerated in Section 5 of Presidential Decr
ee (P.D.) No. 902-A was transferred to the RTC designated as a special commercia
l court.[8] The records of Rodrigo s SEC case were thus turned over to the RTC,
Branch 142, Makati, and docketed as Civil Case No. 00-1553. On October 22, 2002,
Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit.[9] He
claimed that the complaint is a mere nuisance or harassment suit and should, ac
cording to the Interim Rules of Procedure for IntraCorporate Controversies, be d
ismissed; and that it is not a bona fide derivative suit as it partakes of the n
ature of a petition for the settlement of estate of the deceased Anastacia that
is outside the jurisdiction of a special commercial court. The RTC, in its Order
dated November 29, 2002 (RTC Order), denied the motion in part and declared: A
close reading of the Complaint disclosed the presence of two (2) causes of actio
n, namely: a) a derivative suit for accounting of the funds and assets of the co
rporation which are in the control, custody, and/or possession of the respondent
[herein petitioner Oscar] with prayer to appoint a management committee; and b)
an action for determination of the shares of stock of deceased spouses Pedro an
d Anastacia Reyes allegedly taken by respondent, its
REMLAW Page 236

determination of the shares of stock of deceased spouses Pedro and Anastacia Rey
es allegedly taken by respondent, its accounting and the corresponding delivery
of these shares to the parties brothers and sisters. The latter is not a deriva
tive suit and should properly be threshed out in a petition for settlement of es
tate. Accordingly, the motion is denied. However, only the derivative suit consi
sting of the first cause of action will be taken cognizance of by this Court.[10
] Oscar thereupon went to the CA on a petition for certiorari, prohibition, and
mandamus[11] and prayed that the RTC Order be annulled and set aside and that th
e trial court be prohibited from continuing with the proceedings. The appellate
court affirmed the RTC Order and denied the petition in its Decision dated May 2
6, 2004. It likewise denied Oscar s motion for reconsideration in a Resolution d
ated October 21, 2004. Petitioner now comes before us on appeal through a petiti
on for review on certiorari under Rule 45 of the Rules of Court. ASSIGNMENT OF E
RRORS Petitioner Oscar presents the following points as conclusions the CA shoul
d have made: 1. that the complaint is a mere nuisance or harassment suit that sh
ould be dismissed under the Interim Rules of Procedure of Intra-Corporate Contro
versies; and 2. that the complaint is not a bona fide derivative suit but is in
fact in the nature of a petition for settlement of estate; hence, it is outside
the jurisdiction of the RTC acting as a special commercial court. Accordingly, h
e prays for the setting aside and annulment of the CA decision and resolution, a
nd the dismissal of Rodrigo s complaint before the RTC. THE COURT S RULING We fi
nd the petition meritorious. The core question for our determination is whether
the trial court, sitting as a special commercial court, has jurisdiction over th
e subject matter of Rodrigo s complaint. To resolve it, we rely on the judicial
principle that "jurisdiction over the subject matter of a case is conferred by l
aw and is determined by the allegations of the complaint, irrespective of whethe
r the plaintiff is entitled to all or some of the claims asserted therein."[12]
Jurisdiction of Special Commercial Courts P.D. No. 902-A enumerates the cases ov
er which the SEC (now the RTC acting as a special commercial court) exercises ex
clusive jurisdiction: SECTION 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission over corporations, partnersh
ip, and other forms of associations registered with it as expressly granted unde
r existing laws and decrees, it shall have original and exclusive jurisdiction t
o hear and decide cases involving: a) Devices or schemes employed by or any acts
of the board of directors, business associates, its officers or partners, amoun
ting to fraud and misrepresentation which may be detrimental to the interest of
the public and/or of the stockholders, partners, members of associations or orga
nizations registered with the Commission. b) Controversies arising out of intracorporate or partnership relations, between and among stockholders, members, or
associates; between any or all of them and the corporation, partnership or assoc
iation of which they are stockholders, members, or associates, respectively; and
between such corporation, partnership or association and the State insofar as i
t concerns their individual franchise or right to exist as such entity; and c) C
ontroversies in the election or appointment of directors, trustees, officers, or
managers of such corporations, partnerships, or associations. The allegations s
et forth in Rodrigo s complaint principally invoke Section 5, paragraphs (a) and
(b) above as basis for the exercise of the RTC s special court jurisdiction. Ou
r focus in examining the allegations of the complaint shall therefore be on thes
e two provisions. Fraudulent Devices and Schemes The rule is that a complaint mu
st contain a plain, concise, and direct statement of the ultimate facts constitu
ting the plaintiff s cause of action and must specify the relief sought.[13] Sec
tion 5, Rule 8 of the Revised Rules of Court provides that in all averments of f
raud or mistake, the circumstances constituting fraud or mistake must be stated
with particularity.[14] These rules find specific application to Section 5(a) of
P.D. No. 902-A which speaks of corporate devices or schemes that amount to frau
d or misrepresentation detrimental to the public and/or to the stockholders.
REMLAW Page 237

In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in

the complaint the following: 3. This is a complaint...to determine the shares of
stock of the deceased spouses Pedro and Anastacia Reyes that were arbitrarily a
nd fraudulently appropriated for himself [herein petitioner Oscar] which were no
t collated and taken into account in the partition, distribution, and/or settlem
ent of the estate of the deceased Spouses Pedro and Anastacia Reyes, for which h
e should be ordered to account for all the income from the time he took these sh
ares of stock, and should now deliver to his brothers and sisters their just and
respective shares with the corresponding equivalent amount of P7,099,934.82 plu
s interest thereon from 1978 representing his obligations to the Associated Citi
zens Bank that was paid for his account by his late mother, Anastacia C. Reyes.
This amount was not collated or taken into account in the partition or distribu
tion of the estate of their late mother, Anastacia C. Reyes. 3.1. Respondent Osc
ar C. Reyes, through other schemes of fraud including misrepresentation, unilate
rally, and for his own benefit, capriciously transferred and took possession and
control of the management of Zenith Insurance Corporation which is considered a
s a family corporation, and other properties and businesses belonging to Spouses
Pedro and Anastacia Reyes. xxxx 4.1. During the increase of capitalization of Z
enith Insurance Corporation, sometime in 1968, the property covered by TCT No. 2
25324 was illegally and fraudulently used by respondent as a collateral. xxxx 5.
The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, t
he shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of stock
s and [sic] valued in the corporate books at P7,699,934.28, more or less, exclud
ing interest and/or dividends, had been transferred solely in the name of respon
dent. By such fraudulent manipulations and misrepresentation, the shareholdings
of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and
becomes [sic] the majority stockholder of Zenith Insurance Corporation, which po
rtion of said shares must be distributed equally amongst the brothers and sister
s of the respondent Oscar C. Reyes including the complainant herein. xxxx 9.1 Th
e shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at
P7,099,934.28 were illegally and fraudulently transferred solely to the respond
ent s [herein petitioner Oscar] name and installed himself as a majority stockho
lder of Zenith Insurance Corporation [and] thereby deprived his brothers and sis
ters of their respective equal shares thereof including complainant hereto. xxxx
10.1 By refusal of the respondent to account of his [sic] shareholdings in the
company, he illegally and fraudulently transferred solely in his name wherein [s
ic] the shares of stock of the deceased Anastacia C. Reyes [which] must be prope
rly collated and/or distributed equally amongst the children, including the comp
lainant Rodrigo C. Reyes herein, to their damage and prejudice. xxxx 11.1 By con
tinuous refusal of the respondent to account of his [sic] shareholding with Zeni
th Insurance Corporation[,] particularly the number of shares of stocks illegall
y and fraudulently transferred to him from their deceased parents Sps. Pedro and
Anastacia Reyes[,] which are all subject for collation and/or partition in equa
l shares among their children. [Emphasis supplied.] Allegations of deceit, machi
nation, false pretenses, misrepresentation, and threats are largely conclusions
of law that, without supporting statements of the facts to which the allegations
of fraud refer, do not sufficiently state an effective cause of action.[15] The
late Justice Jose Feria, a noted authority in Remedial Law, declared that fraud
and mistake are required to be averred with particularity in order to enable th
e opposing party to controvert the particular facts allegedly constituting such
fraud or mistake.[16] Tested against these standards, we find that the charges o
f fraud against Oscar were not properly supported by the required factual allega
tions. While the complaint contained allegations of fraud purportedly committed
by him, these allegations are not particular enough to bring the controversy wit
hin the special commercial court s jurisdiction; they are not statements of ulti
mate facts, but are mere conclusions of law: how and why the alleged appropriati
on of shares can
REMLAW Page 238

not statements of ultimate facts, but are mere conclusions of law: how and why t
he alleged appropriation of shares can be characterized as "illegal and fraudule
nt" were not explained nor elaborated on. Not every allegation of fraud done in
a corporate setting or perpetrated by corporate officers will bring the case wit
hin the special commercial court s jurisdiction. To fall within this jurisdictio
n, there must be sufficient nexus showing that the corporation s nature, structu
re, or powers were used to facilitate the fraudulent device or scheme. Contrary
to this concept, the complaint presented a reverse situation. No corporate power
or office was alleged to have facilitated the transfer of the shares; rather, O
scar, as an individual and without reference to his corporate personality, was a
lleged to have transferred the shares of Anastacia to his name, allowing him to
become the majority and controlling stockholder of Zenith, and eventually, the c
orporation s President. This is the essence of the complaint read as a whole and
is particularly demonstrated under the following allegations: 5. The complainan
t Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholding
s of their deceased mother, Doa Anastacia C. Reyes, shares of stocks and *sic+ val
ued in the corporate books at P7,699,934.28, more or less, excluding interest an
d/or dividends, had been transferred solely in the name of respondent. By such f
raudulent manipulations and misrepresentation, the shareholdings of said respond
ent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] t
he majority stockholder of Zenith Insurance Corporation, which portion of said s
hares must be distributed equally amongst the brothers and sisters of the respon
dent Oscar C. Reyes including the complainant herein. xxxx 9.1 The shareholdings
of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28
were illegally and fraudulently transferred solely to the respondent s [herein p
etitioner Oscar] name and installed himself as a majority stockholder of Zenith
Insurance Corporation [and] thereby deprived his brothers and sisters of their r
espective equal shares thereof including complainant hereto. [Emphasis supplied.
] In ordinary cases, the failure to specifically allege the fraudulent acts does
not constitute a ground for dismissal since such defect can be cured by a bill
of particulars. In cases governed by the Interim Rules of Procedure on Intra-Cor
porate Controversies, however, a bill of particulars is a prohibited pleading.[1
7] It is essential, therefore, for the complaint to show on its face what are cl
aimed to be the fraudulent corporate acts if the complainant wishes to invoke th
e court s special commercial jurisdiction. We note that twice in the course of t
his case, Rodrigo had been given the opportunity to study the propriety of amend
ing or withdrawing the complaint, but he consistently refused. The court s funct
ion in resolving issues of jurisdiction is limited to the review of the allegati
ons of the complaint and, on the basis of these allegations, to the determinatio
n of whether they are of such nature and subject that they fall within the terms
of the law defining the court s jurisdiction. Regretfully, we cannot read into
the complaint any specifically alleged corporate fraud that will call for the ex
ercise of the court s special commercial jurisdiction. Thus, we cannot affirm th
e RTC s assumption of jurisdiction over Rodrigo s complaint on the basis of Sect
ion 5(a) of P.D. No. 902-A.[18] Intra-Corporate Controversy A review of relevant
jurisprudence shows a development in the Court s approach in classifying what c
onstitutes an intracorporate controversy. Initially, the main consideration in d
etermining whether a dispute constitutes an intra-corporate controversy was limi
ted to a consideration of the intra-corporate relationship existing between or a
mong the parties.[19] The types of relationships embraced under Section 5(b), as
declared in the case of Union Glass & Container Corp. v. SEC,[20] were as follo
ws: a) between the corporation, partnership, or association and the public; b) b
etween the corporation, partnership, or association and its stockholders, partne
rs, members, or officers; c) between the corporation, partnership, or associatio
n and the State as far as its franchise, permit or license to operate is concern
ed; and d) among the stockholders, partners, or associates themselves. [Emphasis
supplied.] The existence of any of the above intra-corporate relations was suff
icient to confer jurisdiction to the SEC, regardless of the subject matter of th
e dispute. This came to be known as the relationship test. However, in the 1984
case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc.,[21]the Court in

troduced the nature of the controversy test. We declared in this case that it is
not the mere existence of an intra-corporate relationship that gives rise to an
intra-corporate controversy; to rely on the relationship test alone will divest
the regular courts of their jurisdiction for the sole reason that the dispute i
nvolves a corporation, its directors, officers, or stockholders. We saw that the
re is no legal sense in disregarding or minimizing the value of the nature of th
e transactions which gives rise to the dispute.
REMLAW Page 239

the dispute. Under the nature of the controversy test, the incidents of that rel
ationship must also be considered for the purpose of ascertaining whether the co
ntroversy itself is intra-corporate.[22] The controversy must not only be rooted
in the existence of an intra-corporate relationship, but must as well pertain t
o the enforcement of the parties correlative rights and obligations under the C
orporation Code and the internal and intra-corporate regulatory rules of the cor
poration. If the relationship and its incidents are merely incidental to the con
troversy or if there will still be conflict even if the relationship does not ex
ist, then no intra-corporate controversy exists. The Court then combined the two
tests and declared that jurisdiction should be determined by considering not on
ly the status or relationship of the parties, but also the nature of the questio
n under controversy.[23] This two-tier test was adopted in the recent case of Sp
eed Distribution, Inc. v. Court of Appeals:[24] To determine whether a case invo
lves an intra-corporate controversy, and is to be heard and decided by the branc
hes of the RTC specifically designated by the Court to try and decide such cases
, two elements must concur: (a) the status or relationship of the parties; and (
2) the nature of the question that is the subject of their controversy. The firs
t element requires that the controversy must arise out of intra-corporate or par
tnership relations between any or all of the parties and the corporation, partne
rship, or association of which they are stockholders, members or associates; bet
ween any or all of them and the corporation, partnership, or association of whic
h they are stockholders, members, or associates, respectively; and between such
corporation, partnership, or association and the State insofar as it concerns th
eir individual franchises. The second element requires that the dispute among th
e parties be intrinsically connected with the regulation of the corporation. If
the nature of the controversy involves matters that are purely civil in characte
r, necessarily, the case does not involve an intra-corporate controversy. Given
these standards, we now tackle the question posed for our determination under th
e specific circumstances of this case: Application of the Relationship Test Is t
here an intra-corporate relationship between the parties that would characterize
the case as an intra-corporate dispute? We point out at the outset that while R
odrigo holds shares of stock in Zenith, he holds them in two capacities: in his
own right with respect to the 4,250 shares registered in his name, and as one of
the heirs of Anastacia Reyes with respect to the 136,598 shares registered in h
er name. What is material in resolving the issues of this case under the allegat
ions of the complaint is Rodrigo s interest as an heir since the subject matter
of the present controversy centers on the shares of stocks belonging to Anastaci
a, not on Rodrigo s personally-owned shares nor on his personality as shareholde
r owning these shares. In this light, all reference to shares of stocks in this
case shall pertain to the shareholdings of the deceased Anastacia and the partie
s interest therein as her heirs. Article 777 of the Civil Code declares that th
e successional rights are transmitted from the moment of death of the decedent.
Accordingly, upon Anastacia s death, her children acquired legal title to her es
tate (which title includes her shareholdings in Zenith), and they are, prior to
the estate s partition, deemed co-owners thereof.[25] This status as coowners, h
owever, does not immediately and necessarily make them stockholders of the corpo
ration. Unless and until there is compliance with Section 63 of the Corporation
Code on the manner of transferring shares, the heirs do not become registered st
ockholders of the corporation. Section 63 provides: Section 63. Certificate of s
tock and transfer of shares. - The capital stock of stock corporations shall be
divided into shares for which certificates signed by the president or vice-presi
dent, countersigned by the secretary or assistant secretary, and sealed with the
seal of the corporation shall be issued in accordance with the by-laws. Shares
of stock so issued are personal property and may be transferred by delivery of t
he certificate or certificates indorsed by the owner or his attorney-in-fact or
other person legally authorized to make the transfer. No transfer, however, shal
l be valid, except as between the parties, until the transfer is recorded in the
books of the corporation so as to show the names of the parties to the transact
ion, the date of the transfer, the number of the certificate or certificates, an
d the number of shares transferred. [Emphasis supplied.] No shares of stock agai

nst which the corporation holds any unpaid claim shall be transferable in the bo
oks of the corporation. Simply stated, the transfer of title by means of success
ion, though effective and valid between the parties involved (i.e., between the
decedent s estate and her heirs), does not bind the corporation and third partie
s. The transfer must be registered in the books of the corporation to make the t
ransferee-heir a stockholder entitled to recognition as such both by the corpora
tion and by third parties.[26] We note, in relation with the above statement, th
at in Abejo v. Dela Cruz[27] and TCL Sales Corporation v. Court of
REMLAW Page 240

We note, in relation with the above statement, that in Abejo v. Dela Cruz[27] an
d TCL Sales Corporation v. Court of Appeals[28] we did not require the registrat
ion of the transfer before considering the transferee a stockholder of the corpo
ration (in effect upholding the existence of an intra-corporate relation between
the parties and bringing the case within the jurisdiction of the SEC as an intr
a-corporate controversy). A marked difference, however, exists between these cas
es and the present one. In Abejo and TCL Sales, the transferees held definite an
d uncontested titles to a specific number of shares of the corporation; after th
e transferee had established prima facie ownership over the shares of stocks in
question, registration became a mere formality in confirming their status as sto
ckholders. In the present case, each of Anastacia s heirs holds only an undivide
d interest in the shares. This interest, at this point, is still inchoate and su
bject to the outcome of a settlement proceeding; the right of the heirs to speci
fic, distributive shares of inheritance will not be determined until all the deb
ts of the estate of the decedent are paid. In short, the heirs are only entitled
to what remains after payment of the decedent s debts;[29] whether there will b
e residue remains to be seen. Justice Jurado aptly puts it as follows: No succes
sion shall be declared unless and until a liquidation of the assets and debts le
ft by the decedent shall have been made and all his creditors are fully paid. Un
til a final liquidation is made and all the debts are paid, the right of the hei
rs to inherit remains inchoate. This is so because under our rules of procedure,
liquidation is necessary in order to determine whether or not the decedent has
left any liquid assets which may be transmitted to his heirs.[30] [Emphasis supp
lied.] Rodrigo must, therefore, hurdle two obstacles before he can be considered
a stockholder of Zenith with respect to the shareholdings originally belonging
to Anastacia. First, he must prove that there are shareholdings that will be lef
t to him and his co-heirs, and this can be determined only in a settlement of th
e decedent s estate. No such proceeding has been commenced to date. Second, he m
ust register the transfer of the shares allotted to him to make it binding again
st the corporation. He cannot demand that this be done unless and until he has e
stablished his specific allotment (and prima facie ownership) of the shares. Wit
hout the settlement of Anastacia s estate, there can be no definite partition an
d distribution of the estate to the heirs. Without the partition and distributio
n, there can be no registration of the transfer. And without the registration, w
e cannot consider the transferee-heir a stockholder who may invoke the existence
of an intra-corporate relationship as premise for an intra-corporate controvers
y within the jurisdiction of a special commercial court. In sum, we find that insofar as the subject shares of stock (i.e., Anastacia s shares) are concerned
- Rodrigo cannot be considered a stockholder of Zenith. Consequently, we cannot
declare that an intra-corporate relationship exists that would serve as basis to
bring this case within the special commercial court s jurisdiction under Sectio
n 5(b) of PD 902-A, as amended. Rodrigo s complaint, therefore, fails the relati
onship test. Application of the Nature of Controversy Test The body rather than
the title of the complaint determines the nature of an action.[31] Our examinati
on of the complaint yields the conclusion that, more than anything else, the com
plaint is about the protection and enforcement of successional rights. The contr
oversy it presents is purely civil rather than corporate, although it is denomin
ated as a "complaint for accounting of all corporate funds and assets." Contrary
to the findings of both the trial and appellate courts, we read only one cause
of action alleged in the complaint. The "derivative suit for accounting of the f
unds and assets of the corporation which are in the control, custody, and/or pos
session of the respondent [herein petitioner Oscar]" does not constitute a separ
ate cause of action but is, as correctly claimed by Oscar, only an incident to t
he "action for determination of the shares of stock of deceased spouses Pedro an
d Anastacia Reyes allegedly taken by respondent, its accounting and the correspo
nding delivery of these shares to the parties brothers and sisters." There can
be no mistake of the relationship between the "accounting" mentioned in the comp
laint and the objective of partition and distribution when Rodrigo claimed in pa
ragraph 10.1 of the complaint that: 10.1 By refusal of the respondent to account
of [sic] his shareholdings in the company, he illegally and fraudulently transf

erred solely in his name wherein [sic] the shares of stock of the deceased Anast
acia C. Reyes [which] must be properly collated and/or distributed equally among
st the children including the complainant Rodrigo C. Reyes herein to their damag
e and prejudice. We particularly note that the complaint contained no sufficient
allegation that justified the need for an accounting other than to determine th
e extent of Anastacia s shareholdings for purposes of distribution. Another sign
ificant indicator that points us to the real nature of the complaint are Rodrigo
s repeated claims of illegal and fraudulent transfers of Anastacia s shares by
Oscar to the prejudice of the other heirs of the decedent; he cited these allege
dly fraudulent acts as basis for his demand for the collation and distribution o
f Anastacia s shares to the heirs. These claims tell us unequivocally that the p
resent controversy arose from the parties relationship as heirs of Anastacia an
d not as shareholders of Zenith. Rodrigo, in filing the complaint, is enforcing
his rights as a co-heir and not as a stockholder of Zenith. The injury he seeks
to remedy is one suffered by an heir (for the impairment of his successional rig
hts) and not by the corporation nor by Rodrigo as a shareholder on record.
REMLAW Page 241

rights) and not by the corporation nor by Rodrigo as a shareholder on record. Mo

re than the matters of injury and redress, what Rodrigo clearly aims to accompli
sh through his allegations of illegal acquisition by Oscar is the distribution o
f Anastacia s shareholdings without a prior settlement of her estate - an object
ive that, by law and established jurisprudence, cannot be done. The RTC of Makat
i, acting as a special commercial court, has no jurisdiction to settle, partitio
n, and distribute the estate of a deceased. A relevant provision - Section 2 of
Rule 90 of the Revised Rules of Court - that contemplates properties of the dece
dent held by one of the heirs declares: Questions as to advancement made or alle
ged to have been made by the deceased to any heir may be heard and determined by
the court having jurisdiction of the estate proceedings; and the final order of
the court thereon shall be binding on the person raising the questions and on t
he heir. [Emphasis supplied.] Worth noting are this Court s statements in the ca
se of Natcher v. Court of Appeals:[32] Matters which involve settlement and dist
ribution of the estate of the decedent fall within the exclusive province of the
probate court in the exercise of its limited jurisdiction. xxxx It is clear tha
t trial courts trying an ordinary action cannot resolve to perform acts pertaini
ng to a special proceeding because it is subject to specific prescribed rules. [
Emphasis supplied.] That an accounting of the funds and assets of Zenith to dete
rmine the extent and value of Anastacia s shareholdings will be undertaken by a
probate court and not by a special commercial court is completely consistent wit
h the probate court s limited jurisdiction. It has the power to enforce an accou
nting as a necessary means to its authority to determine the properties included
in the inventory of the estate to be administered, divided up, and distributed.
Beyond this, the determination of title or ownership over the subject shares (w
hether belonging to Anastacia or Oscar) may be conclusively settled by the proba
te court as a question of collation or advancement. We had occasion to recognize
the court s authority to act on questions of title or ownership in a collation
or advancement situation in Coca v. Pangilinan[33] where we ruled: It should be
clarified that whether a particular matter should be resolved by the Court of Fi
rst Instance in the exercise of its general jurisdiction or of its limited proba
te jurisdiction is in reality not a jurisdictional question. In essence, it is a
procedural question involving a mode of practice "which may be waived." As a ge
neral rule, the question as to title to property should not be passed upon in th
e testate or intestate proceeding. That question should be ventilated in a separ
ate action. That general rule has qualifications or exceptions justified by expe
diency and convenience. Thus, the probate court may provisionally pass upon in a
n intestate or testate proceeding the question of inclusion in, or exclusion fro
m, the inventory of a piece of property without prejudice to its final determina
tion in a separate action. Although generally, a probate court may not decide a
question of title or ownership, yet if the interested parties are all heirs, or
the question is one of collation or advancement, or the parties consent to the a
ssumption of jurisdiction by the probate court and the rights of third parties a
re not impaired, the probate court is competent to decide the question of owners
hip. [Citations omitted. Emphasis supplied.] In sum, we hold that the nature of
the present controversy is not one which may be classified as an intra-corporate
dispute and is beyond the jurisdiction of the special commercial court to resol
ve. In short, Rodrigo s complaint also fails the nature of the controversy test.
DERIVATIVE SUIT Rodrigo s bare claim that the complaint is a derivative suit wi
ll not suffice to confer jurisdiction on the RTC (as a special commercial court)
if he cannot comply with the requisites for the existence of a derivative suit.
These requisites are: a. the party bringing suit should be a shareholder during
the time of the act or transaction complained of, the number of shares not bein
g material; b. the party has tried to exhaust intra-corporate remedies, i.e., ha
s made a demand on the board of directors for the appropriate relief, but the la
tter has failed or refused to heed his plea; and c. the cause of action actually
devolves on the corporation; the wrongdoing or harm having been or being caused
to the corporation and not to the particular stockholder bringing the suit. [34
] Based on these standards, we hold that the allegations of the present complain
t do not amount to a derivative suit. First, as already discussed above, Rodrigo

is not a shareholder with respect to the shareholdings originally belonging to

Anastacia; he only stands as a transferee-heir whose rights to the share are inc
hoate and unrecorded. With respect to his own individually-held shareholdings, R
odrigo has not alleged any individual cause or basis as a shareholder on record
to proceed against Oscar. Second, in order that a stockholder may show a right t
o sue on behalf of the corporation, he must allege with some
REMLAW Page 242

Second, in order that a stockholder may show a right to sue on behalf of the cor
poration, he must allege with some particularity in his complaint that he has ex
hausted his remedies within the corporationby making a sufficient demand upon th
e directors or other officers for appropriate relief with the expressed intent t
o sue if relief is denied.[35] Paragraph 8 of the complaint hardly satisfies thi
s requirement since what the rule contemplates is the exhaustion of remedies wit
hin the corporate setting: 8. As members of the same family, complainant Rodrigo
C. Reyes has resorted [to] and exhausted all legal means of resolving the dispu
te with the end view of amicably settling the case, but the dispute between them
ensued. Lastly, we find no injury, actual or threatened, alleged to have been d
one to the corporation due to Oscar s acts. If indeed he illegally and fraudulen
tly transferred Anastacia s shares in his own name, then the damage is not to th
e corporation but to his co-heirs; the wrongful transfer did not affect the capi
tal stock or the assets of Zenith. As already mentioned, neither has Rodrigo all
eged any particular cause or wrongdoing against the corporation that he can cham
pion in his capacity as a shareholder on record.[36] In summary, whether as an i
ndividual or as a derivative suit, the RTC - sitting as special commercial court
- has no jurisdiction to hear Rodrigo s complaint since what is involved is the
determination and distribution of successional rights to the shareholdings of A
nastacia Reyes. Rodrigo s proper remedy, under the circumstances, is to institut
e a special proceeding for the settlement of the estate of the deceased Anastaci
a Reyes, a move that is not foreclosed by the dismissal of his present complaint
. WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court
of Appeals dated May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the
Regional Trial Court, Branch 142, Makati, docketed as Civil Case No. 00-1553, is
ordered DISMISSED for lack of jurisdiction. SO ORDERED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI81.931\reyes%20v
%20rtc%20makati.docx>
REMLAW Page 243

BP 129, as amended by RA 7691, Secs. 2 to 4

Sunday, November 14, 2010 11:31 PM
REMLAW Page 244

?Sps Fajardo v. Anita Flores GR 167891 Jan 15, 2010

Sunday, November 14, 2010 11:31 PM
REMLAW Page 245

Vda De Barrera et al v. Heirs of Vicente Legaspi GR 174346 Sept 12, 2008;

Sunday, November 14, 2010 11:31 PM
[G.R. No. 174346, September 12, 2008] FERNANDA GEONZON VDA. DE BARRERA AND JOHNN
Y OCO, JR., PETITIONERS, VS. HEIRS OF VICENTE LEGASPI, REPRESENTED BY PEDRO LEGA
SPI, RESPONDENTS. DE C I SI O N
CARPIO MORALES, J.: Under review before this Court is the July 31, 2006 Decision
of the Court of Appeals, [1 ] which affirmed that of the Regional Trial Court,
Branch 16, of Tangub City in Civil Case No. TC-97-001, ordering the defendants-p
etitioners herein, Fernanda Geonzon vda. de Barrera and Johnny Oco. Jr. to retur
n possession of the subject property to the plaintiffs-herein respondents, Heirs
of Vicente Legaspi. On October 1, 1996, petitioner Johnny Oco Jr. (Oco), said t
o be a "peace officer connected with the PNP," accompanied by "unidentified CAFG
U members," forced his way into respondents 0.9504-hectare irrigated farmland l
ocated at Liloan, Bonifacio, Misamis Occidental. After dispossessing respondents
of the property, Oco and company used a tractor to destroy the planted crops, t
ook possession of the land, and had since tended it. [2 ] Respondents thus filed
on February 7, 1997 a complaint before the Regional Trial Court of Tangub City
for Reconveyance of Possession with Preliminary Mandatory Injunction and Damages
[3 ] against petitioners. In their Answer, petitioners claimed that the subject
land forms part of a three-hectare property described in OCT No. P-447 issued on
February 10, 1956 in the name of Andrea Lacson who sold a 2-hectare portion the
reof to Eleuterio Geonzon who, in turn, sold 1.1148 thereof to his sister petiti
oner Fernanda Geonzon vda. de Barrera (Fernanda). [4 ] Respondents, on the other
hand, asserted that the land was occupied, possessed and cultivated by their pr
edecessor-in-interest Vicente Legaspi and his wife Lorenza since 1935;[5 ] after
a subdivision survey was conducted in November 30, 1976, it was found out that
the land formed part of the titled property of Andrea Lacson;[6 ] and despite th
is discovery, they never filed any action to recover ownership thereof since the
y were left undisturbed in their possession,[7 ] until October 1, 1996 when peti
tioners forced their way into it. Petitioners raised the issue of ownership as a
special affirmative defense. [8 ] In their Memorandum, however, they questioned
the jurisdiction of the RTC over the subject matter of the complaint, the asses
sed value of the land being only P11,160,[9 ] as reflected in Tax Declaration No
. 7565.[1 0 ] By Decision of November 27, 1998, the trial court found for respon
dents, disposing as follows: WHEREFORE, judgment is hereby rendered in favor of
the plaintiffs [herein respondents] and against the defendants [-herein petition
ers]: Ordering the latter to return the possession of the land in question to th
e plaintiffs and Ordering the latter to desist from further depriving and distur
bing plaintiffs peaceful possession thereof, unless there be another court judg
ment to the contrary. SO ORDERED.
1. 2.
REMLAW Page 246

SO ORDERED. On the issue of jurisdiction over the subject matter, the trial cour
t, maintaining that it had, held: The Court is not persuaded by [the defendants
] arguments. What determines the nature of the action as well as the jurisdictio
n of the [c]ourt are the facts alleged in the complaint and not those alleged in
the answer of the defendants. xxx x In [p]ar. 2 of plaintiffs complaint, the l
and in question was described as a riceland "situated at Liloan, Bonifacio, Misa
mis Occ. and declared under [T]ax [D]eclaration No. 7564 in the name of Vicente
Legaspi and bounded on the north by a creek, on the east Sec. 12, on the south L
ot No. 007 and on the west also by Lot No. 007 which tax declaration cancels for
mer [T]ax [D]eclaration No. 12933 under the name of Lorenza Bacul Legaspi which
likewise cancels [T]ax [D]eclaration No. 5454 covering the bigger portion of the
land under which the land described under [T]ax [D]eclaration No. 7565 is part
and parcel thereof [sic]; the present estimated value being P50,000."[1 1 ] (Emp
hasis and underscoring supplied) Petitioners thereupon appealed to the Court of
Appeals which affirmed the trial court s disposition of the issue of jurisdictio
n over the subject matter. On the merits, the appellate court affirmed too the t
rial court s decision, finding that "both testimonial and documentary evidence o
n record established that appellees, through their predecessors-in-interest, hav
e been in peaceful, continuous, public and actual possession of the property in
dispute even before the year 1930."[1 2 ] The appellate court emphasized that in
an accion publiciana, the only issue involved is the determination of possessio
n de jure.[1 3 ] Hence, the present petition for review which raises the followi
ng issues: I. . . . WHETHER OWNERSHIP AND TITLE CANNOT BE AN ISSUE TO DETERMINE
WHO HAS A BETTER RIGHT [TO] THE PORTION LITIGATED; AND II. WHETHER . . . THE NAT
URE OF THE ACTION AS WELL AS THE JURISDICTION OF THE COURT DEPEND ON THE FACTS A
S ALLEGED IN THE COMPLAINT.[1 4 ] For obvious reasons, the issue of lack of juri
sdiction over the subject matter shall be first considered. Section 33 of Batas
Pambansa Bilang 129, (the Judiciary Reorganization Act of 1980), as amended by R
epublic Act No. 7691 provides for the jurisdiction of metropolitan trial courts,
municipal trial courts and municipal circuit trial courts, to wit: xxx x (3) Ex
clusive original jurisdiction in all civil actions which involve title to, or po
ssession 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 exc
eed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever
kind, attorney s fees, litigation expenses and costs: Provided, That in cases o
f land not declared for taxation purposes, the value of such property shall be d
etermined by the assessed value of the adjacent lots. (Emphasis, italics and und
erscoring supplied) Before the amendments introduced by Republic Act No. 7691, t
he plenary action of accion publiciana was to be brought before the regional tri
al court. [1 5 ] With the modifications introduced by R.A. No. 7691 in 1994, the
jurisdiction of the first level courts has been expanded to include jurisdictio
n over other real actions where the assessed value does not exceed P20,000, P50,
000 where the action is filed in Metro Manila. The first level courts thus have
exclusive original jurisdiction over accion publiciana and accion reivindicatori
a where the assessed value of the real property does not exceed the aforestated
amounts. Accordingly, the jurisdictional element is the assessed value of the pr
operty. Assessed value is understood to be "the worth or value of property estab
lished by taxing
REMLAW Page 247

Assessed value is understood to be "the worth or value of property established b

y taxing authorities on the basis of which the tax rate is applied. Commonly, ho
wever, it does not represent the true or market value of the property."[1 6 ] Th
e subject land has an assessed value of P11,160 as reflected in Tax Declaration
No. 7565, a common exhibit of the parties. The bare claim of respondents that it
has a value of P50,000 thus fails. The case, therefore, falls within the exclus
ive original jurisdiction of the municipal trial court. It was error then for th
e RTC to take cognizance of the complaint based on the allegation that "the pres
ent estimated value [of the land is] P50,000," which allegation is, oddly, handw
ritten on the printed pleading. The estimated value, commonly referred to as fai
r market value,[1 7 ] is entirely different from the assessed value of the prope
rty. Lack of jurisdiction is one of those excepted grounds where the court may d
ismiss a claim or a case at any time when it appears from the pleadings or the e
vidence on record that any of those grounds exists, even if they were not raised
in the answer or in a motion to dismiss.[1 8 ] That the issue of lack of jurisd
iction was raised by petitioners only in their Memorandum filed before the trial
court did not thus render them in estoppel. En passant, the Court notes that re
spondents cause of action - accion publiciana is a wrong mode. The dispossessio
n took place on October 1, 1996 and the complaint was filed four months thereaft
er or on February 7, 1997. Respondents exclusion from the property had thus not
lasted for more than one year to call for the remedy of accion publiciana. In f
ine, since the RTC has no jurisdiction over the complaint filed by respondents,
all the proceedings therein as well as the Decision of November 27, 1998, are nu
ll and void. The complaint should perforce be dismissed. This leaves it unnecess
ary to still dwell on the first issue. WHEREFORE, the petition is hereby GRANTED
. The challenged July 31, 2006 Decision of the Court of Appeals is SET ASIDE. Th
e decision of Branch 16 of the Regional Trial Court of Tangub City in Civil Case
No. TC-97-001 is declared NULL and VOID for lack of jurisdiction.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI88.650\vda%20de%
20barrera.docx>
REMLAW Page 248

Ouano v. PGTT Gr No. 134230 July 7, 2002;

Sunday, November 14, 2010 11:31 PM
G.R. No. 134230 July 17, 2002 JOVENAL OUANO, petitioner, vs. PGTT INTERNATIONAL
INVESTMENT CORPORATION and HON. JUDGE RAMON G. CODILLA, JR., respondents. SANDOV
AL-GUTIERREZ, J.: PGTT International Investment Corporation (PGTT), respondent,
is a corporation duly organized under existing laws, with address at YASCO Bldg.
, M. J. Cuenco Ave., Cebu City. On December 11, 1997, PGTT filed with the Region
al Trial Court (RTC), Branch 20, Cebu City, a verified complaint against Jovenal
Ouano, petitioner, docketed as Civil Case No. CEB- 21319, entitled "PGTT INTERN
ATIONAL INVESTMENT CORPORATION, Plaintiff, vs. JUVENAL OUANO, Defendant," for "R
ecovery of Ownership and Possession of Real Property and Damages."1 In its compl
aint, PGTT alleged that it is the owner of Lot Nos. 1-10, Block 2 of the Sunnyme
ade Crescent Subdivision located at Pit-os, Talamban, Cebu City. Sometime in Oct
ober of 1996, PGTT found that Ouano uprooted the concrete monuments of the said
lots, plowed them and planted corn thereon. Despite PGTTs demand that he vacate t
he lots and restore them to their original condition, Ouano refused, claiming he
is the owner and lawful possessor of the 380 square meters he occupied. Due to
Ouanos wrongful act, PGTT was deprived of the use of its property and suffered da
mages in the amount of P100,000.00 a year. Likewise, PGTT was constrained to fil
e the subject action and hired the services of his counsel for P100,000.00. PGTT
prayed: "WHEREFORE, in view of all the foregoing, it is most respectfully praye
d that after due notice and hearing, judgment be rendered ordering defendant (Jo
venal Ouano) to vacate the premises and restore the lots to their original condi
tion; pay plaintiff (PGTT) P100,000.00 as damages per year, beginning October, 1
996 until he shall have vacated the premises and restored the lots to their orig
inal condition; pay P100,000.00 as attorney s fees; and pay P50,000.00 as expens
es of litigation. "Plaintiff prays for such other reliefs and remedies, just and
equitable under the premises." 2 On February 5, 1998, Ouano filed a motion to d
ismiss the complaint on the ground that it is the Municipal Trial Court (MTC), n
ot the RTC, which has jurisdiction over it considering that the assessed value o
f the lots involved is only P2,910, as indicated in the latest tax declaration,3
citing Section 19 (paragraph 2) and Section 33 (paragraph 3) of Batas Pambansa
Bilang 129 (The Judiciary Reorganization Act of 1980), as amended by Republic Ac
t No. 7691.4 In its opposition to Ouanos motion, PGTT contends that the RTC has j
urisdiction since the market value of the lots is P49,760.00.5 Besides, the comp
laint is not only an action for recovery of ownership and possession of real pro
perty, but also for damages exceeding P100,000.00, over which claim the RTC has
exclusive original jurisdiction under Section 19 (paragraph 8) of the same law.
On March 6, 1998, the RTC, presided by Judge Ramon G. Codilla, Jr., issued an Or
der denying the motion to dismiss, holding that: "This court believes that this
court has jurisdiction to try this case considering that the real properties con
sist of ten parcels of land in a subdivision and the court takes note that there
is a discrepancy somewhere by the Office of the City Assessor in the Assessment
of the parcels of land for only less than P2,000.00 and that the government is
very much at a loss by these unrealistic valuation." 6 Ouano filed a motion for
reconsideration but was likewise denied by the RTC in its Order dated May 27, 19
98. The trial court ruled it has jurisdiction over the case because "(i)t is of
judicial knowledge that the real properties situated in Cebu City command a high
er valuation than those indicated in the tax declaration. The observation of pla
intiffs (PGTTs) counsel as to the issue on damages is likewise sustained consideri
ng that, being a corporation, it may have incurred damages in the form of unreal
ized profits."7 Hence the present petition for certiorari filed by Ouano under R
ule 65 of the 1997 Rules of Civil Procedure, as amended, assailing the Orders of
respondent judge dated March 6, 1998 and May 27, 1998 as having been issued wit
h grave abuse of discretion amounting to lack or excess of jurisdiction. At the
outset, it is necessary to stress that a direct recourse to this Court is highly
improper, for it violates the established policy of strict observance of the ju
dicial hierarchy of courts.8 We need to reiterate, for the guidance of petitione
r, that this Courts original jurisdiction to issue a writ of certiorari (as well

as prohibition, mandamus, quo warranto, habeas corpus and injunction) is concurr

ent with the Court of Appeals (CA), as in the present case, and with the RTCs in
proper cases within their respective regions.9 However, this concurrence of jur
isdiction does not grant a party seeking any of the extraordinary writs the abso
lute freedom to file his petition with the court of his choice. This Court is a
court of last resort, and must so remain if it is to satisfactorily perform the
functions assigned to it by the Constitution and immemorial tradition.10 The hie
rarchy of courts determines the appropriate forum for such petitions. Thus, peti
tions for the issuance of such extraordinary writs against the first level ("inf
erior") courts should be filed with the RTC, and those against the latter, with
the CA.11 A direct invocation of this Courts original jurisdiction to issue these
writs should be allowed only when there are special and important reasons there
for, clearly and specifically set out in the petition. This
REMLAW Page 249

allowed only when there are special and important reasons therefor, clearly and
specifically set out in the petition. This is the established policy. It is a po
licy that is necessary to prevent inordinate demands upon this Courts time and at
tention which are better devoted to those matters within its exclusive jurisdict
ion, and to prevent further overcrowding of its docket.12 Unfortunately, the ins
tant petition does not allege any special and compelling reason to justify a dir
ect recourse to this Court. However, we deem it more appropriate and practical t
o resolve the controversy in order to avoid further delay, but only in this inst
ance. The lone issue for our resolution is whether the RTC has jurisdiction over
Civil Case No. CEB-21319. The complaint seeks to recover from private responden
t the ownership and possession of the lots in question and the payment of damage
s. Since the action involves ownership and possession of real property, the juri
sdiction over the subject matter of the claim is determined by the assessed valu
e, not the market value, thereof, pursuant to Batas Pambansa Blg. 129, as amende
d by R.A. 7691. Section 33 (paragraph 3) of the said law provides: "Sec. 33. Jur
isdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Cir
cuit Trial Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Cou
rts and Municipal Circuit Trial Courts shall exercise: x x x. (3) Exclusive orig
inal 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 c
ivil actions in Metro Manila, where such assessed value does not exceed Fifty Th
ousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attor
neys fees, litigation expenses and costs: Provided, That in cases of land not dec
lared for taxation purposes, the value of such property shall be determined by t
he assessed value of the adjacent lots. x x x." (Emphasis ours) Likewise, Sectio
n 19 (paragraph 2) of the same law reads: "Sec. 19. Jurisdiction in civil cases.
- The Regional Trial Court shall exercise exclusive original jurisdiction: x x
x. (2) In all civil actions, which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the property invo
lved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in Metro M
anila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions
for forcible entry into and unlawful detainer of lands or buildings, original j
urisdiction over which is conferred upon the Metropolitan Trial Courts, Municipa
l Trial Courts, and Municipal Circuit Trial Courts; x x x." (Emphasis ours) It i
s undisputed that the assessed value of the property involved, as shown by the c
orresponding tax declaration, is only P2,910.00. As such, the complaint is well
within the MTCs P20,000.00 jurisdictional limit. The finding of respondent judge
that the value of the lots is higher than that indicated in the tax declaration
and that, therefore, the RTC has jurisdiction over the case is highly speculativ
e. It is elementary that the tax declaration indicating the assessed value of th
e property enjoys the presumption of regularity as it has been issued by the pro
per government agency. Respondent judge further held that since the complaint al
so seeks the recovery of damages exceeding P100,000.00, then it is within the co
mpetence of the RTC pursuant to Section 19 (paragraph 8) of Batas Pambansa Blg.
129, as amended by R.A. 7691, which states: "SEC. 19. Jurisdiction in civil case
s. Regional Trial Courts shall exercise exclusive original jurisdiction: xxx "(8
) In all other cases in which the demand, exclusive of interest, damages of what
ever kind, attorneys fees, litigation expenses, and costs or the value of the pro
perty in controversy exceeds One Hundred Thousand Pesos (P100,000.00) or, in suc
h other cases in Metro Manila, where the demand, exclusive of the above mentione
d items exceeds Two hundred thousand pesos (P200,000.00)." (Emphasis ours) The a
bove provision does not apply to the instant case. It is applicable only to "all
other cases" other than an action involving title to, or possession of real pro
perty in which the assessed value is the controlling factor in determining the c
ourts jurisdiction. Besides, the same provision explicitly excludes from the dete
rmination of the jurisdictional amount the demand for "interest, damages of what
ever kind, attorneys fees, litigation expenses, and costs". The exclusion of such
damages is reiterated in Section 33, paragraph 3 of the same Batas Pambansa Blg
. 129, as amended, quoted earlier. The said damages are merely incidental to, or

a consequence of, the main cause of action for recovery of ownership and posses
sion of real property. In this connection, this Court issued Administrative Circ
ular No. 09-94 setting the guidelines in the implementation of R.A. 7691. Paragr
aph 2 states: "2. The exclusion of the term damages of whatever kind in determinin
g 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 inc
idental 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 acti
on, the amount of such claim shall be considered in determining the jurisdiction
of the court." (Emphasis ours) We thus find that in issuing the assailed orders
denying petitioners motion to dismiss, thus taking cognizance of the case, the R
TC committed grave abuse of discretion. WHEREFORE, the instant petition is GRANT
ED. The assailed Orders issued by respondent RTC on March 6, 1998 and May 27, 19
98 in Civil Case No. CEB-21319 are SET ASIDE. Accordingly, the complaint is orde
red DISMISSED. SO ORDERED.
REMLAW Page 250

SO ORDERED.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI92.172\ouano.doc
x>
REMLAW Page 251

RA 7160 (Local Government Code of 1991) Secs 399-422

Sunday, November 14, 2010 11:31 PM
CHAPTER VII Katarungang Pambarangay Section 399. Lupong Tagapamayapa. (a) There
is hereby created in each barangay a lupong tagapamayapa, hereinafter referred t
o as the lupon, composed of the punong barangay, as chairman and ten (10) to twe
nty (20) members. The lupon shall be constituted every three (3) years in the ma
nner provided herein. (b) Any person actually residing or working, in the barang
ay, not otherwise expressly disqualified by law, and possessing integrity, impar
tiality, independence of mind, sense of fairness, and reputation for probity, ma
y be appointed a member of the lupon. (c) A notice to constitute the lupon, whic
h shall include the names of proposed members who have expressed their willingne
ss to serve, shall be prepared by the punong barangay within the first fifteen (
15) days from the start of his term of office. Such notice shall be posted in th
ree (3) conspicuous places in the barangay continuously for a period of not less
than three (3) weeks; (d) The punong barangay, taking into consideration any op
position to the proposed appointment or any recommendations for appointment as m
ay have been made within the period of posting, shall within ten (10) days there
after, appoint as members those whom he determines to be suitable therefor. Appo
intments shall be in writing, signed by the punong barangay, and attested to by
the barangay secretary. (e) The list of appointed members shall be posted in thr
ee (3) conspicuous places in the barangay for the entire duration of their term
of office; and (f) In barangays where majority of the inhabitants are members of
indigenous cultural communities, local systems of settling disputes through the
ir councils of datus or elders shall be recognized without prejudice to the appl
icable provisions of this Code. Section 400. Oath and Term of Office. - Upon app
ointment, each lupon member shall take an oath of office before the punong baran
gay. He shall hold office until a new lupon is constituted on the third year fol
lowing his appointment unless sooner terminated by resignation, transfer of resi
dence or place of work, or withdrawal of appointment by the punong barangay with
the concurrence of the majority of all the members of the lupon. Section 401. V
acancies. - Should a vacancy occur in the lupon for any cause, the punong barang
ay shall immediately appoint a qualified person who shall hold office only for t
he unexpired portion of the term. Section 402. Functions of the Lupon. - The lup
on shall: (a) Exercise administrative supervision over the conciliation panels p
rovided herein; (b) Meet regularly once a month to provide a forum for exchange
of ideas among its members and the public on matters relevant to the amicable se
ttlement of disputes, and to enable various conciliation panel members to share
with one another their observations and experiences in effecting speedy resoluti
on of disputes; and (c) Exercise such other powers and perform such other duties
and functions as may be prescribed by law or ordinance. Section 403. Secretary
of the Lupon. - The barangay secretary shall concurrently serve as the secretary
of the lupon. He shall record the results of mediation proceedings before the p
unong barangay and shall submit a report thereon to the proper city or municipal
courts. He shall also receive and keep the records of proceedings submitted to
him by the various conciliation panels. Section 404. Pangkat ng Tagapagkasundo.
(a) There shall be constituted for each dispute brought before the lupon a conci
liation panel to be known as the pangkat ng tagapagkasundo, hereinafter referred
to as the pangkat, consisting of three (3) members who shall be chosen by the p
arties to the dispute from the list of members of the lupon. Should the parties
fail to agree on the pangkat membership, the same shall be determined by lots dr
awn by the lupon chairman. (b) The three (3) members constituting the pangkat sh
all elect from among themselves the chairman and the secretary. The secretary sh
all prepare the minutes of the pangkat proceedings and submit a copy duly attest
ed to by the chairman to the lupon secretary and to the proper city or municipal
court.
REMLAW Page 252

copy duly attested to by the chairman to the lupon secretary and to the proper c
ity or municipal court. He shall issue and cause to be served notices to the par
ties concerned. The lupon secretary shall issue certified true copies of any pub
lic record in his custody that is not by law otherwise declared confidential. Se
ction 405. Vacancies in the Pangkat. - Any vacancy in the pangkat shall be chose
n by the parties to the dispute from among the other lupon members. Should the p
arties fail to agree on a common choice, the vacancy shall be filled by lot to b
e drawn by the lupon chairman. Section 406. Character of Office and Service of L
upon Members. (a) The lupon members, while in the performance of their official
duties or on the occasion thereof, shall be deemed as persons in authority, as d
efined in the Revised Penal Code. (b) The lupon or pangkat members shall serve w
ithout compensation, except as provided for in Section 393 and without prejudice
to incentives as provided for in this Section and in Book IV of this Code. The
Department of the Interior and Local Government shall provide for a system of gr
anting economic or other incentives to the lupon or pangkat members who adequate
ly demonstrate the ability to judiciously and expeditiously resolve cases referr
ed to them. While in the performance of their duties, the lupon or pangkat membe
rs, whether in public or private employment, shall be deemed to be on official t
ime, and shall not suffer from any diminution in compensation or allowance from
said employment by reason thereof. Section 407. Legal Advice on Matters Involvin
g Questions of Law. - The provincial, city legal officer or prosecutor or the mu
nicipal legal officer shall render legal advice on matters involving questions o
f law to the punong barangay or any lupon or pangkat member whenever necessary i
n the exercise of his functions in the administration of the katarungang pambara
ngay. Section 408. Subject Matter for Amicable Settlement; Exception Thereto. The lupon of each barangay shall have authority to bring together the parties ac
tually residing in the same city or municipality for amicable settlement of all
disputes except: (a) Where one party is the government, or any subdivision or in
strumentality thereof; (b) Where one party is a public officer or employee, and
the dispute relates to the performance of his official functions; (c) Offenses p
unishable by imprisonment exceeding one (1) year or a fine exceeding Five thousa
nd pesos (P5,000.00); (d) Offenses where there is no private offended party; (e)
Where the dispute involves real properties located in different cities or munic
ipalities unless the parties thereto agree to submit their differences to amicab
le settlement by an appropriate lupon; (f) Disputes involving parties who actual
ly reside in barangays of different cities or municipalities, except where such
barangay units adjoin each other and the parties thereto agree to submit their d
ifferences to amicable settlement by an appropriate lupon; (g) Such other classe
s of disputes which the President may determine in the interest of Justice or up
on the recommendation of the Secretary of Justice. The court in which non-crimin
al cases not falling within the authority of the lupon under this Code are filed
may, at any time before trial motu propio refer the case to the lupon concerned
for amicable settlement. Section 409. Venue. (a) Disputes between persons actua
lly residing in the same barangay shall be brought for amicable settlement befor
e the lupon of said barangay. (b) Those involving actual residents of different
barangays within the same city or municipality shall be brought in the barangay
where the respondent or any of the respondents actually resides, at the election
of the complaint. (c) All disputes involving real property or any interest ther
ein shall be brought in the barangay where the real property or the larger porti
on thereof is situated. (d) Those arising at the workplace where the contending
parties are employed or at the institution where such parties are enrolled for s
tudy, shall be brought in the barangay where such workplace or institution is lo
cated. Objections to venue shall be raised in the mediation proceedings before t
he punong barangay; otherwise, the same shall be deemed waived. Any legal questi
on which may confront the punong barangay in resolving objections to venue herei
n referred to may be submitted to the Secretary of
REMLAW Page 253

barangay in resolving objections to venue herein referred to may be submitted to

the Secretary of Justice, or his duly designated representative, whose ruling t
hereon shall be binding. Section 410. Procedure for Amicable Settlement. (a) Who
may initiate proceeding - Upon payment of the appropriate filing fee, any indiv
idual who has a cause of action against another individual involving any matter
within the authority of the lupon may complain, orally or in writing, to the lup
on chairman of the barangay. (b) Mediation by lupon chairman - Upon receipt of t
he complaint, the lupon chairman shall within the next working day summon the re
spondent(s), with notice to the complainant(s) for them and their witnesses to a
ppear before him for a mediation of their conflicting interests. If he fails in
his mediation effort within fifteen (15) days from the first meeting of the part
ies before him, he shall forthwith set a date for the constitution of the pangka
t in accordance with the provisions of this Chapter. (c) Suspension of prescript
ive period of offenses - While the dispute is under mediation, conciliation, or
arbitration, the prescriptive periods for offenses and cause of action under exi
sting laws shall be interrupted upon filing the complaint with the punong barang
ay. The prescriptive periods shall resume upon receipt by the complainant of the
complainant or the certificate of repudiation or of the certification to file a
ction issued by the lupon or pangkat secretary: Provided, however, That such int
erruption shall not exceed sixty (60) days from the filing of the complaint with
the punong barangay. (d) Issuance of summons; hearing; grounds for disqualifica
tion - The pangkat shall convene not later than three (3) days from its constitu
tion, on the day and hour set by the lupon chairman, to hear both parties and th
eir witnesses, simplify issues, and explore all possibilities for amicable settl
ement. For this purpose, the pangkat may issue summons for the personal appearan
ce of parties and witnesses before it. In the event that a party moves to disqua
lify any member of the pangkat by reason of relationship, bias, interest, or any
other similar grounds discovered after the constitution of the pangkat, the mat
ter shall be resolved by the affirmative vote of the majority of the pangkat who
se decision shall be final. Should disqualification be decided upon, the resulti
ng vacancy shall be filled as herein provided for. (e) Period to arrive at a set
tlement - The pangkat shall arrive at a settlement or resolution of the dispute
within fifteen (15) days from the day it convenes in accordance with this sectio
n. This period shall, at the discretion of the pangkat, be extendible for anothe
r period which shall not exceed fifteen (15) days, except in clearly meritorious
cases. Section 411. Form of settlement. - All amicable settlements shall be in
writing, in a language or dialect known to the parties, signed by them, and atte
sted to by the lupon chairman or the pangkat chairman, as the case may be. When
the parties to the dispute do not use the same language or dialect, the settleme
nt shall be written in the language known to them. Section 412. Conciliation. (a
) Pre-condition to Filing of Complaint in Court. - No complaint, petition, actio
n, or proceeding involving any matter within the authority of the lupon shall be
filed or instituted directly in court or any other government office for adjudi
cation, unless there has been a confrontation between the parties before the lup
on chairman or the pangkat, and that no conciliation or settlement has been reac
hed as certified by the lupon secretary or pangkat secretary as attested to by t
he lupon or pangkat chairman or unless the settlement has been repudiated by the
parties thereto. (b) Where Parties May Go Directly to Court. - The parties may
go directly to court in the following instances: (1) Where the accused is under
detention; (2) Where a person has otherwise been deprived of personal liberty ca
lling for habeas corpus proceedings; (3) Where actions are coupled with provisio
nal remedies such as preliminary injunction, attachment, delivery of personal pr
operty and support pendente lite; and (4) Where the action may otherwise be barr
ed by the statute of limitations. (c) Conciliation among members of indigenous c
ultural communities. - The customs and traditions of indigenous cultural communi
ties shall be applied in settling disputes between members of the cultural commu
nities. Section 413. Arbitration. (a) The parties may, at any stage of the proce
edings, agree in writing that they shall abide by the arbitration award of the l
upon chairman or the pangkat. Such agreement to arbitrate may be repudiated with
in five (5) days from the date thereof for the same grounds and in accordance wi

th the procedure
REMLAW Page 254

within five (5) days from the date thereof for the same grounds and in accordanc
e with the procedure hereinafter prescribed. The arbitration award shall be made
after the lapse of the period for repudiation and within ten (10) days thereaft
er. (b) The arbitration award shall be in writing in a language or dialect known
to the parties. When the parties to the dispute do not use the same language or
dialect, the award shall be written in the language or dialect known to them. S
ection 414. Proceedings Open to the Public; Exception. - All proceedings for set
tlement shall be public and informal: Provided, however, That the lupon chairman
or the pangkat chairman, as the case may be, may motu proprio or upon request o
f a party, exclude the public from the proceedings in the interest of privacy, d
ecency, or public morals. Section 415. Appearance of Parties in Person. - In all
katarungang pambarangay proceedings, the parties must appear in person without
the assistance of counsel or representative, except for minors and incompetents
who may be assisted by their next-of-kin who are not lawyers. Section 416. Effec
t of Amicable Settlement and Arbitration Award. - The amicable settlement and ar
bitration award shall have the force and effect of a final judgment of a court u
pon the expiration of ten (10) days from the date thereof, unless repudiation of
the settlement has been made or a petition to nullify the award has been filed
before the proper city or municipal court. However, this provision shall not app
ly to court cases settled by the lupon under the last paragraph of Section 408 o
f this Code, in which case the compromise or the pangkat chairman shall be submi
tted to the court and upon approval thereof, have the force and effect of a judg
ment of said court. Section 417. Execution. - The amicable settlement or arbitra
tion award may be enforced by execution by the lupon within six (6) months from
the date of the settlement. After the lapse of such time, the settlement may be
enforced by action in the appropriate city or municipal court. Section 418. Repu
diation. - Any party to the dispute may, within ten (10) days from the date of t
he settlement, repudiate the same by filing with the lupon chairman a statement
to that effect sworn to before him, where the consent is vitiated by fraud, viol
ence, or intimidation. Such repudiation shall be sufficient basis for the issuan
ce of the certification for filing a complaint as hereinabove provided. Section
419. Transmittal of Settlement and Arbitration. - Award to the Court. - The secr
etary of the lupon shall transmit the settlement or the arbitration award to the
appropriate city or municipal court within five (5) days from the date of the a
ward or from the lapse of the ten-day period repudiating the settlement and shal
l furnish copies thereof to each of the parties to the settlement and the lupon
chairman. Section 420. Power to Administer Oaths. - The punong barangay, as chai
rman of the lupong tagapamayapa, and the members of the pangkat are hereby autho
rized to administer oaths in connection with any matter relating to all proceedi
ngs in the implementation of the katarungang pambarangay. Section 421. Administr
ation; Rules and Regulations. - The city or municipal mayor, as the case may be,
shall see to the efficient and effective implementation and administration of t
he katarungang pambarangay. The Secretary of Justice shall promulgate the rules
and regulations necessary to implement this Chapter. Section 422. Appropriations
. - Such amount as may be necessary for the effective implementation of the kata
rungang pambarangay shall be provided for in the annual budget of the city or mu
nicipality concerned.
Pasted from <http://www.lawphil.net/statutes/repacts/ra1991/ra_7160_1991.html>
REMLAW Page 255

Leo Wee v. George de Castro et al GR 1764095 Aug 20, 2008;

Sunday, November 14, 2010 11:31 PM
[G.R. No. 176405, August 20, 2008] LEO WEE, PETITIONER, VS. GEORGE DE CASTRO (ON
HIS BEHALF AND AS ATTORNEY-IN-FACT OF ANNIE DE CASTRO AND FELOMINA UBAN) AND MA
RTINIANA DE CASTRO, RESPONDENTS. DE C I SI O N
CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari[1 ]
under Rule 45 of the Revised Rules of Court filed by petitioner Leo Wee, seeking
the reversal and setting aside of the Decision[2 ] dated 19 September 2006 and
the Resolution[3 ] dated 25 January 2007 of the Court of Appeals in CA-G.R. SP N
o. 90906. The appellate court, in its assailed Decision, reversed the dismissal
of Civil Case. No. 1990, an action for ejectment instituted by respondent George
de Castro, on his own behalf and on behalf of Annie de Castro, Felomina de Cast
ro Uban and Jesus de Castro[4 ] against petitioner, by the Municipal Trial Court
(MTC) of Alaminos City, which was affirmed by the Regional Trial Court (RTC), B
ranch 54, Alaminos City, Pangasinan; and, ruling in favor of the respondents, or
dered the petitioner to vacate the subject property. In its assailed Resolution
dated 25 January 2007, the Court of Appeals refused to reconsider its earlier De
cision of 19 September 2006. In their Complaint [5 ] filed on 1 July 2002 with t
he MTC of Alaminos City, docketed as Civil Case No. 1990, respondents alleged th
at they are the registered owners of the subject property, a two-storey building
erected on a parcel of land registered under Transfer Certificate of Title (TCT
) No. 16193 in the Registry of Deeds of Pangasinan, described and bounded as fol
lows: A parcel of land (Lot 13033-D-2, Psd-01550-022319, being a portion of Lot
13033-D, Psd-018529, LRC Rec. No.____) situated in Pob., Alaminos City; bounded
on the NW. along line 1-2 by Lot 13035-D-1 of the subdivision plan; on the NE. a
long line 2-3 by Vericiano St.; on the SE. along line 3-4 by Lot 13033-D-2 of th
e subdivision plan; on the SW. along line 4-1 by Lot 575, Numeriano Rabago. It i
s coverd by TCT No. 16193 of the Register of Deeds of Pangasinan (Alaminos City)
and declared for taxation purposes per T.D. No. 2075, and assessed in the sum o
f P93,400.00.[6 ] Respondents rented out the subject property to petitioner on a
month to month basis for P9,000.00 per month.[7 ] Both parties agreed that effe
ctive 1 October 2001, the rental payment shall be increased from P9,000.00 to P1
5,000.00. Petitioner, however, failed or refused to pay the corresponding increa
se on rent when his rental obligation for the month of 1 October 2001 became due
. The rental dispute was brought to the Lupon Tagapagpamayapa of Poblacion, Alam
inos, Pangasinan, in an attempt to amicably settle the matter but the parties fa
iled to reach an agreement, resulting in the issuance by the Barangay Lupon of a
Certification to file action in court on 18 January 2002. On 10 June 2002, resp
ondent George de Castro sent a letter to petitioner terminating their lease agre
ement and demanding that the latter vacate and turn over the subject property to
respondents. Since petitioner stubbornly refused to comply with said demand let
ter, respondent George de Castro, together with his siblings and co-respondents,
Annie de Castro, Felomina de Castro Uban and Jesus de Castro, filed the Complai
nt for ejectment before the MTC. It must be noted, at this point, that although
the Complaint stated that it was being filed by all of the respondents, the Veri
fication and the Certificate of Non-Forum Shopping were signed by respondent Geo
rge de Castro alone. He would subsequently attach to his position paper filed be
fore the MTC on 28 October 2002 the Special Powers of Attorney (SPAs) executed b
y his sisters Annie de Castro and Felomina de Castro Uban dated 7 February
REMLAW Page 256

executed by his sisters Annie de Castro and Felomina de Castro Uban dated 7 Febr
uary 2002 and 14 March 2002 respectively, authorizing him to institute the eject
ment case against petitioner. Petitioner, on the other hand, countered that ther
e was no agreement between the parties to increase the monthly rentals and respo
ndents demand for an increase was exorbitant. The agreed monthly rental was onl
y for the amount of P9,000.00 and he was religiously paying the same every month
. Petitioner then argued that respondents failed to comply with the jurisdiction
al requirement of conciliation before the Barangay Lupon prior to the filing of
Civil Case. No. 1990, meriting the dismissal of their Complaint therein. The Cer
tification to file action issued by the Barangay Lupon appended to the responden
ts Complaint merely referred to the issue of rental increase and not the matter
of ejectment. Petitioner asserted further that the MTC lacked jurisdiction over
the ejectment suit, since respondents Complaint was devoid of any allegation t
hat there was an "unlawful withholding" of the subject property by the petitione
r. [8 ] During the Pre-Trial Conference[9 ] held before the MTC, the parties sti
pulated that in May 2002, petitioner tendered to respondents the sum of P9,000.0
0 as rental payment for the month of January 2002; petitioner paid rentals for t
he months of October 2001 to January 2002 but only in the amount of P9,000.00 pe
r month; respondents, thru counsel, sent a letter to petitioner on 10 June 2002
terminating their lease agreement which petitioner ignored; and the Barangay Lup
on did issue a Certification to file action after the parties failed to reach an
agreement before it. After the submission of the parties of their respective Po
sition Papers, the MTC, on 21 November 2002, rendered a Decision[1 0 ] dismissin
g respondents Complaint in Civil Case No. 1990 for failure to comply with the p
rior conciliation requirement before the Barangay Lupon. The decretal portion of
the MTC Decision reads: WHEREFORE, premised considered, judgment is hereby rend
ered ordering the dismissal of this case. Costs against the [herein respondents]
. On appeal, docketed as Civil Case No. A-2835, the RTC of Alaminos, Pangasinan,
Branch 54, promulgated its Decision[1 1 ] dated 27 June 2005 affirming the dism
issal of respondents Complaint for ejectment after finding that the appealed MT
C Decision was based on facts and law on the matter. The RTC declared that since
the original agreement entered into by the parties was for petitioner to pay on
ly the sum of P9.000.00 per month for the rent of the subject property, and no c
oncession was reached by the parties to increase such amount to P15.000.00, peti
tioner cannot be faulted for paying only the originally agreed upon monthly rent
als. Adopting petitioner s position, the RTC declared that respondents failure
to refer the matter to the Barangay court for conciliation process barred the ej
ectment case, conciliation before the Lupon being a condition sine qua non in th
e filing of ejectment suits. The RTC likewise agreed with petitioner in ruling t
hat the allegation in the Complaint was flawed, since respondents failed to alle
ge that there was an "unlawful withholding" of possession of the subject propert
y, taking out Civil Case No. 1990 from the purview of an action for unlawful det
ainer. Finally, the RTC decreed that respondents Complaint failed to comply wit
h the rule that a co-owner could not maintain an action without joining all the
other co-owners. Thus, according to the dispositive portion of the RTC Decision:
WHEREFORE the appellate Court finds no cogent reason to disturb the findings of
the court a quo. The Decision dated November 21, 2002 appealed from is hereby A
FFIRMED IN TOTO.[1 2 ] Undaunted, respondents filed a Petition for Review on Cer
tiorari[1 3 ] with the Court of Appeals where it was docketed as CA-G.R. SP No.
90906. Respondents argued in their Petition that the RTC gravely erred in ruling
that their failure to comply with the conciliation process was fatal to their C
omplaint, since it is only respondent George de Castro who resides in Alaminos C
ity, Pangasinan, while respondent Annie de Castro resides in Pennsylvania, Unite
d States of America (USA); respondent Felomina de Castro Uban, in California, US
A; and respondent Jesus de Castro, now substituted by his wife, Martiniana, resi
des in Manila. Respondents further claimed that the MTC was not divested of juri
sdiction over their Complaint for ejectment because of the mere absence therein
of the term "unlawful withholding" of their subject property, considering that t
hey had sufficiently

REMLAW Page 257

"unlawful withholding" of their subject property, considering that they had suff
iciently alleged the same in their Complaint, albeit worded differently. Finally
, respondents posited that the fact that only respondent George de Castro signed
the Verification and the Certificate of Non-Forum Shopping attached to the Comp
laint was irrelevant since the other respondents already executed Special Powers
of Attorney (SPAs) authorizing him to act as their attorney-in-fact in the inst
itution of the ejectment suit against the petitioner. On 19 September 2006, the
Court of Appeals rendered a Decision granting the respondents Petition and orde
ring petitioner to vacate the subject property and turn over the same to respond
ents. The Court of Appeals decreed: WHEREFORE, premises considered, the instant
petition is GRANTED. The assailed Decision dated June 27, 2005 issued by the RTC
of Alaminos City, Pangasinan, Branch 54, is REVERSED and SET ASIDE. A new one i
s hereby rendered ordering [herein petitioner] Leo Wee to SURRENDER and VACATE t
he leased premises in question as well as to pay the sum of P15,000.00 per month
reckoned from March, 2002 until he shall have actually turned over the possessi
on thereof to petitioners plus the rental arrearages of P30,000.00 representing
unpaid increase in rent for the period from October, 2001 to February, 2002, wit
h legal interest at 6% per annum to be computed from June 7, 2002 until finality
of this decision and 12% thereafter until full payment thereof. Respondent is l
ikewise hereby ordered to pay petitioners the amount of P20,000.00 as and for at
torney s fees and the costs of suit.[1 4 ] In a Resolution dated 25 January 2007
, the appellate court denied the Motion for Reconsideration interposed by petiti
oner for lack of merit. Petitioner is now before this Court via the Petition at
bar, making the following assignment of errors: I. THE HONORABLE COURT OF APPEAL
S GRAVELY ERRED IN DECLARING THAT CONCILIATION PROCESS IS NOT A JURISDICTIONAL R
EQUIREMENT THAT NON-COMPLIANCE THEREWITH DOES NOT AFFECT THE JURISDICTION IN EJE
CTMENT CASE; II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE S
UFFICIENCY OF THE ALLEGATIONS IN THE COMPLAINT FOR EJECTMENT DESPITE THE WANT OF
ALLEGATION OF "UNLAWFUL WITHOLDING PREMISES" (sic) QUESTIONED BY PETITIONER; II
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FILING OF THE
COMPLAINT OF RESPONDENT GEORGE DE CASTRO WITHOUT JOINING ALL HIS OTHER CO-OWNER
S OVER THE SUBJECT PROPERTY IS PROPER; IV. THE HONORABLE COURT OF APPEALS GRAVEL
Y ERRED IN NOT APPLYING SUPREME COURT CIRCULAR NO. 10 WHICH DIRECTS A PLEADER TO
INDICATE IN HIS PLEADINGS HIS OFFICIAL RECEIPT OF HIS PAYMENT OF HIS IBP DUES.[
1 5 ] Petitioner avers that respondents failed to go through the conciliation pr
ocess before the Barangay Lupon, a jurisdictional defect that bars the legal act
ion for ejectment. The Certification to file action dated 18 January 2002 issued
by the Barangay Lupon, appended by the respondents to their Complaint in Civil
Case No. 1990, is of no moment, for it attested only that there was confrontatio
n between the parties on the matter of rental increase but not on unlawful detai
ner of the subject property by the petitioner. If it was the intention of the re
spondents from the very beginning to eject petitioner from the subject property,
they should have brought up the alleged unlawful stay of the petitioner on the
subject property for conciliation before the Barangay Lupon. The barangay justic
e system was established primarily as a means of easing up the congestion of cas
es in the judicial courts. This could be accomplished through a proceeding befor
e the barangay courts which, according to the one who conceived of the system, t
he
REMLAW Page 258

late Chief Justice Fred Ruiz Castro, is essentially arbitration in character; an

d to make it truly effective, it should also be compulsory. With this primary ob
jective of the barangay justice system in mind, it would be wholly in keeping wi
th the underlying philosophy of Presidential Decree No. 1508 (Katarungang Pambar
angay Law), which would be better served if an out-of-court settlement of the ca
se is reached voluntarily by the parties. [1 6 ] To ensure this objective, Secti
on 6 of Presidential Decree No. 1508 requires the parties to undergo a conciliat
ion process before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a prec
ondition to filing a complaint in court subject to certain exceptions. The said
section has been declared compulsory in nature. [1 7 ] Presidential Decree No. 1
508 is now incorporated in Republic Act No. 7160 (The Local Government Code), wh
ich took effect on 1 January 1992. The pertinent provisions of the Local Governm
ent Code making conciliation a precondition to the filing of complaints in court
are reproduced below: SEC. 412. Conciliation.- (a) Pre-condition to filing of c
omplaint in court. - No complaint, petition, action, or proceeding involving any
matter within the authority of the lupon shall be filed or instituted directly
in court or any other government office for adjudication, unless there has been
a confrontation between the parties before the lupon chairman or the pangkat, an
d that no conciliation or settlement has been reached as certified by the lupon
secretary or pangkat secretary as attested to by the lupon or pangkat chairman o
r unless the settlement has been repudiated by the parties thereto. (b) Where pa
rties may go directly to court. - The parties may go directly to court in the fo
llowing instances: (1) Where the accused is under detention; (2) Where a person
has otherwise been deprived of personal liberty calling for habeas corpus procee
dings; (3) Where actions are coupled with provisional remedies such as prelimina
ry injunction, attachment, delivery of personal property, and support pendente l
ite; and (4) Where the action may otherwise be barred by the statute of limitati
ons. (c) Conciliation among members of indigenous cultural communities. - The cu
stoms and traditions of indigenous cultural communities shall be applied in sett
ling disputes between members of the cultural communities. SEC. 408. Subject Mat
ter for Amicable Settlement; Exception Thereto. - The lupon of each barangay sha
ll have authority to bring together the parties actually residing in the same ci
ty or municipality for amicable settlement of all disputes except: (a) Where one
party is the government or any subdivision or instrumentality thereof; (b) Wher
e one party is a public officer or employee, and the dispute relates to the perf
ormance of his official functions; (c) Offenses punishable by imprisonment excee
ding one (1) year or a fine exceeding Five thousand pesos (P5,000.00); (d) Offen
ses where there is no private offended party; (e) Where the dispute involves rea
l properties located in different cities or municipalities unless the parties th
ereto agree to submit their differences to amicable settlement by an appropriate
lupon; (f) Disputes involving parties who actually reside in barangays of diffe
rent cities or
REMLAW Page 259

(f) Disputes involving parties who actually reside in barangays of different cit
ies or municipalities, except where such barangay units adjoin each other and th
e parties thereto agree to submit their differences to amicable settlement by an
appropriate lupon; (g) Such other classes of disputes which the President may d
etermine in the interest of justice or upon the recommendation of the Secretary
of Justice. There is no question that the parties to this case appeared before t
he Barangay Lupon for conciliation proceedings. There is also no dispute that th
e only matter referred to the Barangay Lupon for conciliation was the rental inc
rease, and not the ejectment of petitioner from the subject property. This is ap
parent from a perusal of the Certification to file action in court issued by the
Barangay Lupon on 18 January 2002, to wit: CERTIFICATION TO FILE COMPLAINTS Thi
s is to certify that: There was personal confrontation between parties before th
e barangay Lupon regarding rental increase of a commercial building but concilia
tion failed; Therefore, the corresponding dispute of the above-entitled case may
now be filed in Court/Government Office.[1 8 ] (Emphasis ours.) The question no
w to be resolved by this Court is whether the Certification dated 18 January 200
2 issued by the Barangay Lupon stating that no settlement was reached by the par
ties on the matter of rental increase sufficient to comply with the prior concil
iation requirement under the Katarungang Pambarangay Law to authorize the respon
dents to institute the ejectment suit against petitioner. The Court rules affirm
atively. While it is true that the Certification to file action dated 18 January
2002 of the Barangay Lupon refers only to rental increase and not to the ejectm
ent of petitioner from the subject property, the submission of the same for conc
iliation before the Barangay Lupon constitutes sufficient compliance with the pr
ovisions of the Katarungang Pambarangay Law. Given the particular circumstances
of the case at bar, the conciliation proceedings for the amount of monthly renta
l should logically and reasonably include also the matter of the possession of t
he property subject of the rental, the lease agreement, and the violation of the
terms thereof. We now proceed to discuss the meat of the controversy. The contr
act of lease between the parties did not stipulate a fixed period. Hence, the pa
rties agreed to the payment of rentals on a monthly basis. On this score, Articl
e 1687 of the Civil Code provides: Art. 1687. If the period for the lease has no
t been fixed, it is understood to be from year to year, if the rent agreed upon
is annual; from month to month, if it is monthly; from week to week, if the rent
is weekly; and from day to day, if the rent is to be paid daily. However, even
though a monthly rent is paid, and no period for the lease has been set, the cou
rts may fix a longer term for the lease after the lessee has occupied the premis
es for over one year. If the rent is weekly, the courts may likewise determine a
longer period after the lessee has been in possession for over six months. In c
ase of daily rent, the courts may also fix a longer period after the lessee has
stayed in the place for over one month. (Emphasis supplied.) The rentals being p
aid monthly, the period of such lease is deemed terminated at the end of each mo
nth. Thus, respondents have every right to demand the ejectment of petitioners a
t the end of each month, the contract having expired by operation of law. Withou
t a lease contract, petitioner has no right of possession to the subject propert
y and must vacate the same. Respondents, thus, should be allowed to resort to an
action for ejectment before the MTC to recover possession of the subject proper
ty from petitioner. Corollarily, petitioner s ejectment, in this case, is only t
he reasonable consequence of his unrelenting refusal to comply with the responde
nts demand for the payment of rental increase agreed upon by both parties. Veri
ly, the lessor s right to rescind the contract of
1.
2.
REMLAW Page 260

lease for non-payment of the demanded increased rental was recognized by this Co
urt in Chua v. Victorio[1 9 ]: The right of rescission is statutorily recognized
in reciprocal obligations, such as contracts of lease. In addition to the gener
al remedy of rescission granted under Article 1191 of the Civil Code, there is a
n independent provision granting the remedy of rescission for breach of any of t
he lessor or lessee s statutory obligations. Under Article 1659 of the Civil Cod
e, the aggrieved party may, at his option, ask for (1) the rescission of the con
tract; (2) rescission and indemnification for damages; or (3) only indemnificati
on for damages, allowing the contract to remain in force. Payment of the rent is
one of a lessee s statutory obligations, and, upon nonpayment by petitioners of
the increased rental in September 1994, the lessor acquired the right to avail
of any of the three remedies outlined above. (Emphasis supplied.) Petitioner nex
t argues that respondent George de Castro cannot maintain an action for ejectmen
t against petitioner, without joining all his co-owners. Article 487 of the New
Civil Code is explicit on this point: ART. 487. Any one of the co-owners may bri
ng an action in ejectment. This article covers all kinds of action for the recov
ery of possession, i.e., forcible entry and unlawful detainer (accion interdicta
l), recovery of possession (accion publiciana), and recovery of ownership (accio
n de reivindicacion). As explained by the renowned civilist, Professor Arturo M.
Tolentino[2 0 ]: A co-owner may bring such an action, without the necessity of
joining all the other co-owners as co-plaintiffs, because the suit is deemed to
be instituted for the benefit of all. If the action is for the benefit of the pl
aintiff alone, such that he claims possession for himself and not for the co-own
ership, the action will not prosper. (Emphasis added.) In the more recent case o
f Carandang v. Heirs of De Guzman,[21] this Court declared that a co-owner is no
t even a necessary party to an action for ejectment, for complete relief can be
afforded even in his absence, thus: In sum, in suits to recover properties, all
co-owners are real parties in interest. However, pursuant to Article 487 of the
Civil Code and the relevant jurisprudence, any one of them may bring an action,
any kind of action for the recovery of co-owned properties. Therefore, only one
of the co-owners, namely the co-owner who filed the suit for the recovery of the
co-owned property, is an indispensable party thereto. The other co-owners are n
ot indispensable parties. They are not even necessary parties, for a complete re
lief can be afforded in the suit even without their participation, since the sui
t is presumed to have been filed for the benefit of all co-owners. Moreover, res
pondents Annie de Castro and Felomina de Castro Uban each executed a Special Pow
er of Attorney, giving respondent George de Castro the authority to initiate Civ
il Case No. 1990. A power of attorney is an instrument in writing by which one p
erson, as principal, appoints another as his agent and confers upon him the auth
ority to perform certain specified acts or kinds of acts on behalf of the princi
pal. The written authorization itself is the power of attorney, and this is clea
rly indicated by the fact that it has also been called a "letter of attorney."[2
2 ] Even then, the Court views the SPAs as mere surplusage, such that the lack
thereof does not in any way affect the validity of the action for ejectment inst
ituted by respondent George de Castro. This also disposes of petitioner s conten
tion that respondent George de Castro lacked the authority to sign the Verificat
ion and the Certificate of Non-Forum Shopping. As the Court ruled in Mendoza v.
Coronel[2 3 ]: We likewise hold that the execution of the certification against
forum shopping by the attorney-in-fact in the case at bar is not a violation of
the requirement that the parties must personally sign the same. The attorney-infact, who has authority to file, and who actually filed the complaint as the rep
resentative of the plaintiff co-owner, pursuant to a Special Power of Attorney,
is a party to the ejectment suit. In fact, Section 1, Rule 70 of the Rules of Co
urt includes the representative of the owner in an ejectment suit
REMLAW Page 261

Rule 70 of the Rules of Court includes the representative of the owner in an eje
ctment suit as one of the parties authorized to institute the proceedings.(Empha
sis supplied.) Failure by respondent George de Castro to attach the said SPAs to
the Complaint is innocuous, since it is undisputed that he was granted by his s
isters the authority to file the action for ejectment against petitioner prior t
o the institution of Civil Case No. 1990. The SPAs in his favor were respectivel
y executed by respondents Annie de Castro and Felomina de Castro Uban on 7 Febru
ary 2002 and 14 March 2002; while Civil Case No. 1990 was filed by respondent Ge
orge de Castro on his own behalf and on behalf of his siblings only on 1 July 20
02, or way after he was given by his siblings the authority to file said action.
The Court quotes with approval the following disquisition of the Court of Appea
ls: Moreover, records show that [herein respondent] George de Castro was indeed
authorized by his sisters Annie de Castro and Felomina de Castro Uban, to prosec
ute the case in their behalf as shown by the Special Power of Attorney dated Feb
ruary 7, 2002 and March 14, 2002. That these documents were appended only to [re
spondent George de Castro s] position paper is of no moment considering that the
authority conferred therein was given prior to the institution of the complaint
in July, 2002. x x x. [2 4 ] Respondent deceased Jesus de Castro s failure to s
ign the Verification and Certificate of Non-Forum Shopping may be excused since
he already executed an Affidavit [2 5 ] with respondent George de Castro that he
had personal knowledge of the filing of Civil Case No. 1990. In Torres v. Speci
alized Packaging Development Corporation,[2 6 ] the Court ruled that the persona
l signing of the verification requirement was deemed substantially complied with
when, as in the instant case, two out of 25 real parties-in-interest, who undou
btedly have sufficient knowledge and belief to swear to the truth of the allegat
ions in the petition, signed the verification attached to it. In the same vein,
this Court is not persuaded by petitioner s assertion that respondents failure
to allege the jurisdictional fact that there was "unlawful withholding" of the s
ubject property was fatal to their cause of action. It is apodictic that what de
termines the nature of an action as well as which court has jurisdiction over it
are the allegations in the complaint and the character of the relief sought. In
an unlawful detainer case, the defendant s possession was originally lawful but
ceased to be so upon the expiration of his right to possess. Hence, the phrase
"unlawful withholding" has been held to imply possession on the part of defendan
t, which was legal in the beginning, having no other source than a contract, exp
ress or implied, and which later expired as a right and is being withheld by def
endant. [2 7 ] In Barba v. Court of Appeals,[2 8 ] the Court held that although
the phrase "unlawfully withholding" was not actually used by therein petitioner
in her complaint, the Court held that her allegations, nonetheless, amounted to
an unlawful withholding of the subject property by therein private respondents,
because they continuously refused to vacate the premises even after notice and d
emand. In the Petition at bar, respondents alleged in their Complaint that they
are the registered owners of the subject property;the subject property was being
occupied by the petitioner pursuant to a monthly lease contract; petitioner ref
used to accede to respondents demand for rental increase; the respondents sent
petitioner a letter terminating the lease agreement and demanding that petitione
r vacate and turn over the possession of the subject property to respondents; an
d despite such demand, petitioner failed to surrender the subject property to re
spondents.[2 9 ] The Complaint sufficiently alleges the unlawful withholding of
the subject property by petitioner, constitutive of unlawful detainer, although
the exact words "unlawful withholding" were not used. In an action for unlawful
detainer, an allegation that the defendant is unlawfully withholding possession
from the plaintiff is deemed sufficient, without necessarily employing the termi
nology of the law. [3 0 ] Petitioner s averment that the Court of Appeals should
have dismissed respondents Petition in light of the failure of their counsel t
o attach the Official Receipt of his updated payment of Integrated Bar of the Ph
ilippines (IBP) dues is now moot and academic, since respondents counsel has al
ready duly complied therewith. It must be stressed that judicial cases do not co
me and go through the portals of a court of law by the mere mandate of technical
ities. [3 1 ]

REMLAW Page 262

come and go through the portals of a court of law by the mere mandate of technic
alities. [3 1 ] Where a rigid application of the rules will result in a manifest
failure or miscarriage of justice, technicalities should be disregarded in orde
r to resolve the case. [3 2 ] Finally, we agree in the ruling of the Court of Ap
peals that petitioner is liable for the payment of back rentals, attorney s fees
and cost of the suit. Respondents must be duly indemnified for the loss of inco
me from the subject property on account of petitioner s refusal to vacate the le
ased premises. WHEREFORE, premises considered, the instant Petition is DENIED. T
he Decision dated 19 September 2006 and Resolution dated 25 January 2007 of the
Court of Appeals in CA-G.R. SP No. 90906 are hereby AFFIRMED in toto. Costs agai
nst petitioner.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI21.636\leo%20wee
.docx>
REMLAW Page 263

Aquino v. Aure, GR 153567 Feb 18, 2008

Sunday, November 14, 2010 11:31 PM
G.R. No. 153567 February 18, 2008 LIBRADA M. AQUINO, petitioner, vs. ERNEST S. A
URE1, respondent. DEC I SI O N CHICO-NAZARIO, J.: Before this Court is a Petitio
n for Review on Certiorari2 under Rule 45 of the Revised Rules of Court filed by
petitioner Librada M. Aquino (Aquino), seeking the reversal and the setting asi
de of the Decision3 dated 17 October 2001 and the Resolution 4 dated 8 May 2002
of the Court of Appeals in CA-G.R. SP No. 63733. The appellate court, in its ass
ailed Decision and Resolution, reversed the Decision5 of the Regional Trial Cour
t (RTC) of Quezon City, Branch 88, affirming the Decision6 of the Metropolitan T
rial Court (MeTC) of Quezon City, Branch 32, which dismissed respondent Ernesto
Aures (Aure) complaint for ejectment on the ground, inter alia, of failure to com
ply with barangay conciliation proceedings. The subject of the present controver
sy is a parcel of land situated in Roxas District, Quezon City, with an area of
449 square meters and covered by Transfer Certificate of Title (TCT) No. 205447
registered with the Registry of Deeds of Quezon City (subject property).7 Aure a
nd E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for ejectm
ent against Aquino before the MeTC docketed as Civil Case No. 17450. In their Co
mplaint, Aure and Aure Lending alleged that they acquired the subject property f
rom Aquino and her husband Manuel (spouses Aquino) by virtue of a Deed of Sale8
executed on 4 June 1996. Aure claimed that after the spouses Aquino received sub
stantial consideration for the sale of the subject property, they refused to vac
ate the same.9 In her Answer,10 Aquino countered that the Complaint in Civil Cas
e No. 17450 lacks cause of action for Aure and Aure Lending do not have any lega
l right over the subject property. Aquino admitted that there was a sale but suc
h was governed by the Memorandum of Agreement 11 (MOA) signed by Aure. As stated
in the MOA, Aure shall secure a loan from a bank or financial institution in hi
s own name using the subject property as collateral and turn over the proceeds t
hereof to the spouses Aquino. However, even after Aure successfully secured a lo
an, the spouses Aquino did not receive the proceeds thereon or benefited therefr
om. On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in fa
vor of Aquino and dismissed the Complaint for ejectment of Aure and Aure Lending
for non-compliance with the barangay conciliation process, among other grounds.
The MeTC observed that Aure and Aquino are residents of the same barangay but t
here is no showing that any attempt has been made to settle the case amicably at
the barangay level. The MeTC further observed that Aure Lending was improperly
included as plaintiff in Civil Case No. 17450 for it did not stand to be injured
or benefited by the suit. Finally, the MeTC ruled that since the question of ow
nership was put in issue, the action was converted from a mere detainer suit to
one "incapable of pecuniary estimation" which properly rests within the original
exclusive jurisdiction of the RTC. The dispositive portion of the MeTC Decision
reads: WHEREFORE, premises considered, let this case be, as it is, hereby order
ed DISMISSED. [Aquinos] counterclaim is likewise dismissed. 12 On appeal, the RTC
affirmed the dismissal of the Complaint on the same ground that the dispute was
not brought before the Barangay Council for conciliation before it was filed in
court. In a Decision dated 14 December 2000, the RTC stressed that the barangay
conciliation process is a conditio sine qua non for the filing of an ejectment
complaint involving residents of the same barangay, and failure to comply therew
ith constitutes sufficient cause for the dismissal of the action. The RTC likewi
se validated the ruling of the MeTC that the main issue involved in Civil Case N
o. 17450 is incapable of pecuniary estimation and cognizable by the RTC. Hence,
the RTC ruled: WHEREFORE, finding no reversible error in the appealed judgment,
it is hereby affirmed in its entirety.13 Aures Motion for Reconsideration was den
ied by the RTC in an Order 14 dated 27 February 2001. Undaunted, Aure appealed t
he adverse RTC Decision with the Court of Appeals arguing that the lower court e
rred in dismissing his Complaint for lack of cause of action. Aure asserted that
misjoinder of parties was not a proper ground for dismissal of his Complaint an
d that the MeTC should have only ordered the exclusion of Aure Lending as plaint
iff without prejudice to the

REMLAW Page 264

continuation of the proceedings in Civil Case No. 17450 until the final determin
ation thereof. Aure further asseverated that mere allegation of ownership should
not divest the MeTC of jurisdiction over the ejectment suit since jurisdiction
over the subject matter is conferred by law and should not depend on the defense
s and objections raised by the parties. Finally, Aure contended that the MeTC er
red in dismissing his Complaint with prejudice on the ground of non-compliance w
ith barangay conciliation process. He was not given the opportunity to rectify t
he procedural defect by going through the barangay mediation proceedings and, th
ereafter, refile the Complaint. 15 On 17 October 2001, the Court of Appeals rend
ered a Decision, reversing the MeTC and RTC Decisions and remanding the case to
the MeTC for further proceedings and final determination of the substantive righ
ts of the parties. The appellate court declared that the failure of Aure to subj
ect the matter to barangay conciliation is not a jurisdictional flaw and it will
not affect the sufficiency of Aures Complaint since Aquino failed to seasonably
raise such issue in her Answer. The Court of Appeals further ruled that mere all
egation of ownership does not deprive the MeTC of jurisdiction over the ejectmen
t case for jurisdiction over the subject matter is conferred by law and is deter
mined by the allegations advanced by the plaintiff in his complaint. Hence, mere
assertion of ownership by the defendant in an ejectment case will not oust the
MeTC of its summary jurisdiction over the same. The decretal part of the Court o
f Appeals Decision reads: WHEREFORE, premises considered, the petition is hereby
GRANTED - and the decisions of the trial courts below REVERSED and SET ASIDE. L
et the records be remanded back to the court a quo for further proceedings for a
n eventual decision of the substantive rights of the disputants.16 In a Resoluti
on dated 8 May 2002, the Court of Appeals denied the Motion for Reconsideration
interposed by Aquino for it was merely a rehash of the arguments set forth in he
r previous pleadings which were already considered and passed upon by the appell
ate court in its assailed Decision. Aquino is now before this Court via the Peti
tion at bar raising the following issues: I. WHETHER OR NOT NON-COMPLIANCE WITH
THE BARANGAY CONCILIATION PROCEEDINGS IS A JURISDICT IONAL DEFECT THAT WARRANTS
THE DISMISSAL OF THE COMPLAINT. II. WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS
THE MeTC OF ITS JURISDICTION OVER AN EJECTMENT CASE. The barangay justice syste
m was established primarily as a means of easing up the congestion of cases in t
he judicial courts. This could be accomplished through a proceeding before the b
arangay courts which, according to the conceptor of the system, the late Chief J
ustice Fred Ruiz Castro, is essentially arbitration in character, and to make it
truly effective, it should also be compulsory. With this primary objective of t
he barangay justice system in mind, it would be wholly in keeping with the under
lying philosophy of Presidential Decree No. 1508, otherwise known as the Katarun
gang Pambarangay Law, and the policy behind it would be better served if an outof-court settlement of the case is reached voluntarily by the parties.17 The pri
mordial objective of Presidential Decree No. 1508 is to reduce the number of cou
rt litigations and prevent the deterioration of the quality of justice which has
been brought by the indiscriminate filing of cases in the courts.18 To ensure t
his objective, Section 6 of Presidential Decree No. 1508 19 requires the parties
to undergo a conciliation process before the Lupon Chairman or the Pangkat ng T
agapagkasundo as a precondition to filing a complaint in court subject to certai
n exceptions 20 which are inapplicable to this case. The said section has been d
eclared compulsory in nature. 21 Presidential Decree No. 1508 is now incorporate
d in Republic Act No. 7160, otherwise known as The Local Government Code, which
took effect on 1 January 1992. The pertinent provisions of the Local Government
Code making conciliation a precondition to filing of complaints in court, read:
SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. No c
omplaint, petition, action, or proceeding involving any matter within the author
ity of the lupon shall be filed or instituted directly in court or any other gov
ernment office for adjudication, unless there has been a confrontation between t
he parties before the lupon chairman or the pangkat, and that no conciliation or
settlement has been reached as certified by the lupon secretary or pangkat secr
etary as attested to by the lupon chairman or pangkat chairman or unless the set
tlement has been repudiated by the parties thereto. (b) Where parties may go dir

ectly to court. The parties may go directly to court in the following instances:
(1) Where the accused is under detention; (2) Where a person has otherwise been
deprived of personal liberty calling for habeas corpus proceedings; (3) Where a
ctions are coupled with provisional remedies such as preliminary injunction, att
achment, delivery of personal property, and support pendente lite; and
REMLAW Page 265

attachment, delivery of personal property, and support pendente lite; and (4) Wh
ere the action may otherwise be barred by the statute of limitations. (c) Concil
iation among members of indigenous cultural communities. The customs and traditi
ons of indigenous cultural communities shall be applied in settling disputes bet
ween members of the cultural communities. SEC. 408. Subject Matter for Amicable
Settlement; Exception Therein. The lupon of each barangay shall have authority t
o bring together the parties actually residing in the same city or municipality
for amicable settlement of all disputes except: (a) Where one party is the gover
nment or any subdivision or instrumentality thereof; (b) Where one party is a pu
blic officer or employee, and the dispute relates to the performance of his offi
cial functions; (c) Offenses punishable by imprisonment exceeding one (1) year o
r a fine exceeding Five thousand pesos (P5,000.00); (d) Offenses where there is
no private offended party; (e) Where the dispute involves real properties locate
d in different cities or municipalities unless the parties thereto agree to subm
it their differences to amicable settlement by an appropriate lupon; (f) Dispute
s involving parties who actually reside in barangays of different cities or muni
cipalities, except where such barangay units adjoin each other and the parties t
hereto agree to submit their differences to amicable settlement by an appropriat
e lupon; (g) Such other classes of disputes which the President may determine in
the interest of justice or upon the recommendation of the Secretary of Justice.
There is no dispute herein that the present case was never referred to the Bara
ngay Lupon for conciliation before Aure and Aure Lending instituted Civil Case N
o. 17450. In fact, no allegation of such barangay conciliation proceedings was m
ade in Aure and Aure Lendings Complaint before the MeTC. The only issue to be res
olved is whether non-recourse to the barangay conciliation process is a jurisdic
tional flaw that warrants the dismissal of the ejectment suit filed with the MeT
C. Aquino posits that failure to resort to barangay conciliation makes the actio
n for ejectment premature and, hence, dismissible. She likewise avers that this
objection was timely raised during the pre-trial and even subsequently in her Po
sition Paper submitted to the MeTC. We do not agree. It is true that the precise
technical effect of failure to comply with the requirement of Section 412 of th
e Local Government Code on barangay conciliation (previously contained in Sectio
n 5 of Presidential Decree No. 1508) is much the same effect produced by non-exh
austion of administrative remedies -- the complaint becomes afflicted with the v
ice of pre-maturity; and the controversy there alleged is not ripe for judicial
determination. The complaint becomes vulnerable to a motion to dismiss.22 Nevert
heless, the conciliation process is not a jurisdictional requirement, so that no
n-compliance therewith cannot affect the jurisdiction which the court has otherw
ise acquired over the subject matter or over the person of the defendant.23 As e
nunciated in the landmark case of Royales v. Intermediate Appellate Court24: Ord
inarily, non-compliance with the condition precedent prescribed by P.D. 1508 cou
ld affect the sufficiency of the plaintiff s cause of action and make his compla
int vulnerable to dismissal on ground of lack of cause of action or prematurity;
but the same would not prevent a court of competent jurisdiction from exercisin
g its power of adjudication over the case before it, where the defendants, as in
this case, failed to object to such exercise of jurisdiction in their answer an
d even during the entire proceedings a quo. While petitioners could have prevent
ed the trial court from exercising jurisdiction over the case by seasonably taki
ng exception thereto, they instead invoked the very same jurisdiction by filing
an answer and seeking affirmative relief from it. What is more, they participate
d in the trial of the case by cross-examining respondent Planas. Upon this premi
se, petitioners cannot now be allowed belatedly to adopt an inconsistent posture
by attacking the jurisdiction of the court to which they had submitted themselv
es voluntarily. x x x (Emphasis supplied.) In the case at bar, we similarly find
that Aquino cannot be allowed to attack the jurisdiction of the MeTC over Civil
Case No. 17450 after having submitted herself voluntarily thereto. We have scru
pulously examined Aquinos Answer before the MeTC in Civil Case No. 17450 and ther
e is utter lack of any objection on her part to any deficiency in the complaint
which could oust the MeTC of its jurisdcition. We thus quote with approval the d
isquisition of the Court of Appeals: Moreover, the Court takes note that the def

endant [Aquino] herself did not raise in defense the aforesaid lack of conciliat
ion proceedings in her answer, which raises the exclusive affirmative defense of
simulation. By this acquiescence, defendant [Aquino] is deemed to have waived s
uch objection. As held in a case of similar circumstances, the failure of a defe
ndant [Aquino]
REMLAW Page 266

such objection. As held in a case of similar circumstances, the failure of a def

endant [Aquino] in an ejectment suit to specifically allege the fact that there
was no compliance with the barangay conciliation procedure constitutes a waiver
of that defense. x x x. 25 By Aquinos failure to seasonably object to the deficie
ncy in the Complaint, she is deemed to have already acquiesced or waived any def
ect attendant thereto. Consequently, Aquino cannot thereafter move for the dismi
ssal of the ejectment suit for Aure and Aure Lendings failure to resort to the ba
rangay conciliation process, since she is already precluded from doing so. The f
act that Aquino raised such objection during the pre-trial and in her Position P
aper is of no moment, for the issue of non-recourse to barangay mediation procee
dings should be impleaded in her Answer. As provided under Section 1, Rule 9 of
the 1997 Rules of Civil Procedure: Sec. 1. Defenses and objections not pleaded.
Defenses and objections not pleaded either in a motion to dismiss or in the answ
er are deemed waived. However, when it appears from the pleadings or the evidenc
e on record that the court has no jurisdiction over the subject matter, that the
re is another action pending between the same parties for the same cause, or tha
t the action is barred by a prior judgment or by statute of limitations, the cou
rt shall dismiss the claim. (Emphasis supplied.) While the aforequoted provision
applies to a pleading (specifically, an Answer) or a motion to dismiss, a simil
ar or identical rule is provided for all other motions in Section 8 of Rule 15 o
f the same Rule which states: Sec. 8. Omnibus Motion. - Subject to the provision
s of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or pro
ceeding shall include all objections then available, and all objections not so i
ncluded shall be deemed waived. The spirit that surrounds the foregoing statutor
y norm is to require the party filing a pleading or motion to raise all availabl
e exceptions for relief during the single opportunity so that single or multiple
objections may be avoided.26 It is clear and categorical in Section 1, Rule 9 o
f the Revised Rules of Court that failure to raise defenses and objections in a
motion to dismiss or in an answer is deemed a waiver thereof; and basic is the r
ule in statutory construction that when the law is clear and free from any doubt
or ambiguity, there is no room for construction or interpretation. 27 As has be
en our consistent ruling, where the law speaks in clear and categorical language
, there is no occasion for interpretation; there is only room for application. 2
8 Thus, although Aquinos defense of non-compliance with Presidential Decree No. 1
508 is meritorious, procedurally, such defense is no longer available for failur
e to plead the same in the Answer as required by the omnibus motion rule. Neithe
r could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997 Rules of Ci
vil Procedure provide only three instances when the court may motu proprio dismi
ss the claim, and that is when the pleadings or evidence on the record show that
(1) the court has no jurisdiction over the subject matter; (2) there is another
cause of action pending between the same parties for the same cause; or (3) whe
re the action is barred by a prior judgment or by a statute of limitations. Thus
, it is clear that a court may not motu proprio dismiss a case on the ground of
failure to comply with the requirement for barangay conciliation, this ground no
t being among those mentioned for the dismissal by the trial court of a case on
its own initiative. Aquino further argues that the issue of possession in the in
stant case cannot be resolved by the MeTC without first adjudicating the questio
n of ownership, since the Deed of Sale vesting Aure with the legal right over th
e subject property is simulated. Again, we do not agree. Jurisdiction in ejectme
nt cases is determined by the allegations pleaded in the complaint. As long as t
hese allegations demonstrate a cause of action either for forcible entry or for
unlawful detainer, the court acquires jurisdiction over the subject matter. This
principle holds, even if the facts proved during the trial do not support the c
ause of action thus alleged, in which instance the court -- after acquiring juri
sdiction -- may resolve to dismiss the action for insufficiency of evidence. The
necessary allegations in a Complaint for ejectment are set forth in Section 1,
Rule 70 of the Rules of Court, which reads: SECTION 1. Who may institute proceed
ings, and when. Subject to the provisions of the next succeeding section, a pers
on deprived of the possession of any land or building by force, intimidation, th
reat, strategy, or stealth, or a lessor, vendor, vendee, or other person against

whom the possession of any land or building is unlawfully withheld after the ex
piration or termination of the right to hold possession, by virtue of any contra
ct, express or implied, or the legal representatives or assigns of any such less
or, vendor, vendee, or other person may at any time within one (1) year after su
ch unlawful deprivation or withholding of possession, bring an action in the pro
per Municipal Trial Court against the person or persons unlawfully withholding o
r depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs. In the case at
bar, the Complaint filed by Aure and Aure Lending on 2 April 1997, alleged as f
ollows: 2. [Aure and Aure Lending] became the owners of a house and lot located
at No. 37 Salazar
REMLAW Page 267

In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997
, alleged as follows: 2. [Aure and Aure Lending] became the owners of a house an
d lot located at No. 37 Salazar Street corner Encarnacion Street, B.F. Homes, Qu
ezon City by virtue of a deed of absolute sale executed by [the spouses Aquino]
in favor of [Aure and Aure Lending] although registered in the name of x x x Ern
esto S. Aure; title to the said property had already been issued in the name of
[Aure] as shown by a transfer Certificate of Title , a copy of which is hereto a
ttached and made an integral part hereof as Annex A; 3. However, despite the sal
e thus transferring ownership of the subject premises to [Aure and Aure Lending]
as above-stated and consequently terminating [Aquinos] right of possession over
the subject property, [Aquino] together with her family, is continuously occupyi
ng the subject premises notwithstanding several demands made by [Aure and Aure L
ending] against [Aquino] and all persons claiming right under her to vacate the
subject premises and surrender possession thereof to [Aure and Aure Lending] cau
sing damage and prejudice to [Aure and Aure Lending] and making [Aquinos] occupan
cy together with those actually occupying the subject premises claiming right un
der her, illegal. 29 It can be inferred from the foregoing that Aure, together w
ith Aure Lending, sought the possession of the subject property which was never
surrendered by Aquino after the perfection of the Deed of Sale, which gives rise
to a cause of action for an ejectment suit cognizable by the MeTC. Aures asserti
on of possession over the subject property is based on his ownership thereof as
evidenced by TCT No. 156802 bearing his name. That Aquino impugned the validity
of Aures title over the subject property and claimed that the Deed of Sale was si
mulated should not divest the MeTC of jurisdiction over the ejectment case.30 As
extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v. C
ourt of Appeals31: As the law on forcible entry and unlawful detainer cases now
stands, even where the defendant raises the question of ownership in his pleadin
gs and the question of possession cannot be resolved without deciding the issue
of ownership, the Metropolitan Trial Courts, Municipal Trial Courts, and Municip
al Circuit Trial Courts nevertheless have the undoubted competence to resolve th
e issue of ownership albeit only to determine the issue of possession. x x x. Th
e law, as revised, now provides instead that when the question of possession can
not be resolved without deciding the issue of ownership, the issue of ownership
shall be resolved only to determine the issue of possession. On its face, the ne
w Rule on Summary Procedure was extended to include within the jurisdiction of t
he inferior courts ejectment cases which likewise involve the issue of ownership
. This does not mean, however, that blanket authority to adjudicate the issue of
ownership in ejectment suits has been thus conferred on the inferior courts. At
the outset, it must here be stressed that the resolution of this particular iss
ue concerns and applies only to forcible entry and unlawful detainer cases where
the issue of possession is intimately intertwined with the issue of ownership.
It finds no proper application where it is otherwise, that is, where ownership i
s not in issue, or where the principal and main issue raised in the allegations
of the complaint as well as the relief prayed for make out not a case for ejectm
ent but one for recovery of ownership. Apropos thereto, this Court ruled in Hila
rio v. Court of Appeals32: Thus, an adjudication made therein regarding the issu
e of ownership should be regarded as merely provisional and, therefore, would no
t bar or prejudice an action between the same parties involving title to the lan
d. The foregoing doctrine is a necessary consequence of the nature of forcible e
ntry and unlawful detainer cases where the only issue to be settled is the physi
cal or material possession over the real property, that is, possession de facto
and not possession de jure." In other words, inferior courts are now "conditiona
lly vested with adjudicatory power over the issue of title or ownership raised b
y the parties in an ejectment suit." These courts shall resolve the question of
ownership raised as an incident in an ejectment case where a determination there
of is necessary for a proper and complete adjudication of the issue of possessio
n. 33 WHEREFORE, premises considered, the instant Petition is DENIED. The Court
of Appeals Decision dated 17 October 2001 and its ResolutioResolution dated 8 Ma
y 2002 in CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs against the petitioner
.

Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI22.701\aquino%20

v%20aure.docx>
REMLAW Page 268

Makati Ins. V. Reyes et al GR 167403 Aug 6, 2008

Sunday, November 14, 2010 11:31 PM
[G.R. No. 165744, August 11, 2008]
OSCAR C. REYES, PETITIONER, VS. HON. REGIONAL TRIAL COURT OF MAKATI, BRANCH 142,
ZENITH INSURANCE CORPORATION, AND RODRIGO C. REYES, RESPONDENTS.
DECIS ION BRION, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks
to set aside the Decision of the Court of Appeals (CA) [1] promulgated on May 2
6, 2004 in CA-G.R. SP No. 74970. The CA Decision affirmed the Order of the Regio
nal Trial Court (RTC), Branch 142, Makati City dated November 29, 2002[2] in Civ
il Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and
Damages") which denied petitioner Oscar C. Reyes (Oscar) Motion to Declare Com
plaint as Nuisance or Harassment Suit. BACKGROUND FACTS
Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four chil
dren of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodr
igo each owned shares of stock of Zenith Insurance Corporation (Zenith), a domes
tic corporation established by their family. Pedro died in 1964, while Anastacia
died in 1993. Although Pedro s estate was judicially partitioned among his heir
s sometime in the 1970s, no similar settlement and partition appear to have been
made with Anastacia s estate, which included her shareholdings in Zenith. As of
June 30, 1990, Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owne
d 8,715,637 and 4,250 shares, respectively.[3] On May 9, 2000, Zenith and Rodrig
o filed a complaint[4] with the Securities and Exchange Commission (SEC) against
Oscar, docketed as SEC Case No. 05-00-6615. The complaint stated that it is "a
derivative suit initiated and filed by the complainant Rodrigo C. Reyes to obtai
n an accounting of the funds and assets of ZENITH INSURANCE CORPORATION which ar
e now or formerly in the control, custody, and/or possession of respondent [here
in petitioner Oscar] and to determine the shares of stock of deceased spouses Pe
dro and Anastacia Reyes that were arbitrarily and fraudulently appropriated [by
Oscar] for himself [and] which were not collated and taken into account in the p
artition, distribution, and/or settlement of the estate of the deceased spouses,
for which he should be ordered to account for all the income from the time he t
ook these shares of stock, and should now deliver to his brothers and sisters th
eir just and respective shares."[5] [Emphasis supplied.]
In his Answer with Counterclaim,[6] Oscar denied the charge that he illegally ac
quired the shares of Anastacia Reyes. He asserted, as a defense, that he purchas
ed the subject shares with his own funds from the unissued stocks of Zenith, and
that the suit is not a bona fide derivative suit because the requisites therefo
r have not been complied with. He thus questioned the SEC s jurisdiction to ente
rtain the complaint because it pertains to the settlement of the estate of Anast
acia Reyes.
When Republic Act (R.A.) No. 8799[7] took effect, the SEC s exclusive and origin
al jurisdiction over cases enumerated in Section 5 of Presidential Decree (P.D.)
No. 902-A was transferred to the RTC designated as a special commercial court.[
8] The records of Rodrigo s SEC case were thus turned over to the RTC, Branch 14
2, Makati, and docketed as Civil Case No. 00-1553.
On October 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Ha
rassment Suit.[9] He claimed that the complaint is a mere nuisance or harassment
suit and should, according to the Interim Rules of Procedure for Intra-Corporat
e Controversies, be dismissed; and that it is not a bona fide
REMLAW Page 269

Rules of Procedure for Intra-Corporate Controversies, be dismissed; and that it

is not a bona fide derivative suit as it partakes of the nature of a petition fo
r the settlement of estate of the deceased Anastacia that is outside the jurisdi
ction of a special commercial court. The RTC, in its Order dated November 29, 20
02 (RTC Order), denied the motion in part and declared: A close reading of the C
omplaint disclosed the presence of two (2) causes of action, namely: a) a deriva
tive suit for accounting of the funds and assets of the corporation which are in
the control, custody, and/or possession of the respondent [herein petitioner Os
car] with prayer to appoint a management committee; and b) an action for determi
nation of the shares of stock of deceased spouses Pedro and Anastacia Reyes alle
gedly taken by respondent, its accounting and the corresponding delivery of thes
e shares to the parties brothers and sisters. The latter is not a derivative su
it and should properly be threshed out in a petition for settlement of estate. A
ccordingly, the motion is denied. However, only the derivative suit consisting o
f the first cause of action will be taken cognizance of by this Court.[10]
Oscar thereupon went to the CA on a petition for certiorari, prohibition, and ma
ndamus[11] and prayed that the RTC Order be annulled and set aside and that the
trial court be prohibited from continuing with the proceedings. The appellate co
urt affirmed the RTC Order and denied the petition in its Decision dated May 26,
2004. It likewise denied Oscar s motion for reconsideration in a Resolution dat
ed October 21, 2004.
Petitioner now comes before us on appeal through a petition for review on certio
rari under Rule 45 of the Rules of Court. ASSIGNMENT OF ERRORS
Petitioner Oscar presents the following points as conclusions the CA should have
made: 1. that the complaint is a mere nuisance or harassment suit that should b
e dismissed under the Interim Rules of Procedure of Intra-Corporate Controversie
s; and 2. that the complaint is not a bona fide derivative suit but is in fact i
n the nature of a petition for settlement of estate; hence, it is outside the ju
risdiction of the RTC acting as a special commercial court. Accordingly, he pray
s for the setting aside and annulment of the CA decision and resolution, and the
dismissal of Rodrigo s complaint before the RTC. THE COURT S RULING
We find the petition meritorious.
The core question for our determination is whether the trial court, sitting as a
special commercial court, has jurisdiction over the subject matter of Rodrigo s
complaint. To resolve it, we rely on the judicial principle that "jurisdiction
over the subject matter of a case is conferred by law and is determined by the a
llegations of the complaint, irrespective of whether the plaintiff is entitled t
o all or some of the claims asserted therein."[12] Jurisdiction of Special Comme
rcial Courts
P.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a
special commercial court) exercises exclusive jurisdiction: SECTION 5. In additi
on to the regulatory and adjudicative functions of the Securities and Exchange C
ommission over corporations, partnership, and other forms of associations regist
ered with it as expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases involving: a) Devi
ces or schemes employed by or any acts of the board of directors, business assoc
iates, its officers or partners, amounting to fraud and misrepresentation which
may be detrimental to the interest of the public and/or of the stockholders, par
tners, members of associations or organizations registered with the Commission.
REMLAW Page 270

the Commission. b) Controversies arising out of intra-corporate or partnership r

elations, between and among stockholders, members, or associates; between any or
all of them and the corporation, partnership or association of which they are s
tockholders, members, or associates, respectively; and between such corporation,
partnership or association and the State insofar as it concerns their individua
l franchise or right to exist as such entity; and c) Controversies in the electi
on or appointment of directors, trustees, officers, or managers of such corporat
ions, partnerships, or associations. The allegations set forth in Rodrigo s comp
laint principally invoke Section 5, paragraphs (a) and (b) above as basis for th
e exercise of the RTC s special court jurisdiction. Our focus in examining the a
llegations of the complaint shall therefore be on these two provisions.
Fraudulent Devices and Schemes
The rule is that a complaint must contain a plain, concise, and direct statement
of the ultimate facts constituting the plaintiff s cause of action and must spe
cify the relief sought.[13] Section 5, Rule 8 of the Revised Rules of Court prov
ides that in all averments of fraud or mistake, the circumstances constituting f
raud or mistake must be stated with particularity.[14] These rules find specific
application to Section 5(a) of P.D. No. 902-A which speaks of corporate devices
or schemes that amount to fraud or misrepresentation detrimental to the public
and/or to the stockholders. In an attempt to hold Oscar responsible for corporat
e fraud, Rodrigo alleged in the complaint the following: 3. This is a complaint.
..to determine the shares of stock of the deceased spouses Pedro and Anastacia R
eyes that were arbitrarily and fraudulently appropriated for himself [herein pet
itioner Oscar] which were not collated and taken into account in the partition,
distribution, and/or settlement of the estate of the deceased Spouses Pedro and
Anastacia Reyes, for which he should be ordered to account for all the income fr
om the time he took these shares of stock, and should now deliver to his brother
s and sisters their just and respective shares with the corresponding equivalent
amount of P7,099,934.82 plus interest thereon from 1978 representing his obliga
tions to the Associated Citizens Bank that was paid for his account by his late
mother, Anastacia C. Reyes. This amount was not collated or taken into account
in the partition or distribution of the estate of their late mother, Anastacia C
. Reyes.
3.1. Respondent Oscar C. Reyes, through other schemes of fraud including misrepr
esentation, unilaterally, and for his own benefit, capriciously transferred and
took possession and control of the management of Zenith Insurance Corporation wh
ich is considered as a family corporation, and other properties and businesses b
elonging to Spouses Pedro and Anastacia Reyes.
xxx x
4.1. During the increase of capitalization of Zenith Insurance Corporation, some
time in 1968, the property covered by TCT No. 225324 was illegally and fraudulen
tly used by respondent as a collateral. xxx x
5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme,
the shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of sto
cks and [sic] valued in the corporate books at P7,699,934.28, more or less, excl
uding interest and/or dividends, had been transferred solely in the name of resp
ondent. By such fraudulent manipulations and misrepresentation, the shareholding
s of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] an
d becomes [sic] the majority stockholder of Zenith Insurance Corporation, which
portion of said shares must be distributed equally amongst the brothers and sist
ers of the respondent Oscar C. Reyes including the complainant herein.
REMLAW Page 271

xxx x 9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Rey
es valued at P7,099,934.28 were illegally and fraudulently transferred solely to
the respondent s [herein petitioner Oscar] name and installed himself as a majo
rity stockholder of Zenith Insurance Corporation [and] thereby deprived his brot
hers and sisters of their respective equal shares thereof including complainant
hereto.
xxx x
10.1 By refusal of the respondent to account of his [sic] shareholdings in the c
ompany, he illegally and fraudulently transferred solely in his name wherein [si
c] the shares of stock of the deceased Anastacia C. Reyes [which] must be proper
ly collated and/or distributed equally amongst the children, including the compl
ainant Rodrigo C. Reyes herein, to their damage and prejudice.
xxx x
11.1 By continuous refusal of the respondent to account of his [sic] shareholdin
g with Zenith Insurance Corporation[,] particularly the number of shares of stoc
ks illegally and fraudulently transferred to him from their deceased parents Sps
. Pedro and Anastacia Reyes[,] which are all subject for collation and/or partit
ion in equal shares among their children. [Emphasis supplied.] Allegations of de
ceit, machination, false pretenses, misrepresentation, and threats are largely c
onclusions of law that, without supporting statements of the facts to which the
allegations of fraud refer, do not sufficiently state an effective cause of acti
on.[15] The late Justice Jose Feria, a noted authority in Remedial Law, declared
that fraud and mistake are required to be averred with particularity in order t
o enable the opposing party to controvert the particular facts allegedly constit
uting such fraud or mistake.[16] Tested against these standards, we find that th
e charges of fraud against Oscar were not properly supported by the required fac
tual allegations. While the complaint contained allegations of fraud purportedly
committed by him, these allegations are not particular enough to bring the cont
roversy within the special commercial court s jurisdiction; they are not stateme
nts of ultimate facts, but are mere conclusions of law: how and why the alleged
appropriation of shares can be characterized as "illegal and fraudulent" were no
t explained nor elaborated on. Not every allegation of fraud done in a corporate
setting or perpetrated by corporate officers will bring the case within the spe
cial commercial court s jurisdiction. To fall within this jurisdiction, there mu
st be sufficient nexus showing that the corporation s nature, structure, or powe
rs were used to facilitate the fraudulent device or scheme. Contrary to this con
cept, the complaint presented a reverse situation. No corporate power or office
was alleged to have facilitated the transfer of the shares; rather, Oscar, as an
individual and without reference to his corporate personality, was alleged to h
ave transferred the shares of Anastacia to his name, allowing him to become the
majority and controlling stockholder of Zenith, and eventually, the corporation
s President. This is the essence of the complaint read as a whole and is particu
larly demonstrated under the following allegations: 5. The complainant Rodrigo C
. Reyes discovered that by some manipulative scheme, the shareholdings of their
deceased mother, Doa Anastacia C. Reyes, shares of stocks and *sic+ valued in the
corporate books at P7,699,934.28, more or less, excluding interest and/or divide
nds, had been transferred solely in the name of respondent. By such fraudulent m
anipulations and misrepresentation, the shareholdings of said respondent Oscar C
. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority
stockholder of Zenith Insurance Corporation, which portion of said shares must
be distributed equally amongst the brothers and sisters of the respondent Oscar
C. Reyes including the complainant herein. xxx x
REMLAW Page 272

9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes val
ued at P7,099,934.28 were illegally and fraudulently transferred solely to the r
espondent s [herein petitioner Oscar] name and installed himself as a majority s
tockholder of Zenith Insurance Corporation [and] thereby deprived his brothers a
nd sisters of their respective equal shares thereof including complainant hereto
. [Emphasis supplied.] In ordinary cases, the failure to specifically allege the
fraudulent acts does not constitute a ground for dismissal since such defect ca
n be cured by a bill of particulars. In cases governed by the Interim Rules of P
rocedure on Intra-Corporate Controversies, however, a bill of particulars is a p
rohibited pleading.[17] It is essential, therefore, for the complaint to show on
its face what are claimed to be the fraudulent corporate acts if the complainan
t wishes to invoke the court s special commercial jurisdiction. We note that twi
ce in the course of this case, Rodrigo had been given the opportunity to study t
he propriety of amending or withdrawing the complaint, but he consistently refus
ed. The court s function in resolving issues of jurisdiction is limited to the r
eview of the allegations of the complaint and, on the basis of these allegations
, to the determination of whether they are of such nature and subject that they
fall within the terms of the law defining the court s jurisdiction. Regretfully,
we cannot read into the complaint any specifically alleged corporate fraud that
will call for the exercise of the court s special commercial jurisdiction. Thus
, we cannot affirm the RTC s assumption of jurisdiction over Rodrigo s complaint
on the basis of Section 5(a) of P.D. No. 902-A.[18] Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Court s approach i
n classifying what constitutes an intra-corporate controversy. Initially, the ma
in consideration in determining whether a dispute constitutes an intra-corporate
controversy was limited to a consideration of the intra-corporate relationship
existing between or among the parties.[19] The types of relationships embraced u
nder Section 5(b), as declared in the case of Union Glass & Container Corp. v. S
EC,[20] were as follows: a) between the corporation, partnership, or association
and the public; b) between the corporation, partnership, or association and its
stockholders, partners, members, or officers;
c) between the corporation, partnership, or association and the State as far as
its franchise, permit or license to operate is concerned; and d) among the stock
holders, partners, or associates themselves. [Emphasis supplied.]
The existence of any of the above intra-corporate relations was sufficient to co
nfer jurisdiction to the SEC, regardless of the subject matter of the dispute. T
his came to be known as the relationship test.
However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve,
Inc.,[21]the Court introduced the nature of the controversy test. We declared in
this case that it is not the mere existence of an intra-corporate relationship
that gives rise to an intra-corporate controversy; to rely on the relationship t
est alone will divest the regular courts of their jurisdiction for the sole reas
on that the dispute involves a corporation, its directors, officers, or stockhol
ders. We saw that there is no legal sense in disregarding or minimizing the valu
e of the nature of the transactions which gives rise to the dispute.
Under the nature of the controversy test, the incidents of that relationship mus
t also be considered for the purpose of ascertaining whether the controversy its
elf is intra-corporate.[22] The controversy must not only be rooted in the exist
ence of an intra-corporate relationship, but must as well pertain to the enforce
ment of the parties correlative rights and obligations under the Corporation Co
de and the internal and intra-corporate regulatory rules of the corporation. If
the relationship and its incidents are merely incidental to the controversy or i
f there will still be conflict even if the relationship does not exist, then no
intra-corporate controversy exists.
REMLAW Page 273

exist, then no intra-corporate controversy exists.

The Court then combined the two tests and declared that jurisdiction should be d
etermined by considering not only the status or relationship of the parties, but
also the nature of the question under controversy.[23] This two-tier test was a
dopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:[24] T
o determine whether a case involves an intra-corporate controversy, and is to be
heard and decided by the branches of the RTC specifically designated by the Cou
rt to try and decide such cases, two elements must concur: (a) the status or rel
ationship of the parties; and (2) the nature of the question that is the subject
of their controversy.
The first element requires that the controversy must arise out of intra-corporat
e or partnership relations between any or all of the parties and the corporation
, partnership, or association of which they are stockholders, members or associa
tes; between any or all of them and the corporation, partnership, or association
of which they are stockholders, members, or associates, respectively; and betwe
en such corporation, partnership, or association and the State insofar as it con
cerns their individual franchises. The second element requires that the dispute
among the parties be intrinsically connected with the regulation of the corporat
ion. If the nature of the controversy involves matters that are purely civil in
character, necessarily, the case does not involve an intra-corporate controversy
. Given these standards, we now tackle the question posed for our determination
under the specific circumstances of this case: Application of the Relationship T
est Is there an intra-corporate relationship between the parties that would char
acterize the case as an intracorporate dispute?
We point out at the outset that while Rodrigo holds shares of stock in Zenith, h
e holds them in two capacities: in his own right with respect to the 4,250 share
s registered in his name, and as one of the heirs of Anastacia Reyes with respec
t to the 136,598 shares registered in her name. What is material in resolving th
e issues of this case under the allegations of the complaint is Rodrigo s intere
st as an heir since the subject matter of the present controversy centers on the
shares of stocks belonging to Anastacia, not on Rodrigo s personally-owned shar
es nor on his personality as shareholder owning these shares. In this light, all
reference to shares of stocks in this case shall pertain to the shareholdings o
f the deceased Anastacia and the parties interest therein as her heirs.
Article 777 of the Civil Code declares that the successional rights are transmit
ted from the moment of death of the decedent. Accordingly, upon Anastacia s deat
h, her children acquired legal title to her estate (which title includes her sha
reholdings in Zenith), and they are, prior to the estate s partition, deemed coowners thereof.[25] This status as co-owners, however, does not immediately and
necessarily make them stockholders of the corporation. Unless and until there is
compliance with Section 63 of the Corporation Code on the manner of transferrin
g shares, the heirs do not become registered stockholders of the corporation. Se
ction 63 provides: Section 63. Certificate of stock and transfer of shares. - Th
e capital stock of stock corporations shall be divided into shares for which cer
tificates signed by the president or vice-president, countersigned by the secret
ary or assistant secretary, and sealed with the seal of the corporation shall be
issued in accordance with the by-laws. Shares of stock so issued are personal p
roperty and may be transferred by delivery of the certificate or certificates in
dorsed by the owner or his attorney-in-fact or other person legally authorized t
o make the transfer. No transfer, however, shall be valid, except as between the
parties, until the transfer is recorded in the books of the corporation so as t
o show the names of the parties to the transaction, the date of the transfer, th
e number of the certificate or certificates, and the number of shares transferre
d. [Emphasis supplied.] No shares of stock against which the corporation holds a
ny unpaid claim shall be transferable in the books of the corporation.
REMLAW Page 274

Simply stated, the transfer of title by means of succession, though effective an

d valid between the parties involved (i.e., between the decedent s estate and he
r heirs), does not bind the corporation and third parties. The transfer must be
registered in the books of the corporation to make the transfereeheir a stockhol
der entitled to recognition as such both by the corporation and by third parties
.[26] We note, in relation with the above statement, that in Abejo v. Dela Cruz[
27] and TCL Sales Corporation v. Court of Appeals[28] we did not require the reg
istration of the transfer before considering the transferee a stockholder of the
corporation (in effect upholding the existence of an intra-corporate relation b
etween the parties and bringing the case within the jurisdiction of the SEC as a
n intra-corporate controversy). A marked difference, however, exists between the
se cases and the present one. In Abejo and TCL Sales, the transferees held defin
ite and uncontested titles to a specific number of shares of the corporation; af
ter the transferee had established prima facie ownership over the shares of stoc
ks in question, registration became a mere formality in confirming their status
as stockholders. In the present case, each of Anastacia s heirs holds only an un
divided interest in the shares. This interest, at this point, is still inchoate
and subject to the outcome of a settlement proceeding; the right of the heirs to
specific, distributive shares of inheritance will not be determined until all t
he debts of the estate of the decedent are paid. In short, the heirs are only en
titled to what remains after payment of the decedent s debts;[29] whether there
will be residue remains to be seen. Justice Jurado aptly puts it as follows: No
succession shall be declared unless and until a liquidation of the assets and de
bts left by the decedent shall have been made and all his creditors are fully pa
id. Until a final liquidation is made and all the debts are paid, the right of t
he heirs to inherit remains inchoate. This is so because under our rules of proc
edure, liquidation is necessary in order to determine whether or not the deceden
t has left any liquid assets which may be transmitted to his heirs.[30] [Emphasi
s supplied.] Rodrigo must, therefore, hurdle two obstacles before he can be cons
idered a stockholder of Zenith with respect to the shareholdings originally belo
nging to Anastacia. First, he must prove that there are shareholdings that will
be left to him and his co-heirs, and this can be determined only in a settlement
of the decedent s estate. No such proceeding has been commenced to date. Second
, he must register the transfer of the shares allotted to him to make it binding
against the corporation. He cannot demand that this be done unless and until he
has established his specific allotment (and prima facie ownership) of the share
s. Without the settlement of Anastacia s estate, there can be no definite partit
ion and distribution of the estate to the heirs. Without the partition and distr
ibution, there can be no registration of the transfer. And without the registrat
ion, we cannot consider the transferee-heir a stockholder who may invoke the exi
stence of an intra-corporate relationship as premise for an intra-corporate cont
roversy within the jurisdiction of a special commercial court. In sum, we find t
hat - insofar as the subject shares of stock (i.e., Anastacia s shares) are conc
erned Rodrigo cannot be considered a stockholder of Zenith. Consequently, we can
not declare that an intracorporate relationship exists that would serve as basis
to bring this case within the special commercial court s jurisdiction under Sec
tion 5(b) of PD 902-A, as amended. Rodrigo s complaint, therefore, fails the rel
ationship test.
Application of the Nature of Controversy Test
The body rather than the title of the complaint determines the nature of an acti
on.[31] Our examination of the complaint yields the conclusion that, more than a
nything else, the complaint is about the protection and enforcement of successio
nal rights. The controversy it presents is purely civil rather than corporate, a
lthough it is denominated as a "complaint for accounting of all corporate funds
and assets." Contrary to the findings of both the trial and appellate courts, we
read only one cause of action alleged in the complaint. The "derivative suit fo
r accounting of the funds and assets of the corporation which are in the control
, custody, and/or possession of the respondent [herein petitioner Oscar]" does n
ot constitute a separate cause of action but is, as correctly claimed by Oscar,

only an incident to the "action

REMLAW Page 275

constitute a separate cause of action but is, as correctly claimed by Oscar, onl
y an incident to the "action for determination of the shares of stock of decease
d spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accountin
g and the corresponding delivery of these shares to the parties brothers and si
sters." There can be no mistake of the relationship between the "accounting" men
tioned in the complaint and the objective of partition and distribution when Rod
rigo claimed in paragraph 10.1 of the complaint that: 10.1 By refusal of the res
pondent to account of [sic] his shareholdings in the company, he illegally and f
raudulently transferred solely in his name wherein [sic] the shares of stock of
the deceased Anastacia C. Reyes [which] must be properly collated and/or distrib
uted equally amongst the children including the complainant Rodrigo C. Reyes her
ein to their damage and prejudice. We particularly note that the complaint conta
ined no sufficient allegation that justified the need for an accounting other th
an to determine the extent of Anastacia s shareholdings for purposes of distribu
tion. Another significant indicator that points us to the real nature of the com
plaint are Rodrigo s repeated claims of illegal and fraudulent transfers of Anas
tacia s shares by Oscar to the prejudice of the other heirs of the decedent; he
cited these allegedly fraudulent acts as basis for his demand for the collation
and distribution of Anastacia s shares to the heirs. These claims tell us unequi
vocally that the present controversy arose from the parties relationship as hei
rs of Anastacia and not as shareholders of Zenith. Rodrigo, in filing the compla
int, is enforcing his rights as a co-heir and not as a stockholder of Zenith. Th
e injury he seeks to remedy is one suffered by an heir (for the impairment of hi
s successional rights) and not by the corporation nor by Rodrigo as a shareholde
r on record. More than the matters of injury and redress, what Rodrigo clearly a
ims to accomplish through his allegations of illegal acquisition by Oscar is the
distribution of Anastacia s shareholdings without a prior settlement of her est
ate - an objective that, by law and established jurisprudence, cannot be done. T
he RTC of Makati, acting as a special commercial court, has no jurisdiction to s
ettle, partition, and distribute the estate of a deceased. A relevant provision
- Section 2 of Rule 90 of the Revised Rules of Court - that contemplates propert
ies of the decedent held by one of the heirs declares: Questions as to advanceme
nt made or alleged to have been made by the deceased to any heir may be heard an
d determined by the court having jurisdiction of the estate proceedings; and the
final order of the court thereon shall be binding on the person raising the que
stions and on the heir. [Emphasis supplied.] Worth noting are this Court s state
ments in the case of Natcher v. Court of Appeals:[32]
Matters which involve settlement and distribution of the estate of the decedent
fall within the exclusive province of the probate court in the exercise of its l
imited jurisdiction. xxx x It is clear that trial courts trying an ordinary acti
on cannot resolve to perform acts pertaining to a special proceeding because it
is subject to specific prescribed rules. [Emphasis supplied.] That an accounting
of the funds and assets of Zenith to determine the extent and value of Anastaci
a s shareholdings will be undertaken by a probate court and not by a special com
mercial court is completely consistent with the probate court s limited jurisdic
tion. It has the power to enforce an accounting as a necessary means to its auth
ority to determine the properties included in the inventory of the estate to be
administered, divided up, and distributed. Beyond this, the determination of tit
le or ownership over the subject shares (whether belonging to Anastacia or Oscar
) may be conclusively settled by the probate court as a question of collation or
advancement. We had occasion to recognize the court s authority to act on quest
ions of title or ownership in a collation or advancement situation in Coca v. Pa
ngilinan[33] where we ruled: It should be clarified that whether a particular ma
tter should be resolved by the Court of First Instance in the exercise of its ge
neral jurisdiction or of its limited probate jurisdiction is in reality not a ju
risdictional question. In essence, it is a procedural question involving a mode
of practice "which may be waived."
As a general rule, the question as to title to property should not be passed upo
n in the testate or intestate proceeding. That question should be ventilated in

a separate action. That general rule has

REMLAW Page 276

intestate proceeding. That question should be ventilated in a separate action. T

hat general rule has qualifications or exceptions justified by expediency and co
nvenience. Thus, the probate court may provisionally pass upon in an intestate o
r testate proceeding the question of inclusion in, or exclusion from, the invent
ory of a piece of property without prejudice to its final determination in a sep
arate action. Although generally, a probate court may not decide a question of t
itle or ownership, yet if the interested parties are all heirs, or the question
is one of collation or advancement, or the parties consent to the assumption of
jurisdiction by the probate court and the rights of third parties are not impair
ed, the probate court is competent to decide the question of ownership. [Citatio
ns omitted. Emphasis supplied.] In sum, we hold that the nature of the present c
ontroversy is not one which may be classified as an intra-corporate dispute and
is beyond the jurisdiction of the special commercial court to resolve. In short,
Rodrigo s complaint also fails the nature of the controversy test.
DERIVATIVE SUIT
Rodrigo s bare claim that the complaint is a derivative suit will not suffice to
confer jurisdiction on the RTC (as a special commercial court) if he cannot com
ply with the requisites for the existence of a derivative suit. These requisites
are: a. the party bringing suit should be a shareholder during the time of the
act or transaction complained of, the number of shares not being material; b. th
e party has tried to exhaust intra-corporate remedies, i.e., has made a demand o
n the board of directors for the appropriate relief, but the latter has failed o
r refused to heed his plea; and c. the cause of action actually devolves on the
corporation; the wrongdoing or harm having been or being caused to the corporati
on and not to the particular stockholder bringing the suit. [34] Based on these
standards, we hold that the allegations of the present complaint do not amount t
o a derivative suit.
First, as already discussed above, Rodrigo is not a shareholder with respect to
the shareholdings originally belonging to Anastacia; he only stands as a transfe
ree-heir whose rights to the share are inchoate and unrecorded. With respect to
his own individually-held shareholdings, Rodrigo has not alleged any individual
cause or basis as a shareholder on record to proceed against Oscar.
Second, in order that a stockholder may show a right to sue on behalf of the cor
poration, he must allege with some particularity in his complaint that he has ex
hausted his remedies within the corporation by making a sufficient demand upon t
he directors or other officers for appropriate relief with the expressed intent
to sue if relief is denied.[35] Paragraph 8 of the complaint hardly satisfies th
is requirement since what the rule contemplates is the exhaustion of remedies wi
thin the corporate setting: 8. As members of the same family, complainant Rodrig
o C. Reyes has resorted [to] and exhausted all legal means of resolving the disp
ute with the end view of amicably settling the case, but the dispute between the
m ensued. Lastly, we find no injury, actual or threatened, alleged to have been
done to the corporation due to Oscar s acts. If indeed he illegally and fraudule
ntly transferred Anastacia s shares in his own name, then the damage is not to t
he corporation but to his co-heirs; the wrongful transfer did not affect the cap
ital stock or the assets of Zenith. As already mentioned, neither has Rodrigo al
leged any particular cause or wrongdoing against the corporation that he can cha
mpion in his capacity as a shareholder on record.[36] In summary, whether as an
individual or as a derivative suit, the RTC - sitting as special commercial cour
t - has no jurisdiction to hear Rodrigo s complaint since what is involved is th
e determination and distribution of successional rights to the shareholdings of
Anastacia Reyes. Rodrigo s proper remedy, under the circumstances, is to institu
te a special proceeding for the settlement of the estate of the deceased Anastac
ia Reyes, a move that is not foreclosed by the dismissal of his present complain
t.
REMLAW Page 277

deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his
present complaint.
WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court of
Appeals dated May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the Re
gional Trial Court, Branch 142, Makati, docketed as Civil Case No. 00-1553, is o
rdered DISMISSED for lack of jurisdiction.
Pasted from <file:///C:\Users\Charisse\AppData\Local\Temp\Rar$DI25.501\reyes%20v
%20rtc.docx>
REMLAW Page 278

Rural Bank of Seven Lakes v. Dan GR 174109 Dec 24, 2008;

Sunday, November 14, 2010 11:32 PM
RURAL BANK OF THE SEVEN LAKES (S.P.C.), Inc., petitioner, vs. BELEN A. DAN, resp
ondent. DECIS ION CHICO-NAZARIO, J.: Before this Court is a Petition for Review
on Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner R
ural Bank of the Seven Lakes (RBSL), seeking to reverse and set aside the Decisi
on1 dated 21 October 2002 and its Resolution2 dated 7 August 2006 of the Court o
f Appeals in CA-G.R. SP No. 59193. In its assailed Decision, the appellate court
reversed the Decision3 dated 9 May 2000 of the Securities and Exchange Commissi
on (SEC) en banc, which upheld the dismissal by the SEC Hearing Officer of SEC C
ase No. 03-99-6229, instituted by respondent Belen A. Dan (Dan), for failure to
prosecute. The factual and procedural antecedents of this instant Petition are a
s follows: RBSL is a domestic corporation duly authorized by the Central Bank of
the Philippines to engage in the banking business. In 1975, Dan was employed by
RBSL as an assistant bookkeeper. She rose from the ranks and, in 1982, she was
appointed bank manager by the RBSL Board of Directors.4 Sometime in 1998, RBSL d
iscovered that Dan committed unsound banking practices, which included the grant
ing of loans to herself, her relatives, and close friends. Accordingly, Dan was
charged with the following offenses: (a) violation of Section 5 of Republic Act
No. 7353;5 (b) loss of confidence; (c) serious misconduct; (d) willful disobedie
nce to the lawful order of the employer; (e) willful breach of trust; and (f) in
competence. On 30 September 1998, Dan was preventively suspended from employment
by the RBSL pending the investigation of the charges against her. After the hea
ring held before the RBSL, Dan was determined to have committed the offenses cha
rged. Consequently, Dans appointment as bank manager was revoked by the RBSL Boar
d of Directors through Board Resolution No. 1998-127 dated 10 November 1998.6 On
4 March 1999, Dan filed a Petition7 before the SEC, docketed as SEC Case No. 03
-99-6229, praying, inter alia, for the nullification of (a) her preventive suspe
nsion and (b) the revocation of her appointment as bank manager; as well as the
payment of her backwages and moral and exemplary damages. During the pendency of
SEC Case No. 03-99-6229, Dan instituted an action for damages against RBSL befo
re the Regional Trial Court (RTC) of San Pablo City, Branch 32, docketed as Civi
l Case SP No. 5734-2000. In her Complaint in said civil case, Dan alleged that s
he suffered serious anxiety as a result of her wrongful separation from employme
nt by RBSL. RBSL filed a motion to dismiss Civil Case SP No. 5734-2000 on the gr
ound of forum shopping, averring that the said case was based exactly on the sam
e cause of action as that in SEC Case No. 03-99-6229 pending before the SEC, nam
ely, the wrongful termination of Dans employment. The RTC, in its Order dated 4 S
eptember 2000, granted the motion of RBSL and dismissed Civil Case SP No. 5734-2
000. The RTC denied Dans Motion for Reconsideration in an Order dated 3 December
2000. Dan challenged the RTC Orders dated 4 September 2000 and 3 December 2000,
dismissing Civil Case SP No. 5734-2000, in her appeal before the Court of Appeal
s.8 In the meantime, the SEC Hearing Officer called SEC Case No. 03-99-6229 for
hearing on 3 November 1999, but Dan failed to appear on the said date.9 Thus, th
e SEC Hearing Officer was prompted to reset the hearing to 29 November 1999, wit
h a warning that should Dan again fail to appear on the date set, the SEC Hearin
g Officer would already be constrained to dismiss the case.10 On 24 November 199
9, Dans counsel filed an Urgent Motion for Cancellation of the 29 November 1999 h
earing, since he had another hearing scheduled on the same date. In an Order11 d
ated 24 November 1999, the SEC Hearing Officer granted the motion and reset the
hearing to 6 December 1999, with a stern warning that he would no longer enterta
in further postponement. Notwithstanding the explicit warning of the SEC Hearing
Officer, Dans counsel still failed to attend the hearing set on 6 December 1999,
finally causing the Hearing Officer to dismiss SEC Case No. 03-99-6229 for fail
ure to prosecute.12
REMLAW Page 279

the Hearing Officer to dismiss SEC Case No. 03-99-6229 for failure to prosecute.
12 On appeal, the SEC en banc rendered its Decision13 dated 9 May 2000, affirmin
g the Order dated 6 December 1999 of the SEC Hearing Officer, which dismissed SE
C Case No. 03-99-6229 for non-suit. Unyielding, Dan filed before the Court of Ap
peals a Petition for Review14 under Rule 43 of the Revised Rules of Court assail
ing the Decision dated 9 May 2000 of the SEC en banc. Dan invoked in her Petitio
n equitable justice to justify her counsels several postponements of the hearing
before the SEC Hearing Officer. Dan urged the appellate court to afford her ampl
e opportunity to fully ventilate her side of the controversy, in consonance with
the Constitutional dicta on due process; and not dispose of her case on technic
ality. Dan also argued that the issue involving the postponements of the hearing
was rendered moot and academic, considering the issuance by the SEC Hearing Off
icer, with the conformity of RBSL, of the orders granting her counsels motions fo
r postponement. Lastly, Dan asserted that the failure of her counsel to appear o
n the hearing scheduled on 6 December 1999 constituted gross and inexcusable neg
lect which should not bind her.15 In response, the RBSL underscored the procedur
al lapses flagrantly committed by Dan. RBSL alleged that Dan violated the rule a
gainst forum shopping by stating in her Complaint in Civil Case SP No. 5734-2000
before the RTC, that she had no knowledge of the pendency of any action involvi
ng the same party and the same subject matter, despite her prior institution of
SEC Case No. 03-99-6229 before the SEC. RBSL also pointed out that Dans appeal be
fore the SEC En Banc lacked verification as required by Section 2, Rule II of th
e 1999 SEC Rules of Procedure. Aside from these procedural flaws, RBSL further c
ontended that, in repeatedly disregarding the hearings set in SEC Case No. 03-99
-6229, Dan only showed that she was not interested in prosecuting the case.16 On
21 October 2002, the Court of Appeals promulgated its Decision17 in favor of Da
n, thus, reversing the Decision dated 9 May 2000 of the SEC en banc. According t
o the appellate court, the rules of procedure should be viewed as mere tools des
igned to facilitate the attainment of justice. Their strict and rigid applicatio
n, which would result in technicalities that tend to frustrate rather than promo
te substantial justice, must always be avoided. In the highest interest of justi
ce and equity, the Court of Appeals directed the SEC Hearing Officer to allow Da
n to complete the presentation of her evidence. The Motion for Reconsideration o
f RBSL was denied by the Court of Appeals in its Resolution18 dated 7 August 200
6. Hence, this instant Petition for Review on Certiorari19 filed by RBSL assigni
ng the following errors: I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN R
ULING THAT [DAN] HAD NOT VIOLATED THE RULE AGAINST FORUM-SHOPPING. II. THE COURT
OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT THE REQUIREMENT OF A VERI
FICATION IN APPEALS BEFORE THE SEC CAN BE RELAXED. III. THE COURT OF APPEALS COM
MITTED REVERSIBLE ERROR IN DISREGARDING *DANS+ FAILURE TO PROSECUTE HER CASE. RBS
L accuses Dan of forum shopping in instituting SEC Case No. 03-99-6229 before th
e SEC and Civil Case SP No. 5734-2000 before the RTC. RBSL alleged that Dan had
trifled with the courts and abused their processes by improperly instituting sev
eral cases from the same cause of action. Forum shopping is a deplorable practic
e of litigants of resorting to two different fora for the purpose of obtaining t
he same relief, to increase his or her chances of obtaining a favorable judgment
. What is pivotal to consider in determining whether forum shopping exists or no
t is the vexation caused to the courts and the parties-litigants by a person who
asks appellate courts and/or administrative entities to rule on the same relate
d causes and/or to grant the same or substantially the same relief, in the proce
ss creating the possibility of conflicting decisions by the different courts or
fora upon the same issues.20 The grave evil sought to be avoided by the rule aga
inst forum shopping is the rendition by two competent tribunals of two separate,
and contradictory decisions. Unscrupulous party litigants, taking advantage of
a variety of competent tribunals, may repeatedly try their luck in several diffe
rent fora until a favorable result is reached. To avoid the resultant confusion,
this Court adheres strictly to the rules against forum shopping, and any violat
ion of these rules results in the dismissal of a case.21 To stamp out this abomi
nable practice which seriously impairs the efficient administration of justice,
this Court promulgated Administrative Circulars No. 28-91 and No. 04-94, which a

re now embodied as
REMLAW Page 280

Court promulgated Administrative Circulars No. 28-91 and No. 04-94, which are no
w embodied as Section 5, Rule 7 of the Rules of Court, which reads: SEC. 5. Cert
ification against forum shopping. The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed the
rewith: (a) that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial agency and, t
o the best of his knowledge, no such other action or claim is pending therein; (
b) if there is such other pending action or claim, a complete statement of the p
resent status thereof; and (c) if he should thereafter learn that the same or si
milar action or claim has been filed or is pending, he shall report that fact wi
thin five (5) days therefrom to the court wherein his aforesaid complaint or ini
tiatory pleading has been filed. Failure to comply with the foregoing requiremen
ts shall not be curable by mere amendment of the complaint or other initiatory p
leading but shall be cause for the dismissal of the case without prejudice, unle
ss otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall const
itute indirect contempt of court, without prejudice to the corresponding adminis
trative and criminal actions. If the acts of the party or his counsel clearly co
nstitute willful and deliberate forum shopping, the same shall be ground for sum
mary dismissal with prejudice and shall constitute direct contempt, as well as a
cause for administrative sanctions. The test for determining the existence of f
orum shopping is whether the elements of litis pendentia are present, or whether
a final judgment in one case amounts to res judicata in another. Thus, there is
forum shopping when the following elements are present: (a) identity of parties
, or at least such parties as represent the same interests in both actions; (b)
identity of rights asserted and relief prayed for, the relief being founded on t
he same facts; and (c) the identity of the two preceding particulars, such that
any judgment rendered in the other action will, regardless of which party is suc
cessful, amount to res judicata in the action under consideration; said requisit
es are also constitutive of the requisites for auter action pendant or lis pende
ns.22 The Court holds that the afore-mentioned requisites are all present in the
instant case. First, the parties in SEC Case No. 03-99-6229 and Civil Case No.
SP No. 5734-2000 are the same, no other than Dan and RBSL. Second, there is also
the identity of rights asserted and reliefs prayed for in these two cases. Dans
Complaint in Civil Case No. SP No. 5734-2000 before the RTC was for the payment
of moral damages and litigation expenses premised on the alleged wrongful revoca
tion of her appointment as bank manager of RBSL. While the primary relief sought
by Dan in filing SEC Case No. 03-99-6229 was for the nullification of the revoc
ation of her appointment as bank manage of RBSL, she also prayed in the same Pet
ition for the payment of the moral damages she suffered by reason thereof. Unden
iably, the damages Dan seeks to recover in these two cases arose from the same s
et of facts and a singular cause of action: the purportedly unjust revocation of
her appointment as bank manager of RBSL. And thirdly, a judgment rendered in ei
ther SEC Case No. 03-99-6229 and Civil Case No. SP No. 5734-2000 shall constitut
e res judicata on the other. Before they could award the moral damages Dan praye
d for, both the SEC and the RTC must first resolve the issue of whether the revo
cation of Dans appointment was valid. Should the SEC determine that the revocatio
n of Dans appointment was proper and, consequently, refuse to award moral damages
, then the RTC would be bound thereby and could not render a contrary ruling on
the very same issue. Dismissal of the case and contempt is the inevitable conseq
uence of Dans violation of the prohibition against forum shopping. As discussed i
n Sps. Ong v. Court of Appeals23: The distinction between the prohibition agains
t forum shopping and the certification requirement should by now be too elementa
ry to be misunderstood. To reiterate, compliance with the certification against
forum shopping is separate from and independent of the avoidance of the act of f
orum shopping itself. There is a difference in the treatment between failure to
comply with the certification requirement and violation of the prohibition again
st forum shopping not only in terms of imposable sanctions but also in the manne
r of enforcing them. The former constitutes sufficient cause for the dismissal w

ithout prejudice of the complaint or initiatory pleading upon motion and after h
earing, while the latter is a ground for summary dismissal thereof and for direc
t contempt. x x x. (Emphasis supplied.) Dan committed another procedural faux pa
s in filing an appeal before the SEC en banc without the required verification.
REMLAW Page 281

required verification. The SEC Rules of Procedure on verification under Section

2, Rule III thereof states: SECTION 2. Verification. All pleadings filed with th
e Commission shall be verified by an affidavit that the affiant has read the ple
ading and the allegations therein are true and correct of his own knowledge and
belief. A pleading which "contains a verification based on information and belie
f," or upon "knowledges, information and belief," or which lacks a proper verifi
cation, shall be treated as an unsigned pleading and shall not be considered as
filed. It is not controverted that Dans appeal was not verified at all. The Court
of Appeals, however, held that the absence of verification in Dans appeal before
the SEC en banc is excusable and does not warrant the dismissal of the same. Ec
hoing the ruling of the appellate court, Dan pleads for the liberal interpretati
on of the procedural rules in the interest of substantial justice. The Court is
not persuaded. The Court cannot sanction Dans utter disregard of procedural rules
. It must be emphasized that procedural rules are designed to facilitate the adj
udication of cases. Courts and litigants alike are enjoined to abide strictly by
the rules. While in certain instances, the Court allows a relaxation in the app
lication of the rules, it never intends to forge a weapon for erring litigants t
o violate the rules with impunity. The liberal interpretation and application of
rules apply only in proper cases of demonstrable merit and under justifiable ca
uses and circumstances. While it is true that litigation is not a game of techni
calities, it is equally true that every case must be prosecuted in accordance wi
th the prescribed procedure to ensure an orderly and speedy administration of ju
stice. Party litigants and their counsel are well advised to abide by, rather th
an flaunt, procedural rules, for these rules illumine the path of the law and ra
tionalize the pursuit of justice.24 It is this symbiosis between form and substa
nce that guarantees that discernible result.25 The use of the words "substantial
justice" is not a magic wand that will automatically compel this Court to suspe
nd procedural rules. Procedural rules are not to be belittled or dismissed, simp
ly because their non-observance may have resulted in prejudice to a partys substa
ntive rights. Like all rules, they are required to be followed except only for t
he 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 com
plying with the procedure prescribed.26 Thus, as called upon by the respondents,
the Court yields to the time-honored principle "Justice is for all." Litigants
must have equal footing in a court of law; the rules are laid down for the benef
it of all and should not be made dependent upon a suitors sweet time and own bidd
ing.27 Considering the circumstances in the instant case, the Court finds no jus
tification for the relaxation of the procedural rules. Other than invoking the C
ourts liberality, Dan miserably failed to give any reason for her failure to comp
ly with the procedural requirement of submitting a verification with her appeal
to the SEC en banc. Without a valid explanation, the Court cannot be expected to
be liberal or indulgent. Finally, the Court finds that the Court of Appeals err
ed in pronouncing that the dismissal of SEC Case No. 03-99-6229 for failure to p
rosecute by the SEC Hearing Officer, as affirmed by the SEC en banc, was unjusti
fied. It cannot sustain the reasoning of the appellate court that the postponeme
nts of the hearing were not intended to delay the proceedings before the SEC and
caused no substantial prejudice to RBSL. To the contrary, this Court sees no fa
ult on the part of the SEC Hearing Officer when it finally decided to dismiss SE
C Case No. 03-99-6229 after the repeated non-appearance of Dan and/or her counse
l on the scheduled dates for the hearing of her case. The true test for the exer
cise of the power to dismiss a case on the ground of failure to prosecute is whe
ther, under the prevailing circumstances, the plaintiff is culpable for want of
due diligence in failing to proceed with reasonable promptitude. 28 It must be r
ecalled that the hearing of SEC Case No. 03-99-6229 was originally set on 3 Nove
mber 1999. It was reset to 24 November 1999 for non-appearance of Dans counsel. H
owever, the hearing was postponed again upon motion of Dans counsel, who already
had another hearing scheduled on the same date; hence, the hearing was moved to
6 December 1999. Despite the fact that the hearing was reset on her account, Dans
counsel still failed to appear before the Hearing Officer on 6 December 1999. N
either Dan nor her counsel provided an explanation for their latest absence. The

se events demonstrate a total lack of regard and respect for the proceedings tak
ing place before the SEC on the part of Dan and her counsel. Dan blames her coun
sel for being negligent in handling her case before SEC Case No. 03-99-6229.
REMLAW Page 282

Dan blames her counsel for being negligent in handling her case before SEC Case
No. 03-99-6229. However, other than her counsels failure to attend the scheduled
hearings, Dan did not allege or present evidence demonstrative of her counsels gr
oss or inexcusable negligence, sufficient to release her from the binding effect
s of her counsels acts. It is a well-settled rule that a client is bound by his c
ounsels conduct, negligence, and mistakes in handling the case; the client cannot
be heard to complain that the result might have been different had his lawyer p
roceeded differently.29 The only exception to the general rule -- that a client
is bound by the mistakes of his counsel -- which this Court finds acceptable is
when the reckless or gross negligence of counsel deprives the client of due proc
ess of law, or when the application of the rule results in the outright deprivat
ion of ones property through a technicality.30 None of the exceptions exist in th
e instant case. Moreover, Dan herself is guilty of some measure of negligence. I
f only she kept herself updated as to the developments in SEC Case No. 03-99-622
9, she would have come to know that there had already been several postponements
of the hearings therein. She could have reminded and/or demanded of her counsel
to give due attention to her case and to attend the next hearing set. It must b
e stressed that a plaintiff is bound to prosecute his complaint with assiduousne
ss. Plaintiff is obliged to give the necessary assistance to his counsel, as his
interest in the outcome of the case is at stake.31 Failure to do so would justi
fy the dismissal of the case.32 It is wrong for plaintiff to expect that all he
needs to do is sit back, relax and await a favorable outcome.33 The actuations o
f Dan and her counsel concerning SEC Case No. 02-99-6229 are replete with neglig
ence, laxity, and truancy, which justify the dismissal of the said case. The evi
dent complacency, if not delinquency, of Dan and her counsel in SEC Case No. 0299-6229 does not merit the Courts sympathy and consideration. For failure to dili
gently pursue her Petition in SEC Case No. 02-99-6229, Dan violated the right of
RBSL to speedy trial. She also sorely tried the patience of the administrative
agency and wasted its precious time and attention. And given the foregoing findi
ng of this Court of negligence and fault on the part of Dan herself, Dan cannot
seek protection behind the protective veil of equity in consonance with the basi
c principle in law that he who comes to court must come with clean hands.34 A fi
nal word. Equitable relief is not the supremacy but the entitlement of due proce
ss previously denied the litigant.35 There was no denial of due process in the i
nstant case that would warrant us to restore a right that was already lost upon
the initiative and fault of Dan. WHEREFORE, in view of the foregoing, the instan
t Petition is GRANTED. The Decision dated 21 October 2002 and Resolution dated 7
August 2006 of the Court of Appeals in CA-G.R. SP No. 59193 are REVERSED and SE
T ASIDE. The Decision of the Securities and Exchange Commission en banc, dated 9
May 2000, affirming the dismissal of SEC Case No. 03-99-6229, is hereby REINSTA
TED. No costs. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2008/dec2008/gr_174109_2008.htm
l>
REMLAW Page 283

?Ceroferr v. CA 376 SCRA 144

Sunday, November 14, 2010 11:32 PM
Moreover, a defendant who moves to dismiss the complaint on the ground of lack o
f cause of action hypothetically admits all the averments thereof. The test of s
ufficiency of the facts found in a complaint as constituting a cause of action i
s whether or not admitting the facts alleged the court can render a valid judgme
nt upon the same in accordance with the prayer thereof. The hypothetical admissi
on extends to the relevant and material facts well pleaded in the complaint and
inferences fairly deducible therefrom. Hence, if the allegations in the complain
t furnish sufficient basis by which the complaint can be maintained, the same sh
ould not be dismissed regardless of the defense that may be assessed by the defe
ndants.
Pasted from <http://www.lawphil.net/judjuris/juri2002/aug2002/gr_129017_2002.htm
l>
REMLAW Page 284

?Camarines Sur Electric v. Aquino GR 167691 Sep 23, 2008

Sunday, November 14, 2010 11:32 PM
REMLAW Page 285

Vinzons-Chato v. Fortune GR 141309 Dec 23, 2008

Sunday, November 14, 2010 11:34 PM
LIWAYWAY VINZONS-CHATO, petitioner, vs. FORTUNE TOBACCO CORPORATION, respondent.
RESOLUTION NACHURA, J.: It is a fundamental principle in the law of public offi
cers that a duty owing to the public in general cannot give rise to a liability
in favor of particular individuals.1 The failure to perform a public duty can co
nstitute an individual wrong only when a person can show that, in the public dut
y, a duty to himself as an individual is also involved, and that he has suffered
a special and peculiar injury by reason of its improper performance or non-perf
ormance.2 By this token, the Court reconsiders its June 19, 2007 Decision3 in th
is case. As culled from the said decision, the facts, in brief, are as follows:
On June 10, 1993, the legislature enacted Republic Act No. 7654 (RA 7654), which
took effect on July 3, 1993. Prior to its effectivity, cigarette brands Champi
on," "Hope," and "More" were considered local brands subjected to an ad valorem
tax at the rate of 20-45%. However, on July 1, 1993, or two days before RA 7654
took effect, petitioner issued RMC 37-93 reclassifying "Champion," "Hope," and "
More" as locally manufactured cigarettes bearing a foreign brand subject to the
55% ad valorem tax. RMC 37-93 in effect subjected "Hope," "More," and "Champion"
cigarettes to the provisions of RA 7654, specifically, to Sec. 142, (c)(1) on l
ocally manufactured cigarettes which are currently classified and taxed at 55%,
and which imposes an ad valorem tax of "55% provided that the minimum tax shall
not be less than Five Pesos (P5.00) per pack." On July 2, 1993, at about 5:50 p.
m., BIR Deputy Commissioner Victor A. Deoferio, Jr. sent via telefax a copy of R
MC 37-93 to Fortune Tobacco but it was addressed to no one in particular. On Jul
y 15, 1993, Fortune Tobacco received, by ordinary mail, a certified xerox copy o
f RMC 37-93. On July 20, 1993, respondent filed a motion for reconsideration req
uesting the recall of RMC 37-93, but was denied in a letter dated July 30, 1993.
The same letter assessed respondent for ad valorem tax deficiency amounting to
P9,598,334.00 (computed on the basis of RMC 37-93) and demanded payment within 1
0 days from receipt thereof. On August 3, 1993, respondent filed a petition for
review with the Court of Tax Appeals (CTA), which on September 30, 1993, issued
an injunction enjoining the implementation of RMC 37-93. In its decision dated A
ugust 10, 1994, the CTA ruled that RMC 37-93 is defective, invalid, and unenforc
eable and further enjoined petitioner from collecting the deficiency tax assessm
ent issued pursuant to RMC No. 37-93. This ruling was affirmed by the Court of A
ppeals, and finally by this Court in Commissioner of Internal Revenue v. Court o
f Appeals. It was held, among others, that RMC 37-93, has fallen short of the re
quirements for a valid administrative issuance. On April 10, 1997, respondent fi
led before the RTC a complaint for damages against petitioner in her private cap
acity. Respondent contended that the latter should be held liable for damages un
der Article 32 of the Civil Code considering that the issuance of RMC 37-93 viol
ated its constitutional right against deprivation of property without due proces
s of law and the right to equal protection of the laws. Petitioner filed a motio
n to dismiss contending that: (1) respondent has no cause of action against her
because she issued RMC 37-93 in the performance of her official function and wit
hin the scope of her authority. She claimed that she acted merely as an agent of
the Republic and therefore the latter is the one responsible for her acts; (2)
the complaint states no cause of action for lack of allegation of malice or bad
faith; and (3) the certification against forum shopping was signed by respondent
s counsel in violation of the rule that it is the plaintiff or the principal pa
rty who should sign the same. On September 29, 1997, the RTC denied petitioner s
motion to dismiss holding that to rule on the allegations of petitioner would b
e to prematurely decide the merits of the case without allowing the parties to p
resent evidence. It further held that the defect in the certification against fo
rum shopping was cured by respondent s submission of the corporate secretary s c
ertificate authorizing its counsel to execute the certification against forum sh
opping. x x x x xxx x
REMLAW Page 286

execute the certification against forum shopping. x x x x xxx x The case was ele
vated to the Court of Appeals via a petition for certiorari under Rule 65. Howev
er, same was dismissed on the ground that under Article 32 of the Civil Code, li
ability may arise even if the defendant did not act with malice or bad faith. Th
e appellate court ratiocinated that Section 38, Book I of the Administrative Cod
e is the general law on the civil liability of public officers while Article 32
of the Civil Code is the special law that governs the instant case. Consequently
, malice or bad faith need not be alleged in the complaint for damages. It also
sustained the ruling of the RTC that the defect of the certification against for
um shopping was cured by the submission of the corporate secretary s certificate
giving authority to its counsel to execute the same.4 [Citations and underscori
ng omitted.] In the aforesaid June 19, 2007 Decision, we affirmed the dispositio
n of the Court of Appeals (CA) and directed the trial court to continue with the
proceedings in Civil Case No. 97-341-MK.5 Petitioner, on July 20, 2007, subsequ
ently moved for the reconsideration of the said decision.6 After respondent file
d its comment, the Court, in its April 14, 2008 Resolution,7 denied with finalit
y petitioner s motion for reconsideration. Undaunted, petitioner filed, on April
29, 2008 her Motion to Refer [the case] to the Honorable Court En Banc.8 She co
ntends that the petition raises a legal question that is novel and is of paramou
nt importance. The earlier decision rendered by the Court will send a chilling e
ffect to public officers, and will adversely affect the performance of duties of
superior public officers in departments or agencies with rule-making and quasijudicial powers. With the said decision, the Commissioner of Internal Revenue wi
ll have reason to hesitate or refrain from performing his/her official duties de
spite the due process safeguards in Section 228 of the National Internal Revenue
Code.9 Petitioner hence moves for the reconsideration of the June 19, 2007 Deci
sion.10 In its June 25, 2008 Resolution,11 the Court referred the case to the En
Banc. Respondent consequently moved for the reconsideration of this resolution.
We now resolve both motions. There are two kinds of duties exercised by public
officers: the "duty owing to the public collectively" (the body politic), and th
e "duty owing to particular individuals, thus: 1. Of Duties to the Public. - The
first of these classes embraces those officers whose duty is owing primarily to
the public collectively --- to the body politic --- and not to any particular i
ndividual; who act for the public at large, and who are ordinarily paid out of t
he public treasury. The officers whose duties fall wholly or partially within th
is class are numerous and the distinction will be readily recognized. Thus, the
governor owes a duty to the public to see that the laws are properly executed, t
hat fit and competent officials are appointed by him, that unworthy and ill-cons
idered acts of the legislature do not receive his approval, but these, and many
others of a like nature, are duties which he owes to the public at large and no
one individual could single himself out and assert that they were duties owing t
o him alone. So, members of the legislature owe a duty to the public to pass onl
y wise and proper laws, but no one person could pretend that the duty was owing
to himself rather than to another. Highway commissioners owe a duty that they wi
ll be governed only by considerations of the public good in deciding upon the op
ening or closing of highways, but it is not a duty to any particular individual
of the community. These illustrations might be greatly extended, but it is belie
ved that they are sufficient to define the general doctrine. 2. Of Duties to Ind
ividuals. - The second class above referred to includes those who, while they ow
e to the public the general duty of a proper administration of their respective
offices, yet become, by reason of their employment by a particular individual to
do some act for him in an official capacity, under a special and particular obl
igation to him as an individual. They serve individuals chiefly and usually rece
ive their compensation from fees paid by each individual who employs them. A she
riff or constable in serving civil process for a private suitor, a recorder of d
eeds in recording the deed or mortgage of an individual, a clerk of court in ent
ering up a private judgment, a notary public in protesting negotiable paper, an
inspector of elections in passing upon the qualifications of an elector, each ow
es a general duty of official good conduct to the public, but he is also under a
special duty to the particular individual concerned which gives the latter a pe

culiar interest in his due performance.12 In determining whether a public office

r is liable for an improper performance or non-performance of a duty, it must fi
rst be determined which of the two classes of duties is involved. For, indeed, a
s the eminent Floyd R. Mechem instructs, "[t]he liability of a public officer to
an individual or the public is
REMLAW Page 287

eminent Floyd R. Mechem instructs, "[t]he liability of a public officer to an in

dividual or the public is based upon and is co-extensive with his duty to the in
dividual or the public. If to the one or the other he owes no duty, to that one
he can incur no liability."13 Stated differently, when what is involved is a "du
ty owing to the public in general", an individual cannot have a cause of action
for damages against the public officer, even though he may have been injured by
the action or inaction of the officer. In such a case, there is damage to the in
dividual but no wrong to him. In performing or failing to perform a public duty,
the officer has touched his interest to his prejudice; but the officer owes no
duty to him as an individual.14 The remedy in this case is not judicial but poli
tical.15 The exception to this rule occurs when the complaining individual suffe
rs a particular or special injury on account of the public officer s improper pe
rformance or non-performance of his public duty. An individual can never be suff
ered to sue for an injury which, technically, is one to the public only; he must
show a wrong which he specially suffers, and damage alone does not constitute a
wrong.16 A contrary precept (that an individual, in the absence of a special an
d peculiar injury, can still institute an action against a public officer on acc
ount of an improper performance or non-performance of a duty owing to the public
generally) will lead to a deluge of suits, for if one man might have an action,
all men might have the like-the complaining individual has no better right than
anybody else.17 If such were the case, no one will serve a public office. Thus,
the rule restated is that an individual cannot have a particular action against
a public officer without a particular injury, or a particular right, which are
the grounds upon which all actions are founded.18 Juxtaposed with Article 3219 o
f the Civil Code, the principle may now translate into the rule that an individu
al can hold a public officer personally liable for damages on account of an act
or omission that violates a constitutional right only if it results in a particu
lar wrong or injury to the former. This is consistent with this Court s pronounc
ement in its June 19, 2007 Decision (subject of petitioner s motion for reconsid
eration) that Article 32, in fact, allows a damage suit for "tort for impairment
of rights and liberties."20 It may be recalled that in tort law, for a plaintif
f to maintain an action for damages for the injuries of which he complains, he m
ust establish that such injuries resulted from a breach of duty which the defend
ant owed the plaintiff, meaning a concurrence of injury to the plaintiff and leg
al responsibility by the person causing it. Indeed, central to an award of tort
damages is the premise that an individual was injured in contemplation of law.21
Thus, in Lim v. Ponce de Leon,22 we granted the petitioner s claim for damages
because he, in fact, suffered the loss of his motor launch due to the illegal se
izure thereof. In Cojuangco, Jr. v. Court of Appeals,23 we upheld the right of p
etitioner to the recovery of damages as there was an injury sustained by him on
account of the illegal withholding of his horserace prize winnings. In the insta
nt case, what is involved is a public officer s duty owing to the public in gene
ral. The petitioner, as the then Commissioner of the Bureau of Internal Revenue,
is being taken to task for Revenue Memorandum Circular (RMC) No. 37-93 which sh
e issued without the requisite notice, hearing and publication, and which, in Co
mmissioner of Internal Revenue v. Court of Appeals,24 we declared as having "fal
len short of a valid and effective administrative issuance."25 A public officer,
such as the petitioner, vested with quasi-legislative or rule-making power, owe
s a duty to the public to promulgate rules which are compliant with the requirem
ents of valid administrative regulations. But it is a duty owed not to the respo
ndent alone, but to the entire body politic who would be affected, directly or i
ndirectly, by the administrative rule. Furthermore, as discussed above, to have
a cause of action for damages against the petitioner, respondent must allege tha
t it suffered a particular or special injury on account of the non-performance b
y petitioner of the public duty. A careful reading of the complaint filed with t
he trial court reveals that no particular injury is alleged to have been sustain
ed by the respondent. The phrase "financial and business difficulties"26 mention
ed in the complaint is a vague notion, ambiguous in concept, and cannot translat
e into a "particular injury." In contrast, the facts of the case eloquently demo
nstrate that the petitioner took nothing from the respondent, as the latter did

not pay a single centavo on the tax assessment levied by the former by virtue of
RMC 37-93. With no "particular injury" alleged in the complaint, there is, ther
efore, no delict or wrongful act or omission attributable to the petitioner that
would violate the primary rights of the respondent. Without such delict or tort
ious act or omission, the complaint then fails to state a cause of action, becau
se a
REMLAW Page 288

such delict or tortious act or omission, the complaint then fails to state a cau
se of action, because a cause of action is the act or omission by which a party
violates a right of another.27 A cause of action exists if the following element
s 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 name
d 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 constit
uting a breach of the obligation of defendant to plaintiff for which the latter
may maintain an action for recovery of damages.28 The remedy of a party whenever
the complaint does not allege a cause of action is to set up this defense in a
motion to dismiss, or in the answer. A motion to dismiss based on the failure to
state a cause of action in the complaint hypothetically admits the truth of the
facts alleged therein. However, the hypothetical admission is limited to the "r
elevant and material facts well-pleaded in the complaint and inferences deducibl
e therefrom. The admission does not extend to conclusions or interpretations of
law; nor does it cover allegations of fact the falsity of which is subject to ju
dicial notice."29 The complaint may also be dismissed for lack of cause of actio
n if it is obvious from the complaint and its annexes that the plaintiff is not
entitled to any relief.30 The June 19, 2007 Decision and the dissent herein reit
erates that under Article 32 of the Civil Code, the liability of the public offi
cer may accrue even if he/she acted in good faith, as long as there is a violati
on of constitutional rights, citing Cojuangco, Jr. v. Court of Appeals,31 where
we said: Under the aforecited article, it is not necessary that the public offic
er acted with malice or bad faith. To be liable, it is enough that there was a v
iolation of the constitutional rights of petitioners, even on the pretext of jus
tifiable motives or good faith in the performance of duties.32 The complaint in
this case does not impute bad faith on the petitioner. Without any allegation of
bad faith, the cause of action in the respondent s complaint (specifically, par
agraph 2.02 thereof) for damages under Article 32 of the Civil Code would be pre
mised on the findings of this Court in Commissioner of Internal Revenue v. Court
of Appeals (CIR v. CA),33 where we ruled that RMC No. 37-93, issued by petition
er in her capacity as Commissioner of Internal Revenue, had "fallen short of a v
alid and effective administrative issuance." This is a logical inference. Withou
t the decision in CIR v. CA, the bare allegations in the complaint that responde
nt s rights to due process of law and to equal protection of the laws were viola
ted by the petitioner s administrative issuance would be conclusions of law, hen
ce not hypothetically admitted by petitioner in her motion to dismiss. But in CI
R v. CA, this Court did not declare RMC 37-93 unconstitutional; certainly not fr
om either the due process of law or equal protection of the laws perspective. On
due process, the majority, after determining that RMC 37-93 was a legislative r
ule, cited an earlier Revenue Memorandum Circular (RMC No. 10-86) requiring prio
r notice before RMC s could become "operative." However, this Court did not make
an express finding of violation of the right to due process of law. On the aspe
ct of equal protection, CIR v. CA said: "Not insignificantly, RMC 37-93 might ha
ve likewise infringed on uniformity of taxation;" a statement that does not amou
nt to a positive indictment of petitioner for violation of respondent s constitu
tional right. Even if one were to ascribe a constitutional infringement by RMC 3
7-93 on the non-uniformity of tax provisions, the nature of the constitutional t
ransgression falls under Section 28, Article VI-not Section 1, Article III-of th
e Constitution. This Court s own summation in CIR v. CA: "All taken, the Court i
s convinced that the hastily promulgated RMC 37-93 has fallen short of a valid a
nd effective administrative issuance," does not lend itself to an interpretation
that the RMC is unconstitutional. Thus, the complaint s reliance on CIR v. CA-w
hich is cited in, and a copy of which is annexed to, the complaint-as suggestive
of a violation of due process and equal protection, must fail. Accordingly, fro
m the foregoing discussion, it is obvious that paragraph 2.02 of respondent s co
mplaint loses the needed crutch to sustain a valid cause of action against the p
etitioner, for what is left of the paragraph is merely the allegation that only
respondent s "Champion", "Hope" and "More" cigarettes were reclassified. If we d
ivest the complaint of its reliance on CIR v. CA, what remains of respondent s c

ause of action for violation of constitutional rights would be paragraph 2.01, w

hich reads: 2.01. On or about July 1, 1993, defendant issued Revenue Memorandum
Circular No. 37-93 (hereinafter referred to as RMC No. 37-93) reclassifying spec
ifically "Champion", "Hope" and "More" as locally manufactured cigarettes bearin
g a foreign brand. A copy of the aforesaid circular is attached hereto and made
an integral part hereof as ANNEX "A". The issuance of a circular and its impleme
ntation resulted in
REMLAW Page 289

made an integral part hereof as ANNEX "A". The issuance of a circular and its im
plementation resulted in the "deprivation of property" of plaintiff. They were d
one without due process of law and in violation of the right of plaintiff to the
equal protection of the laws. (Italics supplied.) But, as intimated above, the
bare allegations, "done without due process of law" and "in violation of the rig
ht of plaintiff to the equal protection of the laws" are conclusions of law. The
y are not hypothetically admitted in petitioner s motion to dismiss and, for pur
poses of the motion to dismiss, are not deemed as facts. In Fluor Daniel, Inc. P
hilippines v. EB. Villarosa & Partners Co., Ltd.,34 this Court declared that the
test of sufficiency of facts alleged in the complaint as constituting a cause o
f action is whether or not, admitting the facts alleged, the court could render
a valid verdict in accordance with the prayer of the complaint. In the instant c
ase, since what remains of the complaint which is hypothetically admitted, is on
ly the allegation on the reclassification of respondent s cigarettes, there will
not be enough facts for the court to render a valid judgment according to the p
rayer in the complaint. Furthermore, in an action for damages under Article 32 o
f the Civil Code premised on violation of due process, it may be necessary to ha
rmonize the Civil Code provision with subsequent legislative enactments, particu
larly those related to taxation and tax collection. Judicial notice may be taken
of the provisions of the National Internal Revenue Code, as amended, and of the
law creating the Court of Tax Appeals. Both statutes provide ample remedies to
aggrieved taxpayers; remedies which, in fact, were availed of by the respondentwithout even having to pay the assessment under protest-as recounted by this Cou
rt in CIR v. CA, viz.: In a letter, dated 19 July 1993, addressed to the appella
te division of the BIR, Fortune Tobacco requested for a review, reconsideration
and recall of RMC 37-93. The request was denied on 29 July 1993. The following d
ay, or on 30 July 1993, the CIR assessed Fortune Tobacco for ad valorem tax defi
ciency amounting to P9,598,334.00. On 03 August 1993, Fortune Tobacco filed a pe
tition for review with the CTA.35 The availability of the remedies against the a
ssailed administrative action, the opportunity to avail of the same, and actual
recourse to these remedies, contradict the respondent s claim of due process inf
ringement. At this point, a brief examination of relevant American jurisprudence
may be instructive. 42 U.S. Code 1983, a provision incorporated into the Civil
Rights Act of 1871, presents a parallel to our own Article 32 of the Civil Code,
as it states: Every person who, under color of any statute, ordinance, regulati
on, custom, usage, or any State or Territory, subjects, or causes to be subjecte
d, any citizen of the United States or other person within the jurisdiction ther
eof to the deprivation of any rights, privileges or immunities secured by the Co
nstitution and laws, shall be liable to the party injured in an action at law, s
uit in equity or other proper proceeding for redress. This provision has been em
ployed as the basis of tort suits by many petitioners intending to win liability
cases against government officials when they violate the constitutional rights
of citizens. Webster Bivens v. Six Unknown Named Agents of Federal Bureau of Inv
estigation,36 has emerged as the leading case on the victim s entitlement to rec
over money damages for any injuries suffered as a result of flagrant and unconst
itutional abuses of administrative power. In this case, federal narcotics office
rs broke into Bivens home at 6:30 a.m. without a search warrant and in the abse
nce of probable cause. The agents handcuffed Bivens, searched his premises, empl
oyed excessive force, threatened to arrest his family, subjected him to a visual
strip search in the federal court house, fingerprinted, photographed, interroga
ted and booked him. When Bivens was brought before a United States Commissioner,
however, charges against him were dismissed. On the issue of whether violation
of the Fourth Amendment "by a federal agent acting under color of authority give
s rise to a cause of action for damages consequent upon his constitutional condu
ct," the U.S. Supreme Court held that Bivens is entitled to recover damages for
injuries he suffered as a result of the agents violation of the Fourth Amendmen
t. A number of subsequent decisions have upheld Bivens. For instance, in Scheuer
v. Rhodes,37 a liability suit for money damages was allowed against Ohio Govern
or James Rhodes by petitioners who represented three students who had been kille
d by Ohio National Guard troops at Kent State University as they protested again

st U.S. involvement in Vietnam. In Wood v. Strickland,38 local school board memb

ers were sued by high school students who argued that they had been deprived of
constitutional
REMLAW Page 290

members were sued by high school students who argued that they had been deprived
of constitutional due process rights when they were expelled from school for ha
ving spiked a punch bowl at a school function without the benefit of a full hear
ing. In Butz v. Economou,39 Economou, whose registration privilege as a commodit
ies futures trader was suspended, without prior warning, by Secretary of Agricul
ture Earl Butz, sued on a Bivens action, alleging that the suspension was aimed
at "chilling" his freedom of expression right under the First Amendment. A numbe
r of other cases40 with virtually the same conclusion followed. However, it is e
xtremely dubious whether a Bivens action against government tax officials and em
ployees may prosper, if we consider the pronouncement of the U.S. Supreme Court
in Schweiker v. Chilicky,41 that a Bivens remedy will not be allowed when other
"meaningful safeguards or remedies for the rights of persons situated as (is the
plaintiff)" are available. It has also been held that a Bivens action is not ap
propriate in the civil service system42 or in the military justice system.43 In
Frank Vennes v. An Unknown Number of Unidentified Agents of the United States of
America,44 petitioner Vennes instituted a Bivens action against agents of the I
nternal Revenue Service (IRS) who alleged that he (Vennes) owed $250,000 in tax
liability, instituted a jeopardy assessment, confiscated Vennes business, force
d a total asset sale, and put Vennes out of business, when in fact he owed not a
dime. The U.S. Court of Appeals, Eighth Circuit, ruled: The district court dism
issed these claims on the ground that a taxpayer s remedies under the Internal R
evenue Code preclude such a Bivens action. Vennes cites to us no contrary author
ity, and we have found none. Though the Supreme Court has not addressed this pre
cise question, it has strongly suggested that the district court correctly appli
ed Bivens: When the design of a Government program suggests that Congress has pr
ovided what it considers adequate remedial mechanisms for constitutional violati
ons that may occur in the course of its administration, we have not created addi
tional Bivens remedies. xxx x Congress has provided specific and meaningful reme
dies for taxpayers who challenge overzealous tax assessment and collection activ
ities. A taxpayer may challenge a jeopardy assessment both administratively and
judicially, and may sue the government for a tax refund, and have authorized tax
payer actions against the United States to recover limited damages resulting fro
m specific types of misconduct by IRS employees. These carefully crafted legisla
tive remedies confirm that, in the politically sensitive realm of taxation, Cong
ress s refusal to permit unrestricted damage action by taxpayers has not been in
advertent. Thus, the district court correctly dismissed Vennes s Bivens claims a
gainst IRS agents for their tax assessment and collection activities. In still a
nother Bivens action, instituted by a taxpayer against IRS employees for alleged
violation of due process rights concerning a tax dispute, the U.S. District Cou
rt of Minnesota said: In addition, the (Tax) Code provides taxpayers with remedi
es, judicial and otherwise, for correcting and redressing wrongful acts taken by
IRS employees in connection with any collection activities. Although these prov
isions do not provide taxpayers with an all-encompassing remedy for wrongful act
s of IRS personnel, the rights established under the Code illustrate that it pro
vides all sorts of rights against the overzealous officialdom, including, most f
undamentally, the right to sue the government for a refund if forced to overpay
taxes, and it would make the collection of taxes chaotic if a taxpayer could byp
ass the remedies provided by Congress simply by bringing a damage suit against I
RS employees.45 American jurisprudence obviously validates the contention of the
petitioner. Finally, we invite attention to Section 227, Republic Act No. 8424
(Tax Reform Act of 1997), which provides: Section 227. Satisfaction of Judgment
Recovered Against any Internal Revenue Officer. - When an action is brought agai
nst any Internal Revenue officer to recover damages by reason of any act done in
the performance of official duty, and the Commissioner is notified of such acti
on in time to make defense against the same, through the Solicitor General, any
judgment, damages or costs recovered in such action shall be satisfied by the Co
mmissioner, upon approval of the Secretary of Finance, or if the same be paid by
the person sued shall be repaid or reimbursed to him. No such judgment, damages
or costs shall be paid or reimbursed in behalf of a person who has acted neglig
ently or in bad faith, or with willful oppression. Because the respondent s comp

laint does not impute negligence or bad faith to the petitioner, any money judgm
ent by the trial court against her will have to be assumed by the Republic of th
e
REMLAW Page 291

money judgment by the trial court against her will have to be assumed by the Rep
ublic of the Philippines. As such, the complaint is in the nature of a suit agai
nst the State.46 WHEREFORE, premises considered, we GRANT petitioner s motion fo
r reconsideration of the June 19, 2007 Decision and DENY respondent s motion for
reconsideration of the June 25, 2008 Resolution. Civil Case No. CV-97-341-MK, p
ending with the Regional Trial Court of Marikina City, is DISMISSED. SO ORDERED.
ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: REYNATO S. PUNO Chief J
ustice LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO Associate Justice Associa
te Justice
ANTONIO T. CARPIO Associate Justice
*RENATO C.
MA. ALICIA AUSTRIA-MARTINEZ Associate Justice
CONCHITA CARPIO MORALES Associate Justice DANTE O. TINGA Associate Justice PRESB
ITERO J. VELASCO, JR. Associate Justice
CORONA Associate Justice ADOLFO S. AZCUNA Associate Justice MINITA V. CHICO-NAZA
RIO Associate Justice
RUBEN T. REYES Associate Justice
ARTURO D. BRION Associate Justice
TERESITA J. LEONARDO-DE CASTRO Associate Justice
CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is he
reby certified that the conclusions in the above Decision were reached in consul
tation before the case was assigned to the writer of the opinion of the Court. R
EYNATO S. PUNO Chief Justice Footnotes * On leave. 1 Cruz, The Law of Public Off
icers, 2007 ed., p. 223. 2 Moss v. Cummins, 44 Mich. 359, 360-361, 6 N.W. 843, 8
44 (1880). 3 Rollo, pp. 630-645; Vinzons-Chato v. Fortune Tobacco Corporation, G
.R. No. 141309, June 19 2007, 525 SCRA 11. 4 Id. at 632-634. 5 Id. at 643. 6 Id.
at 646. 7 Id. at 859. 8 Id. at 860-882. 9 Id. at 860-864. 10 Id. at 881. 11 Id.
at 891. 12 Mechem, A Treatise on the Law of Public Offices and Officers (1890),
pp. 386-387. 13 Id. at 390. 14 Id. at 390-391. 15 Supra note 1. 16 Supra note 1
2, at 390-391. 17 Butler v. Kent, 19 Johns. 223, 10 Am. Dec. 219 (1821).
REMLAW Page 292

16
Supra note 12, at 390-391. Johns. 223, 10 Am. Dec. 219 (1821). 18 Id. 19 Article
32. Any public officer or employee, or any private individual, who directly or
indirectly obstructs, defeats, violates or in any manner impedes or impairs any
of the following rights and liberties of another person shall be liable to the l
atter for damages: (1) Freedom of religion; (2) Freedom of speech; (3) Freedom t
o write for the press or to maintain a periodical publication; (4) Freedom from
arbitrary or illegal detention; (5) Freedom of suffrage; (6) The right against d
eprivation of property without due process of law; (7) The right to a just compe
nsation when private property is taken for public use; (8) The right to the equa
l protection of the laws; (9) The right to be secure in one s person, house, pap
ers, and effects against unreasonable searches and seizures; (10) The liberty of
abode and of changing the same; (11) The privacy of communication and correspon
dence; (12) The right to become a member of associations or societies for purpos
es not contrary to law; (13) The right to take part in a peaceable assembly to p
etition the Government for redress of grievances; (14) The right to be free from
involuntary servitude in any form; (15) The right of the accused against excess
ive bail; (16) The right of the accused to be heard by himself and counsel, to b
e informed of the nature and cause of the accusation against him, to have a spee
dy and public trial, to meet witnesses face to face, and to have compulsory proc
ess to secure the attendance of witnesses in his behalf; (17) Freedom from being
compelled to be a witness against one s self, or from being forced to confess g
uilt, or from being induced by a promise of immunity or reward to make such conf
ession, except when the person confessing becomes a State witness; (18) Freedom
from excessive fines, or cruel and unusual punishment, unless the same is impose
d or inflicted in accordance with a statute which has not been judicially declar
ed unconstitutional; and (19) Freedom of access to the courts. In any of the cas
es referred to in this article, whether or not the defendant s act or omission c
onstitutes a criminal offense, the aggrieved party has a right to commence an en
tirely separate and distinct civil action for damages, and for other relief. Suc
h civil action shall proceed independently of any criminal prosecution (if the l
atter be instituted) and may be proved by preponderance of evidence. The indemni
ty shall include moral damages. Exemplary damages may also be adjudicated. The r
esponsibility herein set forth is not demandable from a judge unless his act or
omission constitutes a violation of the Penal Code or other penal statute. 20 Vi
nzons-Chato v. Fortune Tobacco Corporation, supra note 3. 21 Sps. Custodio v. Co
urt of Appeals, 323 Phil. 575 (1996), cited in Laynesa v. Uy, G.R. No. 149553, F
ebruary 29, 2008, 547 SCRA 200. 22 No. L-22554, August 29, 1975, 66 SCRA 299. 23
G.R. No. 119398, July 2, 1999, 309 SCRA 602, 621. 24 G.R. No. 119761, August 29
, 1996, 261 SCRA 236. 25 Id. at 252. 26 Rollo, p. 686. 27 Drilon v. Court of App
eals, G.R. No. 106922, April 20, 2001. 28 Id. 29 Id. 30 Fluor Daniel, Inc. Phili
ppines v. EB. Villarosa & Partners Co., Ltd., G.R. No. 159648, July 27, 2007. 31
G.R. No. 119398, July 2, 1999, 309 SCRA 602. 32 Id. at 620-621. 33 G. R. No. 11
9761, August 29, 1996. 34 G.R. No. 159648, July 27, 2008. 35 Commissioner of Int
ernal Revenue v. Court of Appeals, G.R. No. 119761, August 29, 1996, 261 SCRA 23
6, 244.
17 Butler v. Kent, 19
REMLAW Page 293

236, 244. 36 403 U.S. 388 (1971), 91 S. Ct. 1999, 29 L. Ed. 2d. 619 37 416 U.S.
232 (1974). 38 420 U.S. 308 (1975). 39 434 U.S. 994 (1978). 40 E.g., Carlson v.
Green, 446 U.S. 14 (1980); Martinez v. State of California, 444 U.S. 277 (1980).
41 487 U.S. 412 (1988). 42 Bush v. Lucas, 462 U.S. 367 (1983). 43 Chappell v. W
allace, 462 U.S. 296 (1983). 44 26 F. 3d 1448 (1994), 74 A.F.T.R. 2d 94-5144. 45
Tonn v. United States of America, 847 F. Supp. 711, 73 A.F.T.R. 2d 94-727 46 Se
e Veterans Manpower and Protective Services, Inc. v. Court of Appeals, 214 SCRA
286.
Pasted from <http://www.lawphil.net/judjuris/juri2008/dec2008/gr_141309_2008.htm
l>
REMLAW Page 294

BPI Family v. De Coscuella, GR No. 167724, Jun 27, 2006

Sunday, November 14, 2010 11:34 PM
BPI FAMILY SAVINGS BANK, INC., Petitioner, vs. MARGARITA VDA. DE COSCOLLUELA, Re
spondent. DE C I S I O N CALLEJO, SR., J.: Assailed before this Court is a Petit
ion for Review under Rule 45 of the Rules of Court of the Decision1 of the Court
of Appeals (CA) in CA-G.R. SP No. 69732 granting respondents petition for certio
rari, and its resolution denying petitioners motion for reconsideration. The Ante
cedents Respondent Margarita Coscolluela and her husband Oscar Coscolluela obtai
ned an agricultural sugar crop loan from the Far East Bank & Trust Co. (FEBTC) B
acolod City Branch (later merged with petitioner Bank of the Philippine Islands)
for crop years 1997 and 1998.2 However, in the book of FEBTC, the loan account
of the spouses was treated as a single account,3 which amounted to P13,592,492.0
0 as evidenced by 67 Promissory Notes4 executed on various dates, from August 29
, 1996 to January 23, 1998, to wit: 1avvphil.net Promissory Note No. 1. 2. 3. 4.
5. 6. 7. 02-052-960971 02-052-961095 02-052-961122 02-052-961205 02-052-961231
02-052-961252 02-052-961274 Date 29 August 1996 Amount (in Phil. Peso) 148,000
23 September 1996 1,200,000 27 September 1996 550,000 11 October 1996 18 October
1996 24 October 1996 30 October 1996 180,000 155,000 190,000 115,000
8. 9. 10. 11. 12.
13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.
02-052-961310 02-052-961373 02-052-961442 02-052-961464 02-052-961498
02-052-961542 02-052-970018 02-052-970052 02-052-970078 02-052-970087 02-052-970
131 02-052-970163 02-052-970190 02-052-970215 02-052-970254 02-052-970293
8 November 1996 21 November 1996 6 December 1996 12 December 1996 19 December 19
96
27 December 1996 3 January 1997 10 January 1997 15 January 1997 17 January 1997
23 January 1997 31 January 1997 7 February 1997 13 February 1997 20 February 199
7 28 February 1997
90,000 125,000 650,000 240,000 164,000
200,000 120,000 185,000 80,000 170,000 180,000 220,000 110,000 170,000 140,000 1
30,000
REMLAW Page 295

23. 24. 25. 26. 27. 28. 29.

02-052-970293 02-052-970345 02-052-970367 02-052-970402 02-052-970422 02-052-970
453 02-052-970478
28 February 1997 7 March 1997 13 March 1997 21 March 1997 26 March 1997 4 April
1997 11 April 1997
130,000 90,000 50,000 160,000 190,000 82,000 150,000
30. 31. 32. 33. 34.
35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50.
02-052-970502 02-052-970539 02-052-970558 02-052-970589 02-052-970770
02-052-970781 02-052-970819 02-052-970852 02-052-970926 02-052-970949 02-052-970
975 02-052-970999 02-052-971028 02-052-971053 02-052-971073 02-052-971215 02-052
-971253 02-052-971280 02-052-971317 02-052-971340 02-052-971351
17 April 1997 25 April 1997 30 April 1997 8 May 1997 25 June 1997
27 June 1997 4 July 1997 11 July 1997 1 August 1997 5 August 1997 8 August 1997
15 August 1997 22 August 1997 29 August 1997 4 September 1997
80,000 145,000 135,000 54,000 646,492
160,000 250,000 350,000 170,000 200,000 120,000 150,000 110,000 130,000 90,000
12 September 1997 160,000 19 September 1997 190,000 26 September 1997 140,000 2
October 1997 10 October 1997 15 October 1997 115,000 115,000 700,000
51. 52. 53. 54. 55.
56. 57. 58. 59. 60. 61. 62.
02-052-971362 02-052-971394 02-052-971407 02-052-971449 02-052-971464
02-052-971501 02-052-971527 02-052-971538 02-052-971569 02-052-971604 02-052-971
642 02-052-971676
16 October 1997 24 October 1997 29 October 1997 6 November 1997 13 November 1997
20 November 1997 25 November 1997 28 November 1997 4 December 1997 12 December 1
997 18 December 1997 23 December 1997
90,000 185,000 170,000 105,000 170,000
150,000 620,000 130,000 140,000 220,000 185,000 117,000
REMLAW Page 296

62. 63. 64. 65. 66. 67.

02-052-971676 02-052-971688 02-052-980019 02-052-980032 02-052-980064 02-052-980
079
23 December 1997 29 December 1997 7 January 1998 8 January 1998 15 January 1998
23 January 1998
117,000 100,000 195,000 170,000 225,000 176,000
The promissory notes listed under Nos. 1 to 33 bear the maturity date of Februar
y 9, 1998, with a 30day extension of up to March 11, 1998, while those listed un
der Nos. 34 to 67 bear December 28, 1998 as maturity date. Meanwhile, on June 13
, 1997, the spouses Coscolluela executed a real estate mortgage in favor of FEBT
C over their parcel of land located in Bacolod City covered by Transfer Certific
ate of Title (TCT) No. T-109329 as security of loans on credit accommodation obt
ained by the spouses from FEBTC and those that may be obtained by the mortgagees
which was fixed at P7,000,000.00, as well as those that may be extended by the
mortgagor to the mortgagees.5 Under the terms and conditions of the real estate
mortgage, in the event of failure to pay the mortgage obligation or any portion
thereof when due, the entire principal, interest, penalties and other charges th
en outstanding, shall become immediately due; upon such breach or violation of t
he terms and conditions thereof, FEBTC may, at its absolute discretion foreclose
the same extrajudicially in accordance with the procedure prescribed by Act No.
3135, as amended, and for the purpose appointed FEBTC as its attorney-in-fact w
ith full power and authority to enter the premises where the mortgaged property
is located and to take actual possession and control thereof without need of any
order of any court, nor written permission from the spouses, and with special p
ower to sell the mortgaged property at a public or private sale at the option of
the mortgagee; and that the spouses expressly waived the term of 30 days or any
other terms granted by law as the period which must elapse before the mortgage
agreement may be foreclosed and, in any case, such period has already lapsed. Th
e mortgage was registered with the Registry of Deeds of Bacolod and was annotate
d in the title of the land on June 20, 1997.6 Meantime, Oscar died intestate and
was survived by his widow, herein respondent. For failure to settle the outstan
ding obligation on the maturity dates, FEBTC sent a final demand letter7 to resp
ondent on March 10, 1999 demanding payment, within five days from notice, of the
principal of the loan amounting to P13,481,498.68, with past due interests and
penalties or in the total amount of P19,482,168.31 as of March 9, 1999.8 Respond
ent failed to settle her obligation. On June 10, 1999, FEBTC filed a petition fo
r the extrajudicial foreclosure of the mortgaged property, significantly only fo
r the total amount of P4,687,006.68 exclusive of balance, interest and penalty,
covered by promissory notes from 1 to 33, except nos. 2 and 10.9 While the extra
judicial foreclosure proceeding was pending, petitioner FEBTC filed a complaint1
0 with the Regional Trial Court (RTC) of Makati City, Branch 64, against respond
ent for the collection of the principal amount of P8,794,492.00 plus interest an
d penalty, or the total amount of P12,672,000.31, representing the amounts indic
ated in the rest of the promissory notes, specifically Promissory Note Nos. 34 t
o 67, as well as those dated December 6, 1996 and September 23, 1996: PN No. 2-0
52-980079 2-052-980064 2-052-980032 2-052-980019 2-052-971688 2-052-971676 2-052
-971642 2-052-971604 Date January 02, 1998 January 15, 1998 January 08, 1998 Jan
uary 07, 1998 December 29, 1997 December 23, 1997 December 18, 1997 December 12,
1997 Amount 176,000.00 225,000.00 170,000.00 195,000.00 100,000.00 117,000.00 1
85,000.00 220,000.00 Annex A B C D E F G H
REMLAW Page 297

2-052-971604 2-052-971569 2-052-971538 2-052-971527 2-052-971501 2-052-971464 2052-971449

December 12, 1997 December 04, 1997 November 28, 1997 November 25, 1997 November
20, 1997 November 13, 1997 November 06, 1997
220,000.00 140,000.00 130,000.00 620,000.00 150,000.00 170,000.00 105,000.00
H I J K L M N
2-052-971407 2-052-971394 2-052-971362 2-052-971351 2-052-971340
2-052-971317 2-052-971280 2-052-971253 2-052-971215 2-052-971073 2-052-971053 2052-971028 2-052-970999 2-052-970975 2-052-970949 2-052-970926 2-052-970852 2-05
2-970819 2-052-970781 2-052-970770 2-052-961442
October 29, 1997 October 24, 1997 October 16, 1997 October 15, 1997 October 15,
1997
October 02, 1997
170,000.00 185,000.00 90,000.00 700,000.00 115,000.00
115,000.00
O P Q R S
T U V W X Y Z AA BB CC DD EE FF GG HH II
September 26, 1997 140,000.00 September 19, 1997 190,000.00 September 12, 1997 1
60,000.00 September 04, 1997 90,000.00 August 29, 1997 August 22, 1997 August 15
, 1997 August 08, 1997 August 05, 1997 August 01, 1997 July 11, 1997 July 04, 19
97 June 27, 1997 June 25, 1997 December 06, 1996 130,000.00 110,000.00 150,000.0
0 120,000.00 200,000.00 170,000.00 350,000.00 250,000.00 160,000.00 646,492.00 6
50,000.00
2-052-961095
September 23, 1996 1,200,000.00 JJ11
Petitioner prayed that, after due proceedings, judgment be rendered in its favor
, thus: WHEREFORE, it is respectfully prayed that, after trial, judgment be rend
ered in its favor and against defendants ordering them to pay the following: a.
The amount TWELVE MILLION SIX HUNDRED SEVENTY-TWO THOUSAND PESOS and 31/100 (P12
,672,000.31), with additional stipulated interest and penalty equivalent to one
(1%) percent of the amount due for every thirty (30) days or fraction thereof, u
ntil fully paid; b. Expense of litigation amounting to P50,000.00; c. The amount
of P500,000.00 as attorneys fees. Other reliefs just and equitable in the premis
es are similarly prayed for.12 In her answer, respondent alleged, by way of spec
ial and affirmative defense, that the complaint was barred by litis pendentia, s
pecifically, the pending petition for the extrajudicial foreclosure of the real
estate mortgage, thus: 8) That plaintiff is guilty of forum shopping, in that so
me of the promissory notes attached to plaintiffs complaint are also the same pro
missory notes which were made the basis of the plaintiff in their extrajudicial
foreclosure of mortgage filed against the defendant-spouses and also marked in e
vidence in
REMLAW Page 298

extrajudicial foreclosure of mortgage filed against the defendant-spouses and al

so marked in evidence in support of their opposition to the issuance of the prel
iminary injunction in Civil Case No. 99-10864; 9) That plaintiff-bank has not on
ly charged but over charged the defendant-spouses with excessive and exorbitant
interest over and above those authorized by law. And in order to add more injury
to the defendants, plaintiff also included other charges not legally collectibl
e from the defendant-spouses; 10) That the act of the plaintiff-bank in seeking
to collect twice on the same promissory notes is not only unfair and unjust but
also condemnable as plaintiff seek to unjustly enrich itself at the expense of t
he defendants; 11) That there is another action pending between the same parties
for the same cause; 12) That the claim or demand set forth in the plaintiffs com
plaint has either been waived, abandoned or otherwise extinguished.13 Petitioner
presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as so
le witness. He testified that the spouses Coscolluela were granted an agricultur
al sugar loan which is designed to finance the cultivation and plantation of sug
ar farms of the borrowers.14 Borrowers were allowed to make successive drawdowns
or availments against the loan as their need arose. Each drawdown is covered by
a promissory note with uniform maturity dates.15 The witness also testified tha
t the loan account of the spouses was a "single loan account."16 After petitione
r rested its case, respondent filed a demurrer to evidence17 contending, among o
thers, that, with Ganuelas admission, there is only one loan account secured by t
he real estate mortgage, that the promissory notes were executed as evidence of
the loans. Plaintiff was thus barred from instituting a personal action for coll
ection of the drawdowns evidenced by Promissory Note Nos. 2, 10, and 34 to 67 af
ter instituting a petition for extrajudicial foreclosure of the real estate mort
gage for the amount covered by Promissory Note Nos. 1, 3 to 9, and 11 to 33. Res
pondent insisted that by filing a complaint for a sum of money, petitioner there
by split its cause of action against her; hence, the complaint must perforce be
dismissed on the ground of litis pendentia. Petitioner opposed the demurrer argu
ing that while the loans were considered as a single account, each promissory no
te executed by respondent constituted a separate contract. It reiterated that it
s petition for the extrajudicial and foreclosure of the real estate mortgage bef
ore the Ex-Oficio Provincial Sheriff involves obligations different and separate
from those in its action for a sum of money before the court. Thus, petitioner
could avail of the personal action for the collection of the amount evidenced by
the 36 promissory notes not subject of its petition for the extrajudicial forec
losure of the real estate mortgage. Petitioner insists that the promissory notes
subject of its collection suit should be treated separately from the other set
of obligations, that is, the 31 promissory notes subject of its extrajudicial fo
reclosure petition.18 In its Order19 dated January 10, 2002, the trial court den
ied the demurrer on the ground that the promissory notes executed by respondent
and her deceased husband contained different amounts, and each note covered a lo
an distinct from the others. Thus, petitioner had the option to file a petition
for the extrajudicial foreclosure of the real estate mortgage covering 31 of the
promissory notes, and, as to the rest, to file an ordinary action for collectio
n. Petitioner, thus, merely opted to institute an action for collection of the d
ebt on the 36 promissory notes, and waived its action for the foreclosure of the
security given on these notes. Respondent filed a motion for reconsideration,20
which the trial court denied in its February 19, 2002 Order,21 prompting her to
file a certiorari petition22 under Rule 65 with the CA, assailing the January 1
0, 2002 and February 19, 2002 Orders of the trial court. Respondent alleged that
: 1. PUBLIC RESPONDENT GRAVELY ABUSED HER DISCRETION TANTAMOUNT TO LACK AND/OR E
XCESS OF JURISDICTION IN HOLDING THAT THE RESPONDENT BANK CAN FILE SIMULTANEOUS
ACTIONS FOR FORECLOSURE AND FOR COLLECTION. Meanwhile, on January 6, 2003, the p
arcel of land subject of the aforementioned real estate mortgage was sold at pub
lic auction where petitioner emerged as the highest bidder.23 On September 30, 2
004, the CA rendered its Decision24 granting the petition, holding, under prevai
ling jurisprudence, the remedies either a real action to foreclose the mortgage
or a personal action to collect the debt of a mortgage creditor are alternative
and not cumulative. Since respondent availed of the first one, it was deemed to

have waived the second. Further, the filing of both actions results in a splitti
ng of a single cause of action. Thus, in denying her Demurrer to Evidence, the R
TC committed
REMLAW Page 299

grave abuse of discretion as it overruled settled judicial pronouncements. The d

ispositive part of the decision states: WHEREFORE, the instant petition is GRANT
ED. The assailed Orders dated January 10, 2002 and February 19, 2002 are SET ASI
DE. SO ORDERED. The CA cited the ruling of this Court in Bachrach Motor Co., Inc
. v. Esteban Icaragal and Oriental Commercial Co., Inc.25 Aggrieved, petitioner f
iled a motion for reconsideration26 on October 12, 2004. Respondent filed her op
position27 to the motion on October 26, 2004. The CA thereafter denied the motio
n in a resolution promulgated on April 6, 2005.28 Petitioner filed the instant p
etition for review on certiorari, alleging that: I. THE COURT OF APPEALS ERRED I
N GRANTING THE PETITION FOR CERTIORARI OF RESPONDENT ON THE GROUND OF GRAVE ABUS
E OF DISCRETION. xxx x The Trial Court did not commit grave abuse of discretion
amounting to lack or excess of jurisdiction in denying the Demurrer to Evidence
filed by the respondents. Petitioner, in instituting a petition for the Extra Ju
dicial Foreclosure of the Mortgage of respondents based on 31 promissory notes e
xecuted by respondents and another action to collect on a separate set of 36 pro
missory notes, did not split their cause of action. xxx x The trial court did no
t commit grave abuse of discretion amounting to lack or excess of jurisdiction w
hen it denied respondents Demurrer to Evidence. In this wise, the Petition for Ce
rtiorari filed by respondents should not have been granted.29 During the pendenc
y of this appeal, petitioner filed with this Court on December 2, 2005 a manifes
tation and joint motion for substitution, informing the court that petitioner ba
nk has assigned to the Philippine Asset Investment, Inc. all its rights, title a
nd interest over its non-performing loan accounts pursuant to Republic Act No. 9
182 entitled "The Special Purpose Vehicle Act of 2002." The issues raised in thi
s case are (1) whether the petition for certiorari under Rule 65 of the Rules of
Court filed by respondent in the CA was the proper remedy to assail the January
10, 2002 Order of the trial court; (2) whether the appellate court issued its J
anuary 10, 2002 Order with grave abuse of its discretion amounting to excess or
lack of jurisdiction. Petitioner avers that the January 10, 2002 Order of the RT
C denying the Demurrer to Evidence of respondent was interlocutory, and as such
could not be the subject of a petition for certiorari. 30 The RTC did not commit
a grave abuse of its discretion in issuing its January 10, 2002 Order. Petition
er maintains that respondent executed 67 separate loan obligations evidenced by
67 separate promissory notes, with different amounts and maturity dates. It aver
s that each of the loans, as evidenced by each of the promissory notes, may prop
erly be the subject of a separate action; thus, each promissory note is an actio
nable document. Moreover, the real estate mortgage executed by the spouses secur
ed an obligation only to a fixed amount of P7,000,000.00 which is covered by Pro
missory Note Nos. 1 to 31, whereas the loans secured by the spouses covered by t
he Promissory Note Nos. 32 to 67 for the total amount of P12,672,000.31 were not
secured by the real estate mortgage. Petitioner insists that it was proper to f
ile the petition for extrajudicial foreclosure of the real estate mortgage only
for respondents loan account covered by the 36 promissory notes for the amount of
P7,755,733.64. It was not barred from filing a separate action for the collecti
on of the P12,672,000.31 against respondent in the RTC for the drawdowns as evid
enced by Promissory Note Nos. 34 to 67. What should apply, petitioner asserts, i
s the ruling of this Court in Caltex Philippines, Inc. v. Intermediate Appellate
Court31 and Quiogue v. Bautista,32 and not the ruling of this Court in Bachrach
which involves only one promissory note. Petitioner insists that, although resp
ondent and her husband had a joint account with it, they had separate loan oblig
ations as evidenced by the promissory notes; hence, it had separate causes of ac
tion for each and every drawdown evidenced by a promissory note. For her part, r
espondent admits having executed the promissory notes. However, as testified to
by Ganuelas, the witness for petitioner, she and her husband only have one loan
account with petitioner, hence, the latter had only one cause of action against
her either for the collection of the entire loan account or for the extrajudicia
l foreclosure of the real estate mortgage, also for the entire amount of the
REMLAW Page 300

account or for the extrajudicial foreclosure of the real estate mortgage, also f
or the entire amount of the loan. Petitioner cannot split her single loan accoun
t by filing a simple collection suit and a petition for extrajudicial foreclosur
e of the real estate mortgage without violating the rule against splitting a sin
gle cause of action. Respondent asserts that the real estate mortgage executed b
y respondent and her deceased husband was a security not only of their loan acco
unt in the amount of P7,000,000.00 but for all other loans that may have been ex
tended to them in excess of that amount. The petition is unmeritorious. On the f
irst issue, we agree with petitioners contention that the general rule is that an
order denying a motion to dismiss or demurrer to evidence is interlocutory and
is not appealable. Consequently, defendant must go to trial and adduce its evide
nce, and appeal, in due course, from an adverse decision of the trial court. How
ever, the rule admits of exceptions. Where the denial by the trial court of a mo
tion to dismiss or demurrer to evidence is tainted with grave abuse of discretio
n amounting to excess or lack of jurisdiction, the aggrieved party may assail th
e order of dismissal on a petition for certiorari under Rule 65 of the Rules of
Court. A wide breadth of discretion is granted in certiorari proceedings in the
interest of substantial justice and to prevent a substantial wrong.33 As the Cou
rt held in Preferred Home Specialties, Inc. v. Court of Appeals:34 It bears stre
ssing that a writ of certiorari is of the highest utility and importance for cur
bing excessive jurisdiction and correcting errors and most essential to the safe
ty of the people and the public welfare. Its scope has been broadened and extend
ed, and is now one of the recognized modes for the correction of errors by this
Court. The cases in which it will lie cannot be defined. To do so would be to de
stroy its comprehensiveness and limit its usefulness. The appropriate function o
f a certiorari writ is to relieve aggrieved parties from the injustice arising f
rom errors of law committed in proceedings affecting justiciable rights when no
other means for an adequate and speedy relief is open. It is founded upon a sens
e of justice, to release against wrongs otherwise irreconcilable, wrongs which g
o unredressed because of want of adequate remedy which would be a grave reproach
to any system of jurisprudence.35 The aggrieved party is entitled to a writ of
certiorari where the trial court commits a grave abuse of discretion amounting t
o excess or lack of jurisdiction in denying a motion to dismiss a complaint on t
he ground of litis pendentia. An appeal while available eventually is cumbersome
and inadequate for it requires the parties to undergo a useless and time-consum
ing and expensive trial. The second case constitutes a rude if not debilitating
imposition on the trial and the docket of the judiciary.36 In the present case,
we agree with the ruling of the CA that the RTC acted with grave abuse of discre
tion amounting to excess or lack of jurisdiction when it denied the Demurrer to
Evidence of respondent and, in the process, ignored applicable rulings of this C
ourt. Although respondent had the right to appeal the decision of the trial cour
t against her after trial, however, she, as defendant, need not use up funds and
undergo the tribulations of a trial and thereafter appeal from an adverse decis
ion. Section 3, Rule 2 of the 1997 Rules of Civil Procedure provides that a part
y may not institute more than one suit for a single cause of action and, if two
or more suits are instituted on the basis of the same cause of action, the filin
g of one on a judgment upon the merits in any one is available as ground for the
dismissal of the other or others.37 A party will not be permitted to split up a
single cause of action and make it a basis for several suits.38 A party seeking
to enforce a claim must present to the court by the pleadings or proofs or both
, all the grounds upon which he expects a judgment in his favor. He is not at li
berty to split up his demands and prosecute it by piecemeal, or present only a p
ortion of the grounds upon which special relief is sought, and leave the rest to
be presented in a second suit if the first fails.39 The law does not permit the
owner of a single or entire cause of action or an entire or indivisible demand
to divide and split the cause or demand so as to make it the subject of several
actions. The whole cause must be determined in one action. Indeed, in Goldberg v
. Eastern Brewing Co.,40 the New York Supreme Court emphasized that: It was held
in the case of Bendernagle v. Cocks, 19 Wend. 207 (32 Am.Dec. 448), that where
a party had several demands or existing causes of action growing out of the same

contract or resting in matter of account, which may be joined and sued for in t
he same action, they must be joined; and if the demands or causes of action be s
plit up, and a suit brought for part only, and subsequently a second suit for th
e residue is brought, the first action may be pleaded in abatement or in bar of
the second action. x x x 41 The rule against splitting causes of action is not a
ltogether one of original legal right but is one of
REMLAW Page 301

The rule against splitting causes of action is not altogether one of original le
gal right but is one of interposition based upon principles of public policy and
of equity to prevent the inconvenience and hardship incident to repeated and un
necessary litigation.42 It is not always easy to determine whether in a particul
ar case under consideration, the cause of action is single and entire or separat
e. The question must often be determined, not by the general rules but by refere
nce to the facts and circumstances of the particular case. Where deeds arising o
ut of contract are distinct and separate, they give rise to separate cause of ac
tion for which separate action may be maintained; but it is also true that the s
ame contract may give rise to different causes of action either by reason of suc
cessive breaches thereof or by reason of different stipulations or provisions of
the contract.43 The true rule which determines whether a party has only a singl
e and entire cause of action for all that is due him, and which must be sued for
in one action, or has a severable demand for which he may maintain separate sui
ts, is whether the entire amount arises from one and the same act or contract or
the several parts arise from distinct and different acts or contracts.44 Where
there are entirely distinct and separate contracts, they give rise to separate c
auses of action for which separate actions may be instituted and presented. When
money is payable by installments, a distinct cause of action assails upon the f
ollowing due by each installment and they may be recovered in successive action.
On the other hand, where several claims payable at different times arise out of
the same transactions, separate actions may be brought as each liability accoun
ts. But where no action is brought until more than one is due, all that are due
must be included in one action; and that if an action is brought to recover upon
one or more that are due but not upon all that are due, a recovery in such acti
on will be a bar to a several or other actions brought to recover one or more cl
aims of the other claims that were due at the time the first action was brought.
45 The weight of authority is that in the absence of special controlling circums
tances, an open or continuous running account between the same parties constitut
es a single and indivisible demand, the aggregate of all the items of the accoun
t constituting the amount due. But the rule is otherwise where it affirmatively
appears that the parties regarded the different items of the account as separate
transactions and not parts of an ordinary running account. And there may also b
e, even between the same parties, distinct and separate actions upon which separ
ate actions may be maintained.46 In fine, what is decisive is that there be eith
er an express contract, or the circumstances must be such as to raise an implied
contract embracing all the items to make them, when they arise, at different ti
mes, a single or entire demand or cause of action.47 Decisive of the principal i
ssue is the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icaragal
and Oriental Commercial Co., Inc.48 in which it ruled that on the nonpayment of
a note secured by a mortgage, the creditor has a single cause of action against
the debtor. The single cause of action consists in the recovery of the credit wi
th execution of the suit. In a mortgage credit transaction, the credit gives ris
e to a personal action for collection of the money. The mortgage is the guarante
e which gives rise to a mortgage foreclosure suit to collect from the very prope
rty that secured the debt.49 The action of the creditor is anchored on one and t
he same cause: the nonpayment by the debtor of the debt to the creditor-mortgage
e. Though the debt may be covered by a promissory note or several promissory not
es and is covered by a real estate mortgage, the latter is subsidiary to the for
mer and both refer to one and the same obligation. A mortgage creditor may insti
tute two alternative remedies against the mortgage debtor, either a personal act
ion for the collection of debt, or a real action to foreclose the mortgage, but
not both. Each remedy is complete by itself. As explained by this Court: We hold
, therefore, that, in the absence of express statutory provisions, a mortgage cr
editor may institute against the mortgage debtor either a personal action for de
bt or a real action to foreclose the mortgage. In other words, he may pursue eit
her of the two remedies, but not both. By such election, his cause of action can
by no means be impaired, for each of the two remedies is complete in itself. Th
us, an election to bring a personal action will leave open to him all the proper
ties of the debtor for attachment and execution, even including the mortgaged pr

operty itself. And, if he waives such personal action and pursues his remedy aga
inst the mortgaged property, an unsatisfied judgment thereon would still give hi
m the right to sue for a deficiency judgment, in which case, all the properties
of the defendant, other than the mortgaged property, are again open to him for t
he satisfaction of the deficiency. In either case, his remedy is complete, his c
ause of action undiminished, and any advantages attendant to the pursuit of one
or the other remedy are purely accidental and are all under his right of electio
n. On the other
REMLAW Page 302

of one or the other remedy are purely accidental and are all under his right of
election. On the other hand, a rule that would authorize the plaintiff to bring
a personal action against the debtor and simultaneously or successively another
action against the mortgaged property, would result not only in multiplicity of
suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious
to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting
the defendant to the vexation of being sued in the place of his residence or of
the residence of the plaintiff, and then again in the place where the property l
ies.50 If the mortgagee opts to foreclose the real estate mortgage, he thereby w
aives the action for the collection of the debt and vice versa.51 If the credito
r is allowed to file its separate complaints simultaneously or successively, one
to recover his credit and another to foreclose his mortgage, he will, in effect
, be authorized plural redress for a single breach of contract at so much costs
to the court and with so much vexation and oppressiveness to the debtor.52 In th
e present case, petitioner opted to file a petition for extrajudicial foreclosur
e of the real estate mortgage but only for the principal amount of P4,687,006.08
or in the total amount of P7,755,733.64 covering only 31 of the 67 promissory n
otes. By resorting to the extrajudicial foreclosure of the real estate mortgage,
petitioner thereby waived its personal action to recover the amount covered not
only by said promissory notes but also of the rest of the promissory notes. Thi
s is so because when petitioner filed its petition before the Ex-Oficio Provinci
al Sheriff on June 10, 1999, the entirety of the loan account of respondent unde
r the 67 promissory notes was already due. The obligation of respondent under Pr
omissory Note Nos. 1 to 33 became due on February 9, 1998 but was extended up to
March 11, 1998, whereas, those covered by Promissory Note Nos. 34 to 67 matured
on December 28, 1998. Petitioner should have caused the extrajudicial foreclosu
re of the real estate mortgage for the recovery of the entire obligation of resp
ondent, on all the promissory notes. By limiting the account for which the real
estate mortgage was being foreclosed to the principal amount of P4,687,006.68, e
xclusive of interest and penalties, petitioner thereby waived recovery of the re
st of respondents agricultural loan account. It must be stressed that the parties
agreed in the Real Estate Mortgage that in the event that respondent shall fail
to pay the mortgage obligation "or any portion thereof when due, the entire pri
ncipal, interest, penalties and other charges then outstanding shall become imme
diately due, payable and defaulted," thus: 3. The terms and conditions of the Mo
rtgage have been violated when the Mortgagors failed and/or refused to pay, notw
ithstanding repeated demands, the installment and/or maturity amount of the Mort
gage obligation which became due and payable on the said date; 4. Under the term
s and conditions of the Mortgage Agreement, in the event the Mortgagors fail and
/or refuse to pay the Mortgage obligation or any portion thereof when due, the e
ntire principal, interest, penalties and other charges then outstanding, shall,
without need for demand, notice, or any other act or deed, become immediately du
e, payable and defaulted; 5. The Mortgage Agreement provides that upon such brea
ch or violation of the terms and conditions thereof, the Mortgagee may, at its a
bsolute discretion foreclose the same extrajudicially in accordance with the pro
cedure prescribed by Act No. 3135, as amended, and for the purpose appointed the
Mortgagee as its attorney-in-fact with full power and authority to enter the pr
emises where the Mortgaged property is located and to take actual possession and
control thereof without need of any order of any Court, nor written permission
from the Mortgagors, and with special power to sell the Mortgaged Property at a
public or private sale at the option of the Mortgagee.53 Petitioner cannot split
the loan account of respondent by filing a petition for the extrajudicial forec
losure of the real estate mortgage for the principal amount of P4,687,006.68 cov
ered by the first set of promissory notes, and a personal action for the collect
ion of the principal amount of P12,672,000.31 covered by the second set of promi
ssory notes without violating the proscription against splitting a single cause
of action against respondent. The contention of petitioner that respondents loan
account that was secured by the real estate mortgage was limited only to those c
overed by the Promissory Note Nos. 1 to 33 or for the total amount of P7,000,000
.00 is belied by the real estate mortgage and by its own evidence. Under the dee

d, the mortgage was to secure the payment of a credit accommodation already obta
ined by respondent, the principal of all of which was fixed at P7,000,000.00, as
well as any other obligation that may be extended to respondent, including inte
rest and expenses, to wit: That for and in consideration of credit accommodation
obtained from the MORTGAGEE, and to secure
REMLAW Page 303

that may be extended to respondent, including interest and expenses, to wit: Tha
t for and in consideration of credit accommodation obtained from the MORTGAGEE,
and to secure the payment of the same and those that may hereafter be obtained,
the principal of all of which is hereby fixed at SEVEN MILLION PESOS ONLY (P7,00
0,000.00), Philippine Currency, as well as those that the MORTGAGEE may extend t
o the MORTGAGOR, including interest and expenses or any other obligation owing t
o the MORTGAGEE, whether direct or indirect, principal or secondary, as appears
in the accounts, books and records of the MORTGAGEE, the MORTGAGOR does hereby t
ransfer and convey by way of mortgage unto the MORTGAGEE, its successors or assi
gns, the parcels of land which are described in the list inserted on the back of
this document and/or appended herein, together with all the buildings and impro
vements now existing or which may hereafter be erected or constructed thereon, o
f which the MORTGAGOR declares that he/it is the absolute owner free from all li
ens and encumbrances. However, if the MORTGAGOR shall pay to the MORTGAGEE, its
successors or assigns, the obligation secured by this mortgage when due, togethe
r with interest, and shall keep and perform all and singular the covenants and a
greements herein contained for the MORTGAGOR to keep and perform, then this mort
gage shall be void, otherwise, it shall remain in full force and effect.54 (Emph
asis supplied) The testimony of Ganuelas in the RTC relative to the real estate
mortgage follows: Q The real estate mortgage states: "That for and in considerat
ion of credit accommodation obtained from the mortgagee." This simply means, Mr.
Witness, that this mortgage is offered to secure loans already obtained by the
mortgagor from the mortgagee Far East Bank and Trust Company. I am referring onl
y to that phrase, obtained from the mortgagee, is that correct? A Yes, Sir. Q So
from this phrase in the real estate mortgage, this mortgage was constituted to
secure the credit accommodation already obtained by the mortgagor, the defendant
spouses, as of the time of the execution of the real estate mortgage, is that c
orrect? A Yes, Sir. Q Now since the loan secured by the defendants are evidenced
by promissory notes, will you agree with me, Mr. Witness, that this real estate
mortgage was executed for promissory notes already executed by the defendant sp
ouses as of the time of the execution of the mortgage on June 13, 1997, is that
correct? A Yes, Sir. ATTY. MIRANO: For purposes of identification, we respectful
ly request that this phrase: "that for and in consideration of the credit accomm
odation obtained from the mortgagee" be bracketed and mark as Exhibit 6-B. (Acti
ng court interpreter marking said phrase as Exhibit 6-B.) Q Now in accordance wi
th the terms of this real estate mortgage, this real estate mortgage was execute
d by the defendant spouses not only to secure the loan already obtained by the s
aid spouses as of the time of the execution of the mortgage on June 13, 1997 but
also all other loans that may be extended by Far East Bank and Trust Company to
the defendant spouses after the execution of the mortgage as stated in this por
tion of the real estate mortgage which we quote: "to secure the payment as and t
hose that may hereafter be obtained," is that correct? A Yes, Sir. Q So from you
r statement, Mr. Witness, this real estate mortgage was offered by the defendant
spouses as a security for the loans they already secured as of the time of the
execution of the mortgage but also for the loans that they will secure thereafte
r, is that correct? A Yes, Sir.55 (Emphasis supplied) As gleaned from the plain
terms of the real estate mortgage, the real estate of respondent served as conti
nuing security liable for future advancements or obligations beyond the amount o
f P7,000,000.00. The mortgage partakes of the nature of contract for future adva
ncements. As explained by this Court in the early case of Lim Julian v. Lutero:5
6 The rule, of course, is well settled that an action to foreclose a mortgage mu
st be limited to the amount mentioned in the mortgage. The exact amount, however
, for which the mortgage is given need not always be specifically named. The amo
unt for which the mortgage is given may be stated in definite or general terms,
as is frequently the case in mortgages to secure future advancements. The amount
named in the mortgage does not limit the amount for which it may stand as secur
ity, if, from the four corners of the document, the intent to secure future inde
btedness or future advancements is apparent. Where the plain terms, of the mortg
age, evidence such an intent, they will control as against a
REMLAW Page 304

Where the plain terms, of the mortgage, evidence such an intent, they will contr
ol as against a contention of the mortgagor that it was the understanding of the
parties that the mortgage was security only for the specific amount named. (Cit
izens Savings Bank v. Kock, 117 Mich. 225). In that case, the amount mentioned in
the mortgage was $7,000. The mortgage, however, contained a provision that "the
mortgagors agree to pay said mortgagee any sum of money which they may now or h
ereafter owe said mortgagee." At the time the action of foreclosure was brought,
the mortgagors owed the mortgagee the sum of $21,522. The defendants contended
that the amount to be recovered in an action to foreclose should be limited to t
he amount named in the mortgage. The court held that the amount named as conside
ration for the mortgage did not limit the amount for which the mortgage stood as
security, if, from the whole instrument the intent to secure future indebtednes
s could be gathered. The court held that a mortgage to cover future advances is
valid. (Michigan Insurance Co. v. Brown, 11 Mich. 265; Jones on Mortgages, 1, se
c. 373; Keyes v. Bumps Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78; Brow
n v. Kiefer, 71 N.Y. 610; Douglas v. Reynolds, 7 Peters [U.S.] 113; Shores v. Do
herty, 65 Wis. 153) Literal accuracy in describing the amount due, secured by a
mortgage, is not required, but the description of the debt must be correct and f
ull enough to direct attention to the sources of correct information in regard t
o it, and be such as not to mislead or deceive as to the amount of it, by the la
nguage used. Reading the mortgage before us from its four corners, we find that
the description of the debt is full enough to give information concerning the am
ount due. The mortgage recites that it is given to secure the sum of P12,000, in
terest, commissions, damages, and all other amounts which may be found to be due
at maturity. The terms of the contract are sufficiently clear to put all partie
s who may have occasion to deal with the property mortgaged upon inquiry. The pa
rties themselves from the very terms of the mortgage could not be in ignorance a
t any time of the amount of their obligation and the security held to guarantee
the payment. When a mortgage is given for future advancements and the money is p
aid to the mortgagor "little by little" and repayments are made from time to tim
e, the advancements and the repayments must be considered together for the purpo
se of ascertaining the amount due upon the mortgage at maturity. Courts of equit
y will not permit the consideration of the repayments only for the purpose of de
termining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26 Ph
il. 111) The mere fact that, in contract of advancements, the repayments at any
one time exceeds the specific amount mentioned in the mortgage will not have the
effect of discharging the mortgage when the advancements at that particular tim
e are greatly in excess of the repayments; especially is this true when the cont
ract of advancement or mortgage contains a specific provision that the mortgage
shall cover all "such other amounts as may be then due." Such a provision is add
ed to the contract of advancements or mortgage for the express purpose of coveri
ng advancements in excess of the amount mentioned in the mortgage. (Luengo & Mar
tinez v. Moreno, supra) The sum found to be owing by the debtor at the terminati
on of the contract of advancements between him and the mortgagee, during continu
ing credit, is still secured by the mortgage on the debtors property, and the mor
tgagee is entitled to bring the proper action for the collection of the amounts
still due and to request the sale of the property covered by the mortgage. (Luen
go & Martinez v. Moreno, supra; Russell v. Davey, 7 Grant Ch. 13; Patterson Firs
t National Bank v. Byard, 26 N.J. Equity 225) Under a mortgage to secure the pay
ment of future advancements, the mere fact that the repayments on a particular d
ay equal the amount of the mortgage will not discharge the mortgage before matur
ity so long as advancements may be demanded and are being received. (Luengo & Ma
rtinez v. Moreno, supra) 57 Moreover, the series of loan advancements herein can
not be likened to the credit line discussed in Caltex Philippines, Inc. v. Inter
mediate Appellate Court,58 as petitioner posited in its reply59 filed before thi
s Court. In Caltex, unlike the instant case, the real estate mortgage executed d
id not contain a "dragnet" clause 60 that would subsume all past and future debt
s. The mortgage therein specifically secured only the loans extended prior to th
e mortgage. Thus, in the said case, the future debts were deemed as constituting
a separate transaction from the past debts secured by the mortgage. The ruling

of the Court in Quiogue v. Bautista61 is likewise inapplicable. In that case, th

e Court deemed the loan transactions as separate, considering that those were tw
o separate loans secured by two separate mortgages. In this case, however, there
is only one mortgage securing all 67 drawdowns made by respondent. In fine, for
the failure of respondent to pay her loan obligation, petitioner had only one c
ause of action
REMLAW Page 305

In fine, for the failure of respondent to pay her loan obligation, petitioner ha
d only one cause of action arising from such non-payment. This single cause of a
ction consists in the recovery of the credit with execution of the security.62 P
etitioner is proscribed from splitting its single cause of action by filing an e
xtrajudicial foreclosure proceedings on June 10, 1999 with respect to the amount
s in the 31 promissory notes, and, during the pendency thereof, file a collectio
n case on June 23, 1999, with respect to the amounts in the remaining 36 promiss
ory notes. Considering, therefore, that, in the case at bar, petitioner had alre
ady instituted extrajudicial foreclosure proceedings of the mortgaged property,
it is now barred from availing itself of a personal action for the collection of
the indebtedness. IN VIEW OF ALL THE FOREGOING, the instant petition is DISMISS
ED for lack of merit. Costs against petitioner. SO ORDERED. ROMEO J. CALLEJO, SR
. Associate Justice WE CONCUR: ARTEMIO V. PANGANIBAN Chief Justice Chairperson C
ONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ Associate Justice Asscociate
Justice MINITA V. CHICO-NAZARIO Associate Justice CE R T I F I C AT I O N Pursu
ant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the c
ase was assigned to the writer of the opinion of the Courts Division. ARTEMIO V.
PANGANIBAN Chief Justice Footnotes 1 Penned by Associate Justice Vicente S.E. Ve
loso, with Associate Justices Roberto A. Barrios and Amelita G. Tolentino, concu
rring. 2 TSN, August 17, 2001, p. 7. 3 TSN, October 12, 2001, pp. 51-53. 4 Rollo
, pp. 63-134, 136-197. 5 Id. at 198-203. 6 Id. at 203. 7 Id. at 135, 204. 8 Id.
at 204. 9 Id. at 205-208. 10 Id. at 277-281. 11 Id. at 282-353. 12 Id. at 280-28
1. 13 Id. at 355-363. 14 TSN, August 17, 2001, p. 8. 15 Id. at 9. 16 Id. at 7. 1
7 Records, pp. 442-450. 18 Id. at 451-455. 19 Id. at 462-464. 20 Id. at 465-474.
21 Id. at 481-482. 22 Id. at 483-503. 23 CA rollo, p. 108. 24 Rollo, pp. 43-59.
REMLAW Page 306

23
CA rollo, p. 108.
24 Rollo, pp. 43-59. 25
68 Phil. 287 (1939). rollo, p. 247-249. 27 Id. at 253-255. 28 Rollo, p. 61-62. 2
9 Id. at 22, 28. 30 Tadeo v. People, G.R. No. 129774, December 29, 1998, 300 SCR
A 744. 31 G.R. No. 74730, August 25, 1989, 176 SCRA 741. 32 114 Phil. 401 (1962)
. 33 Chu, Sr. v. Benelda Estate Development Corporation, G.R. No. 142313, March
1, 2001, 353 SCRA 424. 34 G.R. No. 163593, December 16, 2005, 478 SCRA 387. 35 I
d. at 407-408. 36 Casil v. Court of Appeals, 349 Phil. 187 (1998). 37 Section 4,
Rule 2 of the Rules of Court. 38 Bachrach Motor Co., Inc. v. Esteban Icaragal an
d Oriental Commercial Co., Inc., supra note 25. 39 Stark v. Starr, 94 U.S. 477,
24 L.Ed. 276 (1876). 40 136 A.D. 692, 121 N.Y.S. 465 (1910). 41 Id. at 694. 42 U
.S. v. Pan-American Petroleum Co., 55 F.2d 753 (1932). 43 Fidelity & Deposit Co.
of Maryland v. Brown, 65 S.W.2d 1064 (1933). 44 Meyerotto v. Rommels Estate, 49
S.W.2d 1081 (1932). 45 Fidelity & Deposit Co. of Maryland v. Brown, supra. 46 Me
yerotto v. Rommels Estate, supra. 47 Friedman, Keller & Co. v. Olson, 173 S.W. 28
(1915). 48 Supra, note 38. 49 Federal Deposit Insurance Corporation v. Altimar,
Inc., 716 F. 7011. 50 Bachrach Motor Co., Inc. V. Esteban Icaragal and Oriental
Commercial Co., Inc., supra note 25, at 294-295. 51 Industrial Finance Corporati
on v. Apostol, G.R. No. 35453, September 15, 1989, 177 SCRA 521. 52 Bachrach Mot
or Co., Inc. V. Esteban Icaragal and Oriental Commercial Co., Inc., supra note 25
, at 294. 53 Rollo, pp. 206-207. 54 Id. at 198. 55 TSN, October 12, 2001, pp. 913. 56 49 Phil. 703. 57 Id. at 714-716. 58 G.R. No. 74730, August 25, 1989, 176
SCRA 741, 749. 59 Rollo, pp. 556-564. 60 Philippine Bank of Communications v. Co
urt of Appeals, G.R. No. 118552, February 5, 1996, 253 SCRA 241, 253. 61 114 Phi
l. 401 (1962). 62 Danao v. Court of Appeals, G.R. L-48276, September 30, 1987, 1
54 SCRA 447, 457.
26 CA
Pasted from <http://www.lawphil.net/judjuris/juri2006/jun2006/gr_167724_2006.htm
l>
REMLAW Page 307

?UCPB v. Sps. Beluso GR 159912 Aug 17, 2007

Sunday, November 14, 2010 11:34 PM
REMLAW Page 308

Carlos v. Sandoval GR 179922 Dec 16, 2008;

Sunday, November 14, 2010 11:34 PM
JUAN DE DIOS CARLOS, petitioner, vs. FELICIDAD SANDOVAL, also known as FELICIDAD
S. VDA. DE CARLOS or FELICIDAD SANDOVAL CARLOS or FELICIDAD SANDOVAL VDA. DE CA
RLOS, and TEOFILO CARLOS II, respondents. DECIS ION REYES, R.T., J.: ONLY a spou
se can initiate an action to sever the marital bond for marriages solemnized dur
ing the effectivity of the Family Code, except cases commenced prior to March 15
, 2003. The nullity and annulment of a marriage cannot be declared in a judgment
on the pleadings, summary judgment, or confession of judgment. We pronounce the
se principles as We review on certiorari the Decision1 of the Court of Appeals (
CA) which reversed and set aside the summary judgment2 of the Regional Trial Cou
rt (RTC) in an action for declaration of nullity of marriage, status of a child,
recovery of property, reconveyance, sum of money, and damages. The Facts The ev
ents that led to the institution of the instant suitare unveiled as follows: Spo
uses Felix B. Carlos and Felipa Elemia died intestate. They left six parcels of
land to their compulsory heirs, Teofilo Carlos and petitioner Juan De Dios Carlo
s. The lots are particularly described as follows: Parcel No. 1 Lot No. 162 of t
he MUNTINLUPA ESTATE SUBDIVISION, Case No. 6137 of the Court of Land Registratio
n. Exemption from the provisions of Article 567 of the Civil Code is specificall
y reserved. Area: 1 hectare, 06 ares, 07 centares. Parcel No. 2 A parcel of land
(Lot No. 159-B), being a portion of Lot 159, situated in the Bo. of Alabang, Mu
nicipality of Muntinlupa, Province of Rizal, x x x containing an area of Thirtee
n Thousand Four Hundred Forty One (13,441) square meters. Parcel No. 3 A parcel
of land (Lot 159-B-2 of the subd. plan [LRC] Psd-325903, approved as a non-subd.
project), being a portion of Lot 159-B [LRC] Psd- Alabang, Mun. of Muntinlupa,
Metro Manila, Island of Luzon. Bounded on the NE, points 2 to 4 by Lot 155, Munt
inlupa Estate; on the SE, point 4 to 5 by Lot 159-B-5; on the S, points 5 to 1 b
y Lot 159-B-3; on the W, points 1 to 2 by Lot 159-B-1 (Road widening) all of the
subd. plan, containing an area of ONE HUNDRED THIRTY (130) SQ. METERS, more or
less. PARCEL No. 4 A parcel of land (Lot 28-C of the subd. plan Psd-13-007090, b
eing a portion of Lot 28, Muntinlupa Estate, L.R.C. Rec. No. 6137), situated in
the Bo. of Alabang, Mun. of Muntinlupa, Metro Manila. Bounded on the NE, along l
ines 1-2 by Lot 27, Muntinlupa Estate; on the East & SE, along lines 2 to 6 by M
angangata River; and on the West., along line 6-1, by Lot 28-B of the subd. plan
x x x containing an area of ONE THUSAND AND SEVENTY-SIX (1,076) SQUARE METERS.
PARCEL No. 5 PARCELA DE TERRENO No. 50, Manzana No. 18, de la subd. de Solocan.
Linda por el NW, con la parcela 49; por el NE, con la parcela 36; por el SE, con
la parcela 51; y por el SW, con la calle Dos Castillas. Partiendo de un punto m
arcado 1 en el plano, el cual se halla a S. gds. 01 W, 72.50 mts. Desde el punto
1 de esta manzana, que es un mojon de concreto de la Ciudad de Manila, situado
on el esquina E. que forman las Calles Laong Laan y Dos. Castillas, continiendo
un extension superficial de CIENTO CINCUENTA (150) METROS CUADRADOS. PARCEL No.
6 PARCELA DE TERRENO No. 51, Manzana No. 18, de la subd. De Solocon. Linda por e
l NW, con la parcela 50; por el NE, con la parcela 37; por el SE, con la parcela
52; por el SW, con la Calle Dos Castillas. Partiendo de un punto Marcado 1 en e
l plano, el cual se halla at S. 43 gds. 01 E, 82.50 mts. Desde el punto 1 de est
a manzana, que es un mojon de concreto de la Ciudad de Manila, situado on el esq
uina E.
REMLAW Page 309

que forman las Calles Laong Laan y Dos. Castillas, continiendo una extension sup
erficial de CIENTO CINCUENTA (150) METROS CUADRADOS.3 During the lifetime of Fel
ix Carlos, he agreed to transfer his estate to Teofilo. The agreement was made i
n order to avoid the payment of inheritance taxes. Teofilo, in turn, undertook t
o deliver and turn over the share of the other legal heir, petitioner Juan De Di
os Carlos. Eventually, the first three (3) parcels of land were transferred and
registered in the name of Teofilo. These three (3) lots are now covered by Trans
fer Certificate of Title (TCT) No. 234824 issued by the Registry of Deeds of Mak
ati City; TCT No. 139061 issued by the Registry of Deeds of Makati City; and TCT
No. 139058 issued by the Registry of Deeds of Makati City. Parcel No. 4 was reg
istered in the name of petitioner. The lot is now covered by TCT No. 160401 issu
ed by the Registry of Deeds of Makati City. On May 13, 1992, Teofilo died intest
ate. He was survived by respondents Felicidad and their son, Teofilo Carlos II (
Teofilo II). Upon Teofilo s death, Parcel Nos. 5 & 6 were registered in the name
of respondent Felicidad and co-respondent, Teofilo II. The said two (2) parcels
of land are covered by TCT Nos. 219877 and 210878, respectively, issued by the
Registry of Deeds of Manila. In 1994, petitioner instituted a suit against respo
ndents before the RTC in Muntinlupa City, docketed as Civil Case No. 94-1964. In
the said case, the parties submitted and caused the approval of a partial compr
omise agreement. Under the compromise, the parties acknowledged their respective
shares in the proceeds from the sale of a portion of the first parcel of land.
This includes the remaining 6,691square-meter portion of said land. On September
17, 1994, the parties executed a deed of extrajudicial partition, dividing the
remaining land of the first parcel between them. Meanwhile, in a separate case e
ntitled Rillo v. Carlos,4 2,331 square meters of the second parcel of land were
adjudicated in favor of plaintiffs Rillo. The remaining 10,000-square meter port
ion was later divided between petitioner and respondents. The division was incor
porated in a supplemental compromise agreement executed on August 17, 1994, with
respect to Civil Case No. 94-1964. The parties submitted the supplemental compr
omise agreement, which was approved accordingly. Petitioner and respondents ente
red into two more contracts in August 1994. Under the contracts, the parties equ
ally divided between them the third and fourth parcels of land. In August 1995,
petitioner commenced an action, docketed as Civil Case No. 95-135, against respo
ndents before the court a quo with the following causes of action: (a) declarati
on of nullity of marriage; (b) status of a child; (c) recovery of property; (d)
reconveyance; and (e) sum of money and damages. The complaint was raffled to Bra
nch 256 of the RTC in Muntinlupa. In his complaint, petitioner asserted that the
marriage between his late brother Teofilo and respondent Felicidad was a nullit
y in view of the absence of the required marriage license. He likewise maintaine
d that his deceased brother was neither the natural nor the adoptive father of r
espondent Teofilo Carlos II. Petitioner likewise sought the avoidance of the con
tracts he entered into with respondent Felicidad with respect to the subject rea
l properties. He also prayed for the cancellation of the certificates of title i
ssued in the name of respondents. He argued that the properties covered by such
certificates of title, including the sums received by respondents as proceeds, s
hould be reconveyed to him. Finally, petitioner claimed indemnification as and b
y way of moral and exemplary damages, attorney s fees, litigation expenses, and
costs of suit. On October 16, 1995, respondents submitted their answer. They den
ied the material averments of petitioner s complaint. Respondents contended that
the dearth of details regarding the requisite marriage license did not invalida
te Felicidad s marriage to Teofilo. Respondents declared that Teofilo II was the
illegitimate child of the deceased Teofilo Carlos with another woman. On the gr
ounds of lack of cause of action and lack of jurisdiction over the subject matte
r, respondents prayed for the dismissal of the case before the trial court. They
also asked that their counterclaims for moral and exemplary damages, as well as
attorney s fees, be granted. But before the parties could even proceed to pre-t
rial, respondents moved for summary judgment. Attached to the motion was the aff
idavit of the justice of the peace who solemnized the marriage. Respondents also
submitted the Certificate of Live Birth of respondent Teofilo II. In the certif
icate, the late Teofilo Carlos and respondent Felicidad were designated as paren

ts.
REMLAW Page 310

late Teofilo Carlos and respondent Felicidad were designated as parents. On Janu
ary 5, 1996, petitioner opposed the motion for summary judgment on the ground of
irregularity of the contract evidencing the marriage. In the same breath, petit
ioner lodged his own motion for summary judgment. Petitioner presented a certifi
cation from the Local Civil Registrar of Calumpit, Bulacan, certifying that ther
e is no record of birth of respondent Teofilo II. Petitioner also incorporated i
n the counter-motion for summary judgment the testimony of respondent Felicidad
in another case. Said testimony was made in Civil Case No. 89-2384, entitled Car
los v. Gorospe, before the RTC Branch 255, Las Pias. In her testimony, respondent
Felicidad narrated that corespondent Teofilo II is her child with Teofilo.5 Sub
sequently, the Office of the City Prosecutor of Muntinlupa submitted to the tria
l court its report and manifestation, discounting the possibility of collusion b
etween the parties. RTC and CA Dispositions On April 8, 1996, the RTC rendered j
udgment, disposing as follows: WHEREFORE, premises considered, defendant s (resp
ondent s) Motion for Summary Judgment is hereby denied. Plaintiff s (petitioner
s) Counter-Motion for Summary Judgment is hereby granted and summary judgment is
hereby rendered in favor of plaintiff as follows: 1. Declaring the marriage bet
ween defendant Felicidad Sandoval and Teofilo Carlos solemnized at Silang, Cavit
e on May 14, 1962, evidenced by the Marriage Certificate submitted in this case,
null and void ab initio for lack of the requisite marriage license; 2. Declarin
g that the defendant minor, Teofilo S. Carlos II, is not the natural, illegitima
te, or legally adopted child of the late Teofilo E. Carlos; 3. Ordering defendan
t Sandoval to pay and restitute to plaintiff the sum of P18,924,800.00 together
with the interest thereon at the legal rate from date of filing of the instant c
omplaint until fully paid; 4. Declaring plaintiff as the sole and exclusive owne
r of the parcel of land, less the portion adjudicated to plaintiffs in Civil Cas
e No. 11975, covered by TCT No. 139061 of the Register of Deeds of Makati City,
and ordering said Register of Deeds to cancel said title and to issue another ti
tle in the sole name of plaintiff herein; 5. Declaring the Contract, Annex "K" o
f complaint, between plaintiff and defendant Sandoval null and void, and orderin
g the Register of Deeds of Makati City to cancel TCT No. 139058 in the name of T
eofilo Carlos, and to issue another title in the sole name of plaintiff herein;
6. Declaring the Contract, Annex M of the complaint, between plaintiff and defen
dant Sandoval null and void; 7. Ordering the cancellation of TCT No. 210877 in t
he names of defendant Sandoval and defendant minor Teofilo S. Carlos II and orde
ring the Register of Deeds of Manila to issue another title in the exclusive nam
e of plaintiff herein; 8. Ordering the cancellation of TCT No. 210878 in the nam
e of defendant Sandoval and defendant Minor Teofilo S. Carlos II and ordering th
e Register of Deeds of Manila to issue another title in the sole name of plainti
ff herein. Let this case be set for hearing for the reception of plaintiff s evi
dence on his claim for moral damages, exemplary damages, attorney s fees, appear
ance fees, and litigation expenses on June 7, 1996 at 1:30 o clock in the aftern
oon. SO ORDERED.6 Dissatisfied, respondents appealed to the CA. In the appeal, r
espondents argued, inter alia, that the trial court acted without or in excess o
f jurisdiction in rendering summary judgment annulling the marriage of Teofilo,
Sr. and Felicidad and in declaring Teofilo II as not an illegitimate child of Te
ofilo, Sr. On October 15, 2002, the CA reversed and set aside the RTC ruling, di
sposing as follows: WHEREFORE, the summary judgment appealed from is REVERSED an
d SET ASIDE and in lieu thereof, a new one is entered REMANDING the case to the
court of origin for further proceedings. SO ORDERED.7 The CA opined: We find the
rendition of the herein appealed summary judgment by the court a quo contrary t
o law and public policy as ensconced in the aforesaid safeguards. The fact that
it was appellants who first sought summary judgment from the trial court, did no
t justify the grant thereof in favor of appellee. Not being an action "to recove
r upon a claim" or "to obtain a declaratory relief," the rule on summary judgmen
t apply (sic) to an action to annul a marriage. The mere fact that no genuine is
sue was presented and the
REMLAW Page 311

apply (sic) to an action to annul a marriage. The mere fact that no genuine issu
e was presented and the desire to expedite the disposition of the case cannot ju
stify a misinterpretation of the rule. The first paragraph of Article 88 and 101
of the Civil Code expressly prohibit the rendition of decree of annulment of a
marriage upon a stipulation of facts or a confession of judgment. Yet, the affid
avits annexed to the petition for summary judgment practically amount to these m
ethods explicitly proscribed by the law. We are not unmindful of appellee s argu
ment that the foregoing safeguards have traditionally been applied to prevent co
llusion of spouses in the matter of dissolution of marriages and that the death
of Teofilo Carlos on May 13, 1992 had effectively dissolved the marriage herein
impugned. The fact, however, that appellee s own brother and appellant Felicidad
Sandoval lived together as husband and wife for thirty years and that the annul
ment of their marriage is the very means by which the latter is sought to be dep
rived of her participation in the estate left by the former call for a closer an
d more thorough inquiry into the circumstances surrounding the case. Rather that
the summary nature by which the court a quo resolved the issues in the case, th
e rule is to the effect that the material facts alleged in the complaint for ann
ulment of marriage should always be proved. Section 1, Rule 19 of the Revised Ru
les of Court provides: "Section 1. Judgment on the pleadings. - Where an answer
fails to tender an issue, or otherwise admits the material allegations of the ad
verse party s pleading, the court may, on motion of that party, direct judgment
on such pleading. But in actions for annulment of marriage or for legal separati
on, the material facts alleged in the complaint shall always be proved." (Unders
coring supplied) Moreover, even if We were to sustain the applicability of the r
ules on summary judgment to the case at bench, Our perusal of the record shows t
hat the finding of the court a quo for appellee would still not be warranted. Wh
ile it may be readily conceded that a valid marriage license is among the formal
requisites of marriage, the absence of which renders the marriage void ab initi
o pursuant to Article 80(3) in relation to Article 58 of the Civil Code the fail
ure to reflect the serial number of the marriage license on the marriage contrac
t evidencing the marriage between Teofilo Carlos and appellant Felicidad Sandova
l, although irregular, is not as fatal as appellee represents it to be. Aside fr
om the dearth of evidence to the contrary, appellant Felicidad Sandoval s affirm
ation of the existence of said marriage license is corroborated by the following
statement in the affidavit executed by Godofredo Fojas, then Justice of the Pea
ce who officiated the impugned marriage, to wit: "That as far as I could remembe
r, there was a marriage license issued at Silang, Cavite on May 14, 1962 as basi
s of the said marriage contract executed by Teofilo Carlos and Felicidad Sandova
l, but the number of said marriage license was inadvertently not placed in the m
arriage contract for the reason that it was the Office Clerk who filled up the b
lanks in the Marriage Contract who in turn, may have overlooked the same." Rathe
r than the inferences merely drawn by the trial court, We are of the considered
view that the veracity and credibility of the foregoing statement as well as the
motivations underlying the same should be properly threshed out in a trial of t
he case on the merits. If the non-presentation of the marriage contract - the pr
imary evidence of marriage - is not proof that a marriage did not take place, ne
ither should appellants non-presentation of the subject marriage license be tak
en as proof that the same was not procured. The burden of proof to show the null
ity of the marriage, it must be emphasized, rests upon the plaintiff and any dou
bt should be resolved in favor of the validity of the marriage. Considering that
the burden of proof also rests on the party who disputes the legitimacy of a pa
rticular party, the same may be said of the trial court s rejection of the relat
ionship between appellant Teofilo Carlos II and his putative father on the basis
of the inconsistencies in appellant Felicidad Sandoval s statements. Although i
t had effectively disavowed appellant s prior claims regarding the legitimacy of
appellant Teofilo Carlos II, the averment in the answer that he is the illegiti
mate son of appellee s brother, to Our mind, did not altogether foreclose the po
ssibility of the said appellant s illegitimate filiation, his right to prove the
same or, for that matter, his entitlement to inheritance rights as such. Withou
t trial on the merits having been conducted in the case, We find appellee s bare

allegation that appellant Teofilo Carlos II was merely purchased from an indige
nt couple by appellant Felicidad Sandoval, on the whole, insufficient to support
what could well be a minor s total forfeiture of the rights arising from his pu
tative filiation. Inconsistent though it may be to her previous statements, appe
llant Felicidad Sandoval s declaration regarding the illegitimate filiation of T
eofilo Carlos II is more credible
REMLAW Page 312

when considered in the light of the fact that, during the last eight years of hi
s life, Teofilo Carlos allowed said appellant the use of his name and the shelte
r of his household. The least that the trial court could have done in the premis
es was to conduct a trial on the merits in order to be able to thoroughly resolv
e the issues pertaining to the filiation of appellant Teofilo Carlos II.8 On Nov
ember 22, 2006, petitioner moved for reconsideration and for the inhibition of t
he ponente, Justice Rebecca De Guia-Salvador. The CA denied the twin motions. Is
sues In this petition under Rule 45, petitioner hoists the following issues: 1.
That, in reversing and setting aside the Summary Judgment under the Decision, An
nex A hereof, and in denying petitioner s Motion for reconsideration under the R
esolution, Annex F hereof, with respect to the nullity of the impugned marriage,
petitioner respectfully submits that the Court of Appeals committed a grave rev
ersible error in applying Articles 88 and 101 of the Civil Code, despite the fac
t that the circumstances of this case are different from that contemplated and i
ntended by law, or has otherwise decided a question of substance not theretofore
decided by the Supreme Court, or has decided it in a manner probably not in acc
ord with law or with the applicable decisions of this Honorable Court; 2. That i
n setting aside and reversing the Summary Judgment and, in lieu thereof, enterin
g another remanding the case to the court of origin for further proceedings, pet
itioner most respectfully submits that the Court of Appeals committed a serious
reversible error in applying Section 1, Rule 19 (now Section 1, Rule 34) of the
Rules of Court providing for judgment on the pleadings, instead of Rule 35 gover
ning Summary Judgments; 3. That in reversing and setting aside the Summary Judgm
ent and, in lieu thereof, entering another remanding the case to the court of or
igin for further proceedings, petitioner most respectfully submits that the Cour
t of Appeals committed grave abuse of discretion, disregarded judicial admission
s, made findings on ground of speculations, surmises, and conjectures, or otherw
ise committed misapplications of the laws and misapprehension of the facts.9 (Un
derscoring supplied) Essentially, the Court is tasked to resolve whether a marri
age may be declared void ab initio through a judgment on the pleadings or a summ
ary judgment and without the benefit of a trial. But there are other procedural
issues, including the capacity of one who is not a spouse in bringing the action
for nullity of marriage. Our Ruling I. The grounds for declaration of absolute
nullity of marriage must be proved. Neither judgment on the pleadings nor summar
y judgment is allowed. So is confession of judgment disallowed. Petitioner fault
s the CA in applying Section 1, Rule 1910 of the Revised Rules of Court, which p
rovides: SECTION 1. Judgment on the pleadings. - Where an answer fails to tender
an issue, or otherwise admits the material allegations of the adverse party s p
leading, the court may, on motion of that party, direct judgment on such pleadin
g. But in actions for annulment of marriage or for legal separation, the materia
l facts alleged in the complaint shall always be proved. He argues that the CA s
hould have applied Rule 35 of the Rules of Court governing summary judgment, ins
tead of the rule on judgment on the pleadings. Petitioner is misguided. The CA d
id not limit its finding solely within the provisions of the Rule on judgment on
the pleadings. In disagreeing with the trial court, the CA likewise considered
the provisions on summary judgments, to wit: Moreover, even if We are to sustain
the applicability of the rules on summary judgment to the case at bench, Our pe
rusal of the record shows that the finding of the court a quo for appellee would
still not be warranted. x x x 11 But whether it is based on judgment on the ple
adings or summary judgment, the CA was correct in reversing the summary judgment
rendered by the trial court. Both the rules on judgment on the pleadings and su
mmary judgments have no place in cases of declaration of absolute nullity of mar
riage and even in annulment of marriage. With the advent of A.M. No. 02-11-10-SC
, known as "Rule on Declaration of Absolute Nullity of Void Marriages and Annulm
ent of Voidable Marriages," the question on the application of summary judgments
or even judgment on the pleadings in cases of nullity or annulment of marriage
has been stamped with clarity. The significant principle laid down by the said R
ule, which took effect on March 15, 200312 is found in Section 17, viz.:
REMLAW Page 313

200312 is found in Section 17, viz.: SEC. 17. Trial. - (1) The presiding judge s
hall personally conduct the trial of the case. No delegation of evidence to a co
mmissioner shall be allowed except as to matters involving property relations of
the spouses. (2) The grounds for declaration of absolute nullity or annulment o
f marriage must be proved. No judgment on the pleadings, summary judgment, or co
nfession of judgment shall be allowed. (Underscoring supplied) Likewise instruct
ive is the Court s pronouncement in Republic v. Sandiganbayan.13 In that case, W
e excluded actions for nullity or annulment of marriage from the application of
summary judgments. Prescinding from the foregoing discussion, save for annulment
of marriage or declaration of its nullity or for legal separation, summary judg
ment is applicable to all kinds of actions.14 (Underscoring supplied) By issuing
said summary judgment, the trial court has divested the State of its lawful rig
ht and duty to intervene in the case. The participation of the State is not term
inated by the declaration of the public prosecutor that no collusion exists betw
een the parties. The State should have been given the opportunity to present con
troverting evidence before the judgment was rendered.15 Both the Civil Code and
the Family Code ordain that the court should order the prosecuting attorney to a
ppear and intervene for the State. It is at this stage when the public prosecuto
r sees to it that there is no suppression of evidence. Concomitantly, even if th
ere is no suppression of evidence, the public prosecutor has to make sure that t
he evidence to be presented or laid down before the court is not fabricated. To
further bolster its role towards the preservation of marriage, the Rule on Decla
ration of Absolute Nullity of Void Marriages reiterates the duty of the public p
rosecutor, viz.: SEC. 13. Effect of failure to appear at the pre-trial. - (a) x
x x (b) x x x If there is no collusion, the court shall require the public prose
cutor to intervene for the State during the trial on the merits to prevent suppr
ession or fabrication of evidence. (Underscoring supplied) Truly, only the activ
e participation of the public prosecutor or the Solicitor General will ensure th
at the interest of the State is represented and protected in proceedings for dec
laration of nullity of marriages by preventing the fabrication or suppression of
evidence.16 II. A petition for declaration of absolute nullity of void marriage
may be filed solely by the husband or wife. Exceptions: (1) Nullity of marriage
cases commenced before the effectivity of A.M. No. 02-11-10SC; and (2) Marriage
s celebrated during the effectivity of the Civil Code. Under the Rule on Declara
tion of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages,
the petition for declaration of absolute nullity of marriage may not be filed by
any party outside of the marriage. The Rule made it exclusively a right of the
spouses by stating: SEC. 2. Petition for declaration of absolute nullity of void
marriages. (a) Who may file. - A petition for declaration of absolute nullity o
f void marriage may be filed solely by the husband or the wife. (Underscoring su
pplied) Section 2(a) of the Rule makes it the sole right of the husband or the w
ife to file a petition for declaration of absolute nullity of void marriage. The
rationale of the Rule is enlightening, viz.: Only an aggrieved or injured spous
e may file a petition for annulment of voidable marriages or declaration of abso
lute nullity of void marriages. Such petition cannot be filed by compulsory or i
ntestate heirs of the spouses or by the State. The Committee is of the belief th
at they do not have a legal right to file the petition. Compulsory or intestate
heirs have only inchoate rights prior to the death of their predecessor, and, he
nce, can only question the validity of the marriage of the spouses upon the deat
h of a spouse in a proceeding for the settlement of the estate of the deceased s
pouse filed in the regular courts. On the other hand, the concern of the State i
s to preserve marriage and not to seek its dissolution.17 (Underscoring supplied
) The new Rule recognizes that the husband and the wife are the sole architects
of a healthy, loving, peaceful marriage. They are the only ones who can decide w
hen and how to build the foundations of marriage. The spouses alone are the engi
neers of their marital life. They are simultaneously the directors and actors of
their matrimonial true-to-life play. Hence, they alone can and should decide wh
en to take a cut, but only in accordance with the grounds allowed by law. The in
novation incorporated in A.M. No. 02-11-10-SC sets forth a demarcation line betw
een marriages covered by the Family Code and those solemnized under the Civil Co

de. The Rule extends only to marriages entered into during the effectivity of th
e Family Code which took effect on August 3, 1988.18
REMLAW Page 314

marriages entered into during the effectivity of the Family Code which took effe
ct on August 3, 1988.18 The advent of the Rule on Declaration of Absolute Nullit
y of Void Marriages marks the beginning of the end of the right of the heirs of
the deceased spouse to bring a nullity of marriage case against the surviving sp
ouse. But the Rule never intended to deprive the compulsory or intestate heirs o
f their successional rights. While A.M. No. 02-11-10-SC declares that a petition
for declaration of absolute nullity of marriage may be filed solely by the husb
and or the wife, it does not mean that the compulsory or intestate heirs are wit
hout any recourse under the law. They can still protect their successional right
, for, as stated in the Rationale of the Rules on Annulment of Voidable Marriage
s and Declaration of Absolute Nullity of Void Marriages, compulsory or intestate
heirs can still question the validity of the marriage of the spouses, not in a
proceeding for declaration of nullity but upon the death of a spouse in a procee
ding for the settlement of the estate of the deceased spouse filed in the regula
r courts.19 It is emphasized, however, that the Rule does not apply to cases alr
eady commenced before March 15, 2003 although the marriage involved is within th
e coverage of the Family Code. This is so, as the new Rule which became effectiv
e on March 15, 200320 is prospective in its application. Thus, the Court held in
Enrico v. Heirs of Sps. Medinaceli,21 viz.: As has been emphasized, A.M. No. 02
-11-10-SC covers marriages under the Family Code of the Philippines, and is pros
pective in its application.22 (Underscoring supplied) Petitioner commenced the n
ullity of marriage case against respondent Felicidad in 1995. The marriage in co
ntroversy was celebrated on May 14, 1962. Which law would govern depends upon wh
en the marriage took place.23 The marriage having been solemnized prior to the e
ffectivity of the Family Code, the applicable law is the Civil Code which was th
e law in effect at the time of its celebration.24 But the Civil Code is silent a
s to who may bring an action to declare the marriage void. Does this mean that a
ny person can bring an action for the declaration of nullity of marriage? We res
pond in the negative. The absence of a provision in the Civil Code cannot be con
strued as a license for any person to institute a nullity of marriage case. Such
person must appear to be the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit.25 Elsewi
se stated, plaintiff must be the real party-in-interest. For it is basic in proc
edural law that every action must be prosecuted and defended in the name of the
real party-in-interest.26 Interest within the meaning of the rule means material
interest or an interest in issue to be affected by the decree or judgment of th
e case, as distinguished from mere curiosity about the question involved or a me
re incidental interest. One having no material interest to protect cannot invoke
the jurisdiction of the court as plaintiff in an action. When plaintiff is not
the real party-in-interest, the case is dismissible on the ground of lack of cau
se of action.27 Illuminating on this point is Amor-Catalan v. Court of Appeals,2
8 where the Court held: True, under the New Civil Code which is the law in force
at the time the respondents were married, or even in the Family Code, there is
no specific provision as to who can file a petition to declare the nullity of ma
rriage; however, only a party who can demonstrate "proper interest" can file the
same. A petition to declare the nullity of marriage, like any other actions, mu
st be prosecuted or defended in the name of the real party-in-interest and must
be based on a cause of action. Thus, in Nial v. Badayog, the Court held that the
children have the personality to file the petition to declare the nullity of mar
riage of their deceased father to their stepmother as it affects their successio
nal rights. xxx x In fine, petitioner s personality to file the petition to decl
are the nullity of marriage cannot be ascertained because of the absence of the
divorce decree and the foreign law allowing it. Hence, a remand of the case to t
he trial court for reception of additional evidence is necessary to determine wh
ether respondent Orlando was granted a divorce decree and whether the foreign la
w which granted the same allows or restricts remarriage. If it is proved that a
valid divorce decree was obtained and the same did not allow respondent Orlando
s remarriage, then the trial court should declare respondent s marriage as bigam
ous and void ab initio but reduced the amount of moral damages from P300,000.00
to P50,000.00 and exemplary damages from P200,000.00 to P25,000.00. On the contr

ary, if it is proved that a valid divorce decree was obtained which allowed Orla
ndo to remarry, then the trial court must dismiss the instant petition to declar
e nullity of marriage on the ground that petitioner Felicitas AmorCatalan lacks
legal personality to file the same.29 (Underscoring supplied)
REMLAW Page 315

Catalan lacks legal personality to file the same.29 (Underscoring supplied) III.
The case must be remanded to determine whether or not petitioner is a real-part
y-in-interest to seek the declaration of nullity of the marriage in controversy.
In the case at bench, the records reveal that when Teofilo died intestate in 19
92, his only surviving compulsory heirs are respondent Felicidad and their son,
Teofilo II. Under the law on succession, successional rights are transmitted fro
m the moment of death of the decedent and the compulsory heirs are called to suc
ceed by operation of law.30 Upon Teofilo s death in 1992, all his property, righ
ts and obligations to the extent of the value of the inheritance are transmitted
to his compulsory heirs. These heirs were respondents Felicidad and Teofilo II,
as the surviving spouse and child, respectively. Article 887 of the Civil Code
outlined who are compulsory heirs, to wit: (1) Legitimate children and descendan
ts, with respect to their legitimate parents and ascendants; (2) In default of t
he foregoing, legitimate parents and ascendants, with respect to their legitimat
e children and descendants; (3) The widow or widower; (4) Acknowledged natural c
hildren, and natural children by legal fiction; (5) Other illegitimate children
referred to in Article 287 of the Civil Code.31 Clearly, a brother is not among
those considered as compulsory heirs. But although a collateral relative, such a
s a brother, does not fall within the ambit of a compulsory heir, he still has a
right to succeed to the estate. Articles 1001 and 1003 of the New Civil Code pr
ovide: ART. 1001. Should brothers and sisters or their children survive with the
widow or widower, the latter shall be entitled to one-half of the inheritance a
nd the brothers and sisters or their children to the other half. ART. 1003. If t
here are no descendants, ascendants, illegitimate children, or a surviving spous
e, the collateral relatives shall succeed to the entire estate of the deceased i
n accordance with the following articles. (Underscoring supplied) Indeed, only t
he presence of descendants, ascendants or illegitimate children excludes collate
ral relatives from succeeding to the estate of the decedent. The presence of leg
itimate, illegitimate, or adopted child or children of the deceased precludes su
ccession by collateral relatives.32 Conversely, if there are no descendants, asc
endants, illegitimate children, or a surviving spouse, the collateral relatives
shall succeed to the entire estate of the decedent.33 If respondent Teofilo II i
s declared and finally proven not to be the legitimate, illegitimate, or adopted
son of Teofilo, petitioner would then have a personality to seek the nullity of
marriage of his deceased brother with respondent Felicidad. This is so, conside
ring that collateral relatives, like a brother and sister, acquire successional
right over the estate if the decedent dies without issue and without ascendants
in the direct line. The records reveal that Teofilo was predeceased by his paren
ts. He had no other siblings but petitioner. Thus, if Teofilo II is finally foun
d and proven to be not a legitimate, illegitimate, or adopted son of Teofilo, pe
titioner succeeds to the other half of the estate of his brother, the first half
being allotted to the widow pursuant to Article 1001 of the New Civil Code. Thi
s makes petitioner a real-party-interest to seek the declaration of absolute nul
lity of marriage of his deceased brother with respondent Felicidad. If the subje
ct marriage is found to be void ab initio, petitioner succeeds to the entire est
ate. It bears stressing, however, that the legal personality of petitioner to br
ing the nullity of marriage case is contingent upon the final declaration that T
eofilo II is not a legitimate, adopted, or illegitimate son of Teofilo. If Teofi
lo II is proven to be a legitimate, illegitimate, or legally adopted son of Teof
ilo, then petitioner has no legal personality to ask for the nullity of marriage
of his deceased brother and respondent Felicidad. This is based on the ground t
hat he has no successional right to be protected, hence, does not have proper in
terest. For although the marriage in controversy may be found to be void from th
e beginning, still, petitioner would not inherit. This is because the presence o
f descendant, illegitimate,34 or even an adopted child35 excludes the collateral
relatives from inheriting from the decedent. Thus, the Court finds that a reman
d of the case for trial on the merits to determine the validity or nullity of th
e subject marriage is called for. But the RTC is strictly instructed to dismiss
the nullity of marriage case for lack of cause of action if it is proven by evid
ence that Teofilo II is a legitimate, illegitimate, or legally adopted son of Te

ofilo Carlos, the deceased brother of petitioner.

REMLAW Page 316

legally adopted son of Teofilo Carlos, the deceased brother of petitioner. IV. R
emand of the case regarding the question of filiation of respondent Teofilo II i
s proper and in order. There is a need to vacate the disposition of the trial co
urt as to the other causes of action before it. Petitioner did not assign as err
or or interpose as issue the ruling of the CA on the remand of the case concerni
ng the filiation of respondent Teofilo II. This notwithstanding, We should not l
eave the matter hanging in limbo. This Court has the authority to review matters
not specifically raised or assigned as error by the parties, if their considera
tion is necessary in arriving at a just resolution of the case.36 We agree with
the CA that without trial on the merits having been conducted in the case, petit
ioner s bare allegation that respondent Teofilo II was adopted from an indigent
couple is insufficient to support a total forfeiture of rights arising from his
putative filiation. However, We are not inclined to support its pronouncement th
at the declaration of respondent Felicidad as to the illegitimate filiation of r
espondent Teofilo II is more credible. For the guidance of the appellate court,
such declaration of respondent Felicidad should not be afforded credence. We rem
ind the CA of the guaranty provided by Article 167 of the Family Code to protect
the status of legitimacy of a child, to wit: ARTICLE 167. The child shall be co
nsidered legitimate although the mother may have declared against its legitimacy
or may have been sentenced as an adulteress. (Underscoring supplied) It is stre
ssed that Felicidad s declaration against the legitimate status of Teofilo II is
the very act that is proscribed by Article 167 of the Family Code. The language
of the law is unmistakable. An assertion by the mother against the legitimacy o
f her child cannot affect the legitimacy of a child born or conceived within a v
alid marriage.37 Finally, the disposition of the trial court in favor of petitio
ner for causes of action concerning reconveyance, recovery of property, and sum
of money must be vacated. This has to be so, as said disposition was made on the
basis of its finding that the marriage in controversy was null and void ab init
io. WHEREFORE, the appealed Decision is MODIFIEDas follows: 1. The case is REMAN
DED to the Regional Trial Court in regard to the action on the status and filiat
ion of respondent Teofilo Carlos II and the validity or nullity of marriage betw
een respondent Felicidad Sandoval and the late Teofilo Carlos; 2. If Teofilo Car
los II is proven to be the legitimate, or illegitimate, or legally adopted son o
f the late Teofilo Carlos, the RTC is strictly INSTRUCTED to DISMISS the action
for nullity of marriage for lack of cause of action; 3. The disposition of the R
TC in Nos. 1 to 8 of the fallo of its decision is VACATED AND SET ASIDE. The Reg
ional Trial Court is ORDERED to conduct trial on the merits with dispatch and to
give this case priority in its calendar. No costs. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2008/dec2008/gr_179922_2008.htm
l>
REMLAW Page 317

Estreller v. Ysmael GR 170264 Mar 13, 2009

Sunday, November 14, 2010 11:34 PM
JAMES ESTRELLER, EDUARDO CULIANAN, GREG CARROS, RAQUEL YEE, JOSELITO PENILLA, LO
RNA DOTE, CRESENCIANA CLEOPAS, TRINIDAD TEVES, SONIA PENILLA, ANITA GOMINTONG, C
HING DIONESIO, MARIBEL MANALO, DESIRES HUERTO, and RAYMUNDO CORTES, Petitioners,
vs. LUIS MIGUEL YSMAEL and CRISTETA L. SANTOS-ALVAREZ, Respondents.* DE C I S I
O N AUSTRIA-MARTINEZ, J.: In the present petition, the Court finds occasion to
reassert the legal precepts that a co-owner may file an action for recovery of p
ossession without the necessity of joining all the other co-owners as coplaintif
fs since the suit is deemed to be instituted for the benefit of all; and that Se
ction 2 of Presidential Decree (P.D.) No. 2016, reinforced by P.D. No. 1517, whi
ch prohibits the eviction of qualified tenants/occupants, extends only to landle
ss urban families who are rightful occupants of the land and its structures, and
does not include those whose presence on the land is merely tolerated and witho
ut the benefit of contract, those who enter the land by force or deceit, or thos
e whose possession is under litigation. Respondents filed with the Regional Tria
l Court (RTC), Branch 216, Quezon City, a case for Recovery of Possession agains
t petitioners, claiming ownership of the property subject of dispute located in
E. Rodriguez Avenue and La Filonila Streets in Quezon City, by virtue of Transfe
r Certificate of Title (TCT) No. 41698 issued by the Register of Deeds of Quezon
City on June 10, 1958. Respondents alleged that on various dates in 1973, petit
ioners entered the property through stealth and strategy and had since occupied
the same; and despite demands made in March 1993, petitioners refused to vacate
the premises, prompting respondents to file the action. 1 Petitioners denied res
pondents allegations. According to them, respondent Luis Miguel Ysmael (Ysmael)
had no personality to file the suit since he only owned a small portion of the
property, while respondent Cristeta Santos-Alvarez (Alvarez) did not appear to b
e a registered owner thereof. Petitioners also contended that their occupation o
f the property was lawful, having leased the same from the Magdalena Estate, and
later on from Alvarez. Lastly, petitioners asserted that the property has alrea
dy been proclaimed by the Quezon City Government as an Area for Priority Develop
ment under P. D. Nos. 1517 and 2016, which prohibits the eviction of lawful tena
nts and demolition of their homes. 2 After trial, the RTC rendered its Decision
dated September 15, 2000 in favor of respondents. The dispositive portion of the
Decision reads: WHEREFORE, premises considered, judgment is hereby rendered in
favor of plaintiffs Luis Miguel Ysmael and Cristeta L. Santos-Alvarez and agains
t defendants ordering the latter and all persons claiming rights under them to i
mmediately vacate the subject property and peacefully surrender the same to the
plaintiffs. Defendants are likewise ordered to pay plaintiffs the following: 1.
The amount of P400.00 each per month from the date of extra-judicial demand unti
l the subject property is surrendered to plaintiffs as reasonable compensation f
or the use and possession thereof; 2. The amount of P20,000.00 by way of exempla
ry damages; 3. The amount of P20,000.00 by way of attorney s fees and litigation
expenses; 4. Cost of suit. Corollarily, the counter-claims of defendants are he
reby DISMISSED for lack of merit. SO ORDERED.3 Petitioners appealed to the Court
of Appeals (CA), which, in a Decision 4 dated March 14, 2005, dismissed their a
ppeal and affirmed in toto the RTC Decision. Hence, the present petition for rev
iew under Rule 45 of the Rules of Court, on the following grounds: I THE HONORAB
LE COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENTS YSMAEL AND ALVAREZ ARE
BOTH "REAL PARTIES IN INTEREST" WHO WOULD BE BENEFITED OR INJURED BY THE JUDGMEN
T OR THE PARTY ENTITLED TO THE AVAILS OF THE SUIT. II THE HONORABLE COURT OF APP
EALS FAILED TO CONSIDER AND DECIDE THE RELEVANT
REMLAW Page 318

THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND DECIDE THE RELEVANT QUESTI
ONS AND ISSUES PRESENTED BY THE PETITIONERS IN ROMAN NUMERALS II, III AND IV OF
THEIR DISCUSSIONS AND ARGUMENTS IN THE APPELLANTS BRIEF WHICH ARE HEREUNTO COPIE
D OR REPRODUCED. 5 The present petition merely reiterates the issues raised and
settled by the RTC and the CA. On this score, it is well to emphasize the rule t
hat the Courts role in a petition under Rule 45 is limited to reviewing or revers
ing errors of law allegedly committed by the appellate court. Factual findings o
f the trial court, especially when affirmed by the CA, are conclusive on the par
ties. Since such findings are generally not reviewable, this Court is not duty-b
ound to analyze and weigh all over again the evidence already considered in the
proceedings below, unless the factual findings complained of are devoid of suppo
rt from the evidence on record or the assailed judgment is based on a misapprehe
nsion of facts. 6 The Court then finds that the petition is without merit. Respo
ndents are real parties-in-interest in the suit below and may, therefore, commen
ce the complaint for accion publiciana. On the part of Ysmael, he is a named coowner of the subject property under TCT No. 41698, together with Julian Felipe Y
smael, Teresa Ysmael, and Ramon Ysmael. 7 For her part, Alvarez was a buyer of a
portion of the property, as confirmed in several documents, namely: (1) Decisio
n dated August 30, 1974 rendered by the Regional Trial Court of Quezon City, Bra
nch 9 (IX), in Civil Case No. Q-8426, which was based on a Compromise Agreement
between Alvarez and the Magdalena Estate; 8 (2) an unnotarized Deed of Absolute
Sale dated May 1985 executed between the Ysmael Heirs and Alvarez;9 and (3) a no
tarized Memorandum of Agreement between the Ysmael Heirs and Alvarez executed on
May 2, 1991.10 Recently, in Wee v. De Castro,11 the Court, citing Article 487 o
f the Civil Code, reasserted the rule that any one of the co-owners may bring an
y kind of action for the recovery of co-owned properties since the suit is presu
med to have been filed for the benefit of all co-owners. The Court also stressed
that Article 487 covers all kinds of action for the recovery of possession, i.e
., forcible entry and unlawful detainer (accion interdictal), recovery of posses
sion (accion publiciana), and recovery of ownership (accion de reivindicacion),
thus: In the more recent case of Carandang v. Heirs of De Guzman,this Court decl
ared that a co-owner is not even a necessary party to an action for ejectment, f
or complete relief can be afforded even in his absence, thus: In sum, in suits t
o recover properties, all co-owners are real parties in interest. However, pursu
ant to Article 487 of the Civil Code and the relevant jurisprudence, any one of
them may bring an action, any kind of action for the recovery of co-owned proper
ties. Therefore, only one of the co-owners, namely the co-owner who filed the su
it for the recovery of the co-owned property, is an indispensable party thereto.
The other co-owners are not indispensable parties. They are not even necessary
parties, for a complete relief can be afforded in the suit even without their pa
rticipation, since the suit is presumed to have been filed for the benefit of al
l co-owners. (Emphasis supplied) Petitioners persistently question the validity
of the transfer of ownership to Alvarez. They insist that Alvarez failed to esta
blish any right over the property since the Deed of Absolute Sale was not inscri
bed on TCT No. 41698. Interestingly, petitioners debunked their own argument whe
n they themselves claimed in their Answer with Counter-claim that they derived t
heir right to occupy the property from a lease agreement with, first, the Magdal
ena Estate, and thereafter, Alvarez herself.12 More importantly, the fact that t
he sale was not annotated or inscribed on TCT No. 41698 does not make it any les
s valid. A contract of sale has the force of law between the contracting parties
and they are expected to abide, in good faith, by their respective contractual
commitments. Article 1358 of the Civil Code which requires the embodiment of cer
tain contracts in a public instrument, is only for convenience; and registration
of the instrument only adversely affects third parties, and non-compliance ther
ewith does not adversely affect the validity of the contract or the contractual
rights and obligations of the parties thereunder. 13 Petitioners further contend
that the property subject of the Deed of Absolute Sale Lot 6, Block 4 of Subd.
Plan Psd No. 33309 is different from that being claimed in this case, which are
Lots 2 and 3. They claim that there exists another title covering the subject pr
operty, i.e., TCT No. 41698 in the names of Victoria M. Panganiban and Teodoro M

. Panganiban. Notably, TCT No. 41698 in the name of the Ysmael Heirs covers seve
ral parcels of land under Subd. Plan Psd No. 33309. These include: Lot 2, Block
4; Lot 3, Block 4; and Lot 6, Block 4, each of which contains 1,000 square meter
s. In the Decision dated August 30, 1974 rendered by the RTC of Quezon City, Bra
nch 9, in Civil Case No. Q-8426, the ownership of 200 square meters of Lot 2, Bl
ock 4; 250 square meters of Lot 3, Block 4; and the full 1,000 square meters of
Lot 6, Block 4, was conferred on Alvarez. A Deed of Absolute Sale dated May 1985
was later executed by the Ysmael Heirs in favor of Alvarez, but it covered
REMLAW Page 319

Absolute Sale dated May 1985 was later executed by the Ysmael Heirs in favor of
Alvarez, but it covered only Lot 6, Block 4. Nevertheless, a Memorandum of Agree
ment dated May 2, 1991 was subsequently entered into by the Ysmael Heirs and Alv
arez, whereby all three apportioned parcels of land allocated to Alvarez under t
he RTC Decision dated August 30, 1974, were finally sold, transferred and convey
ed to her. Evidently, while the title was yet to be registered in the name of Al
varez, for all intents and purposes, however, the subject property was already o
wned by her. The Ysmael Heirs are merely naked owners of the property, while Alv
arez is already the beneficial or equitable owner thereof; and the right to the
gains, rewards and advantages generated by the property pertains to her. The exi
stence of a title in the same TCT No. 41698, this time in the names of Victoria
M. Panganiban and Teodoro M. Panganiban, was adequately explained by the Certifi
cation of the Register of Deeds dated March 1, 1994, and which reads: At the ins
tance of RUY ALBERTO S. RONDAIN, I, SAMUEL C. CLEOFE, Register of Deeds of Quezo
n City, do hereby certify that TCT No. 41698, covering Lot 19, Blk. 8 of the con
s.-subd. plan Pos-817, with an area of Three Hundred Seventy Five (375) Square M
eters, registered in the name of VICTORIA M. PANGANIBAN; and TEODORO M. PANGANIB
AN, married to Elizabeth G. Panganiban, issued on February 8, 1991, is existing
and on file in this Registry. This is to certify further that TCT No. 41698 pres
ented by Ruy Alberto S. Rondain covering Lot 3, Blk. 2 of the subd. Plan PSD-330
9, with an area of Nine Hundred Ninety Six (996) Square Meters, issued on June 1
0, 1958 and registered in the name of JUAN FELIPE YSMAEL, TERESA YSMAEL, RAMON Y
SMAEL, LUIS MIGUEL YSMAEL, which is also an existing title is different and dist
inct from each other inasmuch as they cover different Lots and Plans. That it is
further certified that the similarity in the title numbers is due to the fact t
hat after the fire of June 11, 1988, the Quezon City Registry issued new title n
umbers beginning with TCT No. 1.14 (Emphasis supplied) Finally, petitioners cla
im that they are entitled to the protection against eviction and demolition affo
rded by P.D. Nos. 2016, 15 1517,16 and Republic Act (R.A.) No. 7279, 17 is not p
lausible. Section 6 of P.D. No. 1517 grants preferential rights to landless tena
nts/occupants to acquire land within urban land reform areas, while Section 2 of
P.D. No. 2016 prohibits the eviction of qualified tenants/ occupants. In Dimacu
langan v. Casalla,18 the Court was emphatic in ruling that the protective mantle
of P.D. No. 1517 and P.D. No. 2016 extends only to landless urban families who
meet these qualifications: a) they are tenants as defined under Section 3(f) of
P.D. No. 1517; b) they built a home on the land they are leasing or occupying; c
) the land they are leasing or occupying is within an Area for Priority Developm
ent and Urban Land Reform Zone; and d) they have resided on the land continuousl
y for the last 10 years or more. Section 3(f) of P.D. No. No. 1517 defines the t
erm "tenant" covered by the said decree as the "rightful occupant of land and it
s structures, but does not include those whose presence on the land is merely to
lerated and without the benefit of contract, those who enter the land by force o
r deceit, or those whose possession is under litigation." It has already been ru
led that occupants of the land whose presence therein is devoid of any legal aut
hority, or those whose contracts of lease were already terminated or had already
expired, or whose possession is under litigation, are not considered "tenants"
under the Section 3(f). 19 Petitioners claim that they are lawful lessees of the
property. However, they failed to prove any lease relationship or, at the very
least, show with whom they entered the lease contract. Respondents, on the other
hand, were able to prove their right to enjoy possession of the property. Thus,
petitioners, whose occupation of the subject property by mere tolerance has bee
n terminated by respondents, clearly do not qualify as "tenants" covered by thes
e social legislations. Finally, petitioners failed to demonstrate that they qual
ify for coverage under R. A. No. 7279 or the Urban Development and Housing Act o
f 1992. R. A. No. 7279 provides for the procedure to be undertaken by the concer
ned local governments in the urban land development process, to wit: conduct an
inventory of all lands and improvements within their respective localities, and
in coordination with the National Housing Authority, the Housing and Land Use Re
gulatory Board, the National Mapping Resource Information Authority, and the Lan
d Management Bureau; identify lands for socialized housing and resettlement area

s for the immediate and future needs of the underprivileged and homeless in the
urban areas; acquire the lands; and dispose of said lands to the beneficiaries o
f the program. 20 While there is a Certification that the area bounded by E. Rod
riguez, Victoria Avenue, San Juan River and 10th Street of Barangay. Damayang La
gi, Quezon City is included in the list of Areas for Priority Development under
Presidential Proclamation No. 1967, 21
REMLAW Page 320

City is included in the list of Areas for Priority Development under Presidentia
l Proclamation No. 1967, 21 there is no showing that the property has already be
en acquired by the local government for this purpose; or that petitioners have d
uly qualified as beneficiaries. All told, the Court finds no reason to grant the
present petition. WHEREFORE, the petition is DENIED for lack of merit. The Deci
sion dated March 14, 2005 of the Court of Appeals is AFFIRMED. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2009/mar2009/gr_170264_2009.htm
l>
REMLAW Page 321

Robert De Galicia v. Mercado, GR No. 146744, Mar 6, 2006;

Sunday, November 14, 2010 11:34 PM
ROBERT G. DE GALICIA, Petitioner, vs. MELY MERCADO, Respondent. DE C I S I O N C
ORONA, J.: Petitioner Robert G. de Galicia was a business partner in RCL Enterpr
ises. On or about December 15, 1997, he was asked by his partner Carmen Arciaga
to co-sign with her a Philbank check for P50,000 payable to cash. Allegedly with
out his knowledge and consent, Arciaga rediscounted the check with respondent Me
ly Mercado at 8% interest. Respondent gave Arciaga the sum of P46,000, represent
ing the value of the check less 8% as interest. Later, respondent presented the
check for payment but it was dishonored for insufficiency of funds. She then fil
ed a complaint for estafa and for violation of Batas Pambansa Blg. (BP) 221 agai
nst petitioner and Carmen Arciaga. Petitioner countered by filing in the Regiona
l Trial Court (RTC) of Manila, Branch 32, a case for the declaration of nullity
of the agreement to pay interest between respondent and his partner, Arciaga. He
prayed that the agreement, together with the rediscounted check, be declared vo
id for being contrary to public policy. After trial, the RTC, in an order dated
November 21, 2000, dismissed petitioners case for lack of jurisdiction. In anothe
r order dated January 15, 2001, it also denied his motion for reconsideration. T
reating the complaint as one for recovery of a sum of money, the trial court rul
ed: Even granting in arguendo, that the action seeks to have the agreement (?) b
etween defendant Mely Mercado and one Carmen Arciaga with respect to the payment
of interest to be declared null and void, this Court is in a quandary because o
ne of the parties (Carmen Arciaga) in the so-called agreement is not a party to
the present case. Also, even considering and computing the interest rate at 8% o
r 5%, it is still within the rate of P50,000 and way below the jurisdictional am
ount vested in the Regional Trial Court. The present action is treated by this C
ourt as one for the recovery of sum of money, construing the same from the facts
alleged in the complaint xxx with the present action/complaint having no title
of the action. A reading of the instant case indicates that the principal relief
sought is for the declaration of the subject check in the amount of P50,000 a n
ullity. Hence, capable of pecuniary estimation, the so-called agreement merely a
n incident thereto. After going over the entire record of this case, and further
considering that every court has the power to review and amend its findings and
conclusions, this Court finds no reversible error to reconsider its assailed ord
er (dated November 21, 2000). WHEREFORE, the assailed Order (supra) [D]ismissing
this case, [S]tands. The Motion for Reconsideration, for lack of merit, is here
by DENIED.2 Via this petition for review under Rule 45 of the 1997 Rules of Civi
l Procedure, on a pure question of law, petitioner assigns this error to the abo
vementioned order: THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT FOR LACK OF
JURISDICTION OVER ITS SUBJECT MATTER SIMPLY BECAUSE THE AMOUNT INVOLVED [WAS] O
NLY P50,000.00.3 In his memorandum,4 petitioner insisted that the complaint for
declaration of nullity of the agreement between respondent and Arciaga was withi
n the jurisdiction of the RTC. According to petitioner, the subject matter of th
e complaint was not for the recovery of a sum of money but for the nullification
of the agreement to pay interest, with a prayer to also nullify the check, in w
hich case the action was not capable of pecuniary estimation. He argued that it
was error for the trial court to dismiss the complaint on the basis merely that
the amount involved was P50,000. Respondent, however, contends that the dismissa
l by the RTC of the complaint was warranted since the action essentially involve
d the nullification of the check amounting to P50,000. She insisted that the amo
unt was outside the RTCs jurisdiction, thus, it could not possibly take cognizanc
e of the case. Respondent added that the RTC did not err in dismissing the compl
aint because Arciaga, as an
REMLAW Page 322

indispensable party, was not impleaded. Under BP 129,5 the RTC shall exercise ex
clusive jurisdiction on the following actions: (1) In all civil actions in which
the subject of the litigation is incapable of pecuniary estimation; (2) In all
civil actions which involve the title to, or possession of, real property, or an
y interest therein, where the assessed value of the property involve[d] exceeds
Twenty [T]housand [P]esos (P20,000.00) or for civil actions in Metro Manila, whe
re such value exceeds Fifty [T]housand [P]esos (P50,000.00) except actions for f
orcible entry into and unlawful detainer of lands or buildings, original jurisdi
ction over which is conferred upon the Metropolitan Trial Courts, Municipal Tria
l Courts, and Municipal Circuit Trial Courts. xxx xxx xxx In determining whether
or not the subject matter of an action is capable of pecuniary estimation, the
Court, in the early case of Singsong v. Isabella Sawmill,6 laid down the followi
ng criterion: xxx this Court has adopted the criterion of first ascertaining the
nature of the principal action or remedy sought. If it is primarily for the rec
overy of a sum of money, the claim is considered capable of pecuniary estimation
, and whether jurisdiction is in the municipal courts or in the courts of first
instance (now RTC) would depend on the amount involved. However, where the basic
issue is something other than the right to recover a sum of money, where the mo
ney claim is purely incidental to, or a consequence of, the principal relief sou
ght, this Court has considered such actions as cases where the subject of the li
tigation may not be estimated in terms of money, and are cognizable by the court
s of first instance (RTC). (emphasis supplied) Based on the foregoing criterion,
the subject of the action before the trial court was indeed incapable of pecuni
ary estimation and therefore cognizable by the RTC. A perusal of the complaint7
reveals that it primarily sought to annul the agreement under which Arciaga obli
gated herself to pay respondent interest on the amount of the rediscounted check
. What was being assailed was the payment of interest. Petitioner was not seekin
g recovery of a sum of money as found by the trial court. The records do not sho
w that he asked for payment of the amount of the check. Besides, it was not for
petitioner to ask for reimbursement of the amount of the check but respondent wh
o gave P46,000 to petitioners business partner, Arciaga. Nevertheless, notwithsta
nding the RTCs jurisdiction on the subject case, this Court sustains the dismissa
l of the subject complaint for its failure to implead an indispensable party. Un
der Rule 3, Section 7 of the 1997 Rules of Civil Procedure, an indispensable par
ty is a party-in-interest without whom there can be no final determination of an
action. The interests of such indispensable party in the subject matter of the
suit and the relief are so bound with those of the other parties that his legal
presence as a party to the proceeding is an absolute necessity.8 As a rule, an i
ndispensable partys interest in the subject matter is such that a complete and ef
ficient determination of the equities and rights of the parties is not possible
if he is not joined.9 Here, we hold that Arciaga was an indispensable party to t
he suit filed by petitioner against respondent. Her interest in the suit was int
ertwined with the rights and interest of both petitioner and respondent. She was
as involved in the suit as petitioner and respondent, being a co-signatory of t
he re-discounted check and being privy to the assailed agreement. Had the subjec
t complaint been resolved on the merits, any judgment made by the trial court wa
s going to affect not only respondent but Arciaga as well. Unfortunately, due to
the failure of petitioner to implead her in the complaint, any judgment therein
could not bind her. It was as if the complaint had not been filed at all. In Ar
acelona v. Court of Appeals,10 the Court held that the joinder of all indispensa
ble parties must be made under any and all conditions, their presence being a si
ne qua non for the exercise of the judicial power. There, we ruled that when an
indispensable party is not before the court, the action should be dismissed.11 I
t is interesting to note that petitioner filed the subject complaint after respo
ndent initiated a complaint for estafa and violation of BP 22.12 The filing of t
he complaint for declaration of nullity of the agreement to pay interest and the
nullity of the check appeared to be an afterthought and an attempt to affect th
e outcome of the criminal complaint against him. WHEREFORE, the petition is here
by DENIED. No costs. SO ORDERED.

REMLAW Page 323

SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2006/mar2006/gr_146744_2006.htm
l>
REMLAW Page 324

Lagunilla v. Velasco GR 169276 Jun 16, 2009;

Sunday, November 14, 2010 11:34 PM
DIONISIA MONIS LAGUNILLA and RAFAEL MONIS, Petitioners, vs. ANDREA MONIS VELASCO
and MACARIA MONIS, Respondents. DE C I S I O N NACHURA, J.: For review is the C
ourt of Appeals (CA) Decision1 dated July 13, 2005 in CA-G.R. CV No. 56998 affir
ming with modification the Regional Trial Court (RTC) Decision2 dated April 24,
1997 in Civil Case No. 466 for Annulment of Documents and Damages. The facts, as
culled from the records, are as follows: Rev. Fr. Patricio (Patricio), Magdalen
a Catalina (Magdalena), Venancio, and respondent Macaria, all surnamed Monis, as
well as respondent Andrea Monis - Velasco (Andrea), are siblings. Venancio is t
he father of petitioners Dionisia Monis Lagunilla and Rafael Monis. During their
lifetime, Patricio and Magdalena acquired several properties which included sev
eral parcels of land in the province of La Union and another one situated in Que
zon City, with an area of 208.35 sq. m. (otherwise known as the Quezon City prop
erty).3 The Quezon City property was co-owned by Patricio and Magdalena, togethe
r with Andrea and Pedro Velasco. After the death of Patricio and Magdalena, or o
n February 24, 1993, Andrea and Macaria (to the exclusion of Venancios children)
executed a Deed of Extrajudicial Settlement with Donation4 (hereinafter referred
to as the subject Deed) involving the Quezon City property, and donated the sam
e to Andreas son, Pedro Monis Velasco, Jr. (Pedro). By virtue of said Deed, Trans
fer Certificate of Title (TCT) No. RT-60455 (190472)5 was cancelled and a new on
e (TCT No. 85837) was issued in the name of Pedro.6 On June 1, 1993, petitioners
instituted an action for Annulment of Documents and Damages7 before the Regiona
l Trial Court (RTC) of Balaoan, La Union against respondents. The case was raffl
ed to Branch 34 and was docketed as Civil Case No. 466. In their complaint, peti
tioners sought the annulment of the subject Deed, allegedly because of the fraud
ulent act committed by respondents in executing the same. They claimed that resp
ondents misrepresented that they were the only surviving heirs of Patricio and M
agdalena when, in fact, they (petitioners) were also surviving heirs by virtue o
f their right to represent their deceased father Venancio. In short, being Patri
cio and Magdalenas nephew and niece, they were asserting their rights, as co-heir
s, to the Quezon City property. Respondents fraudulent act was, according to peti
tioners, a ground for the annulment of the subject Deed. As a consequence of the
nullity of the extrajudicial settlement, they further sought the cancellation o
f the title and tax declarations issued pursuant thereto, in the name of Pedro.
Respondents countered that nowhere in the subject Deed did they assert to be the
only surviving heirs of Patricio and Magdalena. Admittedly, however, they claim
ed to be the only legitimate sisters of the deceased. They added that annulment
of the Deed was not tenable, considering that petitioners already received advan
ces on their share of the properties of the decedent; besides, there were other
properties that had not been the subject of partition from which they could obta
in reparation, if they are so entitled. Contrary to petitioners claim, respondent
s insisted that there was no way that the subject Deed could be annulled in the
absence of any valid ground to rely on.8 No amicable settlement was reached duri
ng the pre-trial; thus, trial on the merits ensued. After petitioners rested the
ir case, they moved for the amendment of the complaint to implead additional par
ty and to conform to the evidence presented.9 Petitioners averred that the resol
ution of the case would affect the interest of Pedro as donee; hence, he is an i
ndispensable party. The RTC, however, denied the motion, as the amendment of the
complaint would result in the introduction of a different cause of action preju
dicial to respondents. The court further held that the amendment of the complain
t would unduly delay the resolution of the case. On April 24, 1997, the RTC deci
ded in favor of respondents, disposing, as follows: WHEREFORE, taken in the abov
e light, the Court hereby orders the case DISMISSED and further orders
REMLAW Page 325

WHEREFORE, taken in the above light, the Court hereby orders the case DISMISSED
and further orders the plaintiffs to pay the defendants jointly and severally th
e following, thus: 1) P100,000.00 as moral damages; 2) P50,000.00 as exemplary d
amages; 3) P100,000.00 as attorneys fees; and 4) To pay the costs of this suit. S
O ORDERED.10 Applying Article 887 of the Civil Code, the RTC ruled that petition
ers are not compulsory heirs; thus, they could not invoke bad faith as a ground
to rescind the subject Deed. As to respondents declaration that they were the onl
y surviving heirs of the decedents, the trial court said that it was, in a way,
a nonrecognition of petitioners claim that they, too, are heirs. The court, likew
ise, gave credence to respondents claim that petitioners had previously received
advances on their share of the inheritance. As to the remedy of rescission, the
court declared that it was not available in the instant case because of the exis
tence of other remedies that may be availed of by petitioners, considering that
there were other properties from which they could obtain reparation, assuming th
ey are entitled.11 On appeal to the Court of Appeals, the appellate court affirm
ed with modification the trial courts decision, viz.: WHEREFORE, premises conside
red, the assailed decision dated April 24, 1997 of the Regional Trial Court of B
alao[a]n, La Union in Civil Case No. 466 is hereby AFFIRMED with MODIFICATION, i
n that the award of exemplary damages and attorneys fees is deleted. No pronounce
ment as to costs. SO ORDERED.12 The appellate court made a definitive conclusion
that petitioners, together with respondents, are heirs of Macaria and Patricio.
However, considering that petitioners are not compulsory heirs, it agreed with
the RTC that they could not use "bad faith" as a ground to rescind the contract
as provided for in Article 1104 of the New Civil Code. The appellate court also
agreed with the trial court that bad faith on the part of respondents was wantin
g. While recognizing the doctrine that the subject Deed was not binding on petit
ioners because they did not participate therein, the appellate court refused to
annul the contract on the basis thereof, in view of the existence of other prope
rties previously received by petitioners and those that may still be the subject
of partition. The court further denied the prayer to annul the donation made in
favor of Pedro, inasmuch as it was belatedly raised by petitioners.13 The appel
late court likewise found the deletion of the award of exemplary damages and att
orneys fees proper.141awphi1 Unsatisfied, petitioners come to this Court in this
petition for review on certiorari raising the following issues: I. WHETHER OR NO
T THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AND MANIFESTLY OVERLO
OKED RELEVANT FACTS NOT DISPUTED AND WHICH IF PROPERLY CONSIDERED WOULD JUSTIFY
A DIFFERENT CONCLUSION THAT THERE IS FRAUD OR BAD FAITH ON THE PART OF DEFENDANT
S-APPELLEES IN EXCLUDING PLAINTIFFS-APPELLANTS FROM THE DEED OF EXTRA JUDICIAL S
ETTLEMENT WITH DONATION. II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN CONCLUDING THAT "THE MERE ACT OF REPUDIATING THE INTERES
T OF A CO-OWNER IS NOT SUFFICIENT TO SUPPORT A FINDING OF BAD FAITH SINCE NO BAD
FAITH CAN BE ATTRIBUTED TO A PERSON WHO ONLY EXERCISES A PRIVILEGE GRANTED BY L
AW." III. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETIO
N IN CONCLUDING THAT THERE IS ABSENCE OF FRAUD OR BAD FAITH ON THE PART OF DEFEN
DANTSAPPELLEES IN EXCLUDING PLAINTIFFS-APPELLANTS IN THE EXTRA JUDICIAL SETTLEME
NT BASED ON AN INFERENCE THAT IS MANIFESTLY MISTAKEN THAT PLAINTIFFS-APPELLANTS
HAVE ALREADY OBTAINED THEIR ADVANCE OF INHERITANCE FROM THE DECEDENTS. IV. WHETH
ER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW AND GRAVE ABU
SE OF DISCRETION IN CONCLUDING THAT THE ASSAILED EXTRAJUDICIAL SETTLEMENT CANNOT
BE ANNULLED SINCE THE MISREPRESENTATION IS NOT SO GRAVE IN CHARACTER AS TO AMOU
NT TO BAD FAITH (AND) RULE 74, SECTION 1, SECOND PARAGRAPH, DOES NOT DISCOUNT TH
E POSSIBILITY THAT SOME HEIRS MAY HAVE BEEN EXCLUDED IN THE EXECUTION OF THE EXT
RAJUDICIAL SETTLEMENT. V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTE
D GRAVE ABUSE OF DISCRETION TANTAMOUNT TO AN ERROR OF LAW IN CONCLUDING THAT THE
DEED OF
REMLAW Page 326

DISCRETION TANTAMOUNT TO AN ERROR OF LAW IN CONCLUDING THAT THE DEED OF EXTRAJUD

ICIAL SETTLEMENT WITH DONATION CANNOT BE ANNULLED. VI. WHETHER OR NOT THE COURT
OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN AWARDING MORAL DAMAGES DESPITE
FINDING THAT THE SUIT WAS MADE IN GOOD FAITH. VII. WHETHER OR NOT THE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF THE REG
IONAL TRIAL COURT THAT THE MOTION TO AMEND COMPLAINT TO IMPLEAD ADDITIONAL PARTY
AND TO CONFORM TO THE EVIDENCE PRESENTED FILED BY THE PLAINTIFFS-APPELLANTS IS
NOT PROPER. 15 In fine, petitioners challenge the appellate courts conclusions on
the validity of the extrajudicial settlement with donation and the denial of th
e motion to amend the complaint to implead an indispensable party and conform to
the evidence presented. Much as we would like to make a definitive conclusion o
n the respective rights of all the parties and decide, once and for all, their i
nterests over the subject property, we are barred by a jurisdictional issue. Jur
isdiction is the power invested in courts for administering justice, that is, to
hear and decide cases. For the court to exercise the authority to dispose of th
e case on the merits, it must acquire jurisdiction over the subject matter and t
he parties.16 Courts acquire jurisdiction over a party plaintiff upon the filing
of the complaint. On the other hand, jurisdiction over the person of a party de
fendant is assured upon the service of summons in the manner required by law or,
otherwise, by his voluntary appearance. As a rule, if a defendant has not been
summoned, the court acquires no jurisdiction over his person, and a personal jud
gment rendered against such defendant is null and void. A decision that is null
and void for want of jurisdiction of the trial court is not a decision in contem
plation of law and can never become final and executory.17 Corollary to the issu
e of jurisdiction, and equally important, is the mandatory rule on joinder of in
dispensable parties set forth in Section 7, Rule 3 of the Rules of Court, to wit
: SEC. 7. Compulsory joinder of indispensable parties. Parties in interest witho
ut whom no final determination can be had of an action shall be joined either as
plaintiffs or defendants. The general rule with reference to parties to a civil
action requires the joinder of all necessary parties, where possible, and the j
oinder of all indispensable parties under any and all conditions.18 The evident
intent of the Rules on the joinder of indispensable and necessary parties is the
complete determination of all possible issues, not only between the parties the
mselves but also as regards other persons who may be affected by the judgment.19
In this case, petitioners challenge the denial of their motion to amend the com
plaint to implead Pedro who, they claim, is an indispensable party to the case.
We are, therefore, compelled to address this important question. In Regner v. Lo
garta20 and Arcelona v. CA,21 we laid down the test to determine if a party is a
n indispensable party, viz.: An indispensable party is a party who has an intere
st in the controversy or subject matter that a final adjudication cannot be made
, in his absence, without injuring or affecting that interest, a party who has n
ot only an interest in the subject matter of the controversy, but also has an in
terest of such nature that a final decree cannot be made without affecting his i
nterest or leaving the controversy in such a condition that its final determinat
ion may be wholly inconsistent with equity and good conscience. It has also been
considered that an indispensable party is a person in whose absence there canno
t be a determination between the parties already before the court which is effec
tive, complete or equitable. Further, an indispensable party is one who must be
included in an action before it may properly go forward. A person is not an indi
spensable party, however, if his interest in the controversy or subject matter i
s separable from the interest of the other parties, so that it will not necessar
ily be directly or injuriously affected by a decree which does complete justice
between them. Also, a person is not an indispensable party if his presence would
merely permit complete relief between him and those already parties to the acti
on, or if he has no interest in the subject matter of the action. It is not a su
fficient reason to declare a person to be an indispensable party that his presen
ce will avoid multiple litigation.22 In upholding the denial of the motion to am
end the complaint, the appellate court concluded that the sole desire of petitio
ners in instituting the case was the annulment of the extrajudicial settlement.
Effectively, it separated the question of the validity of the extrajudicial sett

lement from the validity of the donation. Accordingly, the court said, the latte
r issue could be threshed out in a separate proceeding
REMLAW Page 327

the donation. Accordingly, the court said, the latter issue could be threshed ou
t in a separate proceeding later. This explains why Pedro was not considered an
indispensable party by the trial and appellate courts.1avvphi1 We beg to differ.
Even without having to scrutinize the records, a mere reading of the assailed d
ecision readily reveals that Pedro is an indispensable party. At the time of the
filing of the complaint, the title to the Quezon City property was already regi
stered in the name of Pedro, after TCT No. 60455 (190472) in the names of Pedro
Velasco, Andrea, Magdalena and Patricio Monis was cancelled, pursuant to the ext
rajudicial settlement with donation executed by respondents. The central thrust
of the complaint was that respondents, by themselves, could not have transferred
the Quezon City property to Pedro because petitioners, as heirs of Patricio and
Magdalena, also have rights over it. Accordingly, petitioners specifically pray
ed that the extrajudicial settlement with donation be annulled and the transfer
certificate of title and tax declarations (in the name of Pedro) issued pursuant
thereto be canceled. The pertinent portion of the complaint is quoted for easy
reference: WHEREFORE, in view of the foregoing, it is respectfully prayed that j
udgment be rendered as follows 1. By ordering the annulment of Annex "A" hereof
as well as the cancellation of transfer certificate of title and tax declaration
s issued pursuant thereto.23 If such prayer and thrust were to be denied (as hel
d by the trial and appellate courts), the problem would be less obvious, as the
status quo would be maintained. However, if they were to be upheld, Pedros title
to the property would undoubtedly be directly and injuriously affected. Even if
we only resolve the validity of the extrajudicial settlement, there would be no
final adjudication of the case without involving Pedros interest. Verily, Pedros i
nterest in the subject matter of the suit and in the relief sought are so inextr
icably intertwined with that of the other parties. His legal presence as a party
to the proceedings is, therefore, an absolute necessity.24 His interest in the
controversy and in the subject matter is not separable from the interest of the
other parties. It is unfortunate that petitioners failed to implead Pedro as def
endant in their complaint. Interestingly, however, they realized such mistake, a
lbeit belatedly, and thus sought the amendment of the complaint to join him as a
defendant, but the RTC refused to grant the same. Well-settled is the rule that
joinder of indispensable parties is mandatory.25 It is a condition sine qua non
to the exercise of judicial power.26 The absence of an indispensable party rend
ers all subsequent actions of the court null and void for want of authority to a
ct, not only as to the absent parties but even as to those present.27 Without th
e presence of indispensable parties to the suit, the judgment of the court canno
t attain finality.28 One who is not a party to a case is not bound by any decisi
on of the court; otherwise, he will be deprived of his right to due process.29 T
hat is why the case is generally remanded to the court of origin for further pro
ceedings. 30 In light of these premises, no final ruling can be had on the valid
ity of the extrajudicial settlement. While we wish to abide by the mandate on sp
eedy disposition of cases, we cannot render a premature judgment on the merits.
To do so could result in a possible violation of due process. The inclusion of P
edro is necessary for the effective and complete resolution of the case and in o
rder to accord all parties the benefit of due process and fair play.31 Neverthel
ess, as enunciated in Commissioner Domingo v. Scheer,32 Lotte Phil. Co., Inc. v.
Dela Cruz,33 and PepsiCo, Inc. v. Emerald Pizza, Inc.,34 the non-joinder of ind
ispensable parties is not a ground for the dismissal of an action. The remedy is
to implead the non-party claimed to be indispensable. Parties may be added by o
rder of the court on motion of the party or on its own initiative at any stage o
f the action and/or at such times as are just. If the plaintiff refuses to imple
ad an indispensable party despite the order of the court, then the court may dis
miss the complaint for the plaintiffs failure to comply with a lawful court order
. In light of the foregoing, a remand of the case to the trial court is imperati
ve. WHEREFORE, the Decision of the Court of Appeals dated July 13, 2005 in CA-G.
R. CV No. 56998 is SET ASIDE. Let the case be REMANDED to the Regional Trial Cou
rt for the inclusion of Pedro Velasco, Jr. as an indispensable party, and for fu
rther proceedings. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2009/jun2009/gr_169276_2009.htm

l>
REMLAW Page 328

Pasted from <http://www.lawphil.net/judjuris/juri2009/jun2009/gr_169276_2009.htm

l>
REMLAW Page 329

Josephine Marmo v Moises Anacay GR 182585 Nov 27 2009;

Sunday, November 14, 2010 11:34 PM
JOSEPHINE MARMO,* NESTOR ESGUERRA, DANILO DEL PILAR and MARISA DEL PILAR, Petiti
oners, vs. MOISES O. ANACAY Respondent. DE C I S I O N BRION, J.: Before us is t
he Petition for Review on Certiorari,1 filed by the spouses Josephine Marmo and
Nestor Esguerra and the spouses Danilo del Pilar and Marisa del Pilar (collectiv
ely, the petitioners), to reverse and set aside the Decision2 dated December 28,
2007 and the Resolution3 dated April 11, 2008 of the Former Special Eleventh Di
vision of the Court of Appeals (CA) in CA-G.R. SP No. 94673. The assailed CA Dec
ision dismissed the petitioners petition for certiorari challenging the Orders da
ted March 14, 20064 and May 8, 20065 of the Regional Trial Court (RTC), Branch 9
0, Dasmarias, Cavite in Civil Case No. 2919-03, while the assailed CA Resolution
denied the petitioners motion for reconsideration. FACTUAL BACKGROUND The facts o
f the case, as gathered from the parties pleadings, are briefly summarized below:
On September 16, 2003, respondent Moises O. Anacay filed a case for Annulment o
f Sale, Recovery of Title with Damages against the petitioners6 and the Register
of Deeds of the Province of Cavite, docketed as Civil Case No. 2919-03.7 The co
mplaint states, among others, that: the respondent is the bona-fide co-owner, to
gether with his wife, Gloria P. Anacay (now deceased), of a 50-square meter parc
el of land and the house built thereon, located at Blk. 54, Lot 9, Regency Homes
, Brgy. Malinta, Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT
) No. T-815595 of the Register of Deeds of Cavite; they authorized petitioner Jo
sephine to sell the subject property; petitioner Josephine sold the subject prop
erty to petitioner Danilo for P520,000.00, payable in monthly installments of P8
,667.00 from May 2001 to June 2006; petitioner Danilo defaulted in his installme
nt payments from December 2002 onwards; the respondent subsequently discovered t
hat TCT No. 815595 had been cancelled and TCT No. T-972424 was issued in petitio
ner Josephines name by virtue of a falsified Deed of Absolute Sale dated Septembe
r 20, 2001; petitioner Josephine subsequently transferred her title to petitione
r Danilo; TCT No. T-972424 was cancelled and TCT No. T-991035 was issued in peti
tioner Danilos name. The respondent sought the annulment of the Deed of Absolute
Sale dated September 20, 2001 and the cancellation of TCT No. T-991035; in the a
lternative, he demanded petitioner Danilos payment of the balance of P347,000.00
with interest from December 2002, and the payment of moral damages, attorneys fee
s, and cost of suit. In her Answer, petitioner Josephine averred, among others,
that the respondents children, as coowners of the subject property, should have b
een included as plaintiffs because they are indispensable parties.8 Petitioner D
anilo echoed petitioner Josephines submission in his Answer.9 Following the pre-t
rial conference, the petitioners filed a Motion to Dismiss the case for the resp
ondents failure to include his children as indispensable parties.10 The responden
t filed an Opposition, arguing that his children are not indispensable parties b
ecause the issue in the case can be resolved without their participation in the
proceedings.11 THE RTC RULING The RTC found the respondents argument to be well-t
aken and thus denied the petitioners motion to dismiss in an Order dated March 14
, 2006.12 It also noted that the petitioners motion was simply filed to delay the
proceedings. After the denial of their Motion for Reconsideration,13 the petiti
oners elevated their case to the CA through a Petition for Certiorari under Rule
65 of the Rules of Court.14 They charged the RTC with grave abuse of discretion
amounting to lack of jurisdiction for not dismissing the case after the respond
ent failed to include indispensable parties. THE CA RULING The CA dismissed the
petition15 in a Decision promulgated on December 28, 2007. It found that the RTC
did not commit any grave abuse of discretion in denying the petitioners motion t
o dismiss, noting that
REMLAW Page 330

did not commit any grave abuse of discretion in denying the petitioners motion to
dismiss, noting that the respondents children are not indispensable parties. The
petitioners moved16 but failed17 to secure a reconsideration of the CA Decision
; hence, the present petition. Following the submission of the respondents Commen
t18 and the petitioners Reply,19 we gave due course to the petition and required
the parties to submit their respective memoranda.20 Both parties complied.21 Mea
nwhile, on April 24, 2009, the petitioners filed with the RTC a Motion to Suspen
d Proceedings due to the pendency of the present petition. The RTC denied the mo
tion to suspend as well as the motion for reconsideration that followed. The pet
itioners responded to the denial by filing with us a petition for the issuance o
f a temporary restraining order (TRO) to enjoin the RTC from proceeding with the
hearing of the case pending the resolution of the present petition. THE PETITIO
N and THE PARTIES SUBMISSIONS The petitioners submit that the respondents children
, who succeeded their deceased mother as coowners of the property, are indispens
able parties because a full determination of the case cannot be made without the
ir presence, relying on Arcelona v. Court of Appeals,22 Orbeta v. Sendiong,23 an
d Galicia v. Manliquez Vda. de Mindo.24 They argue that the non-joinder of indis
pensable parties is a fatal jurisdictional defect. The respondent, on the other
hand, counters that the respondents children are not indispensable parties becaus
e the issue involved in the RTC whether the signatures of the respondent and his
wife in the Deed of Absolute Sale dated September 20, 2001 were falsified - can
be resolved without the participation of the respondents children. THE ISSUE The
core issue is whether the respondents children are indispensable parties in Civi
l Case No. 2919-03. In the context of the Rule 65 petition before the CA, the is
sue is whether the CA correctly ruled that the RTC did not commit any grave abus
e of discretion in ruling that the respondents children are not indispensable par
ties. OUR RULING We see no merit in the petition. General Rule: The denial of a
motion to dismiss is an interlocutory order which is not the proper subject of a
n appeal or a petition for certiorari.
At the outset, we call attention to Section 1 of Rule 4125 of the Revised Rules
of Court governing appeals from the RTC to the CA. This Section provides that an
appeal may be taken only from a judgment or final order that completely dispose
s of the case, or of a matter therein when declared by the Rules to be appealabl
e. It explicitly states as well that no appeal may be taken from an interlocutor
y order. In law, the word "interlocutory" refers to intervening developments bet
ween the commencement of a suit and its complete termination; hence, it is a dev
elopment that does not end the whole controversy.26 An "interlocutory order" mer
ely rules on an incidental issue and does not terminate or finally dispose of th
e case; it leaves something to be done before the case is finally decided on the
merits.27 An Order denying a Motion to Dismiss is interlocutory because it does
not finally dispose of the case, and, in effect, directs the case to proceed un
til final adjudication by the court. Only when the court issues an order outside
or in excess of jurisdiction or with grave abuse of discretion, and the remedy
of appeal would not afford adequate and expeditious relief, will certiorari be c
onsidered an appropriate remedy to assail an interlocutory order.28 In the prese
nt case, since the petitioners did not wait for the final resolution on the meri
ts of Civil Case No. 2919-03 from which an appeal could be taken, but opted to i
mmediately assail the RTC Orders dated March 14, 2006 and May 8, 2006 through a
petition for certiorari before the CA, the issue for us to address is whether th
e RTC, in issuing its orders, gravely abused its discretion or otherwise acted o
utside or in excess of its jurisdiction. The RTC did not commit grave abuse of d
iscretion in denying the petitioners Motion to Dismiss; the respondents co-owners
are not indispensable parties. The RTC grounded its Order dated March 14, 2006 d
enying the petitioners motion to dismiss on the finding that the respondents child
ren, as co-owners of the subject property, are not indispensable parties to the
resolution of the case.
REMLAW Page 331

parties to the resolution of the case. We agree with the RTC. Section 7, Rule 3
of the Revised Rules of Court29 defines indispensable parties as parties-in-inte
rest without whom there can be no final determination of an action and who, for
this reason, must be joined either as plaintiffs or as defendants. Jurisprudence
further holds that a party is indispensable, not only if he has an interest in
the subject matter of the controversy, but also if his interest is such that a f
inal decree cannot be made without affecting this interest or without placing th
e controversy in a situation where the final determination may be wholly inconsi
stent with equity and good conscience. He is a person whose absence disallows th
e court from making an effective, complete, or equitable determination of the co
ntroversy between or among the contending parties. 30 When the controversy invol
ves a property held in common, Article 487 of the Civil Code explicitly provides
that "any one of the co-owners may bring an action in ejectment." We have expla
ined in Vencilao v. Camarenta31 and in Sering v. Plazo32 that the term "action i
n ejectment" includes a suit for forcible entry (detentacion) or unlawful detain
er (desahucio).33 We also noted in Sering that the term "action in ejectment" in
cludes "also, an accion publiciana (recovery of possession) or accion reinvidica
toria34 (recovery of ownership)." Most recently in Estreller v. Ysmael,35 we app
lied Article 487 to an accion publiciana case; in Plasabas v. Court of Appeals36
we categorically stated that Article 487 applies to reivindicatory actions. We
upheld in several cases the right of a co-owner to file a suit without impleadin
g other co-owners, pursuant to Article 487 of the Civil Code. We made this rulin
g in Vencilao, where the amended complaint for "forcible entry and detainer" spe
cified that the plaintiff is one of the heirs who co-owns the disputed propertie
s. In Sering, and Resuena v. Court of Appeals,37 the co-owners who filed the eje
ctment case did not represent themselves as the exclusive owners of the property
. In Celino v. Heirs of Alejo and Teresa Santiago,38 the complaint for quieting
of title was brought in behalf of the co-owners precisely to recover lots owned
in common.39 In Plasabas, the plaintiffs alleged in their complaint for recovery
of title to property (accion reivindicatoria) that they are the sole owners of
the property in litigation, but acknowledged during the trial that the property
is co-owned with other parties, and the plaintiffs have been authorized by the c
o-owners to pursue the case on the latters behalf. These cases should be distingu
ished from Baloloy v. Hular40 and Adlawan v. Adlawan41 where the actions for qui
eting of title and unlawful detainer, respectively, were brought for the benefit
of the plaintiff alone who claimed to be the sole owner. We held that the actio
n will not prosper unless the plaintiff impleaded the other co-owners who are in
dispensable parties. In these cases, the absence of an indispensable party rende
red all subsequent actions of the court null and void for want of authority to a
ct, not only as to the absent parties but even as to those present. We read thes
e cases to collectively mean that where the suit is brought by a co-owner, witho
ut repudiating the co-ownership, then the suit is presumed to be filed for the b
enefit of the other coowners and may proceed without impleading the other co-own
ers. However, where the co-owner repudiates the co-ownership by claiming sole ow
nership of the property or where the suit is brought against a co-owner, his coowners are indispensable parties and must be impleaded as partydefendants, as th
e suit affects the rights and interests of these other co-owners. In the present
case, the respondent, as the plaintiff in the court below, never disputed the e
xistence of a co-ownership nor claimed to be the sole or exclusive owner of the
litigated lot. In fact, he recognized that he is a "bona-fide co-owner" of the q
uestioned property, along with his deceased wife. Moreover and more importantly,
the respondents claim in his complaint in Civil Case No. 2919-03 is personal to
him and his wife, i.e., that his and his wifes signatures in the Deed of Absolute
Sale in favor of petitioner Josephine were falsified. The issue therefore is fa
lsification, an issue which does not require the participation of the respondents
co-owners at the trial; it can be determined without their presence because the
y are not parties to the document; their signatures do not appear therein. Their
rights and interests as co-owners are adequately protected by their co-owner an
d father, respondent Moises O. Anacay, since the complaint was made precisely to
recover ownership and possession of the properties owned in common, and, as suc

h, will redound to the benefit of all the co-owners.421avvphi1 In sum, responden

ts children, as co-owners of the subject property, are not indispensable parties
to the resolution of the case. We held in Carandang v. Heirs of De Guzman43 that
in cases like this, the coowners are not even necessary parties, for a complete
relief can be accorded in the suit even without their participation, since the
suit is presumed to be filed for the benefit of all.44 Thus, the respondents
REMLAW Page 332

their participation, since the suit is presumed to be filed for the benefit of a
ll.44 Thus, the respondents children need not be impleaded as party-plaintiffs in
Civil Case No. 2919-03. We cannot subscribe to the petitioners reliance on our r
ulings in Arcelona v. Court of Appeals,45 Orbeta v. Sendiong46 and Galicia v. Ma
nliquez Vda. de Mindo,47 for these cases find no application to the present case
. In these cited cases, the suits were either filed against a co-owner without i
mpleading the other co-owners, or filed by a party claiming sole ownership of a
property that would affect the interests of third parties. Arcelona involved an
action for security of tenure filed by a tenant without impleading all the co-ow
ners of a fishpond as party-defendants. We held that a tenant, in an action to e
stablish his status as such, must implead all the pro-indiviso co-owners as part
y-defendants since a tenant who fails to implead all the co-owners as party-defe
ndants cannot establish with finality his tenancy over the entire co-owned land.
Orbeta, on the other hand, involved an action for recovery of possession, quiet
ing of title and damages wherein the plaintiffs prayed that they be declared "ab
solute co-owners" of the disputed property, but we found that there were third p
arties whose rights will be affected by the ruling and who should thus be implea
ded as indispensable parties. In Galicia, we noted that the complaint for recove
ry of possession and ownership and annulment of title alleged that the plaintiff
s predecessor-in-interest was deprived of possession and ownership by a third par
ty, but the complaint failed to implead all the heirs of that third party, who w
ere considered indispensable parties. In light of these conclusions, no need ari
ses to act on petitioners prayer for a TRO to suspend the proceedings in the RTC
and we find no reason to grant the present petition. WHEREFORE, premises conside
red, we hereby DENY the petition for its failure to show any reversible error in
the assailed Decision dated December 28, 2007 and Resolution dated April 11, 20
08 of the Court of Appeals in CA-G.R. SP No. 94673, both of which we hereby AFFI
RM. Costs against the petitioners. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2009/nov2009/gr_182585_2009.htm
l>
REMLAW Page 333

Leonis Navigation v Catalina Villamater GR 179169 Mar 3, 2010

Sunday, November 14, 2010 11:34 PM
LEONIS NAVIGATION CO., INC. and WORLD MARINE PANAMA, S.A., Petitioners, vs. CATA
LINO U. VILLAMATER and/or The Heirs of the Late Catalino U. Villamater, represen
ted herein by Sonia Mayuyu Villamater; and NATIONAL LABOR RELATIONS COMMISSION,
Respondents. DE C I S I O N NACHURA, J.: This is a petition for review on certio
rari 1 under Rule 45 of the Rules of Court, seeking to annul and set aside the D
ecision2 dated May 3, 2007 and the Resolution3 dated July 23, 2007 of the Court
of Appeals (CA) in CA-G.R. SP No. 85594, entitled "Leonis Navigation Co., Inc.,
et al. v. Catalino U. Villamater, et al." The antecedents of this case are as fo
llows: Private respondent Catalino U. Villamater (Villamater) was hired as Chief
Engineer for the ship MV Nord Monaco, owned by petitioner World Marine Panama,
S.A., through the services of petitioner Leonis Navigation Co., Inc. (Leonis), a
s the latters local manning agent. Consequent to this employment, Villamater, on
June 4, 2002, executed an employment contract,4 incorporating the Standard Terms
and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Go
ing Vessels as prescribed by the Philippine Overseas Employment Administration (
POEA). Prior to his deployment, Villamater underwent the required Pre-Employment
Medical Examination (PEME). He passed the PEME and was declared "Fit to Work."5
Thereafter, Villamater was deployed on June 26, 2002. Sometime in October 2002,
around four (4) months after his deployment, Villamater suffered intestinal ble
eding and was given a blood transfusion. Thereafter, he again felt weak, lost co
nsiderable weight, and suffered intermittent intestinal pain. He consulted a phy
sician in Hamburg, Germany, who advised hospital confinement. Villamater was dia
gnosed with Obstructive Adenocarcinoma of the Sigmoid, with multiple liver metas
tases, possibly local peritoneal carcinosis and infiltration of the bladder, pos
sibly lung metastasis, and anemia; Candida Esophagitis; and Chronic Gastritis. H
e was advised to undergo chemotherapy and continuous supportive treatment, such
as pain-killers and blood transfusion.6 Villamater was later repatriated, under
medical escort, as soon as he was deemed fit to travel. As soon as he arrived in
the Philippines, Villamater was referred to company-designated physicians. The
diagnosis and the recommended treatment abroad were confirmed. He was advised to
undergo six (6) cycles of chemotherapy. However, Dr. Kelly Siy Salvador, one of
the company-designated physicians, opined that Villamaters condition "appears to
be not work-related," but suggested a disability grading of 1.7 In the course o
f his chemotherapy, when no noticeable improvement occurred, Villamater filed a
complaint8 before the Arbitration Branch of the National Labor Relations Commiss
ion (NLRC) for payment of permanent and total disability benefits in the amount
of US$80,000.00, reimbursement of medical and hospitalization expenses in the am
ount of P11,393.65, moral damages in the sum of P1,000,000.00, exemplary damages
in the amount of P1,000,000.00, as well as attorneys fees. After the submission
of the required position papers, the Labor Arbiter rendered a decision9 dated Ju
ly 28, 2003 in favor of Villamater, holding that his illness was compensable, bu
t denying his claim for moral and exemplary damages. The Labor Arbiter disposed
as follows WHEREFORE, foregoing premises considered, judgment is hereby rendered
declaring complainants illness to be compensable and ordering respondents LEONIS
NAVIGATION CO., INC. and WORLD MARINE PANAMA, S.A. liable to pay, jointly and se
verally, complainant CATALINO U. VILLAMATER, the amount of US$60,000.00 or its P
hilippine Peso equivalent at the time of actual payment, representing the latters
permanent total disability benefits plus ten percent (10%) thereof as Attorneys
Fees. All other claims are dismissed for lack of merit. SO ORDERED.10 Petitioner
s appealed to the NLRC. Villamater also filed his own appeal, questioning the aw
ard of the Labor Arbiter and claiming that the 100% degree of disability should
be compensated in the amount of US$80,000.00, pursuant to Section 2, Article XXI
of the ITF-JSU/AMOSUP Collective Bargaining Agreement (CBA) between petitioners
and Associated Marine Officers & Seamens Union of the
REMLAW Page 334

Agreement (CBA) between petitioners and Associated Marine Officers & Seamens Unio
n of the Philippines, which covered the employment contract of Villamater. On Fe
bruary 4, 2004, the NLRC issued its resolution,11 dismissing the respective appe
als of both parties and affirming in toto the decision of the Labor Arbiter. Pet
itioners filed their motion for reconsideration of the February 4, 2004 resoluti
on, but the NLRC denied the same in its resolution dated June 15, 2004. Aggrieve
d, petitioners filed a petition for certiorari under Rule 65 of the Rules of Cou
rt before the CA. After the filing of the required memoranda, the CA rendered it
s assailed May 3, 2007 Decision, dismissing the petition. The appellate court, l
ikewise, denied petitioners motion for reconsideration in its July 23, 2007 Resol
ution. Hence, this petition based on the following grounds, to wit: First, the C
ourt of Appeals erroneously held that *the+ Commissions Dismissal Decision does n
ot constitute grave abuse of discretion amounting to lack or excess of jurisdict
ion but mere error of judgment, considering that the decision lacks evidentiary
support and is contrary to both evidence on record and prevailing law and jurisp
rudence. Second, the Court of Appeals seriously erred in upholding the NLRCs deci
sion to award Grade 1 Permanent and Total Disability Benefits in favor of seaman
Villamater despite the lack of factual and legal basis to support such award, a
nd more importantly, when it disregarded undisputed facts and substantial eviden
ce presented by petitioners which show that seaman Villamaters illness was not wo
rk-related and hence, not compensable, as provided by the Standard Terms of the
POEA Contract. Third, the Court of Appeals erred in holding that non-joinder of
indispensable parties warrant the outright dismissal of the Petition for Review
on Certiorari. Fourth, the Court of Appeals erroneously held that final and exec
utory decisions or resolutions of the NLRC render appeals to superior courts moo
t and academic. Last, the Court of Appeals seriously erred in upholding the awar
d of attorneys fees considering that the grant has neither factual nor legal basi
s.12 Before delving into the merits of this petition, we deem it fit to discuss
the procedural issues raised by petitioners. First. It is worthy to note that th
e CA dismissed the petition, considering that (1) the June 15, 2004 Resolution o
f the NLRC had already become final and executory on June 26, 2004, and the same
was already recorded in the NLRC Book of Entries of Judgments; and that (2) the
award of the Labor Arbiter was already executed, thus, the case was closed and
terminated. According to Sections 14 and 15, Rule VII of the 2005 Revised Rules
of Procedure of the NLRC Section 14. Finality of decision of the commission and e
ntry of judgment. a) Finality of the Decisions, Resolutions or Orders of the Com
mission. Except as provided in Section 9 of Rule X, the decisions, resolutions o
r orders of the Commission shall become final and executory after ten (10) calen
dar days from receipt thereof by the parties. b) Entry of Judgment. Upon the exp
iration of the ten (10) calendar day period provided in paragraph (a) of this Se
ction, the decision, resolution, or order shall be entered in a book of entries
of judgment. The Executive Clerk or Deputy Executive Clerk shall consider the de
cision, resolution or order as final and executory after sixty (60) calendar day
s from date of mailing in the absence of return cards, certifications from the p
ost office, or other proof of service to parties. Section 15. Motions for recons
ideration. Motion for reconsideration of any decision, resolution or order of th
e Commission shall not be entertained except when based on palpable or patent er
rors; provided that the motion is under oath and filed within ten (10) calendar
days from receipt of decision, resolution or order, with proof of service that a
copy of the same has been furnished, within the reglementary period, the advers
e party; and provided further, that only one such motion from the same party sha
ll be entertained. Should a motion for reconsideration be entertained pursuant t
o this SECTION, the resolution shall be executory after ten (10) calendar days f
rom receipt thereof.13 Petitioners received the June 15, 2004 resolution of the
NLRC, denying their motion for reconsideration, on June 16, 2004. They filed the
ir petition for certiorari before the CA only on August 9, 2004,14 or 54 calenda
r days from the date of notice of the June 15, 2004 resolution. Considering that
the abovementioned 10-day period had lapsed without petitioners filing the appr
opriate appeal, the NLRC issued an Entry of Judgment dated June 28, 2004.
REMLAW Page 335

an Entry of Judgment dated June 28, 2004. Moreover, by reason of the finality of
the June 15, 2004 NLRC resolution, the Labor Arbiter issued on July 29, 2004 a
Writ of Execution.15 Consequently, Leonis voluntarily paid Villamaters widow, Son
ia M. Villamater (Sonia), the amount of P3,649,800.00, with Rizal Commercial and
Banking Corporation (RCBC) Managers Check No. 000000855016 dated August 12, 2004
, as evidenced by the Acknowledgment Receipt17 dated August 13, 2004, and the Ch
eque Voucher18 dated August 12, 2004. Following the complete satisfaction of the
judgment award, the Labor Arbiter issued an Order19 dated September 8, 2004 tha
t reads There being complete satisfaction of the judgment award as shown by the r
ecord upon receipt of the complainant of the amount of P3,649,800.00, voluntaril
y paid by the respondent, as full and final satisfaction of the Writ of Executio
n dated July 29, 2004; and finding the same to be not contrary to law, morals, g
ood custom, and public policy, and pursuant to Section 14, Rule VII of the Rules
of Procedure of the National Labor Relations Commission (NLRC), this case is he
reby ordered DISMISSED with prejudice, and considered CLOSED and TERMINATED. SO
ORDERED. Petitioners never moved for a reconsideration of this Order regarding t
he voluntariness of their payment to Sonia, as well as the dismissal with prejud
ice and the concomitant termination of the case. However, petitioners argued tha
t the finality of the case did not render the petition for certiorari before the
CA moot and academic. On this point, we agree with petitioners. In the landmark
case of St. Martin Funeral Home v. NLRC,20 we ruled that judicial review of dec
isions of the NLRC is sought via a petition for certiorari under Rule 65 of the
Rules of Court, and the petition should be filed before the CA, following the st
rict observance of the hierarchy of courts. Under Rule 65, Section 4,21 petition
ers are allowed sixty (60) days from notice of the assailed order or resolution
within which to file the petition. Thus, although the petition was not filed wit
hin the 10-day period, petitioners reasonably filed their petition for certiorar
i before the CA within the 60-day reglementary period under Rule 65. Further, a
petition for certiorari does not normally include an inquiry into the correctnes
s of its evaluation of the evidence. Errors of judgment, as distinguished from e
rrors of jurisdiction, are not within the province of a special civil action for
certiorari, which is merely confined to issues of jurisdiction or grave abuse o
f discretion. It is, thus, incumbent upon petitioners to satisfactorily establis
h that the NLRC acted capriciously and whimsically in order that the extraordina
ry writ of certiorari will lie. By grave abuse of discretion is meant such capri
cious and whimsical exercise of judgment as is equivalent to lack of jurisdictio
n, and it must be shown that the discretion was exercised arbitrarily or despoti
cally. The CA, therefore, could grant the petition for certiorari if it finds th
at the NLRC, in its assailed decision or resolution, committed grave abuse of di
scretion by capriciously, whimsically, or arbitrarily disregarding evidence that
is material to or decisive of the controversy; and it cannot make this determin
ation without looking into the evidence of the parties. Necessarily, the appella
te court can only evaluate the materiality or significance of the evidence, whic
h is alleged to have been capriciously, whimsically, or arbitrarily disregarded
by the NLRC, in relation to all other evidence on record.22 Notably, if the CA g
rants the petition and nullifies the decision or resolution of the NLRC on the g
round of grave abuse of discretion amounting to excess or lack of jurisdiction,
the decision or resolution of the NLRC is, in contemplation of law, null and voi
d ab initio; hence, the decision or resolution never became final and executory.
23 In the recent case Bago v. National Labor Relations Commission,24 we had occa
sion to rule that although the CA may review the decisions or resolutions of the
NLRC on jurisdictional and due process considerations, particularly when the de
cisions or resolutions have already been executed, this does not affect the stat
utory finality of the NLRC decisions or resolutions in view of Rule VIII, Sectio
n 6 of the 2002 New Rules of Procedure of the NLRC, viz.: RULE VIII xxx x SECTIO
N 6. EFFECT OF FILING OF PETITION FOR CERTIORARI ON EXECUTION. A petition for ce
rtiorari with the Court of Appeals or the Supreme Court shall not stay the execu
tion of the assailed decision unless a temporary restraining order is issued by
the Court of Appeals or the Supreme Court.25 Simply put, the execution of the fi
nal and executory decision or resolution of the NLRC shall proceed

REMLAW Page 336

unless a temporary restraining order is issued by the Court of Appeals or the Su

preme Court.25 Simply put, the execution of the final and executory decision or
resolution of the NLRC shall proceed despite the pendency of a petition for cert
iorari, unless it is restrained by the proper court. In the present case, petiti
oners already paid Villamaters widow, Sonia, the amount of P3,649,800.00, represe
nting the total and permanent disability award plus attorneys fees, pursuant to t
he Writ of Execution issued by the Labor Arbiter. Thereafter, an Order was issue
d declaring the case as "closed and terminated." However, although there was no
motion for reconsideration of this last Order, Sonia was, nonetheless, estopped
from claiming that the controversy had already reached its end with the issuance
of the Order closing and terminating the case. This is because the Acknowledgme
nt Receipt she signed when she received petitioners payment was without prejudice
to the final outcome of the petition for certiorari pending before the CA. Seco
nd. We also agree with petitioners in their position that the CA erred in dismis
sing outright their petition for certiorari on the ground of non-joinder of indi
spensable parties. It should be noted that petitioners impleaded only the then d
eceased Villamater26 as respondent to the petition, excluding his heirs. Rule 3,
Section 7 of the Rules of Court defines indispensable parties as those who are
parties in interest without whom there can be no final determination of an actio
n.27 They are those parties who possess such an interest in the controversy that
a final decree would necessarily affect their rights, so that the courts cannot
proceed without their presence.28 A party is indispensable if his interest in t
he subject matter of the suit and in the relief sought is inextricably intertwin
ed with the other parties interest.29 Unquestionably, Villamaters widow stands as
an indispensable party to this case. Under Rule 3, Section 11 of the Rules of Co
urt, neither misjoinder nor non-joinder of parties is a ground for the dismissal
of an action, thus: Sec. 11. Misjoinder and non-joinder of parties. Neither mis
joinder nor non-joinder of parties is ground for dismissal of an action. Parties
may be dropped or added by order of the court on motion of any party or on its
own initiative at any stage of the action and on such terms as are just. Any cla
im against a misjoined party may be severed and proceeded with separately. The p
roper remedy is to implead the indispensable party at any stage of the action. T
he court, either motu proprio or upon the motion of a party, may order the inclu
sion of the indispensable party or give the plaintiff an opportunity to amend hi
s complaint in order to include indispensable parties. If the plaintiff ordered
to include the indispensable party refuses to comply with the order of the court
, the complaint may be dismissed upon motion of the defendant or upon the court
s own motion. Only upon unjustified failure or refusal to obey the order to incl
ude or to amend is the action dismissed.30 On the merits of this case, the quest
ions to be answered are: (1) Is Villamater entitled to total and permanent disab
ility benefits by reason of his colon cancer? (2) If yes, would he also be entit
led to attorneys fees? As to Villamaters entitlement to total and permanent disabi
lity benefits, petitioners argue, in essence, that colon cancer is not among the
occupational diseases listed under Section 32-A of the POEA Standard Terms and
Conditions Governing the Employment of Filipino Seafarers On-Board Ocean Going V
essels (POEA Standard Contract), and that the risk of contracting the same was n
ot increased by Villamaters working conditions during his deployment. Petitioners
posit that Villamater had familial history of colon cancer; and that, although
dietary considerations may be taken, his diet -- which might have been high in f
at and low in fiber and could have thus increased his predisposition to develop
colon cancer -- might only be attributed to him, because it was he who chose wha
t he ate on board the vessels he was assigned to. Petitioners also cited the sup
posed declaration of their company-designated physicians who attended to Villama
ter that his disease was not work-related. We disagree. It is true that under Se
ction 32-A of the POEA Standard Contract, only two types of cancers are listed a
s occupational diseases (1) Cancer of the epithelial lining of the bladder (papi
lloma of the bladder); and (2) cancer, epithellematous or ulceration of the skin
or of the corneal surface of the eye due to tar, pitch, bitumen, mineral oil or
paraffin, or compound products or residues of these substances. Section 20 of t
he same Contract also states that those illnesses not listed under Section 32 ar

e disputably presumed as work-related. Section 20 should, however, be read toget

her with Section 32-A on the conditions to be satisfied for an illness to be com
pensable,31 to wit: For an occupational disease and the resulting disability or
death to be compensable, all the following conditions must be established:
REMLAW Page 337

conditions must be established: 1. The seafarers work must involve the risk descr
ibed herein; 2. The disease was contracted as a result of the seafarers exposure
to the described risks; 3. The disease was contracted within a period of exposur
e and under such other factors necessary to contract it; 4. There was no notorio
us negligence on the part of the seafarer. Colon cancer, also known as colorecta
l cancer or large bowel cancer, includes cancerous growths in the colon, rectum
and appendix. With 655,000 deaths worldwide per year, it is the fifth most commo
n form of cancer in the United States of America and the third leading cause of
cancer-related deaths in the Western World. Colorectal cancers arise from adenom
atous polyps in the colon. These mushroomshaped growths are usually benign, but
some develop into cancer over time. Localized colon cancer is usually diagnosed
through colonoscopy.32 Tumors of the colon and rectum are growths arising from t
he inner wall of the large intestine. Benign tumors of the large intestine are c
alled polyps. Malignant tumors of the large intestine are called cancers. Benign
polyps can be easily removed during colonoscopy and are not life-threatening. I
f benign polyps are not removed from the large intestine, they can become malign
ant (cancerous) over time. Most of the cancers of the large intestine are believ
ed to have developed as polyps. Colorectal cancer can invade and damage adjacent
tissues and organs. Cancer cells can also break away and spread to other parts
of the body (such as liver and lung) where new tumors form. The spread of colon
cancer to distant organs is called metastasis of the colon cancer. Once metastas
is has occurred in colorectal cancer, a complete cure of the cancer is unlikely.
33 Globally, colorectal cancer is the third leading cause of cancer in males and
the fourth leading cause of cancer in females. The frequency of colorectal canc
er varies around the world. It is common in the Western world and is rare in Asi
a and in Africa. In countries where the people have adopted western diets, the i
ncidence of colorectal cancer is increasing.34 Factors that increase a persons ri
sk of colorectal cancer include high fat intake, a family history of colorectal
cancer and polyps, the presence of polyps in the large intestine, and chronic ul
cerative colitis.35 Diets high in fat are believed to predispose humans to color
ectal cancer. In countries with high colorectal cancer rates, the fat intake by
the population is much higher than in countries with low cancer rates. It is bel
ieved that the breakdown products of fat metabolism lead to the formation of can
cercausing chemicals (carcinogens). Diets high in vegetables and high-fiber food
s may rid the bowel of these carcinogens and help reduce the risk of cancer.36 A
persons genetic background is an important factor in colon cancer risk. Among fi
rst-degree relatives of colon-cancer patients, the lifetime risk of developing c
olon cancer is 18%. Even though family history of colon cancer is an important r
isk factor, majority (80%) of colon cancers occur sporadically in patients with
no family history of it. Approximately 20% of cancers are associated with a fami
ly history of colon cancer. And 5% of colon cancers are due to hereditary colon
cancer syndromes. Hereditary colon cancer syndromes are disorders where affected
family members have inherited cancer-causing genetic defects from one or both o
f the parents.37 In the case of Villamater, it is manifest that the interplay of
age, hereditary, and dietary factors contributed to the development of colon ca
ncer. By the time he signed his employment contract on June 4, 2002, he was alre
ady 58 years old, having been born on October 5, 1943,38 an age at which the inc
idence of colon cancer is more likely.39 He had a familial history of colon canc
er, with a brother who succumbed to death and an uncle who underwent surgery for
the same illness.40 Both the Labor Arbiter and the NLRC found his illness to be
compensable for permanent and total disability, because they found that his die
tary provisions while at sea increased his risk of contracting colon cancer beca
use he had no choice of what to eat on board except those provided on the vessel
s and these consisted mainly of high-fat, high-cholesterol, and low-fiber foods.
While findings of the Labor Arbiter, which were affirmed by the NLRC, are entit
led to great weight and are binding upon the courts, nonetheless, we find it als
o worthy to note that even during the proceedings before the Labor Arbiter, Vill
amater cited that the foods provided on board the vessels were mostly meat, high
in fat and high in cholesterol. On this matter, noticeably, petitioners were si
lent when they argued that Villamaters affliction was brought about by diet and g

enetics. It was only after

REMLAW Page 338

the Labor Arbiter issued his Decision, finding colon cancer to be compensable be
cause the risk was increased by the victuals provided on board, that petitioners
started claiming that the foods available on the vessels also consisted of fres
h fruits and vegetables, not to mention fish and poultry. It is also worth menti
oning that while Dr. Salvador declared that Villamaters cancer "appears to be not
work-related," she nevertheless suggested to petitioners Disability Grade 1, wh
ich, under the POEA Standard Contract, "shall be considered or shall constitute
total and permanent disability."41 During his confinement in Hamburg, Germany, V
illamater was diagnosed to have colon cancer and was advised to undergo chemothe
rapy and medical treatment, including blood transfusions. These findings were, i
n fact, confirmed by the findings of the company-designated physicians. The stat
ement of Dr. Salvador that Villamaters colon cancer "appears to be not work-relat
ed" remained at that, without any medical explanation to support the same. Howev
er, this statement, not definitive as it is, was negated by the same doctors sugg
estion of Disability Grade 1. Under Section 20-B of the Philippine Overseas Empl
oyment Administration-Standard Employment Contract (POEA-SEC), it is the company
-designated physician who must certify that the seafarer has suffered a permanen
t disability, whether total or partial, due to either injury or illness, during
the term of his employment.42 On these points, we sustain the Labor Arbiter and
the NLRC in granting total and permanent disability benefits in favor of Villama
ter, as it was sufficiently shown that his having contracted colon cancer was, a
t the very least, aggravated by his working conditions,43 taking into considerat
ion his dietary provisions on board, his age, and his job as Chief Engineer, who
was primarily in charge of the technical and mechanical operations of the vesse
ls to ensure voyage safety. Jurisprudence provides that to establish compensabil
ity of a non-occupational disease, reasonable proof of work-connection and not d
irect causal relation is required. Probability, not the ultimate degree of certa
inty, is the test of proof in compensation proceedings.44 The Labor Arbiter corr
ectly awarded Villamater total and permanent disability benefits, computed on th
e basis of the schedule provided under the POEA Standard Contract, considering t
hat the schedule of payment of benefits under the ITF-JSU/AMOSUP CBA refers only
to permanent disability as a result of an accident or injury.45 By reason of Vi
llamaters entitlement to total and permanent disability benefits, he (or in this
case his widow Sonia) is also entitled to the award of attorneys fees, not under
Article 2208(2) of the Civil Code, "*w+hen the defendants act or omission has com
pelled the plaintiff to litigate with third persons or to incur expenses to prot
ect his interest," but under Article 2208(8) of the same Code, involving actions
for indemnity under workmens compensation and employers liability laws. WHEREFORE
, the petition is DENIED and the assailed May 3, 2007 Decision and the July 23,
2007 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioners.
SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2010/mar2010/gr_179169_2010.htm
l>
REMLAW Page 339

Relucio v. Lopez 373 SCRA 578

Sunday, November 14, 2010 11:40 PM
IMELDA RELUCIO, petitioner, vs. ANGELINA MEJIA LOPEZ, respondent. PARDO, J.: The
Case The case is a petition for review on certiorari 1 seeking to set aside the
decision2 of the Court of Appeals that denied a petition for certiorari assaili
ng the trial court s order denying petitioner s motion to dismiss the case again
st her inclusion as party defendant therein. The Facts The facts, as found by th
e Court of Appeals, are as follows: "On September 15, 1993, herein private respo
ndent Angelina Mejia Lopez (plaintiff below) filed a petition for "APPOINTMENT A
S SOLE ADMINISTRATIX OF CONJUGAL PARTNERSHIP OF PROPERTIES, FORFEITURE, ETC.," a
gainst defendant Alberto Lopez and petition Imelda Relucio, docketed as Spec. Pr
oc. M-3630, in the Regional Trial Court of Makati, Branch 141. In the petition,
private-respondent alleged that sometime in 1968, defendant Lopez, who is legall
y married to the private respondent, abandoned the latter and their four legitim
ate children; that he arrogated unto himself full and exclusive control and admi
nistration of the conjugal properties, spending and using the same for his sole
gain and benefit to the total exclusion of the private respondent and their four
children; that defendant Lopez, after abandoning his family, maintained an illi
cit relationship and cohabited with herein petitioner since 1976. "It was furthe
r alleged that defendant Lopez and petitioner Relucio, during their period of co
habitation since 1976, have amassed a fortune consisting mainly of stockholdings
in Lopez-owned or controlled corporations, residential, agricultural, commercia
l lots, houses, apartments and buildings, cars and other motor vehicles, bank ac
counts and jewelry. These properties, which are in the names of defendant Lopez
and petitioner Relucio singly or jointly or their dummies and proxies, have been
acquired principally if not solely through the actual contribution of money, pr
operty and industry of defendant Lopez with minimal, if not nil, actual contribu
tion from petitioner Relucio. "In order to avoid defendant Lopez obligations as
a father and husband, he excluded the private respondent and their four children
from sharing or benefiting from the conjugal properties and the income or fruit
s there from. As such, defendant Lopez either did not place them in his name or
otherwise removed, transferred, stashed away or concealed them from the privaterespondent. He placed substantial portions of these conjugal properties in the n
ame of petitioner Relucio.1wphi1.nt "It was also averred that in the past twenty f
ive years since defendant Lopez abandoned the privaterespondent, he has sold, di
sposed of, alienated, transferred, assigned, canceled, removed or stashed away p
roperties, assets and income belonging to the conjugal partnership with the priv
ate-respondent and either spent the proceeds thereof for his sole benefit and th
at of petitioner Relucio and their two illegitimate children or permanently and
fraudulently placed them beyond the reach of the privaterespondent and their fou
r children. "On December 8, 1993, a Motion to Dismiss the Petition was filed by
herein petitioner on the ground that private respondent has no cause of action a
gainst her. "An Order dated February 10, 1994 was issued by herein respondent Ju
dge denying petitioner Relucio s Motion to Dismiss on the ground that she is imp
leaded as a necessary or indispensable party because some of the subject propert
ies are registered in her name and defendant Lopez, or solely in her name. "Subs
equently thereafter, petitioner Relucio filed a Motion for Reconsideration to th
e Order of the respondent Judge dated February 10, 1994 but the same was likewis
e denied in the Order dated May 31, 1994."3 On June 21, 1994, petitioner filed w
ith the Court of Appeals a petition for certiorari assailing the trial court s d
enial of her motion to dismiss.4 On May 31, 1996, the Court of Appeals promulgat
ed a decision denying the petition.5 On June 26, 1996, petitioner filed a motion
for reconsideration.6 However, on April 6, 1996, the Court of Appeals denied pe
titioner s motion for reconsideration.7
REMLAW Page 340

petitioner s motion for reconsideration.7 Hence, this appeal.8 The Issues 1. Whe
ther respondent s petition for appointment as sole administratrix of the conjuga
l property, accounting, etc. against her husband Alberto J. Lopez established a
cause of action against petitioner. 2. Whether petitioner s inclusion as party d
efendant is essential in the proceedings for a complete adjudication of the cont
roversy.9 The Court s Ruling We grant the petition. We resolve the issues in ser
iatim. First issue: whether a cause of action exists against petitioner in the p
roceedings below. "A cause of action is an act or omission of one party the defe
ndant in violation of the legal right of the other."10 The elements of a cause o
f action are: (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 o
n the part of such defendant in violation of the right of the plaintiff or const
ituting a breach of the obligation of the defendant to the plaintiff for which t
he latter may maintain an action for recovery of damages.11 A cause of action is
sufficient if a valid judgment may be rendered thereon if the alleged facts wer
e admitted or proved.12 In order to sustain a motion to dismiss for lack of caus
e of action, the complaint must show that the claim for relief does not exist, r
ather than that a claim has been merely defectively stated or is ambiguous, inde
finite or uncertain.13 Hence, to determine the sufficiency of the cause of actio
n alleged in Special Proceedings M-3630, we assays its allegations. In Part Two
on the "Nature of [the] Complaint," respondent Angelina Mejia Lopez summarized t
he causes of action alleged in the complaint below. The complaint is by an aggri
eved wife against her husband. Nowhere in the allegations does it appear that re
lief is sought against petitioner. Respondent s causes of action were all agains
t her husband. The first cause of action is for judicial appointment of responde
nt as administratrix of the conjugal partnership or absolute community property
arising from her marriage to Alberto J. Lopez. Petitioner is a complete stranger
to this cause of action. Article 128 of the Family Code refers only to spouses,
to wit: "If a spouse without just cause abandons the other or fails to comply w
ith his or her obligations to the family, the aggrieved spouse may petition the
court for receivership, for judicial separation of property, or for authority to
be the sole administrator of the conjugal partnership property xxx" The adminis
tration of the property of the marriage is entirely between them, to the exclusi
on of all other persons. Respondent alleges that Alberto J. Lopez is her husband
. Therefore, her first cause of action is against Alberto J. Lopez. There is no
right-duty relation between petitioner and respondent that can possibly support
a cause of action. In fact, none of the three elements of a cause of action exis
ts. The second cause of action is for an accounting "by respondent husband."14 T
he accounting of conjugal partnership arises from or is an incident of marriage.
Petitioner has nothing to do with the marriage between respondent Alberto J. Lo
pez. Hence, no cause of action can exist against petitioner on this ground. Resp
ondent s alternative cause of action is for forfeiture of Alberto J. Lopez shar
e in the co-owned property "acquired during his illicit relationship and cohabit
ation with [petitioner]"15 and for the "dissolution of the conjugal partnership
of gains between him [Alberto J. Lopez] and the [respondent]." The third cause o
f action is essentially for forfeiture of Alberto J. Lopez share in property co
-owned by him and petitioner. It does not involve the issue of validity of the c
o-ownership between Alberto J. Lopez and petitioner. The issue is whether there
is basis in law to forfeit Alberto J. Lopez share, if any there be, in property
co-owned by him with petitioner. Respondent s asserted right to forfeit extends
to Alberto J. Lopez share alone. Failure of Alberto J. Lopez to surrender such
share, assuming the trial court finds in respondent s favor, results in a breac
h of an obligation to respondent and gives rise to a cause of action.16 Such cau
se of action, however, pertains to Alberto J. Lopez, not petitioner. The respond
ent also sought support. Support cannot be compelled from a stranger.
REMLAW Page 341

Alberto J. Lopez, not petitioner. The respondent also sought support. Support ca
nnot be compelled from a stranger. The action in Special Proceedings M-3630 is,
to use respondent Angelina M. Lopez own words, one by "an aggrieved wife agains
t her husband."17 References to petitioner in the common and specific allegation
s of fact in the complaint are merely incidental, to set forth facts and circums
tances that prove the causes of action alleged against Alberto J. Lopez. Finally
, as to the moral damages, respondent s claim for moral damages is against Alber
to J. Lopez, not petitioner. To sustain a cause of action for moral damages, the
complaint must have the character of an action for interference with marital or
family relations under the Civil Code. A real party in interest is one who stan
ds "to be benefited or injured by the judgment of the suit."18 In this case, pet
itioner would not be affected by any judgment in Special Proceedings M-3630. If
petitioner is not a real party in interest, she cannot be an indispensable party
. An indispensable party is one without whom there can be no final determination
of an action.19 Petitioner s participation in Special Proceedings M-36-30 is no
t indispensable. Certainly, the trial court can issue a judgment ordering Albert
o J. Lopez to make an accounting of his conjugal partnership with respondent, an
d give support to respondent and their children, and dissolve Alberto J. Lopez
conjugal partnership with respondent, and forfeit Alberto J. Lopez share in pro
perty co-owned by him and petitioner. Such judgment would be perfectly valid and
enforceable against Alberto J. Lopez. Nor can petitioner be a necessary party i
n Special Proceedings M-3630. A necessary party as one who is not indispensable
but who ought to be joined as party if complete relief is to be accorded those a
lready parties, or for a complete determination or settlement of the claim subje
ct of the action.20 In the context of her petition in the lower court, responden
t would be accorded complete relief if Alberto J. Lopez were ordered to account
for his alleged conjugal partnership property with respondent, give support to r
espondent and her children, turn over his share in the co-ownership with petitio
ner and dissolve his conjugal partnership or absolute community property with re
spondent. The Judgment WHEREFORE, the Court GRANTS the petition and REVERSES the
decision of the Court of Appeals.21 The Court DISMISSES Special Proceedings M-3
630 of the Regional Trial Court, Makati, Branch 141 as against petitioner.1wphi1.
nt No costs. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2002/jan2002/gr_138497_2002.htm
l>
REMLAW Page 342

AutoCorp v. Intra Strata GR 166662 Jun 27, 2008

Sunday, November 14, 2010 11:40 PM
AUTOCORP GROUP and PETER Y. RODRIGUEZ, petitioner, vs. INTRA STRATA ASSURANCE CO
RPORATION and BUREAU OF CUSTOMS, respondents. DECIS ION CHICO-NAZARIO, J.: This
is a Petition for Review on Certiorari from the Decision1 of the Court of Appeal
s dated 30 June 2004 in CA-G.R. CV No. 62564 which affirmed with modification th
e Decision2 of the Regional Trial Court (RTC) of Makati City, Branch 150 in Civi
l Case No. 95-1584 dated 16 September 1998. The factual and procedural anteceden
ts of this case are as follows: On 19 August 1990, petitioner Autocorp Group, re
presented by its President, petitioner Peter Y. Rodriguez, secured an ordinary r
e-export bond, Instrata Bond No. 5770, from private respondent Intra Strata Assu
rance Corporation (ISAC) in favor of public respondent Bureau of Customs (BOC),
in the amount of P327,040.00, to guarantee the re-export of one unit of Hyundai
Excel 4-door 1.5 LS and/or to pay the taxes and duties thereon. On 21 December 1
990, petitioners obtained another ordinary re-export bond, Instrata Bond No. 715
4, from ISAC in favor of the BOC, in the amount of P447,671.00, which was eventu
ally increased to P707,609.00 per Bond Endorsement No. BE-0912/91 dated 10 Janua
ry 1991, to guarantee the re-export of one unit of Hyundai Sonata 2.4 GLS and/or
to pay the taxes and duties thereon. Petitioners executed and signed two Indemn
ity Agreements with identical stipulations in favor of ISAC, agreeing to act as
surety of the subject bonds. Petitioner Rodriguez signed the Indemnity Agreement
s both as President of the Autocorp Group and in his personal capacity. Petition
ers thus agreed to the following provisions: INDEMNITY: - The undersigned agree
at all times to jointly and severally indemnify the COMPANY and keep it indemnif
ied and hold and save it harmless from and against any and all damages, losses,
costs, stamps, taxes, penalties, charges and expenses of whatsoever kind and nat
ure including counsel or attorneys fee which the COMPANY shall or may at any time
sustain or incur in consequence of having become surety upon the bond herein ab
ove referred to or any extension, renewal, substitution or alteration thereof, m
ade at the instance of the undersigned or any of them, or any other bond execute
d on behalf of the undersigned or any of them, and to pay; reimburse and make go
od to the COMPANY, its successors and assigns, alls sums and amounts of money wh
ich it or its representatives shall pay or cause to be paid, or become liable to
pay on accounts of the undersigned or any of them, of whatsoever kind and natur
e, including 25% of the amount involved in the litigation or other matters growi
ng out of or connected therewith, for and as attorneys fees, but in no case less
than P300.00 and which shall be payable whether or not the case be extrajudicial
ly settled, it being understood that demand made upon anyone of the undersigned
herein is admitted as demand made on all of the signatories hereof. It is hereby
further agreed that in case of any extension or renewal of the bond, we equally
bind ourselves to the COMPANY under the same terms and conditions as therein pr
ovided without the necessity of executing another indemnity agreement for the pu
rpose and that we may be granted under this indemnity agreement. MATURITY OF OUR
OBLIGATIONS AS CONTRACTED HEREWITH AND ACCRUAL OF ACTION: Notwithstanding of (s
ic) the next preceding paragraph where the obligation involves a liquidated amou
nt for the payment of which the COMPANY has become legally liable under the term
s of the obligation and its suretyship undertaking, or by the demand of the obli
gee or otherwise and the latter has merely allowed the COMPANYs aforesaid liabili
ty irrespective of whether or not payment has actually been made by the COMPANY,
the COMPANY for the protection of its interest may forthwith proceed against th
e undersigned or either of them by court action or otherwise to enforce payment,
even prior to making payment to the obligee which may hereafter be done by the
COMPANY. INTEREST IN CASE OF DELAY: - In the event of delay in payment of the sa
id sum or sums by the undersigned they will pay interest at the rate of 12% per
annum or same, which interest, if not paid, will be liquidated and accumulated t
o the capital quarterly, and shall earn the same interest as the capital; all th
is without prejudice to the COMPANYs right to demand judicially or extrajudiciall
y the full payment
REMLAW Page 343

all this without prejudice to the COMPANYs right to demand judicially or extrajud
icially the full payment of its claims. INCONTESTABILITY OF PAYMENT MADE BY THE
COMPANY: - Any payment or disbursement made by the COMPANY on account of the abo
ve-mentioned Bond, its renewals, extensions or substitutions, replacement or nov
ation in the belief either that the COMPANY was obligated to make such payment o
r that said payment was necessary in order to avoid greater losses or obligation
s for which the COMPANY might be liable by virtue of the terms of the above-ment
ioned Bond, its renewal, extensions or substitutions, shall be final and will no
t be disputed by the undersigned, who bind themselves to jointly and severally i
ndemnify the COMPANY of any such payments, as stated in the preceding clauses: W
AIVER OF VENUE OF ACTION: - We hereby agree that any question which may arise be
tween the COMPANY and the undersigned by reason of this document and which has t
o be submitted for decision to a court of justice shall be brought before the co
urt of competent jurisdiction in Makati, Rizal, waiving for this purpose any oth
er venue. WAIVER: - The undersigned hereby waive all the rights[,] privileges an
d benefits that they have or may have under Articles 2077, 2078, 2079, 2080 and
2081, of the Civil Code of the Philippines. The undersigned, by this instrument,
grant a special power of attorney in favor of all or any of the other undersign
ed so that any of the undersigned may represent all the others in all transactio
ns related to this Bond, its renewals, extensions, or any other agreements in co
nnection with this Counter-Guaranty, without the necessity of the knowledge or c
onsent of the others who hereby promise to accept as valid each and every act do
ne or executed by any of the attorneys-in-fact by virtue of the special power of
attorney. OUR LIABILITY HEREUNDER: - It shall not be necessary for the COMPANY t
o bring suit against the principal upon his default or to exhaust the property o
f the principal, but the liability hereunder of the undersigned indemnitors shal
l be jointly and severally, a primary one, the same as that of the principal, an
d shall be exigible immediately upon the occurrence of such default. CANCELLATIO
N OF BOND BY THE COMPANY: - The COMPANY may at any time cancel the abovementione
d Bond, its renewals, extensions or substitutions, subject to any liability whic
h might have accrued prior to the date of cancellation refunding the proportiona
te amount of the premium unearned on the date of cancellation. RENEWALS, ALTERAT
IONS AND SUBSTITUTIONS: - The undersigned hereby empower and authorize the COMPA
NY to grant or consent to the granting of any extension, continuation, increase,
modification, change, alteration and/or renewal of the original bond herein ref
erred to, and to execute or consent to the execution of any substitution for sai
d Bond with the same or different, conditions and parties, and the undersigned h
ereby hold themselves jointly and severally liable to the COMPANY for the origin
al Bond herein above-mentioned or for any extension, continuation, increase, mod
ification, change, alteration, renewal or substitution thereof without the neces
sary of any new indemnity agreement being executed until the full amount includi
ng principal, interest, premiums, costs, and other expenses due to the COMPANY t
hereunder is fully paid up. SEVERABILITY OF PROVISIONS: - It is hereby agreed th
at should any provision or provisions of this agreement be declared by competent
public authority to be invalid or otherwise unenforceable, all remaining provis
ions herein contained shall remain in full force and effect. NOTIFICATION: - The
undersigned hereby accept due notice of that the COMPANY has accepted this guar
anty, executed by the undersigned in favor of the COMPANY.3 In sum, ISAC issued
the subject bonds to guarantee compliance by petitioners with their undertaking
with the BOC to re-export the imported vehicles within the given period and pay
the taxes and/or duties due thereon. In turn, petitioners agreed, as surety, to
indemnify ISAC for the liability the latter may incur on the said bonds. Petitio
ner Autocorp Group failed to re-export the items guaranteed by the bonds and/or
liquidate the entries or cancel the bonds, and pay the taxes and duties pertaini
ng to the said items despite repeated demands made by the BOC, as well as by ISA
C. By reason thereof, the BOC considered the two bonds, with a total face value
of P1,034,649.00, forfeited. Failing to secure from petitioners the payment of t
he face value of the two bonds, despite several demands sent to each of them as
surety under the Indemnity Agreements, ISAC filed with the RTC on 24 October 199
5 an action against petitioners to recover the sum of P1,034,649.00, plus 25% th

ereof or P258,662.25 as attorneys fees. ISAC impleaded the BOC "as a necessary pa
rty plaintiff in order that the
REMLAW Page 344

P258,662.25 as attorneys fees. ISAC impleaded the BOC "as a necessary party plain
tiff in order that the reward of money or judgment shall be adjudged unto the sa
id necessary plaintiff."4 The case was docketed as Civil Case No. 95-1584. Petit
ioners filed a Motion to Dismiss on 11 December 1995 on the grounds that (1) the
Complaint states no cause of action; and (2) the BOC is an improper party. The
RTC, in an Order5 dated 27 February 1996, denied petitioners Motion to Dismiss. P
etitioners thus filed their Answer to the Complaint, claiming that they sought p
ermission from the BOC for an extension of time to re-export the items covered b
y the bonds; that the BOC has yet to issue an assessment for petitioners alleged
default; and that the claim of ISAC for payment is premature as the subject bond
s are not yet due and demandable. During the pre-trial conference, petitioners a
dmitted the genuineness and due execution of Instrata Bonds No. 5770 and No. 715
4, but specifically denied those of the corresponding Indemnity Agreements. The
parties agreed to limit the issue to "whether or not these bonds are now due and
demandable." On 16 September 1998, the RTC rendered its Decision ordering petit
ioners to pay ISAC and/or the BOC the face value of the subject bonds in the tot
al amount of P1,034,649.00, and to pay ISAC P258,662.25 as attorneys fees, thus:
WHEREFORE, judgment is hereby rendered in favor of the [herein private responden
t ISAC] and as against the [herein petitioners] who are ordered to pay the [priv
ate respondent] Intra Strata Assurance Corporation and/or the Bureau of Customs
the amount of P1,034,649.00 which is the equivalent amount of the subject bonds
as well as to pay the plaintiff corporation the sum of P258,662.25 as and for at
torneys fees.6 Petitioners Motion for Reconsideration was denied by the RTC in a R
esolution dated 15 January 1999.7 Petitioners appealed to the Court of Appeals.
On 30 June 2004, the Court of Appeals rendered its Decision affirming the RTC De
cision, only modifying the amount of the attorneys fees awarded: WHEREFORE, the a
ppealed 16 September 1998 Decision is MODIFIED to reduce the award of attorneys f
ees to One Hundred Three Thousand Four Hundred Sixty Four Pesos & Ninety Centavo
s (P103,464.90). The rest is affirmed in toto. Costs against [herein petitioners
].8 In a Resolution dated 5 January 2005, the Court of Appeals refused to recons
ider its Decision. Petitioners thus filed the instant Petition for Review on Cer
tiorari, assigning the following errors allegedly committed by the Court of Appe
als: I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RENDERING JUDGMENT AGAIN
ST PETITIONERS BASED ON A PREMATURE ACTION AND/OR RULING IN FAVOR OF RESPONDENTS
WHO HAVE NO CAUSE OF ACTION AGAINST PETITIONERS. II. THE HONORABLE COURT OF APP
EALS GRAVELY ERRED IN AFFIRMING THE DECISION OF BRANCH 150, REGIONAL TRIAL COURT
OF MAKATI CITY BASED ON MISAPPREHENSION OF FACTS, UNSUPPORTED BY EVIDENCE ON RE
CORD & CONTRARY TO LAW. III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
GIVING MERIT TO THE ISSUE RAISED BY PETITIONERS THAT THE BUREAU OF CUSTOMS IS I
MPROPERLY IMPLEADED BY INTRA STRATA. IV. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED [IN] AFFIRMING THE PORTION OF THE DECISION HOLDING PETITIONER PETER Y. ROD
RIGUEZ AS JOINTLY LIABLE WHEN AMENDMENTS WERE INTRODUCED, WITHOUT HIS CONSENT AN
D APPROVAL.9 The present Petition is without merit. Absence of actual forfeiture
of the subject bonds Petitioners contend that their obligation to ISAC is not y
et due and demandable. They cannot be made liable by ISAC in the absence of an a
ctual forfeiture of the subject bonds by the BOC and/or an explicit pronouncemen
t by the same bureau that ISAC is already liable on the said bonds. In this case
, there is yet no actual forfeiture of the bonds, but merely a recommendation of
forfeiture, for no writ of execution has been issued against such bonds.10 Henc
e, Civil Case No. 95-1584 was prematurely filed by ISAC. Petitioners further arg
ue that: Secondly, it bears emphasis that as borne by the records, not only is t
here no writ of forfeiture against Surety Bond No. 7154, there is likewise no ev
idence adduced on record to prove that respondent Intra Strata has made legal de
mand against Surety Bond No. 5770 neither is there a showing that respondent BOC
initiated a demand or issued notice for its forfeiture and/or confiscation.11 T
he Court of Appeals, in its assailed Decision, already directly addressed petiti
oners arguments by ruling
REMLAW Page 345

The Court of Appeals, in its assailed Decision, already directly addressed petit
ioners arguments by ruling that an actual forfeiture of the subject bonds is not
necessary for petitioners to be liable thereon to ISAC as surety under the Indem
nity Agreements. According to the relevant provision of the Indemnity Agreements
executed between petitioner and ISAC, which reads: [W]here the obligation invol
ves a liquidated amount for the payment of which [ISAC] has become legally liabl
e under the terms of the obligation and its suretyship undertaking or by the dem
and of the [BOC] or otherwise and the latter has merely allowed the *ISACs+ afore
said liability, irrespective of whether or not payment has actually been made by
the [ISAC], the [ISAC] for the protection of its interest may forthwith proceed
against [petitioners Autocorp Group and Rodriguez] or either of them by court a
ction or otherwise to enforce payment, even prior to making payment to the [BOC]
which may hereafter be done by [ISAC][,] 12 petitioners obligation to indemnify
ISAC became due and demandable the moment the bonds issued by ISAC became answer
able for petitioners non-compliance with its undertaking with the BOC. Stated dif
ferently, petitioners became liable to indemnify ISAC at the same time the bonds
issued by ISAC were placed at the risk of forfeiture by the BOC for non-complia
nce by petitioners with its undertaking. The subject bonds, Instrata Bonds No. 5
770 and No. 7154, became due and demandable upon the failure of petitioner Autoc
orp Group to comply with a condition set forth in its undertaking with the BOC,
specifically to re-export the imported vehicles within the period of six months
from their date of entry. Since it issued the subject bonds, ISAC then also beca
me liable to the BOC. At this point, the Indemnity Agreements already give ISAC
the right to proceed against petitioners via court action or otherwise. The Inde
mnity Agreements, therefore, give ISAC the right to recover from petitioners the
face value of the subject bonds plus attorneys fees at the time ISAC becomes lia
ble on the said bonds to the BOC, regardless of whether the BOC had actually for
feited the bonds, demanded payment thereof and/or received such payment. It must
be pointed out that the Indemnity Agreements explicitly provide that petitioner
s shall be liable to indemnify ISAC "whether or not payment has actually been ma
de by the [ISAC]" and ISAC may proceed against petitioners by court action or ot
herwise "even prior to making payment to the [BOC] which may hereafter be done b
y [ISAC]." Even when the BOC already admitted that it not only made a demand upo
n ISAC for the payment of the bond but even filed a complaint against ISAC for s
uch payment,13 such demand and complaint are not necessary to hold petitioners l
iable to ISAC for the amount of such bonds. Petitioners attempts to prove that th
ere was no actual forfeiture of the subject bonds are completely irrelevant to t
he case at bar. It is worthy to note that petitioners did not impugn the validit
y of the stipulation in the Indemnity Agreements allowing ISAC to proceed agains
t petitioners the moment the subject bonds become due and demandable, even prior
to actual forfeiture or payment thereof. Even if they did so, the Court would b
e constrained to uphold the validity of such a stipulation for it is but a sligh
tly expanded contractual expression of Article 2071 of the Civil Code which prov
ides, inter alia, that the guarantor may proceed against the principal debtor th
e moment the debt becomes due and demandable. Article 2071 of the Civil Code pro
vides: Art. 2071. The guarantor, even before having paid, may proceed against th
e principal debtor: (1) When he is sued for the payment; (2) In case of insolven
cy of the principal debtor; (3) When the debtor has bound himself to relieve him
from the guaranty within a specified period, and this period has expired; (4) W
hen the debt has become demandable, by reason of the expiration of the period fo
r payment; (5) After the lapse of ten years, when the principal obligation has n
o fixed period for its maturity, unless it be of such nature that it cannot be e
xtinguished except within a period longer than ten years; (6) If there are reaso
nable grounds to fear that the principal debtor intends to abscond; (7) If the p
rincipal debtor is in imminent danger of becoming insolvent. In all these cases,
the action of the guarantor is to obtain release from the guaranty, or to deman
d a security that shall protect him from any proceedings by the creditor and fro
m the danger of insolvency of the debtor. (Emphases ours.) Petitioners also invo
ke the alleged lack of demand on the part of ISAC on petitioners as regards Inst
rata Bond No. 5770 before it instituted Civil Case No. 95-1584. Even if proven t

rue, such a fact does not carry

REMLAW Page 346

Bond No. 5770 before it instituted Civil Case No. 95-1584. Even if proven true,
such a fact does not carry much weight considering that demand, whether judicial
or extrajudicial, is not required before an obligation becomes due and demandab
le. A demand is only necessary in order to put an obligor in a due and demandabl
e obligation in delay,14 which in turn is for the purpose of making the obligor
liable for interests or damages for the period of delay.15 Thus, unless stipulat
ed otherwise, an extrajudicial demand is not required before a judicial demand,
i.e., filing a civil case for collection, can be resorted to. Inclusion of the B
ureau of Customs as a party to the case ISAC included the BOC "as a necessary pa
rty plaintiff in order that the reward of money or judgment shall be adjudged un
to the said necessary plaintiff."16 Petitioners assail this inclusion of the BOC
as a party in Civil Case No. 95-1584 on the ground that it was not properly rep
resented by the Solicitor General. Petitioners also contend that the inclusion o
f the BOC as a party in Civil Case No. 95-1584 "is highly improper and should no
t be countenanced as the net result would be tantamount to collusion between Int
ra Strata and the Bureau of Customs which would deny and deprive petitioners the
ir personal defenses against the BOC."17 In its assailed Decision, the Court of
Appeals did not find merit in petitioners arguments on the matter, holding that w
hen the BOC forfeited the subject bonds issued by ISAC, subrogation took place s
o that whatever right the BOC had against petitioners were eventually transferre
d to ISAC. As ISAC merely steps into the shoes of the BOC, whatever defenses pet
itioners may have against the BOC would still be available against ISAC. The Cou
rt likewise cannot sustain petitioners position. The misjoinder of parties does n
ot warrant the dismissal of the action. Section 11, Rule 3 of the Rules of Court
explicitly states: SEC. 11. Misjoinder and non-joinder of parties.Neither misjoi
nder nor non-joinder of parties is ground for dismissal of an action. Parties ma
y be dropped or added by order of the court on motion of any party or on its own
initiative at any stage of the action and on such terms as are just. Any claim
against a misjoined party may be severed and proceeded with separately. Conseque
ntly, the purported misjoinder of the BOC as a party cannot result in the dismis
sal of Civil Case No. 95-1584. If indeed the BOC was improperly impleaded as a p
arty in Civil Case No. 95-1584, at most, it may be dropped by order of the court
, on motion of any party or on its own initiative, at any stage of the action an
d on such terms as are just. Should the BOC then be dropped as a party to Civil
Case No. 95-1584? ISAC alleged in its Complaint18 that the BOC is being joined a
s a necessary party in Civil Case No. 95-1584. A necessary party is defined in S
ection 8, Rule 3 of the Rules of Court as follows: SEC. 8. Necessary party.A nece
ssary party is one who is not indispensable but who ought to be joined as a part
y if complete relief is to be accorded as to those already parties, or for a com
plete determination or settlement of the claim subject of the action. The subjec
t matter of Civil Case No. 95-1584 is the liability of Autocorp Group to the BOC
, which ISAC is also bound to pay as the guarantor who issued the bonds therefor
. Clearly, there would be no complete settlement of the subject matter of the ca
se at bar the liability of Autocorp Group to the BOC should Autocorp Group be me
rely ordered to pay its obligations with the BOC to ISAC. BOC is, therefore, a n
ecessary party in the case at bar, and should not be dropped as a party to the p
resent case. It can only be conceded that there was an irregularity in the manne
r the BOC was joined as a necessary party in Civil Case No. 95-1584. As the BOC,
through the Solicitor General, was not the one who initiated Civil Case No. 951584, and neither was its consent obtained for the filing of the same, it may be
considered an unwilling co-plaintiff of ISAC in said action. The proper way to
implead the BOC as a necessary party to Civil Case No. 95-1584 should have been
in accordance with Section 10, Rule 3 of the Rules of Court, viz: SEC. 10. Unwil
ling co-plaintiff. If the consent of any party who should be joined as plaintiff
can not be obtained, he may be made a defendant and the reason therefor shall be
stated in the complaint. Nonetheless, the irregularity in the inclusion of the
BOC as a party to Civil Case No. 95-1584 would not in any way affect the disposi
tion thereof. As the Court already found that the BOC is a necessary party to Ci
vil Case No. 95-1584, it would be a graver injustice to drop it as a party. Peti
tioners argument that the inclusion of the BOC as a party to this case would depr

ive them of their personal defenses against the BOC is utterly baseless.
REMLAW Page 347

personal defenses against the BOC is utterly baseless. First, as ruled by the Co
urt of Appeals, petitioners defenses against the BOC are completely available aga
inst ISAC, since the right of the latter to seek indemnity from petitioner depen
ds on the right of the BOC to proceed against the bonds. The Court, however, dee
ms it essential to qualify that ISACs right to seek indemnity from petitioners do
es not constitute subrogation under the Civil Code, considering that there has b
een no payment yet by ISAC to the BOC. There are indeed cases in the aforementio
ned Article 2071 of the Civil Code wherein the guarantor or surety, even before
having paid, may proceed against the principal debtor, but in all these cases, A
rticle 2071 of the Civil Code merely grants the guarantor or surety an action "t
o obtain release from the guaranty, or to demand a security that shall protect h
im from any proceedings by the creditor and from the danger of insolvency of the
debtor." The benefit of subrogation, an extinctive subjective novation by a cha
nge of creditor, which "transfers to the person subrogated, the credit and all t
he rights thereto appertaining, either against the debtor or against third perso
ns,"19 is granted by the Article 2067 of the Civil Code only to the "guarantor (
or surety) who pays."20 ISAC cannot be said to have stepped into the shoes of th
e BOC, because the BOC still retains said rights until it is paid. ISACs right to
file Civil Case No. 95-1584 is based on the express provision of the Indemnity
Agreements making petitioners liable to ISAC at the very moment ISACs bonds becom
e due and demandable for the liability of Autocorp Group to the BOC, without nee
d for actual payment by ISAC to the BOC. But it is still correct to say that all
the defenses available to petitioners against the BOC can likewise be invoked a
gainst ISAC because the latters contractual right to proceed against petitioners
only arises when the Autocorp Group becomes liable to the BOC for non-compliance
with its undertakings. Indeed, the arguments and evidence petitioners can prese
nt against the BOC to prove that Autocorp Groups liability to the BOC is not yet
due and demandable would also establish that petitioners liability to ISAC under
the Indemnity Agreements has not yet arisen. Second, making the BOC a necessary
party to Civil Case No. 95-1584 actually allows petitioners to simultaneously in
voke its defenses against both the BOC and ISAC. Instead of depriving petitioner
s of their personal defenses against the BOC, Civil Case No. 95-1584 actually ga
ve them the opportunity to kill two birds with one stone: to disprove its liabil
ity to the BOC and, thus, negate its liability to ISAC. Liability of petitioner
Rodriguez Petitioner Rodriguez posits that he is merely a guarantor, and that hi
s liability arises only when the person with whom he guarantees the credit, Auto
corp Group in this case, fails to pay the obligation. Petitioner Rodriguez invok
es Article 2079 of the Civil Code on Extinguishment of Guaranty, which states: A
rt. 2079. An extension granted to the debtor by the creditor without the consent
of the guarantor extinguishes the guaranty. The mere failure on the part of the
creditor to demand payment after the debt has become due does not of itself con
stitute any extension of time referred to herein. Petitioner Rodriguez argues th
at there was an amendment as to the effectivity of the bonds, and this constitut
es a modification of the agreement without his consent, thereby exonerating him
from any liability. We must take note at this point that petitioners have not pr
esented any evidence of this alleged amendment as to the effectivity of the bond
s.21 Be that as it may, even if there was indeed such an amendment, such would n
ot cause the exoneration of petitioner Rodriguez from liability on the bonds. Th
e Court of Appeals, in its assailed Decision, held that the use of the term guar
antee in a contract does not ipso facto mean that the contract is one of guarant
y. It thus ruled that both petitioners assumed liability as a regular party and
obligated themselves as original promissors, i.e., sureties, as shown in the fol
lowing provisions of the Indemnity Agreement: INDEMNITY: - The undersigned [Auto
corp Group and Rodriguez] agree at all times to jointly and severally indemnify
the COMPANY [ISAC] and keep it indemnified and hold and save it harmless from an
d against any and all damages, losses, costs, stamps, taxes, penalties, charges
and expenses of whatsoever kind and nature including counsel or attorneys fee whi
ch the COMPANY *ISAC+ shall or may at any time sustain or incur in consequence o
f having become surety upon the bond herein above referred to x x x xxx x OUR LI
ABILITY HEREUNDER: - It shall not be necessary for the COMPANY [ISAC] to bring s

uit against the principal [Autocorp Group] upon his default or to exhaust the pr
operty of the principal [Autocorp Group], but the liability hereunder of the und
ersigned indemnitors [Rodriguez] shall be jointly and
REMLAW Page 348

Group], but the liability hereunder of the undersigned indemnitors [Rodriguez] s

hall be jointly and severally, a primary one, the same as that of the principal
[Autocorp Group], and shall be exigible immediately upon the occurrence of such
default. (Emphases supplied.) The Court of Appeals concluded that since petition
er Rodriguez was a surety, Article 2079 of the Civil Code does not apply. The ap
pellate court further noted that both petitioners authorized ISAC to consent to
the granting of an extension of the subject bonds. The Court of Appeals committe
d a slight error on this point. The provisions of the Civil Code on Guarantee, o
ther than the benefit of excussion, are applicable and available to the surety.2
2 The Court finds no reason why the provisions of Article 2079 would not apply t
o a surety. This, however, would not cause a reversal of the Decision of the Cou
rt of Appeals. The Court of Appeals was correct that even granting arguendo that
there was a modification as to the effectivity of the bonds, petitioners would
still not be absolved from liability since they had authorized ISAC to consent t
o the granting of any extension, modification, alteration and/or renewal of the
subject bonds, as expressly set out in the Indemnity Agreements: RENEWALS, ALTER
ATIONS AND SUBSTITUTIONS: - The undersigned [Autocorp Group and Rodriguez] hereb
y empower and authorize the COMPANY [ISAC] to grant or consent to the granting o
f any extension, continuation, increase, modification, change, alteration and/or
renewal of the original bond herein referred to, and to execute or consent to t
he execution of any substitution for said Bond with the same or different, condi
tions and parties, and the undersigned [Autocorp Group and Rodriguez] hereby hol
d themselves jointly and severally liable to the COMPANY [ISAC] for the original
Bond herein above-mentioned or for any extension, continuation, increase, modif
ication, change, alteration, renewal or substitution thereof without the necessa
ry of any new indemnity agreement being executed until the full amount including
principal, interest, premiums, costs, and other expenses due to the COMPANY [IS
AC] thereunder is fully paid up.23 (Emphases supplied.) The foregoing provision
in the Indemnity Agreements clearly authorized ISAC to consent to the granting o
f any extension, modification, alteration and/or renewal of the subject bonds. T
here is nothing illegal in such a provision. In Philippine American General Insu
rance Co., Inc. v. Mutuc,24 the Court held that an agreement whereby the suretie
s bound themselves to be liable in case of an extension or renewal of the bond,
without the necessity of executing another indemnity agreement for the purpose a
nd without the necessity of being notified of such extension or renewal, is vali
d; and that there is nothing in it that militates against the law, good customs,
good morals, public order or public policy. WHEREFORE, the instant Petition for
Review on Certiorari is DENIED. The Decision of the Court of Appeals dated 30 J
une 2004 in CA-G.R. CV No. 62564 which affirmed with modification the Decision o
f the Regional Trial Court of Makati City, in Civil Case No. 95-1584 dated 16 Se
ptember 1998 is AFFIRMED in toto. Costs against petitioners. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2008/jun2008/gr_166662_2008.htm
l>
REMLAW Page 349

Van ZuiDen v. GTVL Manufacturing 523 SCRA 233

Sunday, November 14, 2010 11:40 PM
B. VAN ZUIDEN BROS., LTD., Petitioner, vs. GTVL MANUFACTURING INDUSTRIES, INC.,
Respondent. DE C I S I O N CARPIO, J.: The Case Before the Court is a petition f
or review 1 of the 18 April 2001 Decision2 of the Court of Appeals in CAG.R. CV
No. 66236. The Court of Appeals affirmed the Order3 of the Regional Trial Court,
Branch 258, Paraaque City (trial court) dismissing the complaint for sum of mone
y filed by B. Van Zuiden Bros., Ltd. (petitioner) against GTVL Manufacturing Ind
ustries, Inc. (respondent). The Facts On 13 July 1999, petitioner filed a compla
int for sum of money against respondent, docketed as Civil Case No. 99-0249. The
pertinent portions of the complaint read: 1. Plaintiff, ZUIDEN, is a corporatio
n, incorporated under the laws of Hong Kong. x x x ZUIDEN is not engaged in busi
ness in the Philippines, but is suing before the Philippine Courts, for the reas
ons hereinafter stated. xxx x 3. ZUIDEN is engaged in the importation and export
ation of several products, including lace products. 4. On several occasions, GTV
L purchased lace products from [ZUIDEN]. 5. The procedure for these purchases, a
s per the instructions of GTVL, was that ZUIDEN delivers the products purchased
by GTVL, to a certain Hong Kong corporation, known as Kenzar Ltd. (KENZAR), x x
x and the products are then considered as sold, upon receipt by KENZAR of the go
ods purchased by GTVL. KENZAR had the obligation to deliver the products to the
Philippines and/or to follow whatever instructions GTVL had on the matter. Insof
ar as ZUIDEN is concerned, upon delivery of the goods to KENZAR in Hong Kong, th
e transaction is concluded; and GTVL became obligated to pay the agreed purchase
price. xxx x 7. However, commencing October 31, 1994 up to the present, GTVL ha
s failed and refused to pay the agreed purchase price for several deliveries ord
ered by it and delivered by ZUIDEN, as abovementioned. xxx x 9. In spite [sic] o
f said demands and in spite [sic] of promises to pay and/or admissions of liabil
ity, GTVL has failed and refused, and continues to fail and refuse, to pay the o
verdue amount of U.S.$32,088.02 [inclusive of interest].4 Instead of filing an a
nswer, respondent filed a Motion to Dismiss5 on the ground that petitioner has n
o legal capacity to sue. Respondent alleged that petitioner is doing business in
the Philippines without securing the required license. Accordingly, petitioner
cannot sue before Philippine courts. After an exchange of several pleadings6 bet
ween the parties, the trial court issued an Order on 10 November 1999 dismissing
the complaint. On appeal, the Court of Appeals sustained the trial courts dismis
sal of the complaint. Hence, this petition. The Court of Appeals Ruling In affirm
ing the dismissal of the complaint, the Court of Appeals relied on Eriks Pte., L
td. v. Court of Appeals.7 In that case, Eriks, an unlicensed foreign corporation
, sought to collect US$41,939.63 from a Filipino businessman for goods which he
purchased and received on several occasions from January to May 1989. The transf
ers of goods took place in Singapore, for the Filipinos account, F.O.B. Singapore
, with a 90-day credit term. Since the transactions involved were not isolated,
this Court found Eriks to be doing business in the Philippines. Hence, this Cour
t upheld the dismissal of the complaint on the ground that Eriks has no capacity
to sue. The Court of Appeals noted that in Eriks, while the deliveries of the g
oods were perfected in Singapore,
REMLAW Page 350

that Eriks has no capacity to sue. The Court of Appeals noted that in Eriks, whi
le the deliveries of the goods were perfected in Singapore, this Court still fou
nd Eriks to be engaged in business in the Philippines. Thus, the Court of Appeal
s concluded that the place of delivery of the goods (or the place where the tran
saction took place) is not material in determining whether a foreign corporation
is doing business in the Philippines. The Court of Appeals held that what is ma
terial are the proponents to the transaction, as well as the parties to be benef
ited and obligated by the transaction. In this case, the Court of Appeals found
that the parties entered into a contract of sale whereby petitioner sold lace pr
oducts to respondent in a series of transactions. While petitioner delivered the
goods in Hong Kong to Kenzar, Ltd. (Kenzar), another Hong Kong company, the par
ty with whom petitioner transacted was actually respondent, a Philippine corpora
tion, and not Kenzar. The Court of Appeals believed Kenzar is merely a shipping
company. The Court of Appeals concluded that the delivery of the goods in Hong K
ong did not exempt petitioner from being considered as doing business in the Phi
lippines. The Issue The sole issue in this case is whether petitioner, an unlice
nsed foreign corporation, has legal capacity to sue before Philippine courts. Th
e resolution of this issue depends on whether petitioner is doing business in th
e Philippines. The Ruling of the Court The petition is meritorious. Section 133
of the Corporation Code provides: Doing business without license. No foreign cor
poration transacting business in the Philippines without a license, or its succe
ssors or assigns, shall be permitted to maintain or intervene in any action, sui
t or proceeding in any court or administrative agency of the Philippines; but su
ch corporation may be sued or proceeded against before Philippine courts or admi
nistrative tribunals on any valid cause of action recognized under Philippine la
ws. The law is clear. An unlicensed foreign corporation doing business in the Ph
ilippines cannot sue before Philippine courts. On the other hand, an unlicensed
foreign corporation not doing business in the Philippines can sue before Philipp
ine courts. In the present controversy, petitioner is a foreign corporation whic
h claims that it is not doing business in the Philippines. As such, it needs no
license to institute a collection suit against respondent before Philippine cour
ts. Respondent argues otherwise. Respondent insists that petitioner is doing bus
iness in the Philippines without the required license. Hence, petitioner has no
legal capacity to sue before Philippine courts. Under Section 3(d) of Republic A
ct No. 7042 (RA 7042) or "The Foreign Investments Act of 1991," the phrase "doin
g business" includes: x x x soliciting orders, service contracts, opening office
s, whether called "liaison" offices or branches; appointing representatives or d
istributors domiciled in the Philippines or who in any calendar year stay in the
country for a period or periods totalling one hundred eighty (180) days or more
; participating in the management, supervision or control of any domestic busine
ss, firm, entity or corporation in the Philippines; and any other act or acts th
at imply a continuity of commercial dealings or arrangements, and contemplate to
that extent the performance of acts or works, or the exercise of some of the fu
nctions normally incident to, and in progressive prosecution of, commercial gain
or of the purpose and object of the business organization: Provided, however, T
hat the phrase "doing business" shall not be deemed to include mere investment a
s a shareholder by a foreign entity in domestic corporations duly registered to
do business, and/or the exercise of rights as such investor; nor having a nomine
e director or officer to represent its interests in such corporation; nor appoin
ting a representative or distributor domiciled in the Philippines which transact
s business in its own name and for its own account. The series of transactions b
etween petitioner and respondent cannot be classified as "doing business" in the
Philippines under Section 3(d) of RA 7042. An essential condition to be conside
red as "doing business" in the Philippines is the actual performance of specific
commercial acts within the territory of the Philippines for the plain reason th
at the Philippines has no jurisdiction over commercial acts performed in foreign
territories. Here, there is no showing that petitioner performed within the Phi
lippine territory the specific acts of doing business mentioned in Section 3(d)
of RA 7042. Petitioner did not also open an office here in the Philippines, appo
int a representative or distributor, or manage, supervise or control a local bus

iness. While petitioner and respondent entered into a series of

REMLAW Page 351

supervise or control a local business. While petitioner and respondent entered i

nto a series of transactions implying a continuity of commercial dealings, the p
erfection and consummation of these transactions were done outside the Philippin
es.8 In its complaint, petitioner alleged that it is engaged in the importation
and exportation of several products, including lace products. Petitioner asserte
d that on several occasions, respondent purchased lace products from it. Petitio
ner also claimed that respondent instructed it to deliver the purchased goods to
Kenzar, which is a Hong Kong company based in Hong Kong. Upon Kenzars receipt of
the goods, the products were considered sold. Kenzar, in turn, had the obligati
on to deliver the lace products to the Philippines. In other words, the sale of
lace products was consummated in Hong Kong. As earlier stated, the series of tra
nsactions between petitioner and respondent transpired and were consummated in H
ong Kong.9 We also find no single activity which petitioner performed here in th
e Philippines pursuant to its purpose and object as a business organization.10 M
oreover, petitioners desire to do business within the Philippines is not discerni
ble from the allegations of the complaint or from its attachments. Therefore, th
ere is no basis for ruling that petitioner is doing business in the Philippines.
In Eriks, respondent therein alleged the existence of a distributorship agreeme
nt between him and the foreign corporation. If duly established, such distributo
rship agreement could support respondents claim that petitioner was indeed doing
business in the Philippines. Here, there is no such or similar agreement between
petitioner and respondent. We disagree with the Court of Appeals ruling that the
proponents to the transaction determine whether a foreign corporation is doing
business in the Philippines, regardless of the place of delivery or place where
the transaction took place. To accede to such theory makes it possible to classi
fy, for instance, a series of transactions between a Filipino in the United Stat
es and an American company based in the United States as "doing business in the
Philippines," even when these transactions are negotiated and consummated only w
ithin the United States. An exporter in one country may export its products to m
any foreign importing countries without performing in the importing countries sp
ecific commercial acts that would constitute doing business in the importing cou
ntries. The mere act of exporting from ones own country, without doing any specif
ic commercial act within the territory of the importing country, cannot be deeme
d as doing business in the importing country. The importing country does not acq
uire jurisdiction over the foreign exporter who has not performed any specific c
ommercial act within the territory of the importing country. Without jurisdictio
n over the foreign exporter, the importing country cannot compel the foreign exp
orter to secure a license to do business in the importing country. Otherwise, Ph
ilippine exporters, by the mere act alone of exporting their products, could be
considered by the importing countries to be doing business in those countries. T
his will require Philippine exporters to secure a business license in every fore
ign country where they usually export their products, even if they do not perfor
m any specific commercial act within the territory of such importing countries.
Such a legal concept will have a deleterious effect not only on Philippine expor
ts, but also on global trade. To be doing or "transacting business in the Philip
pines" for purposes of Section 133 of the Corporation Code, the foreign corporat
ion must actually transact business in the Philippines, that is, perform specifi
c business transactions within the Philippine territory on a continuing basis in
its own name and for its own account. Actual transaction of business within the
Philippine territory is an essential requisite for the Philippines to acquire j
urisdiction over a foreign corporation and thus require the foreign corporation
to secure a Philippine business license. If a foreign corporation does not trans
act such kind of business in the Philippines, even if it exports its products to
the Philippines, the Philippines has no jurisdiction to require such foreign co
rporation to secure a Philippine business license. Considering that petitioner i
s not doing business in the Philippines, it does not need a license in order to
initiate and maintain a collection suit against respondent for the unpaid balanc
e of respondents purchases. WHEREFORE, we GRANT the petition. We REVERSE the Deci
sion dated 18 April 2001 of the Court of Appeals in CA-G.R. CV No. 66236. No cos
ts. SO ORDERED.

Pasted from <http://www.lawphil.net/judjuris/juri2007/may2007/gr_147905_2007.htm

l>
REMLAW Page 352

Pasted from <http://www.lawphil.net/judjuris/juri2007/may2007/gr_147905_2007.htm

l>
REMLAW Page 353

Deutsche v CA GR 152318 Apr 16, 2009

Sunday, November 14, 2010 11:40 PM
DEUTSCHE GESELLSCHAFT FR TECHNISCHE ZUSAMMENARBEIT, also known as GERMAN AGENCY F
OR TECHNICAL COOPERATION, (GTZ) HANS PETER PAULENZ and ANNE NICOLAY, Petitioners
, vs. HON. COURT OF APPEALS, HON. ARIEL CADIENTE SANTOS, Labor Arbiter of the Ar
bitration Branch, National Labor Relations Commission, and BERNADETTE CARMELLA M
AGTAAS, CAROLINA DIONCO, CHRISTOPHER RAMOS, MELVIN DELA PAZ, RANDY TAMAYO and ED
GARDO RAMILLO, Respondents. DE C I S I O N TINGA, J.: On 7 September 1971, the g
overnments of the Federal Republic of Germany and the Republic of the Philippine
s ratified an Agreement concerning Technical Co-operation (Agreement) in Bonn, c
apital of what was then West Germany. The Agreement affirmed the countries "commo
n interest in promoting the technical and economic development of their States,
and recogni[zed] the benefits to be derived by both States from closer technical
co-operation," and allowed for the conclusion of "arrangements concerning indiv
idual projects of technical co-operation."1 While the Agreement provided for a l
imited term of effectivity of five (5) years, it nonetheless was stated that "[t
]he Agreement shall be tacitly extended for successive periods of one year unles
s either of the two Contracting Parties denounces it in writing three months pri
or to its expiry," and that even upon the Agreements expiry, its provisions would
"continue to apply to any projects agreed upon x x x until their completion."2
On 10 December 1999, the Philippine government, through then Foreign Affairs Sec
retary Domingo Siazon, and the German government, agreed to an Arrangement in fu
rtherance of the 1971 Agreement. This Arrangement affirmed the common commitment
of both governments to promote jointly a project called, Social Health Insuranc
eNetworking and Empowerment (SHINE), which was designed to "enable Philippine fam
iliesespecially poor onesto maintain their health and secure health care of sustai
nable quality."3 It appears that SHINE had already been in existence even prior
to the effectivity of the Arrangement, though the record does not indicate when
exactly SHINE was constituted. Nonetheless, the Arrangement stated the various o
bligations of the Filipino and German governments. The relevant provisions of th
e Arrangement are reproduced as follows: 3. The Government of the Federal Republ
ic of Germany shall make the following contributions to the project. It shall (a
) second - one expert in health economy, insurance and health systems for up to
48 expert/months, - one expert in system development for up to 10 expert/months
- short-term experts to deal with special tasks for a total of up to 18 expert/m
onths, - project assistants/guest students as required, who shall work on the pr
oject as part of their basic and further training and assume specific project ta
sks under the separately financed junior staff promotion programme of the Deutsc
he Gesellschaft fr Technische Zusammenarbeit (GTZ); (b) provide in situ - short-t
erm experts to deal with diverse special tasks for a total of up to 27 expert/mo
nths, - five local experts in health economy, health insurance, community health
systems, information technology, information systems, training and community mo
bilization for a total of up to 240 expert/months, - local and auxiliary personn
el for a total of up to 120 months; (c) supply inputs, in particular - two cross
-country vehicles, - ten computers with accessories, - office furnishings and eq
uipment up to a total value of DM 310,000 (three hundred and ten thousand Deutsc
he Mark); (c) meet
REMLAW Page 354

up to a total value of DM 310,000 (three hundred and ten thousand Deutsche Mark)
; (c) meet - the cost of accommodation for the seconded experts and their famili
es in so far as this cost is not met by the seconded experts themselves, - the c
ost of official travel by the experts referred to in sub-paragraph (a) above wit
hin and outside the Republic of the Philippines, - the cost of seminars and cour
ses, - the cost of transport and insurance to the project site of inputs to be s
upplied pursuant to subparagraph (c) above, excluding the charges and storage fe
es referred to in paragraph 4(d) below, - a proportion of the operating and admi
nistrative costs; xxx 4. The Government of the Republic of the Philippines shall
make the following contributions to the project: It shall (a) provide the neces
sary Philippine experts for the project, in particular one project coordinator i
n the Philippine Health Insurance Corporation (Philhealth), at least three furth
er experts and a sufficient number of administrative and auxiliary personnel, as
well as health personnel in the pilot provinces and in the other project partne
rs, in particular one responsible expert for each pilot province and for each as
sociation representing the various target groups, - release suitably qualified e
xperts from their duties for attendance at the envisaged basic and further train
ing activities; it shall only nominate such candidates as have given an undertak
ing to work on the project for at least five years after completing their traini
ng and shall ensure that these Philippine experts receive appropriate remunerati
on, - ensure that the project field offices have sufficient expendables, - make
available the land and buildings required for the project; (b) assume an increas
ing proportion of the running and operating costs of the project; (c) afford the
seconded experts any assistance they may require in carrying out the tasks assi
gned to them and place at their disposal all necessary records and documents; (d
) guarantee that - the project is provided with an itemized budget of its own in
order to ensure smooth continuation of the project. - the necessary legal and a
dministrative framework is created for the project, - the project is coordinated
in close cooperation with other national and international agencies relevant to
implementation, - the inputs supplied for the project on behalf of the Governme
nt of the Federal Republic of Germany are exempted from the cost of licenses, ha
rbour dues, import and export duties and other public charges and fees, as well
as storage fees, or that any costs thereof are met, and that they are cleared by
customs without delay. The aforementioned exemptions shall, at the request of t
he implementing agencies also apply to inputs procured in the Republic of the Ph
ilippines, - the tasks of the seconded experts are taken over as soon as possibl
e by Philippine experts, - examinations passed by Philippine nationals pursuant
to this Arrangement are recognized in accordance with their respective standards
and that the persons concerned are afforded such opportunities with regard to c
areers, appointments and advancement as are commensurate with their training.4 I
n the arraignment, both governments likewise named their respective implementing
organizations for SHINE. The Philippines designated the Department of Health (D
OH) and the Philippine Health Insurance Corporation (Philhealth) with the implem
entation of SHINE. For their part, the German government "charge*d+ the Deustche
Gesellschaft fr Technische Zusammenarbeit*5 ] (GTZ[6 ]) GmbH, Eschborn, with the
implementation of its contributions."7 Private respondents were engaged as cont
ract employees hired by GTZ to work for SHINE on various dates between December
of 1998 to September of 1999. Bernadette Carmela Magtaas was hired as an "inform
ation systems manager and project officer of SHINE;"8 Carolina Dionco as a "Proj
ect Assistant of SHINE;"9 Christopher Ramos as "a project assistant and liason p
ersonnel of NHI related SHINE activities by GTZ;"10 Melvin Dela Paz and Randy Ta
mayo as programmers;11 and Edgardo Ramilo as "driver, messenger and multipurpose
service man."12 The employment contracts of all six private respondents all spe
cified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the "employer.
" At the same time, all
REMLAW Page 355

specified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the "employ

er." At the same time, all the contracts commonly provided that "[i]t is mutuall
y agreed and understood that [Dr. Tollkotter, as employer] is a seconded GTZ exp
ert who is hiring the Employee on behalf of GTZ and for a PhilippineGerman bilat
eral project named Social Health InsuranceNetworking and Empowerment (SHINE) which
will end at a given time."13 In September of 1999, Anne Nicolay (Nicolay), a Bel
gian national, assumed the post of SHINE Project Manager. Disagreements eventual
ly arose between Nicolay and private respondents in matters such as proposed sal
ary adjustments, and the course Nicolay was taking in the implementation of SHIN
E different from her predecessors. The dispute culminated in a letter14 dated 8
June 2000, signed by the private respondents, addressed to Nicolay, and copies f
urnished officials of the DOH, Philheath, and the director of the Manila office
of GTZ. The letter raised several issues which private respondents claim had bee
n brought up several times in the past, but have not been given appropriate resp
onse. It was claimed that SHINE under Nicolay had veered away from its original
purpose to facilitate the development of social health insurance by shoring up t
he national health insurance program and strengthening local initiatives, as Nic
olay had refused to support local partners and new initiatives on the premise th
at community and local government unit schemes were not sustainablea philosophy t
hat supposedly betrayed Nicolays lack of understanding of the purpose of the proj
ect. Private respondents further alleged that as a result of Nicolays "new thrust
, resources have been used inappropriately;" that the new management style was "
not congruent with the original goals of the project;" that Nicolay herself suff
ered from "cultural insensitivity" that consequently failed to sustain healthy r
elations with SHINEs partners and staff. The letter ended with these ominous word
s: The issues that we [the private respondents] have stated here are very crucia
l to us in working for the project. We could no longer find any reason to stay w
ith the project unless ALL of these issues be addressed immediately and appropri
ately.15 In response, Nicolay wrote each of the private respondents a letter dat
ed 21 June 2000, all similarly worded except for their respective addressees. Sh
e informed private respondents that the "projects orientations and evolution" wer
e decided in consensus with partner institutions, Philhealth and the DOH, and th
us no longer subject to modifications. More pertinently, she stated: You have fi
rmly and unequivocally stated in the last paragraph of your 8th June 2000 letter
that you and the five other staff "could no longer find any reason to stay with
the project unless ALL of these issues be addressed immediately and appropriate
ly." Under the foregoing premises and circumstances, it is now imperative that I
am to accept your resignation, which I expect to receive as soon as possible.16
Taken aback, private respondents replied with a common letter, clarifying that
their earlier letter was not intended as a resignation letter, but one that mere
ly intended to raise attention to what they perceived as vital issues.17 Negotia
tions ensued between private respondents and Nicolay, but for naught. Each of th
e private respondents received a letter from Nicolay dated 11 July 2000, informi
ng them of the pre-termination of their contracts of employment on the grounds o
f "serious and gross insubordination, among others, resulting to loss of confide
nce and trust."18 On 21 August 2000, the private respondents filed a complaint f
or illegal dismissal with the NLRC. Named as respondents therein where GTZ, the
Director of its Manila office Hans Peter Paulenz, its Assistant Project Manager
Christian Jahn, and Nicolay. On 25 October 2005, GTZ, through counsel, filed a M
otion to Dismiss, on the ground that the Labor Arbiter had no jurisdiction over
the case, as its acts were undertaken in the discharge of the governmental funct
ions and sovereign acts of the Government of the Federal Republic of Germany. Th
is was opposed by private respondents with the arguments that GTZ had failed to
secure a certification that it was immune from suit from the Department of Forei
gn Affairs, and that it was GTZ and not the German government which had implemen
ted the SHINE Project and entered into the contracts of employment. On 27 Novemb
er 2000, the Labor Arbiter issued an Order19 denying the Motion to Dismiss. The
Order cited, among others, that GTZ was a private corporation which entered into
an employment contract; and that GTZ had failed to secure from the DFA a certif
ication as to its diplomatic status. On 7 February 2001, GTZ filed with the Labo

r Arbiter a "Reiterating Motion to Dismiss," again praying that the Motion to Di

smiss be granted on the jurisdictional ground, and reprising the arguments for d
ismissal it had earlier raised.20 No action was taken by the Labor Arbiter on th
is new motion. Instead,
REMLAW Page 356

dismissal it had earlier raised.20 No action was taken by the Labor Arbiter on t
his new motion. Instead, on 15 October 2001, the Labor Arbiter rendered a Decisi
on21 granting the complaint for illegal dismissal. The Decision concluded that r
espondents were dismissed without lawful cause, there being "a total lack of due
process both substantive and procedural [sic]."22 GTZ was faulted for failing t
o observe the notice requirements in the labor law. The Decision likewise procee
ded from the premise that GTZ had treated the letter dated 8 June 2000 as a resi
gnation letter, and devoted some focus in debunking this theory. The Decision in
itially offered that it "need not discuss the jurisdictional aspect considering
that the same had already been lengthily discussed in the Order de*n+ying respon
dents Motion to Dismiss."23 Nonetheless, it proceeded to discuss the jurisdiction
al aspect, in this wise: Under pain of being repetitious, the undersigned Labor
Arbiter has jurisdiction to entertain the complaint on the following grounds: Fi
rstly, under the employment contract entered into between complainants and respo
ndents, specifically Section 10 thereof, it provides that "contract partners agr
ee that his contract shall be subject to the LAWS of the jurisdiction of the loc
ality in which the service is performed." Secondly, respondent having entered in
to contract, they can no longer invoke the sovereignty of the Federal Republic o
f Germany. Lastly, it is imperative to be immune from suit, respondents should h
ave secured from the Department of Foreign Affairs a certification of respondent
s diplomatic status and entitlement to diplomatic privileges including immunity f
rom suits. Having failed in this regard, respondents cannot escape liability fro
m the shelter of sovereign immunity.[sic]24 Notably, GTZ did not file a motion f
or reconsideration to the Labor Arbiters Decision or elevate said decision for ap
peal to the NLRC. Instead, GTZ opted to assail the decision by way of a special
civil action for certiorari filed with the Court of Appeals.25 On 10 December 20
01, the Court of Appeals promulgated a Resolution26 dismissing GTZs petition, fin
ding that "judicial recourse at this stage of the case is uncalled for[,] [t]he
appropriate remedy of the petitioners [being] an appeal to the NLRC x x x."27 A
motion for reconsideration to this Resolution proved fruitless for GTZ.28 Thus,
the present petition for review under Rule 45, assailing the decision and resolu
tions of the Court of Appeals and of the Labor Arbiter. GTZs arguments center on
whether the Court of Appeals could have entertained its petition for certiorari
despite its not having undertaken an appeal before the NLRC; and whether the com
plaint for illegal dismissal should have been dismissed for lack of jurisdiction
on account of GTZs insistence that it enjoys immunity from suit. No special argu
ments are directed with respect to petitioners Hans Peter Paulenz and Anne Nicol
ay, respectively the then Director and the then Project Manager of GTZ in the Ph
ilippines; so we have to presume that the arguments raised in behalf of GTZs alle
ged immunity from suit extend to them as well. The Court required the Office of
the Solicitor General (OSG) to file a Comment on the petition. In its Comment da
ted 7 November 2005, the OSG took the side of GTZ, with the prayer that the peti
tion be granted on the ground that GTZ was immune from suit, citing in particula
r its assigned functions in implementing the SHINE programa joint undertaking of
the Philippine and German governments which was neither proprietary nor commerci
al in nature. The Court of Appeals had premised the dismissal of GTZs petition on
its procedural misstep in bypassing an appeal to NLRC and challenging the Labor
Arbiters Decision directly with the appellate court by way of a Rule 65 petition
. In dismissing the petition, the Court of Appeals relied on our ruling in Air S
ervice Cooperative v. Court of Appeals.29 The central issue in that case was whe
ther a decision of a Labor Arbiter rendered without jurisdiction over the subjec
t matter may be annulled in a petition before a Regional Trial Court. That case
may be differentiated from the present case, since the Regional Trial Court does
not have original or appellate jurisdiction to review a decision rendered by a
Labor Arbiter. In contrast, there is no doubt, as affirmed by jurisprudence, tha
t the Court of Appeals has jurisdiction to review, by way of its original certio
rari jurisdiction, decisions ruling on complaints for illegal dismissal. Nonethe
less, the Court of Appeals is correct in pronouncing the general rule that the p
roper recourse from the decision of the Labor Arbiter is to first appeal the sam
e to the NLRC. Air Services is in fact clearly detrimental to petitioners positio

n in one regard. The Court therein noted that on account of the failure to corre
ctly appeal the decision of the Labor Arbiter to the NLRC, such judgment consequ
ently became final and executory.30 GTZ goes as far as to "request" that the Cou
rt re-examine Air Services, a
REMLAW Page 357

suggestion that is needlessly improvident under the circumstances. Air Services

affirms doctrines grounded in sound procedural rules that have allowed for the c
onsidered and orderly disposition of labor cases. The OSG points out, citing Hei
rs of Mayor Nemencio Galvez v. Court of Appeals,31 that even when appeal is avai
lable, the Court has nonetheless allowed a writ of certiorari when the orders of
the lower court were issued either in excess of or without jurisdiction. Indeed
, the Court has ruled before that the failure to employ available intermediate r
ecourses, such as a motion for reconsideration, is not a fatal infirmity if the
ruling assailed is a patent nullity. This approach suggested by the OSG allows t
he Court to inquire directly into what is the main issuewhether GTZ enjoys immuni
ty from suit. The arguments raised by GTZ and the OSG are rooted in several indi
sputable facts. The SHINE project was implemented pursuant to the bilateral agre
ements between the Philippine and German governments. GTZ was tasked, under the
1991 agreement, with the implementation of the contributions of the German gover
nment. The activities performed by GTZ pertaining to the SHINE project are gover
nmental in nature, related as they are to the promotion of health insurance in t
he Philippines. The fact that GTZ entered into employment contracts with the pri
vate respondents did not disqualify it from invoking immunity from suit, as held
in cases such as Holy See v. Rosario, Jr.,32 which set forth what remains valid
doctrine: Certainly, the mere entering into a contract by a foreign state with
a private party cannot be the ultimate test. Such an act can only be the start o
f the inquiry. The logical question is whether the foreign state is engaged in t
he activity in the regular course of business. If the foreign state is not engag
ed regularly in a business or trade, the particular act or transaction must then
be tested by its nature. If the act is in pursuit of a sovereign activity, or a
n incident thereof, then it is an act jure imperii, especially when it is not un
dertaken for gain or profit.33 Beyond dispute is the tenability of the comment p
oints raised by GTZ and the OSG that GTZ was not performing proprietary function
s notwithstanding its entry into the particular employment contracts. Yet there
is an equally fundamental premise which GTZ and the OSG fail to address, namely:
Is GTZ, by conception, able to enjoy the Federal Republics immunity from suit? T
he principle of state immunity from suit, whether a local state or a foreign sta
te, is reflected in Section 9, Article XVI of the Constitution, which states tha
t "the State may not be sued without its consent." Who or what consists of "the
State"? For one, the doctrine is available to foreign States insofar as they are
sought to be sued in the courts of the local State,34 necessary as it is to avo
id "unduly vexing the peace of nations." If the instant suit had been brought di
rectly against the Federal Republic of Germany, there would be no doubt that it
is a suit brought against a State, and the only necessary inquiry is whether sai
d State had consented to be sued. However, the present suit was brought against
GTZ. It is necessary for us to understand what precisely are the parameters of t
he legal personality of GTZ. Counsel for GTZ characterizes GTZ as "the implement
ing agency of the Government of the Federal Republic of Germany," a depiction si
milarly adopted by the OSG. Assuming that characterization is correct, it does n
ot automatically invest GTZ with the ability to invoke State immunity from suit.
The distinction lies in whether the agency is incorporated or unincorporated. T
he following lucid discussion from Justice Isagani Cruz is pertinent: Where suit
is filed not against the government itself or its officials but against one of
its entities, it must be ascertained whether or not the State, as the principal
that may ultimately be held liable, has given its consent to be sued. This ascer
tainment will depend in the first instance on whether the government agency impl
eaded is incorporated or unincorporated. An incorporated agency has a charter of
its own that invests it with a separate juridical personality, like the Social
Security System, the University of the Philippines, and the City of Manila. By c
ontrast, the unincorporated agency is so called because it has no separate jurid
ical personality but is merged in the general machinery of the government, like
the Department of Justice, the Bureau of Mines and the Government Printing Offic
e. If the agency is incorporated, the test of its suability is found in its char
ter. The simple rule is that it is suable if its charter says so, and this is tr
ue regardless of the functions it is performing. Municipal corporations, for exa

mple, like provinces and cities, are agencies of the State when they are engaged
in governmental functions and therefore should enjoy the sovereign immunity fro
m suit. Nevertheless, they are subject to suit even in the performance of such f
unctions because their charter provides that
REMLAW Page 358

they are subject to suit even in the performance of such functions because their
charter provides that they can sue and be sued.35 State immunity from suit may
be waived by general or special law.36 The special law can take the form of the
original charter of the incorporated government agency. Jurisprudence is replete
with examples of incorporated government agencies which were ruled not entitled
to invoke immunity from suit, owing to provisions in their charters manifesting
their consent to be sued. These include the National Irrigation Administration,
37 the former Central Bank,38 and the National Power Corporation.39 In SSS v. Co
urt of Appeals,40 the Court through Justice Melencio-Herrera explained that by v
irtue of an express provision in its charter allowing it to sue and be sued, the
Social Security System did not enjoy immunity from suit: We come now to the ame
ndability of the SSS to judicial action and legal responsibility for its acts. T
o our minds, there should be no question on this score considering that the SSS
is a juridical entity with a personality of its own. It has corporate powers sep
arate and distinct from the Government. SSS own organic act specifically provid
es that it can sue and be sued in Court. These words "sue and be sued" embrace a
ll civil process incident to a legal action. So that, even assuming that the SSS
, as it claims, enjoys immunity from suit as an entity performing governmental f
unctions, by virtue of the explicit provision of the aforecited enabling law, th
e Government must be deemed to have waived immunity in respect of the SSS, altho
ugh it does not thereby concede its liability. That statutory law has given to t
he private citizen a remedy for the enforcement and protection of his rights. Th
e SSS thereby has been required to submit to the jurisdiction of the Courts, sub
ject to its right to interpose any lawful defense. Whether the SSS performs gove
rnmental or proprietary functions thus becomes unnecessary to belabor. For by th
at waiver, a private citizen may bring a suit against it for varied objectives,
such as, in this case, to obtain compensation in damages arising from contract,
and even for tort. A recent case squarely in point anent the principle, involvin
g the National Power Corporation, is that of Rayo v. Court of First Instance of
Bulacan, 110 SCRA 457 (1981), wherein this Court, speaking through Mr. Justice V
icente Abad Santos, ruled: "It is not necessary to write an extended dissertatio
n on whether or not the NPC performs a governmental function with respect to the
management and operation of the Angat Dam. It is sufficient to say that the gov
ernment has organized a private corporation, put money in it and has allowed it
to sue and be sued in any court under its charter. (R.A. No. 6395, Sec. 3[d]). A
s a government, owned and controlled corporation, it has a personality of its ow
n, distinct and separate from that of the Government. Moreover, the charter prov
ision that the NPC can sue and be sued in any court is without qualification o
n the cause of action and accordingly it can include a tort claim such as the on
e instituted by the petitioners."41 It is useful to note that on the part of the
Philippine government, it had designated two entities, the Department of Health
and the Philippine Health Insurance Corporation (PHIC), as the implementing age
ncies in behalf of the Philippines. The PHIC was established under Republic Act
No. 7875, Section 16(g) of which grants the corporation the power "to sue and be
sued in court." Applying the previously cited jurisprudence, PHIC would not enj
oy immunity from suit even in the performance of its functions connected with SH
INE, however, governmental in nature as they may be. Is GTZ an incorporated agen
cy of the German government? There is some mystery surrounding that question. Ne
ither GTZ nor the OSG go beyond the claim that petitioner is "the implementing a
gency of the Government of the Federal Republic of Germany." On the other hand,
private respondents asserted before the Labor Arbiter that GTZ was "a private co
rporation engaged in the implementation of development projects."42 The Labor Ar
biter accepted that claim in his Order denying the Motion to Dismiss,43 though h
e was silent on that point in his Decision. Nevertheless, private respondents ar
gue in their Comment that the finding that GTZ was a private corporation "was ne
ver controverted, and is therefore deemed admitted."44 In its Reply, GTZ controv
erts that finding, saying that it is a matter of public knowledge that the statu
s of petitioner GTZ is that of the "implementing agency," and not that of a priv
ate corporation.45 In truth, private respondents were unable to adduce any evide
nce to substantiate their claim that GTZ was a "private corporation," and the La

bor Arbiter acted rashly in accepting such claim without explanation. But neithe
r has GTZ supplied any evidence defining its legal nature beyond that of the bar
e descriptive "implementing agency." There is no doubt that the 1991 Agreement d
esignated GTZ as the "implementing agency" in behalf of the German government. Y
et the catch is that such term has no
REMLAW Page 359

"implementing agency" in behalf of the German government. Yet the catch is that
such term has no precise definition that is responsive to our concerns. Inherent
ly, an agent acts in behalf of a principal, and the GTZ can be said to act in be
half of the German state. But that is as far as "implementing agency" could take
us. The term by itself does not supply whether GTZ is incorporated or unincorpo
rated, whether it is owned by the German state or by private interests, whether
it has juridical personality independent of the German government or none at all
. GTZ itself provides a more helpful clue, inadvertently, through its own offici
al Internet website.46 In the "Corporate Profile" section of the English languag
e version of its site, GTZ describes itself as follows: As an international coop
eration enterprise for sustainable development with worldwide operations, the fe
derally owned Deutsche Gesellschaft fr Technische Zusammenarbeit (GTZ) GmbH suppo
rts the German Government in achieving its development-policy objectives. It pro
vides viable, forward-looking solutions for political, economic, ecological and
social development in a globalised world. Working under difficult conditions, GT
Z promotes complex reforms and change processes. Its corporate objective is to i
mprove peoples living conditions on a sustainable basis. GTZ is a federal enterpr
ise based in Eschborn near Frankfurt am Main. It was founded in 1975 as a compan
y under private law. The German Federal Ministry for Economic Cooperation and De
velopment (BMZ) is its major client. The company also operates on behalf of othe
r German ministries, the governments of other countries and international client
s, such as the European Commission, the United Nations and the World Bank, as we
ll as on behalf of private enterprises. GTZ works on a public-benefit basis. All
surpluses generated are channeled [sic] back into its own international coopera
tion projects for sustainable development.47 GTZs own website elicits that petiti
oner is "federally owned," a "federal enterprise," and "founded in 1975 as a com
pany under private law." GTZ clearly has a very meaningful relationship with the
Federal Republic of Germany, which apparently owns it. At the same time, it app
ears that GTZ was actually organized not through a legislative public charter, b
ut under private law, in the same way that Philippine corporations can be organi
zed under the Corporation Code even if fully owned by the Philippine government.
This self-description of GTZ in its own official website gives further cause fo
r pause in adopting petitioners argument that GTZ is entitled to immunity from su
it because it is "an implementing agency." The above-quoted statement does not d
ispute the characterization of GTZ as an "implementing agency of the Federal Rep
ublic of Germany," yet it bolsters the notion that as a company organized under
private law, it has a legal personality independent of that of the Federal Repub
lic of Germany. The Federal Republic of Germany, in its own official website,48
also makes reference to GTZ and describes it in this manner: x x x Going by the
principle of "sustainable development," the German Technical Cooperation (Deutsc
he Gesellschaft fr Technische Zusammenarbeit GmbH, GTZ) takes on non-profit proje
cts in international "technical cooperation." The GTZ is a private company owned
by the Federal Republic of Germany.49 Again, we are uncertain of the correspond
ing legal implications under German law surrounding "a private company owned by
the Federal Republic of Germany." Yet taking the description on face value, the
apparent equivalent under Philippine law is that of a corporation organized unde
r the Corporation Code but owned by the Philippine government, or a government-o
wned or controlled corporation without original charter. And it bears notice tha
t Section 36 of the Corporate Code states that "[e]very corporation incorporated
under this Code has the power and capacity x x x to sue and be sued in its corp
orate name."50 It is entirely possible that under German law, an entity such as
GTZ or particularly GTZ itself has not been vested or has been specifically depr
ived the power and capacity to sue and/or be sued. Yet in the proceedings below
and before this Court, GTZ has failed to establish that under German law, it has
not consented to be sued despite it being owned by the Federal Republic of Germ
any. We adhere to the rule that in the absence of evidence to the contrary, fore
ign laws on a particular subject are presumed to be the same as those of the Phi
lippines,51 and following the most intelligent assumption we can gather, GTZ is
akin to a governmental owned or controlled corporation without original charter
which, by virtue of the Corporation Code, has expressly consented to be sued. At

the very least, like the Labor Arbiter and the Court of Appeals, this Court has
no basis in fact to conclude or presume that GTZ enjoys immunity from suit. Thi
s absence of basis in fact leads to another important point, alluded to by the L
abor Arbiter in his
REMLAW Page 360

no basis in fact to conclude or presume that GTZ enjoys immunity from suit. This
absence of basis in fact leads to another important point, alluded to by the La
bor Arbiter in his rulings. Our ruling in Holy See v. Del Rosario52 provided a t
emplate on how a foreign entity desiring to invoke State immunity from suit coul
d duly prove such immunity before our local courts. The principles enunciated in
that case were derived from public international law. We stated then: In Public
International Law, when a state or international agency wishes to plead soverei
gn or diplomatic immunity in a foreign court, it requests the Foreign Office of
the state where it is sued to convey to the court that said defendant is entitle
d to immunity. In the United States, the procedure followed is the process of "s
uggestion," where the foreign state or the international organization sued in an
American court requests the Secretary of State to make a determination as to wh
ether it is entitled to immunity. If the Secretary of State finds that the defen
dant is immune from suit, he, in turn, asks the Attorney General to submit to th
e court a "suggestion" that the defendant is entitled to immunity. In England, a
similar procedure is followed, only the Foreign Office issues a certification t
o that effect instead of submitting a "suggestion" (O Connell, I International L
aw 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities a
nd Obligations, 50 Yale Law Journal 1088 [1941]). In the Philippines, the practi
ce is for the foreign government or the international organization to first secu
re an executive endorsement of its claim of sovereign or diplomatic immunity. Bu
t how the Philippine Foreign Office conveys its endorsement to the courts varies
. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990)
, the Secretary of Foreign Affairs just sent a letter directly to the Secretary
of Labor and Employment, informing the latter that the respondent-employer could
not be sued because it enjoyed diplomatic immunity. In World Health Organizatio
n v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial
court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. E
mbassy asked the Secretary of Foreign Affairs to request the Solicitor General t
o make, in behalf of the Commander of the United States Naval Base at Olongapo C
ity, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodie
d the "suggestion" in a Manifestation and Memorandum as amicus curiae.53 It is t
o be recalled that the Labor Arbiter, in both of his rulings, noted that it was
imperative for petitioners to secure from the Department of Foreign Affairs "a c
ertification of respondents diplomatic status and entitlement to diplomatic privi
leges including immunity from suits."54 The requirement might not necessarily be
imperative. However, had GTZ obtained such certification from the DFA, it would
have provided factual basis for its claim of immunity that would, at the very l
east, establish a disputable evidentiary presumption that the foreign party is i
ndeed immune which the opposing party will have to overcome with its own factual
evidence. We do not see why GTZ could not have secured such certification or en
dorsement from the DFA for purposes of this case. Certainly, it would have been
highly prudential for GTZ to obtain the same after the Labor Arbiter had denied
the motion to dismiss. Still, even at this juncture, we do not see any evidence
that the DFA, the office of the executive branch in charge of our diplomatic rel
ations, has indeed endorsed GTZs claim of immunity. It may be possible that GTZ t
ried, but failed to secure such certification, due to the same concerns that we
have discussed herein. Would the fact that the Solicitor General has endorsed GT
Zs claim of States immunity from suit before this Court sufficiently substitute fo
r the DFA certification? Note that the rule in public international law quoted i
n Holy See referred to endorsement by the Foreign Office of the State where the
suit is filed, such foreign office in the Philippines being the Department of Fo
reign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA h
as endorsed GTZs claim, or that the OSG had solicited the DFAs views on the issue.
The arguments raised by the OSG are virtually the same as the arguments raised
by GTZ without any indication of any special and distinct perspective maintained
by the Philippine government on the issue. The Comment filed by the OSG does no
t inspire the same degree of confidence as a certification from the DFA would ha
ve elicited.1avvphi1 Holy See made reference to Baer v. Tizon,55 and that in the
said case, the United States Embassy asked the Secretary of Foreign Affairs to

request the Solicitor General to make a "suggestion" to the trial court, accompl
ished by way of a Manifestation and Memorandum, that the petitioner therein enjo
yed immunity as the Commander of the Subic Bay Naval Base. Such circumstance is
actually not narrated in the text of Baer itself and was likely supplied in Holy
See because its author, Justice Camilio Quiason, had appeared as the Solicitor
in behalf of the OSG in Baer. Nonetheless, as narrated in Holy See, it was the S
ecretary of Foreign Affairs which directed the OSG to intervene in behalf of the
United States
REMLAW Page 361

the Secretary of Foreign Affairs which directed the OSG to intervene in behalf o
f the United States government in the Baer case, and such fact is manifest enoug
h of the endorsement by the Foreign Office. We do not find a similar circumstanc
e that bears here. The Court is thus holds and so rules that GTZ consistently ha
s been unable to establish with satisfaction that it enjoys the immunity from su
it generally enjoyed by its parent country, the Federal Republic of Germany. Con
sequently, both the Labor Arbiter and the Court of Appeals acted within proper b
ounds when they refused to acknowledge that GTZ is so immune by dismissing the c
omplaint against it. Our finding has additional ramifications on the failure of
GTZ to properly appeal the Labor Arbiters decision to the NLRC. As pointed out by
the OSG, the direct recourse to the Court of Appeals while bypassing the NLRC c
ould have been sanctioned had the Labor Arbiters decision been a "patent nullity.
" Since the Labor Arbiter acted properly in deciding the complaint, notwithstand
ing GTZs claim of immunity, we cannot see how the decision could have translated
into a "patent nullity." As a result, there was no basis for petitioners in fore
going the appeal to the NLRC by filing directly with the Court of Appeals the pe
tition for certiorari. It then follows that the Court of Appeals acted correctly
in dismissing the petition on that ground. As a further consequence, since peti
tioners failed to perfect an appeal from the Labor Arbiters Decision, the same ha
s long become final and executory. All other questions related to this case, suc
h as whether or not private respondents were illegally dismissed, are no longer
susceptible to review, respecting as we do the finality of the Labor Arbiters Dec
ision. A final note. This decision should not be seen as deviation from the more
common methodology employed in ascertaining whether a party enjoys State immuni
ty from suit, one which focuses on the particular functions exercised by the par
ty and determines whether these are proprietary or sovereign in nature. The natu
re of the acts performed by the entity invoking immunity remains the most import
ant barometer for testing whether the privilege of State immunity from suit shou
ld apply. At the same time, our Constitution stipulates that a State immunity fr
om suit is conditional on its withholding of consent; hence, the laws and circum
stances pertaining to the creation and legal personality of an instrumentality o
r agency invoking immunity remain relevant. Consent to be sued, as exhibited in
this decision, is often conferred by the very same statute or general law creati
ng the instrumentality or agency. WHEREFORE, the petition is DENIED. No pronounc
ement as to costs. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2009/apr2009/gr_152318_2009.htm
l>
REMLAW Page 362

Chua v. Torres GR 151900 Aug 30, 2005

Sunday, November 14, 2010 11:40 PM
SECOND DIVISION
CHRISTINE CHUA G.R. No. 151900 Petitioner, Present: PUNO, J. Chairman, - versus
- AUSTRIA-MARTINEZ, CALLEJO, TINGA, and CHICO-NAZARIO, JJ. JORGE TORRES and ANT
ONIO BELTRAN, Respondents.August 30, 2005 x--------------------------------------------------------------------x
DECIS ION
Tinga, J.:
The Court settles an issue, heretofore
signature in the required verification
of a party misjoined as a plaintiff is
omplaint. We rule in the negative. The
w are culled from the records.

undecided, on whether the absence of the

and certification against forum-shopping
a valid ground for the dismissal of the c
relevant facts in this Petition for Revie

On 24 October 2001, a complaint for damages was lodged before the Regional Trial
Court (RTC) of Caloocan City, Branch 126.[1] The complaint was filed by Christi
ne Chua, herein petitioner, impleading her brother Jonathan Chua as a necessary
co-plaintiff. Named as defendants in the suit were herein respondents Jorge Torr
es and Antonio Beltran. Torres was the owner of the 9th Avenue Caltex Service Ce
nter (Caltex Service Center), while Beltran was an employee of the said establis
hment as the head of its Sales and Collection Division.[2] The complaint alleged
that on 3 April 2000, Jonathan Chua issued in favor of the Caltex Service Cente
r his personal Rizal Commercial Banking Corporation (RCBC) Check No. 0412802 in
the amount of Nine Thousand Eight Hundred Forty Nine Pesos and Twenty Centavos (
P9,849.20) in payment for purchases of diesel oil. However, the check was dishon
ored by the drawee bank when presented for payment on the ground that the accoun
t was closed. Beltran then sent petitioner a demand letter informing her of the
dishonor of the check and demanding the payment thereof. Petitioner ignored the
demand letter on the ground that she was not the one who issued the said check.
Without bothering to ascertain who had actually issued the check, Beltran instit
uted against petitioner a criminal action for violation of Batas Pambansa Bilang
22 (B.P. 22). Subsequently, a criminal information was filed against petitioner
with the Metropolitan Trial Court (MTC) of Caloocan City, Branch 50.[3] The MTC
then issued a warrant of arrest against petitioner. The police officers tasked
with serving the warrant looked for her in her residence, in the auto repair sho
p of her brother, and even at the Central University were she was enrolled as a
medical student, all to the alleged embarrassment and social humiliation of pet
itioner.[4]
REMLAW Page 363

humiliation of petitioner.[4]
Beltran s purported negligence amounted to either malicious prosecution or serio
us defamation in prosecuting petitioner resulting from the issuance of a check s
he herself did not draw, and served cause for a claim of moral damages. On the o
ther hand, Torres, as employer of Beltran, was alleged to have failed to observe
the diligence of a good father of the family to prevent the damage suffered by
petitioner. Exemplary damages and attorney s fees were likewise sought, thus bri
nging the aggregate total of damages claimed to Two Million Pesos (P2,000,000.00
), plus costs of suit.[5] Significantly, while Jonathan Chua was named as a plai
ntiff to the suit, it was explicitly qualified in the second paragraph of the co
mplaint that he was being impleaded here-in as a necessary partyplaintiff.[6] T
here was no allegation in the complaint of any damage or injury sustained by Jon
athan, and the prayer therein expressly named petitioner as the only party to wh
om respondents were sought to recompense.[7] Neither did Jonathan Chua sign any
verification or certification against forumshopping, although petitioner did sig
n an attestation, wherein she identified herself as the principal plaintiff.[8]
Upon motion of respondents, the RTC ordered the dismissal of the complaint[9] on
the ground that Jonathan Chua had not executed a certification against forum-sh
opping. The RTC stressed that Section 5, Rule 7 of the Rules of Civil Procedure
, the rule requiring the certification, makes no distinction whether the plainti
ff required to execute the certification is a principal party, a nominal party o
r a necessary party. Instead, the provision requires that a plaintiff or princip
al party who files a complaint or initiatory pleading execute such certification
. Jonathan Chua, being a plaintiff in this case, was obliged to execute or sign
such certification.[10] Hence, his failure to do so in violation of the mandator
y rule requiring the certification against forum-shopping constituted valid caus
e for the dismissal of the petition.[11] After the RTC denied the motion for rec
onsideration[12] lodged by petitioner, the matter was elevated directly to this
Court by way of petition for review under Rule 45, raising a purely legal questi
on,[13] cast, if somewhat unwieldily, as whether or not a co-plaintiff impleade
d only as a necessary party, who however has no claim for relief or is not asser
ting any claim for relief in the complaint, should also make a certification aga
inst forum shopping.[14]
Preliminarily, it bears noting that Jonathan Chua did not sign as well any verif
ication to the complaint, ostensibly in violation of Section 7, Rule 4 of the Ru
les of Civil Procedure. The RTC failed to mention such fact, as does petitioner
in her present petition. In their arguments before this Court, respondents do re
fer in passing to the verification requirement[15], but do not place any particu
lar focus thereto. The verification requirement is separate from the certificati
on requirement.[16] It is noted that as a matter of practice, the verification i
s usually accomplished at the same time as the certification against forumshoppi
ng; hence the customary nomenclature, Verification and Certification of Non For
um-Shopping or its variants. For this reason, it is quite possible that the RTC
meant to assail as well the failure of Jonathan Chua to verify the complaint. Th
e verification requirement is significant, as it is intended to secure an assura
nce that the allegations in the pleading are true and correct and not the produc
t of the imagination or a matter of speculation, and that the pleading is filed
in good faith.[17] The absence of a proper verification is cause to treat the pl
eading as unsigned and dismissible.[18] It would be as well that the Court discu
ss whether under the circumstances, Jonathan Chua is also required to execute a
verification in respect to petitioner s complaint. Having established the proper
parameters of the petition, we proceed to the core issues. We find the petition
has merit, although we appreciate the situation differently from petitioner. Ou
r decision proceeds from the fundamental premise that Jonathan Chua was misjoine
d as a party plaintiff in this
REMLAW Page 364

proceeds from the fundamental premise that Jonathan Chua was misjoined as a part
y plaintiff in this case. It is elementary that it is only in the name of a real
party in interest that a civil suit may be prosecuted.[19] Under Section 2, Rul
e 3 of the Rules of Civil Procedure, a real party in interest is the party who s
tands to be benefited or injured by the judgment in the suit, or the party entit
led to the avails of the suit. "Interest" within the meaning of the rule means m
aterial interest, an interest in issue and to be affected by the decree, as dist
inguished from mere interest in the question involved, or a mere incidental inte
rest.[20] One having no right or interest to protect cannot invoke the jurisdict
ion of the court as a party plaintiff in an action.[21] To qualify a person to b
e a real party in interest in whose name an action must be prosecuted, he must a
ppear to be the present real owner of the right sought to enforced.[22]
The subject complaint does not allege any rights of Jonathan Chua violated by re
spondents, present any rights of his to be enforced, or seek in his behalf any r
ights to the avails of suit. In short, Jonathan claims nothing, and for nothing,
in the subject complaint. If he alone filed the complaint, it would have been d
ismissed on the ground that the complaint states no cause of action, instituted
as it was by a person who was not a real party in interest.
But was it proper for petitioner to have even impleaded Jonathan as a co-plainti
ff in the first place? Petitioner alleged in her complaint that Jonathan was a n
ecessary party, and remains consistent to that claim even before this Court. She
however fails to demonstrate how Jonathan can be considered as a necessary part
y, other than by noting that he was the one who really issued the check in cont
roversy.[23] Such fact, if proven, may establish the malice of respondents in fi
ling the criminal case against petitioner for violation of B.P. 22, but does not
create the need to require Jonathan s participation as a necessary party.
Section 8, Rule 7 of the Rules of Civil Procedure defines a necessary party as
one who is not indispensable but who ought to be joined as a party if complete r
elief is to be accorded as to those already parties, or for a complete determina
tion or settlement of the claim subject of the action.[24] Necessary parties are
those whose presence is necessary to adjudicate the whole controversy, but whos
e interests are so far separable that a final decree can be made in their absenc
e without affecting them.[25] An example of a necessary party may be found in Se
no v. Mangubat.[26] Petitioner therein sold her property through a deed of sale
to three vendees. Two of the vendees then sold their shares to the third buyer,
who then sold the property to another set of persons. Thereafter, petitioner, wh
o claimed that the true intent of the first sale was an equitable mortgage, file
d a complaint seeking the reformation of the deed of sale and the annulment of t
he second sale. The question arose whether the two vendees who had since dispose
d of their shares should be considered as indispensable parties or necessary par
ties. In concluding that they were only necessary parties, the Court reasoned:
In the present case, there are no rights of defendants Andres Evangelista and Bi
envenido Mangubat to be safeguarded if the sale should be held to be in fact an
absolute sale nor if the sale is held to be an equitable mortgage. Defendant Mar
cos Mangubat became the absolute owner of the subject property by virtue of the
sale to him of the shares of the aforementioned defendants in the property. Said
defendants no longer have any interest in the subject property. However, being
parties to the instrument sought to be reformed, their presence is necessary in
order to settle all the possible issues of the controversy. Whether the disputed
sale be declared an absolute sale or an equitable mortgage, the rights of all t
he defendants will have been amply protected. Defendants-spouses Luzame in any e
vent may enforce their rights against defendant Marcos Mangubat.[27] In Seno, th
e persons deemed by the Court as necessary parties may have had already disposed
of their interests in the property. However, should the lower court therein gra
nt the prayer for the reformation
REMLAW Page 365

interests in the property. However, should the lower court therein grant the pra
yer for the reformation of the deed of sale, the ruling will undoubtedly have an
effect on such parties, on matters such as the purchase price which they may ha
ve received, and on whatever transmission of rights that may have occurred betwe
en them and the vendor. In contrast, Jonathan Chua does not stand to be affected
should the RTC rule either favorably or unfavorably of the complaint. This is d
ue to the nature of the cause of action of the complaint, which alleges an injur
y personal to petitioner, and the relief prayed for, which is to be adjudicated
solely to petitioner. There is no allegation in the complaint alleging any viola
tion or omission of any right of Jonathan, either arising from contract or from
law. It may be so that Jonathan may be called to testify by his sister, in order
to prove the essential allegation that she did not issue the check in question,
and perhaps such testimony would be vital to petitioner s cause of action. But
this does not mean that Jonathan should be deemed a necessary party, as such cir
cumstance would merely place him in the same class as those witnesses whose test
imony would be necessary to prove the allegations of the complaint. But the fact
remains that Jonathan would stand unaffected by the final ruling on the complai
nt. The judicial confirmation or rejection of the allegations therein, or grant
or denial of the reliefs prayed for will not infringe on or augment any of his r
ights under the law. If there would be any effect to Jonathan of the RTC s ultim
ate decision on the complaint, it would be merely emotional, arising from whatev
er ties of kinship he may retain towards his sister, and no different from whate
ver effects that may be similarly sustained on petitioner s immediate family. Si
nce we are unconvinced by petitioner s basic premise that Jonathan was a necessa
ry party, it is unnecessary to directly settle the issue as couched by petitione
r of whether or not a co-plaintiff impleaded only as a necessary party, who how
ever has no claim for relief or is not asserting any claim for relief in the com
plaint, should also make a certification against forum shopping.[28] We can note
, as the RTC did, that Section 5, Rule 7 of the 1997 Rules of Civil Procedure ma
kes no distinctions that would expressly exempt a necessary party from executing
the certification against forum shopping. Nonetheless, there are dimensions to
the matter, heretofore unraised, that may unsettle a strict application of the r
ule, such as if the necessary party is impleaded as a plaintiff or counterclaima
nt without his knowledge or against his will.[29] But these circumstances releva
nt to a necessary party are not present in this case, and thus require no furthe
r comment upon for now. Instead, what the Court may rule upon is whether the abs
ence of the signature of the person misjoined as a party-plaintiff in either the
verification page or certification against forum-shopping is ground for the dis
missal of the action. We rule that it is not so, and that the RTC erred in dismi
ssing the instant complaint. There is no judicial precedent affirming or rejecti
ng such a view, but we are comfortable with making such a pronouncement. A misjo
ined party plaintiff has no business participating in the case as a plaintiff in
the first place, and it would make little sense to require the misjoined party
in complying with all the requirements expected of plaintiffs.
At the same time, Section 11, Rule 3 of the 1997 Rules of Civil Procedure states
:
Neither misjoinder nor non-joinder of parties is ground for dismissal of an acti
on. Parties may be dropped or added by order of the court on motion of any party
or on its own initiative at any stage of the action and on such terms as are ju
st. Any claim against a misjoined party may be severed and proceeded with separa
tely. [30]
Clearly, misjoinder of parties is not fatal to the complaint. The rule prohibits
dismissal of a suit on the ground of non-joinder or misjoinder of parties.[31]
Moreover, the dropping of misjoined parties from the complaint may be done motu
proprio by the court, at any stage, without need for a motion to such effect fro
m the adverse party.[32] Section 11, Rule 3 indicates that the misjoinder of par
ties, while erroneous, may be corrected with ease through amendment, without fur
ther hindrance to the

REMLAW Page 366

erroneous, may be corrected with ease through amendment, without further hindran
ce to the prosecution of the suit. It should then follow that any act or omissio
n committed by a misjoined party plaintiff should not be cause for impediment to
the prosecution of the case, much less for the dismissal of the suit. After all
, such party should not have been included in the first place, and no efficacy s
hould be accorded to whatever act or omission of the party.[33] Since the misjoi
ned party plaintiff receives no recognition from the court as either an indispen
sable or necessary party-plaintiff, it then follows that whatever action or inac
tion the misjoined party may take on the verification or certification against f
orum-shopping is inconsequential. Hence, it should not have mattered to the RTC
that Jonathan Chua had failed to sign the certification against forum-shopping,
since he was misjoined as a plaintiff in the first place. The fact that Jonathan
was misjoined is clear on the face of the complaint itself, and the error of th
e RTC in dismissing the complaint is not obviated by the fact that the adverse p
arty failed to raise this point. After all, the RTC could have motu proprio drop
ped Jonathan as a plaintiff, for the reasons above-stated which should have been
evident to it upon examination of the complaint. There may be a school of thoug
ht that would nonetheless find some satisfaction in petitioner s woes before the
RTC, as it was her error in the first place of wrongfully impleading her brothe
r as a party plaintiff which ultimately served as cause for the dismissal of the
complaint. The blame may in the final analysis lie with petitioner, yet we shou
ld not construe the rules of procedure to quench an unnecessary thirst to punish
at the expense of the intellectual integrity of the rules. For our Rules of Cou
rt do not regard the misjoinder of parties as an error of fatal consequence, and
the logical extension of this principle is to consider those procedural acts or
omissions of misjoined parties as of similar import. WHEREFORE, the Petition is
GRANTED. The Orders dated 3 December 2001 and 15 January 2002 of the Regional T
rial Court of Caloocan City, Branch 126, in Civil Case No. C-19863 are SET ASIDE
, and the Complaint in the aforementioned case is REINSTATED. The lower court is
enjoined to hear and decide the case with deliberate dispatch. No pronouncement
as to costs.
SO ORDERED.
Pasted from <http://www.chanrobles.com/scdecisions/jurisprudence2005/aug2005/151
900.php>
REMLAW Page 367

Anicia Valdez Tallorin v Heirs of Juanito Tarona GR 177429 Nov 24, 2009
Sunday, November 14, 2010 11:40 PM
ANICIA VALDEZ-TALLORIN, Petitioner, vs. HEIRS OF JUANITO TARONA, Represented by
CARLOS TARONA, ROGELIO TARONA and LOURDES TARONA, Respondents. DE C I S I O N AB
AD, J.: This case is about a courts annulment of a tax declaration in the names o
f three persons, two of whom had not been impleaded in the case, for the reason
that the document was illegally issued to them. The Facts and the Case On Februa
ry 9, 1998 respondents Carlos, Rogelio, and Lourdes Tarona (the Taronas) filed a
n action before the Regional Trial Court (RTC) of Balanga, Bataan,1 against peti
tioner Anicia Valdez-Tallorin (Tallorin) for the cancellation of her and two oth
er womens tax declaration over a parcel of land. The Taronas alleged in their com
plaint that, unknown to them, in 1981, the Assessors Office of Morong in Bataan c
ancelled Tax Declaration 463 in the name of their father, Juanito Tarona (Juanit
o), covering 6,186 square meters of land in Morong, Bataan. The cancellation was
said to be based on an unsigned though notarized affidavit that Juanito alleged
ly executed in favor of petitioner Tallorin and two others, namely, Margarita Pa
stelero Vda. de Valdez and Dolores Valdez, who were not impleaded in the action.
In place of the cancelled one, the Assessors Office issued Tax Declaration 6164
in the names of the latter three persons. The old man Taronas affidavit had been
missing and no copy could be found among the records of the Assessors Office.2 Th
e Taronas further alleged that, without their fathers affidavit on file, it follo
wed that his tax declaration had been illegally cancelled and a new one illegall
y issued in favor of Tallorin and the others with her. The unexplained disappear
ance of the affidavit from official files, the Taronas concluded, covered-up the
falsification or forgery that caused the substitution.3 The Taronas asked the R
TC to annul Tax Declaration 6164, reinstate Tax Declaration 463, and issue a new
one in the name of Juanitos heirs. On March 6, 1998 the Taronas filed a motion t
o declare petitioner Tallorin in default for failing to answer their complaint w
ithin the allowed time.4 But, before the RTC could act on the motion, Tallorin f
iled a belated answer, alleging among others that she held a copy of the suppose
dly missing affidavit of Juanito who was merely an agricultural tenant of the la
nd covered by Tax Declaration 463. He surrendered and waived in that affidavit h
is occupation and tenancy rights to Tallorin and the others in consideration of
P29,240.00. Tallorin also put up the affirmative defenses of non-compliance with
the requirement of conciliation proceedings and prescription. On March 12, 1998
the RTC set Tallorins affirmative defenses for hearing5 but the Taronas sought r
econsideration, pointing out that the trial court should have instead declared T
allorin in default based on their earlier motion.6 On June 2, 1998 the RTC denie
d the Taronas motion for reconsideration7 for the reasons that it received Tallor
ins answer before it could issue a default order and that the Taronas failed to s
how proof that Tallorin was notified of the motion three days before the schedul
ed hearing. Although the presiding judge inhibited himself from the case on moti
on of the Taronas, the new judge to whom the case was re-raffled stood by his pr
edecessors previous orders. By a special civil action for certiorari before the C
ourt of Appeals (CA),8 however, the Taronas succeeded in getting the latter cour
t to annul the RTCs March 12 and June 2, 1998 orders.9 The CA ruled that the RTC
gravely abused its discretion in admitting Tallorins late answer in the absence o
f a motion to admit it. Even if petitioner Tallorin had already filed her late a
nswer, said the CA, the RTC should have heard the Taronas motion to declare Tallo
rin in default. Upon remand of the case, the RTC heard the Taronas motion to decl
are Tallorin in default,10 granted the same, and directed the Taronas to present
evidence ex parte.11 On January 30, 2002 the RTC rendered judgment, a) annullin
g the tax declaration in the names of Tallorin, Margarita Pastelero Vda. de Vald
ez, and Dolores Valdez; b) reinstating the tax declaration in the
REMLAW Page 368

Tallorin, Margarita Pastelero Vda. de Valdez, and Dolores Valdez; b) reinstating

the tax declaration in the name of Juanito; and c) ordering the issuance in its
place of a new tax declaration in the names of Juanitos heirs. The trial court a
lso ruled that Juanitos affidavit authorizing the transfer of the tax declaration
had no binding force since he did not sign it.1avvphi1 Tallorin appealed the ab
ove decision to the CA,12 pointing out 1) that the land covered by the tax decla
ration in question was titled in her name and in those of her two co-owners; 2)
that Juanitos affidavit only dealt with the surrender of his tenancy rights and d
id not serve as basis for canceling Tax Declaration 463 in his name; 3) that, al
though Juanito did not sign the affidavit, he thumbmarked and acknowledged the s
ame before a notary public; and 4) that the trial court erred in not dismissing
the complaint for failure to implead Margarita Pastelero Vda. de Valdez and Dolo
res Valdez who were indispensable parties in the action to annul Juanitos affidav
it and the tax declaration in their favor.13 On May 22, 2006 the CA rendered jud
gment, affirming the trial courts decision.14 The CA rejected all of Tallorins arg
uments. Since she did not assign as error the order declaring her in default and
since she took no part at the trial, the CA pointed out that her claims were in
effect mere conjectures, not based on evidence of record.15 Notably, the CA did
not address the issue Tallorin raised regarding the Taronas failure to implead M
argarita Pastelero Vda. de Valdez and Dolores Valdez as indispensable partydefen
dants, their interest in the cancelled tax declarations having been affected by
the RTC judgment. Questions Presented The petition presents the following questi
ons for resolution by this Court: 1. Whether or not the CA erred in failing to d
ismiss the Taronas complaint for not impleading Margarita Pastelero Vda. de Valde
z and Dolores Valdez in whose names, like their co-owner Tallorin, the annulled
tax declaration had been issued; 2. Whether or not the CA erred in not ruling th
at the Taronas complaint was barred by prescription; and 3. Whether or not the CA
erred in affirming the RTCs finding that Juanitos affidavit had no legal effect b
ecause it was unsigned; when at the hearing of the motion to declare Tallorin in
default, it was shown that the affidavit bore Juanitos thumbmark. The Courts Ruli
ngs The first question, whether or not the CA erred in failing to dismiss the Ta
ronas complaint for not impleading Margarita Pastelero Vda. de Valdez and Dolores
Valdez in whose names, like their co-owner Tallorin, the annulled tax declarati
on had been issued, is a telling question. The rules mandate the joinder of indi
spensable parties. Thus: Sec. 7. Compulsory joinder of indispensable parties. Pa
rties in interest without whom no final determination can be had of an action sh
all be joined either as plaintiffs and defendants.16 Indispensable parties are t
hose with such an interest in the controversy that a final decree would necessar
ily affect their rights, so that the courts cannot proceed without their presenc
e.17 Joining indispensable parties into an action is mandatory, being a requirem
ent of due process. Without their presence, the judgment of the court cannot att
ain real finality. Judgments do not bind strangers to the suit. The absence of a
n indispensable party renders all subsequent actions of the court null and void.
Indeed, it would have no authority to act, not only as to the absent party, but
as to those present as well. And where does the responsibility for impleading a
ll indispensable parties lie? It lies in the plaintiff.18 Here, the Taronas soug
ht the annulment of the tax declaration in the names of defendant Tallorin and t
wo others, namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez and, in
its place, the reinstatement of the previous declaration in their father Juanit
os name. Further, the Taronas sought to strike down as void the affidavit in whic
h Juanito renounced his tenancy right in favor of the same three persons. It is
inevitable that any decision granting what the Taronas wanted would necessarily
affect the rights of such persons to the property covered by the tax declaration
. The Court cannot discount the importance of tax declarations to the persons in
whose names they are issued. Their cancellation adversely affects the rights an
d interests of such persons over the properties that the documents cover. The re
ason is simple: a tax declaration is a primary evidence, if not the source, of t
he right to claim title of ownership over real property, a right enforceable aga
inst another person. The Court held in Uriarte v. People 19 that, although not c
onclusive, a tax declaration is a telling evidence of the declarants possession w

hich could ripen into ownership. In Director of Lands v. Court of Appeals,20 the
Court said that no one in his right mind would pay taxes for a property that he
did not have in his possession. This honest sense of obligation proves that the
REMLAW Page 369

for a property that he did not have in his possession. This honest sense of obli
gation proves that the holder claims title over the property against the State a
nd other persons, putting them on notice that he would eventually seek the issua
nce of a certificate of title in his name. Further, the tax declaration expresse
s his intent to contribute needed revenues to the Government, a circumstance tha
t strengthens his bona fide claim to ownership.21 Here, the RTC and the CA annul
led Tax Declaration 6164 that belonged not only to defendant Tallorin but also t
o Margarita Pastelero Vda. de Valdez and Dolores Valdez, which two persons had n
o opportunity to be heard as they were never impleaded. The RTC and the CA had n
o authority to annul that tax declaration without seeing to it that all three pe
rsons were impleaded in the case. But the Taronas action cannot be dismissed outr
ight. As the Court held in Plasabas v. Court of Appeals,22 the non-joinder of in
dispensable parties is not a ground for dismissal. Section 11, Rule 3 of the 199
7 Rules of Civil Procedure prohibits the dismissal of a suit on the ground of no
n-joinder or misjoinder of parties and allows the amendment of the complaint at
any stage of the proceedings, through motion or on order of the court on its own
initiative. Only if plaintiff refuses to implead an indispensable party, despit
e the order of the court, may it dismiss the action. There is a need, therefore,
to remand the case to the RTC with an order to implead Margarita Pastelero Vda.
de Valdez and Dolores Valdez as defendants so they may, if they so desire, be h
eard. In view of the Courts resolution of the first question, it would serve no p
urpose to consider the other questions that the petition presents. The resolutio
n of those questions seems to depend on the complete evidence in the case. This
will not yet happen until all the indispensable party-defendants are impleaded a
nd heard on their evidence. WHEREFORE, the Court GRANTS the petition and SETS AS
IDE the decision of the Regional Trial Court of Balanga, Bataan in Civil Case 67
39 dated January 30, 2002 and the decision of the Court of Appeals in CA-G.R. CV
74762 dated May 22, 2006. The Court REMANDS the case to the Regional Trial Cour
t of Balanga, Bataan which is DIRECTED to have Margarita Pastelero Vda. de Valde
z and Dolores Valdez impleaded by the plaintiffs as party-defendants and, afterw
ards, to hear the case in the manner prescribed by the rules. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2009/nov2009/gr_177429_2009.htm
l>
REMLAW Page 370

Littie Sarah Agdeppa v Heirs of Ignacio Bonete GR 164436 Jan 15 2010

Sunday, November 14, 2010 11:40 PM
LITTIE SARAH A. AGDEPPA, LYNN SARAH A. AGDEPPA, LOUELLA JEANNE A. AGDEPPA, and L
ALAINE LILIBETH A. AGDEPPA, Petitioners, vs. HEIRS OF IGNACIO BONETE, represente
d by DOROTEA BONETE, HIPOLITO BONETE, MILAGROS BONETE, MAURICIO BONETE, FERNANDO
BONETE, and OPHELIA BONETE, Respondents. DE C I S I O N NACHURA, J.: Before thi
s Court is a Petition for Review on Certiorari,1 seeking the reversal of the Cou
rt of Appeals (CA) Decision,2 dated December 27, 2002, which reversed and set as
ide the Order,3 dated May 21, 1990, issued by the Regional Trial Court (RTC), Br
anch 18, of Midsayap, Cotabato. The factual and procedural antecedents of the ca
se are as follows: In 1979, respondent Dorotea Bonete (Dorotea), widow of the la
te Ignacio Bonete and mother of respondents Hipolito Bonete, Milagros Bonete, Ma
uricio Bonete, Fernando Bonete, and Ophelia Bonete (respondents), obtained a loa
n in the amount of P55,000.00 from Development Bank of the Philippines (DBP), Co
tabato City Branch, in order to buy farm implements. A parcel of agricultural la
nd, known as Lot No. (1144) H-207865 with an area of 18.00 hectares, covered by
Transfer Certificate of Title (TCT) No. T-56923,4 issued in the name of Dorotea
and situated in Demapaco, Libungan, Cotabato (subject property), was used as col
lateral to secure the said loan. In 1982, respondents, through Dorotea, received
a notice of collection from DBP. Respondents alleged that herein petitioner and
counsel, Atty. Littie Sarah A. Agdeppa (Littie Sarah), expressed deep concern a
nd sympathy for them. Consequently, Littie Sarah accompanied Dorotea to DBP and
obligated herself to pay the loan. Thereafter, Dorotea was allegedly made to sig
n a document as Littie Sarahs security for the amount which the latter paid to DB
P in connection with the said loan. Further, respondents alleged that, since 198
2, Littie Sarah and her representatives had been gradually easing them out of th
e subject property and that they were ordered to stop the cultivation of their r
espective ricefields. Eventually, respondents were forcibly ejected from the sub
ject property. Further, Littie Sarah planted corn and put up duck-raising projec
ts on the subject property. On this account, respondents inquired from the Regis
ter of Deeds and found that the title to the subject property, which was in the
name of respondents predecessor-in-interest, the late Ignacio Bonete, had alrea
dy been canceled and transferred to Littie Sarah under TCT No. T-75454 by virtue
of a purported deed of sale. According to Dorotea, Littie Sarah took advantage
of her by letting her sign a contract, ostensibly as security for the loan from
DBP, which later turned out to be a deed of sale. Thus, respondents filed a Comp
laint5 for Recovery of Ownership and Possession and/or Annulment of Deed of Sale
of the Subject Property with Damages, docketed as Civil Case No. 484 before the
RTC. Littie Sarah filed a Motion to Dismiss6 the Complaint based on the followi
ng grounds: 1) that respondents had no legal capacity to sue; 2) that respondent
s were not the real parties in interest; 3) that the Complaint stated no cause o
f action; and 4) that the claim or demand set forth in the Complaint had already
been waived and extinguished. Later, the Complaint was amended, impleading here
in petitioners Lynn Sarah Agdeppa, Louella Jeanne Agdeppa, and Lalaine Lilibeth
Agdeppa, together with Littie Sarah, as defendants (petitioners).7 Respondents a
lso filed an Opposition to the Motion to Dismiss. 8 On May 21, 1990, the RTC iss
ued an Order dismissing the Amended Complaint with costs against respondents. It
held that the Amended Complaint did not show the character and representation t
hat respondents claimed to have. TCT No. T-56923, covering the subject property,
was not in the name of the late Ignacio Bonete but in Dorotea s name. Thus, the
RTC held that respondents were not real parties in interest. Respondents filed
a Motion for Reconsideration9 which the RTC denied in its Order10 dated January
12, 1991. Therein, the RTC held that respondents lacked the personality to sue;
thus, a
REMLAW Page 371

dated January 12, 1991. Therein, the RTC held that respondents lacked the person
ality to sue; thus, a valid basis to grant the motion to dismiss on the ground t
hat the complaint did not state a cause of action. Aggrieved, respondents went t
o the CA.11 On December 27, 2002, the CA reversed and set aside the RTC Order, a
nd remanded the case to the RTC for further proceedings because Dorotea, being t
he former owner of the subject property, was a real party in interest. Petitione
rs filed their Motion for Reconsideration,12 which the CA denied in its Resoluti
on13 dated April 28, 2004. Hence, this Petition assigning the following errors:
THE HONORABLE COURT OF APPEALS IN REVERSING THE ORDER OF DISMISSAL ISSUED BY THE
REGIONAL TRIAL COURT, ACTED CONTRARY TO LAW AND JURISPRUDENCE; DEPARTED FROM TH
E ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS; GRAVELY ERRED AND GRAVELY A
BUSED ITS DISCRETION TANTAMOUNT TO LACK OF JURISDICTION; AND LAID DOWN A VERY BA
D PRECEDENT, AS FOLLOWS: A. BY VIOLATING SPECIFICALLY THE PROVISIONS OF THE RULE
S OF COURT, PARTICULARLY SECS. 2 AND 3 OF RULE 3 OF THE RULES OF COURT, ON PARTI
ES-PLAINTIFFS TO CIVIL ACTIONS AND REAL PARTIES IN INTEREST; B. BY UPHOLDING THE
LEGAL CAPACITY OF THE PLAINTIFFS HEIRS OF IGNACIO BONETE TO SUE AND TO FILE THI
S CASE WHEN THE HONORABLE COURT OF APPEALS ITSELF EVEN RIGHTFULLY FOUND THAT TCT
NO. T-56923 WAS ALREADY REGISTERED IN THE NAME OF DOROTEA BONETE, WHEN IT WAS S
OLD TO HEREIN DEFENDANTS, SUCH THAT IGNACIO BONETE OR THE HEIRS OF IGNACIO BONET
E [HAD] NOTHING TO DO WITH THE SAID PROPERTY- THUS[,] NOT THE REAL PARTY IN INTE
REST AND [HAD] NO LEGAL PERSONALITY TO SUE AND LIKEWISE [HAD] NO CAUSE OF ACTION
AGAINST DEFENDANTS (PETITIONERS HEREIN); C. THAT THE DECISION OF THIS HONORABLE
COURT OF APPEALS WAS ISSUED CONTRARY TO LAW AND JURISPRUDENCE AND CONTRARY TO T
HE TRUE, ACTUAL AND EXISTING FACTS OF THIS CASE AND EVEN TO THE VERY FINDINGS OF
THE HONORABLE COURT OF APPEALS ITSELF, BECAUSE WHILE THE HONORABLE COURT OF APP
EALS RULED THAT DOROTEA BONETE AS REGISTERED OWNER IS A PARTY IN INTEREST, THIS
CASE IS NOT PROSECUTED IN THE NAME OF DOROTEA BONETE, BUT IN THE NAME OF THE HEI
RS OF IGNACIO BONETE, AND IF EVER THE NAME OF DOROTEA BONETE IS MENTIONED IT WAS
MERELY [AND] ALLEGEDLY IN REPRESENTATION OF THE HEIRS OF IGNACIO BONETE AND NOT
IN HER OWN PERSONAL CAPACITY; BUT WHICH REPRESENTATION IS NOT EVEN ALLEGED IN T
HE COMPLAINT, THUS STILL A VIOLATION OF THE RULES OF COURT; D. THAT THE REMANDIN
G OF THIS CASE TO THE REGIONAL TRIAL COURT FOR FURTHER PROCEEDINGS WITH THE PART
Y PLAINTIFF "HEIRS OF IGNACIO BONETE" NOT BEING A REAL PARTY IN INTEREST VIOLATE
S THE WELL ESTABLISHED "GENERAL RULE [THAT] ONE HAVING NO RIGHT OR INTEREST TO P
ROTECT CANNOT INVOKE THE JURISDICTION OF THE COURT AS A PARTY PLAINTIFF IN AN AC
TION. (Ralla v. Ralla, 199 SCRA 495 [1991])" AND "THE GENERAL RULE OF x x x COMM
ON LAW x x x THAT EVERY ACTION MUST BE BROUGHT IN THE NAME OF THE PARTY WHOSE LE
GAL RIGHT HAS BEEN INVADED OR INFRINGED"; E. IT WILL CREATE A VERY BAD AND IMPRO
PER PRECEDENT NOT WARRANTED UNDER THE PROVISIONS OF THE RULES OF COURT; [AND] F.
WILL UNNECESSARILY CAUSE THE PARTIES UNDUE DELAY AND EXPENSES FOR AFTER ALL THE
PARTIES-PLAINTIFFS THEREIN ARE NOT THE REAL PARTIES IN INTEREST[.] 14 The insta
nt Petition is bereft of merit. While it is true that respondents committed a pr
ocedural infraction before the RTC, such infraction does not justify the dismiss
al of the case. Misjoinder of parties does not warrant the dismissal of the acti
on.15 Rule 3, Section 11 of the Rules of Court clearly provides: Sec. 11. Misjoi
nder and non-joinder of parties. Neither misjoinder nor non-joinder of parties i
s ground for dismissal of an action. Parties may be dropped or added by order of
the court on motion of any party or on its own initiative at any stage of the a
ction and on such terms as are just. Any claim against a misjoined party may be
severed and proceeded with separately. It bears stressing that TCT No. T-56923,
covering the subject property, was issued in the name of
REMLAW Page 372

misjoined party may be severed and proceeded with separately. It bears stressing
that TCT No. T-56923, covering the subject property, was issued in the name of
Dorotea. This is established by the record, and petitioners themselves admit thi
s fact. However, because TCT No. T-75454, allegedly issued in favor of Littie Sa
rah, and the purported deed of sale, allegedly executed by Dorotea in favor of L
ittie Sarah, are not on record. Considering the allegations in the pleadings, it
is best that a trial on the merits be conducted.1avvphi1 We fully agree with th
e apt and judicious ruling of the CA, when it said: As the former owner of the s
ubject property, the same having been titled in her name under TCT No. T-56923,
Dorotea Cariaga Bonete, being the real party [in] interest, has the legal capaci
ty to file the instant case for reconveyance and annulment of deed of sale. The
complaint was filed by the [respondents] precisely to question the issuance of T
CT No. T-75454 in the name of Littie Sarah Agdeppa as the transaction allegedly
contemplated was only to secure Doroteas loan. Why the property became the subjec
t of the deed of sale which is being disputed by Dorotea should be threshed out
in a full-blown trial on the merits in order to afford the contending parties th
eir respective days in court. As held in Del Bros. Hotel Corporation vs. Court o
f Appeals, 210 SCRA 33, the complaint is not supposed to contain evidentiary mat
ters as this will have to be done at the trial on the merits of the case. A fina
l note. A liberal construction of the Rules is apt in situations involving excus
able formal errors in a pleading, as long as the same do not subvert the essence
of the proceeding, and they connote at least a reasonable attempt at compliance
with the Rules.16 The Court is not precluded from rectifying errors of judgment
, if blind and stubborn adherence to procedure would result in the sacrifice of
substantial justice for technicality. To deprive respondents, particularly Dorot
ea, of their claims over the subject property on the strength of sheer technical
ity would be a travesty of justice and equity. WHEREFORE, the instant Petition i
s DENIED and the assailed Court of Appeals Decision is AFFIRMED. The Regional Tr
ial Court, Branch 18 of Midsayap, Cotabato, is hereby directed to resolve this c
ase on the merits with deliberate dispatch. Costs against petitioners. SO ORDERE
D.
Pasted from <http://www.lawphil.net/judjuris/juri2010/jan2010/gr_164436_2010.htm
l>
REMLAW Page 373

Sui Man Hui Chan v. CA, GR 147999, Feb 27, 2004

Sunday, November 14, 2010 11:40 PM
SUI MAN HUI CHAN and GONZALO CO, petitioners vs. HON. COURT OF APPEALS and OSCAR
D. MEDALLA, respondents. DE C I S I O N QUISUMBING, J.: For review on certiorar
i is the Decision1 dated May 3, 2001, of the Court of Appeals in CA-G.R. SP No.
61889, affirming the Order2 dated January 11, 2000, of the Regional Trial Court
(RTC) of Mandaluyong City, Branch 213, in Civil Case No. MC99-666, which had den
ied petitioners Motion to Dismiss the complaint filed by private respondent. The
facts, as culled from records, are as follows: On March 30, 1999, private respon
dent Oscar Medalla filed a complaint before the RTC of Mandaluyong City, dockete
d as Civil Case No. MC99-666, for collection of a sum of money arising from brea
ch of a contract of lease and damages, against petitioners Sui Man Hui Chan and
Gonzalo Co. The complaint alleged that on November 14, 1988, Napoleon C. Medalla
as lessor and Ramon Chan as lessee entered into a Lease Contract3 over a hotel
building located at No. 29 Abanao Street, Baguio City. Chan would use the leased
premises as a restaurant named "Cypress Inn". Pertinently, the parties agreed o
n the following: 1. The period of lease shall be for ten (10) years or from 15 J
uly 1988 to 15 July 1998. 2. The payment of the realty taxes due to the governme
nt on the leased premises shall be for the account of the Lessee. 3. The agreeme
nt is binding upon the heirs and/or successors-in-interest of the Lessor and the
Lessee. Petitioner Gonzalo Co was employed by Ramon Chan as the general manager
of "Cypress Inn" and acted as his agent in all his dealings with Napoleon Medal
la. On August 5, 1989, Ramon Chan died. He was survived by his wife, petitioner
Sui Man Hui Chan, who continued to operate the restaurant. On July 17, 1996, Nap
oleon Medalla died. Among his heirs is private respondent Oscar Medalla, who suc
ceeded him as owner and lessor of the leased premises. The contract was neither
amended nor terminated after the death of the original parties but was continued
by their respective successors-ininterest pursuant to the terms thereof. Petiti
oners Chan and Co, the latter, in his capacity as agent and general manager, con
tinued to deal with private respondent Medalla in all transactions pertaining to
the contract. On various occasions, petitioners failed to pay the monthly renta
ls due on the leased premises. Despite several Statements of Accounts sent by Me
dalla, petitioners failed to pay the rentals due but, nonetheless, continued to
use and occupy the leased premises. On February 26, 1997, Medalla sent a letter
addressed to Ramon Chan, indicating that (1) the contract of lease would expire
on July 15, 1998, and (2) he was not amenable to a renewal of said contract afte
r its expiration. Medalla then sent demand letters to petitioners, but the latte
r still failed to pay the unpaid rentals. He also found out that petitioners had
not paid the realty taxes due on the leased premises since 1991, amounting to P
610,019.11. Medalla then asked petitioners to settle the unpaid rentals, pay the
unpaid real estate taxes, and vacate the leased premises. On January 1999, peti
tioners vacated the premises but without paying their unpaid rentals and realty
taxes. Aggrieved by petitioners refusal to pay the amounts owing, which had reach
ed P4,147,901.80 by March 1999, private respondent Medalla instituted Civil Case
No. MC99-666. In their Answer to the Complaint, petitioners denied owing privat
e respondent the amounts claimed by the latter. They alleged that the late Ramon
Chan had paid all the rentals due up to March 15, 1998. Moreover, they need not
pay any balance owing on the rentals as they were required to pay two (2) month
s advance rentals upon signing of the contract and make a guarantee deposit amou
nting to P220,000. On the matter of unpaid realty taxes, petitioners alleged tha
t private respondent was responsible therefor as the owner of the leased premise
s, notwithstanding any contrary stipulations in the contract.
REMLAW Page 374

the contract. On July 19, 1999, petitioners filed a Supplemental Answer with Mot
ion to Dismiss alleging that they were neither parties nor privies to the Contra
ct of Lease, hence they are not the real parties-in-interest. Private respondent
filed a Reply and Opposition to petitioners Supplemental Answer with Motion to D
ismiss dated August 2, 1999, praying for the denial of the Motion to Dismiss for
having been belatedly filed in direct contravention of Section 1, Rule 16, of t
he 1997 Rules of Civil Procedure.4 He further alleged that petitioner Chan, as t
he owner of the business and petitioner Co as the agent of petitioner Chan, are
clearly real parties-in-interest in the case. Private respondent pointed to thei
r continuous dealings with him in all transactions relating to the contract afte
r the death of Ramon Chan and even after the expiration of the Contract of Lease
. On January 11, 2000, the RTC denied petitioners Motion to Dismiss, thus: WHEREF
ORE, in view of the foregoing, the motion to dismiss dated July 19, 1999 filed b
y defendant through counsel against plaintiff is hereby DENIED for lack of merit
. SO ORDERED.5 The trial court pointed out that petitioners continued to transac
t business with private respondent after the death of Ramon Chan as shown by the
communications between the parties. It also declared that private respondents ac
quiescence to petitioners continued occupation and enjoyment of the leased premis
es and the latters recognition of the formers ownership of said premises reflected
an oral agreement between the parties to continue the Lease Contract. Petitione
rs moved for reconsideration on the ground that any claim should be filed agains
t the estate of Ramon Chan in an estate proceeding pursuant to Section 5, Rule 8
6, of the Revised Rules of Court6 since Ramon Chans estate is the real party-in-i
nterest. The court denied said motion and declared that Section 5, Rule 86 is in
applicable in the case. It pointed out that the unpaid rentals being claimed wer
e those for the period April 1993 to December 1998. These were incurred by petit
ioners and not by the late Ramon Chan, who died on August 5, 1989. Dissatisfied,
petitioners elevated the matter to the Court of Appeals through a special civil
action of certiorari, docketed as CA-G.R. SP No. 61889. The Court of Appeals, h
owever, affirmed the RTC Orders, as follows: WHEREFORE, foregoing premises consi
dered, the petition having no merit in fact and in law is hereby DENIED DUE COUR
SE and ACCORDINGLY ORDERED DISMISSED. The assailed Orders are resultantly AFFIRM
ED WITH COSTS TO PETITIONERS. SO ORDERED.7 Hence, the instant petition submittin
g as sole issue for our resolution: whether or not respondent Court of Appeals c
ommitted serious error in law in affirming the RTC Orders denying petitioners mot
ion to dismiss and the subsequent motion for reconsideration.8 Petitioners argue
that the Court of Appeals erred in affirming the RTCs Orders because they are no
t the real parties-in-interest and hence, were improperly impleaded in the compl
aint as defendants. Petitioners insist that they were neither parties nor were t
hey privy to the Contract of Lease between the late Ramon Chan and Napoleon Meda
lla. They vigorously assert that any claim for unpaid rentals should be made aga
inst the estate of Ramon Chan pursuant to Section 5, Rule 86 of the Revised Rule
s of Court. We find for private respondent. Prefatorily, it bears stressing that
petitioners Motion to Dismiss was filed after an Answer had already been filed.
This alone warranted an outright dismissal of the motion for having been filed i
n contravention of the clear and explicit mandate of Section 1, Rule 16, of the
Revised Rules of Civil Procedure. Under this section, a motion to dismiss shall
be filed within the time for but before filing the answer to the complaint or pl
eading asserting a claim.9 Here, petitioners filed their Supplemental Answer wit
h Motion to Dismiss almost two months after filing their Answer, in clear contra
vention of the aforecited rule. The Court of Appeals stated that the grant or de
nial of a Motion to Dismiss is an interlocutory order, and it cannot be the prop
er subject of a special civil action for certiorari. The proper remedy in such a
case is to appeal after a decision has been rendered, the CA said. A writ of ce
rtiorari is not intended to correct every controversial interlocutory ruling; it
is resorted to only to correct a grave abuse of discretion or a whimsical exerc
ise of judgment equivalent to lack or excess of jurisdiction. The function of a
petition for certiorari is limited to keeping an inferior court within the bound
s of its jurisdiction and to relieve persons from arbitrary acts, acts which cou
rts or judges have no power or authority in law to perform.

REMLAW Page 375

persons from arbitrary acts, acts which courts or judges have no power or author
ity in law to perform. Certiorari is not designed to correct erroneous findings
and conclusions made by the court.10 On this score, we are in agreement with the
appellate court. At any rate, we find no merit to petitioners contention that th
ey are not real parties-in-interest since they are not parties nor signatories t
o the contract and hence should not have been impleaded as defendants. It is und
eniable that petitioner Chan is an heir of Ramon Chan and, together with petitio
ner Co, was a successor-in-interest to the restaurant business of the late Ramon
Chan. Both continued to operate the business after the death of Ramon. Thus, th
ey are real parties-in-interest in the case filed by private respondent, notwith
standing that they are not signatories to the Contract of Lease. A lease contrac
t is not essentially personal in character. Thus, the rights and obligations the
rein are transmissible to the heirs.11 The general rule, therefore, is that heir
s are bound by contracts entered into by their predecessors-in-interest except w
hen the rights and obligations arising therefrom are not transmissible by (1) th
eir nature, (2) stipulation or (3) provision of law.12 In the subject Contract o
f Lease, not only were there no stipulations prohibiting any transmission of rig
hts, but its very terms and conditions explicitly provided for the transmission
of the rights of the lessor and of the lessee to their respective heirs and succ
essors. The contract is the law between the parties. The death of a party does n
ot excuse nonperformance of a contract, which involves a property right, and the
rights and obligations thereunder pass to the successors or representatives of
the deceased. Similarly, nonperformance is not excused by the death of the party
when the other party has a property interest in the subject matter of the contr
act.13 Finally, as to petitioners contention that any claim should have been file
d before the estate proceeding of Ramon Chan pursuant to Section 5 of Rule 86, t
he trial court found that the unpaid rentals sought to be claimed were for the p
eriod April 1993 to December 1998. Note that Ramon Chan, the original lessee, di
ed on August 5, 1989. In other words, as the unpaid rentals did not accrue durin
g the lifetime of Ramon Chan, but well after his death, his estate might not be
held liable for them. Hence, there is no indubitable basis to apply Section 5, R
ule 86, of the Revised Rules of Court as petitioners urge respondents to do. WHE
REFORE, the instant petition is DENIED and the Decision of the Court of Appeals
in CA-G.R. SP. No. 61889 is AFFIRMED. Costs against petitioners. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2004/feb2004/gr_147999_2004.htm
l>
REMLAW Page 376

Carandang vs. Heirs of De Guzman GR 160347 Nov. 29, 2006

Sunday, November 14, 2010 11:40 PM
ARCADIO and MARIA LUISA CARANDANG, Petitioners, vs. HEIRS OF QUIRINO A. DE GUZMA
N, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA G.
RAGASA and QUIRINO DE GUZMAN, JR., Respondents. DE C I S I O N CHICO-NAZARIO, J.
: This is a Petition for Review on Certiorari assailing the Court of Appeals Dec
ision 1 and Resolution affirming the Regional Trial Court (RTC) Decision renderi
ng herein petitioners Arcadio and Luisa Carandang [hereinafter referred to as sp
ouses Carandang] jointly and severally liable for their loan to Quirino A. de Gu
zman. The Court of Appeals summarized the facts as follows: [Quirino de Guzman]
and [the Spouses Carandang] are stockholders as well as corporate officers of Ma
buhay Broadcasting System (MBS for brevity), with equities at fifty four percent
(54%) and forty six percent (46%) respectively. On November 26, 1983, the capit
al stock of MBS was increased, from P500,000 to P1.5 million and P345,000 of thi
s increase was subscribed by [the spouses Carandang]. Thereafter, on March 3, 19
89, MBS again increased its capital stock, from P1.5 million to P3 million, [the
spouses Carandang] yet again subscribed to the increase. They subscribed to P93
,750 worth of newly issued capital stock. [De Guzman] claims that, part of the p
ayment for these subscriptions were paid by him, P293,250 for the November 26, 1
983 capital stock increase and P43,125 for the March 3, 1989 Capital Stock incre
ase or a total of P336,375. Thus, on March 31, 1992, [de Guzman] sent a demand l
etter to [the spouses Carandang] for the payment of said total amount. [The spou
ses Carandang] refused to pay the amount, contending that a pre-incorporation ag
reement was executed between [Arcadio Carandang] and [de Guzman], whereby the la
tter promised to pay for the stock subscriptions of the former without cost, in
consideration for *Arcadio Carandangs+ technical expertise, his newly purchased e
quipment, and his skill in repairing and upgrading radio/communication equipment
therefore, there is no indebtedness on their part [sic]. On June 5, 1992, [de G
uzman] filed his complaint, seeking to recover the P336,375 together with damage
s. After trial on the merits, the trial court disposed of the case in this wise:
"WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Gu
zman]. Accordingly, [the spouses Carandang] are ordered to jointly and severally
pay [de Guzman], to wit: (1) P336,375.00 representing *the spouses Carandangs+ l
oan to de Guzman; (2) interest on the preceding amount at the rate of twelve per
cent (12%) per annum from June 5, 1992 when this complaint was filed until the p
rincipal amount shall have been fully paid; (3) P20,000.00 as attorneys fees; (4)
Costs of suit. The spouses Carandang appealed the RTC Decision to the Court of
Appeals, which affirmed the same in the 22 April 2003 assailed Decision: WHEREFO
RE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No co
sts. [2] The Motion for Reconsideration filed by the spouses Carandang was simil
arly denied by the Court of Appeals in the 6 October 2003 assailed Resolution: W
HEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and o
ur Decision of April 22, 2003, which is based on applicable law and jurisprudenc
e on the matter is hereby AFFIRMED and REITERATED. [3] The spouses Carandang the
n filed before this Court the instant Petition for Review on Certiorari, bringin
g forth the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS C
OMMITTED MANIFEST ERROR IN FAILING TO STRICTLY COMPLY WITH SECTION 16, RULE 3 OF
THE 1997 RULES OF CIVIL PROCEDURE. II.
REMLAW Page 377

STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. II
. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING T
HAT THERE IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRE
SS PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS. I
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THA
T THE RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISR
EGARD OF THE REVISED RULES ON EVIDENCE. IV. WHETHER OR NOT THE HONORABLE COURT O
F APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY SECTIONS 2 AND 7, R
ULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. V. WHETHER OR NOT THE HONORABLE COUR
T OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PURPORTED LIABILITY OF PETITION
ERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE.
[4] Whether or not the RTC Decision is void for failing to comply with Section 1
6, Rule 3 of the Rules of Court The spouses Carandang claims that the Decision o
f the RTC, having been rendered after the death of Quirino de Guzman, is void fo
r failing to comply with Section 16, Rule 3 of the Rules of Court, which provide
s: SEC. 16. Death of party; duty of counsel. Whenever a party to a pending action
dies, and the claim is not thereby extinguished, it shall be the duty of his co
unsel to inform the court within thirty (30) days after such death of the fact t
hereof, and to give the name and address of his legal representative or represen
tatives. Failure of counsel to comply with this duty shall be a ground for disci
plinary action. The heirs of the deceased may be allowed to be substituted for t
he deceased, without requiring the appointment of an executor or administrator a
nd the court may appoint a guardian ad litem for the minor heirs. The court shal
l forthwith order the legal representative or representatives to appear and be s
ubstituted within a period of thirty (30) days from notice. If no legal represen
tative is named by the counsel for the deceased party, or if the one so named sh
all fail to appear within the specified period, the court may order the opposing
party, within a specified time, to procure the appointment of an executor or ad
ministrator for the estate of the deceased and the latter shall immediately appe
ar for and on behalf of the deceased. The court charges in procuring such appoin
tment, if defrayed by the opposing party, may be recovered as costs. The spouses
Carandang posits that such failure to comply with the above rule renders void t
he decision of the RTC, in adherence to the following pronouncements in Vda. de
Haberer v. Court of Appeals 5 and Ferreria v. Vda. de Gonzales [6]: Thus, it has
been held that when a party dies in an action that survives and no order is iss
ued by the court for the appearance of the legal representative or of the heirs
of the deceased in substitution of the deceased, and as a matter of fact no subs
titution has ever been effected, the trial held by the court without such legal
representatives or heirs and the judgment rendered after such trial are null and
void because the court acquired no jurisdiction over the persons of the legal r
epresentatives or of the heirs upon whom the trial and judgment would be binding
. [7] In the present case, there had been no court order for the legal represent
ative of the deceased to appear, nor had any such legal representative appeared
in court to be substituted for the deceased; neither had the complainant ever pr
ocured the appointment of such legal representative of the deceased, including a
ppellant, ever asked to be substituted for the deceased. As a result, no valid s
ubstitution was effected, consequently, the court never acquired jurisdiction ov
er appellant for the purpose of making her a party to the case and making the de
cision binding upon her, either personally or as a representative of the estate
of her deceased mother. [8] However, unlike jurisdiction over the subject matter
which is conferred by law and is not subject to the discretion of the parties,
9 jurisdiction over the person of the parties to the case may be waived either e
xpressly or impliedly. 10 Implied waiver comes in the form of either voluntary a
ppearance or a failure to object. [11] In the cases cited by the spouses Caranda
ng, we held that there had been no valid substitution by the
REMLAW Page 378

In the cases cited by the spouses Carandang, we held that there had been no vali
d substitution by the heirs of the deceased party, and therefore the judgment ca
nnot be made binding upon them. In the case at bar, not only do the heirs of de
Guzman interpose no objection to the jurisdiction of the court over their person
s; they are actually claiming and embracing such jurisdiction. In doing so, thei
r waiver is not even merely implied (by their participation in the appeal of sai
d Decision), but express (by their explicit espousal of such view in both the Co
urt of Appeals and in this Court). The heirs of de Guzman had no objection to be
ing bound by the Decision of the RTC. Thus, lack of jurisdiction over the person
, being subject to waiver, is a personal defense which can only be asserted by t
he party who can thereby waive it by silence. It also pays to look into the spir
it behind the general rule requiring a formal substitution of heirs. The underly
ing principle therefor is not really because substitution of heirs is a jurisdic
tional requirement, but because non-compliance therewith results in the undeniab
le violation of the right to due process of those who, though not duly notified
of the proceedings, are substantially affected by the decision rendered therein.
[12] Such violation of due process can only be asserted by the persons whose ri
ghts are claimed to have been violated, namely the heirs to whom the adverse jud
gment is sought to be enforced. Care should, however, be taken in applying the f
oregoing conclusions. In People v. Florendo, [13] where we likewise held that th
e proceedings that took place after the death of the party are void, we gave ano
ther reason for such nullity: "the attorneys for the offended party ceased to be
the attorneys for the deceased upon the death of the latter, the principal x x
x." Nevertheless, the case at bar had already been submitted for decision before
the RTC on 4 June 1998, several months before the passing away of de Guzman on
19 February 1999. Hence, no further proceedings requiring the appearance of de G
uzmans counsel were conducted before the promulgation of the RTC Decision. Conseq
uently, de Guzmans counsel cannot be said to have no authority to appear in trial
, as trial had already ceased upon the death of de Guzman. In sum, the RTC Decis
ion is valid despite the failure to comply with Section 16, Rule 3 of the Rules
of Court, because of the express waiver of the heirs to the jurisdiction over th
eir persons, and because there had been, before the promulgation of the RTC Deci
sion, no further proceedings requiring the appearance of de Guzmans counsel. Befo
re proceeding with the substantive aspects of the case, however, there is still
one more procedural issue to tackle, the fourth issue presented by the spouses C
arandang on the non-inclusion in the complaint of an indispensable party. Whethe
r or not the RTC should have dismissed the case for failure to state a cause of
action, considering that Milagros de Guzman, allegedly an indispensable party, w
as not included as a party-plaintiff The spouses Carandang claim that, since thr
ee of the four checks used to pay their stock subscriptions were issued in the n
ame of Milagros de Guzman, the latter should be considered an indispensable part
y. Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman a
s a party-plaintiff should cause the dismissal of the action because "(i)f a sui
t is not brought in the name of or against the real party in interest, a motion
to dismiss may be filed on the ground that the complaint states no cause of acti
on." [14] The Court of Appeals held: We disagree. The joint account of spouses Q
uirino A de Guzman and Milagros de Guzman from which the four (4) checks were dr
awn is part of their conjugal property and under both the Civil Code and the Fam
ily Code the husband alone may institute an action for the recovery or protectio
n of the spouses conjugal property. Thus, in Docena v. Lapesura [355 SCRA 658], t
he Supreme Court held that "x x x Under the New Civil Code, the husband is the a
dministrator of the conjugal partnership. In fact, he is the sole administrator,
and the wife is not entitled as a matter of right to join him in this endeavor.
The husband may defend the conjugal partnership in a suit or action without bei
ng joined by the wife. x x x Under the Family Code, the administration of the co
njugal property belongs to the husband and the wife jointly. However, unlike an
act of alienation or encumbrance where the consent of both spouses is required,
joint management or administration does not require that the husband and wife al
ways act together. Each spouse may validly exercise full power of management alo
ne, subject to the intervention of the court in proper cases as provided under A

rticle 124 of the Family Code. x x x." The Court of Appeals is correct. Petition
ers erroneously interchange the terms "real party in interest"
REMLAW Page 379

The Court of Appeals is correct. Petitioners erroneously interchange the terms "
real party in interest" and "indispensable party." A real party in interest is t
he party who stands to be benefited or injured by the judgment of the suit, or t
he party entitled to the avails of the suit. [15] On the other hand, an indispen
sable party is a party in interest without whom no final determination can be ha
d of an action, [16] in contrast to a necessary party, which is one who is not i
ndispensable but who ought to be joined as a party if complete relief is to be a
ccorded as to those already parties, or for a complete determination or settleme
nt of the claim subject of the action. [17] The spouses Carandang are indeed cor
rect that "(i)f a suit is not brought in the name of or against the real party i
n interest, a motion to dismiss may be filed on the ground that the complaint st
ates no cause of action." [18] However, what dismissal on this ground entails is
an examination of whether the parties presently pleaded are interested in the o
utcome of the litigation, and not whether all persons interested in such outcome
are actually pleaded. The latter query is relevant in discussions concerning in
dispensable and necessary parties, but not in discussions concerning real partie
s in interest. Both indispensable and necessary parties are considered as real p
arties in interest, since both classes of parties stand to be benefited or injur
ed by the judgment of the suit. Quirino and Milagros de Guzman were married befo
re the effectivity of the Family Code on 3 August 1988. As they did not execute
any marriage settlement, the regime of conjugal partnership of gains govern thei
r property relations. [19] All property acquired during the marriage, whether th
e acquisition appears to have been made, contracted or registered in the name of
one or both spouses, is presumed to be conjugal unless the contrary is proved.
[20] Credits are personal properties, [21] acquired during the time the loan or
other credit transaction was executed. Therefore, credits loaned during the time
of the marriage are presumed to be conjugal property. Consequently, assuming th
at the four checks created a debt for which the spouses Carandang are liable, su
ch credits are presumed to be conjugal property. There being no evidence to the
contrary, such presumption subsists. As such, Quirino de Guzman, being a co-owne
r of specific partnership property, [22] is certainly a real party in interest.
Dismissal on the ground of failure to state a cause of action, by reason that th
e suit was allegedly not brought by a real party in interest, is therefore unwar
ranted. So now we come to the discussion concerning indispensable and necessary
parties. When an indispensable party is not before the court, the action should
likewise be dismissed. [23] The absence of an indispensable party renders all su
bsequent actuations of the court void, for want of authority to act, not only as
to the absent parties but even as to those present. [24] On the other hand, the
non-joinder of necessary parties do not result in the dismissal of the case. In
stead, Section 9, Rule 3 of the Rules of Court provides for the consequences of
such non-joinder: Sec. 9. Non-joinder of necessary parties to be pleaded. Whenev
er in any pleading in which a claim is asserted a necessary party is not joined,
the pleader shall set forth his name, if known, and shall state why he is omitt
ed. Should the court find the reason for the omission unmeritorious, it may orde
r the inclusion of the omitted necessary party if jurisdiction over his person m
ay be obtained. The failure to comply with the order for his inclusion, without
justifiable cause, shall be deemed a waiver of the claim against such party. The
non-inclusion of a necessary party does not prevent the court from proceeding i
n the action, and the judgment rendered therein shall be without prejudice to th
e rights of such necessary party. Non-compliance with the order for the inclusio
n of a necessary party would not warrant the dismissal of the complaint. This is
an exception to Section 3, Rule 17 which allows the dismissal of the complaint
for failure to comply with an order of the court, as Section 9, Rule 3 specifica
lly provides for the effect of such non-inclusion: it shall not prevent the cour
t from proceeding in the action, and the judgment rendered therein shall be with
out prejudice to the rights of such necessary party. Section 11, Rule 3 likewise
provides that the non-joinder of parties is not a ground for the dismissal of t
he action. Other than the indispensable and necessary parties, there is a third
set of parties: the pro-forma parties, which are those who are required to be jo
ined as co-parties in suits by or against another party as may be provided by th

e applicable substantive law or procedural rule. [25] An example is provided by

Section 4, Rule 3 of the Rules of Court: Sec. 4. Spouses as parties. Husband and
wife shall sue or be sued jointly, except as provided by law. Pro-forma parties
can either be indispensable, necessary or neither indispensable nor necessary.
The third case occurs if, for example, a husband files an action to recover a pr
operty which he claims to be
REMLAW Page 380

third case occurs if, for example, a husband files an action to recover a proper
ty which he claims to be part of his exclusive property. The wife may have no le
gal interest in such property, but the rules nevertheless require that she be jo
ined as a party. In cases of pro-forma parties who are neither indispensable nor
necessary, the general rule under Section 11, Rule 3 must be followed: such non
-joinder is not a ground for dismissal. Hence, in a case concerning an action to
recover a sum of money, we held that the failure to join the spouse in that cas
e was not a jurisdictional defect. [26] The non-joinder of a spouse does not war
rant dismissal as it is merely a formal requirement which may be cured by amendm
ent. [27] Conversely, in the instances that the pro-forma parties are also indis
pensable or necessary parties, the rules concerning indispensable or necessary p
arties, as the case may be, should be applied. Thus, dismissal is warranted only
if the pro-forma party not joined in the complaint is an indispensable party. M
ilagros de Guzman, being presumed to be a co-owner of the credits allegedly exte
nded to the spouses Carandang, seems to be either an indispensable or a necessar
y party. If she is an indispensable party, dismissal would be proper. If she is
merely a necessary party, dismissal is not warranted, whether or not there was a
n order for her inclusion in the complaint pursuant to Section 9, Rule 3. Articl
e 108 of the Family Code provides: Art. 108. The conjugal partnership shall be g
overned by the rules on the contract of partnership in all that is not in confli
ct with what is expressly determined in this Chapter or by the spouses in their
marriage settlements. This provision is practically the same as the Civil Code p
rovision it superceded: Art. 147. The conjugal partnership shall be governed by
the rules on the contract of partnership in all that is not in conflict with wha
t is expressly determined in this Chapter. In this connection, Article 1811 of t
he Civil Code provides that "[a] partner is a co-owner with the other partners o
f specific partnership property." Taken with the presumption of the conjugal nat
ure of the funds used to finance the four checks used to pay for petitioners stoc
k subscriptions, and with the presumption that the credits themselves are part o
f conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of
the alleged credit. Being co-owners of the alleged credit, Quirino and Milagros
de Guzman may separately bring an action for the recovery thereof. In the fairl
y recent cases of Baloloy v. Hular [28] and Adlawan v. Adlawan, [29] we held tha
t, in a co-ownership, co-owners may bring actions for the recovery of co-owned p
roperty without the necessity of joining all the other co-owners as co-plaintiff
s because the suit is presumed to have been filed for the benefit of his co-owne
rs. In the latter case and in that of De Guia v. Court of Appeals, [30] we also
held that Article 487 of the Civil Code, which provides that any of the co-owner
s may bring an action for ejectment, covers all kinds of action for the recovery
of possession. [31] In sum, in suits to recover properties, all co-owners are r
eal parties in interest. However, pursuant to Article 487 of the Civil Code and
relevant jurisprudence, any one of them may bring an action, any kind of action,
for the recovery of co-owned properties. Therefore, only one of the co-owners,
namely the coowner who filed the suit for the recovery of the co-owned property,
is an indispensable party thereto. The other co-owners are not indispensable pa
rties. They are not even necessary parties, for a complete relief can be accorde
d in the suit even without their participation, since the suit is presumed to ha
ve been filed for the benefit of all co-owners. [32] We therefore hold that Mila
gros de Guzman is not an indispensable party in the action for the recovery of t
he allegedly loaned money to the spouses Carandang. As such, she need not have b
een impleaded in said suit, and dismissal of the suit is not warranted by her no
t being a party thereto. Whether or not respondents were able to prove the loan
sought to be collected from petitioners In the second and third issues presented
by the spouses Carandang, they claim that the de Guzmans failed to prove the al
leged loan for which the spouses Carandang were held liable. As previously state
d, spouses Quirino and Milagros de Guzman paid for the stock subscriptions of th
e spouses Carandang, amounting to P336,375.00. The de Guzmans claim that these p
ayments were in the form of loans and/or advances and it was agreed upon between
the late Quirino de Guzman, Sr. and the spouses Carandang that the latter would
repay him. Petitioners, on the other hand, argue that there was an oral preinco

rporation agreement wherein it was agreed that Arcardio

aintain his 46% equity participation in the corporation
ctures were increased, and that Quirino de Guzman would
y shares/stock subscriptions of Arcardio Carandang with
REMLAW Page 381

Carandang would always m

even if the capital stru
personally pay the equit
no cost to the latter.

to the latter. On this main issue, the Court of Appeals held: [The spouses Caran
dang] aver in its ninth assigned error that [the de Guzmans] failed to prove by
preponderance of evidence, either the existence of the purported loan or the non
-payment thereof. Simply put, preponderance of evidence means that the evidence
as a whole adduced by one side is superior to that of the other. The concept of
preponderance of evidence refers to evidence that is of greater weight, or more
convincing, than that which is offered in opposition to it; it means probability
of truth. [The spouses Carandang] admitted that it was indeed [the de Guzmans]
who paid their stock subscriptions and their reason for not reimbursing the latt
er is the alleged pre-incorporation agreement, to which they offer no clear proo
f as to its existence. It is a basic rule in evidence that each party must prove
his affirmative allegation. Thus, the plaintiff or complainant has to prove his
affirmative allegations in the complaints and the defendant or respondent has t
o prove the affirmative allegations in his affirmative defenses and counterclaim
s. [33] The spouses Carandang, however, insist that the de Guzmans have not prov
en the loan itself, having presented evidence only of the payment in favor of th
e Carandangs. They claim: It is an undeniable fact that payment is not equivalen
t to a loan. For instance, if Mr. "A" decides to pay for Mr. "Bs" obligation, tha
t payment by Mr. "A" cannot, by any stretch of imagination, possibly mean that t
here is now a loan by Mr. "B" to Mr. "A". There is a possibility that such payme
nt by Mr. "A" is purely out of generosity or that there is a mutual agreement be
tween them. As applied to the instant case, that mutual agreement is the pre-inc
orporation agreement (supra) existing between Mr. de Guzman and the petitioners
--- to the effect that the former shall be responsible for paying stock subscrip
tions of the latter. Thus, when Mr. de Guzman paid for the stock subscriptions o
f the petitioners, there was no loan to speak of, but only a compliance with the
pre-incorporation agreement. [34] The spouses Carandang are mistaken. If indeed
a Mr. "A" decides to pay for a Mr. "Bs" obligation, the presumption is that Mr.
"B" is indebted to Mr. "A" for such amount that has been paid. This is pursuant
to Articles 1236 and 1237 of the Civil Code, which provide: Art. 1236. The credi
tor is not bound to accept payment or performance by a third person who has no i
nterest in the fulfillment of the obligation, unless there is a stipulation to t
he contrary. Whoever pays for another may demand from the debtor what he has pai
d, except that if he paid without the knowledge or against the will of the debto
r, he can recover only insofar as the payment has been beneficial to the debtor.
Art. 1237. Whoever pays on behalf of the debtor without the knowledge or agains
t the will of the latter, cannot compel the creditor to subrogate him in his rig
hts, such as those arising from a mortgage, guarantee, or penalty. Articles 1236
and 1237 are clear that, even in cases where the debtor has no knowledge of pay
ment by a third person, and even in cases where the third person paid against th
e will of the debtor, such payment would produce a debt in favor of the paying t
hird person. In fact, the only consequences for the failure to inform or get the
consent of the debtor are the following: (1) the third person can recover only
insofar as the payment has been beneficial to the debtor; and (2) the third pers
on is not subrogated to the rights of the creditor, such as those arising from a
mortgage, guarantee or penalty. [35] We say, however, that this is merely a pre
sumption. By virtue of the parties freedom to contract, the parties could stipula
te otherwise and thus, as suggested by the spouses Carandang, there is indeed a
possibility that such payment by Mr. "A" was purely out of generosity or that th
ere was a mutual agreement between them. But such mutual agreement, being an exc
eption to presumed course of events as laid down by Articles 1236 and 1237, must
be adequately proven. The de Guzmans have successfully proven their payment of
the spouses Carandangs stock subscriptions. These payments were, in fact, admitte
d by the spouses Carandang. Consequently, it is now up to the spouses Carandang
to prove the existence of the pre-incorporation agreement that was their defense
to the purported loan. Unfortunately for the spouses Carandang, the only testim
ony which touched on the existence and substance of the pre-incorporation agreem
ent, that of petitioner Arcardio Carandang, was stricken off the record because
he did not submit himself to a cross-examination of the opposing party. On the o
ther hand, the testimonies of Romeo Saavedra, [36] Roberto S. Carandang, [37] Ge

rtrudes Z. Esteban,
REMLAW Page 382

other hand, the testimonies of Romeo Saavedra, [36] Roberto S. Carandang, [37] G
ertrudes Z. Esteban, [38] Ceferino Basilio, [39] and Ma. Luisa Carandang [40] to
uched on matters other than the existence and substance of the pre-incorporation
agreement. So aside from the fact that these witnesses had no personal knowledg
e as to the alleged existence of the pre-incorporation agreement, the testimonie
s of these witnesses did not even mention the existence of a pre-incorporation a
greement. Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa
Carandang even contradicted the existence of a pre-incorporation agreement becau
se when they were asked by their counsel regarding the matter of the check payme
nts made by the late Quirino A. de Guzman, Sr. in their behalf, they said that t
hey had already paid for it thereby negating their own defense that there was a
preincorporation agreement excusing themselves from paying Mr. de Guzman the amo
unts he advanced or loaned to them. This basic and irrefutable fact can be glean
ed from their testimonies which the private respondents are quoting for easy ref
erence: a. With respect to the testimony of Ma. Luisa Carandang Q: Now, can you
tell this Honorable Court how do you feel with respect to the Complaint of the p
laintiff in this case charging you that you paid for this year and asking enough
to paid (sic) your tax? A: We have paid already, so, we are not liable for anyt
hing payment (sic). [41] b. With respect to the testimony of Arcadio Carandang "
Q: How much? A: P40,000.00 to P50,000.00 per month. Q: The plaintiff also claime
d thru witness Edgar Ragasa, that there were receipts issued for the payment of
your shares; which receipts were marked as Exhibits "G" to "L" (Plaintiff). Im sh
owing to you these receipts so marked by the plaintiff as their exhibits which w
ere issued in the name of Ma. Luisa Carandang, your wife; and also, Arcadio M. C
arandang. Will you please go over this Official Receipt and state for the record
s, who made for the payment stated in these receipts in your name? A: I paid for
those shares." [42] There being no testimony or documentary evidence proving th
e existence of the pre-incorporation agreement, the spouses Carandang are forced
to rely upon an alleged admission by the original plaintiff of the existence of
the pre-incorporation agreement. Petitioners claim that the late Quirino A. de
Guzman, Sr. had admitted the existence of the preincorporation agreement by virt
ue of paragraphs 13 and 14 of their Answer and paragraph 4 of private respondent
s Reply. Paragraphs 13 and 14 of petitioners Answer dated 7 July 1992 state in ful
l: 13. Sometime in November, 1973 or thereabout, herein plaintiff invited defend
ant Arcadio M. Carandang to a joint venture by pooling together their technical
expertise, equipments, financial resources and franchise. Plaintiff proposed to
defendant and mutually agreed on the following: 1. That they would organize a co
rporation known as Mabuhay Broadcasting Systems, Inc. 2. Considering the technic
al expertise and talent of defendant Arcadio M. Carandang and his new equipments
he bought, and his skill in repairing and modifying radio/communication equipme
nts into high proficiency, said defendant would have an equity participation in
the corporation of 46%, and plaintiff 54% because of his financial resources and
franchise. 3. That defendant would always maintain his 46% equity participation
in the corporation even if the capital structures are increased, and that plain
tiff would personally pay the equity shares/stock subscriptions of defendant wit
h no cost to the latter. 4. That because of defendants expertise in the trade inc
luding the marketing aspects, he would be the President and General Manager, and
plaintiff the Chairman of the Board. 5. That considering their past and trustwo
rthy relations, they would maintain such relations in the joint venture without
any mental reservation for their common benefit and success of the business. 14.
Having mutually agreed on the above arrangements, the single proprietorship of
plaintiff was immediately spun-off into a corporation now known as Mabuhay Broad
casting System, Inc. The incorporators are plaintiff and his family members/nomi
nees controlling jointly 54% of the stocks and defendant Arcadio M. Carandang co
ntrolling singly 46% as previously agreed. [43] Meanwhile, paragraphs 3 and 4 of
private respondents Reply dated 29 July 1992 state in full: 3. Plaintiffs admits
the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and d
efendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcast
ing Systems,
REMLAW Page 383

defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcas

ting Systems, Inc. Plaintiff specifically denies the other allegations in paragr
aph 13 of the Answer, the same being devoid of any legal or factual bases. The t
ruth of the matter is that defendant Arcadio M. Carandang was not able to pay pl
aintiff the agreed amount of the lease for a number of months forcing the plaint
iff to terminate lease. Additionally, the records would show that it was the def
endant Arcadio M. Carandang who proposed a joint venture with the plaintiff. It
appears that plaintiff agreed to the formation of the corporation principally be
cause of a directive of then President Marcos indicating the need to broaden the
ownership of radio broadcasting stations. The plaintiff owned the franchise, th
e radio transmitter, the antenna tower, the building containing the radio transm
itter and other equipment. Verily, he would be placed in a great disadvantage if
he would still have to personally pay for the shares of defendant Arcadio M. Ca
randang. 4. Plaintiff admits the allegations in paragraph 14 of the Answer. [44]
In effect, the spouses Carandang are relying on the fact that Quirino de Guzman
stated that he admitted paragraph 14 of the Answer, which incidentally containe
d the opening clause "(h)aving mutually agreed on the above arrangements, x x x.
" Admissions, however, should be clear and unambiguous. This purported admission
by Quirino de Guzman reeks of ambiguity, as the clause "(h)aving mutually agree
d on the above arrangements," seems to be a mere introduction to the statement t
hat the single proprietorship of Quirino de Guzman had been converted into a cor
poration. If Quirino de Guzman had meant to admit paragraph 13.3, he could have
easily said so, as he did the other paragraphs he categorically admitted. Instea
d, Quirino de Guzman expressly stated the opposite: that "(p)laintiff specifical
ly denies the other allegations of paragraph 13 of the Answer." [45] The Reply f
urthermore states that the only portion of paragraph 13 which Quirino de Guzman
had admitted is paragraph 13.1, and only insofar as it said that Quirino de Guzm
an and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc. [46] All
the foregoing considered, we hold that Quirino de Guzman had not admitted the al
leged preincorporation agreement. As there was no admission, and as the testimon
y of Arcardio Carandang was stricken off the record, we are constrained to rule
that there was no pre-incorporation agreement rendering Quirino de Guzman liable
for the spouses Carandangs stock subscription. The payment by the spouses de Guz
man of the stock subscriptions of the spouses Carandang are therefore by way of
loan which the spouses Carandang are liable to pay. Whether or not the liability
of the spouses Carandang is joint and solidary Finally, the Court of Appeals al
so upheld the RTC Decision insofar as it decreed a solidary liability. According
to the Court of Appeals: With regards (sic) the tenth assigned error, [the spou
ses Carandang] contend that: "There is absolutely no evidence, testimonial or do
cumentary, showing that the purported obligation of [the spouses Carandang] is j
oint and solidary. x x x "Furthermore, the purported obligation of [the spouses
Carandang] does not at all qualify as one of the obligations required by law to
be solidary x x x." It is apparent from the facts of the case that [the spouses
Carandang] were married way before the effectivity of the Family Code hence; the
ir property regime is conjugal partnership under the Civil Code. It must be note
d that for marriages governed by the rules of conjugal partnership of gains, an
obligation entered into by the husband and wife is chargeable against their conj
ugal partnership and it is the partnership, which is primarily bound for its rep
ayment. Thus, when the spouses are sued for the enforcement of the obligation en
tered into by them, they are being impleaded in their capacity as representative
s of the conjugal partnership and not as independent debtors, such that the conc
ept of joint and solidary liability, as between them, does not apply. [47] The C
ourt of Appeals is correct insofar as it held that when the spouses are sued for
the enforcement of the obligation entered into by them, they are being impleade
d in their capacity as representatives of the conjugal partnership and not as in
dependent debtors. Hence, either of them may be sued for the whole amount, simil
ar to that of a solidary liability, although the amount is chargeable against th
eir conjugal partnership property. Thus, in the case cited by the Court of Appea
ls, Alipio v. Court of Appeals, [48] the two sets of defendant-spouses therein w
ere held liable for P25,300.00 each, chargeable to their respective conjugal par

tnerships. WHEREFORE, the Decision of the Court of Appeals, affirming the judgme
nt rendered against the spouses Carandang, is hereby AFFIRMED with the following
MODIFICATION: The spouses Carandang are
REMLAW Page 384

Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Caran
dang are ORDERED to pay the following amounts from their conjugal partnership pr
operties: (1) P336,375.00 representing the spouses Carandangs loan to Quirino de
Guzman; and (2) Interest on the preceding amount at the rate of twelve percent (
12%) per annum from 5 June 1992 when the complaint was filed until the principal
amount can be fully paid; and (3) P20,000.00 as attorneys fees. No costs. SO ORD
ERED.
Pasted from <http://www.lawphil.net/judjuris/juri2006/nov2006/gr_160347_2006.htm
l>
REMLAW Page 385

Judge Sumaljag v. Literato GR 149787 Jun 18, 2008

Sunday, November 14, 2010 11:40 PM
JUDGE ANTONIO C. SUMALJAG, petitioner, vs. SPOUSES DIOSDIDIT and MENENDEZ M. LIT
ERATO; and MICHAELES MAGLASANG RODRIGO, respondents. DECIS ION CARPIO MORALES, J
.: Before this Court is the Petition for Review on Certiorari under Rule 45 of t
he Rules of Court assailing the Decision1 of the Court of Appeals ("CA") dated J
une 26, 2001 and its related Resolution2 dated September 4, 2001 in CA-G.R. SP N
o. 59712. The assailed Decision dismissed the petition for certiorari filed by p
etitioner Judge Antonio C. Sumaljag (the "petitioner") in the interlocutory matt
er outlined below in Civil Cases B-1239 and B-1281 before the trial court. The c
hallenged Resolution denied the petitioner s motion for reconsideration. ANTECED
ENT FACTS On November 16, 1993, Josefa D. Maglasang ("Josefa") filed with the Re
gional Trial Court ("RTC"), Branch 14, Baybay, Leyte a complaint3 (docketed as C
ivil Case No. B-1239) for the nullity of the deed of sale of real property purpo
rtedly executed between her as vendor and the spouses Diosdidit and Menendez Lit
erato (the "respondent spouses") as vendees. The complaint alleged that this dee
d of sale dated October 15, 1971 of Lot 1220-D is spurious. Josefa was the siste
r of Menendez Maglasang Literato ("Menendez"). They were two (2) of the six (6)
heirs who inherited equal parts of a 6.3906-hectare property (Lot 1220) passed o
n to them by their parents Cristito and Inecita Diano Maglasang.4 Lot 1220D was
partitioned to Josefa, while Lot 1220-E was given to Menendez. The respondent sp
ouses response to the complaint was an amended answer with counterclaim5 denyin
g that the deed of sale was falsified. They impleaded the petitioner with Josefa
as counterclaim defendant on the allegation that the petitioner, at the instanc
e of Josefa, occupied Lot 1220-D and Lot 1220-E without their (the respondent sp
ouses ) authority; Lot 1220-E is theirs by inheritance while 1220D had been sold
to them by Josefa. They also alleged that the petitioner acted in bad faith in
acquiring the two (2) lots because he prepared and notarized on September 26, 19
86 the contract of lease over the whole of Lot 1220 between all the Maglasang he
irs (but excluding Josefa) and Vicente Tolo, with the lease running from 1986 to
1991; thus, the petitioner then knew that Josefa no longer owned Lot 1220D. Civ
il Case No. 12816 is a complaint that Menendez filed on April 4, 1996 with the R
TC for the declaration of the inexistence of lease contract, recovery of possess
ion of land, and damages against the petitioner and Josefa after the RTC dismiss
ed the respondent spouses counterclaim in Civil Case No. 1239. The complaint al
leged that Josefa, who had previously sold Lot 1220-D to Menendez, leased it, to
gether with Lot 1220-E, to the petitioner. Menendez further averred that the pet
itioner and Josefa were in bad faith in entering their contract of lease as they
both knew that Josefa did not own the leased lots. Menendez prayed, among other
s, that this lease contract between Josefa and the petitioner be declared null a
nd void. Josefa died on May 3, 1999 during the pendency of Civil Case Nos. B-123
9 and B-1281. On August 13, 1999, Atty. Zenen A. Puray ("Atty. Puray") - the pet
itioner s and Josefa s common counsel - asked the RTC in Civil Case No. 1239 tha
t he be given an extended period or up to September 10, 1999 within which to fil
e a formal notice of death and substitution of party. The RTC granted the motion
in an order dated August 13, 1999.7 On August 26, 1999, Atty. Puray filed with
the RTC a notice of death and substitution of party,8 praying that Josefa - in h
is capacity as plaintiff and third party counterclaim defendant - be substituted
by the petitioner. The submission alleged that prior to Josefa s death, she exe
cuted a Quitclaim Deed9 over Lot 1220-D in favor of Remismundo D. Maglasang10 wh
o in turn sold this property to the petitioner. Menendez, through counsel, objec
ted to the proposed substitution, alleging that Atty. Puray filed the notice of
death and substitution of party beyond the thirty-day period provided under Sect
ion 16, Rule 3 of the 1997 Rules of Civil Procedure, as amended. She recommended
instead that Josefa be substituted by the latter s full-blood sister, Michaeles
Maglasang Rodrigo ("Michaeles").
REMLAW Page 386

by the latter s full-blood sister, Michaeles Maglasang Rodrigo ("Michaeles"). Th

e RTC denied Atty. Puray s motion for substitution and instead ordered the appea
rance of Michaeles as representative of the deceased Josefa. This Order provides
: WHEREFORE, in view of the foregoing, the motion is hereby DENIED for lack of m
erit and instead order the appearance of Mrs. Mechailes Maglasang-Rodrigo of Brg
y. Binulho, Albuera, Leyte, as representative of the deceased Josefa Maglasang.
SO ORDERED.11 The RTC subsequently denied the petitioner s motion for reconsider
ation in an order12 dated May 25, 2000. The petitioner went to the CA on a petit
ion for certiorari (docketed as CA-G.R. SP No. 59712) to question the above inte
rlocutory orders. In a Decision13 dated June 26, 2001, the CA dismissed the peti
tion for lack of merit. The appellate court similarly denied the petitioner s mo
tion for reconsideration in its Resolution14 dated September 4, 2001. The presen
t petition essentially claims that the CA erred in dismissing CA-G.R. No. SP 597
12 since: (a) the property under litigation was no longer part of Josefa s estat
e since she was no longer its owner at the time of her death; (b) the petitioner
had effectively been subrogated to the rights of Josefa over the property under
litigation at the time she died; (c) without an estate, the heir who was appoin
ted by the lower court no longer had any interest to represent; (d) the notice o
f death was seasonably submitted by the counsel of Josefa to the RTC within the
extended period granted; and (e) the petitioner is a transferee pendente lite wh
o the courts should recognize pursuant to Rule 3, Section 20 of the Rules of Cou
rt. THE COURT S RULING We resolve to deny the petition for lack of merit. The Go
verning Rule. The rule on substitution in case of death of a party is governed b
y Section 16, Rule 3 of the 1997 Rules of Civil Procedure, as amended, which pro
vides: Section 16. Death of a party; duty of counsel. -Whenever a party to a pen
ding action dies, and the claim is not thereby extinguished, it shall be the dut
y of his counsel to inform the court within thirty (30) days after such death of
the fact thereof, and to give the name and address of his legal representative
or representatives. Failure of counsel to comply with this duty shall be a groun
d for disciplinary action. The heirs of the deceased may be allowed to be substi
tuted for the deceased, without requiring the appointment of an executor or admi
nistrator and the court may appoint a guardian ad litem for the minor heirs. The
court shall forthwith order said legal representative or representatives to app
ear and be substituted within a period of thirty (30) days from notice. If no le
gal representative is named by the counsel for the deceased party, or if the one
so named shall fail to appear within the specified period, the court may order
the opposing party, within a specified time, to procure the appointment of an ex
ecutor or administrator for the estate of the deceased, and the latter shall imm
ediately appear for and on behalf of the deceased. The court charges in procurin
g such appointment, if defrayed by the opposing party, may be recovered as costs
. (Emphasis ours) The purpose behind this rule is the protection of the right to
due process of every party to the litigation who may be affected by the interve
ning death. The deceased litigant is herself or himself protected as he/she cont
inues to be properly represented in the suit through the duly appointed legal re
presentative of his estate.15 Application of the Governing Rule. a. Survival of
the pending action A question preliminary to the application of the above provis
ion is whether Civil Case Nos. B-1239 and B-1281 are actions that survive the de
ath of Josefa. We said in Gonzalez v. Pagcor:16 "The criteria for determining wh
ether an action survives the death of a plaintiff or petitioner was elucidated u
pon in Bonilla v. Barcena (71 SCRA 491 (1976). as follows: . . . The question as
to whether an action survives or not depends on the nature of the action and th
e damage sued for. In the causes of action which survive, the wrong complained [
of] affects primarily and principally property and property rights, the injuries
to the person being merely incidental, while in the causes of action which do n
ot survive, the injury complained of is to the person, the property and rights o
f property affected being incidental. . . .
REMLAW Page 387

of property affected being incidental. . . . Since the question involved in thes

e cases relate to property and property rights, then we are dealing with actions
that survive so that Section 16, Rule 3 must necessarily apply. b. Duty of Coun
sel under the Rule. The duty of counsel under the aforecited provision is to inf
orm the court within thirty (30) days after the death of his client of the fact
of death, and to give the name and address of the deceased s legal representativ
e or representatives. Incidentally, this is the only representation that counsel
can undertake after the death of a client as the fact of death terminated any f
urther lawyer-client relationship.17 In the present case, it is undisputed that
the counsel for Josefa did in fact notify the lower court, although belatedly, o
f the fact of her death.18 However, he did as well inform the lower court that "
2. That before she died she executed a QUITCLAIM DEED in favor of REMISMUNDO D.
MAGLASANG over the land in question (Lot No. 1220-D of Benolho, Albuera, Leyte),
evidenced by a QUITCLAIM DEED, copy of which is hereto attached as Annex "B" wh
o in turn sold it in favor of JUDGE ANTONIO SUMALJAG, evidenced by a DEED OF ABS
OLUTE SALE, copy of which is hereto attached as Annex "C"." Further, counsel ask
ed that "the deceased Josefa Maglasang in her capacity as plaintiff and as Third
Party Counterclaim Defendant be substituted in the case at bar by JUDGE ANTONIO
SUMALJAG whose address is 38 Osmena Street, Ormoc City" pursuant to "Section 16
, Rule 3 of the 1997 Rules of Civil Procedure". This notification, although file
d late, effectively informed the lower court of the death of litigant Josefa Mag
lasang so as to free her counsel of any liability for failure to make a report o
f death under Section 16, Rule 3 of the Rules of Court. In our view, counsel sat
isfactorily explained to the lower court the circumstances of the late reporting
, and the latter in fact granted counsel an extended period. The timeliness of t
he report is therefore a non-issue. The reporting issue that goes into the core
of this case is whether counsel properly gave the court the name and address of
the legal representative of the deceased that Section 16, Rule 3 specifies. We r
ule that he did not. The "legal representatives" that the provision speaks of, r
efer to those authorized by law - the administrator, executor or guardian19 who,
under the rule on settlement of estate of deceased persons,20 is constituted to
take over the estate of the deceased. Section 16, Rule 3 likewise expressly pro
vides that "the heirs of the deceased may be allowed to be substituted for the d
eceased, without requiring the appointment of an executor or administrator . . .
". Significantly, the person - now the present petitioner - that counsel gave as
substitute was not one of those mentioned under Section 16, Rule 3. Rather, he
is a counterclaim co-defendant of the deceased whose proferred justification for
the requested substitution is the transfer to him of the interests of the decea
sed in the litigation prior to her death. Under the circumstances, both the lowe
r court and the CA were legally correct in not giving effect to counsel s sugges
ted substitute. First, the petitioner is not one of those allowed by the Rules t
o be a substitute. Section 16, Rule 3 speaks for itself in this respect. Second,
as already mentioned above, the reason for the Rule is to protect all concerned
who may be affected by the intervening death, particularly the deceased and her
estate. We note in this respect that the Notice that counsel filed in fact refl
ects a claim against the interest of the deceased through the transfer of her re
maining interest in the litigation to another party. Interestingly, the transfer
is in favor of the very same person who is suggested to the court as the substi
tute. To state the obvious, the suggested substitution effectively brings to nau
ght the protection that the Rules intend; plain common sense tells us that the t
ransferee who has his own interest to protect, cannot at the same time represent
and fully protect the interest of the deceased transferor. Third, counsel has e
very authority to manifest to the court changes in interest that transpire in th
e course of litigation. Thus, counsel could have validly manifested to the court
the transfer of Josefa s interests in the subject matter of litigation pursuant
to Section 19, Rule 3.21 But this can happen only while the client-transferor w
as alive and while the manifesting counsel was still the effective and authorize
d counsel for the client-transferor, not after the death of the client when the
lawyer-client relationship has terminated. The fact that the alleged transfer ma
y have actually taken place is immaterial to this conclusion, if only for the re

ason that it is not for counsel, after the death of his client, to make such man
ifestation because he then has lost the authority to speak for and bind his clie
nt. Thus,
REMLAW Page 388

to make such manifestation because he then has lost the authority to speak for a
nd bind his client. Thus, at most, the petitioner can be said to be a transferee
pendente lite whose status is pending with the lower court. Lastly, a close exa
mination of the documents attached to the records disclose that the subject matt
er of the Quitclaim allegedly executed by Josefa in favor of Remismundo is Lot 1
220-E, while the subject matter of the deed of sale executed by Remismundo in th
e petitioner s favor is Lot 1220-D. This circumstance alone raises the possibili
ty that there is more than meets the eye in the transactions related to this cas
e. c. The Heirs as Legal Representatives. The CA correctly harked back to the pl
ain terms of Section 16, Rule 3 in determining who the appropriate legal represe
ntative/s should be in the absence of an executor or administrator. The second p
aragraph of the Section 16, Rule 3 of the 1997 Rules of Court, as amended, is cl
ear - the heirs of the deceased may be allowed to be substituted for the decease
d, without requiring the appointment of an executor or administrator. Our decisi
ons on this matter have been clear and unequivocal. In San Juan, Jr. v. Cruz, th
is Court held: The pronouncement of this Court in Lawas v. Court of Appeals x x
x that priority is given to the legal representative of the deceased (the execut
or or administrator) and that it is only in case of unreasonable delay in the ap
pointment of an executor or administrator, or in cases where the heirs resort to
an extra-judicial settlement of the estate that the court may adopt the alterna
tive of allowing the heirs of the deceased to be substituted for the deceased, i
s no longer true.22 (Emphasis ours) We likewise said in Gochan v. Young: 23 For
the protection of the interests of the decedent, this Court has in previous inst
ances recognized the heirs as proper representatives of the decedent, even when
there is already an administrator appointed by the court. When no administrator
has been appointed, as in this case, there is all the more reason to recognize t
he heirs as the proper representatives of the deceased. Josefa s death certifica
te24 shows that she was single at the time of her death. The records do not show
that she left a will. Therefore, as correctly held by the CA, in applying Secti
on 16, Rule 3, her heirs are her surviving sisters (Michaelis, Maria, Zosima, an
d Consolacion) and the children of her deceased sister, Lourdes (Manuel, Cesar,
Huros and Regulo) who should be her legal representatives. Menendez, although al
so a sister, should be excluded for being one of the adverse parties in the case
s before the RTC. WHEREFORE, premises considered, we DENY the petition for lack
of merit. We AFFIRM the Court of Appeals decision that the surviving heirs of th
e deceased Josefa - namely Michaelis M. Rodrigo; Maria M. Cecilio; Zosima D. Mag
lasang; Consolacion M. Bag-aw; and the children of Lourdes M. Lumapas, namely Ma
nuel Lumapas, Cesar Lumapas, Huros Lumapas and Regulo Maquilan - should be her s
ubstitutes and are hereby so ordered to be substituted for her in Civil Case Nos
. B-1239 and B-1281. Costs against the petitioner. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2008/jun2008/gr_149787_2008.htm
l>
REMLAW Page 389

?Domingo v Landicho GR 170015 Aug 29, 2007

Sunday, November 14, 2010 11:41 PM
REMLAW Page 390

Napere v. Barbarona GR 160426 Jan 31, 2008

Sunday, November 14, 2010 11:41 PM
CAPITOLINA VIVERO NAPERE, petitioner, vs. AMANDO BARBARONA and GERVACIA MONJAS B
ARBARONA, respondents. RESOL UTI ON NACHURA, J.: Petitioner Capitolina Vivero Na
pere interposes this petition for review to assail the Court of Appeals Decision1
dated October 9, 2003, which upheld the validity of the Regional Trial Courts de
cision despite failure to formally order the substitution of the heirs of the de
ceased defendant, petitioners husband. The case stems from the following antecede
nts: Respondent Amando Barbarona is the registered owner of Lot No. 3177, situat
ed in Barangay San Sotero (formerly Tambis), Javier, Leyte and covered by Origin
al Certificate of Title (OCT) No. P-7350. Lot No. 3176, covered by OCT No. 1110
in the name of Anacleto Napere, adjoins said lot on the northeastern side. After
Anacleto died, his son, Juan Napere, and the latters wife, herein petitioner, pl
anted coconut trees on certain portions of the property with the consent of his
co-heirs. In their complaint, respondents alleged that in April 1980, the spouse
s Napere, their relatives and hired laborers, by means of stealth and strategy,
encroached upon and occupied the northeastern portion of Lot No. 3177; that the
Naperes harvested the coconut fruits thereon, appropriated the proceeds thereof,
and, despite demands, refused to turn over possession of the area; that in Apri
l 1992, a relocation survey was conducted which confirmed that the respondents pr
operty was encroached upon by the Naperes; that on the basis of the relocation s
urvey, the respondents took possession of this encroached portion of the lot and
harvested the fruits thereon from April 1993 to December 1993; but that in Janu
ary 1994, the Naperes repeated their acts by encroaching again on the respondent
s property, harvesting the coconuts and appropriating the proceeds thereof, and r
efusing to vacate the property on demand. On November 10, 1995, while the case w
as pending, Juan Napere died. Their counsel informed the court of Juan Naperes de
ath, and submitted the names and addresses of Naperes heirs. At the pre-trial, th
e RTC noted that the Naperes were not contesting the respondents right of possess
ion over the disputed portion of the property but were demanding the rights of a
planter in good faith under Articles 445 and 455 of the Civil Code. On October
17, 1996, the RTC rendered a Decision against the estate of Juan Napere, thus: W
HEREFORE, this Court finds in favor of the plaintiff and against the defendant,
hereby declaring the following: a) The estate of Juan Napere is liable to pay th
e amount of ONE HUNDRED SEVENTY-NINE THOUSAND TWO HUNDRED (P179,200.00) PESOS in
actual damages; b) The estate of Juan Napere shall be liable to pay FIVE THOUSA
ND (P5,000.00) PESOS in litigation expenses, and the c) Cost[s] of suit. SO ORDE
RED.2 Petitioner appealed the case to the Court of Appeals (CA), arguing, inter
alia, that the judgment of the trial court was void for lack of jurisdiction ove
r the heirs who were not ordered substituted as partydefendants for the deceased
. On October 9, 2003, the CA rendered a Decision affirming the RTC Decision.3 Th
e appellate court held that failure to substitute the heirs for the deceased def
endant will not invalidate the proceedings and the judgment in a case which surv
ives the death of such party. Thus, this petition for review where the only issu
e is whether or not the RTC decision is void for lack of jurisdiction over the h
eirs of Juan Napere. Petitioner alleges that the trial court did not acquire jur
isdiction over the persons of the heirs because of its failure to order their su
bstitution pursuant to Section 17,4 Rule 3 of the Rule of Court; hence, the proc
eedings conducted and the decision rendered by the trial court are null and void
. The petition must fail.
REMLAW Page 391

the trial court are null and void. The petition must fail. When a party to a pen
ding case dies and the claim is not extinguished by such death, the Rules requir
e the substitution of the deceased party by his legal representative or heirs. I
n such case, counsel is obliged to inform the court of the death of his client a
nd give the name and address of the latters legal representative. The complaint f
or recovery of possession, quieting of title and damages is an action that survi
ves the death of the defendant. Notably, the counsel of Juan Napere complied wit
h his duty to inform the court of his clients death and the names and addresses o
f the heirs. The trial court, however, failed to order the substitution of the h
eirs. Nonetheless, despite this oversight, we hold that the proceedings conducte
d and the judgment rendered by the trial court are valid. The Court has repeated
ly declared that failure of the counsel to comply with his duty to inform the co
urt of the death of his client, such that no substitution is effected, will not
invalidate the proceedings and the judgment rendered thereon if the action survi
ves the death of such party.5 The trial courts jurisdiction over the case subsist
s despite the death of the party. Mere failure to substitute a deceased party is
not sufficient ground to nullify a trial courts decision. The party alleging nul
lity must prove that there was an undeniable violation of due process.6 Strictly
speaking, the rule on substitution by heirs is not a matter of jurisdiction, bu
t a requirement of due process.7 The rule on substitution was crafted to protect
every partys right to due process.8 It was designed to ensure that the deceased
party would continue to be properly represented in the suit through his heirs or
the duly appointed legal representative of his estate.9 Moreover, non-complianc
e with the Rules results in the denial of the right to due process for the heirs
who, though not duly notified of the proceedings, would be substantially affect
ed by the decision rendered therein.10 Thus, it is only when there is a denial o
f due process, as when the deceased is not represented by any legal representati
ve or heir, that the court nullifies the trial proceedings and the resulting jud
gment therein.11 Formal substitution by heirs is not necessary when they themsel
ves voluntarily appear, participate in the case, and present evidence in defense
of the deceased.12 In such case, there is really no violation of the right to d
ue process. The essence of due process is the reasonable opportunity to be heard
and to submit any evidence available in support of ones defense.13 When due proc
ess is not violated, as when the right of the representative or heir is recogniz
ed and protected, noncompliance or belated formal compliance with the Rules cann
ot affect the validity of a promulgated decision.14 In light of these pronouncem
ents, we cannot nullify the proceedings before the trial court and the judgment
rendered therein because the petitioner, who was, in fact, a co-defendant of the
deceased, actively participated in the case. The records show that the counsel
of Juan Napere and petitioner continued to represent them even after Juans death.
Hence, through counsel, petitioner was able to adequately defend herself and th
e deceased in the proceedings below. Due process simply demands an opportunity t
o be heard and this opportunity was not denied petitioner. Finally, the alleged
denial of due process as would nullify the proceedings and the judgment thereon
can be invoked only by the heirs whose rights have been violated. Violation of d
ue process is a personal defense that can only be asserted by the persons whose
rights have been allegedly violated.15 Petitioner, who had every opportunity and
who took advantage of such opportunity, through counsel, to participate in the
trial court proceedings, cannot claim denial of due process. WHEREFORE, premises
considered, the petition is DENIED DUE COURSE. The Decision of the Court of App
eals, dated October 9, 2003, in CA-G.R. CV No. 56457, is AFFIRMED. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2008/jan2008/gr_160426_2008.htm
l>
REMLAW Page 392

Sps Algura v. LGU GR 150135 Oct 30, 2006

Sunday, November 14, 2010 11:41 PM
SPOUSES ANTONIO F. ALGURA and LORENCITA S.J. ALGURA, petitioners, vs. THE LOCAL
GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY. MANUEL TEOXON, ENGR. LEON PALMIANO, N
ATHAN SERGIO and BENJAMIN NAVARRO, SR., respondents. DECIS ION VELASCO, JR., J.:
Anyone who has ever struggled with poverty knows how extremely expensive it is
to be poor. James Baldwin The Constitution affords litigantsmoneyed or poorequal ac
cess to the courts; moreover, it specifically provides that poverty shall not ba
r any person from having access to the courts.1 Accordingly, laws and rules must
be formulated, interpreted, and implemented pursuant to the intent and spirit o
f this constitutional provision. As such, filing fees, though one of the essenti
al elements in court procedures, should not be an obstacle to poor litigants op
portunity to seek redress for their grievances before the courts. The Case This
Petition for Review on Certiorari seeks the annulment of the September 11, 2001
Order of the Regional Trial Court (RTC) of Naga City, Branch 27, in Civil Case N
o. 99-4403 entitled Spouses Antonio F. Algura and Lorencita S.J. Algura v. The L
ocal Government Unit of the City of Naga, et al., dismissing the case for failur
e of petitioners Algura spouses to pay the required filing fees.2 Since the inst
ant petition involves only a question of law based on facts established from the
pleadings and documents submitted by the parties,3 the Court gives due course t
o the instant petition sanctioned under Section 2(c) of Rule 41 on Appeal from t
he RTCs, and governed by Rule 45 of the 1997 Rules of Civil Procedure. The Facts
On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura filed
a Verified Complaint dated August 30, 19994 for damages against the Naga City G
overnment and its officers, arising from the alleged illegal demolition of their
residence and boarding house and for payment of lost income derived from fees p
aid by their boarders amounting to PhP 7,000.00 monthly. Simultaneously, petitio
ners filed an Ex-Parte Motion to Litigate as Indigent Litigants,5 to which petit
ioner Antonio Algura s Pay Slip No. 2457360 (Annex "A" of motion) was appended,
showing a gross monthly income of Ten Thousand Four Hundred Seventy Four Pesos (
PhP 10,474.00) and a net pay of Three Thousand Six Hundred Sixteen Pesos and Nin
ety Nine Centavos (PhP 3,616.99) for [the month of] July 1999.6 Also attached as
Annex "B" to the motion was a July 14, 1999 Certification7 issued by the Office
of the City Assessor of Naga City, which stated that petitioners had no propert
y declared in their name for taxation purposes. Finding that petitioners motion
to litigate as indigent litigants was meritorious, Executive Judge Jose T. Atie
nza of the Naga City RTC, in the September 1, 1999 Order,8 granted petitioners
plea for exemption from filing fees. Meanwhile, as a result of respondent Naga C
ity Government s demolition of a portion of petitioners house, the Alguras alle
gedly lost a monthly income of PhP 7,000.00 from their boarders rentals. With t
he loss of the rentals, the meager income from Lorencita Algura s sari-sari stor
e and Antonio Algura s small take home pay became insufficient for the expenses
of the Algura spouses and their six (6) children for their basic needs including
food, bills, clothes, and schooling, among others. On October 13, 1999, respond
ents filed an Answer with Counterclaim dated October 10, 1999,9 arguing that the
defenses of the petitioners in the complaint had no cause of action, the spouse
s boarding house blocked the road right of way, and said structure was a nuisan
ce per se. Praying that the counterclaim of defendants (respondents) be dismisse
d, petitioners then filed their Reply with Ex-Parte Request for a Pre-Trial Sett
ing10 before the Naga City RTC on October 19, 1999. On February 3, 2000, a pre-t
rial was held wherein respondents asked for five (5) days within which to file a
REMLAW Page 393

February 3, 2000, a pre-trial was held wherein respondents asked for five (5) da
ys within which to file a Motion to Disqualify Petitioners as Indigent Litigants
. On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs for
Non-Payment of Filing Fees dated March 10, 2000.11 They asserted that in additi
on to the more than PhP 3,000.00 net income of petitioner Antonio Algura, who is
a member of the Philippine National Police, spouse Lorencita Algura also had a
mini-store and a computer shop on the ground floor of their residence along Baya
was St., Sta. Cruz, Naga City. Also, respondents claimed that petitioners secon
d floor was used as their residence and as a boarding house, from which they ear
ned more than PhP 3,000.00 a month. In addition, it was claimed that petitioners
derived additional income from their computer shop patronized by students and f
rom several boarders who paid rentals to them. Hence, respondents concluded that
petitioners were not indigent litigants. On March 28, 2000, petitioners subsequ
ently interposed their Opposition to the Motion12 to respondents motion to disq
ualify them for non-payment of filing fees. On April 14, 2000, the Naga City RTC
issued an Order disqualifying petitioners as indigent litigants on the ground t
hat they failed to substantiate their claim for exemption from payment of legal
fees and to comply with the third paragraph of Rule 141, Section 18 of the Revis
ed Rules of Courtdirecting them to pay the requisite filing fees.13 On April 28,
2000, petitioners filed a Motion for Reconsideration of the April 14, 2000 Order
. On May 8, 2000, respondents then filed their Comment/Objections to petitioner
s Motion for Reconsideration. On May 5, 2000, the trial court issued an Order14
giving petitioners the opportunity to comply with the requisites laid down in Se
ction 18, Rule 141, for them to qualify as indigent litigants. On May 13, 2000,
petitioners submitted their Compliance15 attaching the affidavits of petitioner
Lorencita Algura16 and Erlinda Bangate,17 to comply with the requirements of the
n Rule 141, Section 18 of the Rules of Court and in support of their claim to be
declared as indigent litigants. In her May 13, 2000 Affidavit, petitioner Loren
cita Algura claimed that the demolition of their small dwelling deprived her of
a monthly income amounting to PhP 7,000.00. She, her husband, and their six (6)
minor children had to rely mainly on her husband s salary as a policeman which p
rovided them a monthly amount of PhP 3,500.00, more or less. Also, they did not
own any real property as certified by the assessor s office of Naga City. More s
o, according to her, the meager net income from her small sarisari store and the
rentals of some boarders, plus the salary of her husband, were not enough to pa
y the family s basic necessities. To buttress their position as qualified indige
nt litigants, petitioners also submitted the affidavit of Erlinda Bangate, who a
ttested under oath, that she personally knew spouses Antonio Algura and Lorencit
a Algura, who were her neighbors; that they derived substantial income from thei
r boarders; that they lost said income from their boarders rentals when the Loc
al Government Unit of the City of Naga, through its officers, demolished part of
their house because from that time, only a few boarders could be accommodated;
that the income from the small store, the boarders, and the meager salary of Ant
onio Algura were insufficient for their basic necessities like food and clothing
, considering that the Algura spouses had six (6) children; and that she knew th
at petitioners did not own any real property. Thereafter, Naga City RTC Acting P
residing Judge Andres B. Barsaga, Jr. issued his July 17, 200018 Order denying t
he petitioners Motion for Reconsideration. Judge Barsaga ratiocinated that the
pay slip of Antonio F. Algura showed that the "GROSS INCOME or TOTAL EARNINGS of
plaintiff Algura [was] 10,474.00 which amount [was] over and above the amount me
ntioned in the first paragraph of Rule 141, Section 18 for pauper litigants resi
ding outside Metro Manila."19 Said rule provides that the gross income of the li
tigant should not exceed PhP 3,000.00 a month and shall not own real estate with
an assessed value of PhP 50,000.00. The trial court found that, in Lorencita S.
J. Algura s May 13, 2000 Affidavit, nowhere was it stated that she and her immed
iate family did not earn a gross income of PhP 3,000.00. The Issue Unconvinced o
f the said ruling, the Alguras instituted the instant petition raising a solitar
y issue for the consideration of the Court: whether petitioners should be consid
ered as indigent litigants who qualify for exemption from paying filing fees. Th
e Ruling of the Court The petition is meritorious. A review of the history of th

e Rules of Court on suits in forma pauperis (pauper litigant) is necessary befor

e the Court rules on the issue of the Algura spouses claim to exemption from pa
ying filing fees.
REMLAW Page 394

before the Court rules on the issue of the Algura spouses claim to exemption fr
om paying filing fees. When the Rules of Court took effect on January 1, 1964, t
he rule on pauper litigants was found in Rule 3, Section 22 which provided that:
Section 22. Pauper litigant.Any court may authorize a litigant to prosecute his
action or defense as a pauper upon a proper showing that he has no means to that
effect by affidavits, certificate of the corresponding provincial, city or muni
cipal treasurer, or otherwise. Such authority[,] once given[,] shall include an
exemption from payment of legal fees and from filing appeal bond, printed record
and printed brief. The legal fees shall be a lien to any judgment rendered in t
he case [favorable] to the pauper, unless the court otherwise provides. From the
same Rules of Court, Rule 141 on Legal Fees, on the other hand, did not contain
any provision on pauper litigants. On July 19, 1984, the Court, in Administrati
ve Matter No. 83-6-389-0 (formerly G.R. No. 64274), approved the recommendation
of the Committee on the Revision of Rates and Charges of Court Fees, through its
Chairman, then Justice Felix V. Makasiar, to revise the fees in Rule 141 of the
Rules of Court to generate funds to effectively cover administrative costs for
services rendered by the courts.20 A provision on pauper litigants was inserted
which reads: Section 16. Pauper-litigants exempt from payment of court fees.Paupe
r-litigants include wage earners whose gross income do not exceed P2,000.00 a mo
nth or P24,000.00 a year for those residing in Metro Manila, and P1,500.00 a mon
th or P18,000.00 a year for those residing outside Metro Manila, or those who do
not own real property with an assessed value of not more than P24,000.00, or no
t more than P18,000.00 as the case may be. Such exemption shall include exemptio
n from payment of fees for filing appeal bond, printed record and printed brief.
The legal fees shall be a lien on the monetary or property judgment rendered in
favor of the pauperlitigant. To be entitled to the exemption herein provided, t
he pauper-litigant shall execute an affidavit that he does not earn the gross in
come abovementioned, nor own any real property with the assessed value afore-men
tioned [sic], supported by a certification to that effect by the provincial, cit
y or town assessor or treasurer. When the Rules of Court on Civil Procedure were
amended by the 1997 Rules of Civil Procedure (inclusive of Rules 1 to 71) in Su
preme Court Resolution in Bar Matter No. 803 dated April 8, 1997, which became e
ffective on July 1, 1997, Rule 3, Section 22 of the Revised Rules of Court was s
uperseded by Rule 3, Section 21 of said 1997 Rules of Civil Procedure, as follow
s: Section 21. Indigent party.A party may be authorized to litigate his action, c
laim or defense as an indigent if the court, upon an ex parte application and he
aring, is satisfied that the party is one who has no money or property sufficien
t and available for food, shelter and basic necessities for himself and his fami
ly. Such authority shall include an exemption from payment of docket and other l
awful fees, and of transcripts of stenographic notes which the court may order t
o be furnished him. The amount of the docket and other lawful fees which the ind
igent was exempted from paying shall be a lien on any judgment rendered in the c
ase favorable to the indigent, unless the court otherwise provides. Any adverse
party may contest the grant of such authority at any time before judgment is ren
dered by the trial court. If the court should determine after hearing that the p
arty declared as an indigent is in fact a person with sufficient income or prope
rty, the proper docket and other lawful fees shall be assessed and collected by
the clerk of court. If payment is not made within the time fixed by the court, e
xecution shall issue for the payment thereof, without prejudice to such other sa
nctions as the court may impose. At the time the Rules on Civil Procedure were a
mended by the Court in Bar Matter No. 803, however, there was no amendment made
on Rule 141, Section 16 on pauper litigants. On March 1, 2000, Rule 141 on Legal
Fees was amended by the Court in A.M. No. 00-2-01-SC, whereby certain fees were
increased or adjusted. In this Resolution, the Court amended Section 16 of Rule
141, making it Section 18, which now reads: Section 18. Pauper-litigants exempt
from payment of legal fees.Pauper litigants (a) whose gross income and that of t
heir immediate family do not exceed four thousand (P4,000.00) pesos a month if r
esiding in Metro Manila, and three thousand (P3,000.00) pesos a month if residin
g outside Metro
REMLAW Page 395

residing in Metro Manila, and three thousand (P3,000.00) pesos a month if residi
ng outside Metro Manila, and (b) who do not own real property with an assessed v
alue of more than fifty thousand (P50,000.00) pesos shall be exempt from the pay
ment of legal fees. The legal fees shall be a lien on any judgment rendered in t
he case favorably to the pauper litigant, unless the court otherwise provides. T
o be entitled to the exemption herein provided, the litigant shall execute an af
fidavit that he and his immediate family do not earn the gross income abovementi
oned, nor do they own any real property with the assessed value aforementioned,
supported by an affidavit of a disinterested person attesting to the truth of th
e litigant s affidavit. Any falsity in the affidavit of a litigant or disinteres
ted person shall be sufficient cause to strike out the pleading of that party, w
ithout prejudice to whatever criminal liability may have been incurred. It can b
e readily seen that the rule on pauper litigants was inserted in Rule 141 withou
t revoking or amending Section 21 of Rule 3, which provides for the exemption of
pauper litigants from payment of filing fees. Thus, on March 1, 2000, there wer
e two existing rules on pauper litigants; namely, Rule 3, Section 21 and Rule 14
1, Section 18. On August 16, 2004, Section 18 of Rule 141 was further amended in
Administrative Matter No. 04-2-04SC, which became effective on the same date. I
t then became Section 19 of Rule 141, to wit: Sec. 19. Indigent litigants exempt
from payment of legal fees. INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT O
F THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT DOUBLE THE MONTHLY MINIMUM WAGE
OF AN EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR MARKET VALUE AS
STATED IN THE CURRENT TAX DECLARATION OF MORE THAN THREE HUNDRED THOUSAND (P300
,000.00) PESOS SHALL BE EXEMPT FROM PAYMENT OF LEGAL FEES. The legal fees shall
be a lien on any judgment rendered in the case favorable to the indigent litigan
t unless the court otherwise provides. To be entitled to the exemption herein pr
ovided, the litigant shall execute an affidavit that he and his immediate family
do not earn a gross income abovementioned, and they do not own any real propert
y with the fair value aforementioned, supported by an affidavit of a disinterest
ed person attesting to the truth of the litigant s affidavit. The current tax de
claration, if any, shall be attached to the litigant s affidavit. Any falsity in
the affidavit of litigant or disinterested person shall be sufficient cause to
dismiss the complaint or action or to strike out the pleading of that party, wit
hout prejudice to whatever criminal liability may have been incurred. (Emphasis
supplied.) Amendments to Rule 141 (including the amendment to Rule 141, Section
18) were made to implement RA 9227 which brought about new increases in filing f
ees. Specifically, in the August 16, 2004 amendment, the ceiling for the gross i
ncome of litigants applying for exemption and that of their immediate family was
increased from PhP 4,000.00 a month in Metro Manila and PhP 3,000.00 a month ou
tside Metro Manila, to double the monthly minimum wage of an employee; and the m
aximum value of the property owned by the applicant was increased from an assess
ed value of PhP 50,000.00 to a maximum market value of PhP 300,000.00, to be abl
e to accommodate more indigent litigants and promote easier access to justice by
the poor and the marginalized in the wake of these new increases in filing fees
. Even if there was an amendment to Rule 141 on August 16, 2004, there was still
no amendment or recall of Rule 3, Section 21 on indigent litigants. With this h
istorical backdrop, let us now move on to the sole issuewhether petitioners are e
xempt from the payment of filing fees. It is undisputed that the Complaint (Civi
l Case No. 99-4403) was filed on September 1, 1999. However, the Naga City RTC,
in its April 14, 2000 and July 17, 2000 Orders, incorrectly applied Rule 141, Se
ction 18 on Legal Fees when the applicable rules at that time were Rule 3, Secti
on 21 on Indigent Party which took effect on July 1, 1997 and Rule 141, Section
16 on Pauper Litigants which became effective on July 19, 1984 up to February 28
, 2000. The old Section 16, Rule 141 requires applicants to file an ex-parte mot
ion to litigate as a pauper litigant by submitting an affidavit that they do not
have a gross income of PhP 2,000.00 a month or PhP 24,000.00 a year for those r
esiding in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year for tho
se residing outside Metro Manila or those who do not own real property with an a
ssessed value of not more than PhP 24,000.00 or not more than PhP 18,000.00 as t
he case may be. Thus, there are

REMLAW Page 396

of not more than PhP 24,000.00 or not more than PhP 18,000.00 as the case may be
. Thus, there are two requirements: a) income requirementthe applicants should no
t have a gross monthly income of more than PhP 1,500.00, and b) property require
mentthey should not own property with an assessed value of not more than PhP 18,00
0.00. In the case at bar, petitioners Alguras submitted the Affidavits of petiti
oner Lorencita Algura and neighbor Erlinda Bangate, the pay slip of petitioner A
ntonio F. Algura showing a gross monthly income of PhP 10,474.00,21 and a Certif
ication of the Naga City assessor stating that petitioners do not have property
declared in their names for taxation.22 Undoubtedly, petitioners do not own real
property as shown by the Certification of the Naga City assessor and so the pro
perty requirement is met. However with respect to the income requirement, it is
clear that the gross monthly income of PhP 10,474.00 of petitioner Antonio F. Al
gura and the PhP 3,000.00 income of Lorencita Algura when combined, were above t
he PhP 1,500.00 monthly income threshold prescribed by then Rule 141, Section 16
and therefore, the income requirement was not satisfied. The trial court was th
erefore correct in disqualifying petitioners Alguras as indigent litigants altho
ugh the court should have applied Rule 141, Section 16 which was in effect at th
e time of the filing of the application on September 1, 1999. Even if Rule 141,
Section 18 (which superseded Rule 141, Section 16 on March 1, 2000) were applied
, still the application could not have been granted as the combined PhP 13,474.0
0 income of petitioners was beyond the PhP 3,000.00 monthly income threshold. Un
relenting, petitioners however argue in their Motion for Reconsideration of the
April 14, 2000 Order disqualifying them as indigent litigants23 that the rules h
ave been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of Civil pro
cedure which authorizes parties to litigate their action as indigents if the cou
rt is satisfied that the party is "one who has no money or property sufficient a
nd available for food, shelter and basic necessities for himself and his family.
" The trial court did not give credence to this view of petitioners and simply a
pplied Rule 141 but ignored Rule 3, Section 21 on Indigent Party. The position o
f petitioners on the need to use Rule 3, Section 21 on their application to liti
gate as indigent litigants brings to the fore the issue on whether a trial court
has to apply both Rule 141, Section 16 and Rule 3, Section 21 on such applicati
ons or should the court apply only Rule 141, Section 16 and discard Rule 3, Sect
ion 21 as having been superseded by Rule 141, Section 16 on Legal Fees. The Cour
t rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended as Rule
141, Section 18 on March 1, 2000 and subsequently amended by Rule 141, Section 1
9 on August 16, 2003, which is now the present rule) are still valid and enforce
able rules on indigent litigants. For one, the history of the two seemingly conf
licting rules readily reveals that it was not the intent of the Court to conside
r the old Section 22 of Rule 3, which took effect on January 1, 1994 to have bee
n amended and superseded by Rule 141, Section 16, which took effect on July 19,
1984 through A.M. No. 83-6-389-0. If that is the case, then the Supreme Court, u
pon the recommendation of the Committee on the Revision on Rules, could have alr
eady deleted Section 22 from Rule 3 when it amended Rules 1 to 71 and approved t
he 1997 Rules of Civil Procedure, which took effect on July 1, 1997. The fact th
at Section 22 which became Rule 3, Section 21 on indigent litigant was retained
in the rules of procedure, even elaborating on the meaning of an indigent party,
and was also strengthened by the addition of a third paragraph on the right to
contest the grant of authority to litigate only goes to show that there was no i
ntent at all to consider said rule as expunged from the 1997 Rules of Civil Proc
edure. Furthermore, Rule 141 on indigent litigants was amended twice: first on M
arch 1, 2000 and the second on August 16, 2004; and yet, despite these two amend
ments, there was no attempt to delete Section 21 from said Rule 3. This clearly
evinces the desire of the Court to maintain the two (2) rules on indigent litiga
nts to cover applications to litigate as an indigent litigant. It may be argued
that Rule 3, Section 21 has been impliedly repealed by the recent 2000 and 2004
amendments to Rule 141 on legal fees. This position is bereft of merit. Implied
repeals are frowned upon unless the intent of the framers of the rules is unequi
vocal. It has been consistently ruled that: (r)epeals by implication are not fav
ored, and will not be decreed, unless it is manifest that the legislature so int

ended. As laws are presumed to be passed with deliberation and with full knowled
ge of all existing ones on the subject, it is but reasonable to conclude that in
passing a statute[,] it was not intended to interfere with or abrogate any form
er law relating to same matter, unless the repugnancy between the two is not onl
y irreconcilable, but also clear and convincing, and flowing necessarily from th
e language used, unless the later act fully embraces the subject matter of the e
arlier, or unless the reason for the earlier act is beyond peradventure removed.
Hence, every effort must be used to make all acts stand
REMLAW Page 397

earlier act is beyond peradventure removed. Hence, every effort must be used to
make all acts stand and if, by any reasonable construction they can be reconcile
d, the later act will not operate as a repeal of the earlier.24 (Emphasis suppli
ed). Instead of declaring that Rule 3, Section 21 has been superseded and implie
dly amended by Section 18 and later Section 19 of Rule 141, the Court finds that
the two rules can and should be harmonized. The Court opts to reconcile Rule 3,
Section 21 and Rule 141, Section 19 because it is a settled principle that when
conflicts are seen between two provisions, all efforts must be made to harmoniz
e them. Hence, "every statute [or rule] must be so construed and harmonized with
other statutes [or rules] as to form a uniform system of jurisprudence."25 In M
anila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in the i
nterpretation of seemingly conflicting laws, efforts must be made to first harmo
nize them. This Court thus ruled: Consequently, every statute should be construe
d in such a way that will harmonize it with existing laws. This principle is exp
ressed in the legal maxim interpretare et concordare leges legibus est optimus
interpretandi, that is, to interpret and to do it in such a way as to harmonize
laws with laws is the best method of interpretation.26 In the light of the fore
going considerations, therefore, the two (2) rules can stand together and are co
mpatible with each other. When an application to litigate as an indigent litigan
t is filed, the court shall scrutinize the affidavits and supporting documents s
ubmitted by the applicant to determine if the applicant complies with the income
and property standards prescribed in the present Section 19 of Rule 141that is,
the applicant s gross income and that of the applicant s immediate family do not
exceed an amount double the monthly minimum wage of an employee; and the applic
ant does not own real property with a fair market value of more than Three Hundr
ed Thousand Pesos (PhP 300,000.00). If the trial court finds that the applicant
meets the income and property requirements, the authority to litigate as indigen
t litigant is automatically granted and the grant is a matter of right. However,
if the trial court finds that one or both requirements have not been met, then
it would set a hearing to enable the applicant to prove that the applicant has "
no money or property sufficient and available for food, shelter and basic necess
ities for himself and his family." In that hearing, the adverse party may adduce
countervailing evidence to disprove the evidence presented by the applicant; af
ter which the trial court will rule on the application depending on the evidence
adduced. In addition, Section 21 of Rule 3 also provides that the adverse party
may later still contest the grant of such authority at any time before judgment
is rendered by the trial court, possibly based on newly discovered evidence not
obtained at the time the application was heard. If the court determines after h
earing, that the party declared as an indigent is in fact a person with sufficie
nt income or property, the proper docket and other lawful fees shall be assessed
and collected by the clerk of court. If payment is not made within the time fix
ed by the court, execution shall issue or the payment of prescribed fees shall b
e made, without prejudice to such other sanctions as the court may impose. The C
ourt concedes that Rule 141, Section 19 provides specific standards while Rule 3
, Section 21 does not clearly draw the limits of the entitlement to the exemptio
n. Knowing that the litigants may abuse the grant of authority, the trial court
must use sound discretion and scrutinize evidence strictly in granting exemption
s, aware that the applicant has not hurdled the precise standards under Rule 141
. The trial court must also guard against abuse and misuse of the privilege to l
itigate as an indigent litigant to prevent the filing of exorbitant claims which
would otherwise be regulated by a legal fee requirement. Thus, the trial court
should have applied Rule 3, Section 21 to the application of the Alguras after t
heir affidavits and supporting documents showed that petitioners did not satisfy
the twin requirements on gross monthly income and ownership of real property un
der Rule 141. Instead of disqualifying the Alguras as indigent litigants, the tr
ial court should have called a hearing as required by Rule 3, Section 21 to enab
le the petitioners to adduce evidence to show that they didn t have property and
money sufficient and available for food, shelter, and basic necessities for the
m and their family.27 In that hearing, the respondents would have had the right
to also present evidence to refute the allegations and evidence in support of th

e application of the petitioners to litigate as indigent litigants. Since this C

ourt is not a trier of facts, it will have to remand the case to the trial court
to determine whether petitioners can be considered as indigent litigants using
the standards set in Rule 3, Section 21. Recapitulating the rules on indigent li
tigants, therefore, if the applicant for exemption meets the salary and property
requirements under Section 19 of Rule 141, then the grant of the application is
mandatory.
REMLAW Page 398

and property requirements under Section 19 of Rule 141, then the grant of the ap
plication is mandatory. On the other hand, when the application does not satisfy
one or both requirements, then the application should not be denied outright; i
nstead, the court should apply the "indigency test" under Section 21 of Rule 3 a
nd use its sound discretion in determining the merits of the prayer for exemptio
n. Access to justice by the impoverished is held sacrosanct under Article III, S
ection 11 of the 1987 Constitution. The Action Program for Judicial Reforms (APJ
R) itself, initiated by former Chief Justice Hilario G. Davide, Jr., placed prim
e importance on easy access to justice by the poor as one of its six major com
ponents. Likewise, the judicial philosophy of Liberty and Prosperity of Chief Ju
stice Artemio V. Panganiban makes it imperative that the courts shall not only s
afeguard but also enhance the rights of individualswhich are considered sacred un
der the 1987 Constitution. Without doubt, one of the most precious rights which
must be shielded and secured is the unhampered access to the justice system by t
he poor, the underprivileged, and the marginalized. WHEREFORE, the petition is G
RANTED and the April 14, 2000 Order granting the disqualification of petitioners
, the July 17, 2000 Order denying petitioners Motion for Reconsideration, and t
he September 11, 2001 Order dismissing the case in Civil Case No. RTC-99-4403 be
fore the Naga City RTC, Branch 27 are ANNULLED and SET ASIDE. Furthermore, the N
aga City RTC is ordered to set the "Ex-Parte Motion to Litigate as Indigent Liti
gants" for hearing and apply Rule 3, Section 21 of the 1997 Rules of Civil Proce
dure to determine whether petitioners can qualify as indigent litigants. No cost
s. SO ORDERED.
Pasted from <http://www.lawphil.net/judjuris/juri2006/oct2006/gr_150135_2006.htm
l>
REMLAW Page 399

Uniwide v. Cruz GR 171456 Aug 9, 2007

Sunday, November 14, 2010 11:41 PM
UNIWIDE HOLDINGS, INC., petitioner, vs. ALEXANDER M. CRUZ, respondent. DECIS ION
CARPIO MORALES, J.: Petitioner, Uniwide Holdings, Inc. (UHI), whose principal o
ffice is located in Paraaque City, entered into a Franchise Agreement1 (the agree
ment) granting respondent, Alexander M. Cruz (Cruz), a five-year franchise to ad
opt and use the "Uniwide Family Store System" for the establishment and operatio
n of a "Uniwide Family Store" along Marcos Highway, Sta. Cruz, Cogeo, Marikina C
ity. Article 10.22 of the agreement called for Cruz as franchisee to pay UHI a m
onthly service fee of P50,000 or three percent of gross monthly purchases, which
ever is higher, payable within five days after the end of each month without nee
d of formal billing or demand from UHI. In case of any delay in the payment of t
he monthly service fee, Cruz would, under Article 10.33 of the agreement, be lia
ble to pay an interest charge of three percent per month. It appears that Cruz h
ad purchased goods from UHIs affiliated companies First Paragon Corporation (FPC)
and Uniwide Sales Warehouse Club, Inc. (USWCI). In August 2002, FPC and USWCI e
xecuted Deeds of Assignment4 in favor of UHI assigning all their rights and inte
rests over Cruzs accounts payable to them. As of August 13, 2002, Cruz had outsta
nding obligations with UHI, FPC, and USWCI in the total amount of P1,358,531.89,
drawing UHI to send him a letter of even date for the settlement thereof in fiv
e days. His receipt of the letter notwithstanding, Cruzs accounts remained unsett
led. Thus UHI filed a complaint5 for collection of sum of money before the Regio
nal Trial Court (RTC) of Paraaque docketed as Civil Case No. 04-0278 against Cruz
on the following causes of action: First Cause of Action 10. Being entitled to
the payment of monthly service fee pursuant to the FA, which defendant failed to
pay despite demand, plaintiff suffered actual damages in the amount of Phil. Pe
so: One Million Three Hundred Twenty Seven Thousand Six Hundred Sixty Nine & 83/
100 (P1,327,669.83), computed as of 05 April 2004, for which defendant should be
held liable together with legal interest thereon from the date of filing of thi
s Complaint, until fully paid. Second Cause of Action 11. Being the assignee of
the receivable of FPC, which receivable defendant failed to pay despite demand,
plaintiff suffered actual damages in the amount of Phil. Peso: Sixty Four Thousa
nd One Hundred Sixty Five & 96/100 (P64,165.96) for which defendant should be he
ld liable together with the legal interest thereon computed from date of receipt
of plaintiffs demand letter, or on August 16, 2002 to be exact, until fully paid
. Third Cause of Action 12. Being the assignee of the receivable of USWCI, which
receivable defendant failed to pay despite demand, plaintiff suffered actual da
mages in the total amount of Phil. Peso: One Million Five Hundred Seventy Nine T
housand Sixty One & 36/100 (P1,579,061.36), computed as of 05 April 2004, inclus
ive of the two and a half percent (2.5%) monthly interest, as and by way of pena
lty, and the three (3%) annual interest on the unpaid amount, for which defendan
t should be held liable, with legal interest thereon from the date of filing of
this Complaint, until fully paid. Fourth Cause of Action 13. By reason of defend
ants obstinate refusal or failure to pay his indebtedness, plaintiff was constrai
ned to file this Complaint and in the process incur expenses by way of attorneys
fees, which could be reasonably estimated to reach at least Phil. Peso: Two Hund
red Fifty Thousand (P250,000.00) and for which defendant should be held answerab
le for.6 (Emphasis and underscoring supplied) To the complaint Cruz filed a moti
on to dismiss7 on the ground of improper venue, he invoking Article 27.5 of the
agreement which reads: 27.5 Venue Stipulation The Franchisee consents to the exc
lusive jurisdiction of the courts of Quezon
REMLAW Page 400

27.5 of the agreement which reads: 27.5 Venue Stipulation The Franchisee consent
s to the exclusive jurisdiction of the courts of Quezon City, the Franchisee wai
ving any other venue.8 (Emphasis supplied) Branch 258 of the Paraaque RTC, by Ord
er9 of December 12, 2005, granted Cruzs motion to dismiss. Hence, the present pet
ition before this Court, raising the sole legal issue of: WHETHER A CASE BASED O
N SEVERAL CAUSES OF ACTION IS DISMISSIBLE ON THE GROUND OF IMPROPER VENUE WHERE
ONLY ONE OF THE CAUSES OF ACTION ARISES FROM A CONTRACT WITH EXCLUSIVE VENUE STI
PULATION.10 (Underscoring supplied) Petitioner contends that nowhere in the agre
ement is there a mention of FPC and USWCI, and neither are the two parties there
to, hence, they cannot be bound to the stipulation on "exclusive venue." The pet
ition is impressed with merit. The general rule on venue of personal actions, as
in petitioners complaint for collection of sum of money, is embodied in Section
2, Rule 4 of the Rules of Court which provides: Sec. 2. Venue of personal action
s. All other actions may be commenced and tried where the plaintiff or any of th
e principal plaintiffs resides, or where the defendant or any of the principal d
efendants resides, or in the case of a nonresident defendant, where he may be fo
und, at the election of the plaintiff. (Emphasis and underscoring supplied) The
afore-quoted provision is, however, qualified by Section 4 of the same rule whic
h allows parties, before the filing of the action, to validly agree in writing o
n an exclusive venue.11 The forging of a written agreement on an exclusive venue
of an action does not, however, preclude parties from bringing a case to other
venues. Where there is a joinder of causes of action between the same parties on
e of which does not arise out of the contract where the exclusive venue was stip
ulated upon, the complaint, as in the one at bar, may be brought before other ve
nues provided that such other cause of action falls within the jurisdiction of t
he court and the venue lies therein.12 Based on the allegations in petitioners co
mplaint, the second and third causes of action are based on the deeds of assignm
ent executed in its favor by FPC and USWCI. The deeds bear no exclusive venue st
ipulation with respect to the causes of action thereunder. Hence, the general ru
le on venue applies that the complaint may be filed in the place where the plain
tiff or defendant resides.13 It bears emphasis that the causes of action on the
assigned accounts are not based on a breach of the agreement between UHI and Cru
z. They are based on separate, distinct and independent contractsdeeds of assign
ment in which UHI is the assignee of Cruzs obligations to the assignors FPC and U
SWCI. Thus, any action arising from the deeds of assignment cannot be subjected
to the exclusive venue stipulation embodied in the agreement. So San Miguel Corp
oration v. Monasterio14 enlightens: Exclusive venue stipulation embodied in a co
ntract restricts or confines parties thereto when the suit relates to breach of
said contract. But where the exclusivity clause does not make it necessarily enc
ompassing, such that even those not related to the enforcement of the contract s
hould be subject to the exclusive venue, the stipulation designating exclusive v
enues should be strictly confined to the specific undertaking or agreement. Othe
rwise, the basic principles of freedom to contract might work to the great disad
vantage of a weak party-suitor who ought to be allowed free access to courts of
justice.15 (Emphasis and underscoring supplied) In fine, since the other causes
of action in petitioners complaint do not relate to a breach of the agreement it
forged with Cruz embodying the exclusive venue stipulation, they should not be s
ubjected thereto. As San Miguel further enlightens: Restrictive stipulations are
in derogation of the general policy of making it more convenient for the partie
s to institute actions arising from or in relation to their agreements. Thus, th
e restriction should be strictly construed as relating solely to the agreement f
or which the exclusive venue stipulation is embodied. Expanding the scope of suc
h limitation on a contracting party will create unwarranted restrictions which t
he parties might find unintended or worse, arbitrary and oppressive.16 (Undersco
ring supplied) WHEREFORE, the petition is GRANTED. The December 12, 2005 Order o
f Regional Trial Court of Paraaque City, Branch 258 in Civil Case No. 04-0278 is
SET ASIDE. The case is REMANDED to said court which is directed to reinstate the
case to its docket and conduct further proceedings thereon with dispatch. SO OR
DERED. Quisumbing, Chairperson, Carpio, Tinga, Velasco, Jr., JJ., concur.
REMLAW Page 401

Quisumbing, Chairperson, Carpio, Tinga, Velasco, Jr., JJ., concur. Footnotes 1 R

ecords, pp. 10-26. 2 Id. at 14. 3 Ibid. 4 Id. at 27-32. 5 Id. at 1-9. 6 Id. at 4
-6. 7 Id. at 199-207. 8 Id. at 25. 9 Id. at 272. 10 Rollo, p. 20. 11 Capati v. D
r. Ocampo, 199 Phil. 230, 233 (1982). 12 Rule 2, Section 5 of the Rules of Court
provides: SECTION 5. Joinder of causes of action. A party may in one pleading a
ssert, in the alternative or otherwise, as many causes of action as may have aga
inst an opposing party, subject to the following conditions: xxx x (c) Where the
causes of action are between the same parties but pertain to different venues o
r jurisdictions, the joinder may be allowed in the Regional Trial Court provided
one of the causes of action falls within the jurisdiction of said court and the
venue lies therein; x x x (Underscoring supplied) 13 Polytrade Corporation v. B
lanco, 140 Phil. 604, 607 (1969). 14 G.R. No. 151037, June 23, 2005, 461 SCRA 89
. 15 Id. at 94-95. 16 Id. at 95.
Pasted from <http://www.lawphil.net/judjuris/juri2007/aug2007/gr_171456_2007.htm
l>
REMLAW Page 402

?Infante v. Aran Builders, GR 156594 Aug 24, 2007

Sunday, November 14, 2010 11:41 PM
REMLAW Page 403

HiYield v. CA GR 168863 Jun 23, 2009

Sunday, November 14, 2010 11:41 PM
HI-YIELD REALTY, INCORPORATED, Petitioner, vs. HON. COURT OF APPEALS, HON. CESAR
O. UNTALAN, in his capacity as PRESIDING JUDGE OF RTCMAKATI, BRANCH 142, HONORI
O TORRES & SONS, INC., and ROBERTO H. TORRES, Respondents. DE C I S I O N QUISUM
BING, J.: This is a special civil action for certiorari seeking to nullify and s
et aside the Decision1 dated March 10, 2005 and Resolution2 dated May 26, 2005 o
f the Court of Appeals in CA-G.R. SP. No. 83919. The appellate court had dismiss
ed the petition for certiorari and prohibition filed by petitioner and denied it
s reconsideration. The antecedent facts of the case are undisputed. On July 31,
2003, Roberto H. Torres (Roberto), for and on behalf of Honorio Torres & Sons, I
nc. (HTSI), filed a Petition for Annulment of Real Estate Mortgage and Foreclosu
re Sale 3 over two parcels of land located in Marikina and Quezon City. The suit
was filed against Leonora, Ma. Theresa, Glenn and Stephanie, all surnamed Torre
s, the Register of Deeds of Marikina and Quezon City, and petitioner HiYield Rea
lty, Inc. (Hi-Yield). It was docketed as Civil Case No. 03-892 with Branch 148 o
f the Regional Trial Court (RTC) of Makati City. On September 15, 2003, petition
er moved to dismiss the petition on grounds of improper venue and payment of ins
ufficient docket fees. The RTC denied said motion in an Order4 dated January 22,
2004. The trial court held that the case was, in nature, a real action in the f
orm of a derivative suit cognizable by a special commercial court pursuant to Ad
ministrative Matter No. 00-11-03-SC.5 Petitioner sought reconsideration, but its
motion was denied in an Order6 dated April 27, 2004. Thereafter, petitioner fil
ed a petition for certiorari and prohibition before the Court of Appeals. In a D
ecision dated March 10, 2005, the appellate court agreed with the RTC that the c
ase was a derivative suit. It further ruled that the prayer for annulment of mor
tgage and foreclosure proceedings was merely incidental to the main action. The
dispositive portion of said decision reads: WHEREFORE, premises considered, this
Petition is hereby DISMISSED. However, public respondent is hereby DIRECTED to
instruct his Clerk of Court to compute the proper docket fees and thereafter, to
order the private respondent to pay the same IMMEDIATELY. SO ORDERED.7 Petition
ers motion for reconsideration8 was denied in a Resolution dated May 26, 2005. He
nce, this petition which raises the following issues: I. WHETHER THE HONORABLE C
OURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN NOT DISMISSING THE CASE AGAINST
HI-YIELD FOR IMPROPER VENUE DESPITE FINDINGS BY THE TRIAL COURT THAT THE ACTION
IS A REAL ACTION. II. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMI
SSING THE COMPLAINT AS AGAINST HI-YIELD EVEN IF THE JOINDER OF PARTIES IN THE CO
MPLAINT VIOLATED THE RULES ON VENUE. III. WHETHER THE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT THE ANNULMENT OF REAL ESTATE MORTGAGE AND FORECLOSURE SAL
E IN THE COMPLAINT IS MERELY INCIDENTAL [TO] THE DERIVATIVE SUIT. 9 The pivotal
issues for resolution are as follows: (1) whether venue was properly laid; (2) w
hether there was proper joinder of parties; and (3) whether the action to annul
the real estate mortgage and foreclosure sale is a mere incident of the derivati
ve suit. Petitioner imputes grave abuse of discretion on the Court of Appeals fo
r not dismissing the case against it even as the trial court found the same to b
e a real action. It explains that the rule on venue under the Rules of Court pre
vails over the rule prescribing the venue for intra-corporate controversies; hen
ce, HTSI erred when it filed its suit only in Makati when the lands subjects of
the case are in Marikina and
REMLAW Page 404

erred when it filed its suit only in Makati when the lands subjects of the case
are in Marikina and Quezon City. Further, petitioner argues that the appellate c
ourt erred in ruling that the action is mainly a derivative suit and the annulme
nt of real estate mortgage and foreclosure sale is merely incidental thereto. It
points out that the caption of the case, substance of the allegations, and reli
ef prayed for revealed that the main thrust of the action is to recover the land
s. Lastly, petitioner asserts that it should be dropped as a party to the case f
or it has been wrongly impleaded as a non-stockholder defendant in the intra-cor
porate dispute. On the other hand, respondents maintain that the action is prima
rily a derivative suit to redress the alleged unauthorized acts of its corporate
officers and major stockholders in connection with the lands. They postulate th
at the nullification of the mortgage and foreclosure sale would just be a logica
l consequence of a decision adverse to said officers and stockholders. After car
eful consideration, we are in agreement that the petition must be dismissed. A p
etition for certiorari is proper if a tribunal, board or officer exercising judi
cial or quasi-judicial functions acted without or in excess of jurisdiction or w
ith grave abuse of discretion amounting to lack or excess of jurisdiction and th
ere is no appeal, or any plain, speedy and adequate remedy in the ordinary cours
e of law.10 Petitioner sought a review of the trial courts Orders dated January 2
2, 2004 and April 27, 2004 via a petition for certiorari before the Court of App
eals. In rendering the assailed decision and resolution, the Court of Appeals wa
s acting under its concurrent jurisdiction to entertain petitions for certiorari
under paragraph 2,11 Section 4 of Rule 65 of the Rules of Court. Thus, if erron
eous, the decision and resolution of the appellate court should properly be assa
iled by means of a petition for review on certiorari under Rule 45 of the Rules
of Court. The distinction is clear: a petition for certiorari seeks to correct e
rrors of jurisdiction while a petition for review on certiorari seeks to correct
errors of judgment committed by the court a quo.12 Indeed, this Court has often
reminded members of the bench and bar that a special civil action for certiorar
i under Rule 65 lies only when there is no appeal nor plain, speedy and adequate
remedy in the ordinary course of law.13 In the case at hand, petitioner impetuo
usly filed a petition for certiorari before us when a petition for review was av
ailable as a speedy and adequate remedy. Notably, petitioner filed the present p
etition 5814 days after it received a copy of the assailed resolution dated May
26, 2005. To our mind, this belated action evidences petitioners effort to substi
tute for a lost appeal this petition for certiorari. For the extraordinary remed
y of certiorari to lie by reason of grave abuse of discretion, the abuse of disc
retion must be so patent and gross as to amount to an evasion of positive duty,
or a virtual refusal to perform the duty enjoined or to act in contemplation of
law, or where the power is exercised in an arbitrary and despotic manner by reas
on of passion and personal hostility.15 We find no grave abuse of discretion on
the part of the appellate court in this case. Simply, the resolution of the issu
es posed by petitioner rests on a determination of the nature of the petition fi
led by respondents in the RTC. Both the RTC and Court of Appeals ruled that the
action is in the form of a derivative suit although captioned as a petition for
annulment of real estate mortgage and foreclosure sale. A derivative action is a
suit by a shareholder to enforce a corporate cause of action.16 Under the Corpo
ration Code, where a corporation is an injured party, its power to sue is lodged
with its board of directors or trustees. But an individual stockholder may be p
ermitted to institute a derivative suit on behalf of the corporation in order to
protect or vindicate corporate rights whenever the officials of the corporation
refuse to sue, or are the ones to be sued, or hold control of the corporation.
In such actions, the corporation is the real party-in-interest while the suing s
tockholder, on behalf of the corporation, is only a nominal party.17 In the case
of Filipinas Port Services, Inc. v. Go,18 we enumerated the foregoing requisite
s before a stockholder can file a derivative suit: a) the party bringing suit sh
ould be a shareholder as of the time of the act or transaction complained of, th
e number of his shares not being material; b) he has tried to exhaust intra-corp
orate remedies, i.e., has made a demand on the board of directors for the approp
riate relief but the latter has failed or refused to heed his plea; and c) the c

ause of action actually devolves on the corporation, the wrongdoing or harm havi
ng been, or being caused to the corporation and not to the particular stockholde
r bringing the suit.19 Even then, not every suit filed on behalf of the corporat
ion is a derivative suit. For a derivative suit to
REMLAW Page 405

being caused to the corporation and not to the particular stockholder bringing t
he suit.19 Even then, not every suit filed on behalf of the corporation is a der
ivative suit. For a derivative suit to prosper, the minority stockholder suing f
or and on behalf of the corporation must allege in his complaint that he is suin
g on a derivative cause of action on behalf of the corporation and all other sto
ckholders similarly situated who may wish to join him in the suit.20 The Court f
inds that Roberto had satisfied this requirement in paragraph five (5) of his pe
tition which reads: 5. Individual petitioner, being a minority stockholder, is i
nstituting the instant proceeding by way of a derivative suit to redress wrongs
done to petitioner corporation and vindicate corporate rights due to the mismana
gement and abuses committed against it by its officers and controlling stockhold
ers, especially by respondent Leonora H. Torres (Leonora, for brevity) who, with
out authority from the Board of Directors, arrogated upon herself the power to b
ind petitioner corporation from incurring loan obligations and later allow compa
ny properties to be foreclosed as hereinafter set forth;21 Further, while it is
true that the complaining stockholder must satisfactorily show that he has exhau
sted all means to redress his grievances within the corporation; such remedy is
no longer necessary where the corporation itself is under the complete control o
f the person against whom the suit is being filed. The reason is obvious: a dema
nd upon the board to institute an action and prosecute the same effectively woul
d have been useless and an exercise in futility.221avvphi1 Here, Roberto alleged
in his petition that earnest efforts were made to reach a compromise among fami
ly members/stockholders before he filed the case. He also maintained that Leonor
a Torres held 55% of the outstanding shares while Ma. Theresa, Glenn and Stephan
ie excluded him from the affairs of the corporation. Even more glaring was the f
act that from June 10, 1992, when the first mortgage deed was executed until Jul
y 23, 2002, when the properties mortgaged were foreclosed, the Board of Director
s of HTSI did nothing to rectify the alleged unauthorized transactions of Leonor
a. Clearly, Roberto could not expect relief from the board. Derivative suits are
governed by a special set of rules under A.M. No. 01-2-04-SC23 otherwise known
as the Interim Rules of Procedure Governing Intra-Corporate Controversies under
Republic Act No. 8799.24 Section 1,25 Rule 1 thereof expressly lists derivative
suits among the cases covered by it. As regards the venue of derivative suits, S
ection 5, Rule 1 of A.M. No. 01-2-04-SC states: SEC. 5. Venue. - All actions cov
ered by these Rules shall be commenced and tried in the Regional Trial Court whi
ch has jurisdiction over the principal office of the corporation, partnership, o
r association concerned. Where the principal office of the corporation, partners
hip or association is registered in the Securities and Exchange Commission as Me
tro Manila, the action must be filed in the city or municipality where the head
office is located. Thus, the Court of Appeals did not commit grave abuse of disc
retion when it found that respondents correctly filed the derivative suit before
the Makati RTC where HTSI had its principal office. There being no showing of a
ny grave abuse of discretion on the part of the Court of Appeals the other alleg
ed errors will no longer be passed upon as mere errors of judgment are not prope
r subjects of a petition for certiorari. WHEREFORE, the instant petition is here
by DISMISSED. The Decision dated March 10, 2005 and the Resolution dated May 26,
2005 of the Court of Appeals in CA-G.R. SP. No. 83919 are AFFIRMED. No pronounc
ement as to costs. SO ORDERED. LEONARDO A. QUISUMBING Associate Justice WE CONCU
R: CONSUELO YNARES-SANTIAGO* Associate Justice
MINITA V. CHICO-NAZARIO** TERESITA J. LEONARDO-DE CASTRO*** Associate Justice As
sociate Justice ARTURO D. BRION Associate Justice ATT ES T AT I O N I attest tha
t the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division. LEONAR
DO A. QUISUMBING
REMLAW Page 406

assigned to the writer of the opinion of the Courts Division. LEONARDO A. QUISUMB
ING Associate Justice Chairperson CE RT I F I C A T I O N Pursuant to Section 13
, Article VIII of the Constitution and the Division Chairpersons Attestation, I c
ertify that the conclusions in the above Decision had been reached in consultati
on before the case was assigned to the writer of the opinion of the Courts Divisi
on. REYNATO S. PUNO Chief Justice Footnotes * Designated member of the Second Di
vision per Special Order No. 645 in place of Associate Justice Conchita Carpio M
orales who is on official leave. ** Designated member of the Second Division per
Special Order No. 658. *** Designated member of the Second Division per Special
Order No. 635 in view of the retirement of Associate Dante O. Tinga. 1 Rollo, p
p. 20-31. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justi
ces Lucas P. Bersamin (now a member of this Court) and Celia C. Librea-Leagogo c
oncurring. 2 Id. at 33. 3 Records, pp. 1-6. 4 Id. at 47-51. 5 Resolution Designa
ting Certain Branches of Regional Trial Courts to Try and Decide Cases Formerly
Cognizable by the Securities and Exchange Commission, took effect on December 15
, 2000. 6 Records, p. 77. 7 Rollo, p. 31. 8 Id. at 92-102. 9 Id. at 141-142. 10
Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R No. 132703, Ju
ne 23, 2000, 334 SCRA 305, 315. 11 SEC. 4. When and where petition filed. - The
petition may be filed not later than sixty (60) days from notice of the judgment
, order or resolution sought to be assailed in the Supreme Court or, if it relat
es to the acts or omissions of a lower court or of a corporation, board, officer
or person, in the Regional Trial Court exercising jurisdiction over the territo
rial area as defined by the Supreme Court whether or not the same is in aid of i
ts appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appell
ate jurisdiction. If it involves the acts or omissions of a quasi-judicial agenc
y, unless otherwise provided by law or these rules, the petition shall be filed
in and cognizable only by the Court of Appeals. 12 Banco Filipino Savings and Mo
rtgage Bank v. Court of Appeals, supra at 316. 13 Id. 14 Petitioner received a c
opy of the assailed Resolution dated May 26, 2005 on May 31, 2005. 15 Banco Fili
pino Savings and Mortgage Bank v. Court of Appeals, supra at 315. 16 R.N. Symaco
Trading Corporation v. Santos, G.R. No. 142474, August 18, 2005, 467 SCRA 312,
329. 17 Filipinas Port Services, Inc. v. Go, G.R. No. 161886, March 16, 2007, 51
8 SCRA 453, 471. 18 Id. 19 Id. at 472. 20 Chua v. Court of Appeals, G.R. No. 150
793, November 19, 2004, 443 SCRA 259, 268. 21 Rollo, p. 35. 22 Filipinas Port Se
rvices, Inc., v. Go, supra at 472. 23 Took effect on April 1, 2001. 24 The Secur
ities Regulation Code, approved on July 19, 2000. 25 SECTION 1. (a) Cases covere
d. These Rules shall govern the procedure to be observed in civil cases involvin
g the following: xxx x (4) Derivative suits; and xxx x
REMLAW Page 407

Pasted from <http://www.lawphil.net/judjuris/juri2009/jun2009/gr_168863_2009.htm

l>
REMLAW Page 408

Irene Marcos-Araneta v. CA GR 154096 Aug 22, 2008

Sunday, November 14, 2010 11:41 PM
IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, AND JOSE G. RESLIN, PETIT
IONERS, VS. COURT OF APPEALS, JULITA C. BENEDICTO, AND FRANCISCA BENEDICTO-PAULI
NO, RESPONDENTS. DECIS ION VELASCO JR., J.: The Case This Petition for Review on
Certiorari under Rule 45 assails and seeks to nullify the Decision[1] dated Oct
ober 17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resol
ution[2] of June 20, 2002 denying petitioners motion for reconsideration. The a
ssailed CA decision annulled and set aside the Orders dated October 9, 2000, Dec
ember 18, 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17
in Batac, Ilocos Norte which admitted petitioners amended complaint in Civil Ca
se Nos. 3341-17 and 3342-17. The Facts Sometime in 1968 and 1972, Ambassador Rob
erto S. Benedicto, now deceased, and his business associates (Benedicto Group) o
rganized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corp
oration (UEC), respectively. As petitioner Irene Marcos-Araneta would later alle
ge, both corporations were organized pursuant to a contract or arrangement where
by Benedicto, as trustor, placed in his name and in the name of his associates,
as trustees, the shares of stocks of FEMII and UEC with the obligation to hold t
hose shares and their fruits in trust and for the benefit of Irene to the extent
of 65% of such shares. Several years after, Irene, through her trustee-husband,
Gregorio Ma. Araneta III, demanded the reconveyance of said 65% stockholdings,
but the Benedicto Group refused to oblige. In March 2000, Irene thereupon instit
uted before the RTC two similar complaints for conveyance of shares of stock, ac
counting and receivership against the Benedicto Group with prayer for the issuan
ce of a temporary restraining order (TRO). The first, docketed as Civil Case No.
3341-17, covered the UEC shares and named Benedicto, his daughter, and at least
20 other individuals as defendants. The second, docketed as Civil Case No. 3342
-17, sought the recovery to the extent of 65% of FEMII shares held by Benedicto
and the other defendants named therein. Respondent Francisca Benedicto-Paulino,[
3] Benedicto s daughter, filed a Motion to Dismiss Civil Case No. 3341-17, follo
wed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved t
o dismiss[4] Civil Case No. 3342-17, adopting in toto the five (5) grounds raise
d by Francisca in her amended motion to dismiss. Among these were: (1) the cases
involved an intra-corporate dispute over which the Securities and Exchange Comm
ission, not the RTC, has jurisdiction; (2) venue was improperly laid; and (3) th
e complaint failed to state a cause of action, as there was no allegation therei
n that plaintiff, as beneficiary of the purported trust, has accepted the trust
created in her favor.
To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedict
o and Francisca countered with a Joint Reply to Opposition. Upon Benedicto s mot
ion, both cases were consolidated.
During the preliminary proceedings on their motions to dismiss, Benedicto and Fr
ancisca, by way of bolstering their contentions on improper venue, presented the
Joint Affidavit[5] of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Ras
co who all attested being employed as household staff at the Marcos Mansion in
Brgy. Lacub, Batac, Ilocos Norte and that Irene did not maintain residence in sa
id
REMLAW Page 409

place as she in fact only visited the mansion twice in 1999; that she did not vo
te in Batac in the 1998 national elections; and that she was staying at her husb
and s house in Makati City. Against the aforesaid unrebutted joint affidavit, Ir
ene presented her PhP 5 community tax certificate [6] (CTC) issued on "11/07/99"
in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Nort
e. In the meantime, on May 15, 2000, Benedicto died and was substituted by his w
ife, Julita C. Benedicto, and Francisca. On June 29, 2000, the RTC dismissed bot
h complaints, stating that these partly constituted "real action," and that Iren
e did not actually reside in Ilocos Norte, and, therefore, venue was improperly
laid. In its dismissal order,[7] the court also declared "all the other issues r
aised in the different Motions to Dismiss x x x moot and academic." From the abo
ve order, Irene interposed a Motion for Reconsideration[8] which Julita and Fran
cisca duly opposed. Pending resolution of her motion for reconsideration, Irene
filed on July 17, 2000 a Motion (to Admit Amended Complaint),[9] attaching there
with a copy of the Amended Complaint[10] dated July 14, 2000 in which the names
of Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional pl
aintiffs. As stated in the amended complaint, the added plaintiffs, all from Ilo
cos Norte, were Irene s new trustees. Parenthetically, the amended complaint sta
ted practically the same cause of action but, as couched, sought the reconveyanc
e of the FEMII shares only. During the August 25, 2000 hearing, the RTC dictated
in open court an order denying Irene s motion for reconsideration aforementione
d, but deferred action on her motion to admit amended complaint and the oppositi
on thereto.[11] On October 9, 2000, the RTC issued an Order[12] entertaining the
amended complaint, dispositively stating: WHEREFORE, the admission of the Amend
ed Complaint being tenable and legal, the same is GRANTED.
Let copies of the Amended Complaint be served to the defendants who are ordered
to answer within the reglementary period provided by the rules. The RTC predicat
ed its order on the following premises:
(1) Pursuant to Section 2, Rule 10 of the Rules of Court,[13] Irene may opt to f
ile, as a matter of right, an amended complaint.
(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos N
orte resident, in the amended complaint setting out the same cause of action cur
ed the defect of improper venue. (3) Secs. 2 and 3 of Rule 3 in relation to Sec.
2 of Rule 4 allow the filing of the amended complaint in question in the place
of residence of any of Irene s co-plaintiffs.
In time, Julita and Francisca moved to dismiss the amended complaint, but the RT
C, by Order[14] dated December 18, 2000, denied the motion and reiterated its di
rective for the two to answer the amended complaint.
In said order, the RTC stood pat on its holding on the rule on amendments of ple
adings. And scoffing at the argument about there being no complaint to amend in
the first place as of October 9, 2000 (when the RTC granted the motion to amend)
as the original complaints were dismissed with finality earlier, i.e., on Augus
t 25, 2000 when the court denied Irene s motion for reconsideration of the June
29, 2000
REMLAW Page 410

i.e., on August 25, 2000 when the court denied Irene s motion for reconsideratio
n of the June 29, 2000 order dismissing the original complaints, the court state
d thusly: there was actually no need to act on Irene s motion to admit, it being
her right as plaintiff to amend her complaints absent any responsive pleading t
hereto. Pushing its point, the RTC added the observation that the filing of the
amended complaint on July 17, 2000 ipso facto superseded the original complaints
, the dismissal of which, per the June 29, 2000 Order, had not yet become final
at the time of the filing of the amended complaint. Following the denial on Marc
h 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order
aforestated, Julita and Francisca, in a bid to evade being declared in default,
filed on April 10, 2001 their Answer to the amended complaint.[15] But on the s
ame day, they went to the CA via a petition for certiorari, docketed as CA-G.R.
SP No. 64246, seeking to nullify the following RTC orders: the first, admitting
the amended complaint; the second, denying their motion to dismiss the amended c
omplaint; and the third, denying their motion for reconsideration of the second
issuance. Inasmuch as the verification portion of the joint petition and the cer
tification on non-forum shopping bore only Francisca s signature, the CA require
d the joint petitioners "to submit x x x either the written authority of Julita
C. Benedicto to Francisca B. Paulino authorizing the latter to represent her in
these proceedings, or a supplemental verification and certification duly signed
by x x x Julita C. Benedicto."[16] Records show the submission of the correspond
ing authorizing Affidavit[17] executed by Julita in favor of Francisca. Later de
velopments saw the CA issuing a TRO[18] and then a writ of preliminary injunctio
n[19] enjoining the RTC from conducting further proceedings on the subject civil
cases. On October 17, 2001, the CA rendered a Decision, setting aside the assai
led RTC orders and dismissing the amended complaints in Civil Case Nos. 3341-17
and 3342-17. The fallo of the CA decision reads: WHEREFORE, based on the foregoi
ng premises, the petition is hereby GRANTED. The assailed Orders admitting the a
mended complaints are SET ASIDE for being null and void, and the amended complai
nts a quo are, accordingly, DISMISSED. [20] Irene and her new trustees motion f
or reconsideration of the assailed decision was denied through the equally assai
led June 20, 2002 CA Resolution. Hence, this petition for review is before us. T
he Issues
Petitioners urge the setting aside and annulment of the assailed CA decision and
resolution on the following submissions that the appellate court erred in: (1)
allowing the submission of an affidavit by Julita as sufficient compliance with
the requirement on verification and certification of non-forum shopping; (2) rul
ing on the merits of the trust issue which involves factual and evidentiary dete
rmination, processes not proper in a petition for certiorari under Rule 65 of th
e Rules of Court; (3) ruling that the amended complaints in the lower court shou
ld be dismissed because, at the time it was filed, there was no more original co
mplaint to amend; (4) ruling that the respondents did not waive improper venue;
and (5) ruling that petitioner Irene was not a resident of Batac, Ilocos Norte a
nd that none of the principal parties are residents of Ilocos Norte.[21] The Cou
rt s Ruling
We affirm, but not for all the reasons set out in, the CA s decision.
First Issue: Substantial Compliance with the Rule on Verification and Certificat
ion of Non-Forum Shopping Petitioners tag private respondents petition in CA-G.
R. SP No. 64246 as defective for non-compliance with the requirements of Secs. 4
[22] and 5[23] of Rule 7 of the Rules of Court at least with regard to Julita, w
ho failed to sign the verification and certification of non-forum shopping. Peti
tioners thus fault the appellate court for directing Julita s counsel to submit
a written authority for Francisca to represent
REMLAW Page 411

appellate court for directing Julita s counsel to submit a written authority for
Francisca to represent Julita in the certiorari proceedings. We are not persuad
ed. Verification not Jurisdictional; May be Corrected Verification is, under the
Rules, not a jurisdictional but merely a formal requirement which the court may
motu proprio direct a party to comply with or correct, as the case may be. As t
he Court articulated in Kimberly Independent Labor Union for Solidarity, Activis
m and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and
Agriculture (OLALIA) v. Court of Appeals: [V]erification is a formal, not a juri
sdictional requisite, as it is mainly intended to secure an assurance that the a
llegations therein made are done in good faith or are true and correct and not m
ere speculation. The Court may order the correction of the pleading, if not veri
fied, or act on the unverified pleading if the attending circumstances are such
that a strict compliance with the rule may be dispensed with in order that the e
nds of justice may be served. [24] Given this consideration, the CA acted within
its sound discretion in ordering the submission of proof of Francisca s authori
ty to sign on Julita s behalf and represent her in the proceedings before the ap
pellate court.
Signature by Any of the Principal Petitioners is Substantial Compliance
Regarding the certificate of non-forum shopping, the general rule is that all th
e petitioners or plaintiffs in a case should sign it.[25] However, the Court has
time and again stressed that the rules on forum shopping, which were designed t
o promote the orderly administration of justice, do not interdict substantial co
mpliance with its provisions under justifiable circumstances.[26] As has been ru
led by the Court, the signature of any of the principal petitioners[27] or princ
ipal parties,[28] as Francisca is in this case, would constitute a substantial c
ompliance with the rule on verification and certification of nonforum shopping.
It cannot be overemphasized that Francisca herself was a principal party in Civi
l Case No. 3341-17 before the RTC and in the certiorari proceedings before the C
A. Besides being an heir of Benedicto, Francisca, with her mother, Julita, was s
ubstituted for Benedicto in the instant case after his demise. And should there
exist a commonality of interest among the parties, or where the parties filed th
e case as a "collective," raising only one common cause of action or presenting
a common defense, then the signature of one of the petitioners or complainants,
acting as representative, is sufficient compliance. We said so in Cavile v. Heir
s of Clarita Cavile.[29] Like Thomas Cavile, Sr. and the other petitioners in Ca
vile, Francisca and Julita, as petitioners before the CA, had filed their petiti
on as a collective, sharing a common interest and having a common single defense
to protect their rights over the shares of stocks in question.
Second Issue: Merits of the Case cannot be Resolved on Certiorari under Rule 65
Petitioners posture on the second issue is correct. As they aptly pointed out,
the CA, in the exercise of its certiorari jurisdiction under Rule 65, is limited
to reviewing and correcting errors of jurisdiction only. It cannot validly delv
e into the issue of trust which, under the premises, cannot be judiciously resol
ved without first establishing certain facts based on evidence.
Whether a determinative question is one of law or of fact depends on the nature
of the dispute. A question of law exists when the doubt or controversy concerns
the correct application of law or jurisprudence to a certain given set of facts;
or when the issue does not call for an examination of the probative value of th
e evidence presented, the truth or falsehood of facts being admitted. A question
of fact obtains when the doubt or difference arises as to the truth or falsehoo
d of facts or when the query
REMLAW Page 412

invites the calibration of the whole evidence considering mainly the credibility
of the witnesses, the existence and relevancy of specific surrounding circumsta
nces, as well as their relation to each other and to the whole, and the probabil
ity of the situation.[30]
Clearly then, the CA overstepped its boundaries when, in disposing of private re
spondents petition for certiorari, it did not confine itself to determining whe
ther or not lack of jurisdiction or grave abuse of discretion tainted the issuan
ce of the assailed RTC orders, but proceeded to pass on the factual issue of the
existence and enforceability of the asserted trust. In the process, the CA virt
ually resolved petitioner Irene s case for reconveyance on its substantive merit
s even before evidence on the matter could be adduced. Civil Case Nos. 3341-17 a
nd 3342-17 in fact have not even reached the pre-trial stage. To stress, the nat
ure of the trust allegedly constituted in Irene s favor and its enforceability,
being evidentiary in nature, are best determined by the trial court. The origina
l complaints and the amended complaint certainly do not even clearly indicate wh
ether the asserted trust is implied or express. To be sure, an express trust dif
fers from the implied variety in terms of the manner of proving its existence.[3
1] Surely, the onus of factually determining whether the trust allegedly establi
shed in favor of Irene, if one was indeed established, was implied or express pr
operly pertains, at the first instance, to the trial court and not to the appell
ate court in a special civil action for certiorari, as here. In the absence of e
vidence to prove or disprove the constitution and necessarily the existence of t
he trust agreement between Irene, on one hand, and the Benedicto Group, on the o
ther, the appellate court cannot intelligently pass upon the issue of trust. A p
ronouncement on said issue of trust rooted on speculation and conjecture, if pro
perly challenged, must be struck down. So it must be here. Third Issue: Admissio
n of Amended Complaint Proper As may be recalled, the CA veritably declared as r
eversibly erroneous the admission of the amended complaint. The flaw in the RTC
s act of admitting the amended complaint lies, so the CA held, in the fact that
the filing of the amended complaint on July 17, 2000 came after the RTC had orde
red with finality the dismissal of the original complaints. According to petitio
ners, scoring the CA for its declaration adverted to and debunking its posture o
n the finality of the said RTC order, the CA failed to take stock of their motio
n for reconsideration of the said dismissal order. We agree with petitioners and
turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides: S
EC. 2. Amendments as a matter of right. -- A party may amend his pleading once a
s a matter of right at any time before a responsive pleading is served or in the
case of a reply, at any time within ten (10) days after it is served. As the af
orequoted provision makes it abundantly clear that the plaintiff may amend his c
omplaint once as a matter of right, i.e., without leave of court, before any res
ponsive pleading is filed or served. Responsive pleadings are those which seek a
ffirmative relief and/or set up defenses,[32] like an answer. A motion to dismis
s is not a responsive pleading for purposes of Sec. 2 of Rule 10.[33] Assayed ag
ainst the foregoing perspective, the RTC did not err in admitting petitioners a
mended complaint, Julita and Francisca not having yet answered the original comp
laints when the amended complaint was filed. At that precise moment, Irene, by f
orce of said Sec. 2 of Rule 10, had, as a matter of right, the option of amendin
g her underlying reconveyance complaints. As aptly observed by the RTC, Irene s
motion to admit amended complaint was not even necessary. The Court notes though
that the RTC has not offered an explanation why it saw fit to grant the motion
to admit in the first place. In Alpine Lending Investors v. Corpuz, the Court, e
xpounding on the propriety of admitting an amended complaint before a responsive
pleading is filed, wrote: [W]hat petitioner Alpine filed in Civil Case No. C-20
124 was a motion to dismiss, not an answer. Settled is the rule that a motion to
dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no
responsive pleading had been filed, respondent could amend her complaint in Civi
l Case No. C-20124 as a matter of right. Following this Court s ruling in Bresli
n v. Luzon Stevedoring Co. considering that respondent has the right to amend he
r complaint, it is the correlative duty of

REMLAW Page 413

the trial court to accept the amended complaint; otherwise, mandamus would lie a
gainst it. In other words, the trial court s duty to admit the amended complaint
was purely ministerial. In fact, respondent should not have filed a motion to a
dmit her amended complaint. [34] It may be argued that the original complaints h
ad been dismissed through the June 29, 2000 RTC order. It should be pointed out,
however, that the finality of such dismissal order had not set in when Irene fi
led the amended complaint on July 17, 2000, she having meanwhile seasonably soug
ht reconsideration thereof. Irene s motion for reconsideration was only resolved
on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 20
00, the order of dismissal was not yet final, implying that there was strictly n
o legal impediment to her amending her original complaints.[35]
Fourth Issue: Private Respondents did not Waive Improper Venue Petitioners maint
ain that Julita and Francisca were effectively precluded from raising the matter
of improper venue by their subsequent acts of filing numerous pleadings. To pet
itioners, these pleadings, taken together, signify a waiver of private responden
ts initial objection to improper venue.
This contention is without basis and, at best, tenuous. Venue essentially concer
ns a rule of procedure which, in personal actions, is fixed for the greatest con
venience possible of the plaintiff and his witnesses. The ground of improperly l
aid venue must be raised seasonably, else it is deemed waived. Where the defenda
nt failed to either file a motion to dismiss on the ground of improper venue or
include the same as an affirmative defense, he is deemed to have waived his righ
t to object to improper venue.[36] In the case at bench, Benedicto and Francisca
raised at the earliest time possible, meaning "within the time for but before f
iling the answer to the complaint,"[37] the matter of improper venue. They would
thereafter reiterate and pursue their objection on venue, first, in their answe
r to the amended complaints and then in their petition for certiorari before the
CA. Any suggestion, therefore, that Francisca and Benedicto or his substitutes
abandoned along the way improper venue as ground to defeat Irene s claim before
the RTC has to be rejected.
Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper Venue Subject
Civil Cases are Personal Actions It is the posture of Julita and Francisca that
the venue was in this case improperly laid since the suit in question partakes
of a real action involving real properties located outside the territorial juris
diction of the RTC in Batac.
This contention is not well-taken. In a personal action, the plaintiff seeks the
recovery of personal property, the enforcement of a contract, or the recovery o
f damages.[38] Real actions, on the other hand, are those affecting title to or
possession of real property, or interest therein. In accordance with the wording
s of Sec. 1 of Rule 4, the venue of real actions shall be the proper court which
has territorial jurisdiction over the area wherein the real property involved,
or a portion thereof, is situated. The venue of personal actions is the court wh
ere the plaintiff or any of the principal plaintiffs resides, or where the defen
dant or any of the principal defendants resides, or in the case of a non-residen
t defendant where he may be found, at the election of the plaintiff.[39]
In the instant case, petitioners are basically asking Benedicto and his Group, a
s defendants a quo, to acknowledge holding in trust Irene s purported 65% stocko
wnership of UEC and FEMII, inclusive of the fruits of the trust, and to execute
in Irene s favor the necessary conveying deed over the said 65% shareholdings. I
n other words, Irene seeks to compel recognition of the trust arrangement she ha
s with the Benedicto Group. The fact that FEMII s assets include real properties
does not materially change the nature of the action, for the ownership interest
of a stockholder over corporate assets is only inchoate as the corporation, as
a juridical person, solely owns such assets. It is only upon the liquidation of
the corporation that the stockholders, depending on the type and nature of their
stockownership, may have a real inchoate right over the corporate assets, but t
hen only to the extent of their stockownership.
REMLAW Page 414

a real inchoate right over the corporate assets, but then only to the extent of
their stockownership.
The amended complaint is an action in personam, it being a suit against Francisc
a and the late Benedicto (now represented by Julita and Francisca), on the basis
of their alleged personal liability to Irene upon an alleged trust constituted
in 1968 and/or 1972. They are not actions in rem where the actions are against t
he real properties instead of against persons.[40] We particularly note that pos
session or title to the real properties of FEMII and UEC is not being disputed,
albeit part of the assets of the corporation happens to be real properties. Give
n the foregoing perspective, we now tackle the determinative question of venue i
n the light of the inclusion of additional plaintiffs in the amended complaint.
Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4 We point out at
the outset that Irene, as categorically and peremptorily found by the RTC after
a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The Court p
erceives no compelling reason to disturb, in the confines of this case, the fact
ual determination of the trial court and the premises holding it together. Accor
dingly, Irene cannot, in a personal action, contextually opt for Batac as venue
of her reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. 2
, Rule 4 of the Rules of Court adverts to as the place "where the plaintiff or a
ny of the principal plaintiffs resides" at the time she filed her amended compla
int. That Irene holds CTC No. 17019451[41] issued sometime in June 2000 in Batac
, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilo
cos is really of no moment. Let alone the fact that one can easily secure a basi
c residence certificate practically anytime in any Bureau of Internal Revenue or
treasurer s office and dictate whatever relevant data one desires entered, Iren
e procured CTC No. 17019451 and appended the same to her motion for reconsiderat
ion following the RTC s pronouncement against her being a resident of Batac.
Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is t
he proper court venue, asseverate that Batac, Ilocos Norte is where the principa
l parties reside. Pivotal to the resolution of the venue issue is a determinatio
n of the status of Irene s co-plaintiffs in the context of Secs. 2 and 3 of Rule
3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows: Rule 3
PARTIES TO CIVIL ACTIONS
SEC. 2. Parties in interest. -- A real party in interest is the party who stands
to be benefited or injured by the judgment in the suit, or the party entitled t
o the avails of the suit. Unless otherwise authorized by law or these Rules, eve
ry action must be prosecuted or defended in the name of the real party in intere
st. SEC. 3. Representatives as parties. -- Where the action is allowed to be pro
secuted or defended by a representative or someone acting in a fiduciary capacit
y, the beneficiary shall be included in the title of the case and shall be deeme
d to be the real party in interest. A representative may be a trustee of an expr
ess trust, a guardian, an executor or administrator, or a party authorized by la
w or these Rules. An agent acting in his own name and for the benefit of an undi
sclosed principal may sue or be sued without joining the principal except when t
he contract involves things belonging to the principal.
Rule 4 VENUE OF ACTIONS
SEC. 2. Venue of personal actions. -- All other actions may be commenced and tri
ed where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, or in the case of a non-re
sident defendant where he may be found, at the election of the plaintiff.
REMLAW Page 415

election of the plaintiff. Venue is Improperly Laid There can be no serious disp
ute that the real party-in-interest plaintiff is Irene. As self-styled beneficia
ry of the disputed trust, she stands to be benefited or entitled to the avails o
f the present suit. It is undisputed too that petitioners Daniel Rubio, Orlando
G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaint
iffs in the amended complaint as Irene s new designated trustees. As trustees, t
hey can only serve as mere representatives of Irene.
Upon the foregoing consideration, the resolution of the crucial issue of whether
or not venue had properly been laid should not be difficult.
Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaint
iff in a personal action case, the residences of the principal parties should be
the basis for determining proper venue. According to the late Justice Jose Y. F
eria, "the word
principal has been added [in the uniform procedure rule] in or
der to prevent the plaintiff from choosing the residence of a minor plaintiff or
defendant as the venue."[42] Eliminate the qualifying term "principal" and the
purpose of the Rule would, to borrow from Justice Regalado, "be defeated where a
nominal or formal party is impleaded in the action since the latter would not h
ave the degree of interest in the subject of the action which would warrant and
entail the desirably active participation expected of litigants in a case."[43]
Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands un
disputedly as the principal plaintiff, the real party-in-interest. Following Sec
. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted at t
he place where Irene resides. Principal Plaintiff not a Resident in Venue of Act
ion
As earlier stated, no less than the RTC in Batac declared Irene as not a residen
t of Batac, Ilocos Norte. Withal, that court was an improper venue for her conve
yance action.
The Court can concede that Irene s three co-plaintiffs are all residents of Bata
c, Ilocos Norte. But it ought to be stressed in this regard that not one of the
three can be considered as principal partyplaintiffs in Civil Case Nos. 3341-17
and 3342-17, included as they were in the amended complaint as trustees of the p
rincipal plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Ru
le 3, the right to prosecute a suit, but only on behalf of the beneficiary who m
ust be included in the title of the case and shall be deemed to be the real part
y-in-interest. In the final analysis, the residences of Irene s co-plaintiffs ca
nnot be made the basis in determining the venue of the subject suit. This conclu
sion becomes all the more forceful considering that Irene herself initiated and
was actively prosecuting her claim against Benedicto, his heirs, assigns, or ass
ociates, virtually rendering the impleading of the trustees unnecessary.
And this brings us to the final point. Irene was a resident during the period ma
terial of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac
, Ilocos Norte, although jurisprudence[44] has it that one can have several resi
dences, if such were the established fact. The Court will not speculate on the r
eason why petitioner Irene, for all the inconvenience and expenses she and her a
dversaries would have to endure by a Batac trial, preferred that her case be hea
rd and decided by the RTC in Batac. On the heels of the dismissal of the origina
l complaints on the ground of improper venue, three new personalities were added
to the complaint doubtless to insure, but in vain as it turned out, that the ca
se stays with the RTC in Batac.
Litigants ought to bank on the righteousness of their causes, the superiority of
their cases, and the persuasiveness of arguments to secure a favorable verdict.
It is high time that courts, judges, and those who come to court for redress ke
ep this ideal in mind. WHEREFORE, the instant petition is hereby DISMISSED. The
Decision and Resolution dated October 17,
REMLAW Page 416

WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution
dated October 17, 2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP
No. 64246, insofar as they nullified the assailed orders of the RTC, Branch 17
in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of l
ack of jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated
October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case
Nos. 3341-17 and 3342-17 are accordingly ANNULLEDand SET ASIDE and said civil c
ases are DISMISSED. Costs against petitioners.
SO ORDERED
Quisumbing, (Chairperson), Carpio Morales, Tinga, and Brion, JJ., concur.
[1]
Rollo, pp. 306-317. Penned by Associate Justice Elvi John S. Asuncion and concur
red in by Associate Justices Perlita J. Tria Tirona and Amelita G. Tolentino.
[2] Id.
at 341-341A.
[3] She admitted in the motion to be defendant Franscisca De Leon referred to in
the first complaint.
[4]
Rollo, pp. 98-99.
[5] Id.
[6]
at 143.
Id. at 128, CTC No. 12308513. Id. at 152. at 153-157. at 345-346. at 347-357. at
165-166.
[7]
[8] Id. [9] Id.
[10] Id. [11] Id. [12] Id.
at 167-171.
[13] Sec. 2.
Amendments as a matter of right. - A party may amend his pleading once as a matt
er of right at any time before a responsive pleading is served x x x.
[14] Rollo, [15] Id. [16] Id.
pp. 358-365A.
at 238-245 & 246-253, for Civil Case Nos. 3341-17 and 3342-17, respectively. at
261.
[17] Id.
[18]
at 258.
Id. at 262, CA Resolution.

[19] Id.
at 300-301.
REMLAW Page 417

[19]
Id. at 300-301. Supra note 1, at 316. Rollo, p. 677.
[20]
[21]
[22]
SEC. 4. Verification. -- x x x A pleading is verified by an affidavit that the a
ffiant has read the pleading and that the allegations therein are true and corre
ct of his personal knowledge or based on authentic records. x x x
[23] SEC.
5. Certification against forum shopping. -- The plaintiff or principal party sha
ll certify under oath in the complaint or other initiatory pleading asserting a
claim for relief, or in a sworn certification annexed thereto and simultaneously
filed therewith: (a) that he has not theretofore commenced any action or filed
any claim involving the same issues in any court, [or] tribunal x x x and, to th
e best of his knowledge, no such other action or claim is pending therein; (b) i
f there is such other pending action or claim, a complete statement of the prese
nt status thereof; and (c) if he should thereafter learn that the same or simila
r action or claim has been filed or is pending, he shall report that fact x x x
to the court wherein his aforesaid complaint or initiatory pleading has been fil
ed.
Failure to comply with the foregoing requirements shall not be curable by mere a
mendment of the complaint or other initiatory pleading but shall be cause for th
e dismissal of the case without prejudice, unless otherwise provided, upon motio
n and after hearing.
[24]
G.R. Nos. 149158-59, July 24, 2007, 528 SCRA 45, 60. Enopia v. Court of Appeals,
G.R. No. 147396, July 31, 2006, 497 SCRA 211, 219.
[25]
[26]
Heirs of Venancio Bajenting v. Ibanez, G.R. No. 166190, September 20, 2006, 502
SCRA 531, 547-548; citing Cavile v. Heirs of Clarita Cavile, G.R. No. 148635, Ap
ril 1, 2003, 400 SCRA 255.
[27]
Calo v. Villanueva, G.R. No. 153756, January 30, 2006, 480 SCRA 561, 567.
[28] Condo Suite Travel,
[29] Supra note 26,
Inc. v. NLRC, G.R. No. 125671, January 28, 2000, 323 SCRA 679, 687.
at 262.
[30] Estate of the Late Encarnacion Vda. de Panlilio v.
Dizon, G.R. No. 148777, October 18, 2007, 536 SCRA 565, 587; citing Heirs of Cip
riano Reyes v. Calumpang, G.R. No. 138463, October 30, 2006, 506 SCRA 56, 70.
[31] Art.
1443 of the Civil Code provides that no express trust concerning an immovable pr

operty may be proved by parol evidence, while Art. 1446 of the Code requires tha
t the beneficiary of an express trust must accept the trust if it imposes onerou
s conditions.
[32] Fernandez v. International Corporate Bank, G.R. No. 131283,
October 7, 1999, 316 SCRA 326, 335; citing Diaz v. Adiong, G.R. No. 106847, Marc
h 5, 1993, 219 SCRA 631, 637.
[33] Alpine Lending Investors v. Corpuz, November 24, 2006, [34] Id.
508 SCRA 45, 48; citations omitted.
at 48-49.
[35] See Bautista v. Maya-Maya Cottages, Inc., G.R. No. 148361,
November 29, 2005, 476 SCRA 416, 419; citing Salazar v. Bartolome, G.R. No. 4336
4, September 30, 1976, 73 SCRA 247, 250.
[36] Davao Light &
Power Co., Inc. v. Court of Appeals, G.R. No. 111685, August 20, 2001, 363 SCRA
396,
400.
REMLAW Page 418

400.
[37] RULES
[38]
OF COURT, Rule 16, Sec. 1.
Regner v. Logarta, G.R. No. 168747, October 19, 2007, 537 SCRA 277, 293; citing
Hernandez v. Rural Bank of Lucena, Inc., No. L-29791, January 10, 1978, 81 SCRA
75, 84.
[39]
RULES OF COURT, Rule 4, Sec. 2.
[40] Asiavest Limited
[41]
v. Court of Appeals, G.R. No. 128803, September 25, 1998, 296 SCRA 539, 552.
Rollo, p. 157.
[42] 1
[43] 1
CIVIL PROCEDURE ANNOTATED 261 (2001).
REMEDIAL LAW COMPENDIUM 108 (8th ed., 2002). September 18, 1995, 248 SCRA 300,
[44] Romualdez-Marcos v. Commission on Elections, G.R. No. 119976,
324.
Pasted from <http://elibrary.judiciary.gov.ph/decisions.php?doctype=Decisions%20
/%20Signed%20Resolutions&docid= 122049414865801818>
REMLAW Page 419

Philbanking v. Tensuan, 230 SCRA 413

Sunday, November 14, 2010 11:41 PM
PHILIPPINE BANKING CORPORATION, petitioner, vs. HON. SALVADOR S. TENSUAN, Judge
of the Regional Trial Court, National Capital Region, Branch 146, Makati; BRINEL
L METAL WORKS CORP.; SPS. JOSE & NALLY ANG, respondents. Abelardo G. Luzano for
petitioner. Samson Law Offices for private respondents.
NOCON, J.: On the strength of the provision in the promissory notes sued upon th
at Manila shall be the venue of any action which may arise out of the promissory
notes, the Regional Trial Court of Makati, Metro Manila granted the motion to d
ismiss the complaint in Civil Case No. 91-3366 entitled "Philippine Banking Corp
oration v. Brinell Metal Works Corp., et al." for improper venue. Supported by a
plethora of decisions evincing a view contrary to that of the trial court, peti
tioner comes to us on a petition for review on certiorari. Briefly, the facts sh
ow that petitioner, Philippine Banking Corporation, filed a complaint with praye
r for preliminary attachment on December 5, 1991 against private respondents her
ein, Brinell Metal Works Corporation and Spouses Jose and Nally Ang, for collect
ion of a loan evidenced by two (2) promissory notes. On December 16, 1991, respo
ndent Court issued an order granting the petitioner s prayer for the issuance of
writ of preliminary attachment. On January 28, 1992, private respondents filed
with the respondent court a motion to dismiss on the grounds of (a) lack of juri
sdiction over the persons of the defendants; and (b) improper venue. They claim
that summons was served on defendant corporation s customer who was not authoriz
ed to receive the same for and in behalf of the corporation. They likewise objec
t to the venue claiming that the plaintiffs complaint is based on two promissory
notes which commonly declare, among others:
I/WE HEREBY EXPRESSLY SUBMIT TO THE JURISDICTION OF THE COURTS OF MANILA, ANY LE
GAL ACTION WHICH MAY ARISE OUT OF THIS PROMISSORY NOTE. 1
On February 28, 1992 respondent Court issued the following questioned order, to
wit:
Acting on defendants Motion to Dismiss dated January 28, 1992, on grounds of a)
lack of jurisdiction over the corporate defendant insofar as service of summons
upon it was effected on a person not authorized in law to receive the same; and
b) improper venue; and plaintiff having failed to appear for today s hearing an
d/or to formally oppose the same notwithstanding a showing of receipt of the sub
ject motion as early as January 31, 1992. Finding the motion to be studiously we
ll-taken particularly in connection with the dismissal of this action on grounds
of improper venue consistent with the provisions of Sec. 13, Rule 14 of the Rul
es of Court, it appearing on the face of the actionable document sued upon that
venue had been by agreement of the parties laid in Manila. WHEREFORE, said motio
n to dismiss is hereby granted forthwith on grounds of impropriety of venue. The
above-entitled case is accordingly dismissed without pronouncement as to costs.
SO ORDERED. 2
On March 2, 1992, petitioner moved for reconsideration of the aforesaid order gr
anting the motion to dismiss anchored on the ground that in view of the absence
of qualifying or restrictive words in the agreement which would indicate that Ma
nila alone is the venue agreed upon by the parties, the plaintiffs still has the
choice to file the action in the place of his residence citing the case of Poly
trade Corporation v. Blanco. 3 On March 11, 1992, respondent court denied petiti
oner s motion for reconsideration and remained steadfast in its position explain
ing that its dismissal order is predicated on the doctrinal rule enunciated in B
autista v. Hon. Juan de Borja, et al. 4 that the proper court of Manila is the v
enue for an action upon a document stipulating such "in case of any litigation h
erefrom, or in connection herewith," on a rationale that neither party reserved
the right to choose venue as provided for in Section 2(b), Rule 4 of the Rules o
f Court, as would have been
REMLAW Page 420

choose venue as provided for in Section 2(b), Rule 4 of the Rules of Court, as w
ould have been done had the parties intended to retain such right of election. R
espondent court brushed aside Polytrade v. Blanco 5 stating that Bautista and Po
lytrade appear not to square with each other and that perhaps, the clear paramet
ers on the rule vis-avis proper venue should be defined. Thus, the sole issue to
be resolved in this petition is whether or not the respondent court erred in ho
lding that the venue of the action was improperly laid. Under Section 1(c), Rule
of the Revised Rules of Court, a motion to dismiss an action may be made within
the time for pleading on the ground that venue is improperly laid. Venue relate
s to the place of trial or geographical location in which an action or proceedin
g should be brought and not to the jurisdiction of the court. The matter of venu
e is regulated by the Rules of Court, so that the choice of venue is not left to
the caprices of plaintiff. 6 As a general rule, all personal actions may be com
menced and tried where the defendant or any of the defendants resides or may be
found, or where the plaintiff or any of the plaintiffs resides, at the election
of the plaintiff. 7 However, by written agreement of the parties, the venue of a
n action may be changed or transferred from one province to another. 8 Besides w
hen improper venue is not objected to in a motion to dismiss it is deemed waived
. 9 In other words, venue is waivable. It is procedural, not a jurisdictional ma
tter. It is intended to provide convenience to the parties, rather than restrict
their access to the courts. The rules on venue simply arrange for the convenien
t and effective transaction of business in the courts and do not relate to their
power, authority or jurisdiction over the subject matter of the action. As earl
y as the case of Central Azucarera de Tarlac v. De Leon, 10 this Court ruled tha
t an agreement in a contract fixing the venue of actions arising therefrom is a
valid waiver of the venue as fixed by law. Interpreting a stipulation in the wri
tten contracts sued upon that "in case of any litigation arising (t)herefrom or
in connection (t)herewith, the venue of action shall be in the City of Manila, P
hilippines," this Court held in Bautista v. De Borja, 11 that the parties must r
eserve their right of election if they want to file in a place other than the ve
nue agreed upon, thus:
. . . We note that neither party to the contracts reserved the right to choose t
he venue of action as fixed by law (i.e., where the plaintiff or defendant resid
es, at the election of the plaintiff (par. [b], Section 2, Rule 4, Revised Rules
of Court), as is usually done if the parties to retain that right of election g
ranted by the Rules. Such being the case, it can reasonably be inferred that the
parties intended to definitely fix the venue of action, in connection with the
written contracts sued upon in the proper courts of the City of Manila only, not
withstanding that neither party is a resident of Manila. . . .
Subsequently, in Polytrade Corporation v. Blanco, 12 this Court expostulated a c
ontrary doctrine that as long as the stipulation does not set forth qualifying o
r restrictive words to indicate that the agreed place alone and none other is th
e venue of the action, the parties do not lose the option of choosing the venue,
to wit:
. . . An accurate reading, however, of the stipulation. "The parties agree to su
e and be sued in the Courts of Manila," does not preclude the filing of suits in
the residence of plaintiff of defendant. The plain meaning is that the parties
merely consented to be sued in Manila. Qualifying or restrictive words which wou
ld indicate that Manila and Manila alone is the venue are totally absent therefr
om. We cannot read into that clause that plaintiff and defendant bound themselve
s to file suits with respect to the last two transactions in question only or ex
clusively in Manila. For, that agreement did not change or transfer venue. It si
mply is permissive. The parties solely agreed to add the courts of Manila as tri
bunals to which they may resort. They did not waive their right to pursue remedy
in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non
praesumitur.

The latter case made reference to Engel v. Shubert Theatrical Co. 13 where an an
alogous stipulation which read: "In case of dispute, both contracting parties ag
ree to submit to the jurisdiction of the Vienna courts" was interpreted as follo
ws: "By the clause in question the parties do not agree to submit their dispute
to the jurisdiction of the Viennese court, and to those courts only. There is no
thing exclusive in the language used. They do agree to submit to the Viennese ju
risdiction, but they say not a word in restriction of the jurisdiction of courts
elsewhere; and whatever may be said on the subject of the legality of contracts
to submit controversies to courts of certain jurisdiction exclusively, it is en
tirely plain that such agreements should be strictly construed, and should not b
e extended by implication." The doctrine in Polytrade was reiterated in Nicolas
v. Reparations Commission 14 where the issue posed was also whether the stipulat
ion on venue is restrictive or merely permissive. The Court therein held:
. . . venue in personal is fixed for the convenience of the plaintiff and his wi
tnesses and to promote the ends of justice. We cannot conceive how the interests
of justice may be served by confining the situs of
REMLAW Page 421

the action to Manila, considering that the residences or offices of all the part
ies, including the situs of the acts sought to be restrained or required to be d
one, are all within the territorial jurisdiction of Rizal. While the parties hav
e agreed to submit their dispute to the jurisdiction of the Manila courts, there
is nothing in the language used in the aforecited stipulation which clearly sho
ws that the intention of the parties was to limit the venue of the action to the
City of Manila only. Such agreements should be construed reasonably and should
not be applied in such a manner that it would work more to the inconvenience of
the parties without promoting the ends of justice.
Without reference to Polytrade nor to Nicolas cases, this Court enunciated the s
ame doctrine in Tantoco v. Court of Appeals, 15 to wit:
It is elementary that venue is waivable, since it is a procedural, not a jurisdi
ctional, matter. The record shows that the parties agreed that the courts of Man
ila shall have jurisdiction to try this case. The agreement is evidenced by sale
s contracts duly presented at the ex parte hearing of March 25, 1966, whereby th
e parties submitted themselves to the jurisdiction of the courts of Manila for a
ny legal action arising out of their transaction. In short, the parties agreed t
o add the courts of Manila as tribunals to which they may resort in the event of
suit, and not only to the courts either of Rizal, of which private respondent i
s a resident, or of Bulacan, where petitioner resides, pursuant to Section 2(b)
of Rule 4 of the Revised Rules of Court.
On the other hand, private respondent cite the case of Hoechst Philippines, Inc.
v. Torres, 16 in support of the trial court s decision. The stipulation: "In ca
se of litigation arising out of this agreement, the venue of any action shall be
in the competent courts of the Province of Rizal" was interpreted therein that
any action by either of the parties would have to be filed only in the competent
courts of Rizal province exclusively. Noteworthy, however, is the fact that on
May 19, 1978, or the day following the promulgation of the Hoechst case in May 1
8, 1978, this Court interpreted a similar stipulation on venue as unenforceable
in Sweet Lines, Inc. v. Teves. 17 Condition 14 of the shipping ticket issued by
Sweet Lines, Inc. which provides "that any and all actions arising out of the co
ndition and provisions of this ticket, irrespective of where it is issued, shall
be filed in the competent courts in the City of Cebu" was held subversive of pu
blic policy on transfers of venue of actions. The Court therein explained that t
he philosophy underlying the provisions on transfer of venue of actions is the c
onvenience of the plaintiffs as well as his witnesses and to promote the end of
justice. Considering the expense and trouble a passenger residing outside of Ceb
u City would incur to prosecute a claim in the City of Cebu, he would most proba
bly decide not to file the action at all, the Court said. The later cases of Lam
is Ents. v. Lagamon; 18 Capati v. Ocampo; 19 Western Minolco v. Court of Appeals
; 20 Moles v. Intermediate Appellate Court; 21 Hongkong and Shanghai Banking Cor
poration v. Sherman; 22 Nasser v. Court of Appeals; 23 and just recently, Suriga
o Century Sawmill Co. v. Court of Appeals, 24 all treaded the path blazed by Pol
ytrade. The conclusion to be drawn from all these is that the more recent jurisp
rudence shall properly be deemed modificatory of the old ones. Restating the rul
e, venue stipulations in a contract, while considered valid and enforceable, do
not as rule supersede the general rule set forth in Rule 4 of the Revised Rules
of Court. In the absence of qualifying or restrictive words, they should be cons
idered merely as an agreement on additional forum, not as limiting venue to the
specified place. They are not exclusive but, rather permissive. For, to restrict
venue only to that place stipulated in the agreement is a construction purely b
ased on technicality which, on the contrary, should be liberally construed. Thus
, we hold that the petitioner in this case is not barred nor proscribed from fil
ing its case against private respondents in Makati where petitioner holds its re
sidence, pursuant to Section 2(b) of Rule 4 of the Revised Rules of Court. WHERE
FORE, the petition in this case is GRANTED and the orders of respondent Presidin
g Judge of the Regional Trial Court Branch 146, at Makati, dated February 28, 19

92 and March 11, 1992 dismissing the complaint and denying the motion for recons
ideration are hereby REVERSED and the complaint in the captioned civil case is R
EINSTATED. SO ORDERED. Narvasa, C.J., Regalado and Puno, JJ., concur.
Separate Opinions
PADILLA, J., dissenting: Section 3, Rule 4 of the Rules of Court allows the part
ies to agree on the change or transfer of venue.
REMLAW Page 422

venue. The doctrine in Polytrade Corporation vs. Blanco, 30 SCRA 187 (1969) whic
h is upheld by the majority in this case, that the general rules on venue remain
applicable in the absence of qualifying or restrictive words in the agreement w
hich indicate that the place specified is the only venue agreed upon, was laid d
own to prevent undue hardship or inconvenience to the parties. In my view, the i
ssue of whether or not an agreement fixing the venue of actions prevents the app
lication of the general rule on venue under Sections 1 and 2 of Rule 4, Rules of
Court, should be settled by keeping the purpose of the doctrine in mind. There
is hardly any question that a stipulation in contracts of adhesion, fixing venue
to a specified place only, is void for, in such cases, there would appear to be
no valid and free waiver of the venue fixed by the Rules of Court. However, in
cases where both parties freely and voluntarily agree on a specified place to be
the venue of actions, if any, between them, then the only considerations should
be whether the waiver (of the venue fixed by the Rules of Court) is against pub
lic policy and whether the parties would suffer, by reason of such waiver, undue
hardship and inconvenience; otherwise, such waiver of venue should be upheld as
binding on the parties. The waiver of venue in such cases is sanctioned by the
Rules of Court and would still be subject to and limited by the rules on jurisdi
ction. In the case at bench, there us no showing that any party would, in any wa
y, be unduly inconvenienced in adhering to their agreed venue; besides, the two
(2) venues involved, namely Makati and Manila, are so geographically close to ea
ch other, such that there is no perceivable reason why there would be any substa
ntial difference between the said two (2) venues. In such a case, the venue agre
ed by the parties should control. I therefore vote to DENY the petition and upho
ld the decision of the court a quo. Separate Opinions PADILLA, J., dissenting: S
ection 3, Rule 4 of the Rules of Court allows the parties to agree on the change
or transfer of venue. The doctrine in Polytrade Corporation vs. Blanco, 30 SCRA
187 (1969) which is upheld by the majority in this case, that the general rules
on venue remain applicable in the absence of qualifying or restrictive words in
the agreement which indicate that the place specified is the only venue agreed
upon, was laid down to prevent undue hardship or inconvenience to the parties. I
n my view, the issue of whether or not an agreement fixing the venue of actions
prevents the application of the general rule on venue under Sections 1 and 2 of
Rule 4, Rules of Court, should be settled by keeping the purpose of the doctrine
in mind. There is hardly any question that a stipulation in contracts of adhesi
on, fixing venue to a specified place only, is void for, in such cases, there wo
uld appear to be no valid and free waiver of the venue fixed by the Rules of Cou
rt. However, in cases where both parties freely and voluntarily agree on a speci
fied place to be the venue of actions, if any, between them, then the only consi
derations should be whether the waiver (of the venue fixed by the Rules of Court
) is against public policy and whether the parties would suffer, by reason of su
ch waiver, undue hardship and inconvenience; otherwise, such waiver of venue sho
uld be upheld as binding on the parties. The waiver of venue in such cases is sa
nctioned by the Rules of Court and would still be subject to and limited by the
rules on jurisdiction. In the case at bench, there us no showing that any party
would, in any way, be unduly inconvenienced in adhering to their agreed venue; b
esides, the two (2) venues involved, namely Makati and Manila, are so geographic
ally close to each other, such that there is no perceivable reason why there wou
ld be any substantial difference between the said two (2) venues. In such a case
, the venue agreed by the parties should control. I therefore vote to DENY the p
etition and uphold the decision of the court a quo. # Footnotes
#
1 Rollo, pp. 21 and 28. 2 Rollo, p. 39. 3 G.R. No. 27033, 30 SCRA 187 (1969). 4
G.R. No. L-20600, 18 SCRA (1966). 5 Supra. 6 Clavecilla Radio System v. Antillon
, G.R. No. L-22238, 19 SCRA 379 (1967). 7 Sec. 2(b), Rule 4 of the Revised Rules
of Court. 8 Sec. 3, Rule 4 of the Revised Rules of Court. 9 Sec. 4, Rule 4 of t
he Revised Rules of Court.
REMLAW Page 423

9 Sec. 4, Rule 4 of the Revised Rules of Court. 10 56 Phil. 169. 11 Supra. 12 Su

pra. 13 151 N.Y.S. 593, 594. 14 G.R. No. L-28649, 64 SCRA 110. 15 G.R. No. L-293
45, 77 SCRA 225 (1977). 16 G.R. No. L-44351, 83 SCRA 297. 17 G.R. No. L-37750, 8
3 SCRA 361 (1978). 18 G.R. No. L-57250, 108 SCRA 740 (1981). 19 G.R. No. L-28742
, 113 SCRA 794 (1982). 20 G.R. No. L-51996, 167 SCRA 592 (1988). 21 G.R. No. L-7
3913, 169 SCRA 777 (1989). 22 G.R. No. L-72494, 176 SCRA 331 (1989). 23 G.R. No.
L-32945-46, 191 SCRA 783 (1990). 24 G.R. No. L-83889, 218 SCRA 619 (1993).
Pasted from <http://www.lawphil.net/judjuris/juri1994/feb1994/gr_104649_1994.htm
l>
REMLAW Page 424

Spouses Lantin v. Judge Lantion, GR No. 160053, Aug 28, 2006

Sunday, November 14, 2010 11:41 PM
G.R. No. 160053 August 28, 2006 SPS. RENATO & ANGELINA LANTIN, Petitioners, vs.
HON. JANE AURORA C. LANTION, Presiding Judge of the Regional Trial Court of Lipa
City, Fourth Judicial Region, Branch 13, PLANTERS DEVELOPMENT BANK, ELIZABETH C
. UMALI, ALICE PERCE, JELEN MOSCA, REGISTER OF DEEDS FOR LIPA CITY, BATANGAS, TH
E CLERK OF COURT and EX-OFFICIO SHERIFF OF THE REGIONAL TRIAL COURT OF BATANGAS,
Respondents. DE C I S I O N QUISUMBING, J.: This is a petition for certiorari a
ssailing the orders dated May 15, 2003[1] and September 15, 2003[2] in Civil Cas
e No. 2002-0555 issued by public respondent, Presiding Judge Jane Aurora C. Lant
ion, of the Regional Trial Court (RTC) of Lipa City, Batangas. The facts of the
case are as follows: Petitioners Renato and Angelina Lantin took several peso an
d dollar loans from respondent Planters Development Bank and executed several re
al estate mortgages and promissory notes to cover the loans. They defaulted on t
he payments so respondent bank foreclosed the mortgaged lots. The foreclosed pro
perties, in partial satisfaction of petitioners debt, were sold at a public aucti
on where the respondent bank was the winning bidder. On November 8, 2003, petiti
oners filed against Planters Development Bank and its officers Elizabeth Umali,
Alice Perce and Jelen Mosca (private respondents), a Complaint for Declaration o
f Nullity and/or Annulment of Sale and/or Mortgage, Reconveyance, Discharge of M
ortgage, Accounting, Permanent Injunction, and Damages with the RTC of Lipa City
, Batangas. Petitioners alleged that only their peso loans were covered by the m
ortgages and that these had already been fully paid, hence, the mortgages should
have been discharged. They challenged the validity of the foreclosure on the al
leged non-payment of their dollar loans as the mortgages did not cover those loa
ns. Private respondents moved to dismiss the complaint on the ground of improper
venue since the loan agreements restricted the venue of any suit in Metro Manil
a. On May 15, 2003, the respondent judge dismissed the case for improper venue.
Petitioners sought reconsideration. They argued that the trial court in effect p
rejudged the validity of the loan documents because the trial court based its di
smissal on a venue stipulation provided in the agreement. The motion for reconsi
deration was denied and the lower court held that the previous order did not tou
ch upon the validity of the loan documents but merely ruled on the procedural is
sue of venue. Petitioners now come before us alleging that: I THE HONORABLE JUDG
E COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTIO
N IN HOLDING THAT THE VENUE STIPULATIONS IN THE "REAL ESTATE MORTGAGE" AND "PROM
ISSORY NOTES" FALL WITHIN THE PURVIEW OF SECTION 4(B) OF RULE 4 OF THE 1997 RULE
S OF CIVIL PROCEDURE IN THAT IT LIMITED THE VENUE OF ACTIONS TO A DEFINITE PLACE
. II THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK O
R EXCESS OF JURISDICTION IN NOT FINDING THAT THE MERE USE OF THE WORD "EXCLUSIVE
LY" DOES NOT, BY ITSELF, MEAN THAT SUCH STIPULATIONS AUTOMATICALLY PROVIDE FOR A
N "EXCLUSIVE VENUE", AS CONTEMPLATED BY SECTION 4(B) OF RULE 4 OF THE 1997 RULES
OF CIVIL PROCEDURE, SPECIALLY WHEN THE TENOR OR LANGUAGE OF THE ENTIRE VENUE ST
IPULATION CLEARLY PROVIDES OTHERWISE. III THE HONORABLE JUDGE COMMITTED GRAVE AB
USE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISREGARDING TH
E FACT THAT HEREIN PETITIONERS COMPLAINT INVOLVES SEVERAL CAUSES OF ACTION WHICH
DO NOT ARISE SOLELY FROM THE "REAL ESTATE MORTGAGE" AND "PROMISSORY NOTES" AND W
HICH OTHER CAUSES OF ACTION MAY BE FILED IN OTHER VENUES UNDER
REMLAW Page 425

SECTIONS 1 AND 2 OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE. IV THE HONORABL
E JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURIS
DICTION IN DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF ACTIONS IS ESTAB
LISHED FOR THE CONVENIENCE OF THE PLAINTIFFS.[3] The main issue in the present p
etition is whether respondent judge committed grave abuse of discretion when she
dismissed the case for improper venue. Petitioners contend that, since the vali
dity of the loan documents were squarely put in issue, necessarily this meant al
so that the validity of the venue stipulation also was at issue. Moreover, accor
ding to the petitioners, the venue stipulation in the loan documents is not an e
xclusive venue stipulation under Section 4(b) of Rule 4 of the 1997 Rules of Civ
il Procedure.[4] The venue in the loan agreement was not specified with particul
arity. Besides, petitioners posit, the rule on venue of action was established f
or the convenience of the plaintiff, herein petitioners. Further, petitioners al
so contend that since the complaint involves several causes of action which did
not arise solely from or connected with the loan documents, the cited venue stip
ulation should not be made to apply. Private respondents counter that, in their
complaint, petitioners did not assail the loan documents, and the issue of valid
ity was merely petitioners afterthought to avoid being bound by the venue stipula
tion. They also aver that the venue stipulation was not contrary to the doctrine
in Unimasters,[5] which requires that a venue stipulation employ categorical an
d suitably limiting language to the effect that the parties agree that the venue
of actions between them should be laid only and exclusively at a definite place
. According to private respondents, the language of the stipulation is clearly e
xclusive. At the outset, we must make clear that under Section 4 (b) of Rule 4 o
f the 1997 Rules of Civil Procedure, the general rules on venue of actions shall
not apply where the parties, before the filing of the action, have validly agre
ed in writing on an exclusive venue. The mere stipulation on the venue of an act
ion, however, is not enough to preclude parties from bringing a case in other ve
nues. The parties must be able to show that such stipulation is exclusive.[6] In
the absence of qualifying or restrictive words, the stipulation should be deeme
d as merely an agreement on an additional forum, not as limiting venue to the sp
ecified place.[7] The pertinent provisions of the several real estate mortgages
and promissory notes executed by the petitioner respectively read as follows: 18
. In the event of suit arising out of or in connection with this mortgage and/or
the promissory note/s secured by this mortgage, the parties hereto agree to bri
ng their causes of auction (sic) exclusively in the proper court of Makati, Metr
o Manila or at such other venue chosen by the Mortgagee, the Mortgagor waiving f
or this purpose any other venue.[8] (Emphasis supplied.) I/We further submit tha
t the venue of any legal action arising out of this note shall exclusively be at
the proper court of Metropolitan Manila, Philippines or any other venue chosen
by the BANK, waiving for this purpose any other venue provided by the Rules of C
ourt.[9] (Emphasis supplied.) Clearly, the words "exclusively" and "waiving for
this purpose any other venue" are restrictive and used advisedly to meet the req
uirements. Petitioners claim that effecting the exclusive venue stipulation woul
d be tantamount to a prejudgment on the validity of the loan documents. We note
however that in their complaint, petitioners never assailed the validity of the
mortgage contracts securing their peso loans. They only assailed the terms and c
overage of the mortgage contracts. What petitioners claimed is that their peso l
oans had already been paid thus the mortgages should be discharged, and that the
mortgage contracts did not include their dollar loans. In our view, since the i
ssues of whether the mortgages should be properly discharged and whether these a
lso cover the dollar loans, arose out of the said loan documents, the stipulatio
n on venue is also applicable thereto. Considering all the circumstances in this
controversy, we find that the respondent judge did not commit grave abuse of di
scretion, as the questioned orders were evidently in accord with law and jurispr
udence. WHEREFORE, the petition is DISMISSED. The assailed orders dated May 15,
2003 and September 15, 2003 of the Regional Trial Court of Lipa City, Batangas,
in Civil Case No. 2002-0555 are AFFIRMED. Costs against petitioners. SO ORDERED.
Pasted from <http://webcache.googleusercontent.com/u/lawphil?

REMLAW Page 426

Pasted from <http://webcache.googleusercontent.com/u/lawphil? q=cache:iajE6KkACa

MJ:www.lawphil.net/judjuris/juri2006/aug2006/gr_160053_2006.html+G.R.+No.+160053
&cd=1 &hl=en&ct=clnk&ie=UTF-8>
REMLAW Page 427